Mr. Speaker, I move—

As hon. members know, it is customary to introduce, at the end of the session, a Finance Bill which usually ties up a few loose ends, and which includes other miscellaneous matters relating to the Consolidated Revenue Fund and the Railways and Harbours Fund. I do not think it is necessary for me to explain these matters in detail. These matters are all set out clearly in the Explanatory Memorandum. These are matters which should really be discussed during the Committee Stage because they are all separate and not coherent matters.

In view of the amendment to clause 6 which appears in my name on the Order Paper, I do want to point out, however, that the clause as initially worded, created the impression that interest on the loan of R1 million would be remitted as from the date on which the loan was concluded. The intention is however that the loan shall be interest bearing up to and including the commencement of this Bill, i.e. the actual date on which the amount of R1 million is written off, and the amendment proposed by me gives effect to this.

If there are any hon. members who desire more information on any aspect, I should like to furnish them with further details during the Committee Stage.

Mr. Speaker, we shall not oppose the Second Reading of this Bill. It deals with the ordinary financial matters which arise in the course of running a country. There are, however, a number of issues which I should like to raise pertinently with the hon. the Minister.

Firstly, in regard to clause 1(c), there is the question of the amount relating to the Foreign Currency Adjustment Account. Bearing in mind other amounts which we have already dealt with, this becomes a fairly large sum. I hope that the hon. the Minister will be able to deal with this matter in some greater detail. There have been quite a number of consequences of changes of currency and I think that one of the matters that troubled some of us was the fact that some of the loans that were obtained, not necessarily by the Government but by other institutions, were in fact given forward cover in respect of foreign exchange. In these circumstances, many of the authorities paid less attention to the risk of currency changes which might have had an adverse effect on South Africa than to the interest factor which was attractive to them because there was, of course, cover given in respect of a foreign exchange loss. This is an issue which is important from the point of view of borrowing overseas. I should like the hon. the Minister to assure us that when loans are incurred in particular currencies, whether by the State or other authorities, due consideration is given to possible losses which might be incurred as a result thereof.

The second matter I should like to raise is covered by clause 1(d) in relation to the Economic Co-operation Promotion Loan Fund. We are being asked to vote an amount of R6 million here. I want to say that we on this side of the House are very much in favour of the concept behind this. We are, however, rather disappointed in regard to this matter because from the 1973 accounts which were the latest accounts available to me, it appears that some R17½ million is lying in the account unused. As far as the 1973 financial year was concerned, all that was shown in respect of a loan to new Governments was the somewhat small amount of R1 780 000. From this it appears to me that our foreign aid programme is not going as well as it might be. It may well be that during the 1973-’74 financial year we were able to provide more assistance. I would be very grateful if the hon. the Minister could tell us whether there have been further foreign loans and whether in fact this amount of R6 million is really necessary. If we already have an amount of R17½ million lying idle in this account, it does not appear to be logical that we should put more money into it.

The next point I want to refer to is covered by clause 4. This matter, the question of the savings fund levy, will be dealt with by another hon. colleague of mine on this side of the House. In this regard there is also the question of whether further protection of the public is not required before these amounts are forfeited to the State. As I say, one of my hon. colleagues will deal with this question in greater detail.

I should like now to refer to the provisions of clause 5 which cover the write-off of the loan to the Maize Board of R10 million. With respect, I feel that this is also a matter which requires some further explanation. If we consider some of the figures that are available—I should like to mention a few of them in this regard—we find that as at 30 April 1975 the amount in the Stabilization Fund of the Maize Board is expected to be just under R70 million. In respect of the maize crop during the current year, it is fairly clear that it is likely to reach a record level. What is more, export prices for maize are also likely to be at very substantial levels. I should like here to quote from the Agricultural News of 11 October 1974. It is stated there:

These are very formidable figures. Sir, the accounts of the Mealie Board which are available are not very up to date, but the last available account shows that the financial position of the Mealie Board was an extremely healthy one. Sir, in the light of that, I think the hon. the Minister owes some explanation to the House as to why in fact in these circumstances the amount of R10 million should be written off.

Mr. Speaker, the hon. member for Yeoville discussed the Stabilization Fund of the Maize Board here, and I think it would be a good think if one were to clarify this matter a little at this stage. Sir, on behalf of this side of the House, I should like to give the Bill, which we have before us, my sincere support because it simply stems from legislation previously passed in this House. In regard to the Stabilization Fund of the Maize Board, I should just like to say to the hon. member for Yeoville—this is also apparent from questions which he put to the hon. the Deputy Minister the other day—that there could perhaps be a misunderstanding over this Stabilization Fund amount. If we were just to glance at the figures for the past ten years, from 1963-’64 to 1972-’73, we would see that the Stabilization Fund of the Maize Board has in fact had to bear a heavy burden. During that specific period of ten years, there was a profit on exports in only two years. The total profit in those two years was Rl,89 million. Over the remaining eight years there was a loss of R68 784 000. Sir, we are aware of the purpose of the Stabilization Fund. The Maize Board’s price is usually determined at the beginning of April, and one of the components of the maize price is the overseas realization which has to be estimated in advance on the basis of calculations which can be made at that stage, and so we have over the years had the position that the producers, the consumers and the Government had to contribute to the Stabilization Fund of the Maize Board in order, eventually, to rectify the error in calculation. At the end of 1963-’64 the Stabilization Fund stood at R27 626 000, and during this 10-year period the producers contributed R53 080 000; the Government contributed R35 163 000, and the consumers of maize contributed R12 628 000. But, Sir, in the year 1972-’73, which is under discussion, the export costs of maized or the export loss as some people term it, was calculated at an amount of R60,2 million. In that particular year, as far as the price of maize is concerned, it was agreed that the producer would have to contribute R27 266 000; the Government indicated that it would contribute R16 285 million, and the consumer was assessed for a contribution of R4 805 in order to cover the export costs. Sir, fortunately the position changed and although there was a loss of Rl,3 million in the initial stages of the export programme, this was in fact followed by a reasonably large profit, so much so that the Stabilization Fund, at the end of the 1972-’73 season, had a credit balance of approximately R40 million, but because there was a total crop failure of only 4,1 tons of maize, and because production costs had increased to such an extent, it would have been necessary for an emergency payment of R45 million to have been made to the producer of maize. If this had happened, the Stabilization Fund of the Maize Board would have been in the red by approximately R5 million. Sir, when the Stabilization Fund was established, it was in fact intended exclusively for export losses. The Government also donated an amount of R16 285 million for that purpose in this specific year. But over the years the practice has begun to develop for the Stabilization Fund to be utilized for a wider purpose in regard to the stabilization of the industry as such, and in certain years a small additional amount was given to the producer when the Government perhaps felt that the consumer price should not rise too far, but that the producer on the other hand should also be assisted; and at other times again a small amount was taken from the Stabilization Fund in order to subsidize the consumer. In this way the principle developed that the Stabilization Fund should in fact be utilized to stabilize the industry, depending upon the circumstances. But, Sir, another principle also developed, viz. that once a contribution had been made to the Stabilization Fund once, that money which was paid in in this way by the three parties, the Government, the consumer and the producer, lost its identity. In that year when the production costs rose and the producer price had to be increased, and when, on the other hand, consideration also had to be given to the price the consumer had to pay, the Government indicated that R6,285 million of its contribution of R16,285 million was to be used to subsidize the price for the consumer; this was over and above the amount which the Government contributes annually to cover the total storage and handling costs in connection with the domestic consumption of maize plus a subsidy on the railage for the domestic consumption of maize. This amount appears every year in the Estimates, and has since 1948-’49 risen from R2,6 million to an amount in the region of R35 million per annum. That amount is given annually by the Government to keep the consumer price within reasonable limits. But the Government indicated in that specific year that an additional amount of R6 285 million had to be utilized to subsidize the consumer price of maize by R1-35 per ton.

Therefore, Sir, I am only rising to say thank you very much to the Government and the Minister for this R10 million, which was initially paid into the fund and was subsequently to have been lent to the Maize Board, but which the Government eventually decided, after representations by the Maize Board, to donate to the industry in the spirit and in the disposition in which the contributions have over the years been made to the Stabilization Fund of the Maize Board. Sir, this amount is in fact the due of the maize industry as such, because there was a small crop of 4,1 million tons the previous year, and because some of the expensive maize of the next season which could have been exported had to be held back to supplement the domestic supplies so that we would have enough maize here. I think the Government took the right step in stabilizing the maize industry in this case as well, so that we, as maize producers, were able to get stuck in and produce this wonderful harvest of 11 million tons last year. Sir, I would be guilty of dereliction of duty today if I did not rise and say thank you very much to the Government and the Minister for this R10 million which has been contributed in this way. This is one of the bases which is always taken into account in the calculation of our maize price, and, we are grateful that the Government has recognized this principle, through this contribution. We say thank you very much for this.

Mr. Speaker, the speech by the hon. member for Heilbron was very interesting, but he will probably forgive me for not reacting to it. I should just like to say that I am very pleased the maize farmers has done so well this year and I only hope they will do even better next year.

†Sir, the hon. member for Yeoville dealt very comprehensively with this Bill, and I am going to deal very briefly with clause 4. There are certain aspects of this clause on which this side of the House would like clarity. A personal and savings fund levy was imposed in terms of section 7 of Act 40 of 1942; the levy became payable in the years 1942 and 1945. In those days, of course, over 30 years ago, the money which was paid in was worth something, and I take it that people are not bothering to claim that money back, firstly because there is only a small amount due to each person; secondly, the money is now practically worthless compared to what it was worth 30 years ago, and thirdly, many of the people who paid in this money have passed away and the people who are administering their estates are not even aware of the fact that they have claims against the State. Then there are other people who have forgotten that they lent this money to the State. The hon. the Minister in answer to a question on the Order Paper indicated that the total amount which still due from the State to these individuals amounted to something like R 1,079 million. Now R1 million in the normal course of events is a lot of money. Yet this amount is owing to the taxpayers. We can see the difficulty the Minister’s department has in this regard because the money is owing to something like 100 000 people. We understand that the certificates which were issued to the taxpayers were issued on the basis that some taxpayers even received two or three certificates in relation to the levies they paid in. We understand that the total number of certificates issued was something in the vicinity of 250 000 and that the average amount which is owing is something like R10.

We are also told that the greater majority of the people are owed actually less than R1 and that that is presumably the reason why people did not claim these refunds. We are also pleased to see that in this Bill there is provision that the people who are owed these funds are entitled to reclaim the money until 31 October 1975. In other words, they have a year of grace within which to reclaim these moneys, presumably if they can produce their tax certificates. What we would like to know from the Minister is this. Would he give us an assurance that if any taxpayer comes to him or to his department after 31 October 1975, he will allow that taxpayer to get a refund by way of an ex gratia-payment, and if he does not have his certificate but can furnish proof that he in fact did pay this levy between 1942 and 1945, could we get the assurance from the hon. the Minister that he would authorize an ex gratia-payment being made to those taxpayers?

Sir, the only other point to which I would like to draw the hon. the Minister’s attention is this. Would he not consider again advising the taxpayers that this amount is due, even by way of Press publicity or by way of a publication in the Government Gazette? I feel that if the hon. the Minister would agree to these points I have raised, this side of the House would be satisfied in regard to this matter.

Mr. Speaker, I do not think it is necessary to reply in full to all these matters. I thought they would come up in the Committee Stage, but seeing that the questions have been asked I should just like to reply to them briefly.

Regarding the question raised by the hon. member for Yeoville in regard, in the first place, to the Maize Board, I think a full reply has been given by the hon. member for Heilbron. I just want to add that at the stage when the decision was made to re-grant the R10 million as a loan to the Maize Board, we were not yet aware that prices would go up to the extent we find now they have gone up. Secondly, there was a misunderstanding between the Maize Board and the Government in the sense that the Maize Board really understood—and I can understand that they understood it in that way—that this money will lose its identity once it comes into the possession of the Maize Board. But certainly I want to assure the hon. member that it was all done in good faith, and the Government will not lose anything in this regard, because in future that will be taken into consideration when further contributions are made to the Maize Board in respect of subsidization, etc. A fourth factor has been mentioned, that after the bad harvest of the previous year the Maize Board paid out R45 million as an extra payment to the farmers. They needed this money in order to be able to pay out this extra amount to the farmers. But the State will not lose any of the money. It will all be taken into account if any occasion should arise in future …

May I ask a question on this? To what extent does the hon. the Minister consider that the Stabilization Fund should actually be built up?

Actually I cannot answer that question. However, I think it should be built up fairly substantially high because one never knows about the exigencies. At the present moment we know that prices for next year will be very high and we will get very high export prices. That is as things seem now. But we do not know about the following year. There are so many variations in the prices of export articles that we really do not know what might happen. My colleague might disagree with me but I think that they are fairly high at present.

In regard to the other points made by the hon. member in regard to clause 1(c), the Foreign Currency Adjustment Account of R4,6 million, the explanation is actually this. The Reserve Bank holds our reserves in two main forms, in the first place in the form of gold and in the second place in the form of foreign currency, and when the Reserve Bank makes payments to the outside world it does it in the first place from the foreign currency and if there is not enough foreign currency, it has to sell gold. Now, it happens sometimes, for instance, if other currencies should depreciate, that we have to write down the value of those currencies in the accounts of the Reserve Bank. On the other hand, if the rand should up-value then we also have to write down the value of these currencies in the accounts of the Reserve Bank. These are the two main causes why you often find a devaluation, a depreciation of the value of the currencies the Reserve Bank holds in its accounts, things over which we actually have no control except that we have control in the sense that we revalue the rand because the value of the other currencies immediately falls in relation to the rand. But if other countries devalue their currencies, something which happens practically every day, we also have consider the value of these currencies in relation to the rand. Our reserves are expressed in rand. These are things over which we have practically no control. That is the significance of this figure we have here.

To save time, may I ask a further question? I really intended to refer to the Forward Exchange Contracts Contingency Reserve Account which involves some R94 million, and which is the one which is concerned with other matters.

The R94 million which I also mentioned in a question which was put to me and as I also mentioned in the Budget debate, comes to this, that the Reserve Bank grants forward cover in foreign exchange matters, in foreign dealings, in buying and selling and loans, and there are sometimes losses in these exchanges. Those losses we have to suffer. When forward currency is sold by the Reserve Bank, in dollars for instance, and if the dollar should appreciate and there is a loss, and the amount is covered by insurance, the Reserve Bank of course has to pay that loss in foreign currency. It is a huge amount. A premium is paid but of course the premium does not cover the losses made at all. In some years we make a profit but in certain years we make a loss. This year we had a loss because there were immense forward dealings and immense external payments had to be made. But I think this is a service which is being rendered to people who have to deal with the outside world and who are to receive money from the outside world when they sell anything to the outside world and have to pay to the outside world, in order to stabilize their actual receipts on payments in rand. So we really actually ensure the man who has sold, say, articles for R5 million, that he gets his R5 million whatever happens to the other currency. That is the whole scheme. It is a forward exchange insurance of external dealings.

Then the hon. member for Walmer asked me about the repayments of the savings levy and the interest thereon. I can assure him that people have time until 31 October 1975. There is about a year still to go in which these payments can legally be demanded, both of the capital sum of the loan and the interest thereon. I can undertake that we shall again advertise the fact that by the end of October 1975 the legal aspect of this falls away and that thereafter they will have no legal right to claim the money. The money falls back into the Consolidated Revenue Account. But if anyone should apply after that date and he produces the necessary certificate and proven that we owe that money to him, that money will be paid to him, but then it will be granted ex gratia, and of course all ex gratia-payments come to this House and hon. members will see what ex gratia-payments are being made. So, we do not want to keep other people’s money. If there is any proof that the money belongs to them, it will be paid back to them with interest.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, I should just like to raise one point by way of a question. Having dealt under clause 1(b) with the question of the Forward Exchange Contracts Contingency Reserve Account, I wonder whether the Minister could tell me now how much of it relates to the kind of activity which is purely commercial, when one is dealing with forward cover for which the public ask, and how much of it actually relates to loans, particularly by public corporations such as Escom, Iscor, etc., which borrowed and perhaps went into the wrong market looking purely at interest rates as opposed to the strength of the currencies concerned? It may be a difficult question to ask the Minister without notice in these circumstances, but if he cannot answer this, the one matter I am concerned with is that when loans are sought one should keep in mind not only the interest rate but also the strength of the currency in which one is borrowing.

It is a very important question. However, I am afraid I cannot give the figures at the present moment. There is a very large sum involved in the repayment of loans and interest. I could perhaps at a later stage give the hon. member the exact amount.

Clause agreed to.

Clause 6:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Title:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Title, as amended, agreed to.

House Resumed:

Bill reported with amendments.

Report Stage taken without debate. Bill read a Third Time.

Mr. Speaker, before we adjourned last night, I was explaining that the United Party has been using the income tax legislation in recent times to launch an attack on the Budget. It is very clear to us that the United Party were unable to attack the Budget itself and now they want to try to make an attack on a part of it. What is easier than to tell someone that he should not really be paying tax? The United Party states that a further amount of millions of rand should be paid out in pensions, but they must also make their contribution and tell us where the money is to come from. If relief is to be afforded to A, then this must surely be recovered from B or C and that is what they must tell us.

A great deal has been said about various methods of saving. What is particularly disturbing is that one hon. member of the Opposition after another—we do believe that they still believe in the ideology of capitalism although they are less capitalistic than the Progressives—is stating that people who invest their money today, are in fact wasting their money. That is not true. The fact that the value of money is dropping, is simply something we must take into account. It is also true that a man who has capital today—i.e. who is liquid—can buy the biggest bargains he has been able to buy is recent years. As far as houses and land are concerned, the person who has money now can make the best purchases. For that reason we must urge our people to save. It is pointless to tell people that money has no value and that they Should buy more inferior goods in order to get rid of their money before its value drops even further. It is pointless to tell them to invest their money in those inferior goods.

I want to deal more specifically with the amendments effected in terms of clauses 63 through 68. In the sixth schedule to the principal Act, rules are laid down in regard to tax on certain gains made on insurance policies. Clauses 63 through 68 introduce amendments to that schedule. Gains in respect of policies recognized as standard policies are exempted from tax. It has become the practice among big businessmen to take out a single-premium policy. By this means they have had much success in evading tax. A single-premium policy of this kind can be compared with a once-only investment. Let us take an example. A takes out a single-premium policy for R10 000 for, say, a period of 10 years. He gets the investment back in full at the end of the period of 10 years. In other words, he gets his R10 000 back plus interest. There is no risk to this policy. If the insured person dies, there is no death cover. The insured only gets the amount he pays in, plus the interest. In other words, it is simply an investment. If a person were to invest the same R10 000 in a bank or building society, he would pay tax on his full interest income. The Act therefore draws a proper distinction between a standard policy and one which cannot be regarded as standard. Cases where the average tariff is still allowed, are now limited to gains in respect of benefits determinable upon or by reason of the maturity of the policy after 10 years, on death or disablement or the final surrender of a policy after 10 years, with the result that a gain in regard to benefits payable on part surrender is excluded. In addition, it should be noted that paragraph 13(2) of the sixth schedule is amended to withdraw the recognition as standard policies of policies that remain untouched for 10 years, except where the proposals for the policies were made and accepted in writing before 14 August 1974. The main purpose of insurance is to save and make provision for one’s old age. The risk involved on the death of the insured makes it an exceptional kind of saving and it is for this particular reason that there is what is called the 2 000 rule. In terms of paragraph 14 of the sixth schedule, under certain circumstances a standard policy may cease to be a standard policy. In such a case the benefits off the policy are no longer exempted from tax. It must be noted that certain exceptions to the general rules are being made, including cases of the 2 000 rule. In terms of the 2 000 rule, a standard policy does not cease to be a standard policy if, during a tax year in regard to which the rule applies, the sum of all the premiums payable to the insurer by the owner of the policy in question, in regard to that policy and all his other insurance policies, does not exceed R2 000. One can see, therefore, that the man in the street is protected as a taxpayer. The changes effected to this clause are not retrospective either, nor are they applicable to policies taken out after 14 August 1974. In other words, what is being briefly provided here is that a distinction is being drawn between a standard and a non-standard policy. The insurance of a man with an insurance payment or premium of R2 000 per annum is left entirely as it is and no tax is paid on it.

When we listen to the hon. members for Constantia and Yeoville, they talk about the tightness of liquidity. I did some talking to banks and asked them what their prospects were in this regard and what problems they would be caused by taxation. Their comment can briefly be summed up as follows: Inflation, which causes a drain on money, causes more money to be necessary for the same volume of business. Structural shifts in investments and the expectation that long-term interest rates would continue to rise, cause investors to invest their money in the short-term in expectation of what will occur. In other words, there has been uncertainty as far as taking immediate decisions was concerned. The United Party, with the attack it is making here, is feeding that uncertainty to an increasing extent. The swing to short-term investment has meant that banks have had to invest more funds with the Reserve Bank. The liquid asset requirements for short term funds are higher and consequently banks have less funds to lend.

Reference was also made to the wide gap between domestic and foreign interest rates which had existed until recently. This caused our foreign trade to be financed from local sources for the most part and caused money to flow out of the country. For a long time the capital influx from abroad, too, left much to be desired. Authorities predict that the present tight position will change drastically within the next six months and that we shall have to contend with a surplus of funds. One of the factors that will bring about this change is a drop in the tempo of economic activities which will bring about a reduction in the demand for credit. The expected real growth rate for next year is 4% or 5% in comparison with the growth rate of 7% expected this year. State spending will increase sharply. In my opinion this will aid liquidity considerably. It is said that State spending over the next three months will run to more than it has over the past eight months. The State corporations are also going to borrow abroad on a larger scale. Quite possibly the gold price is going to rise further and cause a welcome influx of additional funds. Then, today, there is the accusation, as one could almost call it, by the building societies, that tax relief for the group R3 000 to R6 000 has caused money to flow away from the building societies to the Post Office or to bodies that offer a higher interest rate. In other words, people are no longer investing in tax-free investments, but in investments yielding 9½% to 10%. These tax-free investments have enabled the worker to get a higher interest on his investment.

Mr. Speaker, I am sure the hon. member for Langlaagte will not mind if I do not react to his arguments. I want to tell him that I am pleased he raised the standpoint that the opportunity to save does in fact exist in South Africa, under this Bill, too.

I want to come back to the attack made on this Bill by the hon. member for Yeoville and other members. This Bill makes provision for 79% of the total tax to be levied by the State. For example, this Bill is responsible for the total direct to be levied. The hon. member for Yeoville came along with an amendment in which he stated that the United Party refused to agree to this Bill because it did not take into account the economic and social problems of South Africa. I want to say that this is a general statement that is really not substantiated in detail. This also applies to all the proposals they have come up with. I want to go so far as to say that I believe that this amendment is rot.

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

I withdraw it, Mr. Speaker.

The hon. member should not be so irresponsible.

I want to tell the hon. member for Griqualand East that he is not the Speaker. The hon. member for Yeoville admits, himself, that he does not have a great deal to say about company tax in South Africa. He says that it compares very well with that of the rest of the world; he has no complaints about it. In other words, he admits that he is satisfied with company tax in South Africa. Does the hon. member know that that company tax, imposed on all the companies, gold mines and other mines, represents altogether 52% of the total direct tax for which this legislation provides? It represents 40% of all tax imposed by the State. He is, then, not objecting to a single aspect of the economic situation, because he is satisfied with company tax.

On the other hand, he admits that a great deal is being done to encourage productivity. As far as the social aspect of his amendment is concerned, therefore, he agrees that a great deal is being done to bring about development in South Africa, and in the Black homelands, too, and to create employment opportunities. This legislation is therefore designed to overcome the social and economic problems of the country. The hon. member goes on to plead that discrimination on the basis of colour in the Income Tax Act be done away with. Now I want to put this question to him: Does he, then, want the Black and other people of colour in the country to be more heavily taxed? Is he not aware of the fact that the Bantu homelands are imposing their own taxes in accordance with scales entirely different to ours? They control this themselves. This legislation, therefore, does not apply to that. As far as the social aspect is concerned, he goes on to complain about certain aspects of individual tax. As far as individual tax is concerned, he failed to prove to us that there was any other country with more favourable tariffs and scales than those here in South Africa. This individual tax represents 33% of direct tax and 26% of all tax.

As far as opportunities to save, for which provision is made in this Bill, are concerned, is the hon. member aware—I have before me a list of them—that a person can invest about R300 000 in South Africa tax-free? He can earn approximately R20 000 per annum on that amount without having to pay tax on it. Ample provision is made for savings by means of assurance and annuities. Dividends and interest on investments with building societies are today taxed on the same basis as dividends on ordinary shares. All these are forms of saving for which this Bill makes provision. However I want to tell him that we are not living in a socialist society, but in a capitalist society, something which he and hon. members opposite valve so highly. We cannot expect the State to do everything for the individual. I know of a number of investors, persons who invest fixed amounts with building societies and so on, who do not spend all their interest. They come out at a certain percentage. Say, for argument’s sake, a person invests an amount at 8%. He spends 5% of it and the other 3% he re-invests to ensure that his capital grows and can provide for inflation. The hon. member’s amendment mentions nothing about indirect tax, which amounts to 21% of all tax. In other words, he is satisfied with company tax, which represents 43% of the total tax, and he is satisfied with indirect tax which represents 21% of the total tax; in other words, he is satisfied with 64% of the total tax for which provision is made in this Bill. He is only complaining about aspects of the individual tax, which represents only 26% of all tax. On that basis he moved an amendment, an amendment which I reject. I do not even reject it seriously, I reject it out of hand, because I consider it to be frivolous politics. This amendment really lacks any foundation whatsoever.

I now want to go a little further and dwell on certain details. Hon. members complained about the liquidity in the country, but do they know that this Bill provides for concessions amounting to R133 million in a single year? This money goes back to the taxpayers—to companies, firms and individuals. This money goes back to the entrepreneurs and the creators of capital, the people who see to it that investments continue and that production takes place. This Bill already provides for that. This is the second consecutive year in which we are making tax concessions. This Bill does not only provide for the State funds we have to collect. It also provides for the combating of inflation. Measures to promote productivity are also included in this Bill.

Hon. members opposite come and ask for more concessions, because they say that our personal tax is too high. However, they do not suggest alternative sources from which we could derive the money necessary for this. They complained about our structural tax, but I want to tell them that this side of the House is also in favour of our having to pay less tax at the individual level if this is practicable. However, we must be realistic. I must say that in my opinion, a slight imbalance has developed in the structure of our tax, and I want to explain my statement.

The percentage of indirect tax today, as I have just said, amounts to 21 % and direct tax to 79%. If we go back to 1967-’68 when the Franzsen Commission published its report, we shall see that the ratio then was 40% and 60% respectively. In South Africa, the people who pay individual tax comprise only 8% of the population. In highly developed countries this percentage is between 30% and 40%. A mere 6% out of that 8% provides two-thirds of the individual tax in the country. This means that 94% provides for a mere one-third. In a highly developed country the position is just the opposite. There one has the position that 5% of the taxpayers provide 36% and 95% of them, 64%. I also want to add what those hon. members omitted to say. I believe that indirect tax should be increased. If that percentage were to be increased, one could provide tax relief at the individual level. However, I want to predict that if we were to raise the sales duty, hon. members opposite would kick up a tremendous fuss about it. They would tell us that we were fanning inflation. However, they would not admit that it would involve relief for the individual taxpayer. I am one of the champions of spreading one’s indirect tax as widely as possible and of collecting that tax from all people using those goods. I also want to say that I do not believe that sales tax can fan inflation because it is an increase that only occurs once. It does not fan inflation. That is my view in that regard, but I want to tell you that if we were to do this the U.P. would complain loudly.

Sir, I want to deal with the standpoint adopted here by hon. members opposite when they spoke about the effect of inflation on the general taxpayer, on business, etc. A certain amount of nonsense was spoken in this regard. If we are to investigate that matter, then I believe that we must look at all the categories of taxpayers and the social structure of the entire country. In the first instance we must take a look at the effect on the individual. Hon. members on that side proceed from the standpoint that the individual is having a hard time of it owing to inflation which steadily reduces the value of his income, but they are arguing on the basis of a false premise, since the individual’s salary surely increases through the years together with inflation; the status quo is therefore maintained, but this is not mentioned by those hon. members. Sir, they speak about indexing. We do not have indexing in this country nor do we advocate indexing, but we do have a method of adjustment of wages and salaries. The factors of demand and supply ensure that wages and salaries are increased from time as the rate of inflation increases. Sir, hon. members on that side cannot show me a single group of wage and salary earners in South Africa whose wages and salaries have not risen faster than the rate of inflation, and we must also bear in mind that in recent years, tax obligations have been reduced. The abatement and the marginal tax border have been reduced and one therefore has a tax graph running diagonally downwards. How on earth, then, can hon. members on that side say that this Government is not making provision for the reduced buying power of wages and salaries resulting from inflation? It is absolute rubbish.

Sir, let us now take a look at the mining sector. Here the Government has provided for the write-off of the replacement value of machinery, etc. The mining sector, therefore, has no reason for complaint, because they are entitled, under the present circumstances, to depreciate the entire value of their machinery; provision has already been made for that. Sir, when one comes to the factories, one finds an interesting situation. The factories have no reason to complain about replacement costs, either. In the first instance, the factories purchase supplies which they immediately process into the cost price of their products. As far as machinery is concerned, I just want to mention that the running wear and tear allowed by the Receiver of Revenue is about 15% to 20%. I want to suggest that the percentage allowed for running wear and tear should perhaps be increased to 25% per annum. Sir, the position in regard to the initial allowance and the investment allowance for factories is as follows: A company or factory situated outside an economically developed area, in other words, in a growth area, may write off as much as 69% of the value of its machinery in the first year. This figure is based on an annual wear and tear allowance of 25% instead of 20% and on the existing initial allowance and its investment allowance. A factory situated within an economically developed area can write off 80% in the first year, and apart from this, factories can have a percentage of the value of their buildings written off. If the building was erected in an economically developed area before April 1973, they can write off 35%, and if the building was erected after that date, they can write off 40%, and outside an economically developed area they can write off 10% and 15% respectively, and that applies to improvements, too. I do not believe, therefore, that industrialists have any difficulties in this regard because there are generous write-offs for replacements.

Last night the hon. member for Jeppe asked whether second-hand machinery, or machinery from overseas, could also perhaps qualify for this allowance. This is so. It qualifies for that allowance, even though it may be second-hand, if it is moved to an economic development area. Similarly, machinery that has never been subject to an initial and investment allowance, also qualifies for it if it comes from overseas. Apart from this, there is an additional number of development allowances which may be allowed at the discretion of the Minister and which are very high. Therefore, when we come to the factories, I do not believe that there are problems as far as inflation is concerned. All I want to say, and this I want to concede to the hon. members over there, is that inflation creates a problem for wholesale and retail trades and the retail service organizations. It creates fictitious profits in the replacement of its supply. Those fictitious profits cause that firm to pay certain taxes on profits which it has earned on paper but which it has not really earned. In other words, a shortage eventually occurs in the cash flow of that business as a result of inflation, and then it is saddled with inflation problems. Now, the question of what one can do to solve this matter, is a difficult one. There have been pleas for the application of so-called “inflation accounting”. This is very difficult to apply for income tax purposes. “Inflation accounting” really means that one keeps two sets of books and no one has yet been able to devise a system that is acceptable in practice. I want to make a recommendation here in this respect. In the first instance I want to say this. Take enterprises such as garages and retail organizations or service organizations which also require machinery to provide those services, but which do not receive the allowances which a factory receives. Even though they do not produce, they nevertheless repair and have the same problems as factories. I want to propose that the benefits granted to factories in regard to machinery, also be granted to firms of that nature. But I want to suggest in regard to the ordinary wholesale and retail trades, which are experiencing these cash flow problems—I know this is a difficult matter, and I therefore want to ask the Minister to refer it to the committee because it has many implications and one cannot think it through all at once—that we introduce something which one could call an upwards valuation allowance or an appreciation allowance, an allowance which could be added to the opening stock of that firm each year and which would be based on the rate of inflation for the year, which would result in the profits of that company being reduced by that amount. By doing this it might take up less cash and this, again, would improve its cash flow.

Now, Sir, what does an Income Tax Act envisage? What does it involve and how must it levy taxes? When one comes to the imposing of taxes and tax provisions, one will get many opinions. All a Tax Act need try to do, as the hon. member for Smithfield said, is to be as just and as fair as possible and it must impose taxes with a view to the State’s requirements at that stage, and then it must distribute the tax obligation as evenly as possible across the entire population of the country. But now, as I have said, there will be many opinions, and a responsible Minister—and this Minister is responsible, and so is the Government-will ensure that it is properly advised. When we have heard all the opinions, there is only one opinion that counts, and that is the Minister’s opinion, because he is the person responsible. He has been given a mandate from the people. What is more, each time we have come back with a mandate stronger than the previous one, because the nation is satisfied that the actions and decisions of the Government have been correct. I want to tell the hon. the Minister that he should not take much notice of the opinions we have had, particularly that of the hon. member for Yeoville, because he is trying to tempt us onto paths we should not follow. The hon. the Minister should continue, because this Bill is the most pleasant I have had the privilege of supporting since it affords substantial tax relief. This Bill is a much pleasanter one than last year’s. I can tell you that I am going home and I shall defend this Bill from any platform with great satisfaction and I challenge any member opposite to do so together with me. The people will certainly return us once again. I support this Bill wholeheartedly.

Mr. Speaker, I do not intend to follow the main thrust of the speech made by the hon. member for Pietersburg because I am happy to think that the hon. member for Yeoville is more than capable of dealing with the vast majority of the points raised by that hon. member.

Passing the buck.

In regard to one point, re-echoed and reiterated by the hon. member for Langlaagte, I agree that a balance needs to be struck and I should like to come back to that in the course of my speech. This Bill we are now discussing, must be looked at against the background of a 7% real growth in South Africa, for which we are very grateful and in which every South African can, indeed, place some confidence. However, at the same time it has to be looked at whichever way one looks at figures, and I am not particularly concerned whether it is an annual rate or whatever. I am concerned about the trend of inflation in this country. It sees to me that the Government and the hon. the Minister should be attempting to strike a balance between humanity and compassion, while at the same time encouraging future prosperity for all the inhabitants of this country, at least in the sense of not diminishing its potential. If we look at some of the provisions in this bill, before I come back to my general point, I should like to agree with the members to my right, and particularly the hon. member for Yeoville, in regard to three things. Firstly, the discriminatory tax in respect of Black South Africans is something I raised with the hon. the Minister of Finance in the Budget debate. It seems to me, and I should like to repeat it, that the failure to eradicate that injustice is simply beyond argument. I do not see how any person in South Africa can justify why Black South Africans should commence paying tax at a level below those of the more fortunate ones of us who at this point in time happen to be Whites. I appreciate that in one sense the argument will be used that this is no longer a primary responsibility of this Government in the sense that these people are supposed to belong to the homelands. What I should like to ask the Government, if that is the case, is whether there is going to be no attempt to co-ordinate the tax regimes which apply between the various homelands and in White South Africa. If that is not the case, then obviously we are going to face very great difficulties and to some extent chaos.

Secondly, I should like to agree with the hon. members on my right as regards the question of rebates for married women. With a view to the future this is important now. One obviously wants to increase the productivity of this country and, quite frankly, it is difficult to take this increase seriously. It will not make any difference at the margin as to whether a woman works or not. It is of no account, and I really cannot understand why it was introduced if it is only on such a scale.

It’s not even enough to pay your domestic servant!

The last point we are in favour of is the encouragement of people to give their children or indeed themselves the best possible education. In a great number of countries those fees are deductible from personal income. I also think that it has a further benefit in the sense that there are still a number of private schools throughout South Africa. They tend to provide more of a diversity than Government-run schools, which tend to conform much more typically to what one might call National Christian education. I would have thought that this country needed as much diversity as it could possibly have and anything that can be done to encourage that should be done.

I want to say that we welcome the decision by the Government to back-date the definition of “new gold mines” to January 1974. This is clearly an equitable measure which is very welcome. The hon. the Minister will probably know that we on these benches made some further points during the discussion on the Vote of the Minister of Mines which referred to the present mining formula and to the capital allowance. We were told by the hon. the Minister of Mines at that stage that these matters were being considered. For that reason I do not think there is any point in reiterating them. On the other hand, I do have certain specific suggestions arising out of this Bill which I should like to offer to the hon. the Minister. I want to refer the hon. the Minister to clause 35(1)(b) of the Bill. The new paragraph (e) of section 50 of the Act, which is substituted by this paragraph, deals with exemptions from the undistributed profits tax which has been touched on already. Indeed, the question is whether the undistributed profits tax should be kept or not. The particular point I want to raise concerns certain foreign companies which operate in South Africa. As I understand this definition these companies will not qualify for exemption from undistributed profits tax unless their earnings overseas are greater than their earnings in South Africa. When we consider the economic situation overseas there are a certain number of companies which are going to run into a dilemma, to put it mildly, so far as this measure is concerned. I am thinking particularly of for instance Leyland Motors in the United Kingdom, Ferranti, Alfred Herbert in England and Volkswagen in Germany. The parent companies are now suffering losses while their South African subsidiaries are making profits. Therefore by definition they no longer qualify for exemption from the undistributed profits tax. If I understand the position correctly, they have two choices. They either have to pay undistributed profits tax—which is a tax which one does not want to pay unless one has to—or else they have to declare a dividend which means that money will go out of South Africa to the parent companies. I simply think that this is something which arises out of the changed circumstances overseas and which ought to be looked at.

In so far as clause 15 is concerned, the hon. the Minister in his introductory speech said that the Bill gave effect to the Budget proposals to increase the initial allowance on plant and machinery brought into use in a metropolitan area on or after 15 August from 15% to 25% and the investment allowance from 20% to 25%. This is a general thing and there are obviously added benefits when you get to the economic development areas. If one looks at the competition for capital in this world, it is a fact that for instance in the United Kingdom 100% of that is allowed in the first year. While these increases are no doubt welcome to the industrial sector of the economy, which I would have thought is the primary sector which will benefit from this, these are by no means startling and are indeed uncompetitive with other tax systems and what is offered elsewhere. This is becoming more and more important when you consider the attraction to our country of getting an acceptable level of inflow of foreign capital. An important factor in the decision of people to invest in South Africa as compared to another country is the machinery depreciation allowance. I think this might also tend to put us at a competitive disadvantage and I would like to bring this to the hon. the Minister’s attention.

Then we have the question of medical expenses. I quite agree that administratively this is going to be a horror show, to have to keep every bill from a chemist or a dentist. I feel that there must be an easier way around this, as suggested by the hon. member for Yeoville, e.g., the choosing of a figure up to which people will not be required to substantiate expenses.

I also want to refer to section 88 of the Act which is amended by this Bill. The explanatory memorandum, in dealing with the repayment of moneys when there is a dispute as to a person’s tax level, states that the clause provides that if any tax is to be refunded due to the assessment being altered on appeal it must be refunded with interest at the rate of 7½% per annum. I would like to ask the hon. the Minister to confirm whether I am correct or not, because I would have thought that such interest on the money which goes in in the first instance would not be deductible against somebody’s income. Therefore I would have thought that it would be logical and equitable that if somebody gets a repayment of that money the interest portion should also be excluded from the income of that person for tax purposes.

The last matter I want to raise is a question which was first raised by the hon. member for Wynberg last night, viz. the fact that at the present time widowed persons without dependants enjoy a tax advantage over unmarried or divorced persons. I simply do not want to comment on this. I have had correspondence with the Secretary of the department in this regard who says that the matter is under review, but I would like to agree with the hon. member for Wynberg that I hope this matter will come forward in due course and be dealt with.

I would like to come to two other points which were raised by the hon. member for Yeoville. To a certain extent I am myself seeking enlightenment. The hon. member for Yeoville, and indeed the hon. member for Constantia, talked about the desirability and the attraction of inflation-proof bonds. Prima facie I could not agree with them more. Clearly any kind of method or instrument which is devised to get round the problem of inflation is thoroughly to be applauded. They also talked about indexation. I do not know whether they are aware of it, but this view is shared by the hon. the Minister of Finance. He said in an interview recently in Germany that in the future loans would be issued with some sort of indexation anyhow and that loans would be tied to the cost-of-living index or to gold. He continued: “However, for the value of money this is a gigantic danger. After all, it demonstrates to everyone that the struggle for a stable monetary value has finally been abandoned. In English they say if you cannot beat them, join them.” He was then asked: “Do you believe that indexation will primarily be based on gold or on all merchandise-groups?” The hon. the Minister of Finance replied: “On all merchandize groups. The investor does not want to part with his money for 10 years and then not know how much his money will be worth in 10 years’ time.” He went on to say that you could also see this with the Arabs and that nobody had any confidence in the future of money. These two things seem to me to go hand in hand. I honestly do not see how you can devise an instrument such as this whereby people can invest with the certainty that their money over 10 years is going to keep pace with the cost of living. Who is going to pick up the bill after 10 years? If you are saying that you think that any particular generation should have the right to maintain in real terms its purchases over a period of time, that is one argument, but it runs very much against the system that has been adopted in most parts of the world up to now.

The other thing I cannot understand, to be quite truthful, is the gold bond. There seems to me to be an underlying assumption that, if you offer a bond which is tied to gold to any individual in South Africa, this will take care of inflation since the price of gold in 10 years’ time will meet this need. I sincerely hope that this is absolutely correct but, there again, who is going to provide the wherewithal other than the taxpayers at that point in time? It seems to me either a question of maintaining your position vis-à-vis the generations that come afterwards or it is a question of a sophisticated form of wealth-tax. There is another worry I have in regard to the gold bonds. Although I hope it is the last thing that will happen, what happens if the price of gold comes down as it has been known to do?

Next I would like to touch on the question of inflation accounting which the hon. member for Pietersburg, who is not present at the moment, also mentioned. This is obviously a problem as the hon. the Minister will know. It is in fact a generally recognized problem if we want to strike a balance between humanity and compassion now and future prosperity for all through an increase in productivity. In this regard I want to quote what the chairman of the Industrial Development Corporation had to say—

He went on to say—

The hon. the Minister of Finance has told us that they are looking at this position. I simply want to reinforce again the importance of this in South Africa at this point in time.

I would like to turn to some other more general points that have been made. The hon. members of the United Party to my right have harped—I do not mean that in a negative or destructive sense—on the effects of taxation on individuals in inflationary times. There is a great deal in what they have said. I have considerable reservations as to how far these are in fact a disincentive to industry or hard work in South Africa at this point in time, especially vis-à-vis certain other countries in the world where the rate of marginal tax is much higher. I think it is fair to say, however, that the examples used by hon. members on my right served to demonstrate the scale of increase that is required to maintain an after-tax income in real terms in the case of people in certain income brackets. This highlights the fact that nobody is immune from the effects of inflation. It is of course true that the Government gets what may be described as a windfall benefit as people enter higher marginal income brackets in such a situation. This is not the place to argue the overall level of Government spending as being the cause of inflation. This is a matter I have already dealt with. At the same time I think it is fair to bear in mind that the Government will naturally also need more paper money to bid for and purchase the same goods and services at whatever level that may be fixed at a particular point in time. I must be quite honest about it; we hope the level will be severely lower but, even so, it is going to cost more than it did last year. The point to remember, to my mind, is that money is after all only a medium of exchange. It is only in the exercise of that function that it has a use or purpose. In one sense, therefore, although the argument is of great importance, it is sectional. It does not go to the heart of the matter. It seems to me that the first task is surely to increase the production of goods and services for all South Africans, thereby increasing the general wealth and prosperity of our country.

The second question which arises, as the first one does, directly out of this Bill, is that of division. I would like to look at the question of division in South Africa from the viewpoint of totality, rather than to put undue emphasis on the position of White South Africans. The hon. the Minister of Finance gave us some interesting figures in reply to a question on Friday, 2 October. For the 1973 financial year—I am now talking about the total number of people who paid income tax in South Africa—the numbers were as follows: White South Africans, 1 253 000; Coloured South Africans, 89 000; and Indian South Africans. 51 000. The corresponding figures with regard to tax were: White South Africans, R660 million; Coloured South Africans, R8.6 million; and Indian South Africans, R10,2 million. Of course, these figures relate to normal income tax; but it seems to me that it constitutes a very fair reflection of the present state of affairs. It highlights for us how far we have to go. I think that the figure normally used to establish the percentage of the population comprising the working force of the country is of the order of 25%. If one uses that figure as basis, one arrives at roughly the following figures: There should be about one million working and taxpaying White South Africans, 0,5 million Coloured South Africans and 180 000 to 190 000 Indian South Africans. It is the numbers I am primarily concerned with. It would seem to me, as I have said, that they provide a broad, first indication. They serve as a means of delineating or highlighting those who have a stake in our country, and therefore at least an interest in its economic stability and development. This relates to the second part of the balance I thought should be struck. I take the point, of course, that material wealth is not everything, but it must certainly be high on the list of priorities for many South Africans in the light of these figures which I have just given. I do not in any sense want to say that the Government has not done more that an insignificant amount for the Black, Brown and Coloured South Africans, but these figures—I hope the hon. the Minister will agree with me—serve to re-emphasize and underline the importance of what remains to be done. I always remember that Caesar warned of the dangers of those with “a lean and hungry look” and said:

I see the hon. member for Durban Point has come in, but I am not talking in a physical sense here; I am talking about an outlook on life. It seems to me that it is an eminently desirable end for all of us in this country I hope the hon. the Minister will agree with me that the sooner we get there the better—that we have larger and larger numbers of taxpayers. It will be an important sign as we go along the road. It would be very interesting to compare these numbers as we continue to go down that particular road. The Government certainly can—and I hope it will—do a great deal more to accelerate our arrival at that point by removing the shackles which at present bind us and by encouragement through its fiscal policy. Charity is not the answer. We must give the right to everyone of the people who live in this country to earn sufficient so as to become a taxpayer.

I should like to say in conclusion that this will not be at the expense but rather to the benefit in both the short and long term of the White people of our country.

Mr. Speaker, the hon. member for Johannesburg North will forgive me if I do not react to everything he said. He was addressing himself mainly to the hon. the Minister. Nevertheless, I should just like to refer to one single aspect which he brought up here, namely the increased abatement in respect of the education of our children.

It is true that in clause 5(1)(b) of this Bill a very big additional concession is being made in respect of the education of our children. I also want to refer to what was said by the hon. member for Yeoville in this regard. I am pleased to hear that the hon. member for Yeoville advocated in his speech last night what I had advocated in my second speech in this House in the year 1958, namely that we should make it possible for our higher income groups to give their children a proper education and, especially, a university education. I have been pleading for many years that we allow increased abatements to parents wishing to send their children to university. Up to now the position has been that the Act provided that a child had to be wholly dependent upon his parents before this abatement could be allowed. Fortunately the Commissioner of Inland Revenue usually stretched his interpretation of this clause a little. First he allowed an amount of R150, which a child could receive by way of a bursary or loan. At a later stage this amount was increased to R300 and later still to R450, i.e. the amount which such a child could receive by way of a bursary or loan before this abatement disappeared. In clause 5(1)(b) of the Bill before us the provision that such a child should be wholly dependent upon his parents before this abatement is allowed is being done away with completely. It is now being provided here that that abatement will be allowed as long as the child himself is not liable for the payment of income tax. I think this is an aspect which has not been emphasized sufficiently. In fact, up to now it has not been emphasized in this debate at all. It is something of which our parents must very definitely take cognizance. A new principle is now being introduced by way of this Bill, namely that the abatement in respect of the education of our children will be allowed as long as that child himself is not liable for the payment of income tax. To my mind this is a major concession, and on behalf of this side of the House we want to express our sincere thanks to the hon. the Minister for this concession.

I should also like to say a few words on the means the hon. the Minister could take in hand in order to influence the course of our economic cycle by way of income tax. In the main the Minister of Finance has two tasks. The one is to balance the finances of the State—in other words, to balance its revenue and expenditure account. I do not want to say much about that, Sir, for you will not allow me to elaborate on it in too much detail. But I should like to say something about the second part of the function of a Minister of Finance, i.e. to determine the course of the economic cycle by way of his taxation proposals, his fiscal policy. Sir, the days of very high fluctuations in the economic cycle are long past. I am thinking now of the huge trough in which our economy found itself in the period 1929-’33. That was probably the lowest depression phase we have ever had. This, again, is followed by a very high boom phase. But I say that the days of huge differences between the depression and the boom phases have passed for good, for Ministers of Finance and Governments, by making use of monetary and fiscal measures, are being very successful nowadays in ironing out the curve of the economic cycle so that it is much closer to a straight line than was the case before. One of the means which a Minister of Finance has at his disposal for ironing out those fluctuations in the economic cycle is income tax, and, of course, other forms of tax as well, such as sales duty. But if we consider the way in which this Government has applied this means we see that the scales of taxation cannot be changed very often, for a large number of considerations have been built into them, considerations which cannot be changed every year. Sir, if my memory serves me correctly, our present scales of taxation were last changed when sales duty was introduced; I think that was in 1970. That was the last year in which the scales of taxation themselves were changed, and that was done so as to eliminate the so-called tax bulge, and to my mind the hon. the Minister of Finance did succeed very well in doing so at the time. But because it is his task to determine or to influence the course of the economy from year to year, he therefore has to come up every year either with a tax surcharge or with a tax rebate. I must say, Mr. Speaker, that in all my years in this House I have not come across a tax rebate but only a reduction in the tax surcharge. I hope that before I leave this House I shall yet have the pleasant experience of in fact witnessing our being given a tax rebate, in other words, a rebate of, say, 5% of the normal scales of taxation. Sir, I say that the Minister can influence the course of the economy through increasing or reducing this surcharge on the normal scales. I want to indicate the extent to which he has been applying this means at his disposal over the past six years: In 1969 there was a 5% surcharge, in 1970 there was another 5% surcharge, in 1971 there was a 10% surcharge, in 1972 there was a 20% surcharge, in 1973 there was a 10% surcharge, and in 1974 there was a 5% surcharge. In addition to this there is, of course, the loan levy too, but for the purposes of my argument it would take me too far afield to discuss loan levies. After all, a loan levy is not a tax, because it is paid back to the taxpayer. I shall therefore confine myself to this surcharge on the normal scales of taxation.

In 1969 our economy experienced a boom phase. Accordingly it was unnecessary to stimulate the economy to any marked degree. Therefore I would rather have seen a higher surcharge than 5% in 1969, and I shall come back to this later on. Of course, we have always been saddled with an Opposition that has consistently accused the Government every year of over-taxing the taxpayers. This is, of course, what makes it difficult for the Government to act strictly in accordance with the exigencies of the moment at all times. In 1970 there was another surcharge of 5%. Now, if one considers the course of the economic cycle, one sees that the economy started flattening off as far back as 1970, that the curve of the economic cycle started showing a downward trend at that stage already, and for that reason it was a very wise step on the part of the Minister of Finance in 1970 to introduce only a 5% surcharge on the normal scales. In 1971 that surcharge was increased to 10%, which was to my mind a pity, but the hon. the Minister of Finance had no option, for the problem is specifically that when one is moving in the tough phase of the economic cycle, when it is necessary to stimulate the economy by way of tax concessions, the State is receiving so much less in revenue because the company profits are down and, consequently, the amount collected in taxes too. At the very time when the State requires revenue so as to be able to stimulate the economy, it is receiving less in revenue. That is why it has been my plea for the past number of years, in virtually every Budget debate or income tax debate, that whenever we find ourselves in a boom phase of the economy, the hon. the Minister of Finance should not make so many concessions when he is receiving more in revenue. He should rather use that increased revenue for building up reserves so that he may make use of them whenever he needs them badly, i.e. during the depression phase, when he wants to stimulate the economy. The irony of the matter is that when he requires money for stimulating the economy, he does not have it. For that very reason he should levy higher taxes in order that he may fulfil his other function, i.e. that of balancing the State finances. That is why I have been pleading for years that we build up reserves during the boom phase for application in the trough, i.e. during the depression phase. In 1972 there was a 20% surcharge, in 1973 a 10% surcharge and in 1974 a 5% surcharge. That 20% surcharge, although it hit the taxpayers hard, as did the 10% of the following year, was something I welcomed because it enabled the Minister to use some of the funds he obtained in the boom phase of the economy for the purpose of building up reserves. In fact, this is what he did, and fortunately so. At the moment it is clear to all of us that the economy has started to flatten off. In his Third Reading speech the Minister of Finance said here yesterday that his prediction was that we would experience a temporary recession in 1975 along with the other countries of the Western world. The hon. the Minister, in his wise far-sightedness, has now come along and reduced this surcharge on income tax to 5%. Why? Because he now wants to stimulate the economy again, and I predict that he is going to succeed to a large extent. It stands to reason that he cannot eliminate the economic cycle completely. He cannot turn the curve of the economic cycle into a straight line, because we are living in a world which is getting smaller and smaller. If recessions develop in other parts of the world and we have trade relations with those countries, we must necessarily experience those recessions, too. In so far as a minister of finance and a government can determine the course of matters by way of fiscal and monetary measures, this Government is doing so very effectively.

I said I would come back to the question of over-taxation of the taxpayer. Recently I said here in a debate that the parliamentary Opposition had a very important function to fulfil. I still adhere to that standpoint. However, to my regret I must make the statement that when it comes to financial legislation, this Opposition does not fulfil its rightful function since it is, of course, always a popular thing to do to impress upon the public that it is being over-taxed. Every time we want to levy high taxes in this boom phase so as to build up a nest-egg for the difficult times ahead, we are accused, like clockwork, of over-taxing the public. Let us make an appeal to hon. members of the Opposition to adopt a broad approach and to join the Minister of Finance in trying to iron out that curve of the economic cycle so that it may be as close to a straight line as possible. Let us refrain from continually prompting the taxpayer, for the sake of a little bit of cheap popularity with the taxpayer, into thinking that he is being overtaxed. After all, none of us are very keen to pay tax. It is said that it is the French blood in our veins which is the cause of our not being very fond of paying tax. However, it is essential to do so, and this is why I am once again making an appeal to the hon. Opposition not to allow our whole economy to land in the ditch for the sake of this cheap popularity.

It is my very pleasant privilege to lend my hearty support to this legislation as it is before us today.

I do not wish to enter into details as far as this debate is concerned. The hon. the Minister has left the Debating Chamber. He told me that he unfortunately had to go. However, he knows what matter I should like to discuss today. I believe that what I want to say here will also meet with his approval. I cannot but congratulate the hon. member for Johannesburg North, the last speaker on the Opposition side in this debate on the objective manner in which he took part in this debate. I believe that when financial measures are discussed here, especially income tax legislation, and when these matters are debated in such an objective manner on both sides of this House, it can only be in the interests of all taxpayers in South Africa.

The hon. member touched upon one matter which is to my mind of vital importance to the whole of South Africa, and that is the increase in the number of persons who have to pay tax. He drew attention to the large number of persons who are members of the Coloured and the Indian populations and have already become taxpayers. However, I think it is also significant that if the various population groups are compared with one another, the percentage of taxpayers of these population groups, relatively speaking, still lags very far behind the percentage relating to the White population group. I think that all of us are living for that day, not only for the sake of those population groups themselves but also for the sake of sound financial administration in South Africa, when not only the broad base of White taxpayers will become bigger, but when taxpayers will be distributed over the whole of the broad population spectrum of South Africa. When that happens one day, I believe that South Africa will be closer to the era which the hon. the Minister of Finance tried to outline to us yesterday, i.e. an era of unprecedented prosperity in South Africa. We shall then reach the stage where we shall have a much bigger market in South Africa.

My actual reason for rising is to say something with reference to the new paragraph (cC) as proposed by clause 10(1)(c). I think there are only two companies in South Africa which are being affected by this, and I want to thank the Government on their behalf for having in fact agreed to amending the Income Tax Act in such a way that there is no danger of these companies, without their going too far beyond their field of operations, becoming liable to taxation. In view of the problem that exists at all times, i.e. that of interpreting Bills and, more specifically, of determining what the intention is in inserting certain words in this particular paragraph, it is desirable, for the sake of the two utility complaints concerned in Cape Town, for me to outline in brief the background of these two companies. On the one hand I want to express my thanks for the principle involving these two companies and, at the same time, point out that these companies owe their entire establishment and existence to steps taken by the Government. The one company, Garden Cities, came into being as a result of the fact that the first land for development by this company was donated to it by the South African Government. That happened while Mr. Stuttaford was still Minister of Finance. On that land the township of Pinelands was laid out. Pine-lands actually became the basis of this company. Through the years this company, as well as the Citizens’ Housing League, received millions of rand from the Government with which they have had to provide housing for Brown people and Whites in Cape Town. I say, therefore, that their establishment and their existence during their course of years were based largely on donation and other aid received by them from the State. Consequently I think it would be quite incomprehensible if a new pattern were to develop. In view of the fact that these companies have played such a mammoth role in respect of housing for the lower income groups in Cape Town, no measures should be taken, and this includes fiscal measures, to hamper them and their future growth. Sub-paragraph (i) of paragraph (cC) provides inter alia that it must be the sole or principal object of such an association to build dwelling houses for occupation by persons who are members of the general public. In this sub-paragraph reference is made to the “sole or principal object”. I trust that it will always be borne in mind that any company has a primary objective, but in addition to that there are obviously a large number of others as well. In the case of the companies in question, the principal object has most definitely been to build dwelling houses. At the time of their inception, however, they had a broader object. After the Industrial Revolution in Europe and especially in Britain, which resulted in overcrowding in large cities, the dream originated of creating garden cities in the major urban complexes where people could once again breathe more freely. This was also the object of this company with its inception in our country. It was not only to build dwelling houses in towns which had already been planned, but also to replan towns from scratch and to start garden cities here in South Africa. In the course of time, therefore, these companies did not only build dwelling houses but also planned complete townships. In that process they also provided for group housing and built flats for the purpose of being let and for sale. They also provided shopping and office accommodation as this could fulfil a very essential role at a specific stage of a town’s existence. They even ran businesses in certain cases. I want to point out that when the effect of this clause is reviewed in the future, it should not be interpreted too narrowly, and that the object of these companies should not be considered to be exclusively that of building dwelling houses only; it should be considered on a broad basis with a view to the provisions of other essential services in towns so that there may be no hampering of their activities in the future. If that were done, their original objects would for a large part be lost in the process.

I should like to refer to the provision that the Secretary has to be satisfied that the profits made by such associations are, having regard to the future needs of these associations, kept to a minimum. Once again I want to agree wholeheartedly with this provision. These companies would probably not be playing a useful role if they made large profits. But one should also be realistic in this process. In the first instance, here in Cape Town and elsewhere we are faced with ever-increasing land prices. If these companies have a future role to play, they will have to buy land in the future at continually rising prices. Also as far as their broad field of operations is concerned, i.e. the erection of dwelling houses and other buildings, they too are faced with the problem of inflation. Even if they only wanted to carry on with their activities at the present rate, they would require more operating capital in the future for providing a given number of dwelling units than was the case in the past. Firstly, as regards the purchase of land and, secondly, as regards the extension of their activities in order to meet the ever-growing needs, they do therefore require more and more operating capital. Consequently there must be profits in order that these things may be financed. In this regard I should just like to point out, so as to put some emphasis on the problem for the future, that whereas a township such as Pinelands, which is a fully planned township, has a population of approximately 30 000, one of the new townships which is being planned for the future by one company alone, i.e. Garden Cities, will house between approximately 60 000 and 80 000 people here in Cape Town. I am referring here to the area between Bloubergstrand and Melkbosstrand. Hon. members will agree with me that to plan a township, virtually a small city, of that size, huge amounts of money are required merely for getting the whole scheme off the ground, even before the first houses can be built there. Let me therefore put it this way: The mere need as far as demand is concerned, plus the question of inflation, which we believe will always be with us to a certain extent, will make it necessary for these companies to require more and more operating capital for the future.

Then there is a further aspect at which I should like to pause. In a previous debate I pleaded for these companies to be granted the right to meet the housing needs not only of the Whites here in Cape Town and its environs, but also of the permanent non-White groups, namely the Coloureds and the Indians. They should be permitted to operate almost as a neutral personality under the Group Areas Act. I believe that in the future the greatest need is going to lie in the necessity of providing our Coloured and Indian communities with reasonably priced housing in well-planned townships. I believe that these very companies that are already in existence should act as the parent companies, and that they will to a large extent have to start those new Coloured and Indian companies with the aid of their own capital. I think hon. members will agree with me, also as far as this major need for housing is concerned, that it is essential that these utility companies be given the opportunity to show profits and that, when this particular provision has to be interpreted in the future, this need will in fact be taken into account.

There is one other aspect which I should like to point out. In the very last part of subparagraph (v) mention is made of the directors of these companies having to be independent persons who do not derive any remuneration for their services to the association. This is in fact the position today. What worries me in the wording of this provision is that the word “independent” is used there. As far as the question of remuneration is concerned, it is virtually accepted as being self-evident that the directors of these companies are people who are willing to support these companies with their own funds. For instance, Mr. Stuttaford made a large donation at the time so as to get this company off the ground. The word “independent” worries me in the sense that I do not know precisely what is meant by it. If it only means that these persons are not to be employees of the companies concerned, I can quite agree with it. I can also agree with it if what is meant by it is that the persons acting as directors of these groups ought not to be so-called nominees of other groups. If this is the interpretation that is being attached to this word, I think it has some significance in this regard and fits in well with the pattern of development. If neither of these two interpretations can be attached to it, I think that the word may profitably be omitted and that it may suffice that directors must be persons deriving no remuneration for their services to such associations.

I just want to express my sincere thanks for the opportunity I have been afforded to outline, as far as this subject is concerned, the history and background of this company, for I believe that it is the object of the Government to assist them in their activities in future, activities which I believe are still going to be expanded tremendously. I believe that the pattern followed in Cape Town could perhaps be followed up further and applied in other provinces in South Africa. I think that the interpretation of this provision will play a major role in their future.

Mr. Speaker, in the past it was the practice, in the discussion of legislation of this nature, for hon. members to confine themselves strictly to the fiscal proposals contained in the legislation. As a result, inter alia, of the amendment moved by the hon. member for Yeoville, the scope of the discussion in the case of this Bill has been broadened. Let me say at once that I have no objection to the pattern which the discussion followed, for I do not think that one can view the tax proposals of the Government, of the Minister of Finance in this specific case, in isolation.

Before I come to the general and subsequently to the specific aspects to which hon. members referred, I want, by your leave, Mr. Speaker, to make two observations. The first has no bearing on the debate and it is purely a duty I have to perform. I should very much like to offer the hon. member for Worcester my apology for not having, through an oversight, replied to him in a previous debate. I want to tell him that I shall convey the ideas which he raised there to my colleague in question. Secondly, I have fault to find with the hon. member for Constantia. Contrary to what I expected of him, and to what I have become accustomed, he began on a note which I do not think was worthy of his stature—I do not mean his physical stature, but his economic stature. In my opinion he did not begin by discussing the matter ad rem, but ad hominem. Firstly he referred to the sequence in which speakers on this side of the House participated. Inter alia, he referred to the fact that the hon. member for Paarl had not on this occasion introduced the debate, as he had previously done. I think I owe it to the hon. member for Paarl to explain that he had informed that it would not have been possible for him to have been present here yesterday, when the discussion of the Bill commenced. I find no fault with hon. members opposite crossing swords with us in this debate on the quality of the legislation or on our formulation of our standpoints. However, I do not think it was necessary to do this in the way the hon. member did. It is quite correct, I believe, that one cannot regard these proposals which are now under consideration in isolation. In fact, I indicated, when I was delivering the Second Reading speech, that the provisions of this legislation may be classified into four main categories. Naturally I dealt with these categories in their sequence of importance. The first objective of this Bill which I mentioned was, specifically, to give effect to the Budget proposals of the hon. the Minister of Finance. However, I do not think that we are really able to evaluate the Budget proposals of the hon. the Minister if we do not have clarity on what a Budget is supposed to be or what is being envisaged with the Budget proposals. If my approach in this connection is correct—in my view it is correct—it goes without saying that we should also evaluate this legislation, as the instrument by means of which the Budget proposals have to be carried out functionally, against the background of the Budget proposals, their objectives and the methods which have to be applied to achieve those objectives. Superficially the standpoint may be adopted that the Budget is simply a statement of income and expenditure, and that a specific Budget represents the statement of income and expenditure for the present year. No one—not I, either—will dispute that this is an important component of the Budget proposals. Nor do I want to dispute the statement and claim that in respect of the fiscal measures which it comprises, this Bill does not represent one portion of that statement of the accounts of the year. Of far greater importance for every modern state is, however, the fact that it is one of the important instruments of the financial, fiscal and economic policy of the Government. When the merits or deficiencies of a Budget proposal, as well as the legislation which has to implement it are considered, it obviously and quite logically follows that that discussion will not take place in isolation, but against the background of prevailing national and international circumstances. It has to take place, not only in respect of the financial and economic sphere, but also against the background of the other spheres which have an effect on the economic and financial activities in the national and international sphere. The same applies to politics in general and to the military situation in particular.

We are now discussing the legislation which has to implement the present Budget proposals. These proposals must in the first place be seen against the background of the great uncertainty which exists in the international sphere, but also against the background of the known, although historical, facts concerning the domestic economy and the expected development of our economy in the year which lies ahead or even beyond that. If one were now to ask oneself what the background is against which the Budget and this legislation should be considered, one has to concede that it has been a long time since the circumstances in the Western world were last so labile, so unstable, as they are at the present juncture. I think that, if we wanted to consider a comparable set of circumstances, we would have to find it in the thirties. This, therefore, has an effect on our planning in total terms. It also has an effect on our financial and economic planning and the formulation of objectives in particular terms. In 1974 the world experienced the largest number of changes of government in known history. In addition most Western governments are to a greater or lesser degree oriented to the left, and are frequently anti-capitalist. In addition most governments are governing with no or small majorities which makes their actions in the economic sphere, particularly in respect of anti-inflation measures, largely sterile. On the national level there are uncertainties in other spheres. The uncertainty and instability in the sphere of international finance and economy is truly alarming. Almost all Western governments are struggling with the problems of a high inflation rate, to which hon. members referred and to which I shall return, and relatively low growth rates in their various countries. It is a well-known fact, but I am stating it simply for the record, that the international payments mechanism has been disrupted. This affects us, for great uncertainty is prevailing in respect of changes in the exchange rate. This affects our country as well. Because it affects us, cognizance has to be taken of this in the overall planning, and in this specific case as well. By its nature this uncertainty causes a disruption of trade and international capital movements as far as international finance is concerned. South Africa is extremely sensitive to this. Structurally South Africa is relatively a very important foreign trade country. We are sixteenth on the list in order of importance. For that reason we are sensitive to events on the level of international finance and economy. Internally it is true that we are experiencing a relatively high inflation rate, but on the other hand it is equally true—and I think it is a good thing that we take cognizance of this and mention it—that we are maintaining one of the highest real growth rates in comparison with countries which count in the world. The Government has succeeded in doing this not only through its own actions, but also as a result of the actions of the private sector. I do not want to claim all the kudos in this regard for the Government, but I do want to say that in its financial and economic planning, in the uncertain circumstances to which I referred, it has created a climate of confidence in the South African economy. This has frequently been achieved against the background of unpredictable, negative movements in the capital account of the balance of payments.

Let us now consider what the economic objectives are against which we should also test this legislation. The hon. the Minister of Finance formulated the economic objectives of our economic policy clearly, and if hon. members opposite do not agree with these objectives, I expect them to make this clear to us. My impression of the debate on the Budget proposals, as well as this one, is that although members opposite agree with the objectives to which the hon. the Minister referred, they adopted the standpoint that the measures which are being adopted to achieve these objectives cannot, quantitatively and otherwise, ensure the declared objectives, or will at least be inadequate for the purpose of achieving them. I do, however, wish to sound this general note of warning in this specific connection, namely that an optimum balance should be sought between economic objectives, that it can never, as I see it, simply be a question of a choice between black and white. It is very easy to form an opinion on or criticize specific measures in isolation, for example to form an opinion on an increase in interest rates, which is in itself a cost-increasing factor, and therefore inflationary, in solation. But, Sir, I believe that each one of these measures, including this one which we are now considering, ought to be evaluated as a component of a total financial and economic strategy. Sir, let me illustrate this. The choice is not and cannot be between growth and stability as the two poles. The economic objectives form, as I see it, a coherent package and the relative importance which has to be attached to each of these constituent objectives depends upon the prevailing circumstances. In this regard I want to associate myself immediately with the standpoint adopted by the hon. member for Paarl, and I want to re-emphasize that I endorse his statement that these fiscal measures, as they are contained in this Bill, are among the most important regulating instruments which we have to make the course of the business cycle fluctuations as even as possible. Of course it is true that these have been applied with great effectiveness in the past and are, I believe, being applied in the proposals which we are now considering. But, Sir, just as these objectives form a coherent package, so, I believe, the complex measures which the Government is applying to achieve these objectives, also forms a complex which I wish to term an over-all strategy. Sir, we cannot view the Budget proposals in isolation, as hon. members on that side of the House did in fact do. We must consider the taxation proposals in this Bill as one of the instruments which we have to apply, and to which importance has to be allocated in order to achieve our larger economic and financial objectives. I want to make this statement, Sir: The fundamental deficiency, as I see it, in the criticism of hon. members opposite and also in the proposals which they made during this debate, are in my opinion of a dual nature. Hon. members on that side have never told us in specific terms—in contrast to vague generalizations on greater prosperity and justice for all, etc.—what their package of objectives under the prevailing circumstances is; nor did hon. members on that side tell us what their alternative over-all strategy was to achieve the objectives which they formulated. Sir, I listened to all of the speeches made by hon. members on that side, including the hon. member for Yeoville, and if I counted correctly they submitted approximately 30 different proposals to us. I want to inform the hon. member for Yeoville that neither he, nor any other hon. member on that side, is able—and the hon. member will have an opportunity during the Third Reading debate to reply to this if I am wrong—to quantify what their proposals will entail in terms of loss of revenue. Sir, I shall return specifically to those hon. members. When we evaluate these Budget proposals, surely we should evaluate them in terms of possibilities. Surely we are not dealing with financial unrealities which we can simply discuss in a vacuum. Surely we cannot, on the one hand ask, as hon. members on that side did, for tax reductions to be granted and then on the other fail to suggest where we should obtain the revenue in their place, or to state on the other hand what services should be curtailed as a result of tax reductions which hon. members advocated. For that reason I want to emphasize that when hon. members on that side exercise their right to regard legislation of this nature and the fiscal proposals contained herein critically, then they at least owe it to this House to tell us what the effect would be on the revenue of the State in quantitative terms, and then they should also tell us from which source the deficits which could then arise as a result of the acceptance of their proposals should be financed, or else they must tell what services should then be curtailed, and by what percentages. I did not hear hon. members opposite stating any economic objectives. I did not hear them advocating any coherent economic policy. When hon. members opposite—and I am not saying this derogatorily—discuss financial and economic matters, they are in fact conducting, as I see it, an irresponsible guerilla campaign. They are like a person who fires a shotgun into a thicket in the hope of hitting something. Sir, that is not how one should approach debates of this nature. We cannot, when we discuss these matters which should in fact form the basis of stability in all spheres, utilize them for political expediency. Consequently, our arguments should be well-founded and should be spelled out, particularly in terms of money and quantifiable things. But in addition it is not that hon. members only make contradictory statements. If one analyses the statements of the hon. member for Yeoville in this regard, then I want to tell him that the speech which he made during the Second Reading was a repetition of almost everything he said during the Budget debate, and everything he said during the censure debate. We would therefore have every right to anticipate him. He accuses the Government—and he did this repeatedly when he spoke yesterday—of not having an anti-inflationary policy. But on the other hand, what does he do? He advocates in the first place that we should have an anti-inflationary policy, for he states that these proposals do not relate only to the collection of funds for the State to finance its services, but that there are other objectives as well. I agree with him, but what is he advocating on the other hand? For example he pleaded for a “working man’s inflation-proof moneybox”. But surely that is simply another name for indexation, is it not? Surely that was what he was advocating? Surely he is then in fact advocating surrender to inflation. Surely he is not then advocating the combating of inflation; he is pleading to have the effects of inflation for certain people eliminated. Surely he is then adoption conflicting standpoints.

The hon. member also referred to the quantity of money and quasi-money in circulation. But I have never heard the hon. member say anything against banking institutions which send credit cards to people without their having asked for them. I think he is well-qualified, by virtue of his knowledge and also by virtue of his involvement, to combat this evil which exists.

Are you saying credit cards are an evil? Why do you have one in your pocket while you are speaking?

I do not have one in my pocket. I did not refer to the evil of credit cards. I referred to the evil of the creation of more money and quasi-money, and surely this is one way of doing so, not so?

Are credit cards an evil?

I did not say the cards were an evil. Sir, the hon. member complains on the one hand that the revenue of the State on Loan Account is going to increase by 25%, and on Revenue Account by 20%. Sir, what did they want in this regard? Should the State not have transferred a portion of the surplus to the Stabilization Account? I am asking him whether we should finance in a completely unrealistic manner, or should even further tax concessions be made? That is what hon. members are advocating. But surely it would in fact be inflationary to do what the hon. members were proposing with their tax reduction requests in this debate. I want hon. members opposite to know how they contradict one another. I referred to the question of money and quasi-money, which the hon. member for Yeoville discussed critically, and I agree with him. But then there should not be any ambivalence; then he should join us in taking steps to help to reduce this, in the private sector as well.

The hon. member for Constantia criticized the Government in this specific regard because the growth rate is too high. He said that as a result problems were arising in our economy and that we had outgrown the production means in terms of capital, labour, enterprise and raw materials, and that we had exceeded the economic development plan. Does the hon. member not recall how his Leader and all of them joined in the chorus, the burden of which was that we should maintain a growth rate of 10% or 12%? They accused us of the growth rate in the country being too low, and that this was attributable to the ideological standpoints and policies of the Government. If we have to take cognizance of the hon. member’s standpoint, we must also take cognizance of the standpoints previously stated. If we complain about inflation and if we want to get rid of contradictions in regard to growth rates, I am asking again what package of objectives hon. members opposite want, and what their strategy is for combating inflation.

I want to return to the hon. member for Yeoville, and the proposals which he made in respect of the legislation. The criticism of the hon. member, as I see it, was the following. He said that the legislation afforded no protection against inflation. In the second place he said that it did not protect growth. I think that what he meant by that actually goes a little further, namely that it is not stimulating growth. In the third place, he said that there was a lack of fairness and justice in the proposals under consideration. In the fourth place he said that the proposals did not encourage saving. In the fifth place he said that it did not encourage the marginal workers to participate in economic life. To support these main arguments the hon. member put forward various proposals as to how we could change the position, and his speech in fact formed the basis for the debate by hon. members opposite. I find no fault with this action; in fact, I think it was a good thing.

The hon. member appealed for income tax concessions, but I want to ask him again whether it would not be inflationary if we were to implement his proposals apart from the magnitude. He must reply to this, because we cannot, on the one hand, complain about this, and on the other hand advocate something which I believe militates against the concept of combating inflation. The hon. member for Constantia and he argue from the standpoint that people are as a result of inflation obtaining a higher income, and for that reason move up into a higher tariff category for income tax. Consequently they advocate a reduction in income tax.

We pleaded for a reduction in taxable income.

Yes, for a reduction in taxable income which leads to a reduction in tax in absolute terms. Let us consider this. I want to ask hon. members in all fairness whether the money which the State takes from taxpayers, is not also inflated. Does the purchasing power of the money which the State receives remain constant? Is the State not also competing in the ordinary market, in the sectors in which it operates, against the private sector? Surely we cannot then, as the hon. member for Constantia did, argue from one side of the coin only; surely we should argue from the other side as well. The second question I want to ask is whether wages and salaries in general, but in particular those of the lower income groups, have not risen more rapidly than the inflation rate. That is why we are able to raise the standard of living of people in this country.

What the hon. member was really advocating was a tax indexing concept. As he sees it, the taxation rate should begin to reduce from a higher level and furthermore he advocates that it should reduce more rapidly. The hon. member will be afforded an opportunity of telling me what effect something like this would have on the revenue of the State, but can he quantify it?

The hon. member argued that the Budget does not encourage saving. Hon. members on this side, inter alia, the hon. member for Pietersburg, have already indicated to what extent opportunities for people to save do exist, in regard to which no tax need be paid on their earnings.

One can only save if one has the money to save.

I maintain that there are many people who are able to save. What I also maintain—I find fault with this—is that hon. members opposite argue from the point of view that there is only one body which is responsible for combating inflation. The hon. members argue from the standpoint that the Government alone is responsible for combating inflation. I have not yet heard any of them, in this debate, or in the preceding debate, advocate that the private sector should also make a contribution in respect of …

That hon. member did so.

He did not do so in this debate.

What about productivity?

I am coming to that. Has the hon. member ever said to the distribution trade that they should also make a contribution in respect of prices? Has the hon. member ever told the service sectors, the profits of which are increasing more rapidly than the profits in the manufacturing sector, that they should also make a contribution and that they should not consider only the short-term financial advantages, but should also consider the long-term benefits which would be to the advantage of the country in general? I have not yet heard them doing that. The hon. member should not speak in isolation in this debate—as he did—and create the impression that only the Government has a responsibility in this regard.

Either you are deaf or you do not understand.

The hon. member advocated indexing, to which I shall refer. In the first place I want to say that the fiscal measures which have been laid down here as the one instrument are going to serve to achieve the objectives set by the hon. the Minister. What are these objectives? These objectives are, in the first place, to achieve a higher growth rate. Secondly there is the maintenance of stability—with which we agree—the reinforcement of our current account and an alleviation of the position of the lesser privileged. These are the objectives. Let us test the ability of this legislation which we are now considering, not in isolation, but as part of an over-all strategy for achieving these objectives. The hon. member has heard of the methods which we have to apply in this specific regard between the objectives and the measures. What do the anti-inflationary methods include? They include increased interest rates to encourage savings. The interest rate on Government stock has been raised to 9½%, and the interest rate on premium bonds to 81%. In addition there are forward cover transactions which are also intended for the import of capital goods. Contained in this legislation are measures which have to encourage productivity, measures such as bursary schemes, initial and investment allowances—to which I shall return and discuss in qualitative terms—lower marginal scales for individuals as contained in this legislation, more rapid depreciation allowances for mines, additions in regard to the training of labour and, although hon. members dismiss this, additions in respect of income tax for married persons. Then there is also a reduced loan levy on companies to encourage capital formation within companies and to make capital for investment available. Other measures are reduction in transfer fees on property, and the utilization of surpluses. In view of all these things, surely the hon. member cannot argue that the proposals which we are now considering will not succeed in attaining these aims.

I want to return to what hon. members on the opposite of this House advocated in general.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

Afternoon Sitting

Mr. Speaker, I shall try to be brief. Various hon. members opposite advocated a system of indexing in some form or a another. I am not un-acquainted with the advantages of such a system of indexation. It could, inter alia, alleviate the distorting effect of inflation. I could encourage saving by discouraging the flight of money to land and goods. When one considers such a system, the disadvantages should also be considered. The advantages to which I have referred, are not necessarily all the advantages, but I do want to refer for a moment to the disadvantages, to the other side of the coin.

In the first place it is, in my opinion, only effective to deal with the symptoms, and that is really no solution to inflation itself. Secondly it weakens, in my opinion, fiscal and monetary discipline. In fact, this has been the experience in other countries which already have this system. If it is used for all the money, it aggravates the distortion which is taking place. It must then be applicable to wages, debts, interest, currency, assets, dividends liabilities and profits. Usually it is only autocratic forms of government which succeed in applying such a system. The important disadvantage is the effective costs for not everyone can be benefited or be better off. Someone has to bear the burden, and unfortunately it usually falls upon the shoulders of the less well-to-do i.e. the lower income groups, in that the application of minimum wages is lower than the actual inflation rates. A further practical problem which the hon. member for Yeoville will understand, is the problem of the determination of the indices with the geographic, urban or rural differences which are included in this. Then, too, there are the differences in the primary, secondary and tertiary sectors.

The hon. member referred further to a Government stock which was linked to gold, if I understood him correctly. I think the hon. member’s argument is erroneous on two grounds. The first is that South Africans are already entitled to purchase gold coins on a limited scale and derive the benefit of that. I concede that it is only on a limited scale. The second part of my reply, which is more relevant, is that the hon. member was wrong in his argument in respect that the benefit of a gold price increase accrues in the first place to the gold industry itself and not to the State, and an increase in the value of Government premiums on the basis of unpredictable foreign prices, will simply mean that the South African taxpayer has to be held liable for redeeming these fluctuating capital amounts from time to time. The hon. member may return to this during the Third Reading, but there is in my opinion no rational or logical reason for such a link.

The hon. member referred in addition to a State subsidy in respect of rentals. Although I have a great deal of sympathy for the hon. member’s plea in this regard, I must nevertheless point out that if the State were to subsidize all rentals when lessees above 25% of the international norm …

Not everything. Only those who are over 60 and own less than R50 000.

I just want to state the basic principles, for this is in fact what is fundamentally involved. If the State were to pay rent subsidies in case where a lessee cedes more than 25% of his income in rental, it would mean, firstly, that we have to find the resources with which to pay this somewhere. If one then adopts the standpoint that one is advocating general tax concessions, and if one is not able to qualify the amounts involved, hon. members will understand that such a proposal cannot be acceptable now. However, I want to give him the assurance that consideration is from time to time being given to this particular facet, for we are aware of the problems. The hon. member asked for a system which is more or less synonymous with the equalization idea in agriculture in respect of professional people.

Not just professional people, but all self-employed people.

Yes. In any event, whether it is everyone or whether it is only the professional people, does not really make any difference to the reply I wanted to give the hon. member. I think the hon. member proceeded on an incorrect assumption in this case as well. The reason for this equalization system having been introduced in respect of income tax for farmers, is that farmers frequently have to deal with factors over which they have no control whatsoever. Their net income for tax purposes consequently indicates considerably greater fluctuations than the income of other people. After all, it is a fact that the incomes of professional people and those of self-employed people display a greater measure of stability than that of the farmers. Therefore I think we cannot concede to this argument of the hon. member. The hon. member went on to advocate that, to help solve the liquidity problems which certain companies have, we should defer their tax payments. I want to say at once that I think that this would be an inflationary act. In any case, circumstances may change to such an extent that the company in question is subsequently even less able to pay its tax. I want to concede at once, in all fairness, that the hon. member said that this could only be applicable when the money for investment purposes is applied to stimulate investment and increase production in that way.

The hon. member referred further to the question of the training of Bantu and the deductions which are being allowed in this specific regard. In order to save time I do not want to go into the details at this stage. I just want to say that there are a few considerations as to why it is only being made applicable to Bantu workers at this stage—I want to emphasize the words “at this stage”. Firstly, the Bantu population in our country, in comparison with other population groups, is on the lowest level of education and training. It is also a well-known fact that certain training, even though it is a low grade of training, will nevertheless enable them to work more effectively and efficiently. The hon. member is aware that in respect of the Whites, Indians and Coloured people, a system of compulsory education already exists, and that the needs of these groups are, relatively speaking, not the same as those of the Bantu. Secondly, there is the question of the administration of the system. The hon. member will see that the system is being implemented by the Secretary for Bantu Administration, in co-operation with the hon. the Minister of Finance. I want to suggest that at this stage the effective machinery to expand this further does not exist.

Then the hon. member for Pietersburg advocated inflation accounting in respect of commerce, and other hon. members advocated this in respect of the private sector. Voices have recently been raised to the effect that operating results should be reported with regard to inflation, instead of the conventional basis. Tax would then be payable on the real profit instead of on the inflated profit. Let me say at once that I do have sympathy for that standpoint, but I must point out that this question has many facets, and cannot simply be accepted. Even in the accountancy profession there are divergent opinions on standards, and certain concepts of replacement value. On the other hand the expenditure of the State does not escape the effect of inflation, and there are, apart from operating profits, also other forms of revenue which are taxed. I want to say at once that a thorough investigation in this specific context is preferable. This aspect will therefore be referred to the Standing Commission on Taxation, and they will be asked for their advice.

The hon. member then discussed the question of tax on foreign investments. He made one important point in this regard. He prefers owner investment as compared to borrowed money. In principle I agree with him.

The hon. member for Constantia mentioned various aspects, to which I have already referred. He referred, inter alia, to a more liberal treatment of companies in respect of undistributed profits. I do not want to spend much time discussing this. I think that I followed the hon. member’s argument.

†As far as the views of the hon. member and his colleague, the hon. member for Yeoville, are concerned, they have apparently lost sight of the concession already granted to manufacturing companies, namely the plough-back of 45% of the profits and deductions in respect of manufacturing plant brought into use in determining their distributable profits. This means that very few, if any, manufacturing companies are detrimentally affected by UPT. As far as the question of UPT is concerned, it must be pointed out that it should not be viewed in isolation, but that regard should be had to the company/shareholder relationship and the taxation of the composite entity. I think the hon. member would agree with that. It is especially germane in regard to private company/shareholder relationships. At this stage I cannot concede the argument to a further extent. The hon. member went further and said that when the Franzsen Commission brought out its report, it did so in a set of circumstances completely different from those pertaining at the moment.

*Let me say at once that I concede the point that circumstances have changed, but at the same time I want to state that this does not in my opinion affect the principles of the Franzsen Commission report. What I do in fact concede, is that this must have an effect on adjustments in taxation rates, which have nothing to do with the principles laid down by the Franzsen Commission. The hon. member will know that the Commission on Taxation does in fact from time to time and as a continuous process give attention to tax structures and rates. I want to give him the assurance that we will consider this in general, but I must issue the warning, and I am not saying this reproachfully, that we should not simply accept that inflation exists and that we should deal with the consequences of inflation rather than try to eliminate the causes. I am not alleging that the hon. member advocated this; I am merely saying it as a warning. It would reveal a totally defeatist attitude, which the hon. member as an economist, in my opinion, would never support.

Then the hon. member raised the point with which I cannot agree at all. He objected to the transfer of money from the productive sectors, i.e. the private sector, to the unproductive sector, i.e. the public sector. I cannot agree with his basic standpoint and accept that the only productive sector is the private sector. Let me say to him at once that the criterion of effectiveness of the private sector is of course profit. The ability of the private sector to show a profit depends, however, to a large extent and is closely linked to spending in the public sector. I think the hon. member will agree with me on this, for I believe that if the State did not incur heavy expenditure by, for example, establishing the infrastructural services, to create in that way the climate and the circumstances for the private sector to operate profitably, the private sector would not at any rate have been able to do this itself. I am thinking for example of the large amounts which the State is spending—and I call this productive spending—on iron-ore, uranium enrichment, the railway network at Richards Bay, power stations, etc. I can furnish the hon. member with a long and comprehensive list, but I want to content myself by saying that we cannot argue on the basis that the spending of the State is unproductive. On the contrary. I think the State has an important role to play in this regard.

Unfortunately, I cannot refer to all the matters which hon. members raised, and they will understand this.

I come to the hon. member for Wynberg who, as other hon. members did, dealt with the position of the married woman and her liability to pay income tax. I also want to come to the position of the divorcee. In my opinion the hon. member for Wynberg quoted quite unjustifiably from paragraph 125 of the Franzsen Commission report, and for the sake of the record I think that I should take it further. What does the Franzsen Commission state in the paragraph in question? It states, and this is one of the standpoints—

That is what I want the hon. member to read. That is really what the Franzsen Commission says in respect of its standpoint. In other words, the Commission is in principle not advocating a separation. The Commission advocates an aggregation. What does the Franzsen Commission consequently say in its findings—paragraph 130, page 30 of the report—after having considered all the alternatives? It states—

With a maximum of 50%.

No, with all due respect, the Franzsen Commission recommended that the marginal rate should be 60%. It did in fact sketch the ideal position and say that if it could be 50%, it would be better. I concede that. However, its recommendation was not for a 50% marginal maximum scale. I want to content myself by saying the following: We must consider what the basic philosophy in regard to the levying of taxation is. The only real norm which applies, is the ability of people to pay tax. We can argue on that basis. In fact, certain hon. members are already arguing on that basis. It is being said that all money which is earned as a result of overtime work, should be deducted from the taxable income of individuals. I want to give the hon. member an indication of what the results of that would be if one were to get away from the principle that ability to pay should apply as a norm, and no other aspect. In the specific context I have already dealt with the taxation of married women. If the hon. member wants it, I shall set out our standpoint fully in writing and hand it to him so that he can, on a subsequent occasion, argue about the matter further if he is not satisfied. I should not like to take up too much time at the moment.

The hon. member also mentioned a facet which is discussed ad nauseam here and in the Other Pace year after year. I as a public representative frequently experience the same problems as he does in this regard. He discussed the position of the divorcee vis-à-vis the widow or the widower. The hon. member requested that the position of the divorcee be reconsidered, if the divorce was not her fault. From the nature of the case we cannot link liability to pay tax to the guilt or innocence of parties involved in a divorce case. I repeat, however, that one of the cardinal principles of taxation is the ability to pay. Secondly, this ability is determined with due regard to the family circumstances. It is obvious that in respect of persons with an equal income, the ability of a married couple to pay taxation will be less than that of two single persons. Similarly the ability of a married couple with children to pay is smaller than that of a couple with no children. With due regard to these circumstances, it is therefore fair that taxation scales and rebates should be such that the taxation which is required from a taxpayer is such that he should be able to pay it with the least hardship, taking into consideration his family circumstances. There is an anomaly—I concede this—in respect of the widow and the divorcee, but the taxpayer who is out of step here, is not the divorcee; it is the widow who is out of step with the taxation principles to which I referred.

Sir, these widows are regarded as being married for tax purposes, and the reason for this is back to 1929 when the Income Tax Act was amended so as to treat them as being married for tax purposes. I was unable to establish what the motivation for the decision was at the time, but one thing is important, and I think that hon. members ought to keep in mind, and that is that in those years there were not different scales of taxation for married and unmarried persons. The only difference was in the abatements.

Sir, the hon. member for Smithfield replied very effectively to many of the arguments advanced by hon. members on that side. He pointed out, inter alia, what the tax liability of taxpayers is at present, and that they are far better off today. He went on to refer to the improved services for which the State is responsible and which have to be covered by these taxes.

Sir, the hon. member for Losberg made a very interesting contribution and replied quite correctly to the argument that overtime or a portion of overtime should not be taken into account for tax purposes. Sir, we all wish to encourage and stimulate productivity, and I have no fault to find with the motivation of hon. members in this regard, but I want to point out at once that something like this could have a prejudicial effect, as the hon. member for Losberg correctly said, viz. that people could be less productive in the ordinary working hours and more productive in the overtime hours. But there is a second factor, which is namely that it could lead to tax evasion, for it could very easily be agreed between employers and employees that the employee’s salary will be kept low, and his overtime will be increased, and this would then bring about a complete distortion of this concept, but I have a second problem in this regard, and I wish to express the hope that hon. members will understand it, and it is that we should keep taxability in proportion to the ability of people to pay tax, otherwise we will have such a host of nuances that I cannot foresee where it will all end.

The hon. member for Jeppe, who is not here at the moment, referred, inter alia, to machinery which is imported, which is second-hand machinery and which cannot qualify for the investment allowance and the initial allowance. Sir, let me say at once that it does in fact qualify, but it qualifies only in economically developing areas, and not in the metropolitan areas. The reasons for this are as follows: The first is that more people have to be used to service machinery which has become obsolete, and for that reason we are prepared to allow it in developing areas where labour is available, while we want to restrict the movement of labour to the cities as a general principle, and therefore wish to utilize modern machinery, which is less labour-intensive, there.

The hon. member also referred to the amount of 7½% which is paid to a taxpayer in whose favour the court finds in an appeal case relating to his tax and he asked whether this amount was free of income tax. It is not under all circumstances. The hon. member for Johannesburg North raised the same point. There are certain circumstances where interest which he has to pay on the taxation which he paid can be deductible. I hope the hon. member follows the argument. Because it can be deductible under certain circumstances, he must, on the other hand, pay tax on the difference.

†Mr. Speaker, I am about to finish The hon. member for Yeoville pleaded that non-resident’s tax on interest should be abolished and, secondly, that non-resident’s tax should be abolished on approved capital issues or permanent investments in South Africa, as this would encourage investment in South Africa.

New issues.

Yes, new issues.

*The hon. member is aware that circumstances exist under which the Minister of Finance may grant permission—the Act also makes provision for this—for interest on long-term investments in certain production sectors to be free of tax.

†But, Sir, it is a universally accepted practice that the country where the interest or dividend arises should have the right to tax such income. By surrendering this practice in South Africa, the lender or the investor will be no better off as all the countries from which we normally derive our loan or investment funds tax their citizens on a world-wide income basis. All that will happen is that the foreign Treasury will benefit in that it will not have to allow a credit of South African tax on income flowing from South Africa to its residents. The taxpayer himself would still find that he is paying the same tax, only in this case to his country alone.

That is not correct for all countries.

I said for most of the countries that we derive our loan capital and investment funds from.

*The hon. member for Yeoville referred to the abatements. I do not want to go into this, but I think that when we come to the Commitee Stage, and he wishes to discuss this further, we can do so.

I just want to conclude by thanking all hon. members for their contributions. I am referring to the hon. members for Sunny-side, Paarl, Losberg, Pietersburg and Smith-field, and all the other hon. members on the opposite side.

Question put: That all the words after “That” stand part of the Question,

Upon which the House divided:

AYES—96: Albertyn, J. T.; Aucamp, P. L. S.; Badenhorst, P. J.; Barnard, S. P.; Bodenstein, P.; Botha, G. F.; Botha, J. C. G.; Botha, L. J.; Botha, M. C.; Botha, P. W.; Botha, S. P.; Botma, M. C.; Clase, P. J.; Coetsee, H. J.; Coetzee, S. F.; Cronje, P.; Cruywagen, W. A.; De Beer, S. J.; De Jager, A. M. van A.; De Klerk, F. W. De Villiers, D. J.; De Wet, M. W.; Du Plessis, A. H.; Du Plessis, B. J.; Du Plessis, G. C.; Du Plessis, P. T. C; Engelbrecht, J. J.; Erasmus, A. S. D.; Greeff, J. W.; Grobler, M. S. F.; Grobler, W. S. J.; Hartzenberg, F.; Hefer, W. J.; Henning, J. M.; Heunis, J. C.; Hoon, J. H.; Horn, J. W. L.; Janson, J.; Koornhof, P. G. J.; Kotze, G. J.; Kotzé, S. F.; Kotzé, W. D.; Krijnauw, P. H. J.; Kruger, J. T.; Langley, T.; Le Roux, F. J. (Brakpan); Le Roux, F. J. (Hercules); Lloyd, J. J.; Louw, E.; Malan, J. J.; Malan, W. C.; Marais, P. S.; Maree, G. de K.; Meyer, P. H.; Morrison, G. de V.; Mulder, C. P.; Muller, H.; Munnik, L. A. P. A.; Niemann, J. J.; Nothnagel, A. E.; Otto, J. C.; Palm, P. D.; Pansegrouw, J. S.; Potgieter, J. E.; Potgieter, S. P.; Reyneke, J. P. A.; Rossouw, W. J. C; Roux, P. C.; Schoeman, J. C. B.; Smit, H. H.; Steyn, S. J. M.; Swiegers, J. G.; Terblanche, G. P. D.; Treurnicht, A. P.; Treurnicht, N. F.; Ungerer, J. H. B.; Uys, C.; Van den Berg, J. C.; Van der Merwe, H. D. K.; Van der Spuy, S. J. H.; Van Heerden, R. F.; Van Rensburg, H. M. J.; Van Tonder, J. A.; Van Wyk, A. C. (Maraisburg); Van Wyk, A. C. (Winburg); Van Zyl, J. J. B.; Venter, A. A.; Viljoen, P. J. van B.; Vilonel, J. J.; Vlok, A. J.; Volker, V. A.; Vosloo, W. L.

Tellers: J. P. C. le Roux, A. van Breda, C. V. van der Merwe and W. L. van der Merwe.

NOES—38: Aronson, T.; Bartlett, G. S.; Basson, J. D. du P.; Baxter, D. D.; Bell, H. G. H.; Boraine, A. L.; Cadman, R. M.; Dalling, D. J.; Deacon, W. H. D.; De Villiers, I. F. A.; De Villiers, J. I.; Englin, C. W.; Fisher, E. L.; Hickman, T.; Hughes, T. G.; Jacobs, G. F.; Lorimer, R. J.; Miller, H.; Mills, G. W.; Mitchell, M. L.; Murray, L. G.; Oldfield, G. N.; Olivier, N. J. J.; Page, B. W. B.; Pyper, P. A.; Raw, W. V.; Schwarz, H. H.; Slabbert, F. van Z.; Suzman, H.; Van Eck, H. J.; Van Hoogstraten, H. A.; Von Keyserlingk, C. C.; Waddell, G. H.; Webber, W. T.; Wiley, J. W. E.; Wood, L. F.

Tellers: W. G. Kingwill and W. M. Sutton.

Question accordingly affirmed and amendment dropped.

Bill read a Second Time.

Committee Stage

Clause 5:

Mr. Chairman, for your convenience and the convenience of the Committee I want to say, since we are running short of time for financial measures, that we shall be dealing with clauses 5, 12, 14, 19, 35 and the Schedule. I do not know what hon. members on the other side or hon. members of the Progressive Party have in mind, but those are the only clauses on which we intend speaking. I say this merely for the sake of saving time.

In regard to clause 5 I have a number of amendments and again for the sake of convenience I should like to move them at the same time I speak so as to save time. I move the following amendments—

1. (1) In lines 37 and 38, page 21, to omit “shall be six hundred” and to substitute “but not in excess of four shall be six hundred rand, and in respect of each child in excess of four shall be eight hundred”;
2. (2) in line 42, page 21, to omit “two” and to substitute “four”;
3. (3) to add the following further proviso at the end of the proposed paragraph (d) inserted by paragraph (d) of subsection (1):
4. “Provided further that it shall not be necessary to provide any proof of expenditure in terms of subparagraph (iv) if the amount claimed thereunder does not exceed one hundred and fifty rand.”; and
5. (4) to add the following proviso at the end of paragraph (f) inserted by paragraph (d) of subsection (1):

I want to motivate these amendments very briefly. The first amendment—and I have already referred to this in the Second Reading—will have the effect that where there are more children than four, the rebate will be increased in respect of each particular child. We believe that the more children an individual has, the higher the rebate should be. That principle is already accepted in the Act and all we are trying to do is to extend the rebate depending on the number of children. I refer for example to the hon. member for Durban Point who has no shortage of children and who would be one of those who would benefit by this. This might be a Durban Point relief amendment. Although there are other hon. members in this House who might not be concerned with this, it is due to the public as a whole who should be encouraged in this regard. During his reply to the Second Reading the hon. the Minister himself indicated that the more children you have the less disposable income you have unless you have the ability to pay. I can do nothing better than to quote him as an authority for the amendment which I now move.

The second amendment affects the taxpayer to whom a child is born during the year of assessment. We think that the amount allowed for the extra expenses such as the confinement expenses and matters concerned with that is inadequate and therefore we move that that amount be increased to R400.

The third amendment is in respect of medical and pharmaceutical expenses. We have already motivated our argument that there should be no obligation to furnish any vouchers if only R150 is claimed. Whether the Receiver is prepared to dispense with it or not is irrelevant because there should be no obligation if you are prepared to limit your claim under this head to R150.

I want to refer to my fourth amendment. We ask, as we have indicated, that where a child takes the trouble to have his parents with him and such parents are fully dependent upon the children and they are in the same household and they live with them during the entire year, there should be an increase in the rebate which is allowed. We believe very strongly that this encourages not only responsibility by children to their parents, but encourages a stable family existence and encourages the belief or rather the faith which I think most of us have that children have a very real obligation to make the lives of their parents, particularly in their latter years, happy and contented. I wish to move these four amendments but I ask that they be voted upon separately.

Mr. Chairman, the hon. member for Yeoville brought has amendments to me this morning and I thank him for that. I have sympathy with the motivations of the hon. member, but he will understand that I cannot accept his amendments at this stage.

The first amendment he is moving relates to the increase in the amount for children. He mentioned the hon. member for Durban Point as an example.

†I think that is the reason why I cannot accept it. He might be tempted to use his talents elsewhere, whereas I think we need them here.

Which talents?

I have proved the point.

Order!

It is not justified to increase the amount. If the hon. member would refer to paragraph 96 of the Franzsen Commission report he would find that the Franzsen Commission in fact recommended that there should be no differentiation at all. Irrespective of that, we have not accepted that part of the report. I do not think that we can extend it further.

The second amendment where the hon. member asks for the amount allowed as a deduction for a child born during a tax year to be doubled, I am afraid I cannot accept either. The present abatement of R200 merely preserves the status quo. The amount of R400 is unrealistic, having regard to the basic abatements for children that exist already.

In his third amendment the hon. member referred to the question of medical expenses and moved that a proviso be inserted. Again I am afraid I cannot accept this amendment. As the amendment reads taxpayers would in any event have to keep their receipts to check whether their expenses are over R150 or not. I might just point out that from an administrative point of view the Receiver of Revenue does not require these receipts to be submitted when returns are submitted. They are to be kept by the taxpayer and will be required only when that particular taxpayer’s case becomes a test examination case.

The fourth amendment refers to the question of dependants living with children. Hon. members will know that there are already provisions for a deduction in this particular regard, which the hon. member moves must now be doubled. Here again I cannot accept the amendment. I do not believe that it is scientific just to double it. In many cases parents who are partially dependent upon their children and live with them pay board and lodging. If you accept this you have to make allowance for this as well.

Mr. Chairman, I do not propose to indulge in an across-the-floor argument with the hon. the Minister. He has made it clear that he will not accept my amendments. His tone of voice has, however, indicated to me that whereas he may not accept them this year, there may be better hope next year and that more reason will prevail then. We still believe that these four amendments are in the public interest. They do not involve a lot of money and from the social point of view they would in fact be highly desirable.

First amendment negatived (Official Opposition and Progressive Party dissenting).

Second, third and fourth amendments negatived (Official Opposition dissenting).

Clause agreed to.

Clause 10:

Mr. Chairman, when the Second Reading of the legislation was discussed the hon. member for Vasco asked for certain assurances in connection with the interpretation and application of the forms in respect of the utility companies operating in the housing field in particular. I want to say at once that the term “independent director” is being interpreted in precisely the same way as the hon. member did so at that stage. In other words, the directors must not be employees of the company. If the company abide by the spirit of the legislation and seek to carry out their primary objectives, there will be no question of tax liability.

Clause agreed to.

Clause 12:

Mr. Chairman, I move as an amendment—

I argued this case during the Second Reading, so I do not need to substantiate it further except to indicate in the first place that there seems to be every reason why savings should be encouraged and in the second place that this type of saving is anti-inflationary contrary to the argument of certain gentlemen on the other side because, quite clearly, savings are anti-inflationary and the investment in this type of Government bond would also be anti-inflationary. The argument that it is not anti-inflationary, with respect, is of no substance at all. The only real argument that can be raised is whether in fact this amount should be allowed to be deducted before tax is paid. That is the only argument which is relevant here. I submit that, if this type of saving is encouraged, the Government gets the use of the money; it has the money in its coffers as opposed to it being invested in insurance, retirement annuities or any other kind of investment. I believe that one of the things a free enterprise society needs is that savings should be encouraged. My amendment would encourage saving.

Mr. Chairman, I want to say at once that, in principle, I can find no fault with the argument advanced by the hon. member for Yeoville when he spoke about savings. However, I want to add that this proposal and others he discussed but did not move in the form of amendments in my opinion mean that if the State should allow this form of saving in these favourable circumstances, one could get a totally wrong allocation of funds which move from one sector to another. I am sorry, but I cannot accept the amendment. I also want to say that it cannot be compared with the annuities when the amounts payable are in fact deductible from a person’s income in order to determine his taxable income.

† I would suggest that this amendment goes against the whole principle of the Income Tax Act, firstly because it involves a deduction of a capital nature. I agree that the other amounts that are deductible are also of a capital nature. It cannot be compared to pension contributions or retirement annuity fund contributions as the contributions are regularly made over a long period of time out of income and the benefits, which are mainly annuities, are taxable. If I accept the amendment of the hon. member in this regard, he will have to concede that the repayment of that capital must be subject to tax. If you had made deductions from your income in order to determine your taxable income, when the amount is repaid it will naturally have to be taxable as well. I do not think the hon. member would want that.

Mr. Chairman, I think the hon. the Minister is somewhat misinformed on what becomes taxable in the case of retirement annuities, because it is well known that the whole of a retirement annuity, when it becomes due, is not subject to tax. I think it is a fairly well-known factor and if one looks at the Act one will see that that is the case. It is not entirely tax free, but substantial portions of it are tax free.

That is what I meant.

If you mean it now that you have heard it, you did not say it, with respect. I think this is part of the difficulty. The second point that the hon. the Minister made is that it is a diversion of investment from one source to another. The hon. the Minister appears to be unaware of the fact that one of the ways in which the Government presently gets its money is to compel people in insurance companies and pension funds to invest in Government stock. If that money were to be diverted to this source it would really have no effect at all, except that it would be an encouragement to private saving as opposed to saving through pension funds, insurance companies, etc. With respect, Sir, both of his arguments are not of substance but I accept that I shall not be able to convince the hon. the Minister. It appears that I shall have to try again next year.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 14:

Mr. Chairman, I have a series of amendments to move to this clause, as follows:

1. (1) In line 37, page 51, after “Bantu”, to insert “Coloured and Asiatic”;
2. (2) in line 38, page 51, after “is”, to insert “in the case of Bantu workers”;
3. (3) in line 41, page 51, after “Education”, to insert “the Secretary for Coloured Relations and Rehoboth Affairs and the Secretary for Indian Affairs, as the case may be,”;
4. (4) in line 47, page 51, to omit “for Bantu Education” and to substitute “concerned”;
5. (5) in line 9, page 53, after “Bantu”, to insert “Coloured and Indian”;
6. (6) in line 13, page 53, after “Bantu”, to insert “Coloured and Indian”;
7. (7) in line 20, page 53, after “Bantu”, to insert “Coloured and Indian”;
8. (8) in line 26, page 53, after “Bantu”, to insert “Coloured and Indian”;
9. (9) in line 53, page 53, to omit “Bantu”; and
10. (10) in line 22, page 55, to omit “Bantu”.

The effect of all of these amendments is merely to allow the training scheme referred to here and the facilities in respect of that training scheme to apply to training schemes not only for Black people but also for Coloureds and Asians. I have already motivated these amendments at the Second Reading so, having moved my amendment, I say I believe that the needs of the Coloured and Asian communities are also great. The reasons given by the hon. the Minister, that there may be administrative problems in implementing this at this stage, I do not find convincing.

Mr. Chairman, I have already explained in another Second Reading debate what the circumstances are in this particular regard. In spite of the fact that I informed the hon. House that the Committee should now consider extending the provision to Indians and Coloureds, it is a fact that, in respect of both of these population groups, a system of national service has been introduced which was put into operation as from 1973 and in terms of which these children will be kept at school until the end of the year in which they reach the age of 15 years. In other words, as opposed to the Bantu population, there is not the same need among the Indian and Coloured populations. A second important point is that the scope of differentiated education in respect of Indians and Coloureds has reached a more advanced stage than it has in respect of the Bantu. It is a fact that these two population groups to a very large extent enjoy the benefit of technical education which is essential in the industries in particular. I am not opposed to the sentiments expressed by the hon. member for Yeoville. Apart from these considerations I have mentioned, we do not have the administrative machinery for introducing a scheme of this nature for the Indian and the Coloured population. As and when a need exists in this particular regard, a need which we can identify, and if the administrative machinery can be established, we shall give consideration to this matter in the light of circumstances.

First amendment negatived and remaining amendments dropped (Official Opposition and Progressive Party dissenting).

Clause agreed to.

Clause 19:

Mr. Chairman, I move as an amendment—

We have already had a considerable debate at the Second Reading on our attitude towards married women, on our views on the necessity of separate taxation for them. On this particular Bill we cannot move an amendment which would completely cover what we seek to do, but this amendment at least goes some distance of the way towards providing relief. We believe that this will act as an incentive to bring marginal workers into the economy, from the field of married women. Not only do we believe that this is of importance to women, but we feel that it also recognizes the rights which women have. This is not a question of women’s lib in an exaggerated form, it is a question of recognizing the woman for what she is worth. It is an acceptance of her status in the community. We believe that this is an amendment which the hon. the Minister should accept.

Mr. Chairman, I rise merely to recap what I have already said during the Second Reading debate. Firstly, the norm to be applied when people are taxed is the ability of that person to pay that tax Secondly, if the hon. member would just for a moment try to calculate what the loss in revenue would be in this regard, he would find it to be very considerable indeed.

What would you say it is?

I shall come to that now. The reason why the amount is now being increased from R500 to R600 is not to deviate from the principle of a person’s taxability depending upon his ability to pay tax. This is being done because a married woman has other incidental expenses which she incurs in order to go out to work. If I were to accept this amendment, the loss of revenue in this particular case would be R24 million.

*I do not want to take up the time of the Committee unnecessarily, but I should just like to refer once again to the principal recommendation of the Franzsen Commission, a commission consisting of scientists, deliberating on taxation matters. Paragraph 127 reads as follows—

Then, paragraph 128—

Sir, for these reasons I cannot accept the amendment. The amendment would be acceptable only if it could be proved that the rebate of R600 which is now being allowed is not sufficient to compensate the married woman for the additional costs she has to incur as a result of the fact that she goes out to work. I am sorry that I cannot accept the amendment at this stage.

Mr. Chairman, I raised this matter of the joint taxation of husbands and wives in this House more years ago than I care to remember. I think the Hon. Tom Naudé was Acting Minister of Finance when first I raised it. I may say that it is interesting to see that the explanation which he gave me at that time many years ago was exactly the same as the explanation given this afternoon by the hon. the Minister, and that is that it would cost the State many millions of rands (pounds in those days) and that nobody had suggested from what other sources that revenue should be made up. Sir, I agree with this argument, but I just wonder whether either of these Ministers sat down and calculated the amount of additional revenue that would accrue to the State if in fact married women were encouraged to go out to work. It is not the existing number of working married women that we ought to be considering, but the additional numbers of women who would go out to work if it were made worth their while. At the moment it is not worth their while. The R600 which the Minister is now allowing as against the R500 which was previously allowed just does not begin to meet the extra cost of hiring additional domestic help which is usually necessary if a married woman, especially if she has children, goes out to work; the cost of transport to and from her place of work, and the additional clothes she needs because she has to be properly dressed every day. All these are factors which have to be taken into consideration. One does not always find that a husband is encouraging in this respect and therefore the rebate allowed must be something really worthwhile in terms of household expenditure and revenue before the wife will get the encouragement that is necessary if she wants to go out to work. Sir, I think that the present Minister and his predecessors have never really taken into consideration this factor of encouragement, if women go out to work, in promoting the additional productivity which will obviously result from all the skills which they can contribute to the economy. I want to point out that more and more women in South Africa and elsewhere in the world are being trained, are becoming university graduates, and have definite expertise and skills which they could use to contribute towards the economy of the country. I must admit to not having read the Franzsen Commission report, but I doubt whether any real expert study has been made in the last few years to anticipate what the additional growth in the gross national product would be in South Africa if many thousands of married women were encouraged to go out to work.

May I just put certain points? Firstly, I do not know where the figure of R24 million comes from and I would actually like to know how that is arrived at, because you have to calculate here not only what it would mean to allow it up to R1 200, but you also have to take into account what the actual earnings of married women are, and I presume the hon. the Minister is in possession of that information and will be able to give us what the earnings are at the moment of married women, what the tax is that is obtained from married women, and what the effect would be of this actual change, because that is really what he said, that this change that I am suggesting would in fact cost R24 million. I should like to know how that figure is actually arrived at, because I have some difficulty in understanding that particular figure.

The second point I want to make follows on what the hon. member for Houghton has said. The Minister has talked about the fact that he is always concerned about the ability to pay. You see, Sir, this is one of the difficulties I have with the hon. member for Paarl. I do not believe that ability to pay is the only principle of taxation, because if ability to pay is the only principle of taxation, you are ignoring your own textbook, which is the Franzsen Commission, which tells you that equity is one of the most important factors in it, and this can not be a matter of equity at all. It cannot be a matter of equity, Sir. You cannot take people, because they are able to pay, and squeeze them and squeeze them. Ability to pay is a factor, but it is not the only factor. Equity is a very real factor. The other factor which is important, which again you will see from the Franzsen Commission report—and I am in the fortunate position of being able to say that I have not only read it, but studied it, perhaps more than once—is that productivity and encouragement to productivity is a major factor in the economy. I want to say to you, Sir, that the hon. the Minister is in fact acting as a disincentive to productivity by not agreeing to this. With great respect, now to the yourself to the Franzsen Commission’s concept that this is merely to reimburse a woman for what she spends in order to go out to work, I do not think is the right principle. With respect, merely because the Franzsen Commission says so does not make it so. Productivity is as important, equity is as important and encouragement is as important. And I am not talking about unearned income. We have throughout kept to the fact that we are talking about earned income of married women. A different case exists in respect of earned income and the question of joint taxation there, but with great respect, if we now take the premise of the Franzsen Commission and say that it should be R600, merely reimbursive, then I want to tell you that it is entirely devoid of reality in the modern situation to suggest that a woman in the home, instead of going to work, is only worth R600 in replacement value. It is nonsense; it is utter nonsense. There is no question about it. If you merely take the monetary aspect of it, if you take one servant that you employ today to replace a married woman to allow her to go out to work, do you think a servant costs you only R600 a year? You cannot employ one servant for it, if that is the test, and never mind all the other things which the hon. member for Houghton has mentioned. But it is a fundamentally wrong principle merely to talk about the expenses that the household will have to bear because a woman has to go out to work. There are far more important considerations at stake.

May I add one point in regard to that calculation? If I am wrong perhaps the Minister will tell me. I will assume that there are two categories of women who go out to work, those who go to work out of necessity, with whom we are not concerned at this stage because they will continue, and those in the marginal cases, who can be persuaded to work if the return is good enough. Now am I wrong in assuming that in the case of a man in the top tax bracket who is married to somebody who might go out to work, all his wife will have to earn is between R3 500 and R4 000 for the revenue to be no worse off? If we want to persuade a married woman in the marginal category to go out to work, I do not think she will be prepared to do it for a salary of less than R400 per month. My mathematics may be wrong, but I am just wondering whether the hon. the Minister could tell me whether that is correct or not.

Mr. Chairman, it is quite clear to me, of course, that both the Opposition parties actually want to make some political capital out of this. If I also wanted to make political capital out of this matter there would be nothing better for me to do than to ask this afternoon that no woman in South Africa be obliged to pay tax; everything she earns should be tax-free. If I were to ask that, I would be the most popular man in the whole of South Africa.

Even that will not help you.

Wherever I went all the women would fall over me. The argument is advanced that the woman who goes out to work spends far more than the tax rebate of R600. The hon. member for Yeoville says that one would not be able to hire a servant for that amount, but surely that has nothing to do with the matter. Where a concession is made in respect of the married woman it has absolutely nothing to do with what it costs her to be able to go out to work. This is a factor, of course, but what about the unmarried female? She also has to incur expenditure on clothes and so on, or does she not have to buy any clothes? But what about the men?

You are now destroying the argument of the hon. the Minister.

That is not the predominant factor. The hon. member for Yeoville pretends as though it were a very valid argument. Surely it is very clear that our tax structure has been worked out and that it has a basis and a pattern. Surely what the hon. member for Paarl said is correct. Only the man who is able to pay is made to pay. If the hon. Opposition want to reduce rates, if 63% is supposedly too high for the high income group and if hon. members are not satisfied with this they must tell us whether they want to make use of a system of indirect taxation so that the poor man will then have to pay more. Do they want us to do away with the subsidies? Must we do away with the subsidies amounting to approximately R132 million which the Government grants so that we can thereby effect a saving? All the Votes have already been approved and along with them the expenditure on subsidies as well. The money must be found for making such expenditure possible, and that is why the Opposition must tell us what we should save on. Do they want us to withdraw these subsidies or must we curtail other services? Every government takes the taxation pyramid into consideration. It tries to make the base of this pyramid as broad as possible so that the taxation burden on the less well-to-do may be as light as possible. Moreover, one would not like the pyramid to rise too sharply either, for then the persons in the higher income groups would of course have to pay a considerable amount in tax. Of course, if there were no taxation, it would be an incentive for everyone to go out to work, but I do think we should be more realistic. We should not, in the death throes of this session, advance arguments which are nothing but politics aimed at the people outside.

Mr. Chairman, I do want to tell the hon. member for Yeoville that he must not think he is the only person who is wise enough to assess and evaluate matters.

Now you are being personal again.

No, you were being arrogant.

You are proving once again that you do not have a case.

You want to reserve to yourself the right of speaking to other people in less flattering terms, but the moment someone reacts to it, you are sensitive about it. You do not need to tell me that you have read the Franzsen report; I have also read it. You have even less need to come and tell me that you have studied it, as though other people have not studied it.

All I wanted to say when the hon. member for Houghton said that she had not read it, was that I had read it.

I accept it as such. The hon. member knows just as well as I do that various norms are laid down for tax liability. Surely I never pretended as though the ability to pay should be the only norm. In fact, the hon. member will recall that when I replied to him a moment ago, I quoted paragraphs 127 and 128 of the Franzsen report. The Franzsen report stated clearly in paragraph 127 that the ability to pay is normally a sound principle. Of course, fairness and justice are also principles. It is a question of trade-offs between these objectives that you are trying to maintain. That is why I, in all fairness, also quoted paragraph 128 of the report, in which the hon. member will find the motivation for the particular amount of R500 which the commission recommended at that time. To argue as the hon. member for Houghton does that the married woman should be able to deduct or add to the amount all the costs she incurs through being employed …

I did not say that.

The hon. member said she has transport costs, clothing costs, servants’ costs and all these costs.

I said you had to take it into consideration …

Those costs the hon. member referred to are not even deductive for the man when he has to pay tax. However, I want to go further and I do not want to devote much time to it. The hon. member asked me how I arrived at the amount of R24 million. The fact of the matter is that the R100 concession we are now making is costing us R4 million. According to the particulars we have in respect of incomes of married women who work and those of their husbands, we calculate that it will cost us R24 million if we should accept the amendment at the present stage. In conclusion I want to make one final remark, and that is that we have often discussed this problem in the past. The hon. member can have a look at paragraph 129 of the report of the Franzsen Commission. She will see there that the Franzsen Commission did not find at all that it would be an incentive for more people to go out to work. For the sake of the record I should like to read the relevant section—

The hon. member for Houghton referred to that. I read further (translation)—

If we were to take this principle further, hon. members opposite would rightly be able to argue with me that the same tax concessions should be made to pensioners who are being employed. It would be moral, fair and right to do so.

I agree with that.

The hon. member will agree with that, but when I increase the tax rates in order to compensate for the loss in revenue she will once again agree with those people who say that the tax should be reduced. Surely we cannot argue in that wav. Surely it is not reasonable.

The second point I wish to make—and I really would not like to become involved in a dispute with hon. members opposite—is that we should consider the population as a whole. The expenses incurred by well-to-do families, such as keeping two motorcars, more servants and a great deal of clothing, cannot serve as a criterion which we can apply. In any event, the application is not intended to compensate the family for the real additional expenditure. The intention is to fit the tax payable to the ability to pay. We must guard against discriminating against the family. Where the man is the only bread-winner in the family he has to work overtime so as to enable him to supplement the family income. He has to work on Sundays and on Saturdays. This means that increased productivity is being rendered at considerable compensation. If I were to accept the amendment, I would not be able to stop at accepting it, but I would have to take it a great deal further.

I said at the beginning that I had sympathy with the standpoint of the hon. member for Houghton and the hon. member for Yeoville in this particular regard. I assure hon. members of this. We cannot view these things in isolation without evaluating the effect in respect of other people and other circumstances. I want to say at once that the position has not remained static since the Franzsen Commission’s report. An improvement has taken place in the married woman’s position as far as her income is concerned. In the 1972 year of assessment the provision that the R500 allowance should level off on the attainment of an income of R8 000 was abolished and it does not level off at all. This year we propose a concession amounting to an increase of 20%. I want to give hon. members the assurance that we will reconsider the position in the current year and see whether improvements might not be possible.

Mr. Chairman, I do not want to prolong the debate, but I think there are two points I should mention briefly. The one is that I am pleased to note that the hon. the Minister is prepared to say that the matter will be considered further and that possibly there will be a concession. If this debate, even though we have failed in our amendment, produces that result it will have produced some result. The second one is that I still have some difficulty in regard to that figure of R24 million. But I do not want to detain the Committee and will be happy if the hon. the Minister could arrange to have the particulars sent to me from the department so that one can look at it. Thirdly, I just want to read to the hon. the Minister from the Third Interim Report of the Franzsen Commission. Paragraph 279 reads as follows:

One way in which to increase the supply of goods and services in the short term is to encourage people to work more or to work longer. The full utilization of capacity is an elastic concept in the sense that equipment that is used for only one or two shifts per day can possibly be used for two or more shifts a day for some time. For such a purpose, however, additional labour is required, and if the labour force is fully employed, that force can be supplemented only by longer working hours and/or by the attracting of so-called marginal workers, married women in particular, to the labour market. In this connection, the tax systems plays a part. An ordinary person is not prepared to work overtime, or to combine domestic duties with outside work, unless he retains enough of the additional earnings after the fiscus has taken its share.

I can get no greater support for my argument from the Third Interim Report of the Franzsen Commission than I have put in my case here. The hon. the Minister quoted the Second Interim Report correctly and I do not quarrel with him in that regard, but the Third Interim Report makes our case in fact quite unanswerable.

Amendment negatived (Official Opposition and Progressive Party dissenting).

Clause agreed to.

Clause 35:

Mr. Chairman, I move as an amendment—

The effect of this will be to make the provisions of the Act applicable to any company, other than a company whose total net profits are derived solely or mainly from dividends, whose total net profits for the year of assessment in question did not exceed 15% of its paid-up capital as at a specified date, as opposed to the existing provision, which refers to profits not exceeding 5%. I think we have had quite a substantial argument in respect of undistributed profits tax. I think we have made out a case for this and we formally move an amendment in this regard.

Mr. Chairman, the position is that I consider the exemption under section 50(f) of the Act as being adequate. I might just tell the hon. member for Yeoville, since he has quoted the Franzsen Commission as I have also done, that the Franzsen Commission recommended that the section 50(g) exemption in the principal Act should be withdrawn. I do not propose to spend any more time on this. I have explained the position in regard to undistributed profit tax and I do not propose to take it any further.

*The hon. member for Johannesburg North touched on an aspect in respect of clause 35 during the Second Reading debate which I think is important and in this connection I want to give him certain assurances. He pointed out cases of a parent company abroad suffering a loss as a result of which its subsidiary in South Africa lost its exemption with regard to undistributed profits tax. In this particular regard, the hon. member is quite correct. I want to give him the assurance at once that this matter is receiving our attention and that we shall look into the circumstances.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Schedule:

Mr. Chairman, I move as an amendment—

I raised this point in the Second Reading and, unless it escaped me, I think the hon. the Minister did not deal with it in his reply. This amendment is something which members on this side of the House feel very strongly about. We are entering a phase in which more and more of our young men, some not so young, are going to be required to render service to South Africa not because they are professional soldiers, but because they are South Africans and because it is their duty to render that service. In many cases these additional emoluments they receive are not very large. I have tried to work out what it amounts to but it is very difficult. However, it is not a large amount of money that is involved. Nevertheless it may in many cases move people up into a higher tax bracket so that they are forced to pay tax at a higher rate. It may bring young people who would otherwise be entirely exempt from taxation, into a bracket where they will be required to pay tax. In other cases it may create the situation that, whereas normally they would be regarded as dependants, with these earnings together with the earnings that they may have from part-time work, this would create a problem in respect of the tax position of the parents. This is a matter which, we feel, does require the attention of the hon. the Minister. We believe that in these times this is the appropriate and the correct thing to do. We hope the hon. the Minister will see his way clear to accept this amendment. As I have said, it cannot be argued that the amount of money involved here is large. Unfortunately our soldiers are not paid that well that it could become a large sum of money. I believe it would be appropriate if the amendment were accepted.

Mr. Chairman, I rise to support the amendment moved by the hon. member for Yeoville and to raise two other aspects which affect this question. In terms of new procedures introduced this year, national servicemen can volunteer to serve for 18 months or two years. They are paid the normal daily allowance, which is minimal and barely covers their recreation, and certainly does not cover their rail or air fare to get home over long weekends; they are paid a small daily allowance only. At the end of 18 months, depending on their rank, they are paid an amount of R750, and after two years’ service a lump sum which can be R3 000. That money is received as earnings and will be taxed as a lump sum, whereas if it were spread over the full two years of the period of service, it would possibly not have the same effect as far as taxation is concerned. If that amount had, in fact, to be added to the income of the parents it could have a serious effect on the tax payable by the parents. This is a practical aspect of the problem to which I hope the hon. the Minister will give his attention.

I should like to deal very briefly with the principle as well. We are making heavy demands on our young men. In calling them up for service we are holding these men back for a year. 18 months or two years from normal progress in their professions. This is not the same as pay, which one would earn in the normal course of employment. Someone starting off in articles, may be paid very little, but he is building up towards his future income, towards the salary which he will be earning when he is qualified. Whatever he earns is a contribution to his future. I notice the hon. members for Welkom and Uitenhage are not interested in the welfare of the soldiers and young men of South Africa; they could not care less.

That’s a joke. You are being ridiculous.

I get darn fed-up when the attitude of a member of Parliament towards the welfare of national servicemen shows the disrespect for their interest as those hon. members do.

Your party is bankrupt.

A normal person earning a small salary because he is in training is building towards his future, but a national serviceman is not earning money in order to further his own future prospects. He earns the money for a year, 18 months or two years and then has to go right back to scratch. This is a lost period in his earning capacity as a citizen, as a wage-earner. It is pocket money and not earnings in the sense of earnings derived from employment. He has lost the time and in addition has to be taxed for it. The last point I want to make is that these young men are more and more going to be subject to physical danger, the danger of loss of limb or even of life itself. Many of them have already lost their lives, either in action or in accidents. They are prepared to make this supreme sacrifice. I believe the least South Africa can do to express our thanks for what they are doing is to make a gesture of this kind, one which will not affect the taxable income nor have any real effect on the total of income tax, but which I believe will not only be appreciated by the men themselves but which would indicate that we as South Africans are serious in our attitude towards those who make it possible to live in safety and peace. I very strongly urge the hon. the Minister to accept this amendment and perhaps to incorporate commando’s who are not actually covered by the amendment because when we speak of the Citizen Force it is, technically, only the Citizen Force section. The commando’s are a separate section.

Mr. Chairman, my only reason for rising is to say that I believe hon. members opposite will agree with me on one statement, i e. that when it comes to servicemen, the hon. official Opposition and the Government agree with each other. The debates conducted lately are, in my opinion, sufficient proof that this side of the House and the official Opposition have no hesitation whatever about doing for our servicemen everything that could possibly be done.

†I have a technical problem as far as the hon. member for Yeoville is concerned. The schedule to which he has now moved an amendment, proposes taxation. A request for exemption, if that is what is intended, should be in some other form, for example in the form of an amendment to section 10 of the Act. I do not mean this unkindly. Unfortunately I cannot accommodate this amendment technically in this particular section. I want, however, to discuss this amendment on its merits with hon. members.

*The hon. the Minister of Defence has already made representations to the Treasury in connection with this matter to which hon. members have now referred. I do not want to deal with it at any length. I just want to say that in my view the point made by the hon. member for Durban Point could best be dealt with through talks with the hon. the Minister of Finance. It is a principle that income accruing to a person is taxable in the year in which it accrues to him. The hon. member has asked for the tax to be spread over a period of 18 months or two years, which would reduce the liability for taxation of servicemen in general.

Would he then be exempted?

No, because there are further problems, too. Let us also take a look at the position of other Defence Force members, not only servicemen. Let us try to pursue the principle of fairness and also of equal treatment. Hon. members will agree with me that the danger situation in which servicemen operate apply in respect of the Citizen Force and also the Permanent Force to the same extent. We should consider all their circumstances. There are other methods by which one can look at persons employed in the service departments. The hon. member is aware of the fact that this is already being done. However, we are concerned with taxation now, and how we are, really dealing with those departments. The income earned by servicemen is, however, not added to their parents’ income, with the result that the latter are not placed in a higher income bracket. It is only investment income which is added to the parents’ income. The tax paid in this specific connection is tax which has to be paid by the serviceman himself at the rate applicable in his case. I just want to mention it at this stage. No part of any soldier’s remuneration has ever been exempted from taxation. This did not happen during the Second World War nor during the Korean War. This is my problem with the hon. member for Durban Point, although I have sympathy with his motivation. If such a concession were to be granted to voluntary Citizen Force units or members during training, what reason could we have for not granting it to our other military or paramilitary services as well. I mention as an example our Police Force which is doing duty on the border and in Rhodesia at the moment. Their position is undoubtedly the same as that of the servicemen. I do not want to compare these people with one another. I am only comparing their circumstances.

Border allowances could also be exempted then.

I am now dealing with the motion as it stands. I may not go beyond it.

We could make proposals again.

Yes, but not at this stage. I cannot accept the amendment, because there are a large number of consequences which would flow from it and which I should have to consider. I should rather suggest, in respect of these servicemen to whom the hon. member for Point referred, that the possibility be investigated, in conjunction with the Defence Force, of at least spreading payment over a longer period and of not making a lump-sum payment.

Mr. Chairman, there are a number of points that I think one needs to deal with as far as the hon. the Minister’s reply is concerned. Firstly, in regard to his contention that the amendment is in the wrong place and that it should have been under section 10, may I say to the hon. the Minister that I intended in fact to move an amendment to section 10, but on the very best advice that is available to me, the hon. the Minister would then have been able to take the point that the amendment was out of order, and it is for that reason that the amendment has been moved to the Schedule, which is the correct place. I regret to say to the Minister that if I had moved the amendment to section 10, he would have been able to take the point that it was out of order and that we could not then have debated it. I regret to say that the hon. the Minister is mistaken. If he seeks advice from the same source from which I received my advice, he will get the same advice and he will find that he is wrong. However, Sir, that is just by the way; it is not important. But let me tell you, Sir, what I think is important. In the first place, our information is that in fact the servicemen believe, rightly or wrongly, that the gratuity to which the hon. member for Point referred is going to be tax-free. However wrongly they may be under that impression, I think they are under that impression, and it is not enough to say that we will spread the payment over a period. [Interjections.] This is a point, with due respect, which the hon. member made in order to demonstrate how iniquitous it is that in the end they have to pay tax on the lump sum in this form. I agree that if the gratuity were spread over a period it would give some relief, but it is not the answer to the problem, because here these young men are being encouraged to serve for this period of time and it is being held out to them that they are going to get a lump sum at the end of the period, but they are not told that tax is going to be deducted from that amount. That, I think, is the unfortunate situation, and that is why I believe that it is not enough merely to spread it over this period; I think it should be tax-free.

The second point I want to deal with is this: The hon. the Minister talked about other people who are also exposed to other dangers. The hon. the Minister knows, and I know, and hon. members of the House know, that certain allowances are given to people who serve on the border and elsewhere. I do not believe that those allowances should be taxable; I believe that they should be tax-free. I think it is quite wrong, with respect, when you put a man in a position of danger, to say of him, “I am giving you an allowance for being in that position of danger, but remember that the Receiver of Revenue is going to make a profit out of your going there.” I think, with great respect, that that is not the right approach; I think it is quite wrong and that all these allowances should be tax-free. Sir, the third point that I want to make is that you do actually move into a higher tax bracket. The hon. the Minister says that this does not affect the parents at all but, with great respect, Sir, if you look at page 21 of this very piece of legislation that we are dealing with, you will see here that if in fact the man concerned earns sufficient to bring him even out of the ambit of rebates, his parents are affected by it. In other words, if he goes and serves his country, the rebate is affected as far as the parents are concerned. With due respect, Sir, the parent therefore is not unaffected by it. But I am not concerned so much about the parent as I am about the young man who is in fact serving his country. The point was made that if we do this for people in the Citizen Force and in the commandos, then why should we not do it for people in the Permanent Force? Sir, there is an essential difference, and in saying this I do not want to derogate from the work that the Permanent Force is doing. On the contrary, I would like to see our Permanent Force made much bigger and much stronger, but those are professional soldiers and the people with whom we are dealing here are civilians who have to give up part of their time in order to defend their country. There is an essential difference between them and the permanent, professional soldiers. That is why, Sir, we must pursue this amendment. We believe it is right that this should be done. We believe that the amendment is technically in the correct form and we believe that the hon. the Minister should accept it. If he says that he accepts the principle, then the only basis upon which we could agree not to pursue this amendment now would be if the Minister gave us an undertaking on behalf of the Secretary for Inland Revenue or the Minister of Finance that in fact these allowances will become tax-free and that legislation will be enacted retrospectively in order to deal with this. If that undertaking is given to us, we shall withdraw our amendment. If that undertaking is not forthcoming, we believe it is our duty to pursue this amendment in this House.

Sir, I have already replied in full, but the hon. member for Yeoville is quite within his rights to pursue the matter. From the nature of the case, as the hon. member would understand, I cannot give an undertaking of the kind he requested. The second statement I want to make is that the allowance received by policemen doing border duty is not taxable.

And soldiers?

Nor those received by soldiers. The additional allowance they receive is not taxable. The hon. member now claims that the servicemen were under the impression that the lump-sum payments that were to be paid to them at the end of their 18-month or two-year period would be tax-free. I want to say immediately that no one conveyed such information to them in this connection. The only undertaking I am able to give now, and I cannot take it any further, is that I shall have the question of this situation discussed by the two departments. Hon. members will understand the implications of the matter and appreciate that it has to be studied. The hon. member should realize, furthermore, that this represents a fundamental departure from principle. I do not for a moment want to compare the position of the servicemen who undergo non-recurring training for 18 months or two years and then receive a lump sum with that of other people who are not able to do so and who also want to go and study afterwards and do not have the funds. I do not think it is fair to compare these two things; they are not comparable. I say again that the hon. member cannot ask me to give him an undertaking such as the one he did ask of me. I regret it, but I cannot take it any further than I have already done.

Amendment put and the Committee divided:

Tellers: J. M. Henning, S. F. Kotzé, N. F. Treurnicht and A. van Breda.

Amendment accordingly negatived.

Schedule agreed to.

House Resumed:

Bill reported without amendment.

Third Reading

Mr. Speaker, I move subject to Standing Order No. 49:

Mr. Speaker, we have now had a debate in respect of the Government’s income tax proposals. This piece of legislation has high-lighted the differences between the parties in a very interesting form. We on this side of the House have sought to put before this House the case of the people of South Africa, we have looked at the needs of the economy, we have looked at the needs of the various sections of the economy and we have looked at where equity requires changes to be made. We have not been prepared to merely advocate one section of the community’s interest, but we have looked at the matter in a completely broad way. It is interesting to note that during the course of this debate we on this side of the House advanced no less than 22 suggestions for the improvement of the legislation relating to tax. These suggestions covered the necessity for not only seeing to it that there should be equity in the system—as for example our contentions in respect of the equal treatment of people of different colours in South Africa in regard to tax—but we have also covered the business community and we have put forward the concept of deferred taxation. [Interjections.]

Order! Hon. members should not converse aloud.

The concept of deferred taxation means that credit is given to pay tax, that interest it paid to the State, that the money is used for investment in production activities and that no dividend should be paid while the tax is owing. We dealt with undistributed profits tax, with training allowances not only in respect of the Black people, but also in respect of the Coloured and the Asiatic people as well, we have advanced matters in respect of overseas investments, in regard to non-resident bonds and in regard to equity investments and the application of non-resident shareholders tax, with depreciation allowances, with inflation accounting and we suggested further forms of investment in order to create certain taxhaven situations. We suggested that the silent tax extractor should be removed from the taxation system, and we have suggested that tax bulges should be ironed out. We have not forgotten the family man with children, we have not forgotten those who have children during a particular tax year, we have not forgotten the ordinary man who has to keep his little receipts in order to be burdened with this type of job and we have not forgotten the aged people and the fact that they too need care in their old age. We have not forgotten the serviceman who, when he defends our country, should not be forgotten in this respect and who should not be exposed to dangers while having part of his remuneration deducted by the State for exercising this service to our country. We have not forgotten the small man when it comes to inflation-proof savings, and I want to say a word about that again in a moment. We have not forgotten those who seek to own homes and to create a stable society. We have not forgotten the tenants burdened with ever-increasing rents and for whom some relief in the lower income groups needs to be given. We have not forgotten married women who need to be provided for and who should not be taxed in the manner in which they are presently taxed. We have not forgotten the self-employed people and those who wish to educate themselves and their children. We have not forgotten matters which encourage productivity at a time when inflation is a very real problem. I believe that we on the United Party side have demonstrated that we look after all sections of the community. I do not want to be carping in respect of other people and what they have suggested and what they have resisted, but I want to make it quite clear that we have in these debates stood for and advanced the rights and the obligations that need to be exercised towards every section of the community. We can truly say that in these debates we have tried to look after all the people of South Africa, and not just a section of them.

May I just in detail deal with a couple of points. Firstly, there is the question of savings. The hon. member for Johannesburg North had some doubts about index bonds. If he would look at some of the literature that has been written on this subject and if he would look at the experience in other countries in this regard, he would find that index bonds are not something which is that novel. He will not find it to be something that has not worked. In regard to his argument that future generations will have to pay for this, may I point out that we today benefit from past generations’ work, from what they have built and what they have created in South Africa, and future generations will benefit from what we are paying in taxation today. The public works we are building today and the foundations which we are laying will be to their benefit. We are causing no burden to fall on future generations in respect of index bonds. We also made it clear that we feel that initially these should be for a period of five years. As far as getting an index is concerned, it is quite possible to take an index for South Africa as a whole. The hon. the Minister has suggested that there are so many indexes, but there is one consumer price index for South Africa as a whole. It is not necessary to have regional indexes in regard to this particular matter. I make the forecast today that even though the concept of index bonds is rejected today both by the progressive Party and the Nationalist Party it will come in South Africa because we will be proved to be right. When it comes to gold I am amazed that the objection to a bond which is convertible into gold should come from no less a person than the hon. member for Johannesburg North, co-operating with the hon. the Minister on this occasion, because fundamentally what we require, and may I spell it out again in very simple terms, is a bond, a certificate, in respect of which the value of the gold is as determined today where the gold is held by the State and where the gold will be available when the amount has to be converted. It is therefore not a question of where you are going to get the gold from. It is a question that the gold must be there before you issue a certificate. One of the things which some of us with long memories can remember is that there used to be a time when you could take out what was then a £1 note and read on it “I promise to pay”, and know that—that meant gold, that it meant convertibility, that it mean something real. Today, when you take out your money and look at a note it says “I promise to pay”; what does this promise mean? Nothing. What I am appealing for is that we should create a form of investment which will mean a gold bond which is convertible, which is meaningful and which has something to back it; not just a printing press to back it. This note I have here is not something you can convert into anything. Go to the Reserve Bank and see what they give you for it. With great respect, this is what we are looking for. It is true that the value of gold can decrease but that is why I have offered the two alternatives. That is why I suggest either an index bond so that, based upon the index, you know what you are going to get back, or a bond tied to gold. Then, if you want to be more speculative and do not have the confidence in gold that I have, as is apparently the case with the hon. member for Johannesburg North, I cannot understand why this choice should not be offered. With great respect, I cannot understand that from that side of the House of all places there should be an objection to a convertible gold bond. I feel I must have misunderstood the hon. member, to be as charitable to him as I possibly can

There is just one last matter I would like to deal with, and that is the question of where the money is going to come from. It is remarkable that the hon. member for Paarl gave the answer to this question. He said that what is happening at present is that we are overtaxing in order to create a nest-egg for the future. Well, if this is what we are doing, that is a tremendous admission to make because money is then available. Some of the things we have asked for involves very little money. However, they involve equity, justice and a concession to realism and an encouragement on the South African scene of productivity, the fight against inflation and growth in our economy.

Mr. Speaker, I do not want to speak at length. The hon. member for Yeoville mentioned a whole series of matters. The only section of the population he did not mention is the farmers. It seems to me as if he is a hater of farmers. I find it very strange that the hon. members are raising so many points in regard to income tax as this session is giving its last gasps. If we were to make some calculations, we should see what the position is. For example, the hon. the Minister mentioned that the total tax in respect of married women amounted to R24 million. I quickly made a few calculations and came to the conclusion that the hon. member for Yeoville never did his sums. Surely their concession would amount to millions and millions of rands. The hon. member has still not told us where that money is to come from. I hope other members on that side will tell us where that money is to come from.

The hon. member for Yeoville says the hon. member for Paarl said that we were over-taxing in order to save for the future. The one leg of the hon. member’s amendment is, however, that this does not combat inflation. Now, if this is true and the hon. member wants to be honest, surely he should withdraw money from the community at this stage already, because this is one of the ways in which inflation is combated. Why did he not come up with the proposal that these concessions should not be made? Surely that would have combated inflation. He wrecked his whole amendment from A to Z. I hope the hon. members who are going to speak after him will tell us how they are going to combat inflation in South Africa by way of the tax concessions they propose. We should remember one thing, please: The hon. member has omitted to say that the voters of South Africa will not allow themselves to be caught by these specious arguments. The voting public of South Africa knows better. They have more knowledge of economic and financial matters, and so forth, than was suggested this afternoon by the hon. member.

I do not wish to bring all of it up again, but we have merely to recall what the people in South Africa as well as all the newspapers, English as well as Afrikaans newspapers, had to say after the hon. the Minister of Finance had presented his Budget here on 14 August. What did the chambers of commerce have to say? What did the Chamber of Industries, the Chamber of Commerce and the Afrikaanse Handelsinstituut have to say? What did all the experts such as economists and others have to say? They only extolled and praised this Budget. All these matters were raised in the Budget speech; they did not only come up now. It is no wonder that there is such dissension in the ranks of the hon. members on the opposite side. They do not even have their fingers on the pulse of the members of their own party, let alone the voters of South Africa as a whole. Much less do they have any contact with the thinking community in all spheres of our economic composition. I just want to tell the hon. member that he will not get away with these cheap politics he played here this afternoon.

May I simply start with what we in these benches believe, which is that the fiscal policy of the Government should strike a balance between humanity and compassion now together with the need to encourage and develop increasing prosperity for this country. That basically turns on making the most of all the factors of production which are available here—our people, our capital and our natural resources. The other thing I should like to say is directed at the hon. member for Yeoville because we seem to be slightly at cross purposes. Let me start off by saying that of course we owe a debt to the past generations who have built up this country to what it is. It is true of most countries in this world. There is certainly an obligation on the present generation and the ones of the future, I hope, to feel the same. There are many ways of dealing with that but I should like to come back to this question of index bonds. Perhaps I am not as learned in this sphere as the hon. member for Yeoville, but there is a view that these are in effect no cure for inflation. They are merely a palliative. I am not going to argue about whether one wants to have a palliative or not, but we on these benches are more concerned to provide a cure rather than a palliative.

Then give us the cure.

If the hon. gentleman to my left had listened earlier on, he would have heard it, but unfortunately it is not relevant here. I now turn to the question of gold. What I said to the hon. member for Yeoville was that as I understood it, he was proposing a gold bond which would be convertible into gold. One can do that in one of two ways. One can fix the price of gold and I think it was 167,75 dollars at the closing time yesterday. Let us fix it at that price. If inflation runs faster than the price of gold rises over a period of five years, someone is going to lose—in other words, it is no safeguard against inflation. Obviously, if it is not a fixed price, one must run the risk that the price of gold may drop, I hope temporarily. I have made it clear in the past that we think there will be fluctuations and we have said we are cautiously optimistic, although we do not have quite the same confidence as the hon. member for Yeoville in a constantly rising trend, but perhaps that is because I have a more direct interest in a certain sense. If you tell people they must put their money into bonds which are tied to gold and that you allow it to be convertible at the price of gold when it comes to redemption in five years’ time, I would have thought that people would have to take the risk that gold may be down as well as up in price. That is all we meant. I see the hon. member is nodding; so this apparent difference has disappeared.

I want to reply briefly. The hon. member for Johannesburg North made the statement that we should try to utilize all existing factors of production. He referred, too, to the question of the distribution of wealth, of income. I want to tell him at once that I find no fault with the view that all the people living in the country should be given the opportunity to earn income. I find no fault with the idea that he may accumulate wealth through earning his income. In this regard the hon. member and I do not differ in the slightest. However, the hon. member will concede, and I think that he is best qualified to do this, that if we are to achieve all these fine ideals for which he strives, ideals which we share with him, in accordance with an idealistic view, this can only occur within a stable community. These things can only take place when there is order. When we discuss these matters, we should not elevate one specific objective to the absolute. We must not use the objectives, instruments and methods we want to apply, in isolation, but as a package. The hon. member knows that if the labour pattern in this country were to change as he advocates, the basis on which the economic development rests, would disappear entirely because the stability that exists would disappear. I am quite prepared to have a long debate with the hon. member on this, but this is not the time to do so. I want to tell him that I agree with his view on inflation, that we should do everything in our power to eliminate the causes, rather than to try to deal with the symptoms. We should rather try to cause the effect of it to disappear.

The hon. member referred to the problems experienced by companies such as Leyland, among others. The circumstances to which he referred, are correct. They did not apply before. In the economic climate that exists elsewhere, this is something that is happening now. We shall investigate this matter in order to see whether we can provide assistance in this particular case.

I now come to the hon. member for Yeoville. I do not intend to reply to him in depth. I just want to tell him immediately that I do not begrudge him the opportunity of standing up and saying that they forget nobody. He said that they do not forget the old people, that they do not forget the children, that they do not forget the national servicemen and that they do not forget the sick. All that remains forgotten, is the United Party. They have been forgotten by the public at large. In the second place. I do not begrudge the hon. member the method he used to draw attention to the United Party. I want to tell him at once that if one could argue with the executive decisions from day to day from a point of view of non-responsibility and non-confrontation, one could very easily concede all the things he is pleading for. However I want to say this: Provision is made for saving in the case of the lower income groups, too, in terms of the legislation under consideration. It did not exist in their time, and I can understand why it did not exist. No one had anything to save. I also want to tell the hon. member that if he finds out what funds can be invested with the State, with building societies and also with financial institutions, on which no tax need be paid, he will find that people can earn thousands of rands per annum without paying a cent of tax on it. In all fairness, when did the subsidy system in regard to interest on mortgage bonds start? Was it in their time or in this Government’s time? Who are the people who saw to the housing conditions of the people in the lower income groups? Surely the hon. member knows that it is the Nationalist Government that has done all these things in the past 26 years. As far as the increase in pensions, old-age pensions, civil pensions and disability grants is concerned, it was this Government that took all the necessary measures to see to the interests of these people.

Under pressure from the United Party.

I have already furnished a reply in regard to the matter of the “inflation-proof bond” and its effect if it were to be linked to gold. Since the hon. member pleaded for this particular form of indexing, I want to tell him that someone has to pay for it and it is usually the lowly-paid person who has to pay for it. The rich man does not pay for it. When arguing in a debate such as this, we cannot adopt the attitude adopted by the hon. member and still expect responsible people to listen to us. It is clear that he has yet to tell me what all his proposals would mean with regard to the reduction in taxes. He said that liquidity had to be reduced as a fiscal or monetary measure to combat inflation. If we were to place all these millions he is asking for, in the taxpayer’s hands, when should we be able to do what he expects of us, namely to combat inflation?

Motion agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

I want to say at once that this piece of legislation is one of a series and that I do not propose to speak about this at any length.

As hon. members will note, this is not a long Bill and, I trust, not a contentious one either, so hon. members can discuss the Bill in a pleasant atmosphere across the floor and have it passed to the benefit of the members of the Indian Council. It has always been the policy that the South African Indian Council should develop in terms of the same guide-lines as the Coloured Persons’ Representative Council until the Indian Council has legislative and executive powers in matters affecting the Indian community in South Africa.

Hon. members are aware of the fact that the Indian Council does not yet have these powers. However, hon. members are also aware of the fact that some of the members are to be elected soon, and as soon as the council has subsequently been instituted, certain powers will be transferred to the new council. In this connection may I mention that in co-operation with the Indian Council itself I am considering what powers can be transferred to it. In all respects this council is accepted as the highest body established by the Government to look after the interests of the Indian community. It must therefore be accepted as obvious—and I believe that hon. members will agree with me that it is only right—that provision should be made, in the form of a pension, for the day when the members of this council, who like any other representatives of the people sacrifice a great deal of their time and energy to serve their community, will no longer have an income from their present jobs.

The provisions of this Bill concerning the percentage of contributions and period of service qualifying one to receive the maximum pension, are the same as the provisions applicable to hon. members and to persons in certain posts in this House. The content of this Bill also agrees in all respects with a similar Bill which will make provision for a pension scheme for the members of the Coloured Persons’ Representative Council. Although the first Indian Council was established as far back as 1964, it was initially merely an advisory body which was established in terms of an administrative measure to open up a channel of communication between the Government and the Indian community. No allowances were paid to the members of this first council either. Only their travel and accommodation costs were paid, and then only when they were attending meetings. It is only since 1968 that the council has become a statutory body, and only since that time have monthly allowances been paid to the members.

Those members who did such good work in the statutory council that their own people will return them to the council in the next election, or those who will be appointed as members by me, are being given the opportunity in this Bill, if they so desire, to count their service in the statutory council as pensionable service. What is to my mind important in this respect, and what hon. members must bear in mind, is that only six years are at stake and that the persons to whom this choice is being given are still serving in the same council and are not going from a lower to a higher body. At this stage it is very difficult to determine the number of members who will be able to claim this concession whereby they may count six years of their previous service as pensionable service. There will, in any case, not be many of them.

When a member exercises his choice to have his previous service counted as pensionable service, he will not have to pay the amount owing by him in one lump sum either. The amount owing can be deducted in instalments from his allowance.

The Bill also makes provision for the payment of a pension to a member’s widow, and if he does not yet qualify for a pension when he dies, for the repayment to her of the moneys which the member has already paid in, together with an amount equal to 5% of the amount paid in.

The children of a member’s widow are not forgotten either because the Bill provides for the payment of a pension to the children who qualify in terms of the provisions of the Bill.

I accept the fact that it is now clear to the hon. members of the House that the provisions to be made in this Bill are actually no different to those already available to every member of this House.

In conclusion, Mr. Speaker, I must pay tribute to those members of the council who are no longer with us, or to those who for one reason or another will not be serving in the new council, for the unselfish service they have given to their community and also to South Africa. I would be neglecting my duty if I did not do so. The responsible way in which these members carried out their task, solving many of the problems of the Indian community, attests to dedication and deserves the highest praise.

Mr. Speaker, the hon. the Minister has indicated to the House the history of the South African Indian Council and he has indicated that it is necessary to make provision for a pension scheme for those persons who have served on the Indian Council. We on this side of the House support this Bill in principle. We believe it is a good principle to ensure that those persons who are rendering public service are enabled to join a pension scheme and to make a contribution to such a scheme and thereby qualify for á pension when they no longer serve as member of that body. Sir, it is interesting to note that this scheme for the South African Indian Council is based on the same system as that applicable to this Parliament and also on the scheme passed by this Parliament recently for the Coloured Representative Council. Sir, I believe it is a good principle and a good scheme that the contributions are to be based on a certain percentage of the person’s pensionable salary. Pensions will be paid on the basis of one-fifteenth of their annual pensionable salary for each year’s service rendered to the council.

However, there are one or two comments in this regard which I think should be made at this stage. With the basis of calculating the contributions as well as the benefits paid, the salaries paid is of importance, because as far as this council is concerned we understand that the hon. the Minister has indicated on previous occasions that further administrative powers would be granted to it, and indeed, when he announced the improved salaries for members of this council, he did say that he would endeavour to see that the salaries would be adjusted so as eventually to have parity with the members of the Coloured Representative Council as they acquire further legislative and executive powers. This is an important aspect. It means that these people will then be in a position where they can make a greater contribution and also benefit from a larger pension as their task becomes a more full-time task than it is at present.

Then there are other aspects with regard to the provisions which I think require comment. One is that in terms of clause 3 of the Bill, the person has the option to count certain service as pensionable service by making a contribution on the basis of R27 a month for each month of such service to be counted as pensionable service. The hon. the Minister has indicated that there are members who are reappointed to this council. We know that an announcement has been made that 50% of this council will now be elected and the other 50% of the members nominated, so that some of those persons who have rendered service in the past will be re-nominated for service on this council. I ask that the hon. the Minister gives us some clarity in regard to the basis of the contributions at the rate of R27 a month for the pensionable service to be counted for purposes of this scheme, whereas in fact if one looks at the salaries to be paid to the members of this council and take into account the 8% contribution on an annual salary of R2 250 paid to members of this council, it means that his contributions are R180 per annum, or R15 per month, as these will be deducted on a monthly basis. I would like to know from the hon. the Minister the basis of calculating and assessing the past pensionable service of these people in respect of which they will be required to pay an amount of R27 a month.

The other aspect is in regard to the definition of a widow in terms of clause 1. If one looks at the definition of a widow, it merely states that a widow shall not include the widow of a person whom she married after he ceased to be a member. This definition is similar to the one provided for in the parliamentary scheme of this House, and also the scheme for the Coloured Representative Council. It does seem that this requires reconsideration perhaps at some future date to ensure that if those persons marry after they cease to be members of this council, their widows will also be entitled to receive some form of benefit. As far as I can ascertain, this seems to be a unique provision in any pension scheme, whereby a widow does not qualify for widow’s benefits subject to certain conditions. Dealing with the question of widows, I think the position of Indians is slightly different, as it is certainly different for our Parliament and for the Coloured Persons’ Representative Council. There are Indians, of course, who do not practise the Christian faith and it has been brought to my notice that there was a past member of the Indian Council who had three wives. I think this would require some consideration if one is to ascertain who the legitimate widow is who is to receive benefits under such circumstances.

How about going halves?

Thirds.

If one looks at a recent market research organization survey of the Indian community in South Africa, under the heading “Religion” one sees that 68% of the Indian community practise the Hindu religion, 21% practise the Muslim religion while only 7% are Christians. The difficulty I have mentioned could therefore arise, and I am merely asking the hon. the Minister to bear this in mind because obviously this Bill has the approval of the Indian Council.

I now come to the position in respect of clause 7, which furnishes a formula. Special pensions are paid on the basis of this formula. As the clause now stands, provision is only being made for the chairman of the executive committee of the council, for members of the executive committee and for the chairman of the council. This point might also require further consideration by virtue of the fact that 50% of this council is to be elected and consequently you could have a situation where additional officers will be appointed to that council, because on a political basis the Leader of the Opposition or a Whip or other officers who will be appointed in that Council should also receive consideration. As the clause now stands, the only persons who will qualify for this special pension will be the chairman of the executive committee, members of the executive committee and the chairman of the council—in other words, the existing office-bearers in that council.

Another aspect on which I should like the hon. the Minister to give us clarification is the date of commencement of the pension scheme for the members of the council. In terms of clause 19, the date is 6 November 1974. Why does the date not coincide with that for the Coloured Persons’ Representative Council, i.e. 1 November 1974? It seems to me there must be some specific reason why a scheme should commence on 6 November.

We on this side of the House certainly support this Bill in principle; we believe it is necessary; we believe it is of benefit to the members of the South African Indian Council and also that it is of benefit to the Indian community in that it ensures that those persons who are prepared to come forward and offer their services to serve the community are rewarded when the time comes for them to depart from the council.

Mr. Speaker, we shall also support this Bill. We think it is long overdue and we are very glad indeed that the hon. the Minister has introduced it today. I have only one comment to make on this Bill and that, of course, arises out of the astonishing discovery which I made a couple of days ago, when we were discussing the pensions Bills that were introduced in this House, to the effect that there is discrimination on account of sex in these pensions Bills. In other words, “widow” does not include “widower”. A widower of a member of this House, therefore, or a widower of a member of the Coloured Persons’ Representative Council or of the Indian Council, as the Bill now stands, is not entitled to a pension as is the widow of a member of either this House, of the Coloured Persons’ Representative Council or of the Indian Council. For the life of me I cannot understand how this principle crept in, presumably unnoticed by any of us, certainly by me, and presumably unnoticed by other women members of the bodies I am talking about. At the moment I do not know whether there is a woman member of the council; I doubt it. There is a very decided possibility, however, that with the educational facilities opening up as fast as they are for Indian women and girls, Indian women who are now much more emancipated than they were, say, a generation ago, are going to find themselves standing for and in fact being elected to the Indian Council. This is an argument which I raised right at the end of our discussion of the Members of the Coloured Representative Council Pensions Bill the other day, when I discovered to my astonishment that “widow” did not include “widower”. It applies here too. I cannot understand it. Women members of this House, if I may say it with all due modesty as is my wont, do as much work and in many respect more work than their male colleagues. They certainly enjoy all the same activities, the same allowances, the same perks and the same salaries. They are even permitted to use the parliamentary pub, which of course is the greatest concession of all! Yet, we find that when it comes to a question of pensions we are discriminated against or rather, we find that men are being discriminated against because, after all, we women shall be dead by the time these widowers who I feel are entitled to those pensions, will be claiming them. This is not a women’s lib argument, but quite the contrary. I am taking up the cudgels for the poor males who are going to be left not only bereft because their wives have died, but they are also not going to enjoy a pension. I must say that this is the most astonishing set of circumstances. And it amazes me that this has never been discovered before. Hon. members who were in the House the other day when we discussed the Members of the Coloured Persons’ Council Pensions Bill will remember that I raised this with the hon. the Deputy Minister. The hon. the Deputy Minister was under the impression that the word “widow” included the widower. I said to him that since I had been informed otherwise, he was incorrect. In the Third Reading I said that should he discover that he was wrong, he should do something about it in the Other Place. Now I find that he has not done anything about it in the Other Place, because, as he told me, it is a principle which is accepted by the Government. I want to record my strongest possible exception and my strongest possible opposition to this. There can …

Are you fighting with me?

No, I am not fighting with you on this particular occasion, but if you want to join in the fight, you are quite welcome. I am not even fighting with the hon. the Minister in charge of the Bill at the moment because it is not really his responsibility. It is a Cabinet responsibility; it is the Government’s responsibility. I am absolutely astonished that in this day and age any Government has the nerve to make such a distinction.

I want to point out, although I do not know whether it can be repeated here—I do it in a good spirit, Sir—that where pensions are concerned the means test does not apply. That is the point I am trying to make. In other words, the rationale behind this decision might have been: “Oh, well, one has to look after widows, because after all they do not have an earning capacity which the husbands of women members who die would have or might have.” Equally they might not have, because they might be invalids or they might be old. If that is the rationale behind it, it is completely faulty because there is no means test in pensions cases. The hon. members opposite, and I shall not mention names, might be married to millionairesses, but when they die their widows will get their pension irrespective of what they have, so that financial positions have nothing whatever to do with it. I should like the hon. the Minister, who I think is a fair-minded gentleman to bear this in mind and since I have made no headway with his colleague, who obviously was under the wrong impression, I trust the hon. the Minister will raise this matter at Cabinet level, because I think this is an absolutely incorrect principle. I hope to be able to move an amendment in the Committee Stage which I hope the hon. the Minister will consider. We support, however, the principle of this Bill.

I want to thank hon. members for accepting this legislation in principle. Certain aspects have been raised which, in my opinion, can best be dealt with in the Committee Stage. As far as the hon. member for Umbilo’s point is concerned, I want to say that clause 2 stipulates the pension contributions which members of the Indian Council have to make. If the hon. member makes his calculations again he will find that the contribution represents about 8%. I think the hon. member’s mistake was that he subtracted the non-taxable portion of their salary of R4 075 and fixed their salary at R2 700.

R2 250.

In actual fact, the whole compensation received is pensionable, and that is perhaps why the matter is confusing to the hon. member. Secondly, I want to tell the hon. member that in a statement I issued in respect of the future salaries and allowances of the Indian Council, I have already pointed out that it has basically been accepted by the Government that the salaries, allowances and compensation of the Indian Council should be levelled up with those of the Coloured Persons’ Representative Council. I have also pointed out that at this stage, since the Indian Council does not yet have administrative and other powers, it is not yet possible to place them on that level as far as salaries and allowances are concerned. But when they reach that stage of development, their position will be exactly the same as that of members of the CRC. Hon. members will then find their circumstances to be exactly the same as far as pensions are concerned. The hon. member also pointed out that this legislation does not make provision for all the posts, merely making provision for members of the executive committee and for the chairman. My problem in this particular connection is that the Act, in terms of which the council was created, does not make provision for these posts. As he quite rightly said, when the position changes we shall also, in respect of the transfer of powers, have to look at the Act which created the council to see whether amendments should not be introduced. I shall pay attention to the aspects which the hon. member mentioned in this connection. I hope I have now cleared up the position as far as the hon. member is concerned. The hon. hon. member also asked me why the date of commencement of this legislation is 6 November and not the same as that for the CRC. The reason for this is very simple, i.e. that the Indian Council was dissolved on 30 August, and therefore at present there is no council. The members who previously served on the council, and who may now be elected or nominated by me, will however qualify to buy back their service. I hope the position is now clear to the hon. member.

†I would just like to say to the hon. member for Houghton that the hon. the Deputy Minister of Social Welfare and Pensions asked me to apologize to her for the fact that he indicated that the word “widow” in a previous Bill also included widower.

He has done so to me.

I am not going to debate this point for very long. Apart from the problem the hon. member has in this connection, as far as the Indian population is concerned I also have other problems in connection with widows because one does not always have only one widow involved. I do not know if the converse is also true and if more than one widower can be left behind. However, I want to be brief in this connection. Men serving in this House, in the Coloured Council and in the Indian Council, frequently owe their positions to the contributions which their wives, who later become their widows …

It works the other way round too.

I am coming to that. It is tremendously important for a person who is a public figure to have a wife to help him in his public duties. I do not mean this in a bad sense, I am merely explaining the motivation. The second principle is that the man is normally expected to make provision for his widow because he is naturally the bread-winner in the family. That is why his widow receives the pension. That is also why there is a provision in the legislation on parliamentary pensions to the effect that the widow who qualifies shall be the woman to whom he was married when he became entitled to pension benefits. That is why the provision in this Bill is a consequential provision in relation to the other pieces of legislation already passed by the House.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, I do not wish to repeat the arguments which I have just used. I simply want to move an amendment which will bring the widower into line with the widow as far as the right to pension is concerned. Therefore I wish to move as an amendment—

Order! I wish to draw the hon. member’s attention to the fact that I am unable to accept the amendment as it requires the State President’s recommendation. It involves expenditure.

Sir, I could move an instruction to the House, could I not? I could do so tomorrow?

No.

I see. Thank you.

Clause agreed to.

House Resumed:

Bill reported without amendment.

Bill read a Third Time.

Mr. Speaker, I move—

The recent average increase of 15% in the salaries of judges has resulted in the pensions of judges retiring after 1 July 1974 being increased accordingly. The pensions of the 19 judges who have already retired, however, are not affected. According to the existing legislation the salary adjustments of judges have no influence on the pensions of judges’ widows either.

As the hon. member for Koedoespoort recently mentioned in this House in his maiden speech, in the administration of justice our judges have set a standard that is comparable with the best anywhere in the world. They achieve this, too, with the help of their wives who must sacrifice a great deal themselves. We cannot allow those who have in the past made so great a contribution to the administration of justice to be forgotten. I feel it is our duty to ensure that they are able to make a living worthy of their position as retired judges and the widows of judges of the Republic of South Africa.

In clause 1 of the Bill now before the House provision is consequently being made, in the first place, for a minimum pension of R600 per month for judges retiring after 1 July 1974. This appears to be a reasonable minimum. In clause 2 the pensions of persons entitled to pensions after 1 July 1974 as judges’ widows are being increased by nearly 15%. The increase relates to the 15% increase automatically accruing to judges. Here, however, provision is being made for a minimum which will amount to 50% of the minimum for judges themselves, i.e. R300 per month.

Clause 3 makes provision for judges who have already retired. In this case, too, provision is being made for an increase of 15%, with a minimum pension of R600 per month.

In clause 4 provision is being made for two groups of widows. For the group referred to in subsection (1), a pension of R300 per month is being laid down, an amount related to the minimum which I have already referred to. Twenty-three widows will benefit from this in the sense that the increase will be more than 15%. Hence the fixed amount. At present there are four widows in the group to which subsection (2) relates, widows already receiving more than the proposed minimum. In their case the pensions are also being increased by 15%.

In clause 5 provision is also being made for the legislation to commence on 1 July 1974, the date applicable to the increase in salaries of judges.

Mr. Speaker, we obviously approve of this Bill and give it our blessing at Second Reading. However, there are several matters which I should like to raise with the hon. the Minister. One, I may say, arises from the speech made by the hon. member for Houghton during the discussion on the last Bill. When she finished speaking, I sent for the Act and it seems to me that what she said about that Bill applies equally to judges. As I read the Act, the widow of a judge gets a pension, but we now have gracing our Bench the hon. Leo van den Heever, a lady who is married. No doubt the occasion will arise where other ladies are appointed to the Bench and it seems to me as if their widowers are excluded from the operations of the Act, because the definition of “judge” in section 5 says “judge means any male person holding the office of …” and then there are set out the various judicial officers. I know there is nothing we can do about it here during this debate or during the passage of this Bill, but I hope the hon. the Minister will give his attention to this matter. If my reading of the Act is correct, this is an omission which, obviously, should be put right.

As far as this Bill is concerned, the provision of a minimum pension for judges’ widows as well as a minimum pension to judges when they retire is to be welcomed. As far as judges’ widows are concerned, it is a pity that there are a number of judges’ widows who do not fall within the purview of the provisions of this Bill. There are a number of widows whose husbands died before they came under the provisions of this Act. Therefore, the provisions of the Act do not apply to them, nor does the provision that such widow should get a minimum of R300. However, it applies to any widow, although she did not fall within the provisions of this Act, who has been granted a pension in terms of a Pensions (Supplementary) Act by Parliament. The position seems to be unfair and anomalous. There are very few such persons. I do not propose naming any of them, but the hon. the Minister is, I think, aware who they are. It seems unfair that they are not able to have the benefits which are being bestowed upon all the other widows simply for the reason that their husbands died before this scheme came into operation. I want to say that a number of these persons do not want to apply to the Select Committee on Pensions for a pension because very often they feel that it is degrading in that they then have to put their circumstances before such a Committee, especially having regard to the office which their husbands held and the status which they themselves hold. I think the position is anomalous and I feel something should be done about it and could be done about it. The anomaly is even worse when one considers that if a widow applies to the Select Committee on Pensions for a pension and is granted a pension of R5 per month, as I read the Bill, she would be entitled, when the Bill became law, to a pension of a minimum of R300 per month whereas the person who has not applied will get absolutely nothing at all. As there are so few of these people, I hope that the hon. the Minister will find some way of giving his attention to this position. I appreciate that there is a difficulty in that he cannot amend the Act to deal with this matter. Nevertheless, there must be other ways in which to deal with it, perhaps even by introducing a new Bill entirely to deal with this situation.

Finally, I wonder whether the hon. the Minister would indicate whether or not he is prepared to consider the possibility of judges in fact increasing their pension contributions so that they can, if necessary, provide a better pension for their widows. This is obviously a matter he will have to discuss with the hon. the Minister of Finance but it seems to me that if such a desire exists among the judges, there should be no reason in principle, provided the finances can be arranged, why this should not be done. Having made those few remarks, let me say that we support the Second Reading of this Bill.

Mr. Speaker, I rise on this occasion to express a word of thanks to the hon. the Minister and the Government, on behalf of this side of the House, for this Bill now before us. On the occasion of my maiden speech on 21 August of this year I broached this matter, and I am particularly grateful, two months later, to see a Bill before me that is putting this matter right.

As I have pointed out, there are various categories of widows of judges receiving various minimum and maximum pensions in terms of the various pieces of legislation enacted since 1956. Some of them received as little as R70 per month. Now, however, they are all being treated alike and the minimum pension will be R300. We are very grateful for this.

In connection with what the hon. member for Durban North said, I just want to say that I do not think there are more than one or two widows who fall outside the ambit of this legislation. I want to support the attitude of the hon. member for Durban North, and although the hon. the Minister cannot embody this aspect in this Bill, I want to express the hope that in time he will consider introducing legislation that also covers those widows not covered by this legislation.

In connection with what the hon. member for Durban North said about the increased contributions of judges as far as widows’ pensions are concerned, permit me to point out that I personally would welcome such an arrangement if it could be made. There is something else in my maiden speech which I should like to repeat here this afternoon. I think the ideal would be for a widow of a judge to be entitled to at least three quarters of the pension her husband would have been entitled to had he not died, with a minimum, as now provided for in this Bill. I think that would be the ideal situation, and I hope the hon. the Minister will also look at this matter in due course.

A second aspect which I also raised in my maiden speech and which I should like to repeat here is that a judge today qualifies for his maximum pension after 20 years service on the Bench. I think it is reasonable to ask the hon. the Minister to investigate this matter as well and to see whether this period of 20 years cannot be decreased to say 15 years. In my view there are very few judges who really serve 20 years, having to retire as they must at a specific age. I feel that very few of them can really serve as judges for 20 years.

Having singled out these two cases which I hope will receive attention in due course, I want to thank the hon. the Minister for the quick and energetic steps he took to have this matter put right even before the end of the session.

Mr. Chairman, I want to say that we on these benches welcome this Bill. We are very glad indeed that there is to be an increase in the pensions to be paid to judges and to the widows of judges. I would like to support the request of the hon. member for Durban North to the hon. the Minister to find some way of including those few widows who fall outside the ambit of the Bill. Sir, I do not think that the hon. the Minister has been over-generous in these increases. I think, if anything, they should have been higher. My feeling is shared by Mr. Justice Ludorf who, in a statement which he made the other day, commented on the fact that while the salaries of Parliamentarians have gone up very considerably, the salaries of judges, although they have been increased, have not been increased by nearly the same proportion, and he expressed considerable dissatisfaction over this … [Interjection.] It must have been very low to start with if it has been increased by 600%. Sir, I am always a bit nervous of percentages. One has to look at the absolute figure on which the percentage is based; after all, my party has also increased here by 700%!

And look what that cost you!

Well, it has given hon. members here some very good listening hours. Sir, I am interested to see that a whole new range has been opened up by the discussion which we had a little earlier this afternoon on widows. The point that I made there about members of the Indian Council and members of the Coloured Persons’ Representative Council now extends also to judges. As the hon. member for Durban North has rightly said, there is at the moment only one lady judge, but there is certainly a very big possibility, with so many women entering the legal profession, that in time to come there will be many more. Sir, if I may transpose the argument which was used by the Minister in charge of the previous Bill when he argued against the granting of pensions to the widowers of members of these two councils and of Parliament I would like to say that I think he is quite wrong in assuming that it is only the wife who contributes to the husband’s career and not the husband who contributes to the wife’s career. Apparently that is the rationale behind the granting of a pension to the widow of a member of Parliament, but not to a widower of a member of Parliament or of the Indian Council or of the Coloured Persons’ Representative Council. I can assure hon. members that if it were not for the encouragement that women in public life get from their husbands, it would be impossible for them to continue. So the argument which was advanced by the other Minister when we dealt with the other Bill and which would presumably apply here as well, simply falls away. But I have every hope, Sir, that this Minister will take a different point of view. I hope in fact that he will not only press the case for the widowers of women judges, but that in his capacity as a Cabinet Minister he will also press the case for the widowers of other women in public life in other spheres.

Mr. Chairman, I just want to raise briefly with the hon. the Minister the question which was touched on by the hon. member for Durban North, and that is the case of widows who are excluded from the provisions of this Bill. Obviously it would be out of order for me to move an amendment in the Committee Stage to suggest the inclusion of further persons because it would involve increased expenditure. But I want to point out to the hon. the Minister that this Bill provides in clause 4 that this increase will go to those persons who are receiving any grant under the provisions of any Pensions (Supplementary) Act. Sir, the hon. the Minister will know that the Select Committee on Pensions, in dealing with the applications of widows, can only make a recommendation on compassionate grounds, and those compassionate grounds are almost invariably that the person concerned is almost destitute. Petitions have been submitted, on behalf of judges’ widows, whose income is below R300 per month but who have an income which is sufficient for them to survive; then there are others who are able to supplement their income by various undertakings, and those applications have been turned down by the Pensions Select Committee, quite correctly, because before making a recommendation for an ex gratia payment, the person concerned must be practically destitute. I do not think it would be right to use that procedure to adjust matters in the future. There are two ways in which the hon. the Minister could do it. With respect to him, I think there could be an amendment which he could move early next session to clause 13 of the Act so as to provide a further subsection to include the widow of a judge who died prior to the fixed date which is referred to in section 13 of the Act. I shall be glad if the Minister would do that. The alternative, of course, is to use the Pensions Select Committee of this House and for a Cabinet memorandum to be submitted to it, as has been done in the case of widows of leading citizens. The Pensions Select Committee could then confirm or adopt the memorandum from the Cabinet. I hope that the Minister will feel that this is an omission from this Bill. Fortunately we are in the position where we will have a new session shortly, and the hon. the Minister will be able to deal with it at that stage to cover the position of these four or five persons.

I thank hon. members for their support of this Bill, and I also thank the hon. member for Koedoespoort for his friendly word of thanks to me and to the Government. I think the point was well made by the hon. member for Durban North in connection with what the hon. member for Houghton said. I shall give attention to that. I personally am in favour of no distinction being drawn between men and women in this connection. I shall look at the matter to see whether a change can be made. I just want to explain to the House why the one or two cases, which did not come to my attention, were omitted. This happened as a result of an oversight. I was under the impression that these 23 people, whom I mentioned in my Second Reading speech, were the only people receiving less than R300 per month. Of course, I wanted to grant them relief as quickly as possible. I understand that one of the ladies received only R55 per month or some such amount. I decided upon the amount of R300 because it is half of R600 and because R300, even though not a very large amount, is perhaps enough in the case of a single woman. It is not a great deal of money, but in any case it is much better than what they previously had. I understand there are one or two ladies who are still excluded. I shall give attention to their case during the recess.

The other point raised here was whether judges should not be entitled to the maximum pension after 15 years. That is also a point to which I shall give attention later. Now I just want to say thank you for the support. I think that all the arguments are such that I can give them my consideration, and this will be done in the course of time.

Motion agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, I move—

As a result of the international oil crisis which arose during October last year, the Government found it necessary to restrict the consumption of petroleum products in the Republic. These restrictions were imposed in terms of regulations relating to the disposal or use of petroleum products, which were made in terms of the National Supplies Procurement Act, No. 89 of 1970. Initially, however, certain problems were experienced in enforcing the regulations, because the Act did not give the Minister of Economic Affairs sufficient powers in terms of which he could appoint inspectors to assist him in exercising his powers or performing his functions in terms of the Act. Consequently it has become necessary for the Act to be amended in order to eliminate its present shortcomings. These amendments have been embodied in the Bill which is now being submitted to this House for consideration and approval.

I now want to explain briefly the new principles which have been embodied in the Bill:

1. (a) Some definitions contained in the existing Act are being amended, but these amendments are merely consequential upon other amendments proposed in the Act, and therefore require no explanation.
2. (b) Section 10 of the Act, which is being amended by clause 2 of the Bill, relates to the Minister’s power to constitute certain bodies and to appoint controllers, officials and inspectors for the purposes of the Act. The provisions of this section have presented problems, particularly in the enforcement of the measures aimed at fuel conservation. In particular, it has become necessary to introduce the following amendments to section 10 of the Act.

†Firstly, it is proposed that section 10(1)(b)(ii) be inserted in the Act so as to empower the Minister to appoint or authorize any person or class of persons to act as controllers or inspectors. Under the existing provisions of the section, such controllers or inspectors can be appointed only from persons who are on the fixed establishment of the public service, and it is felt that this restriction should be removed.

Secondly, it is proposed that section 10(2)(b) be inserted in the Act to provide that inspectors appointed in terms of the Act be empowered to investigate any contravention of the provisions of the Act or any notice published thereunder, or any attempt or conspiracy, or incitement of any person, to commit such a contravention whenever there are reasonable grounds for suspecting that such offences have been committed. Although the S.A. Police are charged with the enforcement of our laws, they already have their hands full with routine investigations, and it is therefore considered necessary that inspectors appointed under the Act should be empowered to undertake investigations of any offences under the Act.

Thirdly, it is proposed that section 10(3)(a) be inserted in the Act so as to empower the Minister to determine the powers, duties and functions of controllers, officials and inspectors appointed or bodies constituted for the purposes of the Act, and by notice in the Gazette to confer upon inspectors such further powers as it may be deemed necessary for them to exercise in the performance of their duties. The existing provisions of the Act authorize inspectors only to examine books and records and to enter any premises for purposes of the Act and to take samples. In terms of the proposed new provision the Minister could, if he deemed it necessary, confer upon inspectors the power to carry out a search, to seize, retain or dispose of goods or things and to arrest and detain any person with or without a warrant. However, it still remains the Minister’s prerogative to decide whether, and if so to what extent, these powers shall be conferred upon any particular inspector or class of inspectors appointed in terms of the Act.

Fourthly, it is suggested that section 10(3)(b) be inserted in the Act so as to authorize the Minister to determine different powers, duties and functions in respect of different controllers, officials or inspectors appointed, or bodies constituted for the purposes of the Act, and also to confer upon different inspectors powers additional to those determined by him in accordance with the aforementioned procedures.

Fifthly, section 10(4) is inserted in the Act to make it clear that any controller, official and inspector appointed or body constituted under the Act and engaged in any activity under the Act, shall be subject to the directions and the control of the Minister.

Finally, it is suggested that section 10(5) be inserted in the Act to provide that a document in the form determined by the Minister in which it is certified that any person has been appointed or authorized to act as an inspector under the Act and which purports to have been signed by a person designated by the Minister, shall be prima facie proof of such appointment or authorization.

*(c) A new section 15A is being inserted in the Act by clause 3 of the Bill, so as to empower the Minister to grant exemptions from the provisions of the Act. Doubt exists at the moment in regard to the enforcement of the Act on officials who, in the performance of their duties, contravene the regulations in respect of the disposal or the use of fuel.

For this reason it is deemed desirable for the Minister to be empowered to grant exemption from the regulations to the officials concerned in appropriate cases.

The new section 17A, which is being inserted in the Act by clause 4 of the Bill, provides that the Minister of Economic Affairs, in consultation with the Minister of Finance, may direct that any fine imposed or estreated bail in connection with an offence committed under the Act shall be paid to a person, local authority, divisional council, administration or government designated by him, and in accordance with the conditions which may be imposed by the Minister. At the moment, traffic fines are a source of income to local and provincial authorities. If fines were to be imposed in consequence of an offence committed in driving a motor vehicle at a higher speed than the one prescribed, and these fines were to be paid into the Consolidated Revenue Fund, as is at present required by law, local and provincial authorities would have to forego a considerable part of their income. The Minister of Finance has already approved the paying of the relevant fines to local and provincial authorities. In addition, the proposed provision will legalize the position in respect of moneys which have already been paid to the local and provincial authorities or which will be paid in future.

Clause 5 of the Bill only contains the short title of the legislation and provisions regarding its coming into operation.

Mr. Speaker, when the hon. the Minister of Economic Affairs addressed this House during the Third Reading of the Appropriation Bill, he was at pains to draw the attention of the House to the fact that certain emergency measures had arisen in connection with the necessity to recognize the energy crisis and the international oil crisis. He expressed the hope that not only this House, but also the public would cooperate with him in giving effect to the measures which he had deemed necessary. He expressed too his regret that he believed he had been misinterpreted in some of the undertakings he had given and he indicated that if the public had been led to believe that he would be seeking power to seize the vehicles of people who had been found guilty of driving at excessive speeds in terms of the present regulations, this was not his intention and that had it been his intention he would have been able to introduce such clauses in the Bill which he would be introducing shortly, namely the Bill we are now considering.

I think that we should view the Bill that we are now considering against the background of the parent Act, Act 89 of 1970, because that Act gave the Minister extremely wide powers. It will be recalled by members on both sides of the House that at the time the Act was first drafted in 1968 it met with considerable opposition from commerce and industry. When it came before the House in 1970, industry had been able to negotiate with the Minister and get him to accept certain comforting clauses to them. As a result, when the Bill came before this House in 1970, it virtually came as an agreed measure between industry and the House. There were certain precautions taken to satisfy industry and these applied particularly to the two main sections of the parent Act, namely sections 2 and 3, wherein the Minister gave the undertaking that he would not abuse the wide powers given to him to act in the case of an emergency and that he would only call upon the powers of the Act in the event of the security of the State in his opinion being threatened.

These provisions applied in respect of sections 2 and 3 of the principal Act, but they were not carried forward to the further sections. Now the Minister is faced with the fact that he apparently does not have enough teeth in the regulations promulgated in terms of the present Act in order to ensure that there will be adequate and secure control over possible abuse of petroleum products in their various forms. The Minister was given extremely wide powers in terms of the parent Act, but he was then dealing basically with industry. He was concerned with strategic supplies and had the power to bring about either their manufacture and their purchase or procurement or to compel industry to co-operate with him in making such supplies available. Under the Bill we are considering now, the Minister is obtaining wider powers, which are going to apply not only to industry, but also to individuals.

I want to say immediately that we on this side of the House go along with the aims that the Minister has set out in his Second Reading speech. We recognize that under the present state of the world, there is an international oil crisis. We recognize that not only this Government, but other governments as well, are being held to ransom by the oil-producing states. We realize that, if we were to squander the oil resources which we have available in the present strategic storage, we could be faced with drastic conditions in any time of national emergency. I therefore repeat that we go along with the aims of the hon. the Minister, but at that we stop. We do not go along with the methods which the hon. the Minister is assuming in order to assert his authority. I believe that we have to have regard to the fact that in this country we have been criticized internationally for inroads into the freedoms of the individual. I believe that, springing from the precept that an individual in our society should be presumed innocent until such time as he is proved guilty, the entrenched rights of the individual to physical integrity, the right of privacy, should be protected by the State. If we provide laws which conflict with the basic human rights we are negating the principles of democracy.

It is this fear that many people in our country have at the moment, namely that due to the erosion through legislation of basic human rights we are gradually slipping from the democratic way of live into an authoritarian dictatorship. This is what we as an Opposition are here to guard against. I want to indicate to the hon. the Minister that during the Committee Stage we shall move certain amendments which we believe could improve the Bill. We sincerely believe that under present-day conditions the hon. the Minister could have appealed for the co-operation of the people as a whole without having introduced Draconian measures which impose on their individual liberties. We shall introduce amendments to clauses 2 and 3 during the Committee Stage.

I want to make reference to the clauses to which we take particular exception and which we ask the hon. the Minister to reconsider. We believe the hon. the Minister needs the powers to appoint inspectors, controllers or bodies to ensure that such stipulations as he makes in the regulations are observed in full by the public, by commerce and by industry. But when the hon. the Minister is forced to appoint inspectors outside the ranks of the Public Service and the Police, we believe he should take special precautions since under these circumstances he is widening his appointments to persons who may not normally be skilled in dealing with administrative or legal responsibilities. Such people could well abuse their responsibilities. We wish to express our extreme perturbance over the fact that in terms of clause 2 of the Bill the hon. the Minister seeks to allow certain inspectors to carry out inspections and searches, without a warrant, of any person, premises or other place, any vehicle, vessel or aircraft or any receptacle of whatever nature. These inspectors will be given the authority of seizure, retention and disposal, without warrant, of any goods or things. The hon. the Minister indicated that vehicles would not be seized. Under these conditions it may well be that vehicles in terms of the Bill could be seized. Furthermore, these inspectors, who are not necessarily trained members of the Public Service or of the Police who are skilled in carrying out their authority, are also given the power of arrest and detention, without warrant, of any person. We believe that these are Draconian measures and we appeal to the hon. the Minister to consider our amendments in the Committee Stage and to consider whether in this case he cannot meet our requests.

The Minister does make provision in the proposed section 10 (5) of the proposed new section 10 for an inspector to be given a document which will be accepted prima facie as an indication of his authority. We intend to ask the hon. the Minister, even if he does not meet us on our first amendment, to meet us on the amendment in which we shall seek to add that these inspectors, having been given this document, shall then present the document when entering premises for the purposes of an inspection. I put it to you, Mr. Speaker, that we are going to be dealing here with the householder, the owner of a motor vehicle or lawn-mower, who may transgress by storing excessive petrol in his garage or the farmer who, in turn, may be storing excessive petrol. Merely on an assumption that there is good and sufficient cause to carry out this inspection, an individual who is not identifiable as a member of the Public Service or of the Police, may come along and demand to examine or search the individual’s home. It may well be that the home-owner is away and that only the housewife or the daughter is at home. Do you not see, Sir, the dangers to which we are subjecting our housewives and daughters if people who are not compelled to produce a warrant or a document indicating their authority to carry out such a search, can now enter our homes and make searches which may result, firstly, in the seizure of goods and, secondly, the arrest of the individual without a warrant? I know that members on the other side of the House traditionally and historically place a very high value on the privacy of the home. The home may be the Englishman’s castle, but it is equally the castle of the South African. I believe that we must bend over backwards to ensure that no person has the right to enter our homes for the purpose of arrest, of seizure or of search unless he is clearly identifiable and has the necessary warrant.

The Bill goes further and in clause 3 it quite correctly, we believe, assigns to the Minister the right to make certain exceptions and exemptions. We can well understand that in the situation that can arise the Minister will have to make certain exemptions. The Minister has given himself the right to do so. We agree that this is correct and we go along with it. However, in subsection (b) of the proposed section 15A the Minister empowers himself to withdraw such an exemption without assigning any reason therefor and without the person or persons concerned having any right to be heard in respect thereof. Here, again, we regard this as a Draconian and undemocratic measure. We know that this Minister is a fair-minded Minister but as he is asking for extremely wide powers we believe that with his background and academic training provisions of this nature should be an anathema to him. After all, he has been the principal of a great university. He has had to deal with youth and the public at all levels and I believe that he, more than any other Minister, should take cognizance of the fact that South Africans are proud of and place great store in the individual’s privacies and his right to be heard when he feels aggrieved.

In conclusion I repeat that we go along with the aims which the hon. the Minister has expressed in his Second Reading speech. We believe he should have powers in order to protect this extremely precious and scarce resource upon which the wheels of industry, commerce and private life turn today. We give him all our support and we hope that the public will give him all the support. However, we do not agree with the methods which he is introducing for the implementation of this Bill.

Mr. Speaker, it is surprising that there is no hon. member of the Government side wishing to take part in this debate. I think they regard this piece of legislation as such a shocking piece of legislation that they are not prepared to defend it.

They feel the same way as we do; they do not like it.

We do not want to sit here till Monday.

I made a study of the Act which is now being amended by this Bill and I find that the magic words are contained in section 2 of the Act, a section which is not being amended, but which contains the words “security of the Republic”. I believe that the hon. the Minister considers that these words are so magic that he does not need to explain to us why he needs these tremendous powers in order to safeguard strategic materials. I do not think that we should allow anyone to run away with the idea that because this Bill deals with strategic materials it does not need to be properly motivated, that proper reasons need not be submitted as to why it should be enacted. I listened very attentively to the hon. the Minister’s introductory speech and I closely followed the Bill while he spoke. I noticed that the hon. the Minister kept very closely to the actual wording of the Bill. However, he gave us no reasons at all as to why it was necessary to introduce this measure. I believe that the hon. the Minister should take us into his confidence. This House should at least be taken into the Minister’s confidence as to the reasons why these tremendous powers should be given to various people. Although the Minister has referred only to oil as a strategic material, the Act which we are now amending, does not deal with oil only. It deals with all strategic materials. If we pass this Bill, we are going to give the hon. the Minister powers to do to all other strategic materials what he now proposes to do in regard to oil. This widens the scope of the debate considerably. I think the hon. the Minister should be very clear on this when he replies to this debate. He should tell us just what the scope of these amendments are going to be when applied to all strategic materials contemplated in the Act. What is extraordinary about this, is that the Minister is now going to get the right to appoint officials and inspectors not only in the Republic but also outside the Republic.

Outside the Public Service.

Outside the Republic and the Public Service. He wants to appoint these officials who will not be subject to the laws governing the Public Service. He has not given us any reason for that at all, except for saying that he does not want to be restricted by the rules and conditions of the Public Service. But surely we are entitled to some reasons why he does not want to be restricted by the rules and regulations of the Public Service? Is this so secret that the Minister has to have his own secret service to look after strategic materials? What are we really doing in passing this Bill? It seems to me there should be good and sufficient reasons if the officials and inspectors or the bodies he is going to appoint are not going to be subject to the laws governing the Public Service. The Minister merely mentioned in his introductory remarks that he could use the Police for doing this work, but that the Police were too busy with routine matters to tackle this. We think he should elaborate on what routine matters he has in mind. Does he refer to the ordinary job the Police do in the country or to all those unnecessary jobs the Police have to do because of some of the most shocking legislation that has been passed in this country, namely that in regard to group areas, mixed marriages, immorality, etc.? Is that what the Police are so busy with that they cannot do this job in regard to strategic material? I think we are entitled to some good and sufficient reasons. It is quite obvious that the Police are the people to tackle this job, and one cannot understand why the hon. the Minister now wants to take a leaf out of the book of the hon. the Minister of the Interior by appointing super-snoopers just as the hon. the Minister of the Interior appointed super-snoopers under the Publications Bill. I can understand that the Minister may want powers to search persons, premises, vehicles, vessels or aircraft, but I cannot understand why he wants such search to be carried out without a warrant. He has given us no reason at all as to why that job is to be done without a warrant and why this power is to be given to people who are not members of the Public Service or the Police Force. We on this side of the House should like to know what kind of people the Minister has in mind for appointment. Are these going to be people especially trained for the work? Who is going to train them and to whom are they going to be responsible? Is there going to be any discipline over them? Is the controller the only person who is going to look after affairs to see that these people carry out their duties properly? Is a proper code going to be drawn up for the behaviour of these people who are going to be appointed?

We see that the words “without warrant” appear three times, i.e. in the case of seizure, arrest and detention. I believe the hon. the Minister must give us good reasons for wanting this. I cannot imagine any reason sufficiently good for wanting to have and to exercise these powers without a warrant. If the hon. the Minister were to say to us that he does not want them to have a warrant because he is not using the Police, I do not think I would be prepared to accept that explanation. I think there is even more reason, because he is not using the Police, that nothing should be done without a specific warrant.

If we look at paragraph (b) of the proposed new section 15A proposed to be inserted by clause 3, we see that it reads as follows—

Why should we have this type of legislation? Why is it necessary to give the hon. the Minister the power to modify conditions or withdraw exemptions without hearing the persons affected? If the hon. the Minister has given an exemption, he must have given it with good and sufficient reason and, if he is going to withdraw it, surely that person who has the exemption is entitled to be heard? I think that the hon. the Minister owes us a comprehensive explanation in regard to all these matters that have been raised. As far as we are concerned, I think that the hon. the Minister must clear up particularly the point in regard to how these powers are going to be used. What does he have in mind? Under what circumstances is he going to apply these powers? It occurs to me, too, that these inspectors are going to operate outside the Republic. Are they not going to cause international incidents when they operate outside the Republic, particularly if they are going to operate without warrants? Surely they are going to operate with the knowledge or consent of the countries in which they may operate? How are all these things to be regulated? The hon. the Minister has left so many doubts in regard to this legislation and has brought up this legislation so late in the session that I do not think this House can do justice to it. In the circumstances I wonder whether the hon. the Minister should not decide not to proceed with this Bill and, after he has replied to the Second Reading debate, shelve the matter until the next session. Members of this House will then have an opportunity of going into the matter thoroughly.

Mr. Speaker, I am sure there is no one in this House, at this late stage in the session, who appreciates listening to the petty political arguments of the hon. member for Wynberg. He talked a lot of nonsense here about “super-snoopers”, whom the hon. the Minister is supposedly going to appoint. To judge a matter, which is actually of cardinal importance to South Africa, in such a fashion is so ridiculous that I think the hon. member actually needs a few months to study this Bill and its implications. I therefore think it is understandable that he should say he still needs some time to study the Bill.

I now want to come to one aspect in connection with clause 4 of the Bill, a clause in terms of which the hon. the Minister will be empowered to transfer moneys obtained from fines to local authorities and other local administrations. In this specific connection, particularly as a result of what is being done by the Cape Town municipality, one feels compelled to ask the Minister to make a very serious appeal to local authorities. Sir, when the fuel crisis first hit us in November of last year a national speed limit of 50 km/h was imposed in urban areas and a limit of 80 km/h on what we may regard as open roads. On 25 January, however, after several investigations, it was thought fit to abolish the 50 km/h speed limit. In other words, the speed restrictions introduced prior to this national crisis, again became the prevailing restrictions. The speed limit was therefore restored to the previously prevailing of 70 km/h. But at the moment all those persons contravening the speed regulations in the Cape municipal area, i.e. the 60 km/h speed limit, are being charged in terms of these fuel regulations. Cape Town has not, like other local authorities such as Pinelands and Parow and the divisional council, returned the speed limit to 70 km/h in areas where this limit was previously in force. The speed limit has been made 60 km/h. In other words, in this respect Cape Town has created a considerable source of revenue for itself, and people travelling less than 80 km/h are still being charged in terms of these fuel regulations. Exceeding the speed limit entails a considerable fine, the minimum being R50. I have a case here which will indicate to you what is happening in this connection in the Cape Town municipal area. A Coloured driver of a motor vehicle was caught in a speed trap on 22 November. His recorded speed was 56 km/h and the driver received a ticket. Shortly afterwards the Attorney-General of the Cape announced that he was not prepared to prosecute unless persons exceeded the 60 km/h limit. The Traffic Department then went and changed the figure on this original ticket from 56 km/h to 65 km/h and served a summons on this driver alleging that he had been travelling at 65 km/h. This gives an indication of the extremes to which specific local authorities are prepared to go to get the absolute maximum from this source of revenue. In the process they compel people to exceed the limits in the sense that those limits are made considerably lower than they previously were. They thereby engender feelings against the Government because the restrictions are regarded as national restrictions, which in fact they are not. Meanwhile this furnishes a considerable source of revenue. Therefore I should like to make a very serious plea to the hon. the Minister to call upon local authorities, when this legislation is passed, to implement these restrictions and tines as judicially as possible and not to use them to exploit people, as is the case today in the Cape Town municipal area.

There are two points that worry us. The one is the sort of activity which will go on outside the Republic, and the other is the sort of thing that is contemplated as going on inside the Republic. Now it is quite difficult to imagine who the Minister is going to appoint and what he is going to do outside the Republic. If you read the principal Act it is not impossible to imagine that there may be circumstances in terms of which they would either acquire or import or supply goods back to South Africa. But then one comes up against the worry as to why these people can no longer be members of the Public Service. There is also the question outside of that, which one would have thought was a perfectly legal operation in most circumstances that one can think of, in that we will run into problems of extraterritorial jurisdiction outside South Africa in so far as these people are concerned. As I say, we on these benches share the confusion and hope for some explanation from the Minister in regard to the position outside.

Now, in regard to the position inside, of course there is an energy crisis throughout the world, but in practice, what does this mean in so far as South Africa is concerned? It boils down, as the hon. the Minister has said, to the question of the consumption of oil and the ability, which we would obviously be in favour of, to conserve as much of the oil supply available to South Africa, to get as much as possible and to be able to reduce the normal usage. But it seems to me that this is something which should be dealt with by a campaign to educate the public, and one thinks of campaigns over the radio or through other media, or in the newspapers, so that the public is alerted. Because when you come to consider the sort of powers and authorities given to these various people, it seems to me to be a sign of absolutely no confidence in the general public of the country. The only type of offenders one could think of that people would be after seems to me will be comparatively few in number, and if the general public is on the side of the Government, as I am sure they will be if it is brought to their notice and they are educated in this way, then it seems to me that these sort of powers are not required because they really are most extraordinary and wide powers. The word “Draconian” has been used to describe it, and if I could think of a stronger word I would probably use it, because these persons no longer have to be in the Public Service. They do not have to have any warrant. There is no question of any right to compensation. They may carry out these searches without a warrant and they may dispose of goods. The question I would like to ask the Minister is what happens if one of these people enters and seizes goods and disposes of them and thereafter it is discovered that the person has committed no crime. Now, even in the most serious of offences, a search warrant is normally required. The Minister here may delegate these very far-reaching powers to inspectors who are capable of error—everybody is capable of human error—and they may be minor officials. In fact, can the Minister tell us what sort of category he has in mind to appoint as these officials? We are told that nearly all the Government services are understaffed, and that presumably means that the rest of the population is fully employed in other sectors of the economy. We would like to hear from the Minister whom he has in mind to do this work.

While we admit that this is an important question, the question of conserving oil, it is really almost impossible for us to imagine a set of circumstances where the time taken to get a warrant becomes unjustifiable because the sort of crime envisaged, or at least the only sort of crime we can envisage, is not such that the man is likely to get away in the time it takes to produce a warrant. Therefore we stand with the members to the right of us in finding these provisions extremely difficult to accept in any way.

As to the penultimate clause in this Bill, the fact that the Minister can simply act in his discretion and without the person or persons concerned having any right to be heard in respect thereof, abrogates a basic principle of law and we find it very difficult to accept the complete taking away of any right to be heard in one’s own defence. There we are, Sir. We all stand on the ground that we are all in favour of doing what we can to conserve oil and, indeed, to increase the quantity of oil available to this country. However, we feel most strongly that the only possible offenders, which this Bill could possibly be directed at, could be much better dealt with if the general public were alerted and were on the side of the Government. In our opinion, therefore, the necessity for these powers does not arise.

Mr. Speaker, when the Act was originally introduced, it was introduced to provide for certain emergency contingencies. Its provisions were such as to enable the authorities to deal with those contingencies without necessarily declaring a state of emergency. At that time no practical criteria were available to the authorities by means of which they could deal with all the various aspects that could possibly arise. Since then the international oil crisis has arisen and this Act has had to be implemented. Certain contingencies then arose and in dealing with these the authorities gained such experience. They found that in regard to this issue it was better to have this additional provision to enable the authorities to deal more effectively with the particular type of emergency. The amendments being introduced today are merely designed to facilitate implementation so as to enable the authorities to cope better with situations which might arise from time to time. I appreciate the fact that some or other provision here might appear to create problems for certain people, but it must be appreciated that this Act is designed to cope with an emergency situation. It is not designed to cope with a normal situation; it is designed to cope with an emergency. We have now had the necessary experience which tells us that in this or that instance it is necessary to have certain powers which were not provided for in the original Act.

Be more explicit, and tell us what provisions you are referring to.

The first hon. member who spoke asked whether it would not suffice merely to appeal to the public in general for co-operation. I think that the vast majority of us would be prepared to co-operate as a result of such appeal, but then there is always the small minority, the 5%, who do not, generally, react to an appeal. It is this 5%, or whatever the percentage may be, the small minority, who undermine the value of such an appeal and make other people fed-up. A few people do not listen to an appeal. The tendency then is to say: Well, if that person can contravene the law and get away with it because there was not an inspector or an official who could apprehend him at the time, then I can also take a few risks here and there. In this way the whole system is undermined by a small minority of irresponsible people. If inspectors are appointed and enabled to carry out investigations, to enter premises and also to try and obtain information outside the borders of the Republic, surely this can only be aimed at facilitating the implementation of this legislation which, it must be remembered, has to cope with emergency situations, situations which are not so serious as to warrant the declaration of a state of emergency but which, nevertheless, are serious enough to warrant the authorities taking certain action for the benefit and security of every one in South Africa. That is the important thing. We should realize that this is not being done merely to allow the Government to wield the big stick. It is being done for the sake, the benefit and the advantage of all residents of South Africa.

Then there is the question of why it is necessary to issue exemptions and then to give the authorities the right to withdraw those exemptions without hearing the people affected. Clause 3 of this Bill, which amends section 15A of the principal Act, is as follows—

I do not know what particular exemptions the hon. the Minister has in mind, but I want to refer to a possible exemption. Owners of taxis could be exempted from certain provisions, such as the keeping of reserve petrol on their premises if circumstances warrant it at that time. A new set of circumstances, however, might arise which might not make it advisable to give that type of exemption generally any more. The Opposition feels that if the Minister having confidential information wishes to withdraw this general exemption or specific exemption, he must first hear evidence from all those concerned. Surely the hon. the Minister acts according to confidential information which also is for the sake and for the benefit of all people concerned. There is also the important aspect that the confidentiality of this information is also necessary. There are many detractors of South Africa outside South Africa and possibly a few also inside South Africa who would like to have a certain information so that they can plan action accordingly. Consequently it is necessary that the authorities should be able to act in secret and it should not be necessary for people who might have been affected by exemptions to be able to make representations first before those exemptions are withdrawn. [Interjections.]

Order! Hon. members must not converse so loudly.

Surely, if the Minister has the right to make exemptions out of his own free will on the basis of information available to him, he should also have the right to withdraw any exemption previously given because of certain new particular information which might be available to him. I really feel that the opposition to this Bill is not justified. The Opposition may be justified in raising certain points if this Bill did not deal with certain emergency situations, but because the Act is now being amended to deal primarily with a possible emergency situation, I feel the Opposition should appreciate it that a certain amount of leeway, a certain amount of elbow-room, should be left to the Government to act on the basis of confidential information which may become available to them.

Mr. Speaker, we are generally in accord that the question of conserving fuel is a matter of national importance. But I must say that this Bill reflects a very negative attitude on the part of the Government, in particularly on the part of the hon. the Minister. Throughout the session, whenever the hon. the Minister has come here with measures, he has tended to adopt a negative attitude. If there is a national crisis—and let us agree that it is a matter of national concern—we would have expected during the course of this session of Parliament to have heard from the Government of positive measures it intends taking to conserve fuel and not merely coming with negative measures. This Minister’s reaction to questions and his general handling of the public is one of strong-arm, big stick tactics rather than trying to get its co-operation. It may be a question of his temperament, but it is so. I voice the view of the outside public when I say that the feeling they get from the hon. the Minister is that he is trying to brow-beat them into agreeing with him or into helping him rather than persuading them. If one takes the outset of the fuel crisis in October last year, one recalls that there was a tremendous public response. The present Minister of Transport managed to get the public to respond. He took them into his confidence and told them what the fuel-saving goals were and how they were succeeding. He drew comparisons with other countries. I think the hon. the Minister must realize that there is a latent support to be tapped if only he would adopt the techniques which will cause the public to be on his side rather than to threaten the public or to take restrictive measures such as he proposes in this Bill.

Could you tell me when I threatened the public?

I think of his speech the other day about threatening motorists and taking away licences or confiscating motor-cars. The point is that the public in the main would respond if the Minister treated the public like adult citizens who do have the interests of the country at heart. But his attitude is always a threatening one. I say this advisedly, because I want to help the hon. the Minister. But then he must adopted a different manner. In fact, I think the Government must adopt a different approach. I want to ask the Minister: what positive measures or incentives has he announced during the course of this session, which will encourage the public to save fuel? Tell us of the positive measures. In other countries they are adopting positive measures. They are looking into incentives for the use of small engines. Then there is the whole question of switching over from oil to coal, the question of diesel engines as opposed to petrol engines, the introduction of solar heating units to cut down on fuel bills, the whole question of the insulation of mechanical and industrial plant, the insulation and shading of buildings to cut down on air conditioning costs and the whole question of public transport in order to cause people not to use their motor-cars to such an extent. Another method is the giving of special concessions on the railways. [Interjections.] This Bill deals with the conserving of vital commodities and the hon. the Minister indicated that fuel was one of these. We want to know about the positive measures. If the Minister wants to have restrictions such as these and the right to allow people to go into other peoples’ homes to see whether they are hoarding fuel, he must tell us and take the public into his confidence on the positive measures. There is the question of fining people. I think the hon. member for Tygervallei mentioned the case of a traffic fine in connection with a speeding offence. The hon. the Minister must know that many people who are trapped for speeding somewhere in the Karroo or distant places very often find that they have to appear in court personally. The result of that is that they have to go all the way back for 500, 600 or 1 000 km, usually in their motor-cars, in order to go and deal with a speeding fine. The total effect is not of reducing the consumption of fuel but increasing it. I want to ask this hon. Minister, to adopt a positive approach. I believe that he can get the public on your side. Let us know what the Government and the State are doing to conserve fuel. Tell us that the Cabinet, senior civil servants and other people are using less fuel themselves and that they are committed to save fuel. Let us have a public relations campaign at the service stations. Let us have point of sales stickers advertising the saving of fuel. Let the Minister try to get the public on his side in this matter instead of being secretive and trying to deal with the public on the basis of the big stick or the threat. We believe that the public will respond if only this hon. Minister would realize that he must communicate with the public in terms which will give some encouragement rather than merely to threaten.

Business suspended at 6.30 p.m. and resumed at 8.05 p.m.

Evening Sitting

Mr. Speaker, the last time the hon. the Minister of Economic Affairs was in this House—I hope he will give me his attention; the hon. the Deputy Minister of Bantu Administration and Education can talk to him later—we had a contretemps to say the least. The hon. gentleman was most upset because I told him that he had misled the House. I just want to say to him that I think we shall in this debate as always show that we can endure robust exchanges and if we are wrong we shall take our medicine, but if we are right we shall give the medicine.

The more robust the better.

Ah! [Interjections.]

Order! Hon. members need not all be robust.

So far as we in this House are concerned, exchange of views is the essence of this House, the essence of Parliament. That is why I take the gravest exception to that hon. Minister, after this contretemps slinking off to his place of privilege in the Other Place, continuing the exchange and attacking me without my being present to defend myself. [Interjections.] I want to tell him that I take a very dim view of that.

Order! What the hon. member is saying is not relevant now.

Then I will not continue with that except to say that what I have said I have based on the hon. the Minister’s Hansard …

You are not proving to be very robust.

No, I respect the Chair and I obey the Chair’s ruling. What happened I take from the hon. the Minister’s Hansard. He was very upset last time when I accused him of misleading the House. He became so hysterical that it seems to me that, if I were now to accuse him of misleading the House again in respect of this Bill, I would have to phrase my accusation differently since he did get so upset before.

You can say anything you like.

How very kind of the hon. Senator. How very kind of that gentleman, who comes from the Other Place, to tell me, while you are in the Chair, Sir, that I can say anything I like. What an impertinence! Where do you think you are?

You have obviously come here to be unpleasant. [Interjections.]

Order! The hon. member must come back to the Bill.

Sir, I am coming back to it. What I want to tell the hon. gentleman is that as far as this Bill is concerned, he has been—I shall choose my words carefully—guilty of material nondisclosure of doubtful propriety which has had the effect of misleading this House and, in fact, the country. Mr. Speaker, do you know what happened on … [Interjections.]

Order!

Mr. Speaker, on a point of order, is the hon. member allowed to accuse the hon. the Minister of misleading the House?

Order! The hon. member must withdraw the words “doubtful propriety”.

I withdraw those words, sir.

As regards the point of order raised by the hon. member for Sunnyside, I wish to say that the words “mislead” and “mislei” are not unparliamentary.

I have withdrawn the words you requested me to withdraw, Sir. Let me just say that what the Minister did had the effect of misleading the House and the country. What did the hon. gentleman say on 22 October when his. Vote was under discussion in this House? Mr. Speaker, I want to remind, that hon. Minister, who comes from another place …

What has that got to do with you?

Fortunately, very little! [Interjections.]

Order!

Mr. Speaker, I want to remind the hon. the Minister that when he comes to this House, when we debate the Budget and when we discuss the Votes of Ministers this—and I think that hon. gentleman need reminding of this—is the essence of Parliament, of the right of this House, to vote the money, to question how it is spent and to put the Ministers on the spot so that they can give the House, the representatives of the people, and the country an account of what they are doing and are about to do in their respective departments.

Are you talking about the Bill?

Yes, I am talking about the Bill. If I make an allegation in respect of this hon. Minister, I must state my case. I am stating my case now and I hope the hon. gentleman will answer it. On 22 October, dealing under his Vote with petrol restrictions and with the application of the Act which we are now amending in this Bill, that hon. gentleman had the following to say with reference to petrol restrictions—

Then he says—

Note “is going to show a greater awareness” … [Interjections.] Just wait. He said—

I have not finished the quotation but what does it mean when he says—

I.e. in the future—

Again in the future. Right? [Interjections.] All agree. Then we are all agreed that this is what he said. In the same speech he said that the majority were playing the game and—

And note these words—

Mr. Speaker, these are very important words—

Obviously in the future—

In other words, he is saying that he was urging the public please to obey these restrictions, and if they did not he would in the future do something about it. Then he says—

Order!

Do listen to what the hon. the Minister said. I quote—

The one being amended here—

That is what people have been asking here. He continued—

What does that mean? What does that speech mean? What the hon. the Minister is clearly saying is that he wants the public to co-operate and that he wants them to observe the regulations. If they don’t, then he will in the future consider introducing legislation to deal with the matter. On that very same day, unknown to anyone else—I hope the Whip will let the hon. the Minister listen to me because he has to answer me … [Interjections.]

Order! I now want greater order in the House.

On the very same day that the hon. gentleman was telling this to the Committee on the Appropriation Bill, on that very morning he gave notice of this very Bill in the House. He gave notice that he would move the next day to introduce this Bill. As is the usual practice, the notice of motion for the introduction of this Bill then appeared on the Order Paper the following day. This Bill provides for the very measures that he was talking about, viz., for stricter measures to be taken in respect of people who exceed the speed limit. That is what this Bill provides for. I think it is absolutely disgraceful. While he was saying all this, he knew that a Bill was going to be introduced to provide for these powers and to put into effect the threats that he had uttered. I find this quite amazing without some explanation. Why did he not tell the House that day, not that he was thinking about the matter and that he wanted the public to co-operate and that, if they did not co-operate, he might do something, but that he had that day given notice of the Bill and that that Bill was going to deal with the very threats that he had uttered in this regard? [Interjections.] In other words, that hon. gentleman and the Cabinet had apparently already agreed in principle to the Bill. It had already been drafted, he had given notice of it, and it was to be read a First Time on the following day. He failed to make this disclosure to the House.

Disgraceful! [Interjections.] I had to cancel seven other words before I found one I could use.

Mr. Speaker, I hope the hon. the Minister is not going to run away from this one. I want to make absolutely sure that the hon. gentleman understands what I am saying this time because last time he got upset and he did not understand what the point was. I want him to understand this. I want to say that that material non-disclosure on the part of the hon. the Minister is of such a nature in the circumstances that the only defence he can possibly have is that he did not know what was in the Bill of which he had given notice that morning when he made his speech here in the House. That is the only defence that he can have. If that is his defence and, as I say, it is his only one, then he ought to resign right now … [Interjections.] … and he could probably leave the handling of the remaining stages of the Bill to his bench-mate who seems to have been doing all the things one might have expected the Minister of Economic Affairs to have done and not the Minister of Indian Affairs and of Tourism. Sir, the hon. gentleman has one big trouble and that is that when he speaks the Queen’s English, or tries to speak it means one thing to him and something quite different to everybody else. I think it was Humpty-Dumpty who said to Alice in Through the Looking-Glass, “When I use a word, it means just what I choose it to mean, neither more nor less; the question is which is to be master—that’s all.” Sir, that is the hon. gentleman’s trouble, but in this respect that is not the issue; the issue is why he did not tell the House about this Bill. We would like to hear what he has to say to this.

You see, Sir, this Bill in fact deals with an Act which at the time the original Act was passed was agreed to with almost no debate whatsoever in this House; it was a Bill to deal with the procurement of supplies at a time of emergency, and the matter was left entirely to the Minister in the Bill, because no one at that time thought that this kind of situation that we have now would in fact arise.

Nobody thought that you would get a Minister like this.

That is also true.

Was there an emergency in 1970?

No, I did not say that there was an emergency; I said that when the Bill was passed …

You said that it was in an emergency.

Well, that is what the Act is all about. I did not say that there was an emergency in 1970. Sir, I can understand the hon. gentleman’s not being able to speak English, but for goodness sake, let him try to understand it. What I said was that when that measure was passed, it was passed without demur in this House, and it was passed on the basis that in times of emergency, in the Minister’s discretion, these powers could be used in all the different fields. No one at that time anticipated the kind of situation that we now have where there is an emergency situation in relation to fuel, and I do not dispute that. Although I sometimes doubt it, I do not dispute it for the purposes of our discussion. Sir, when the petrol restrictions were introduced I think everybody in the country wondered under what authority the Minister proposed to enforce the restrictions. What he has done in this Bill is to give himself a private Police Force who are given the most excessive powers. Sir, even the powers of the South African Police are contained by the law. The powers contained here in respect of investigations are not subject to any of those restrictions. I do not know who is going to exercise these powers, but I want to say this about the South African Police: They are trained, Sir. They are well trained as to how to use their discretion, as to how to deal with the public and as to how to exercise powers of this nature. This Bill provides that the Minister may in connection with the investigation by inspectors of the offences referred to have give them powers of seizure, retention and disposal, without warrant, of any goods or things. Sir, I do not have to pretend that this is to be applied to the petrol restrictions because the hon. gentleman has said so himself. At the moment that is the only field in which this Act operates. Can he tell me why he wants the power, when investigating an offence under the Act, to dispose of something like a motor-car? Why does he want the power to seize it and to confiscate it? Sir, I want to ask the hon. gentleman to ask himself whether he is not making rather much out of the public’s exceeding the speed limit. I think one must remember that the overwhelming majority of persons who exceed 80 km an hour on the open road—I specially want to refer to them—commit that offence unwittingly and without any intention of doing so. [Interjections.] I suggest to the hon. the Minister that in order to get au fait with the position he should not be driven in his Cadillac but he should drive his Oldsmobile himself on a long journey because I think he will then get some idea of what this is. Because I say this and mean this that the overwhelming majority unwittingly commit that offence, there should be a much bigger leeway in the speed over 80 km an hour at which you are, in fact, charged and for which you have to pay a fine.

Why?

I shall tell the hon. member why; for the reason I have given already, namely that the offence is unwittingly committed. Is there anyone in this House who drives his own motor-car that can honestly say that he has not unwittingly exceeded the speed limit? [Interjections.] There is not one. [Interjections.]

Order!

I do not expect the hon. gentlemen to listen to me, but I hope they will take some notice of what the full Bench of the Eastern Cape Division said. I quote from a report—I understand it is a correct report—on the judgment of Mr. Justice Eksteen on this very thing—

The report goes on to say—

Those are not my words. Those are the words of the full Bench, of two judges of the Eastern Cape Division of the Supreme Court. I think the hon. the Minister could take note of this and he should take note of what ordinary, innocent, decent people think. They think that most people are trying to obey these speed limits but find themselves unable to do so.

That has nothing to do with this Bill.

That has everything to do with the Bill, you idiot! What I want to say to the hon. the Minister …

Order! Did the hon. member use the word “idiot”?

I think I did, Sir.

The hon. member must withdraw it.

I withdraw it.

I think you said it unwittingly.

I think the hon. the Minister should compare his attitude with that of the full Bench of the Eastern Cape Division of the Supreme Court. Theirs is a reasonable attitude dealing with people. This is another reason why we are opposed to this Bill. So long as that is his attitude—that is what it is—and so long as … [Interjections.] I know it gives the hon. gentlemen immense pleasure every time I use the expression “that is what it is”. I am delighted that after so many years it still gives them that pleasure. One of the difficulties with this hon. gentleman is that he is what he is. [Interjections.] What is more, he is what he was and I am afraid that in the future he is going to remain what he is. I think that this is really the essence of the whole Bill. That hon. Minister’s attitude is that he must “donder” the motorists. He must “neuk” them “op”, he must put them in their place, he must see that they do not exceed 80 km/h and that he must use all the armoury that he can find and all the most excessive powers he can find.

Order! The hon. member must withdraw the words “donder” and “neuk op”.

All right, Mr. Speaker. This is the attitude of the hon. gentleman. If, with that attitude, he is to be given the powers in this Bill, powers to tell his inspectors that are going to be appointed and his private police force which is going to be appointed in terms of this Bill, and if he is going to have the power to instruct them what to do, he owes this House an explanation as to how he is going to exercise this power and how he is going to instruct them. Is he going to instruct them to confiscate motor-cars when they do more than 90 km/h or only when they do more than 100 km/h? Perhaps he can tell us whether he is going to make exemptions as he has the power to do in terms of this Bill. Is he going to make exemptions in terms of Ministerial cars? I do not know how fast the hon. vociferous Minister of Bantu Administration and Development was travelling at the time when he met with displeasure with the law, but what is the Minister of Economic Affairs going to do? The hon. gentleman has said nothing whatever to justify the powers which are contained in this Bill. We expect him to do that, but most of all we expect him right at the beginning and right now to explain to the House why he deliberately avoided telling the House that while he told us that he was thinking about doing something he had already decided to do something and would not disclose it to this House.

Mr. Speaker, I want to express my sincere thanks to the hon. members of this House who have made valuable and constructive contributions in this very important debate, which deals with a most important matter. This includes some of my hon. friends on the other side of the House.

Thank you.

I want to say at once that it certainly does not include the last speaker. I must say immediately that I deplore the fact that where we are dealing with a most important measure in this House, in an attempt to solve or to control to some extent, if possible, a very important problem which has arisen in the world as a whole and which we are experiencing in this country in particular, this hon. member for Durban North has seen fit to make a speech such as the one we have had to listen to here tonight.

†It is very easy to come to this House and be unpleasant, which the hon. member deliberately did … [Interjections.] It is very simple for the hon. member to indulge in personal abuse.

What did you do in the Other Place?

As far as I am concerned, everybody who listened to my speech …

What did you do in the Senate?

Order!

Everybody who listened to my speech in the Other Place has come to me to thank me for speaking in the dignified way I did. [Interjections.] The hon. members are unfair. The persons who came to me include two of their own members. [Interjections.] Let us not worry about that. The hon. member started by saying that we must be robust. Immediately he collapsed and he squealed from beginning to end. It was the biggest squeal I have ever heard in this House, and it was the most undignified performance I have seen. Here we are dealing with a very serious matter which I shall try to stress and what did this hon. member do? From beginning to end he made a personal attack on me. He said some extraordinary things, which this whole House has heard. He tried to suggest that I was threatening motorists, but from the very thing he read it turned out to be exactly the opposite. What the hon. member did not say, and he might have taken the trouble to find out, is that I have been receiving ever since I have been in this position, representations from all sections of the population, including many well-known members of the United Party and the Progressive Party in regard to this matter. I am receiving them to this day and I had some yesterday which come in the form of telephone calls, of telegrams and letters, asking me what we are doing in order to conserve petrol and what we are doing to make these measures effective. Nobody has said to me that these measures are unreasonable. In fact, the whole consensus is that this Government is in fact being so reasonable that the people are asking why that section of the public who are disregarding these measures cannot give effect to them and if this goes on why the Government cannot take steps to protect the majority against the action of this minority. That is the whole burden of these representations.

May I ask the hon. the Minister a question?

No, the hon. member will have an opportunity to speak. I am going to make my point. I have been interrupted a good deal and I think I can be allowed to make my point. This is what the factual position is. The public who are dealing with us and with the Controller of Petroleum Products and his staff are throughout telling us that these measures are absolutely reasonable and keep on asking us why that section of the public who are not prepared to play the game are not brought to book. When I appealed to the public, and I appealed several times in my speech as I have done in Press statements … [Interjections.] What is happening now is that we are seeing what patriotism in this country means. [Interjections.] What could be more reasonable under these conditions of a world-wide problem in relation to oil, the excessive increase in costs we have to bear and with the very uncertain world position, than to ask the public to comply with fuel-saving measures? We have the benefit of some of the most authoritative opinions in the world on oil at our disposal. We are getting better advice and assistance in this regard from those overseas authorities than we are getting from a number of members in this House. What are hon. members saying? They use the opportunity on a serious matter such as this, to come forward to make a personal attack. [Interjections.]

Order! Hon. members are now being unreasonable with their interjections. I expect hon. members to give the hon. the Minister a reasonable chance to proceed with his speech.

What did the hon. member for Durban North say? He said he would give the reason why that side of the House is opposed to this Bill. But the hon. member for Cape Town Gardens said that he supported this Bill subject to certain reservations. On an extremely important matter you can see the absolute confusion and chaos of this party. The one says he opposes the Bill while the other one says he supports the Bill. The whole House heard it. I want to ask what the country must feel about an hon. member who comes forward and opposes this Bill while we are trying our best to arrange this matter in a reasonable way. We have discussed this with numerous people. The people I am talking about are mostly English-speaking. They are trying to assist us, but the hon. member is opposing this Bill. That is on record. I think this is the sum total of the hon. member’s extreme discomfiture: he cannot support what every patriotic South African supports today, and he says he is opposed to the Bill. What is this Bill trying to do in the context of the problem before us? It is trying to arrange this matter in the only possible way in which we see our way clear to doing this after taking the very best advice in this country and outside of it, without resorting to rationing.

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

Sit down!

The hon. member must sit down, Sir. This is the only way in which we can do it without resorting to rationing or without applying stringent import control on oil and fuel, as France has done for next year. [Interjections.] Mr. Speaker, I think I would like to make it perfectly clear that I have been subjected to a very substantial personal attack.

Shame!

I am trying to put the facts of this matter and I think that, if hon. members are going to be responsible, they should be a little more co-operative.

What did you do in the Senate?

Never mind, if that is the attitude of that hon. member, let him go ahead with it.

Are you going to reply to me in the Senate?

I want to say that what we are doing in this Bill is to enable us to appoint more people to assist us in carrying out the provisions of the fuel conservation measures as they are at present. We are not trying to impose import control on oil. We are not trying to take the restrictive measures which we may have to take if we do not get co-operation. You can call that a threat if you wish. I have the responsibility to see that the strategic reserves of oil and fuel are built up in this country. I have the responsibility together with the hon. the Minister of Finance, whom I consult continually on this matter, to see that the drain on the balance of payments occasioned by the very severe increase in the price of oil that we import does not go so far as to place an untenable strain on the balance of payments. That is a very big factor. AH I ask is that we adopt a fair and reasonable approach.

This is not a reasonable approach.

Because I am doing that, you can see, Sir, the way in which it is being received. [Interjections.] I want to say, with the greatest respect, that these measures are not Draconian. This is a word that is completely over-used. It has suddenly become a favourite word. If hon. members opposite feel we have gone too far in any respect, the word “Draconian” is dutifully trotted out. What is Draconian about this measure when you compare it with the measures some people might feel they must take and the measures which many people in this country are asking me to consider taking? Hon. members come along and ask why it should affect appointments outside the Republic. If you read the existing Act, you find exactly the same thing applies. We have not altered that. Nobody said that it has been altered. We have simply moved that particular provision in the existing Act to a slightly different place in the relevant clause. There is nothing new about that. Hon. members ask why we must extend the field of appointments and why they cannot simply all be members of the Civil Service. I suppose hon. members opposite who say that might remember that during the war and at certain other times, too …

Which war?

The Boer War.

… that many countries appointed controllers of different materials. They appointed them from outside because those were the most suitable people for the job. We might very well, in a state of emergency, to simply take a case that comes to mind, wish to appoint a controller of steel products; we might wish to appoint an authoritative person from Iscor or even from Highveld Steel, who knows? However, that man would not be in the Civil Service.

What has that got to do with it?

This would be similar to what Britain, America and France have done in these matters. However, we are told that we must not be allowed to use those experts because they must be drawn from the Civil Service. But hon. members ought to read this measure. If hon. members would read this measure they would see that any conditions and remuneration attaching to those appointments must be determined in consultation with the Treasury and the Minister of Finance. This is in order to maintain a very fair balance, as far as we possibly can.

Jobs for pals?

No, not jobs for pals; that does not do the hon. member any credit at all. I am very sorry, it does the hon. member no credit to make a remark like that. I think we can keep this debate at a slightly higher level than that. I want to say as emphatically as I can, that this measure is one of the most considered measures I could possibly have brought to this House. If this House knew the trouble we have taken to obtain the best advice, inside and outside this country, on how to handle this situation, which is not of our making, every fair-minded member of this House would be impressed. Despite the frivolous attitude which a few members opposite think they ought to adopt in regard to this matter, let me say that I have here a letter from the Federated Chamber of Industries. The Federated Chamber of Industries I suppose would be more affected, as a body, by this legislation than possibly any other body in the country. The Federated Chamber of Industries have thought it advisable to put their views in writing to indicate that they accept clause 2, about which these things have been said. They advise me that they have no intention of opposing this measure, as the hon. member for Durban North is doing. That is the opinion of the FCI.

What is the date of that letter?

Would the hon. member like to know the date? It is 28 October 1974. Is the hon. member satisfied? I thought it rather a pity that the hon. member for Wynberg should have talked about “super snoopers” in referring to the appointment of inspectors or controllers to carry out these very essential functions.

I think it was an understatement.

When all these comments are added up, and I have some other comments here that I have written down, the House must excuse me if I have the gravest misgivings as to how successful we can be as far as these measures are concerned. I know there are hon. member in the Opposition who are supporting me because some of them have told me that.

Name them!

Order!

That is a fact. I want to say that I have the gravest misgivings about how we can possibly succeed in this very difficult matter when people whom we had every right to think would give a lead to the country, adopt the kind of attitude we have witnessed here today. I think this is a pretty serious matter. When people read the sort of leading articles on this issue which have appeared in some of our newspapers, arising out of my appeal to the public to support us, what can one expect of others who are not as well informed? I think we are witnessing a very sad day in this country.

The hon. member for Wynberg came to this House and actually said that I should stop this measure at the Second Reading and hold it over until next year.

You have given me not a single reason for introducing it.

This is a measure dealing with one of the most serious issues facing us. [Interjections.] I just want to say that when you talk about the Civil Service it is of course a fact that traffic officers appointed throughout the country are not members of the Civil Service. They are doing this kind of work every day. They are not in the Civil Service. If we do it, we are being Draconian.

*Mr. Speaker, I also want to refer to the request made to me by the hon. member for Tygervallei, i.e. to have a look at some of the municipalities—he referred to the municipality of Cape Town as well and asked us to ensure that the measures of these municipalities relating to fines are judiciously enforced. The hon. member apologized for not being able to remain here any longer tonight, but I just want to give him the assurance that I shall very definitely go into this matter, for I think it is most important. [Interjections.]

Order! Hon. members must stop conducting a dialogue.

Mr. Speaker, I also want to refer to my hon. friend for Klip River, who in my opinion put the matter in the right perspective. He made it quite clear that we are not dealing here with an ordinary measure or state of affairs. We are dealing here with an extraordinary situation.

†We are dealing with an extraordinary state of affairs which has arisen out of world conditions as a result of the oil crisis and which we cannot control except in so far as we can adopt this kind of measure. I was given certain amendments late this afternoon. I received these amendments well after 4 o’clock and, in fact, I received one while the debate was in progress. I merely want to say that I think the hon. members who have submitted these amendments will appreciate that it puts one in a very difficult position if one receives these amendments at the very last minute …

Why did you not come with the Bill earlier? [Interjections.]

… because one obviously has to consult the law advisers and other experts … [Interjections.] You can speak when we come to it. The hon. member will put his amendments and he can then speak. What I was saying … [Interjections.] No, I am not trying to evade them at all. I am going to deal with them.

We showed you the courtesy of giving you these amendments … [Interjections.]

Order!

[Inaudible.]

Order! The hon. member for Pietermaritzburg South must restrain himself.

Mr. Speaker, I have just said that the hon. member can put his amendments because, although they came to me so late and although it was difficult to carry out the consultations I would normally wish to carry out, I am prepared to deal with them. I was putting it in that form, and I think the hon. member might accept it in slightly better grace.

When are you going to tell us why you misled the House?

I do not propose to deal with that hon. member. [Interjections.] I think the whole House has seen what his conduct amounts to tonight.

Well, what is the explanation? [Interjections.]

I want to refer to the hon. member for Sea Point, because I gathered from his speech this evening that he was taking a more constructive attitude than I gathered he took when he made a Press statement on this matter earlier. [Interjections.] Yes, and if he is genuinely wishing to encourage people to do this, we are talking the same language. However, he must not say that I am being negative. If I can possibly avoid it, I do not want to introduce rationing. If I can possibly avoid it, I do not want to impose strict control on the import of oil. These are the only practical alternatives. The hon. member must not go from this House and make Press statements, where I have appealed to the public to help us, and say that because the Cabinet feels, I feel and all my advisers feel that we should not publish the details of the degree of saving we are achieving or what we are achieving in the building up of strategic reserves, therefore we are being negative and that the public will not support us in this.

Your predecessor gave us that information.

I hope that the hon. member will be serious and that he is going to assist us. I think that in this respect he has a great opportunity to adopt a constructive attitude. However, he must not begin by saying that I am being negative, because I am not being negative in this matter.

The question of admissions of guilt and of requiring people to drive long distances to appear in court if they have contravened the speed regulations, was also raised. It is a fact that in terms of the Criminal Procedure Act, no admissions of guilt are permissible where the fine is in excess of R100. This means that if this provision is to be changed, we shall have to amend that Act. My colleague, the hon. the Minister of Justice, has said within the last day or two that he and I are considering this aspect of the matter together to see whether we can in fact be as reasonable as possible. I want to say that the Department of Justice contacted the Attorneys-General some time ago to ask them to be as reasonable as they possibly can in these matters. We are trying to bear the convenience of the public in mind. At the same time, however, there are certain sanctions obtaining which people deliberately contravene. This is what is happening.

What do you save between 80 km and 100 km/h?

We save a great deal. I have given the figures in this House.

It is minimal.

No, Sir. I shall have to ask the Press to publish the figures again. There is a substantial saving.

The saving is minimal.

The hon. member must not keep on saying “minimal”. If he sees the figures, he will have to correct his statement.

I have seen the figures.

Where has the hon. member seen the figures?

You gave them to me.

And does the hon. member say they are minimal? They are most significant.

Compared to the octopus you are creating now.

No, Sir. The hon. member should really keep to the facts in this regard. The figures are most substantial.

Give them to us.

The difference in the consumption of petrol between driving at 100 km per hour and driving at 80 km/h is substantial. In fact, it is this speed restriction which is by far the biggest single saver of fuel. That is the position. In a matter such as this, I think we have to forget some of these divisions which seem to plague us. I should think that in a matter such as this the House should stand as one and might show the public that as far as we are concerned we see the gravity of this matter and that we are trying to meet this problem—I say it again—in the most reasonable manner my advisers and I can devise. I doubt that the most unfortunate remarks made by the hon. member for Durban North about Ministers driving in Cadillacs and in Oldsmobiles, and his snide way of referring to the exemption for Ministerial cars, will get us very far at all. [Interjections.] From the moment these measures were adopted, Cabinet Ministers stopped using Cadillacs. We have not driven in Cadillacs since. [Interjections.] Most of us are driving in ordinary Mercedes. [Interjections.] Mr. Speaker, may I just answer that query?

If we travelled in vehicles drawn by donkeys we would have used you to draw them.

If hon. members wish to be fair they will know that the petrol consumption of Mercedes motor-cars is a good deal lower than many other cars being driven around by people who are not in the Government service. These things have been tested. This sort of remark is just another manifestation of what we are dealing with. Talking about Ministers driving around in Cadillacs does not do that hon. member credit either.

*Sir, the amendments which are going to be moved will of course be dealt with in the Committee Stage, and I have already said that I shall deal with them then. I want to emphasize once again the gravity of this matter and I want to ask hon. members opposite who have adopted this attitude tonight to act a little more responsibly.

†Sir, I think I am entitled to say this because this matter of fuel is one which is affecting our future more than any other issue that I can think of today.

May I ask the hon. the Minister a question?

The hon. member can speak later. It is in that spirit that I am putting this measure before the House. It is a considered measure; it is a responsible measure, and I say again that a man who cannot support his country on an issue like this must stand exposed as a man whose patriotism and whose feeling for his country must be most gravely doubted.

May I ask the hon. the Minister a question? Will he please reply to all the questions raised by hon. members on this side of the House?

Order!

Question put,

Upon which the House divided:

Tellers: J. M. Henning, N. F. Treurnicht, A. van Breda and C. V. van der Merwe.

Tellers: W. G. Kingwill and W. M. Sutton.

Question agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

The Bill before the House deals mainly with proposals announced by the hon. the Minister of Finance in his Budget speech and, as hon. members have been provided with a comprehensive explanatory memorandum, I will enlarge on only a few of the more important measures in the Bill. First of all I shall deal with—

One of the main features of the Bill is the reduction in the cost to a natural person in acquiring immovable property and in transferring such property into his name. I refer here to the new rates of transfer duty, as introduced by clause 3 of the Bill, which, in order to evaluate the effect of the concessions, must be read with clauses 14, 23, 24, 25 and 27 which deal with stamp duty on documents relating to the acquisition and transfer of property.

The new rates of transfer duty apply to transactions for the acquisition of immovable property or for any renunciation of an interest in or restriction upon the use or disposal of immovable property entered into on or after 15 August 1974, while the exemptions from stamp duty in respect of a deed of sale of immovable property, power of attorney for the registration of a deed in a deeds registry, security or guarantee in respect of the payment of the purchase price or balance of purchase price of immovable property and the transfer deed relating to the acquisition of immovable property as well as the abolition of certain fees of office charged by the registrar of deeds come into operation on the same date. If hon. members will refer to the example given in the explanatory memorandum they will observe that in regard to the purchase of a property for R20 000 by a natural person for residential purposes, the transfer duty is being reduced from R350 to R200, but that the sum total of transfer and stamp duty on the transaction is reduced from R478-30 to R200, i.e. a reduction of 58%. I may just add that the proposed rates will not, as was the case in respect of transactions entered into before 15 August 1974, be affected by the use to which the property is to be put. Whereas previously a reduced rate of duty applied if the purpose or one of the principal purposes of a natural person in acquiring a property was to reside thereon or was for the residence of his spouse, child or certain defined relatives, the rate of transfer duty in respect of transactions entered into on or after 15 August 1974, merely distinguish between properties acquired by natural persons and by others. I am sure that these concessions will greatly assist prospective home-owners in acquiring their own property and I sincerely hope that this benefit is not frittered away by increased fees and charges by the private sector.

As regards properties acquired by companies, I do not think that the small additional duty they are called upon to pay is unjustified. In most cases it will be a once-and-for-all payment as, when a property acquired by a company changes ownership, the transfer will in most cases be effected by a sale of shares in the property-owning company in which case only stamp duty at 1% on the net value of shares transferred is payable. The purpose of the formula in clause 3(c) of the Bill, is to ensure that the discus will receive duty at the rate applicable to the value of the property as a whole where a purchaser acquires only an undivided share in such property, and not according to the rate applicable to the undivided share looked at in isolation. This measure is designed to guard against natural persons entering into split transactions in order to get the benefit of a reduced rate.

The Department of Inland Revenue is simplifying the procedures regarding the issue of transfer duty receipts which will not only afford receivers of revenue a measure of relief, but will also assist conveyancers in that the issue of receipts for transfer duty payments will, under the machinery being provided by clauses 4 and 6 of the Bill, be considerably speeded up.

Stamp duties

Mr. Speaker, apart from the stamp duty exemptions mentioned earlier in dealing with transfer duty, the abolition of the following stamp duties is given effect to in the Bill:

In addition the stamp duty on a mortgage bond hypothecating immovable property has been simplified and the variable rate rising to 25 cents per R100 where the debt secured exceeds R6 000, is being replaced by a uniform rate of 20 cents per R100 by clause 18 of the Bill. The Department of Inland Revenue is always prepared to move with the times and to adjust tax procedures to modern requirements wherever possible. Clause 11 of the Bill introduces such a measure. In the age of the computer it is necessary to change methods which are suitable for manual application to meet the requirements of this electronic adjunct to efficient business methods, which is so essential in these days of ever increasing volumes of work brought about by the virility of our economy.

The amendment sought by this clause will empower the Secretary for Inland Revenue to authorize an insurer who uses a suitable computer to pay the stamp duty on life insurance policies, annuity policies and policies issued in compliance with the compulsory Motor Vehicle Insurance Act periodically on declaration instead of laboriously affixing stamps to policies.

Mr. Speaker, while this Bill deals mainly with the reduction of duties, simplification of work and streamlining of departmental procedures, there is one clause that does not fit into these categories and which requires special mention. I refer here to clause 12 which introduces certain penal provisions into the Stamp Duties Act to combat the illegal use and sale of revenue stamps obtained by fraudulent means. The provisions do not affect the general public nor the legal profession. For the latter and the Exchequer it provides protection against unscrupulous persons, whose modus operandi I do not think it is in the public interest to disclose, who have lately become active in the larger centres and who, although known to the police, cannot be convicted by the courts because no specific offence can be proved under the existing provisions of the law.

It is hoped that the new provision will strengthen the hands of the police in combating this crime.

Mr. Speaker, the hon. the Minister will now be sailing in far more tranquil waters than he was a little while ago. I think one can assure him that in this debate he need hold no concern about getting into storms. [Interjections.] No, Mr. Speaker, when you say nice things to the man he gets cross as well. I think I must perhaps do something else.

I am taken aback.

By my being nice?

By your performance on the other side earlier.

I am prepared to be, at the Minister’s choice, either pleasant or unpleasant—he can choose. I want to be very pleasant and nice to him and to have a reasonable debate.

Order! I suggest that we proceed with the Bill.

I would like to take that advice, Sir.

The Bill deals with amendments to a number of statutes and I would like to deal with them in turn. Firstly, in so far as the Marketable Securities Tax Act is concerned, we on this side of the House have no objection to any of the amendments. We think they are warranted and we shall support them. In so far as the Transfer Duty Act is concerned, there are a number of comments I would like to make. In the first place, we think that housing, which is the matter particularly affected, quite obviously gives us cause for a great deal of concern. There is the problem of the young who desire to own houses. There is the problem of saving up for a deposit in order to buy a house. There is the question of increasing and escalating land prices. There is also the question of escalating building costs and the question of extremely high interest rates. All of these make it extremely difficult for young people particularly to seek to own property. With regard to those who do not own property, we have already dealt earlier today with the question of flat rentals and the problems people have who live in flats. These people have to meet the situation of ever-increasing rentals. We have appealed on previous occasions for relief in respect of interest rates and in respect of rentals. The one measure of relief that here appears to be forthcoming, is relief in respect of transfer duties. We welcome any degree of relief which will help towards home ownership. However, there are some queries with regard to this matter. The hon. the Minister said, and the Explanatory Memorandum pointed out too, that in fact this concession does not apply to companies. The hon. the Minister advanced reasons why he in fact thought that a company should not be treated on the same basis. To quote him, he said:

That, with great respect to the hon. the Minister, shows that he is looking at only one means of disposing of property. Let me give you a number of examples. When township development takes place and companies buy land and dispose of the stands, they certainly do not dispose of the shares in township companies. In fact, most of the transfers in the lower price category are transfers of stands. Most of the cases where new homes are to be built fall into that category. Under the circumstances it is incorrect to say that this relief should not be granted to a company. All that is going to happen, is that the increased duty is going to be passed on to the purchaser of the stand in due course. With great respect, this is one classic example of where I think this argument does not apply. In the case of purchasers of flats it is quite clear that when you buy a flat and you get a return on it, whatever cost is involved is again passed on to the tenant by means of a return on the total cost. In respect of sectional title cases, it is clear that the company buys the property and passes on the individual section of the title, and once again the cost is passed on. In the case of the acquisition of industrial property, it is also quite clear that there is every reason in the world why under this set of circumstances the lower amount of duty should apply to companies too. We believe that it is correct and equitable that the same rate of transfer duty should apply whether the acquisition is by way of a company or by way of a natural person.

There is another matter I want to deal with. Looking at the Bill, one finds that clause 3(lXb) on page 5 states very innocuously:

What is really meant by the deletion of those three subsections? It means that under the existing legislation a person in the lower income group who could buy a property at a lower purchase price was granted a concession which he now loses. It is a concession in respect of property which either he or his family would occupy. The case in point is home-ownership, which should be encouraged more than any other aspect. Where the purchase price, in such a case, was less than R15 000, only two-thirds of the amount of the duty was paid. On an amount of between R15 000 and R20 000, half of the duty was involved, and on amounts exceeding R20 000 but not exceeding R25 000, one-third of the duty was paid. That was the rebate. If we look at this situation, it Seems that there is every reason in the world why, in the present circumstances, in respect of the duty that is to apply, these particular subsections should remain so that these concessions may still be granted to people who wish to buy homes which they themselves will occupy. We on this side of the House will move the deletion of clause 3(b) because we believe that that concession should remain in the present circumstances.

Let us turn to the next subsection, which deals with the acquisition of undivided shares. This is worked out in the most involved manner. With due respect, I think it could have been much easier to project the figures. I am not the only one to say this. Let me quote to the hon. the Minister from De Rebus Procuratorial of October of this year. On page 468 the whole matter is dealt with very simply as follows—

With all due respect, in preference to this tremendously involved formula, it would have been easier to put the matter in simple English and Afrikaans.

That is what this formula says.

Sure, that is what it says if one works it out in a most involved manner. [Interjection.] Well, the hon. member likes things that are obscure and involved and mixed up. He tries to baffle people with science. It is perhaps for people like the hon. member that the hon. Minister uttered the warning that these benefits which are being given to the public should not now be frittered away by extra costs. It is when one baffles people with science that one can afford to charge them higher fees. This is what I am seeking to avoid. This baffling with science is something that should not be included in our legislation when the matter can be put in very simple terms—as the hon. member’s own professional handbook demonstrates to him. I hope that as a member of the profession the hon. member does read it. I think it might do him some good.

Are you still a member?

The only membership of mine at the moment of any importance is that of this House and of the United Party. Don’t worry about my other membership.

Your membership is pretty shaky.

No, it is on very firm foundations indeed. There are a number of matters in this piece of legislation which deal with the simplification of procedures, for example, the manner of paying transfer duty and the abolition of a multiplicity of small duties. I think that we on this side of the House support those changes and welcome them. May I, however, draw the hon. the Minister’s attention to clause 9, which repeals section 19 of the Stamp Duties Act. What worries me here is the following: Section 19 of the Act imposes an obligation on a person who effects a sale or purchase of marketable securities or movable property. It is very important to stress “movable property” because in respect of marketable securities we have the Stock Exchange in particular which lays down certain rules. If movable property, however, is sold by someone in the capacity of a broker or an agent—

I quote further—

What the hon. the Minister has done here is that by repealing this section he has abolished not only the duty but also the obligation to furnish a broker’s note, which is an, important matter. In fact, it is desirable to have it in order to avoid any dispute as to what the transaction was, what the purchase price was or what was sold. Here you actually do not only abolish the duty but you change the law in respect of the enforcement of a claim based on a transaction of this nature. I believe it is in the public interest that there should continue to be an obligation to furnish a written broker’s notice, not only in respect of marketable securities sold on the Stock Exchange, but also in respect of other movables. I believe this is desirable in the circumstances.

I want to refer to clause 12, which amends section 28, which relates to adhesive stamps. I am fully cognizant of the problem which exists in that there has been trafficking in revenue stamps of various kinds, both used and unused. I think it is an evil which has to be stamped out. I want to draw the hon. the Minister’s attention to the effect of subsection (1)(a). In practice, when one attorney asks another to help him out with a revenue stamp, in terms of this subsection he will now be committing an offence. This surely cannot be the intention. It seems to me that there should certainly be an overall exemption granted to attorneys in order to deal with this particular problem and possibly to other persons who are not necessarily subject to this provision or suspected of indulging in this kind of practice. It creates a problem because I think this legislation, although desirable, appears to be somewhat too wide.

I must point out that in terms of subsection (2) there is a presumption of guilt based on possession. In this case it is quite clear that guilt can be proved without the evidence of the party concerned. There may be other evidence to show that, in fact, an offence has been committed. This presumption of guilt merely based upon possession, when that act of possession may be completely innocent—one may for example be collecting these stamps—is I believe undesirable in these circumstances. We shall move the deletion of subsection (2) during the Committee Stage. These are all the matters that we have to comment on in respect of this legislation. We shall support the Second Reading of this Bill.

Mr. Speaker, I do not think there is much that has to be said about this legislation since this is legislation which is in fact welcomed throughout the country. I really cannot understand the problems of the hon. member for Yeville. He stated that companies should not be taxed any higher. However, I do not believe it is a very valid argument because the concessions in this legislation envisage and intend, in the first place, to give the necessary relief to the ordinary man who wants to buy a house, that very buyer the hon. member for Yeoville mentioned, the young man who does not have that much capital, and not to the company which undertakes large-scale property development or purchases properties. It is correct that, as far as the company is concerned, there is only a non-recurring payment and no subsequent payments, because subsequent transactions are affected purely by means of the transfer of shares. There is no tax payable thereafter. For that reason the argument of the hon. member for Yeoville is not valid, however, to argue that township developers are being penalized especially on the grounds that they sell some of these properties and that these properties are sold to persons who buy them in order to build on them, is no argument. It is clear that those buyers, in turn, also benefit by this and that it is consequently quite correct. To say, in the light of this, that industrial properties should be involved in this, is ridiculous. It was never the intention of this legislation that that should happen.

The hon. member for Yeoville experienced great problems with the formula which is being applied here in respect of the transactions described in this clause. The hon. member is a lawyer who has been in practice for many years. I cannot understand how he can come along and tell us now that he has problems with this. It is the simplest formula there could be. It explains in the simplest terms in which way transfer duty is calculated in respect of transactions in undivided shares. For the hon. member for Yeoville, of all people, to come along and tell us that he objects to this, is in fact an admission on his part that he, as an hon. member on this side said, has not been in practice for many years.

I repeat that this legislation is being welcomed in all quarters because it gives the benefit of solving these problems to the buyer of properties who, especially on account of the rise in costs and prices which has taken place, has recently had difficulty in meeting the costs. The Bureau for Economic Research of the University of Stellenbosch has calculated that prices have recently risen by up to 2½% per month. For this reason, too, I believe that this legislation will be welcomed. For that reason, too, The Cape Times mentioned in an article—

The vice-chairman of the Association of Building Societies described this measure as follows, according to a report in The Cape Times of 15 August—

I regard this measure, i.e. the abolition of stamp duties in certain instances, the abolition of the duty in these instances and the consolidation thereof in the transfer duties, as a classic example of combating inflation. It encourages sound spending together with sound productivity—which is so essential at present, especially in the building sector—in order to consolidate.

I do not think it is necessary to dwell on this measure any longer. I think it is a very fine measure which is being welcomed in all quarters. It can bring great relief to potential buyers. As has also been mentioned, it will expedite matters as far as the registration of deeds is concerned. As far as conveyancers are concerned, it will also improve the position since it will be possible to dispose of registration more expeditiously. For these reasons I find it a privilege to support this legislation.

Sir, the hon. member for Yeoville raised a number of points. I do not know how much time we really have, but he has given me some amendments.

Your time does not count.

No, but I want to deal with some of these issues in case we do not come to all of them. First of all, there is the question of transfer duty where companies are concerned. The difficulty is that if we apply the 1% and the 3% rate there as well and not the 5% rate as we want to do, we are going to sacrifice a very substantial amount of revenue running into millions of rand. That is the first difficulty and it is a very practical one. The hon. member said that we must bear in mind the public and young married couples and people who are putting up homes and he mentioned township developers and the fact that this duty could simply be passed on. In the first instance, of course, if property changes hands through the transfer of shares in a company, then there is a stamp duty of only 1%, but as often as not—I think the hon. member will agree—the company or the developer purchases the land and then erects the building, and the transfer duty is payable only on the land. It is not payable by him, of course, on the building he erects. Then, of course, the transfer duty is an item of cost, so I do not think in practice that it is really such an important issue. Sir, then the hon. member referred to the formula. It is quite true that one would prefer to use simple English or Afrikaans, if one is able to do it, and not a mathematical formula, but in the case of these undivided shares you can in fact get some pretty complicated cases. In one transaction, for example, you may find that there is a one-third undivided share in Property A, a quarter undivided share in Property B, and a fifth undivided share in Property C. Maybe this is a rare sort of thing, but these things do happen, and in a case of that kind I think you will find, Sir, that you really do need a formula, because if you are going to try to transcribe that into English each time it could be pretty involved. I merely mention this, Sir, because we have to try, of course, to cover all cases.

Sir, if I may I should like to come back to some of the other points, but since the time is short I should like to refer to the new section 28A—this question of revenue stamps—because I do not know how much time the hon. member is going to have. This clause will make it an offence, first of all, for any person other than an officer in the Public Service acting in his official capacity, or any person acting under the written authority of the Secretary, to sell or otherwise dispose of any used or unused adhesive stamp. The hon. member mentioned the case of attorneys where one perhaps hands over a stamp to another. But, Sir, the difficulty is that there is a certain amount of abuse going on. I am not saying that attorneys are dishonest, but this does happen in their offices; it happens perhaps amongst junior messengers and others from time to time, and the difficulty there would be to know how to handle those cases if we simply gave attorneys a blanket exemption. I do have difficulty, therefore, in acceding to the request to accept this amendment. The abuses which have been brought to our attention do tend to occur in attorneys’ offices, and any general exemption in favour of attorneys would automatically apply to their employees and it would make it virtually impossible to apply the proposed new section.

May I ask the hon. Minister a question? If he reads section 28A, he will find—this is one of the difficulties—that it says that “any person who sells or otherwise disposes of a stamp to any other person, etc.”. That actually means that if the attorney goes and buys stamps at the Revenue Office and makes them available to his client for the purpose of putting them on a document and then charges his client for them or does not charge him for them, he is actually committing an offence because he is disposing of them. This is really the problem. Sir, that is surely not the mischief that you are trying to get at, because if you are hitting at that, it is going to be impossible to conduct a practice.

I dare say one will find that there are possibly difficulties of that kind, but the problem is a very real one and we are trying to meet it in this way. If we are going to make exemptions and allow this sort of thing, we are not going to control this problem. I am quite sure of that. I think if an attorney has purchased these stamps for his clients, he is surely acting as an agent for his client.

He purchases them for himself.

He has them in stock.

But in the case where the client is wanting the stamp, the attorney purchases the stamp for his client.

No, he keeps a supply in stock.

I think we shall have to be very careful. I am quite prepared to look into the matter with our advisers. I shall look at it again to see how it works out in practice. I must say that our view is very clear at the moment.

I want to deal now with the provisions of the proposed new section 28A(2) inserted by clause 12. The hon. member raised this question and I think that if the hon. member has time, he wants to move an amendment. If the hon. member is going to have time, I shall not deal with it now. Will he have time?

I shall have time to move it but not to discuss it. However, you may deal with it now, because your time does not count.

I think it will be better if I sit down now and give the hon. member the opportunity to deal with it.

You deal with it, because your time does not count. [Interjections.]

I am trying to be as helpful as I can. The Association of Law Societies has also expressed its disquiet on this point of presumption. I am sure that they are perturbed by the possibility that an innocent person may be convicted unjustly under this section. I think it must in the first place be pointed out that this is not a conclusive presumption. The accused person who has innocently come into possession of a used revenue stamp will surely not have any undue difficulty in having his story, if it is an honest story, accepted by any court. All that the section really says is that the accused must give a reasonably convincing explanation as to how he came to be in possession of the stamp and as to what he proposed doing with it. There is an onus on the prosecution in the first place to show that it is a used adhesive, stamp. That is quite clear.

It will not be difficult to prove that.

It may not be, but I must say that I find it difficult to see why anybody in the normal course of events would want to be in possession of a used stamp which is not affixed to a document.

What about a stamp collector?

It must be borne in mind that a revenue stamp which has been used was affixed to a document which was subject to duty and should have remained affixed to the document to show that the duty had been paid. That is the object. The removal of a stamp, very likely by stealth, is in itself a deplorable act as it must cause embarrassment to any person wanting to use the document in court proceedings and finding that he cannot do so because the document is not duly stamped. I do not think there can be a valid excuse for removing a revenue stamp from a document which is in fact subject to duty. I think one can easily imagine the embarrassment caused in a public office such as the Deeds Registry or even in an attorney’s office when the custodian of documents which have been duly stamped finds that the stamps have been removed. The presumption that a person found in possession of a used stamp which is not affixed to a document knows that it has been removed from a document and intends to do something illegal with it, is surely a natural one, and the statutory provision merely emphasizes this. I have already said that there is of course an onus of showing that a stamp is a used one. That onus rests on the prosecution. It is only when that onus is discharged that the presumption arises. Finally, I want to add that the proposed section 28A(2) does not introduce a radical new principle into the Stamp Duties Act. Section 27(2) of the principal Act contains a similar provision in regard to a person who purchases or receives or has in his possession any paper used for making stamps before the stamps have been made or any plate, die, dandy-roller, mould or other implement used for manufacturing stamps. This provision is, of anything a good deal more drastic than the provision which is now being introduced. One might possibly ask what is really an adhesive stamp. In the Stamp Duties Act a stamp is defined, inter alia, as an adhesive stamp approved by the Minister of Finance for use in terms of that Act. In other words, it is clearly a revenue stamp and not a postage stamp or any other sort of stamp. These are the practical issues which are being encountered in practice in this matter. After very careful thought this is the way we felt this matter could best be handled. I personally feel that this is an effective and also reasonable way of doing it. I think that I shall leave it there for the moment.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Clause 3:

Mr. Chairman, I wish to move the following three amendments—

1. (1) To omit all the words after “of” in line 25, page 5, up to and including “(5)” in line 32;
2. (2) to omit all the words after “rand” in line 38, page 5, up to and including “person” in line 42; and
3. (3) to omit paragraph (b) of subsection (1).

The hon. member for Yeoville motivated the first amendment during the Second reading debate by pointing out that a 5% transfer duty on property registered in the name of a company was going to militate against lower costs generally, particularly in township development. One must bear in mind that all the concessions which are made in this Bill are for the property owner, particularly for the dwelling owner. It is going to mean that this 5% transfer duty is going to be passed on to the purchaser. In other words, the object of the Bill to make land available to home-dwellers at a reduced sum is going to be obstructed by this very clause.

The second amendment provides that this will not apply only to land for dwelling purposes in the name of a natural person.

The third amendment will allow the deductions that are at present in the Act and which are now deleted, namely two-thirds of the amount of duty if the value of the property on which duty is payable does not exceed R15 000, one half of the duty if the value exceeds R15 000 but not R20 000 and one-third if the value exceeds R20 000 but not R25 000. I am afraid that time does not permit of any further motivation.

Mr. Chairman, I am rising to make a few remarks about the amendments which have just been moved by the hon. member for Wynberg. The hon. member for Wynberg is mistaken.

His first amendment deals with the question of levying a transfer duty of 5% on fixed property purchased by companies. I think the object of his amendments is to place the transfer duty which will be applicable to companies on the same footing as the transfer duty which is applicable when private persons purchase property, i.e. 1%. The argument advanced by him, i.e. that the transfer duty applicable to companies would simply be transferred to the eventual buyers of properties in townships is, in my opinion, an argument which may well be advanced, but which is not a material one. What happens when a township is developed? In the first place, vacant land is purchased, quite possibly at a very reasonable price. In many instances it is farm land or land with a very low valuation. Consequently the amount is not paid on developed or very expensive property but the transfer duty is paid in respect of a large piece of vacant land.

Therefore, the amount which is paid in transfer duty is not an enormous amount, for the amount on which it is paid is far lower than the value of the property once it has been developed as a township. In the second place, if this amount which is paid in transfer duty is transferred to the buyers of the eventual plots in that particular township—it is normal practice and it happens this way—such transfer duty is spread over a whole number of plots into which that township is divided. Therefore, it is a minimal amount per plot which is eventually passed on to the various buyers. Although it is a valid argument. I therefore do not regard the argument advanced by the hon. member as being a material one.

His second amendment actually has the same object as the first, for it also seeks to place companies on the same footing as individuals in terms of the new section 2(1 )(b) of the Transfer Duty Act which is inserted by clause 3(lXa). It also seeks to give companies the opportunity to pay 1% if the amount does not exceed R20 000, and 3% if the value does exceed R20 000. The same argument I advanced a moment ago in respect of his first amendment also applies in this particular regard and we therefore need not pursue the matter any further. At first glance his third argument might seem to be a fairly interesting one, i.e. that by the deletion of subsections (2). (3) and (4) of the existing section 2 of the Transfer Duty Act certain deductions existing for certain persons—these are individuals and not companies—were falling away, i.e. a deduction of two-thirds of the transfer duty in some instances, half of the transfer duty in other instances and one-third of the transfer duty in still other instances. If the hon. member had looked at the transfer duty which is now going to be levied in terms of the new section 2(1 )(b), i.e. 1% of the value of property which does not exceed R20 000, he would have realized that that is exactly what was allowed in terms of the old deductions. I think that in terms of the old deductions one was entitled to a two-third rebate on all amounts under R5 000. The basic transfer duty was 3% and if one pays two-thirds of 3%, one receives a deduction of 1% on R5 000. Now it is 1% for amounts under R20 000. So this means a considerable improvement for the buyer. And so it continues. Where we are now dealing with 3% on amounts exceeding R20 000, we should realize that the old transfer duty for the purchase of property by an individual was 4% above a certain amount. If the hon. member has a look at the present Act, he will come to realize that this deduction he is requesting and which is falling away because of the deletions effected by paragraph (b) is in fact included in the draft of the Bill as it stands.

Mr. Chairman, I have replied in brief to the amendments the hon. member for Yeoville proposed to move. I did not reply to them in detail, but I think that what I said will make him realize that it is not possible for us to accept these amendments in this form. There are practical problems we encounter in this regard. I think I should just make this clear to him so as to obviate any misunderstanding. I am sorry, but I am not in a position to accept those amendments.

Amendments negatived (Official Opposition dissenting).

Clause agreed to.

Clause 12:

Mr. Chairman, I move as an amendment—

The basic reason the hon. the Minister suggested as to why the presumption should remain is that he considered that it was necessary in order to effect the proof. He said it will be very easy for someone to come along and say, “That is why I have the revenue stamps in my possession.” There we are already at the prosecution stage. I think it is inherent in the judicial system that, unless there is knowledge which only the person concerned has, the onus should be on the State to prove the offence and that there should therefore not be a presumption of guilt. That is why we moved this amendment. In regard to the earlier part of the proposed section, we have grave difficulties with the proposed new subsection (1)(a). The problem one has is that with professional people it is the practice throughout that revenue stamps are purchased by professional people for the purpose of being used for specific matters. It seems fairly clear that that will fall under the term “disposal”. With all due respect, in these circumstances either the authorities are going to have to impose the high estimates …

Order! In terms of Standing Order No. 87 the time for dealing with this Bill has now expired and all amendments consequently drop.

Clause agreed to.

House Resumed:

Bill reported without amendment.

Bill read a Third Time.

Mr. Speaker, I move—

The amendments being envisaged with the introduction of this Bill relate for the most part to the training of persons as teachers, and in the second place to the constitution and functions of the National Education Council.

It is necessary for the definitions of “service member” and “former employer” to be deleted because all the members of the executive committee of the envisaged National Education Council are appointed on a part-time basis, while the present Act provides for the appointment of such members on a full-time basis. The definition of “head of education” is being amended in view of the fact that the Director of the education branch of my department becomes a member of the National Education Council. In addition the definition of “school” is being amended by indicating that pre-primary education is included in education. In this way any doubts on this matter will be eliminated. Although no formal education is provided in pre-primary schools, there the child is at least being equipped or prepared to acquire specific knowledge and is consequently receiving education. That is what is being envisaged with the amendments to the definitions in clause 1.

The Act provides at present that the training of White persons as teachers for secondary schools may be provided only at university, subject to the Minister’s powers to consent to such training in a subject or in a course also being provided, for a period which the Minister may determine, at a college falling under my department, and on the advice of the National Education Council also at a college falling under a provincial administration.

I have already consented to certain courses being offered at the said colleges for specific periods. However, it has apparently become necessary for certain subjects and courses, for example the teacher’s diploma for workshop instructors, to be offered at colleges for further periods because universities are experiencing problems in this regard. Since it is not possible to determine in advance, with any certainty, how long such periods ought to be, it is proposed that the Minister be empowered after consultation with a university and an administrator or with a university and a college for advanced technical education, to determine from time to time the subject or course which may be offered at a college. Since, as mentioned, consultation with the relevant bodies takes place in advance, it is considered unnecessary to obtain the advice of the National Education Council and the Act is being amended accordingly. Provision is also being made for the fact that consent granted by the Minister prior to the commencement of this Act, for certain subjects or courses to be offered for further periods at colleges, is considered to have been granted in terms of the provisions of the relevant section as amended. It has already been necessary to grant such consent in respect of the part-time and correspondence courses for the National Teachers’ Diploma (Technical) in order to maintain continuity in the training.

In addition the Amendment Act provides that the statutory requirement that persons may only be trained as secondary school teachers at a university, will apply with the retention of section 2A of the Advanced Technical Education Act (1967) and the proposed section 22A of the Financial Relations Consolidation and Amendment Act (1945). The reason for this is that in terms of these two sections a college may render assistance to a university in the training of teachers by making physical amenities and staff available. At present the Act provides that the training of White persons as teachers for primary and pre-primary schools shall be provided at a college or a university: Provided that as of a date, determined by the Minister, such training shall take place at a college and a university working in close co-operation. However, in the Act there is no indication of what is meant by this “close co-operation”, and with a view to such close co-operation it is deemed necessary to provide that an arrangement between an administrator and a university shall be approved by the Minister. This is dealt with in clause 2.

The administrators of the four provinces are in favour of fees being imposed for pre-primary education, and the National Educational Council is in agreement with this. In this connection I want to point out that pre-primary education is not compulsory education. It is, however, desirable to continue providing free pre-primary education to certain pupils in Government schools, for example to physically handicapped and epileptic pupils. Consequently it is proposed that the Minister should determine the categories of pupils in respect of which fees for pre-primary education may be imposed.

†In terms of the present section 3, draft legislation affecting education shall, with a few exceptions, be introduced in the Senate or the House of Assembly or in a provincial council only after prior consultation between the Minister and any other interested Minister or Administrator and after the Minister has obtained the views of the Executive Committee of the National Education Council. It is proposed that the provision that the Minister shall obtain the views of the Executive Committee be deleted. The reason for this amendment is that all the members of the proposed Executive Committee will be appointed on a part-time basis, and probably, not all will be living in the Transvaal. Matters arising from legislation usually require urgent attention and considerable costs could be incurred should the Executive Committee meet every time such matters are to be considered. If the provision concerned is deleted, the Minister would nevertheless be able to obtain the Executive Committee’s views if this is considered necessary. I have now dealt with clauses 3 and 4. I shall now elucidate the proposed amendments in regard to the constitution and functions of the National Education Council. In terms of the proposed provision the reconstituted National Education Council will consist of not more than 21 members, whereas the present council consists of not more than 29 members. Where the present executive committee of the council consists of a part-time chairman and six members who are appointed thereon on a full-time basis, the proposed executive committee will consist of a part-time chairman, a part-time vice-chairman and three other members also appointed thereon on a part-time basis. As the council has already advised the Minister in regard to almost all the matters in connection with which policy can be determined in terms of sections 1B(1) and 2(1) of the Act, the smaller council and executive committee should be able to cope with the work.

I am of the opinion that the functions of the reconstituted council should be comprehensive, broad and general, aimed at bringing about gradually through advice and consultation, the adaptations which are in the interests of education. Therefore provision is being made that the council, in addition to its present functions, shall advise the Minister, at his request, in regard to, inter alia, education provided at a university, a college for advanced technical education, pupils on a part-time basis and apprentices. In view of the council’s proposed functions, provision is being made for persons in executive posts, namely Directors of Education, two principals of universities and a director of a college for advanced technical education to be appointed on the council. As the council also advises the Minister in regard to the coordination of research or investigation and planning in the field of education, provision is being made for the appointment as a member by the Minister of an officer of the Human Sciences Research Council.

The executive committee of the council, which usually initiates advice, now and then desires to obtain advice in regard to a matter requiring special knowledge or experience, and provision is therefore being made that the executive committee may, with the approval of the Minister, designate a person to advise it.

The Act at present provides that the Minister shall lay the council’s annual report upon the Table of the Senate and in the House of Assembly and that copies thereof shall be furnished to each Administrator. It is proposed that this provision be deleted as notice of any steps taken by the Minister in determining the policy in terms of sections 1B(1) and 2(1) shall be given by notice published in the Gazette. It is no longer considered necessary to give notice in the Gazette of the appointment of members of the council, and the provision in question is therefore deleted. Clause 5 has now been dealt with.

In view of the proposal that all members of the executive committee of the council be appointed on a part-time basis, the present provisions concerning the appointment of members of the committee on a fulltime basis have been deleted. Provision is being made in the usual way for the Minister to determine, in consultation with the Minister of Finance, the remuneration and other allowances to be paid to members of the council or of a committee of the council or any person designated by the executive committee to advise it. That is what is being aimed at in clause 6.

*In conclusion I shall deal with a few provisions relating to the Financial Relations Consolidation and Amendment Act, 1945. In terms of section 18(l)(a) of the latter Act, a provincial council may, with the prior consent of the Minister, provide for the payment from the provincial revenue fund of amounts needed to supply accommodation, for the duration of an academic year, to persons being trained at a university as provincial school teachers. In addition, a provincial administration may, in terms of that section, make buildings or equipment available to a university on a part-time basis for the training of such teachers. However, these provisions restrict co-operation too greatly, and therefore provision is being made to approve the furnishing of accommodation for longer periods and to make it possible for provincial administrations to make buildings, equipment and facilities or services available on a full-time basis as well.

Section 22A is being inserted in the Financial Relations Consolidation and Amendment Act, 1945, to make provision for a valid arrangement and an agreement in terms of which a provincial administration may grant assistance to a university in presenting certain subjects or courses for the training of persons as teachers. This provision is necessary because certain universities do not have the facilities and staff available to provide that training in all the subjects and courses. In terms of such an arrangement the relevant students of the university will be granted access to the provincial college so that use may be made of the college’s locales and equipment. In addition, a provincial administration is empowered, by agreement with a university, to make a member of its staff available to the university to assist with the relevant tuition and training. It may be pointed out that section 2A of the Advanced Technical Education Act, 1967, as inserted in section 4(1) of the Education Laws Amendment Act, 1973, makes provision for the training of secondary school teachers at universities, in collaboration with certain Colleges for Advanced Technical Education. I have now dealt with clauses 7 and 8.

Mr. Speaker, one only has to read the long title of this Bill to realize that we are dealing with a piece of legislation which contains a variety of principles. While we listened to the hon. the Minister, we realized that many amendments were being introduced by this Bill. At the outset I want to indicate that the Bill contains several amendments with which we agree; in fact, we welcome these. I believe that even the most biased observer will be able to see in them a clear vindication of the attitudes on education which we on this side of the House have held in the past. Some of the amendments clearly indicate that the hon. the Minister’s predecessor acted overhastily. Perhaps at the time when he introduced certain legislation and embarked upon certain schemes, hon. members on the opposite side were slightly blinded by stark naked ideology, with the result that they started schemes which were just not possible. I want to say to the hon. the Minister that since he was elevated to his present position about four years ago, I have always had sympathy with him because he had to clear the decks, so to speak. Having listened to the hon. the Minister’s speech tonight, I want to say that I still have sympathy with him because, apparently, he fails to learn from mistakes of the past. Perhaps this is one of the reasons why we have to deal with an education Bill which from the point of view of education, still fails to right the wrongs of the past, those things which are definitely wrong in the field of education today. It therefore contains principles which we cannot and certainly dare not approve because these amendments still do not do justice to the high importance which we on this side attach to education in general and to the status of the teacher in general. We shall therefore be unable to support the Second Reading of the Bill.

As the hon. the Minister has indicated, clauses 1 and 3 deal with pre-primary education. I want to say clearly that we must realize that through the inclusion of pre-primary education in the definition of “school”, pre-primary schools—in other words, nursery schools as they are commonly known—will come within the ambit of the National Education Policy Act, Act No. 39 of 1967. It is common knowledge that we on this side of the House are opposed to several of the provisions contained in that Act. I want to make it quite clear to the hon. the Minister so that he can appreciate why we are going to oppose this measure. In the first place we on this side of the House are committed to the introduction of a federal system in South Africa. For instance, we regard education to be something of intimate concern to the legislative assemblies envisaged and as far as policy is concerned, we believe that the local authorities and the relevant bodies in each community must have control over the determination of their own policy. You can have co-ordination on a national level, but the determination of policy is something which must be done on a decentralized basis. This is the very essence of a federal concept. We are completely and utterly opposed to dictation or rule from Pretoria. In terms of this legislation …

May I ask the hon. member a question? What was the attitude of the United Party when this Government passed the control of education of Coloureds into the hands of their own controlling body?

Our attitude is quite clear. As far as the provinces are concerned the communities in, say, Natal must control their own education. Two years ago when control of the education in South-West Africa was taken away from their Legislative Assembly, we believed that it would have been better for the local government in South-West Africa to have exercised that control. It is quite clear that the hon. the Minister as the leader of his party in the Cape Province does not appreciate the federal policy and that we recognize the Coloureds as a community who can control the education of their own people. The fact remains that we are opposed to rule and dictation from Pretoria. In terms of section 2 (1) of the Principal Act the Minister may—

In other words, the Minister controls it. This is centralized control. When this principle was enforced upon primary and secondary education this side of the House objected to it in principle because, as I have stated, we are opposed to centralized control over matters such as these. The determination of policy should be done on local levels. The hon. the Minister is now including pre-primary education within the ambit of the definition of “school”. It means that he can determine the policy and that he can rule it from Pretoria. We believe this is quite unjustifiable. The only argument hon. members opposite can advance is that it is necessary in order to assist them financially. I am aware of the fact that the provision for pre-primary education in South Africa are totally inadequate. Only 8% of the White children in the age group between 3 and 6 who can go to pre-primary schools—the actual figures are 17 000 out of a possible 217 000—attend these schools. What is the main reason for this? The main reason is not because it is not being included within the definition of “school’ but inadequate financing. If hon. members do not want to accept my word for it, I want to read what Dr. Ruth Arndt, the president or the ex-president of the Nursery School Association of South Africa said in May this year—