Mr. Speaker, as I said in my Second Reading speech on this Bill, it does not form any part of my thinking to play politics with the finances of the country. Similarly I have no intention either of making use of the opportunity which this debate offers to score debating points off the hon. the Minister although I must say to him that the openings which he gave me are very tempting indeed. In his reply to the Second Reading debate the hon. the Minister made certain statements which I think do require a reply from this side of the House. I believe that some of the statements he made were made on unsound economic precepts and it is a matter of concern to me that the hon. the Minister of Finance of this country and the Government should be basing their policy and their actions on unsound economic precepts. I intend returning to this topic at a later stage during my speech this afternoon. First of all, however, there are certain other matters that I should like to deal with. I should like to take the opportunity this afternoon with the main Budget only four weeks away, to give this House and to give the Government some idea of the thinking of this side of the House in regard to the policy of the Government not only in relation to the Budget but to finance generally and what that policy should be with regard to the selection of overall strategic aims and some of the tactics to be used in order to achieve those overall objectives.

I think that we can say generally that there is agreement between this side of the House and the Government side on the general objectives of economic policy and I think that at the present stage there are two main priorities that have to be dealt with. There is firstly, the priority of achieving a fairly high rate of real growth which is the only way in which living standards in this country can be improved. The second main objective is to take steps to combat inflation which does so much to erode living standards which can only be raised through growth, and which saps the strength of our whole economy. As a corollary to the fighting of inflation I believe there is a second objective or by-objective that should be followed and that is to alleviate the effects of inflation on those persons who can least afford to bear them. There are a number of measures open to the Government in this regard. Some of the methods which may be selected to promote growth will make it more difficult to combat inflation and vice versa. This applies particularly to the application of monetary measures such as credit control and interest rates and there can be a conflict between the effects of measures taken to promote growth and those of measures taken to combat inflation. There are, however, also measures available to this Government which will stimulate growth, those measures which promote productivity and encourage investment which will also help fight inflation. I believe quite obviously that the policy of the Government should be concentrated on the latter type of measure; in other words, measures which have the dual effect of promoting growth and combating inflation.

I believe that the need for growth cannot be emphasized too strongly because it is only by means of real growth, by promoting real growth at a fairly high rate, that we are going to make any appreciable impression on the living standards of the people of South Africa. I would say that the need for higher living standards in South Africa for everybody is very evident and very urgent. It is very evident and very urgent both in absolute terms in relation to the level of income required to maintain reasonable standards of subsistence and it is very evident in terms of the undue and unjustifiable disparities in income which exist and which are based on differences of colour, and of the undue and unjustifiable disparities in income, much higher than exist normally in other countries between the levels of income of skilled and unskilled workers. I believe that there is nothing to be complacent about in this whole situation. The latest figure available to me in relation to the average disposable per capita income in South Africa, the figure for 1973, shows that the average disposable per capita income was R516 per annum per person. When this figure is broken up into the various race groups we find that Whites enjoy a disposable per capita income of R2 208, Coloureds R348, Asiatics R444 and Africans R120. Mr. Speaker, this reflects a very low income level as far as the non-Whites of South Africa are concerned. The Government may well argue that our non-Whites are better off than non-Whites in other countries in Africa. They may argue that overall average per capita income in South Africa is reasonable in relation to other countries in a similar state of development elsewhere in the world, countries such as Brazil. I do not question that argument, but I do not think it is very relevant.

Why not?

I think that what is relevant is whether the income level in South Africa is as high as we have the potential to achieve.

How do you measure that?

Even one of the Government’s own departments, the Department of Information, a department which I might say is not usually given to painting the picture of South Africa in anything but rosy colours, admits in the excellent Year Book which it produced for 1974 that the average per capita income in South Africa is low. I believe, Sir, that the position of the level of incomes and of the wage gap in South Africa, which is reflected in the figures which I have quoted and which also reflect the abnormally high gap between skilled and unskilled incomes, is a very, very serious one. It is one of which we must all take note, it is one of which the Government must take note, it is one of which private enterprise must take note and do something about. This is a position, Mr. Speaker, which is not conducive to peace and to contentment amongst our population. It is not conducive to the creation of a situation where solutions to our racial, political and social problems will be easy to find. That is why it is so vitally important to give high priority to growth in our financial policy and in the Budget that is to come. The Budget must be framed to promote real growth and not to hinder growth, and it must do so in such ways as to help in the fight against inflation.

Sir, I would like to say a few words now about the overall Budget structure. I would say, first of all, that if the Minister is going to give private enterprise maximum room for expansion by giving it a maximum share of the resources of this country —and I believe that that is a very desirable thing to aim at because it is the private sector that is most likely to promote the growth that we want—and if the Minister is going to make a really major contribution towards fighting inflation, then he has got to be really tough in pruning Government expenditure. I know that he has to use other criteria; I know that he will have to provide a very large sum for defence and that he will have to provide for the security of the land. Those are items that we will support to the hilt, but having done that, I believe that he must lean very heavily on the criterion as to whether State expenditure contributes positively to the productive performance of the economy. Unproductive expenditure by the State— and here I quote, for instance, some controls such as price control and import control which, while they may not be completely superfluous, probably have too big an organization for the job they have to do—is a cost element in the cost structure of the country. You cannot get away from that. In an inflationary situation such as we have at present which is caused by cost push, it is highly undesirable to introduce more cost factors than is absolutely necessary. Having regard to the total amount that is being voted for in this Bill, namely R1 900 million, and realizing at the same time that one cannot draw too definite a conclusion from that amount, this large sum being called for does, nevertheless, not make me particularly confident that the pruning of expenditure that I would like to see is going to take place.

Secondly, I hope that this hon. Minister of Finance, unlike his predecessors going back for a long period, is not going to take more from the taxpayers than is needed to meet expenditure on Revenue Account. The present time, with inflation as rampant as it is and with a slowing down in the real growth of the country, is not a propitious time to take more from the private sector than is absolutely necessary. Private individuals in their capacity as taxpayers are hard pressed on account of the rising cost of living to make ends meet without being burdened with taxation at a level which is higher than absolutely necessary. Businesses, the other main taxpayers, are hard pressed to maintain their cash flows necessary to keep the economy of the country going and to replace the equipment of the economy, let alone expanding the capacity of the economy. I think that most businesses are suffering from liquidity problems and the Government should take this into account in its Budget proposals.

I hope that this hon. Minister will aim for a balanced Budget, a Budget without any appreciable surplus and without any appreciable deficit.

On the assumption that for the current year, ending in March, there will be a surplus, and according to the latest figures available there should be a substantial surplus—measurable probably in hundreds of millions of rand—there should be room for tax relief. If tax relief is to be made— and I sincerely hope that the Government will be in the position to give tax relief— then I believe that some of these objectives must be the objectives of the Government. I believe that the first priority in giving tax relief must be to alleviate the burden of inflation on consumers and particularly consumers in the lower income groups. This can be done by reducing sales taxes, particularly on necessities such as household goods: it can be done by reducing the excise duty on petrol, because petrol is a cost item that everyone has to bear; or it can be done by increasing subsidies on necessities such as bread, maize and dairy products. In fact, I think it is going to be necessary to increase those subsidies in any case to take care of increased farming costs and at the same time to protect the consumer against unnecessary price increases.

Then I consider that the Government should continue a program of improving welfare benefits to those persons in the community who are unable to fend for themselves. This includes the aged, the disabled and, of course, pensioners generally.

The Government should also take steps to narrow the gap between the pensions paid to Whites, Coloureds and Africans. My appeal to the Minister in this regard is not to be afraid to be bold, because I believe the dividends on doing the things I have suggested will be great. Then I believe that the Minister must consider steps to encourage productivity and harder work by giving income tax payers the incentive to work harder and to produce more. One way of doing this will be to give further relief than the rather nominal relief which is at present given to married working women. I believe that if you are really going to try to get married women into the labour market—and there are plenty of them who could contribute to the productivity of the country—very much greater concessions will have to be made in regard to their tax status. I believe that a lower rate of marginal income tax is also an urgent necessity. Our present maximum rate of 63% is still substantially higher than that recommended by the Franszen Commission and it is a cause of discouragement to people in the higher brackets to produce more. Then I believe that the hon. the Minister has got to do something about the present rate of progression in the income tax brackets. There is a need to flatten out the bulge which at present exists, but there is a greater need to take account of the effects of inflation on tax liability. The present position is that if monetary incomes increase at the same rate as the rate of inflation real incomes decrease because higher monetary incomes place them into higher tax brackets. In other words, in order to keep real income in tact it is necessary to increase monetary incomes at a higher rate than the rate of inflation, and that in itself is a highly inflationary situation. In other words, costs go up at a higher rate than even the rate at which prices are going up, and that must accelerate the whole process of inflation.

Finally, in so far as income tax payers are concerned. I believe there is a very strong case for helping home-owners by making bond payments deductible. Then I think that the hon. the Minister should have a look at the position of businesses in relation to their taxation. I believe that one step he must consider is the reduction in the rate of company tax. I say this not in order to facilitate the payment of higher dividends. I say it in order to assist the liquidity and the cash flow position of businesses. I think the same applies to the undistributed profits tax which is applicable to private businesses. As far as productive private companies are concerned, i.e. private companies which are not holding companies or investment companies, the undistributed profits tax could well be done away with altogether. If it is not done away with altogether, then at least some relief in the rate of taxation and in the exemptions from the tax should be given. Private companies form, after all, the backbone of the economy of South Africa. Businesses need relief, as I have said, very badly; they need relief to help them with their cash flow problems, problems which have been caused by inflation itself. There are several ways in which the Minister can do this. I have already mentioned companies tax and I have mentioned the undistributed profits tax.

There is also the possibility of increasing the scope and the size of investment allowances, and also the possibility of increasing depreciation allowances. I realize that at present inflation accounting in South Africa is in its infancy, and that the time may well not be ripe for any form of scientific assessment of depreciation allowances based on inflation accounting, but it is necessary, if the liquidity position of businesses is going to remain intact, that greater depreciation allowances be made by the tax authorities, to take account of the fact that the replacement of plant and equipment is going to cost much more than the original cost of that same equipment.

On capital account I believe, as I have already indicated, that the Minister should refrain from making revenue surpluses in order to finance capital works. By doing so he places an intolerable burden on the taxpayer, who has to pay more tax than is necessary. He also deprives himself of the opportunity of making some of the concessions which I have already described and which are so badly needed in order to promote growth and fight inflation. I believe that the hon. the Minister should rely primarily for the financing of his capital works on local savings and on borrowings from foreign sources. As far as local savings are concerned, I think if he is going to be successful in borrowing large sums, he will have to think up schemes which are going to counteract the ravages which inflation inflicts on savings.

I hope that the hon. the Minister will give serious consideration to the issue of an index-linked bond. This was a proposal which I first mooted in this House two years ago. It is one that has worked successfully in other countries, particularly South American countries, where it has had the effect of being able to help reduce inflation rates. It is a scheme which has the primary advantage of equity, in that what is borrowed is paid back in the same coin. As far as I know, it is the only form of borrowing that has that quality. I believe that any scheme that is based on equity deserves consideration.

Mr. Speaker, those are some of my thoughts in regard to the Budget. I should now like to come back to certain of the statements which the hon. the Minister made in his reply to the Second Reading debate. The first statement the hon. the Minister made was that he refuted my assertion that inflation discourages savings and thrift. He stated that savings had increased substantially in 1974. Mr. Speaker, I can find no evidence of that having happened., The latest bulletin of the South African Reserve Bank refers to “unchanged gross domestic savings up to the third quarter of 1974”. There was an increase in savings in 1973—these are the latest detailed figures available to me—and that increase in savings was due to two main reasons. Firstly, it was due to corporate savings having increased, and corporate savings increased primarily because profits had increased, and the profits increased largely in an inflationary time because they were paper profits made from buying goods at one level of prices and selling them at a higher level of prices when prices had gone up. The second reason why savings increased in 1973 was the increase in the current Government surpluses that year, which only arose because the Government was taking more out of the pockets of the taxpayers than it needed to meet its own expenditure. In 1974 there was an increase in personal savings, due probably to a non-repeatable factor, i.e. the increase in the income of farmers. Apart from the position in agriculture, personal savings—which are the measure of thrift—declined sharply in the year 1973 and presumably also in the year 1974. The latest figures are not available to me, but they are likely to continue to decline sharply. There are very good reasons why that is the case. The reasons are that persons obviously find it much more difficult to save as a result of the higher cost of living. Their incentive to save has actually been turned into a disincentive to save as the result of the ravages of inflation. The hon. the Minister made other assertions in his speech in the Second Reading debate, assertions which I find as unsound as his assertions in regard to saving. As my time has expired, I shall not however be able to go into these matters on this occasion, but I hope to have an opportunity to do so at a later stage. [Time expired.]

Mr. Speaker, I agree with much of what the hon. member for Constantia said this afternoon. For example, I agree with him that we would do well to have another look at the high marginal rate of taxation, and that we could look at undistributed profits tax, etc., but the problem which I have with the hon. member for Constantia, is that he contradicts himself so easily. Let me say immediately that he is an improvement on the average financial speaker on the opposite side of the House. He really tried to give a balanced view of finances this afternoon. I said that the problem is that he contradicts himself so easily. He advocated, for example, that considerable relief be given to the lower income groups. A few sentences later, however, he advocated the reduction of taxation. His solution is that the hon. the Minister of Finance must finance these concessions from his surplus. But at the same time he is the very person who advocated capital formation this afternoon. Is the surplus which the hon. the Minister of Finance uses for his capital expenditure, not in fact capital-forming? When he uses a surplus on the current account to finance capital expenditure, what else is it but capital formation? That is exactly what we want, because if there is one thing which is very scarce at this time, it is capital. Now he advocates that the hon. the Minister must distribute the surplus which, according to him, will arise in the Revenue Account, in the form of tax relief, particularly for the lower income groups. In the course of my speech I shall return to this. First I want to react to a statement which the hon. member made right at the beginning of his speech, viz. that there is too great a disparity between the disposable income of Whites, Coloureds. Asiatics and Blacks. The hon. member then quoted the figures in respect of the various racial groups—I presume that those figures were average figures. To my mind, however, they were completely distorted figures, because the percentage of Black people, for example, who belong to the entrepreneurial class—it is the entrepreneurial class that usually has a high income—is infinitely smaller than that for the White people. Therefore it is obvious that, if the average income of the one group is compared with that of another group, the income of the group which has a lower percentage of entrepreneurs has to be much lower than the income of the group which has a high percentage in the entrepreneurial class and in which there are highly sophisticated positions. Therefore I say that it creates a completely distorted image to come here with average figures to indicate how great the disparities are. I readily concede that there are still great disparities, but is it not this very Government which has purposefully sought to reduce these disparities over the past few years? Is it not this very Government which has caused the percentage increases for the lower income groups, especially the non-White groups, to rise far more than in the case of Whites?

In the course of my speech I shall refer repeatedly to statements which the hon. member has made, but I want to congratulate the hon. member for Constantia on not having lapsed into the old, hackneyed argument that the only reason why we have such high inflation, is that we do not make full use of all manpower, whether White, Brown, Black or whatever.

That will come.

It was a great improvement in his speech that he did not lapse into that old argument again this afternoon. Obviously he is beginning to see the light.

Today I want to exchange a few ideas with the hon. the Minister of Finance on the effect of inflation. The hon. member for Constantia also referred to this. I do not agree with the hon. member for Constantia that inflation is more of a burden to the lower income groups in particular. I do agree though that it is a burden to those who are no longer earning, but for the people who are still working and earning, it is not as bad as he tries to imply, because it is simply the case—and this is also an old argument which we have ad nauseam here—that the inflation rate is not rising more rapidly than wages and salaries. Therefore my greatest concern is not for those who are still working. Of course we on this side of the House have compassion for the lower income groups. After all, most of our people belong to the lower income groups. However, I should like to emphasize very strongly that I am not so much concerned about the people who are still working, because their income rises at least as rapidly or even more rapidly than the inflation rate. I am concerned about the people who are no longer working. In respect of this I want to pay tribute once again to this Government which looks after the most unfortunate sector of our society so well, viz. the lower income group that cannot care for itself. I do not know whether hon. members of the Opposition have noticed, but social pensions—that is pensions received by people who cannot care for themselves—have risen over a period of two years and two months by no less than 39%. They have risen from R492 per annum on 1 October 1972 to R684 per annum on 1 December 1974. Therefore I want to pay tribute to this Government for what it is doing for that most unfortunate sector of our society, the social pensioner on the lowest notch. This Government is also doing a great deal for the civil pensioners who are also having a hard time of it because they are no longer working. Every year increases are allocated with the amounts which are added to civil pension funds to keep those funds solvent and to enable them to increase the amounts paid out by them.

However, I think that we could do a little more in this connection, because I am convinced that those pensioners in particular who retired several years ago are being hard hit. A magistrate who retired about eight years ago told me only recently that he was not complaining, but that he had been forced to budget very carefully. In this connection I want to make a far-reaching statement this afternoon. Is there any reason why, for example, a retired magistrate of a certain grade who retired eight years ago, should receive a smaller pension than one who retired a year ago? In other words, is there any reason why the pension benefits of a man who retired last year should be much better than those of a man who retired say, eight, ten or 12 years ago? There is indeed a very great difference. I know that the objection is a lack of sufficient money, but I do want to ask that we look at this once again even if we have to take away from the man who retired a year ago and add to the man who retired ten years ago. There is really far too great a difference in the pensions received by people who retired a short while ago and those received by people who retired a long time ago.

But now I have not even mentioned the people who were self-employed when they were still working and who made provision themselves for an old-age income. For these people very little or nothing is being done. We now have a new brilliant and dynamic Minister of Finance and I believe that if he applies his abilities to giving attention to this major problem, he will indeed be able to do something. However, brand-new, dynamic ideas are necessary. We must stop saying that there is enough money for these necessary changes. We will have to look at the basic things again. What is basic in this situation in which the whole Western world finds itself today, is that inflation is reducing the buying power of our money very rapidly. In fact, inflation is reducing the value of our money by 10% or more per annum. Because this is the case, we shall have to manifest a completely new direction of thought if we want to soften the blow at all for our retired people. Here I plead especially for those retired people who were self-employed and therefore had to provide their own old-age income.

The most effective way of accommodating these people is of course to bring inflation down, for example, to 2% to 3% or less if that is possible. That is still the most effective way to do justice to those who have already retired. But apparently it is not possible and I am afraid that it is completely impossible in our Western world today to think of an inflation rate of 2% to 3%. I do not want to go into the reasons for this because they are obvious to all of us. Since this is the case, I want to advocate that we apply our dynamic mental resources to ensuring that justice is done to those retired people. Perhaps this would include a form of indexing.

I do not want to see us taking over the entire Brazilian system lock, stock and barrel, but perhaps we will have to use a form of indexing to accommodate these retired people in any case. If we cannot do justice to the retired people, we are undermining the thrift of our people. Once our people go so far as to say that the State cares for those who did not save during their working life while deductions are made from those who did save, we are destroying the thrift of our people. As a result of this the entire capitalistic system will collapse because no economic system, and not only the capitalistic system, can flourish without capital. If our people no longer save, there will no longer be capital. Therefore I advocate this afternoon that we apply our dynamic mental resources afresh to do justice to those who have retired. If we cannot succeed in stimulating the thrift of our people once again, we are simply sliding down the slippery slope where there will ultimately be less and less that can be shared among the people. Therefore I ask that we should please look again at the matter of the thrift of our people.

Here I want to make a little suggestion. Is there any reason why our interest on money which is invested should be fully taxable while dividends are taxable only to a maximum of two-thirds? Is there any reason why we should not treat interest in the same way as dividends? It is in fact the poor man, the man who is less comfortably off, who does not buy shares, but who invests his money to earn interest on it. Why should he be fully taxed on his interest while the taxpayer in the case of dividends is only taxed on two-thirds of his dividend income? This is only a minor matter, but nevertheless it is the sort of thing we must look at if we want to ensure that justice is once again done to the thrift of our people. However, I have every confidence that with this new brilliant Minister of Finance which we have we can look forward to a new dispensation in which we will be able to stimulate the thrift of our people once again and at the same time do justice to those who are no longer working.

Mr. Speaker, I listened with interest to the speech of the hon. member for Paarl who discussed the problems faced by those people with fixed incomes on account of inflation. I agree with him entirely in this regard. However, when the hon. member tells us that people who are earning are not affected because their salaries or wages keep pace with inflation, I am afraid I must disagree. They are not keeping pace and I hope during the course of my speech to be able to make clear why I say that this is so.

During the course of the Second Reading debate on this Bill I heard speaker after speaker on that side of the House telling us how lucky we were to have a Nationalist Government. [Interjections.] We heard speaker after speaker claim that our prosperity in South Africa was something we owed to this Government. I am very sorry to say that we are not prepared to join this paean of praise. We on these benches are not prepared to join this rather sickening chorus of self-congratulation. South Africa has developed a measure of prosperity not because of this Government but rather in spite of this Government. [Interjections.] We can only remark on and wonder at the resilience and toughness of our economy which has somehow survived the misguided bungling and the incredible short-sightedness of a Government completely hidebound by its policies of selfishness and discrimination. During the course of the Second Reading debate my colleague, the hon. member for Johannesburg North, pointed out that the Government’s policy of separate development was in direct conflict with the development of a vigorous and expanding economy. He is quite right. As long as we are shackled and restrained by an outdated ideology we will not make the progress in this country of which we are capable. We will just not do as well as we should be doing. The hon. member for Florida told us during the Second Reading debate that we should stop blaming ideological ghosts. I think that was the term he used. Mr. Speaker, the policies of this Government are nothing more than an ideological skeleton. South Africa would be best served if this skeleton was put away and forgotten in a cupboard never to see the light of day again. [Interjections.] I say again that South Africa would be best served if these policies of ideology and apartheid were buried for ever. I was horrified to listen to so many hon. members sitting back in self-satisfied complacency, just as they are doing right now, having blamed the high cost of living and the high rate of inflation in South Africa on external influences and pressures. There is no doubt at all that external influences have had an effect on our prosperity the results of which are not being felt immediately because these things take time. However, there is also no doubt that our rate of inflation and our rapidly escalating cost of living are far higher than they need be because South Africa is being made to pay and pay through the nose for this ideology of apartheid. [Interjections.] Every South African is suffering because of the obstinacy of the Government in holding to policies which have absolutely no place at all in a developing industrial economy. These are policies which are in fact holding us back and which are to a large extent responsible for South Africans having to pay much more than they need for all the basic necessities of life.

Mr. Speaker, may the hon. member read his speech?

Order! The hon. member may proceed.

Mr. Speaker, the Government is gambling with our prosperity and many South Africans are suffering because of the refusal of these hon. members to scrap their policies of apartheid. [Interjections.] If they would only listen they might learn something. The prosperity that we do have in this country has been brought about by the hard work, skills, know-how and the guts of South African businessmen, industrialists, miners, farmers and workers in spite of the Nationalist Government. [Interjections.] In short, we have our prosperity because of the hard work of the people of South Africa and not because of this Government. Mr. Speaker, we have the raw material resources, we have the labour, we have the manpower, and we have enormous potential for growth, for a steady growth year after year, and we are in the unique position of being able to do something about the inflationary spiral but we are not doing it. We are absolutely tied to an ideology …

Why are you so cross this afternoon?

Because it is blatant …

But why are you so cross? What is wrong with you?

Sir, that hon. member on my left sits there in complacent self-satisfaction when he should be paying attention to this because this is a very serious matters which affects the whole well-being of South Africa.

When are you going to say something?

Sir, inflation is rampant. The cost of living is going up in leaps and bounds, as hon. members opposite all know, but judging by the way they talk they seem to be insulated from the thousands of South Africans who are paying the price for their ideology. This Government seems to be deaf to pleas from the pensioners and the poor. We always hear jeers from the other side of the House when this matter is raised. They all say that they are doing what can be done, but I want to tell them that they are insulated from these people.

What do you know about the poor?

I would ask hon. members on the other side to have regard to the plight of those poor people whose incomes do not keep pace with galloping price rises. There are hundreds of thousands of people in South Africa who are struggling to get by, who can no longer afford even the essentials of life. There are hundreds of thousands of old people, poor people, who are struggling to afford the basic essentials of life—food, clothing and housing. Food prices, as I have said before, have leapt sky-high. The hon. the Minister of Agriculture was reported to have said last year that the consumers must be prepared to pay more, but many people just cannot afford to pay more. [Interjection.] Sir, the hon. the Minister of Agriculture may be as funny as he likes but this is not funny to the people outside who are having to pay these high prices. Mr. Speaker, the people of South Africa know who to blame for these high prices. I was greatly interested to see the results of a poll published in the Argus newspapers recently, showing that 71% of South Africans believed that the Government was not doing enough about the cost of living. Sir, they are quite right; the Government is not doing enough about the cost of living. If I were a member of the Government, I would not be sitting here looking so pleased with myself. The people whom they represent, here are not satisfied with them at all. [Interjections.]

Order! I want to appeal to hon. members to give the hon. member a chance to make his speech.

Thank you, Sir. I do not blame the people outside for blaming the Government. According to this survey 93% of the people on the platteland are very worried about the cost of living situation. One only has to look at food price rises over the last five years and particularly in the last year to realize just how South Africans are being made to pay for the Government’s expensive ideology. Meat, for example, has more than doubled in price over the last five years. In 1974 alone the price of meat went up 23,3%, and please do not tell me, as the hon. member for Paarl did, that salaries have kept pace with these rises because that is just not true. The people in South Africa have had to cut down on the amount of meat they are eating; they are having to buy cheaper cuts, and in many cases they are having to do without meat altogether. The pensioners and the poor people just cannot afford to eat meat. Sir, we have reached the stage in a fruit-growing country where people just cannot afford to eat fruit. I was asked in a shop the other day to pay 10 cents for an orange. The prices of milk and of eggs went up nearly 25% during

May I ask the hon. member a question?

Sir, I have very little time. Overall food prices went up by over 18%. When so many of our people are living at a subsistence level this sort of price rise is crippling.

Do you think the farmers are getting too much for the food they produce?

I do not think that at all. I will give the hon. the Minister my opinion in a moment. The jump in the bread price last year was inexcusable. I know that bread is a good deal cheaper here than in any other country in the Western world, but those countries do not have our problems of poverty and deprivation. It is necessary for us, therefore, to subsidize bread at a higher level, even if we have to subsidize it to the extent of over R100 million, a figure that was mentioned by the Minister last year when the price of bread was raised. To many South Africans, White and Black, bread is the most important part of the basic diet. There is no doubt at all that the rise in the price of bread has created hardship and discontent amongst many of our poor people.

Yet 70% of them eat White bread.

Nobody likes subsidies because they are in themselves inflationary, but I would like to say that if we scrapped apartheid we would be better off, and I am going to try to show how much apartheid does cost us. If we scrapped apartheid, the resultant rise in the prosperity for all sections of the community could well be such that no bread subsidy at all would be necessary because people would then be able to afford to pay an economic price. We must find the money by stopping the criminal waste of money which is being poured down the drain to bolster apartheid. With this policy visibly crumbling—and it is visibly crumbling every day, with the changes in the Government’s policy that we see—such as with the Nico Malan theatre—and with every rationalization, everybody outside can see that these policies are crumbling away. Money is being wasted. There is no doubt that the productivity which would be released if we scrapped apartheid would enable us to fight the inflationary spiral far more effectively than we are doing at the moment.

If we scrapped apartheid, do you think bread would be cheaper?

All I am saying is that the productivity which would be engendered if we scrapped apartheid, productivity which is being wasted now by bolstering up apartheid, would make people prosperous enough perhaps to afford a higher price for bread. But at the moment they can’t, and we are forced into the position where we have to subsidize it. [Interjections.] I cannot even guess, Sir, how much these ideologies are costing the country, but let us take just one aspect, one which is not so insignificant, namely the pass laws in terms of which thousands of people are sent to gaol every day. Just briefly, let us analyse how much this might be costing us. It is a hard economic fact that thousands of policemen are kept busy rounding up pass law offenders, offenders who shuffle in endless dreary processions through our courts all over the country on their way to crowded prisons to serve short-term sentences which, incidentally, have absolutely no rehabilitative purposes, but which give South Africa the memorable reputation of having one of the highest daily prison populations in the civilized world, something like 100 000 per day. Sir, this prison population costs money. How much does it cost us? How much does the administration of the pass laws cost us? How much does it cost us for the arresting officers, for the Police who do the arresting? How much does it cost us to take these people to court and to try them in our overworked courts, and how much does it cost to take them to gaol and to feed them at Government expense? What does it cost to keep all the additional prison staff, and what is the cost of repatriation of the prisoners afterwards? And if one adds to this the value of wasted production time of all those who spend days and weeks and months kicking their heels in gaol, the cost to the country must run into hundreds of millions of rands. Nobody can convince me that there is not a better answer than this. There is a better answer. We just cannot afford to keep meeting these tremendous costs at the same time as keeping the cost of living at a reasonable level. Look at all the other apartheid legislation. Take the Immorality Act. How many people are sent to gaol in terms of that Act every year? This is costing us millions a year. No, Sir, the answer is to scrap apartheid and we will then be in a position to take really positive action against inflation. Many countries in this world today would like to have the opportunities we have in terms of human material and resources, but we who have these opportunities are wasting them on an ideology; we are throwing them away.

Mr. Speaker, the hon. member for Orange Grove got on to the usual tack of the Progressive Party by expounding the cliché that the ideology of this Government is costing the country money.

He proved it.

He did not prove it at all. The hon. member proceeded from the point of view that ideology and the imposition of policies on this country was costing the country money, but he did not prove a thing. He merely makes assumptions, and on the basis of these assumptions he expounds one cliché after another. Perhaps I should recount to the hon. member what I experienced a short while ago. I had a very famous French historian in my home. We had a discussion, during which he asked me several questions about policies in South Africa. Amongst other things, he asked me what I thought of Mrs. Suzman, in the process equating her with the Progressive Party. My reaction to his question was to ask him whether he in fact knew what the words “verkramp” and “verlig” meant. “Oh, yes,” he replied. He knew very well what these words meant in South Africa, so I told him that to mind Mrs. Suzman and the Progressive Party were the most “verkrampte” party in Parliament. [Interjections.] That party stopped thinking in the middle of the previous century. They still adhere to the liberal policy which obtained when we freed the slaves in the 183O’s. They have not progressed one whit along the road of policy-making in South Africa since that time. Just look at what the hon. member for Orange Grove had to say today. He told us that the Immorality Act was costing us money. Why does he say that, he does not prove his allegations; he merely says that it is costing us money in the administration of justice. But if orphans were born as a result of immorality, who would have to look after them? It would be the Government, the State. Would that not constitute a charge upon the Government of the day? [Interjections.] Let us take another one of his fallacious arguments. He says that the pass laws are costing us money. If we did not have the pass laws, we would have had an uncontrolled influx into the cities of South Africa, such as is being experienced, as those hon. members should know, in other parts of Africa. There are cities in Africa which are simply swamped because people are streaming to those cities where there are more work opportunities. Pass laws are necessary for the purposes of influx control and if you do not have influx control you will have to consider the alternative, and the alternative is to provide houses, schools and amenities in built-up areas. This will be costly, and this will again be a charge placed upon the Government. Mr. Speaker, I regard this as completely unproductive, because these same houses, schools, amenities and other facilities can be provided, in terms of the Government’s policy of the decentralization of industry, in the homelands.

Where there are no jobs.

Let us take another point. The hon. member charged the Government with the fact that the inflation rate of 23% was due to the ideology and the policy it is following.

No.

The hon. member blamed the Government for an inflation rate of 23 %.

No, I referred to prices.

I accept that. When we compare this figure with the inflation rate in respect of capital goods and consumer goods imported into South Africa during the past year, we find that the inflation rate in the case of these goods was more than 27%, whilst the South African inflation rate was well below 23 % in respect of the increase in the price of foodstuffs. The increase was in fact mainly due to the increase in respect of imported goods, goods imported from countries which do not follow the policies of this Government and whose policies are, I should say, nearer to the policies advocated by the Progressive Party. I think the hon. member has taken his cliché too far this afternoon. He made a number of other mistakes too, but we shall not go into them now.

I want to return to the hon. member for Constantia, who spoke earlier this afternoon. He complained about one thing. He said that the per capita income of South Africa was not quite high enough and that it could be bettered. He gave us the comparative figures of the per capita income for Whites, Coloureds, Asians and Africans. I do not quarrel with these figures. At this point of time I cannot prove them to be incorrect or not. He said that the per capita income could be higher. I should like to say to him that the productivity in South Africa depends to a very large extent on the entrepreneur class in South Africa and the entrepreneur class, as was explained by the hon. member for Paarl, is to be found mainly within the White nation in South Africa. If it is so that we do not find enough entrepreneurs among the Blacks and the Coloureds to promote better production within their own areas and within their own industries, it is not the fault of the Government at all, because the Government itself has done all it can to promote the formation of capital and to promote the production of entrepreneurs in those communities. Hon. members know very well that we have a Xhosa Development Corporation, a Bantu Development Corporation, a Coloured Development Corporation and various other corporations. I suggest that the reason for that …

We feel we can do a bit better.

… in South Africa is that we are dealing with a specific community which is in the process of development and whilst we are in the process of development we cannot expect heaven on earth.

He went on to make another statement which I felt should be looked at a little bit closer. He said that we should not take more than was needed from current account by way of taxation. He must realize that our country is a developing country and in any developing country one needs capital for the infra-structure of the country. As things are in South Africa today, the capital for the provision of that infrastructure is mainly generated by the Government itself. It is correct that private enterprise provides infra-structure, for instance by putting up new industries, by developing new townships, etc., and I am not minimizing the role that is being played by private capital and private enterprise. But, by and large. I think if one should compare the capital which is being invested by private enterprise in the infra-structure of South Africa with that which is being invested in South Africa by the Government and semi-Government bodies such as Iscor, Escom and the others, one would find that the major share thereof is being put in by the Government. For that purpose the Government needs money. I do not think that the Government can be dependent for billions of rand needed for the expansion of Iscor, for the new petro-chemical industry, etc. on savings, on the one hand, and on overseas capital resources, on the other hand. I think that a policy in terms of which a balanced share of the Budget is used for capitalizing in the infra-structure of this country is very sound policy indeed. If the hon. the Minister of Finance should follow that policy in the future, I am obliged to support it.

*I have replied to a few points raised by the hon. members of the Opposition, and now I want to come to another subject. Before I come to it, I should like to refer briefly to an image which we have had in this House recently, viz. the image of the winged horse Pegasus. Hon. members know that that image dates from ancient Greek mythology. The winged horse Pegasus also spread its wings in our country and as a result of that it has caused a flutter in the dovecotes. On this horse, unlike the Greek mythology, there was a rider. The hon. member for Randburg was the competent rider of the horse Pegasus. Now, the hon. member for Randburg has a backbone. On the one end he has a head which was apparently too much of a hothead, while on the other end he has an end which was used to kick him out of the party. The situation would not be so laughable if it was not that he, to use another metaphor, tried to swim away from the sinking ship of the United Party on this horse. Like Woltemade of old, he had to take with him 17 other drowning men who swam on both sides of him. But while struggling through the waves with the rushing of the water in his ears and looking left and right of him, he saw that there were only four members whom he could save in the whole process. The others had remained on the sinking ship. The hon. member then cried very audibly above the sound of the waves: “Where is Japie, and where is Nic?”, but nobody could answer. In the process he took with him, Senator Bamford and the hon. member for Yeoville on his left side and the hon. member for Bryanston and the hon. member for Sandton on his right side. The hon. member for Bezuidenhout was not there. He was waiting for that greater glory which he had predicted for himself in the politics of South Africa. He still looks forward to the day when he will become captain of that ship, even if it is now a sinking ship. He looks forward to the day when room will be made for him. But he will most probably find that he will go down protesting with the ship, that is, if a moment of lesser glory does not perhaps arrive before then. That moment of lesser glory will be when he and the hon. member for Simonstown have clashed and the latter pushes him off the ship.

Tell us about your sports policy.

Except that this situation in the Opposition ranks provides a little amusement for us, it means absolutely nothing in terms of politics in South Africa and the contribution to the development of racial peace in South Africa. I think that the whole of South Africa has become extremely bored with what is happening in the Opposition …

Explain what happened in connection with the Nico Malan Theatre.

… and that includes the hon. member for Green Point.

Let us look at the sort of contribution which the joint Opposition makes these days in respect of the question of discrimination. In Johannesburg we find that the United Party-controlled city council threw open the library to all population groups in South Africa. In Randburg we find, opposed to this, that, although the city council there has taken exactly the same step, that city council is controlled by the new Reform Party.

Oh no!

Is that not the case?

No. There we have a coalition between the United Party and the National Party.

According to newspaper reports the United Party members in that city council are opposed to the library in Randburg being thrown open.

That is right. They are in coalition with the National Party.

Now we find the situation that, while the United Party say one thing in respect of throwing open the library in Johannesburg, they say another thing as far as throwing open a library in another place is concerned. It is this sort of random decision which we get from the confused ranks of the Opposition in connection with the question of discrimination. Because we are now entering the era of the final implementation of the policy of separate freedoms, and separate development, and because we have now come to the stage of the elimination of discrimination, all those gentlemen also have to climb on to the anti-discrimination bandwagon. But they do not know where to climb on and so they fall off along the road. The foundations of the policy which the National Party accepted, the policy which gives rise to our being able to eliminate discrimination, in South Africa, laid, in the first place, by Dr. D. F. Malan and were subsequently expanded by Dr. Verwoerd. These foundations were established long ago. In 1948, 1958 and in 1961 statements were made by these specific leaders on this very matter. Now hon. members on the opposite side try to suggest that a new policy or a new approach is being followed by this National Party in respect of the elimination of discrimination. Hon. members do not know their history, or they do not want to know it. Hon. members did not hear what was said to them when Dr. Malan spoke in 1948. Hon. members did not listen when Dr. Verwoerd spoke in this House on 14 April 1961. The hon. member for Brits quoted his words very strikingly here the other day. The foundations of the policy which we are now implementing and in terms of which we have come to the point of eliminating discrimination in South Africa, are of long standing. Therefore it is possible for the National Party to enter this new era with peace and quiet, without being at all anxious without floundering about the question of what the effect of this will be. The National Party does not need to flounder around as the Opposition does. The National Party formulated this policy in a time long past. It laid the foundations then, and from then on it built on those foundations to the stage where we are now able to proceed with the further development of this policy to its final consequences.

This policy rests on two basic premises. The first basic premise is that of the emancipation of the once subordinate peoples of South Africa. In the process of this emancipation we find the recognition of the human dignity of the members of those peoples, we find the maintenance of mutual respect among peoples and among their members, and this leads us gradually on the road of the implementation of the policy of separate freedoms, to its logical consequences. The National Party does not recoil from these logical consequences; in fact, it is strange that the National Party always does what it says it will do. In this case, too, it will stand by the final consequences of its policy. What is the final consequence in a specific case? It is that the respect and liberties which we grant to foreigners will also apply between and to the peoples of South Africa. The restrictions which we are prepared to impose on foreigners today, we shall also be prepared to impose on the peoples who are living within the borders of South Africa at the moment.

What is the second leg of this policy? It is based on the inter-state relations with African states. Our place is in Africa and the states of Africa are beginning to accept this fact. We are now entering an era of normal relations with those states, and normal relations mean negotiations and the utilization by those peoples of our facilities as our guests. Therefore it is important to take cognizance of the fact that these are the two basic premises from which we move forward.

The methods which we apply in this connection are and were, in the first place, political separation with a view to eventually having no political discrimination, no domination of one group over another. That means, inter alia, and I want to say it to the hon. member for Green Point who is looking at me now, that there will also be no discrimination against or domination over the Whites in South Africa, and that he will also be able to preserve his sovereignty unimpaired in the process. That is the position which we are going to reach in South Africa; already it is developing in that direction. In terms of our policy we are escaping from political discrimination in this country.

As far as social conditions are concerned as well, we are escaping from discrimination. I want to say to the hon. member who is having such a good laugh at this, that if he looks at his own policy, he will see that it is heading towards discrimination against the Whites. Therefore the hon. member must be careful not to laugh up his sleeve if the day comes when his policy is applied here in South Africa.

In the social field we are moving away from discrimination. The first method which we apply, is that separate facilities are provided, viz. separate schools, residential areas, sporting facilities, beaches, theatres, bioscopes, etc. These facilities must be created and will be created where they have not already been created. This is the first aspect of the movement away from discrimination, viz. that we give the other population groups their opportunities as well, within their own areas. Where there are not sufficient space and facilities for them, the sharing of facilities which are in the hands of the Whites at the moment must be considered. That is precisely what is happening. I want to go further and make the statement that even where separate facilities exist which can serve separate peoples, and where it is necessary for good neighbourship and courtesy, we as Whites will create opportunities in terms of which we will receive the other peoples of South Africa as guests at our facilities. The facilities remain, however, those of the Whites; they remain in their possession. All that happens, is that we show normal civilized behaviour towards these people by receiving them as guests of ours in our facilities. In this connection one might think of the idea which has been expressed from various sources, that the opportunity to given to post-graduate non-White students to further their studies at our White universities. That is a facility which we might make available to the non-White students of South Africa for the sake of courtesy and neighbourliness. If we move on these grounds and make the Nico Malan, so to speak, available, i.e. invite the Coloureds of the Cape to go to that theatre as our guests, I think that the situation can develop further and that the Coloureds in turn can take the reciprocal step of inviting us to come to their Joseph Stone Theatre. It is a theatre in Athlone where the Eoan Group often perform and where very good opera performances are held. I should very much like to know when the Coloureds are going to invite us to that theatre to make use of their facilities. This is the sort of courtesy and neighbourliness which can develop between the peoples of South Africa in terms of which each has his own facilities and is proud of those facilities, and in terms of which it will be possible to show mutual courtesy to each other.

When we speak about making facilities available, the National Party applies two tests as to how, when and where these facilities can be made mutually available. The first test which one applies very explicitly, is the question as to whether making common facilities available, or the opening of facilities, if one can use the term, will give rise to the identity or the sovereignty of the Whites being endangered. If that will happen, then of course wego no further on the road of throwing facilities open or making them available. The other test which one must apply if one wants to make facilities available or throw them open to them, is whether it will give rise to friction between the different racial groups of South Africa. If this test is also negative, then one proceeds with great circumspection because above all the maintenance of racial peace in South Africa is of the uttermost importance.

The National Party is proceeding on the road which it took long ago, by drawing a distinction between peoples and ceasing to discriminate against peoples.

Mr. Speaker, I hope that the hon. member for Bellville will pardon me if I do not reply to him. My time is very limited and there are a few points I should like to suggest to the hon. the Minister. I should just like to say that I have listened to many explanations of Nationalist Party policy but this one goes completely beyond my understanding.

I had occasion last year in the House to discuss the implications of international monetary inflation on South Africa and the problems that we could expect in this regard. I said then that many of the old remedies and laws which have traditionally served the Western economies so well just did not seem to work any more. I said that they did not seem to fulfil the purpose for which they had traditionally been used. I think it is fair to say that because of escalating international monetary inflation we are in fact dealing with a new ball game and like all new ball games, one has to play them by the new rules. I think that at the present moment in the western world we are still trying to play the new ball game by the old rules with the result that we are not making a tremendous amount of progress. I should like to spend the few minutes available to me today to put to the hon. the Minister what I consider to be one of the new rules to be considered in the present international monetary climate and that is the relationship which exists between profit margins and savings on the one hand and productivity and living standards on the other. This relationship could be embodied in a very simple law which states that profit margins and savings must go up or productivity and living standards will go down. If one analyses this simple law one realizes that its logic is irrefutable. There is sufficient proof in the economies of the countries of the Western world, including our own country, to show that this is in fact correct. If one wants proof, one only need to look at the economies of countries that have embarked on policies such as income and price controls and strong fiscal measures to endeavour to control inflation. In all cases it can be seen that these measures have in fact to a large extent been counter-productive. The logic of this approach is I think best explained by giving a simple example which is not meant to be a case study and therefore is very much oversimplified, but which does nevertheless illustrate my point. Let us go back to the good old days when the inflation rate was only 2% and take the example of a company which made a pretax profit of R200 000 on a capital employed of R1 million. The situation in this regard would be that after paying R80 000 in tax one would have a surplus of R120 000. One would require 2% of the R1 million to finance inflation because inflation, like real growth, has to be financed. This would take R20 000 and would leave R100 000 which would be a genuine surplus which could be invested for real growth or could be distributed to shareholders by way of dividends. If, however, one were to assume a rate of inflation of 15% per annum in the 12 months ahead, then the same company, if it still made R200 000 on the capital of R1 million employed, would be on the way to the bankruptcy court; it would be heading for insolvency, because after paying R80 000 tax it would require a further R150 000 to finance inflation, which would mean a deficit of R30 000, and quite clearly it would not be able to continue on its present level of production. In fact, if one does a calculation to see what pre-tax profits this company should make in order to be in the same position as it was in the days of 2% inflation, one finds that with an inflation rate of 15% it would have to make R440 000 before tax, i.e. an increase of 120% in profits. That would mean paying a tax of R176 000; it would require R150 000 to finance inflation, leaving it with a surplus of R115 000, which is the equivalent of R100 000 after allowing for inflation. Sir, the situation is quite clearly that the only people who are gaining in a situation like this are the income tax authorities. They are getting 100% real growth in their profits out of the inflationary situation, while the companies remain in exactly the same position. The tragedy is that there are very few companies which in fact can increase their profits from R200 000 to R440 000, and if they do not succeed in doing so then various problems arise. The one is that they are unable to give their shareholders a decent reward for their investment; secondly, they are unable to finance real growth and, thirdly, they are perhaps not even in a position to finance the requirements of inflation. This means that the production base is smaller; the number of units actually produced diminishes; and the relationship between units produced and the money involved becomes more disproportionate. This furnaces the flames of inflation again and the result of this whole cycle is lower living standards. I would ask the hon. the Minister to have regard to this simple law in drawing up his Budget next month and to have a look at corporate taxation and the way in which it is applied to ensure that companies which are basically very sound companies do not find themselves heading straight for insolvency because of this unfair, disproportionate corporate taxation. Sir, while I am dealing with this, there is another aspect and that is price control. I am not suggesting that price control be lifted, but I am saying that it should be applied very sensitively and that situations of this kind should be borne in mind when price control is applied.

Sir, I do not think one can find fault with the speech by the hon. member for Randburg on the subject of finance. In my opinion he succeeded in showing that the shortage of capital has quite a lot to do with inflation. Sir, I think that our Minister of Finance has a very difficult task before him in the year that lies ahead. Over the past 10 to 15 years the hon. the Minister’s predecessors have had an easier task than has the present Minister, because during the past 10 to 15 years we had a world of growth, a world in which the “have not” countries have received aid from countries such as America and others. The whole world has had money, and that money has been spent on capital works. But I think we are reaching a period in which countries abroad are looking to their currencies, in which one’s traditional trading partners no longer order goods six months in advance and pay immediately. They now let it lie in one’s warehouses and only take what they require every month. This causes pressure of work and one’s capital suffers as a result. The storage process results in a drop in one’s capital and profits. We were at a canning factory at Paarl recently and when one sees the storage capacity that has had to be constructed in order to store supplies and deliver them from time to time, one cannot but realize that our Minister has a difficult task ahead of him. The entire world has become savings conscious and for that reason we want to tell the hon. the Minister from this side of the House that we are grateful to have a Minister with his abilities. We believe that he is going to be an ideal Minister in this situation, a Minister who will be capable of acting when necessary. In this country we have always, from the time of Mr. Havenga, had Ministers of Finance who never introduce shock budgets. The country is quiet before its budgets, because it knows that this Government only does what is best for its people.

Sir, we have a problem in South Africa, viz. the problem of inflation. It is a problem, and I am resentful of certain people in this House. You will never hear me talk politics when we discuss the economy, but in my opinion a few statements have been made here to which I must react. Sir, when the Progressive Party speaks, when the hon. member for Constantia speaks, they discuss the poor man of South Africa, and then they come back to separate development, as if separate development is responsible for everything that is wrong in this country. Separate development has created more employment opportunities for Bantu in the homelands, than those hon. members have people to vote for them in the whole of South Africa.

Now you are talking rubbish.

That is all the United Party can do, viz. speak disparagingly about the truth.

†Sir, it is about time that somebody takes them to task. There we have the city of Johannesburg with an annual budget of R200 million, and what are they doing at the present moment? The poor of Johannesburg, the pensioners, are losing millions of rands down the drain. There have been revaluations of property and valuations have gone up 60% in three years.

*Valuations have gone up by 60% and these people come here and tell us stories about the poor! Do you know how a poor person is affected?

†Do you know who is actually paying the increase in the valuations of 60%? It is the pensioner about whom they are trying to make a big song and dance. There are also increases in light and water.

*Rubbish removal, etc., in a city like Johannesburg now costs an extra R7 million. The pensioner who has bought his own house today pays 60% more in tax, and what is going on in that city? They are offering posts to members of the management committee to leave one position and to go to another. That is the United Party. I do not care for the United Party as an Opposition. I do not mind if the United Party is placed in a position where it can exercise control, but it cannot be allowed to administer the city of Johannesburg any longer, under the circumstances prevailing today. The time has come for the Reformists and the United Party to resign in the City Council of Johannesburg, and to tell the people who elected them where they stand and where they are going. Sir, I am not discussing politics; I am discussing the economy and the finances of a city.

We believe you.

Mr. Speaker, that hon. member is still going to learn that he must be quiet when we adults are discussing a big city. This city has a budget bigger than that of Natal and the Free State combined.

It is a United Party city.

Yes, that is the tragedy of it. There are people who, in respect of differentiation not on the basis of colour but on the basis of language, have through gossip been persuaded not to vote for the National Party.

Now you are starting with the Boer War again.

The hon. member always wants to go back to the Boer War. I shall not reply to his interjection. In debate he only talks about butter, etc., and in my opinion he should confine himself to that. We are now busy with a Johannesburg budget. This is what I am afraid of: The leader of that city council is still threatening today that he might cut off the sewerage feed pipes to the city from Sandton and other places. Sir, do you know what expense that will involve for the city of Johannesburg?

How many Progs are living in Sandton?

Yes, they are now catching political mice. Once again they are not considering the inhabitant and my voter; they are trying to drive people into corners, and who suffers? My voter, my pensioner, who has to live in that city where the cost of the bus service has been increased by 50% and where the cost of sewerage and rubbish removal has been increased. The only matter in respect of which there has been no increase is the removal of the bunch of Reformists.

Mr. Speaker, may I put a question to the hon. member?

Yes, if it is an intelligent question.

If the hon. member feels that way, why is the National Party supporting the United Party in Randburg to enable it to govern there, and why are they threatening to do the same in Johannesburg?

Sir, the hon. member himself has now indicated where his question is leading to. I am discussing economics and not politics.

You had us all fooled!

I do not care who agrees, if the voters and the public benefit from a combination of that nature. Sir, this matter is more serious than people are willing to admit. It will be the first time in history that it may be necessary for a town clerk to take over the management of a city temporarily, because it seems to me as if there is chaos ahead. A situation could be created in which the two parties might not be able to obtain sufficient votes for their no confidence motions, and this could lead to their being unable to continue with those motions. Then, too, we still have the situation that three of the Reformists are sitting together with the one who crossed over from the other side. Can hon. members imagine that I live in a city, the elected deputy mayor of which belongs to a different party and ideology from one day to another?

But the Nico Malan is closed one day and open the next.

Can hon. members imagine that we as inhabitants of our country’s largest city should have to put up with this? I want to join the hon. member for Newton Park in saying: “Oh for the days of the good old Nationalists!” After all, the other day the hon. member referred to the days when a Nationalist was still a Nationalist. We knew that one day the hon. members would come and ask: “But where are the Nationalists?”

We do not know.

Now I come to the Progressive Party. The Progressive Party came to this country—I am still dealing with economics and finance—to plead the cause of the poor. As long as a person is Black and poor, then it is heaven to them. That is the Progressive Party’s policy. What is easier than to tell someone: “Oh, the poor, pitiful people without even a blanket …”

Is that in your constituency?

The hon. member states that this occurs in my constituency. That is what he thinks of the Afrikaner.

No, I said …

That is what the hon. member and his party think of the Afrikaner. That is clear from the words he employed when he asked: “Is that in your constituency?” That is correct. I represent a constituency of workers, the backbone of South Africa, who have never asked for sympathy, but only for honesty from everyone. The hon. members of the Progressive Party only want to share out. The hon. member for Orange Grove is not present.

†He was mixing the wrong way today.

*To me there is one truth and that is:

Why do you not stick to one language?

As far as the hon. member for Johannesburg North is concerned. I want to say—

*I again want to refer to the Progressive Party and to the poor. How are we to help the poor? According to the Progressive Party we must reduce tax, we must do this and we must do that. Let us look at the mines. If hon. members ask me to say where we are to get our taxes, I shall say:

†“I shall take a pot of gold from the mines.”

Yes, I am sure.

Yes, and I am sure.

*It will not be felt in the least in this country’s economy. However I do not want to say too much about this, because that hon. member may take fright.

Now the Progressive Party is talking about federation while the hon. the Leader of the Opposition is talking about differentiation. Do hon. members know what remains to be done by us on this side of the House? Only to govern the country—that is all—and to continue with our good work.

The hon. member for Constantia is an hon. member who always starts talking about matters but then leaves them in the air. He reminds me of a hat-stand economist—he hangs something up and then goes away. The hon. member made a song and dance about the textile factories in our country. Last year the hon. member took it amiss of the hon. the Minister for having taken steps and because the Minister was positive enough to step in at a time of crisis to protect the textile industry. This is precisely what other countries are doing with our products at this very moment, but our Minister may not do this. This Government may not act at a time of crisis, because if it does then there is nothing for the people to be dissatisfied about. I just want to quote briefly what was stated in Rapport about the textile industry—

This is how it started—

According to the Opposition, a situation like this is not of sufficient scope to require action on the part of the Minister. Everything must simply be left so that one problem after another can be created. Then they ask: “Where was the Minister when all this happened?” viz. when the opposite happens and higher duties are not imposed. The hon. member for Constantia had a great deal to say about this. I have received letters in my constituency which have informed me that they are only 25% operational.

That is on page 3.

The hon. member is trying to be facetious. When we find that a machine is only working at 25% of its capacity, he finds it a joke. Give five-hundred and eighty-five Bantu, and other people too, trained people, are working half-time in certain factories. The firm Consolidated Jerseys is situated in my own constituency. They have attracted people from Germany and other places to work for them. They have invested capital of more than R1 million in machinery, but today they find themselves in the position of having to sell “at prices which are distressing”, as they put it, while they have 58% more material than they have a demand for. But they carry on; they cannot simply dismiss people. We know that this matter is under control.

The hon. member for Constantia went ahead and spoke about revaluation. He said: “I have always had faith in the rand.” Well, so have I, as long as it is in my pocket. But this hon. member does not come to the actual point. He tells everyone that the rand does not really have a value. He states: “The corrosion of the rand is such that one cannot save.” He tells the people that they should not save, because in three years’ time they would have nothing. In the same breath he repeats that there is such a shortage of money in our country that we must do something drastic about it. What does the hon. member suggest?—Revaluation. He says we must revalue and strengthen the rand. The hon. the Minister answered him a few times during his speech. I made a few notes about what would really happen if we were to revalue at this moment. I am sure there are many other things that could be added. If we revalue against the dollar, then this will of course apply in respect of all other currencies as well. Imports will be cheaper, but hon. members opposite should not clap their hands before listening further. Our exports would become more expensive abroad and consequently local manufacturers would have stronger competition in respect of imported articles and would therefore be worse off. The higher prices of our experts abroad would make it more difficult for us to compete there and possibly we should also have to lower our prices with resultant disadvantages to exporters. Our major exports, namely metals such as copper, gold and iron-ore would earn the same in terms of dollars as they do at present, but the value to us would be less in rands. The overall effect of all these factors would cause a deterioration in our balance of payments. Since our balance of payments is not very favourable at the moment, it is to be doubted whether revaluation should be given any consideration whatsoever. Our existing foreign loans would become cheaper to repay while the interest payments would also cost us less. The only possible reason for a revaluation of the rand is the fact that it could be a measure to combat inflation and I think that that is what the hon. member has in mind.

Whose words are those?

However, the revaluation will have to be quite substantial to have any effect. Economists believe that a 5% revaluation of the rand will only cause the consumer price index to drop by 1%. It is economists and I who have determined this, if the hon. member really wants to know.

Will that mean a drop of 1% in the cost of living?

That is a very good question, but does the hon. member know what will really happen if there is a 5 % revaluation of the rand? The hon. member is fond of putting questions, but we want some answers from him. We would like him to embroider on this subject. He has given birth to quite a number of ideas, but has fathered none of them. All the beautiful things in life are free. The hon. member is at present advocating a system of giving everything to everybody as long as they want it. But somebody has to pay for it.

*We in this country are privileged to derive benefit from situations abroad through balanced budgets. Despite all present and future problems we have succeeded in raising sufficient capital to develop South Africa.

Unfortunately there is no time to go into further statements. However I should like to quote a very fine thesis stated by James J. Needham of the New York Stock Exchange. He says that it is necessary that people should stop saying that the Government should do this or that. The industries, the man in the street, the farmer and the man who puts his hand to the plough every day will have to go back to labour. He says that it was not capital that put Japan or Germany back on their feet. It was hard work that brought those countries back to a condition of economic prosperity. In this House we, as the National Party, will always ensure and see to it that the standard of living of our people, our pensioners and those who need it the most will be higher than in other countries.

Mr. Speaker, for reasons which may perhaps be understandable I will not reply in any detail to the speech of the hon. member for Lang-laagte. There was, in fact, something of a communications gap. I would like to say just one thing about it. If the hon. member for Langlaagte is under the impression that there is inflation, an increase in the cost of living and a need to raise rates in order to meet the cost of improved services only in Johannesburg, he should speak to his own Minister of Finance who will be able to tell him that the situation is indeed nationwide.

Inflation is, in fact, the scourge of our time. It is the scourge of the whole country and not only of Johannesburg. It is one of the dread horses of the Apocalypse of the twentieth century. It is destroying many of the beliefs and many of the standards upon which our financial institutions are built. As it destroys these beliefs and concepts, so will it eventually destroy the institutions themselves. Our whole free enterprise society will be stripped of the mechanisms on which it depends and which are the foundations of the system by means of which we maintain our way of life. The worst of all is that inflation is psychologically destroying something which is very essential, and that is a moral characteristic which underlies our system. I refer to the desire to practise thrift, to save, to create a surplus out of one’s own productivity, to save spare cash which may be invested to become part of the growth system upon which our whole society depends. When these things are destroyed the whole system breaks down. When the system breaks down, we no longer look forward to progress or to being able to accommodate our increasing population within a system of greater comfort, prosperity and peace; we have to look forward to a system of increasing antagonism and an increasing breakdown of human relations.

This is what inflation is all about. If inflation meant merely two cents on a pound of butter it would not be nearly so serious a matter, but inflation has to do with these things and with our very society. I must say that I was rather appalled therefore, to hear from that side of the House the rather casual way in which inflation is either defended or disposed of as being of no importance. On the contrary, it is vital to our very existence.

Let us look at our growth needs. The hon. the Minister has said some very true things. He has pointed out that we have been successful in maintaining a reasonably high rate of net growth after inflation over the last two years. This is certainly a very great achievement because inflation has indeed been running high. But we have of course been greatly assisted by seasonal or cyclical situations. The fact that we have been able to outstrip an inflationary rate of some 14% is very largely due to the gold windfall which we have enjoyed. It is also largely due, though to a lesser degree, to the agricultural windfall which we have enjoyed through two exceptionally favourable seasons. It is also due to an increase in our manufacture. If the Government is so ready to take credit for what our miners and our farmers and our manufacturers do, it must also be prepared to take the responsibility for those things which do not happen in a lean season. This it seldom does What is important is not a sharp upturn, a sharp rise in a short space of time. One must take these things over a long period. As I said before, we face a period of 25 years ahead during which we as a country are going to be faced with exceptional challenges. I feel that unless we can meet these needs we will move backwards and we will not achieve any of the social, economic or political peace which we look forward to unless we can maintain a certain minimum growth rate. I have no doubt that the hon. the Minister of Finance will find the time, if he has not already done so, to speak to the hon. the Minister of Planning and of Statistics and, of course, to see the Report of the Economic Advisory Council. I think that the hon. the Minister will agree that all these things go to make up a very distinct picture. We have to maintain a rate of net growth in this country which is at least sufficient to keep ahead of the population growth which is 3% compounded annually. That is our population growth. We have to keep abreast of that just to keep up with the game. In addition to that we have to meet the rising expectations of our people and that will probably need another 3%. This is the target we have to aim at. It is a higher growth rate, a higher commitment than practically any other Western country, any modern, industrialized country has got to face. This is the difficult task facing South Africa and the high target we have to aim for. When we talk about inflation in regard to these things, we are talking about inflation as the impediment to what we have to achieve in these spheres. Inflation is our enemy in this regard. It is blocking the achievement of the very things which I have mentioned. It is not an enemy to be dismissed lightly.

There is a tendency on the part of hon. members on that side of the House to say that because inflation is universal in its appearance, in its presence throughout the world, the causes and the remedies are therefore also universal. This is in fact a most misleading assumption.

We never said that.

It has been said that the Government makes no apologies for inflation because it is universal, it happens in other countries, it happens in Japan and in Germany and other countries. They say that if it happens there what have they got to apologize for? The conditions in this country are very different from conditions in other countries. We have a very special, even unique, set of circumstances in this country, we are in essence, or rather in potential, one of the richest countries in the world, and we have special means of protection against the ravages of inflation. The fact that we have failed to use them or that we have fallen into inflation is as much our fault as it is anyone else’s. It is probably more our fault than it is the fault of anyone else. The argument has been used repeatedly—I hope to have another opportunity to develop it—that the special cause of inflation in this country is the shortage of labour. When we speak of labour shortages the hon. the Minister is very quick to refer to the absence of unemployment and he has certain figures which he uses. When we speak of labour shortages and when in fact industries speak of labour shortages, when commerce speaks of labour shortages and when mining speaks of labour shortages, what is being referred to is not necessarily numerical shortage but a shortage of quality. Let me come back to the argument in connection with growth which I raised a little earlier. If in fact, we are to have a massive increase in population if we are going to double our population from 25 million to 50 million, then we are going to have to produce in this country, in this space of only 25 years, a very large number of managerial people. Not very long ago Dr. Etienne Rossouw quoted these figures which I think are important. He quoted certain statistics which apply to an advanced industrial economy. He said—

Now, Sir, if we are going to have a population of 50 million, or let us even take our present population of 25 million, and if we assume that something like one-third of that number is going to be economically active and that one-quarter of that number —26%—is going to have to be employed in managerial, top executive and professional activities, then you require a very large number of people in those highly qualified occupations and you cannot produce that number in South Africa unless you employ a very large number of Black and Brown people in those professions. There simply are not enough White people to produce one-third of the economically active people in this country, with one-quarter of those people in professional occupations. It is a matter of simple arithmetic, Sir, and the fact is that we are not producing these people at nearly a fast enough rate. Sir, we will need something like 3 million Black or Brown managerial people within 25 years. If those people are to reach their most productive stage at the age of, shall we say, 40 or 50, they should already be at school now; they are at least 14 or 15 years old already. Sir, what are the prospects of those millions of people—not hundreds of thousands—getting into technical schools and universities? This is what we mean when we talk about a labour shortage or a labour bottle-neck. The hon. the Minister in dealing with this said: “I still have to be convinced that that statement (i.e. that there is a labour bottle-neck) can conceivably be supported by the facts”. I am giving the hon. gentleman the facts now. If he doubts my calculations, he can get these facts confirmed by the Ministry of Planning and of Statistics. These are the facts. The Minister then goes on to say this, and in doing so he contradicts all the arguments that we have heard here this afternoon—

Well, Sir, that is precisely what we have been saying; this is precisely the argument that we have advanced over the last three, four or five years against the “dempskool” and all those outmoded arguments. We have said, “For goodness’ sake, get on with the job; press on; raise the level of productivity in this country; get your labour off the hook; get it moving”. Hon. members opposite argued against that and said, that it was not necessary. Surely, Sir, the relaxation of labour restrictions has been an important element in restraining inflation; of course it has; but we are going to have to go a lot further.

Your argument is very often that there has not been any relaxation.

There has been, in the Minister’s own words, some relaxation in the past few years and we are grateful for it, but there is going to have to be a lot more. When hon. members on that side of the House argue that they have done enough or that there is no validity in our argument, they are talking absolute nonsense, because the Minister’s own words belie that attitude.

Sir, very briefly in the time available to me I want to refer to another special factor which causes inflation in this country. I have never been one of those to agree that imported, inflation has been a major factor in the inflationary trend in this country. I believe that a factor such as the one to which I have just referred has been more important. I have in previous speeches in this House advanced reasons as to why I believe this,, do be the case. Of course, a certain degree of inflation is imported. There are certain things which we must import— machine tools, certain manufactured goods, pertain materials and oil—and they bring inflation with them. Sir, if indeed it is true, as is often said on that side of the House, that imported inflation is a major cause of the inflationary trend in this country, then there would be an excellent remedy at the disposal of the Minister. If imported inflation played such a vitally important role in the inflationary trend in this country, then the One thing he could do would in fact be to revalue the rand. We had a very elementary lesson here this afternoon from the hon. member for Langlaagte on basic economics. Of course, if you revalue the rand it makes your imports cheaper, and if inflation is indeed as important as it is acknowledged to be in this country, if it is the danger that it is and if a remedy is to hand, why is it not used?

Sir, we have heard a lot about a strong rand. I would like to say just briefly, because this is a subject which it would take too long to go into in detail, that the fact is that since 1970 and up to 1975 the rand has in fact been going down steadily with the dollar and the pound. The U.S. dollar and the pound sterling have in fact been losing strength steadily over the years as against all other curr;ncies of strong industrial nations. They have gone down against the Swiss franc, against the French franc, against the Belgian franc, against the German mark, against the krone, and even against the lira. Sir, this is what has been going on. These currencies, the dollar and the pound, have been going down. The South African rand should in fact have been one of the currencies, with the German mark, the French franc and the Swiss franc, to have gone up because of the inherent strength of our country, but instead it has gone down. I should like to quote some figures which indicate the extent to which this has happened. Between 1970 and 1975 the ratio between the rand, the pound sterling and the U.S. dollar has remained within a bracket of about 5%, plus or minus. The position at present is roughly that it is up 5% on the pound sterling, and that it is up 3% on the dollar. These figures are for the end of last year and are not entirely up to date. But this has been the trend. As regards the other strong industrial currencies, the rand has weakened over the same period by some 38% against the German mark, by some 15% against the French franc, by some 46% against the Swiss franc and by some 16% against the Japanese yen. This is what has been happening to our proud currency. We have been following a policy of financial colonialism. We have been following the pound and the dollar down and down as they weakened against all other strong currencies. This is what has been happening to the rand, and yet it is said that the rand is a strong currency. Sir, if the importation of inflation has any impact on inflation in this country, if it has any significance, then the deliberately contrived weakness of the rand has got a great deal to do with it and revaluation is one of the remedies we could employ to put right our situation; to mitigate, at least to some extent, the heavy inflation we are suffering in South Africa at the present time.

In the remaining two minutes I have I want to suggest to the hon. the Minister that in the armoury of measures which can be used in addition to those I have referred to, and which I would have liked to have more time to argue in detail, there are also psychological measures that can be used, and I think a bit of imagination would in fact be helpful in combating inflation in this country. Quite recently, to quote one example, the French Government introduced a new metal monetary piece, a 50- franc piece. This piece is used by the French Government very largely in paying pensions and making certain State payments to people in various categories. The effect of this very beautifully designed coin, with a considerable content of valuable metal, has been that it has almost gone out of circulation. Now, the effect of issuing a coin of this kind which rapidly goes out of circulation as, if you like, a collector’s piece or because it has intrinsic value of its own, has been to introduce a kind of artificial thrift. It has been, in a sense, an encouragement to saving. A lot of people who had 50 francs to put away, which is of the order of R7, have in fact put this coin away in a stocking or in a drawer or under the mattress rather than spend it because they conceive of it as a kind of hedge against the future, as a way of putting aside something for a rainy day.

Like the Kruger rand.

Yes, but the Kruger rand is a rich man’s toy. I believe that if the hon. the Minister—and I say this not in criticism but as a helpful suggestion—would consider the possibility of issuing a beautiful and valuable metal coin with a face value of, shall we say R5, this would bring it within the reach of the common man. I am not suggesting it should be solid gold. If he would bring it within the reach of the common man, it would be something which could be stored away and which would in fact be a store of value and an attraction as a collector’s piece. It would in its own way act as some kind of hedge against inflation.

There are other things I should like to say to the hon. the Minister, for example in the field of energy. I believe the use of oil is critical in the whole sphere of inflation, and if the Minister would re-think his approach to this question of oil savings and try to use some psychological method designed at gaining the full support of people and the full participation of people in a campaign of this kind, instead of using the kind of threats and the kind of punitive measures that are being used at the moment, he would find a far greater willingness on the part of the public to participate in an anti-inflationary campaign through savings of oil on the lines I have indicated.

Mr. Speaker, the hon. member for Von Brandis concluded his speech with a few very interesting ideas and I am sure the hon. the Minister will give attention to them. At the start of his speech, however, he repeated the old story that we are facing fantastic challenges in the years that lie ahead and he added that he does not know how this Government is going to deal with such challenges. If we look back at the challenges that this Government has had to face over the past quarter of a century, and consider what it has accomplished, I think we can say that we can go forward in steadfast hope and unwavering conviction to deal with the problems that may lie ahead in our country, in the interests of everyone in South Africa.

The hon. member for Von Brandis is worried that we shall not have a high enough growth rate to be able to do what we have to. In the Third Reading debate of the Part Appropriation Bill last year there were also such prophets of doom who were constantly saying that we would not be able to do it. The former hon. Minister of Finance explained to them in detail that over the past decade and even further back, our growth rate had been more than had been predicted and consequently there had been progress. These prophets of doom are, one could almost say, people who see and do not perceive, and who hear and do not listen. They do not want to acknowledge facts supplied by experts all over the world. This Government has never condoned inflation. We have never minimized the danger of inflation. We acknowledge that it is advancing across the world like a whirlwind. We add, however, that through its actions and achievements, this Government has ensured that its people are enjoying protection to be classed among the best in the world against this whirlwind whose cold breath is being felt by every country, in the world. In America inflation is no longer called “enemy number one”; there, unemployment is called “enemy number one” We have read about this and statistics were quoted during the Second Reading debate. The danger of inflation, and the danger of unemployment which South Africa, fortunately, has not yet known or experienced, are dangers in other countries, but in our country they are being dealt with very effectively. It seems to me as if the prophets of doom opposite, namely the hon. member for Orange Grove who made a really bitter speech this afternoon, are hoping and praying that South Africa will be faced with economic problems so severe that political instability will develop in South Africa, too, because under the normal procedure of declaring and fighting elections, they will not beat us. I am sorry to have to say that it seems to me that these people are desirous not only of economic instability in South Africa, but also of political instability, because it seems to me that they feel that it will only be then that they would be able to take over the Government.

In my opinion it is precisely because South Africa has had the highest degree of economic growth over the past quarter century and because its peoples’ income and standard of living have risen accordingly that we have a high degree of political stability. Only yesterday the hon. the Minister of Defence warned of dangers that are developing in Africa, or bodies that are attempting to create chaos in our country and in Southern Africa. Political stability is one of the best weapons we have to combat those dangers. I contend that it is our very economic growth and our economic stability that have contributed towards the political stability we enjoy. What is more, it is said that the National Party is a danger for South Africa. It is also said, and the Leader of the Official Opposition has been saying it for a long time, that we are a security risk. I want to contend that this Government and our leader, the hon. the Prime Minister, in particular, have become the symbol of order and discipline in South Africa. I want to repeat that if the hon. members of the Opposition wish to listen and want to take note of expert opinion, we could read them a number of quotations. I have before me extracts from a speech by Dr. P. Riekert. Which hon. Opposition member will deny that Dr. Riekert is a man of quality and stature and that he is a man who knows the economy?

On 11 February 1975, Dr. Riekert said the following (translation)—

He went on to say (translation)—

If only the hon. members of the Opposition did not want to see without perceiving and hear without listening! If only they wanted to listen to statements like these and look at the facts, they would know that South Africa is one of the strongest countries as regards the drop in the value of money. I have here facts that indicate to me that the purchasing power of 17 of the 25 industrial countries in the world has diminished more than has South Africa’s. Of these countries there are only three whose purchasing power has still been less than 10%. In 1974, South Africa’s percentage was 8,9%, America’s was 9,3% and Canada’s 9,4%. The purchasing power of the currencies of all the other developed Western countries have dropped by more than this. Of the 25 developed countries mentioned here, there are only three in respect of which the drop has not yet reached double figures. The percentages of the Other developed countries are all well into the double figures. The hon. members of the Opposition do not like us to draw comparisons with other countries. Yesterday, during the Second Reading debate, it was said that we had accomplished a great deal more as regards the combating of inflation. The hon. member for Constantia then said: “Thank God that we are better off than other countries.” We are grateful to our Heavenly Father for what we have in this country, and for what we enjoy, but I think that the hon. member for Constantia could also thank this Nationalist Government for what it has done so far to make our country strong in the economic sphere. The hon. members should criticize less. I could quote what Prof. J. L. Sadie said. He said that never before has there been such a degree of pessimism among so many businessmen in the midst of such prosperity. The hon. member for Constantia told us what a hard time the businessmen are having. Is it necessary for him and for other hon. members to tell us what a hard time the businessmen are having and is it necessary for them to be prophets of doom in South Africa? Is it necessary for the hon. member for Constantia to say that it is the National Party which is the cause of these inflationary conditions? Is it necessary for the hon. member for Maitland to say that South Africa’s economy is sick owing to the policy of separate development? The hon. member for Constantia tells us—

I want to tell him and I also want to say to the hon. member for Orange Grove that this Government has fared a great deal better against this whirlwind of inflation than have many other comparable countries in spite of the policy of separate development and in spite of the fact that South Africa is only a developing country. These funds which the hon. the Minister is requesting and which are being discussed in this debate are, once again, going to be used to develop our country further and to apply further our policy of separate development, so that a South Africa may be built in which the White man, the Black man and the Brown man will each have a place in the sun. What is more, the people of South Africa are realizing to an ever-increasing extent that South Africa’s wellbeing and its future will be safe only for as long as this philosophy is applied. There are, of course, people who disagree with me. There are people who say that we are doing nothing for the Brown man and the Black man. In this regard I want to read an extract from the mouthpiece of the Afrikaanse Handels instituut dated January 1975 (translation)—

The National Party will continue along this road because it is the only road that offers South Africa a secure future. I have already quoted the hon. member for Constantia and I want to tell him that it seems to me as if he is willing, for the sake of a few cents, to gamble with the future of South Africa. We can say—and we shall say it again and again—that the one thing that this Government will not do is scrap National Party legislation concerning identity and sovereignty because if that is done, South Africa will be plunged into a bottomless pit of friction, disorder, hate and confrontation, the very last thing this country can afford.

Another argument has been advanced, namely that owing to our political philosophy we utilize the money at our disposal unproductively. There is a second charge that is brought against us, namely that owing to our application of our philosophy there is insufficient money to see to the interests of all the inhabitants of South Africa, in other words, that we are not helping our people to develop, that we are not waging a war against poverty. In this regard I again want to quote what was said by an expert in this field, namely the president of the S.A. Foundation. Recently, when addressing the German Institute for African Studies in Germany, he used these significant words (translation)—

Now this Government with its ideology is again asking for Parliament to vote money to enable it to continue with its work of development and to create better conditions in our fatherland every day to enable South Africa to offer better conditions and employment opportunities every day to everyone in the country who is willing to roll up his sleeves.

The Opposition states that we should not draw comparisons, but I should nevertheless like to do so. Do you know, Mr. Speaker, that the average wage of a Black worker in industry in South Africa is 80% higher than that of the equivalent worker in Ghana, whereas Ghana is the country whose wages are regarded as among the highest in Black Africa? A great deal has been said to the effect that we pay our people too little. This has been said again this afternoon. However, in the mighty America today there are 24 million people earning less than R100 per month. The money the Government is going to receive now, it is going to use to create the best opportunities for everyone in South Africa. This is money that is going to be used to cause the economy to grow and to have people develop in the educational, political and other spheres. This money will also be utilized to combat unemployment so that we will not experience the problems of other countries in this regard. Because my time is almost up, I just want to express a few ideas.

About a month ago, before the hon. member for Yeoville was having difficulties, he held a clinic in his constituency one morning. He sat at a little table and invited people to tell him what their complaints were and what troubled them in politics, so that he could put their case in Parliament. What was their reply? It was reported as follows—

The voters of Yeoville told their representative that they were a little concerned about pensions and about traffic matters. On the major issues in South Africa they had no complaints, because they are satisfied with what the Government is doing in this regard.

A group of American political leaders were in South Africa recently. They came here with an open mind and I should like to quote what they said on their departure. Perhaps this will be a lesson to the Opposition. They said—

Is that not a testimonial for South Africa? People come to South Africa and see a country with possibilities; they see a country with economic and political stability and tell us that if they had to choose again, they would choose South Africa as their fatherland. I still have a great deal to say but I shall say it on a later occasion.

Mr. Speaker, the hon. member for Worcester has listed a number of matters for which we hold this Government responsible but he has, in fact, not given any answers to them. We are now entering the final stages of the debate on the Part Appropriation Bill. Over the last few days we on this side of the House have endeavoured in a constructive and positive manner to indicate to the hon. the Minister of Finance where we pinpoint the economic, financial and currency difficulties that we see facing this country. I think it is important that we on both sides of the House should realize that we appear to be conditioned to think that only the White people constitute the economy of this country. I think this is made abundantly clear by the commentary of my friend, the hon. member for Constantia, when he indicated the average disposable incomes of the various race groups. He listed them as: Whites, R2 208; Coloureds, R344; Indians, R444; and Africans, R120. It so happens that just this week the British department of statistics has released figures pertaining to the average male and female worker in Britain. In this regard I want to quote the following—

These figures are an indication of the standards that obtain in the Western world. When one compares them with the standards that obtain here, one realizes that we are in fact a fortunate country. We have been blessed and endowed with rich natural assets. We have been endowed with tremendous human skills, but no one will deny that until very recently the Nationalists who have been in power for 26 years, were resisting any recommendations by speakers on this side of the House that we should free our economy and human resources, and make maximum use of them and that we should aim at a growth rate of 10%. These were the words of my hon. leader. He said we should make use of the resources we have while we can, because time is running out. I think the hon. the Minister of Finance will agree that this debate today has revolved largely around the fact that inflation is a world-wide ailment. The cost of living throughout the world has become inordinately high and, although we in this country are suffering to a certain extent, though perhaps not as much as the rest of the world, it is nevertheless a criticism that this Government must face from most quarters of the population that it has failed in containing or reducing inflation and that it has made no real contribution in recent months to bring about a fall in the cost of living.

Those of us who are fortunate to be members of the White race, the privileged race, the race that is unrestricted, sheltered and protected, will be failing in our duty if we do not realize that, as members of this House, we are legislating for the destiny, the financial and economic well-being and future not only of the White section of the population, but of all population groups. I put it to each and everyone of you here today, whether you would like to be classified by an accident of nature as belonging to a non-White group such as the Indian or the African group. When we drive home through the poorer areas and see the conditions under which the Africans and most non-Whites in our great country live, can we boast of our high standard of living and say that we are such a wealthy race, one of the richest races in the world? No, Sir, when we say that, we isolate ourselves as the 3 million out of 23 million of the population of this country who have been blessed by an accident of nature to have white skins and therefore enjoy the fruits of an economy which could be so much richer.

I want to refer to the hon. member for Von Brandis who commented this afternoon that perhaps hon. members on the other side of the House have forgotten that, if inflation is a tremendous problem, our population explosion is an even more drastic problem facing this economy. If one accepts the figures that by the year 2000 we will have a population of approximately 50 million and if one realizes the challenge of what that means, then I think that the hon. the Minister of Finance will welcome the commentary from those on this side of the House who have endeavoured to unshackle him from the chains which were holding him back and who have indicated that they will support him in any measures that he takes to free the economy of the shackles of the past, to enter the free market place and allow free market forces to work throughout the system. During recent months there have been complaints that the cost of living is perhaps the one item which concerns the man in the street most. Only recently it has been suggested that we should introduce price control and wage controls in order to free ourselves of this anachronism.

We on this side of the House go along with the hon. the Minister of Finance in saying to the public: Do not ask for complete price control or wage control. We want to tell the hon. the Minister that we believe, with him, that the economic truths of yesterday are still true today and that short-term remedies such as price and wage control and other short-term expedients can often lead to long-term grievances. We want to appeal to the hon. the Minister to give the utmost consideration in his coming Budget to giving free rein to the forces of free competitive enterprise, to make it sensible to want to make profits, to allow industrialists to make profits so as to permit them to plough back those profits into more productive enterprises. We appeal to him to allow those people who do succeed, who show entrepreneurial skills, who show husbandry, energy and drive and enterprise to take back in their pay packets enough to make them believe that it is worthwhile to be more productive. We believe that no matter what may be said by hon. members on that side of the House the key to the solution of reducing the cost of living and increasing the standard of living of the lower income groups in this country is to make productivity possible to an ever-increasing extent and not to decrease demand but to increase supply.

I say that if hon. members on both sides of the House view our economy and our future with that faith which all of us have expressed, we will go from strength to strength. We are a great country and we can and will be a greater country. Do not let us regard our labour units as colour groups in the same way that we do not regard money as being anything else but money. Let us rather regard the demand for goods and services that can be generated in this country as a demand that can be generated by 24 million individual people.

I want to say to the hon. the Minister of Finance that in my Second Reading speech I indicated that we should be bold and allow far more foreign capital, enterprise and skill into South Africa. In his reply he stated that I should be aware of the fact that some R700 million in capital came into the country last year. I am thinking bigger than that; I am thinking on a much grander scale. The general manager of General Mining has indicated that in respect of our mines alone we will need something like R1 500 million to R2 000 million during the next year or two. This is merely for the exploitation of those mines which have now become workable and for new mines. When we think of our motor industry and we talk about the scale of mass production, the economics of it, we are not thinking of present production. We are thinking of the time when our motor manufacturers will be catering for a car for every four or five families throughout South Africa. I am not referring here to White families only. I include all non-White families as well. When we think of television, the industry which can be so exciting because it will provide us with a new concept in home entertainment as well as in education on a national scale, we do not think of one population group only which will purchase 1 000 000 television sets. Imagine the excitement and the new enterprise that will be generated if the population group we had in mind were to comprise from 24 million to 27 million people. It is only on this scale that we realize the exciting challenge of the seventies and what we can do in this country.

The Argentine has been mentioned. This is an example of a country whose people are perhaps as undeveloped as our South Africans. However, because they have made the maximum use of their country, of their natural and labour resources, their growth rate is something to be admired. The future horizon of every individual in that country is wide and he can reach the stars.

I do not believe that this should be a political debate and I feel that financial speakers on this side of the House have tried to keep the debate above the level of politics. Where the hon. the Minister of Finance will during the next four months be disposing of R1 900 million money which belongs to all South Africans, all we want to ask him is that when he searches his horizon, he must set his sights far and be bold in his planning. I believe that if we unleash the potential of our economic machine this country will have a future of which all of us can be proud.

Mr. Speaker, it is a pleasure to me once again to thank my hon. colleagues on this side of the House for their valuable contributions to this debate. I want to thank my hon. friends on that side of the House, too, for the valiant attempt they made to keep this debate going; it could not always have been easy for them, but be that as it may, I found the debate very interesting and I shall try to reply to certain of the arguments.

†Sir, the hon. member for Constantia began by stating a number of general aims of financial policy. I think one could agree with a number of the things which he said. The problem, of course, arises as to the actual measures that one can adopt in any given situation at any given time. One must, of course, adopt fiscal measures which are going to yield a certain minimum amount of income to finance what is regarded as essential expenditure. I am sure the hon. member realizes that only too well.

Sir, I am sure the House would not expect me to comment at this stage on the specific tax and fiscal measures which have been proposed here for inclusion in the Budget. Obviously those are suggestions which one would take into careful consideration in framing the Budget itself. I would just like to refer to the criticism of the hon. member for Constantia in respect of savings. I had pointed out that savings had increased substantially in 1974. The latest figures for 1974, which are still provisional figures which have very recently come to hand, do show a substantial increase in gross domestic savings. Personal savings, which represent a component of the total, have also increased substantially. There is not only an increase in the absolute figures, but also as a percentage of the gross domestic product. I mention that because those were the figures which I relied upon in my earlier speech.

Sir, to come back very briefly to the hon. member for Constantia, the hon. member said that the Minister must be very tough in pruning Government expenditure. The hon. member for Johannesburg North made the same point the other day. He said that we should economize more. Sir, I think nowadays most Ministers of Finance try to control expenditure as much as possible, and I think when hon. members ask that Government expenditure should be pruned they should tell us, when they see the whole list of expenditures in the Estimates, precisely which figures are too high and which items could have been dispensed with. That would then give us something concrete to bite on and we could then look at the figures again. But the point is that in the case of every item in the Estimates, every figure which appears there has been scrutinized very closely. Those figures are not simply plucked out of the air; they are very closely examined before they are included in the Estimates.

Then, Sir, the hon. member also mentioned the need to alleviate the lot of the consumer. One does one’s best within one’s financial abilities to do just that. The hon. member suggested that there could be an improvement in the marginal rates of tax, in the tax position of married women and in the rate of progression of income tax, and that food subsidies should be raised. He also suggested several other measures. The point is, of course, that if you go on making all these concessions you get to the point where your Budget proposals will simply not yield enough income to finance your outlays. Sir, I just want to comment also on the hon. member’s fear that we might finance capital from revenue. He was very much against that. But, Sir, if revenue is buoyant, particularly under conditions of substantial inflation, would it not be worth considering under those conditions whether one ought not to use at least a part—it would be a small part in the nature of things—of that revenue in an effort to defray the very heavy capital outlays with which we are concerned? The demand for infra-structure, as I mentioned a few days ago, is enormous and unceasing, and comes from all sections of the population. You see. Sir, if you take a private business, a non-Government undertaking, this is the sort of thing they aim to do under conditions of inflation particularly. This is one of the reasons why we are getting representations from businesses to reduce or perhaps to abolish the undistributed profits tax so that they can plough back more of their profits into capital expansion. The principle, I think, remains the same whether it is a private business or the Government. I merely say that I think one must look at that a little more carefully than simply to say it must be prohibited from the start. I think if the hon. member will permit me. I will leave in at that for the moment. He gave a perfectly objective statement of his side of the argument and I hope he will consider that I have done the same from my side.

*It is always a pleasure to me to listen to my friend, the hon. member for Paarl especially when he is dealing with financial matters.

The mutual admiration society.

Yes, that is so, but we heard his speech, and what was wrong with that speech? Surely it was a fine and constructive speech. The hon. member rightly emphasized the importance of inflation as well as the importance of saving under the present circumstances. He was certainly quite right as far as that was concerned. He asked me why we differentiated between interest and dividends for tax purposes, i.e. seen from the tax point of view. Now, it is true, of course, that dividends are taxed in part and interest in full. The dividend is taxed in part because it is not granted to the paving company as an expense for tax purposes, but interest is. Interest is a cost item. This means that the dividend comes from the company’s income after tax. I think that is a fairly important difference and it explains why dividends are treated differently for tax purposes.

I regret to say that I cannot pass any favourable comment on the speech made by the hon. member for Orange Grove. I actually wanted to ignore it, but I just want to say that I think we can really do a little better than that in this House. To make nothing but a whole number of dogmatic statements and to present them as we heard them here today, does not meet with my approval and I shall not take the matter any further. It was a negative speech. The hon. member informed me that he could not be here. He has a good reason.

†But I must say. Mr. Speaker, that I hope that the hon. member for Houghton, or the other members of her party who are here, also feel that the hon. member for Orange Grove could have been a little more constructive than simply to make a whole range of condemnatory statements. According to him nothing was right about the economy of South Africa. I tried very hard to distill what I could out of his speech in order to give a serious answer, but it was a series of absolutely dogmatic assertions and, indeed I think in respect of most of them he was extremely vulnerable if one had to try to argue them. He mentioned the need for a subsidy on bread, but of course we have a substantial subsidy on bread. I do not see how one can reasonably expect the subsidy on bread to be higher than it is. Our price of bread is one of the lowest in the world. We know what the prices in the world are; the hon. the Minister of Agriculture mentioned them to me the other day.

But you took R40 million off the subsidy.

If we did not have a subsidy the price of bread would obviously have been very much higher.

The hon. member for Bellville covered a very wide field. I listened to him with much interest and I think he made a very effective speech. However, since I only have a few minutes I cannot really go into all the points he raised. [Interjections.] I must say, however, that he dealt extremely effectively with the hon. member for Orange Grove and I should like to thank him for that. He certainly put him in his place. [Interjections.] I do not know whether the hon. members opposite are disappointed that he did that, but I would have thought they might have felt that he had quite a good point.

I now come to the hon. member for Randburg who made an interesting point about profits and the effect of inflation on company profits. He also dealt with the position of companies under those conditions. In passing he made quite an interesting remark that in these days the old economic remedies do not seem to work awfully well. That is of course very true. In the old days there was a time when if you had inflation the prescription was simply that you took money out of the hands of the public and by doing so, you tended to dampen down the inflation straightaway. So you would raise taxes and you would raise interest rates to discourage investment and you would in fact also follow a tight-money policy. These days, however, things are very much less simple than that as the hon. member quite correctly said and we see it every day when we have to apply these measures in practice.

As I understood him, the hon. member really made a plea for a replacement cost basis of accounting rather than historical cost. I think that is what it really comes down to. I should like to mention to him that this is something which businessmen and business organizations have discussed with us and which we have also discussed at Government and departmental level for some time. This idea of inflation accounting, as they call it today, is not an easy subject. The hon. member will probably know that even amongst themselves accountants are anything but unanimous as to how to go about this and, in fact, I had an illustration of this only last week when some of these people came to see me. It is also true to say that if this sort of approach were adopted, a number of companies would increase their profits as a result, but depending on the state of their balance sheets, some companies would be worse off. I think that is a point one must bear in mind and it is a point which some of these people do appreciate. We have a standing commission on taxation under the chairmanship of the Secretary for Finance and this matter has been referred to the standing commission which will make a very thorough investigation into the whole matter. Thereafter we shall go into it again. We have not ignored this matter in practice. I think the hon. member will agree that the Government has in previous budgets given some recognition to this problem because we do allow an easier or a more liberal interpretation of the valuation of assets. However, I leave that particular matter there for the moment.

I come to the hon. member for Von Brandis who raised some interesting points. He talked about an inflation rate of 14%. If you take the consumer price index between December and December, that would be so, but I think one ought to be very careful not to take an individual month because one can get all sorts of exceptional items cropping up in one particular month which might not recur. I think it would be safer to take an average month to month increase over the whole year; that is what I have done. In that case one will find that the increase over the full year is about 11,6%. I mention that because I think it may be a fairer reflection of the increase in costs or prices as measured by that index.

The hon. member also referred to inflation as a not purely monetary phenomenon. I think he was actually looking at the moral implications which I think is perfectly correct. This is the old-fashioned approach and it is a very sound one. There is a moral overtone to inflation which one must bear in mind. If inflation gets completely out of hand your whole sense of values is likely to be very seriously disturbed and very adversely affected. I fully agree with that.

The hon. member spoke a good deal about revaluation and argued in favour of a revaluation of the rand. As I understood him, he tended to criticize the Government for not having allowed the rand to be revalued. Of course the position is that because our growth rate has been rising so fast we have had to import on a large scale. This is particularly the case with capital goods of all kinds. The capital goods that we are importing and have been importing for some time have had an enormous increase in price. This brings me to the other point the hon. member mentioned, that is that we tended to exaggerate the effects of imported inflation or the magnitude of imported inflation. I do not think that this is the case at all. We cannot overstress the seriousness of imported inflation. If one looks at the figures one will see that particularly during the last year there has been a very substantial jump in the cost of imports. This has particularly been the case in respect of the whole range of capital goods which are so important for our future development in this country.

But I want to come back to the position of the rand. We had to import on a very big scale and our imports last year were 50% above that of the year before. That is a very big jump indeed. Our exports rose very encouragingly too, but certainly not by as much as that, and so we had a gap on the current account. Gold revenue also rose substantially, however, and that helped a great deal. The overall deficit on the current account was about R800 million. Fortunately we had a net amount of capital, an amount of R700 million, coming into this country which left a deficit of about R100 million. There were certain valuation adjustments to the value of R30 million which left us with a net deficit of R70 million. That then was the drawing on the foreign exchange reserve, and that amount of R70 million was not very much to worry about. I want to make the point, however, that if we had allowed the rand to be revalued substantially under those conditions, we would certainly have made the position much worse.

We would have cheapened imports as the hon. member rightly said, but not only would imports have been cheaper; we would have had a much bigger flood of imports coming into this country. The overall value of imports would probably have increased to a greater extent than it did increase during last year, and as I have said, it increased substantially last year.

At the same time it would have had the opposite effect on exports. We would have tended to discourage exports from South Africa and we could have had a very serious position in the current account. That is the reason why we had to watch this so carefully. I would, however, remind the hon. member for Von Brandis that despite that the rand has been allowed to appreciate under the “controlled floating” that we have allowed since last June and it has in fact appreciated several times by small amounts. Since last June this has happened, I think, nine times. The fact is that since last June or July the rand’s value has changed from 1,45 dollars to 1,49 dollars.

The dollar is sinking.

Yes, that may be, but that is why we are not allowing the rand to sink. The hon. member compared the exchange rates of the rand with the exchange rates of other currencies such as, for instance, the Swiss franc. I do not think that that is a particularly significant exchange rate to quote because we should rather be looking at how it compares with currencies of countries with which we do a substantial amount of trade. That would be of greater significance.

I quoted six.

As I mentioned in my reply to the hon. member the other day, if one takes a weighted index of the currencies of the countries with which we do a fairly substantial trade, one finds that the value of the rand today is in fact greater than it was in 1967. That is the answer.

But the currency is depreciating.

We certainly regard the rand as a strong currency. How anyone can suggest that this Government’s view is that the rand is not a strong currency, is beyond me. Our whole policy is based on the point of view that it is a strong currency. However, I say again, if we allow the rand to be revalued substantially or excessively, it is to my mind in the circumstances certainly going to have very far-reaching repercussions on our trading position, and that is where I feel we must put the emphasis.

I want to come to another point the hon. member made. He mentioned the French 50 franc piece—a metal coin. That is indeed a very interesting thing. We are already doing something similar. As I mentioned by way of an interjection, we have the valuable Kruger Rand which I believe is a great success. We are constantly looking at this matter, and are considering the possibility of issuing some other denomination of coin, if possible. This matter is discussed with the Mint. However, the hon. member having raised the question of a valuable coin, leads one to refer to the old Gresham’s law which, as hon. members will know, goes back to the days of Queen Elizabeth I. It was found and has been found ever since that, if one has such a valuable coin as well as the other forms of currency, the valuable coin disappears, just as the hon. member said. People save it because it has value or they use it to pay their external debts because neople overseas will accept it immediately. So one finds that bad money drives good money out of circulation. However, that is something we can watch. I do not think that need worry us much at this stage.

*I want to conclude by saying in general that I made only a brief reference to the motor industry in my earlier speech, when I was replying to the hon. member for Constantia. I now have the figures for the number of passenger vehicles as well as commercial vehicles manufactured last year. It is quite interesting to look at these. Hon. members will remember that the hon. member criticized us on our policy in respect of the local content programme.

†I now have the figures before me. The total passenger car sales for 1974 was 226 776 as against 229 442 the year before. There was, in other words, a slight drop. As against that the sale of commercial vehicle went up. Last year 115151 were sold, as against 112 941 in 1973. If one puts the two together, one finds that between 1973 and 1974 there was an overall drop of 456 vehicles on a total of 342 000, in round figures. This represents a drop of 0,13%, which is neither here nor there. It shows, I think, that under difficult circumstances our motor manufacturing industry has done extremely well. The contrast with overseas is striking. In America last year the number of vehicles produced dropped by more than 25%. In America there is also very big unemployment in the motor industry which is one of their biggest industries. In West Germany which has a very strong economy there was a drop of more than 20% with the result that substantial unemployment has crept in. The unemployment in the motor industry constitutes a big proportion of the overall unemployment of nearly 1,2 million in West Germany. But in this country we were fortunate to find that the motor manufacturing industry was able to hold its own extremely well and that the total sales were virtually the same as the year before. I mention this because it certainly has a bearing on the local content programme and the decision to maintain that programme as we announced it.

The other point I want to refer to is the balance of payments. I have quoted the figures for South Africa briefly here. The contrast with the Western world is striking. For the 24 countries of the so-called OECD the latest estimate I have seen is that there might be an overall deficit in their balances of payments of something like 50 billion dollars. Many of these countries have had surpluses in the past. In what could have been a very difficult year and one which was for other countries an exceptionally difficult year, we ended “all square” last year. We ended with a small deficit of R70 million on a very big overall trade figure. I think this is another illustration of the great strength of the South African economy today. Indeed, I want to draw the attention of the House to an interesting survey which was made in Britain by the intelligence unit of the Economist, a very authoritative research undertaking attached to the newspaper Economist. This survey came to the conclusion about South Africa at the end of last year that “South Africa has a brilliant economic future”. In fact, the best finding of the whole survey was that South Africa had a brilliant economic future, provided only, they said, we did not get into a State where there was violence, war or things of that nature. But then the report went straight on to say that they found conditions in South Africa remarkably stable. They commented on the stability of South Africa, both economically and politically.

*It seems to me that we are doing fairly well. As far as I am concerned, I think the prospects are very favourable indeed. Even though we have problems, which certainly include inflation, I am very confident and I have no doubt that we shall overcome those problems, because our economy is fundamentally sound. One of the reasons for this is certainly the financial and economic policy of the Government.

Motion agreed to.

Bill read a Third Time.

Mr. Speaker, when the debate was adjourned yesterday, I was in the process of putting to the Minister the problem experienced with this Bill by the private commission agent. Certain private commission agents are experiencing a problem with the provisions appearing in clause 26. This clause deals with the exemption of co-operative societies from the obligation to provide security to the Secretary of Agriculture. There are good cooperative societies and there are bad cooperative societies. I believe in co-operative societies and I am a member of three of them. However, the question which arises here is whether it is necessary for cooperative societies to be exempt from these security provisions. The position is that the financially strong co-operative societies which serve the farmer well, do have the security to give the Secretary. The small and bad co-operative societies does not have the security, but they are being exempt here. In our opinion this is the only deficiency in this legislation. I must say that, as far as the private commission agents are concerned, this is a sore point. I just want to mention this so that the Minister could be given the opportunity of replying to this during the Second Reading of this debate.

Mr. Speaker, as I understand it, this is a consolidating measure which regulates the relationship between the producer and the distributor or commission agents, and I would like to assure the hon. the Minister immediately that I am not going to flatter myself that I have either the knowledge or the experience to be able to question the implications of this legislation. But there are however certain logical consequences that result from this legislation itself, and I would like to ask the hon. the Minister for information in connection with this legislation by way of a few questions. If we look at clause 2(4), for example, we see that there are commission agents who can lose their jobs as a result of this particular legislation. As I understand the logic of this particular clause there were commission agents who were not registered according to the provisions of clauses 2(2) and 2(3) and who can now, should this Bill be passed, lose their jobs after three months. It seems important to me that one should obtain more clarity in terms of clause 3(5) as to what the conditions of registration will be. At a first glance it seems to me rather unfair that a man can lose his job if he was lawfully— as stated in clause 2—a commission agent and now has to comply with certain conditions that are not defined by the particular legislation itself. It is not clear what the conditions are which a person has to comply with. In clause 3(5) it merely states—

This is a specific problem which I have, namely that a person can lose his job, and what the conditions for registration are. There is the possibility here that one may get a closed shop situation, because the Secretary of the department can decide what the conditions for registration are to be and from the nature of the case there could be certain people who are unable to comply with those conditions, and so it could to a certain extent, be a monopolistic situation as regards agencies in this respect.

I also want to put a question in regard to clause 4(l)(i). This clause is related to clause 9, and consequently clause 5 is related to clause 10, since both dealt with registration as commission agent which may be refused under certain circumstances, and the right of appeal. Clauses 9 and 10 deal with registration as salesman and clause 10 with the appeal he has to the Minister. It is in regard to clause 4(1)(i) in particular that it seems to me that the Secretary of a department has exceptional discretionary powers because he may decide that a person’s application may be refused, or that a person may no longer be registered either as a commission agent or as a salesman. In fact, the applicant has no right of appeal. He can only go to the Minister in terms of clauses 5 or 10 to ask that his case be reconsidered. I want to know whether it would possibly not be fairer or more reasonable to say that the Secretary or the Minister should set out the reasons for such a refusal and that the case could then be settled in a court to which the man could then appeal in such a way that the court would at least have to give a verdict on whether the refusal of the registration was just or not.

In clause 22(2)(a) it is stated that the commission agent is entitled to invest trust moneys for profit and that he should, after the first year, pay the profits on the investment into a quarantee fund. After that, however, if I understand it correctly, he can claim the money for himself. Is there not a danger of malpractices here? I know the Law Society does not permit any attorney to claim the income on trust funds for himself, and that he has to look after this trust money very carefully. What would the situation be in this case where the commission agent can for instance invest money …

The interest.

After the first year he has to pay the interest into a quarantee fund, if I read it correctly, but thereafter he can claim the interest for himself. I want to ask the hon. the Minister whether he can give me the assurance that a situation cannot develop where a commission agent can begin to speculate with someone else’s money.

The last question I want to put is in connection with clause 59(2). Here it is said that a commission agent can be held responsible for activities of any person who is in his employ. If that person commits an error, then the commission agent as employer is held responsible for that man’s offence. It is even stated in the clause that in the application of sub-clause (l)(b) the fact that a commission agent or livestock auctioneer forbade any act or omission of the nature in question is no excuse. In other words, he can tell his employee that he must not do something, he must not commit a specific act. If the man does commit that act, then according to that sub-clause the commission agent is still held responsible for it. It seems to me rather harsh that the employer has to shoulder the blame for the actions of his employee in this particular case. A tremendous onus of proof is being placed on the employer. He has to prove his innocence. I say this, especially if one sees it in the light of the provisions of clause 61, which lays down that the State may under no circumstances be held liable for the malpractices of anybody in its service. In the one case the employer has to prove his bona fides, and in the other case the employer has to prove his mala fides. It seems to me that these two situations are somewhat contradictory because in the case of the commission agent he is held responsible for the actions of those who are in his employ, while in clause 61 it seems to me that the people in the service of the State are being given kind of escape hatch, which does not exist in terms of the provisions of clause 59(2).

To my mind these are practical problems I see in the nature of the legislation itself. I am sure the hon. the Minister will be able to explain to me how this is going to work in practice and why these particular clauses are necessary. I support this Bill in principle.

Mr. Speaker, the hon. member for Newton Park asked that the funds in the fidelity fund should not be contributed by the farmer. That is not the idea at all. The hon. member would like to see the producer being protected. When the farmer delivers his product to the marketing agent, the marketing agent can charge commission amounting to between 5% and 7½% on that product. This is laid down by the department. It depends on the market, etc. The local municipal levy, etc., must also be recovered from this amount and then he sees to it that this is included in the calculation of his total costs. This is how the fund is built up. However, he does not add the, say, 5% which he takes from the farmer. The fidelity fund policy is in fact built up out of this fund.

The hon. member for Humansdorp explained the matter more fully. Apparently he understands the Bill quite well.

The hon. member for Albany is concerned about private commission agents that feel that co-operatives should also offer security in this instance. There are three cooperatives, the Transvaal Potato Co-operative, the Marko Co-operative and the Bathurst Farmers’ Union, a co-operative which is situated in the hon. members’ constituency. It is a very well run co-operative and I know the hon. member is a member of it. Strangely enough, it is a very successful co-operative although its management is composed of United Party men! [Interjections.] The co-operative idea works as follows: 100 farmers get together and decide to start an agency on a co-operative basis. For what specific purpose should they take out a guarantee? After all, they are handling the goods of their own members and each member is a shareholder in the business. The whole setup protects the farmer. You might be able to recall the old days of the S.A.P. and D., a co-operative which collapsed for various reasons. In practice, however, we see no problems. The co-operative is not compelled to give the security since the farmers themselves are the owners of the co-operatives, and should the co-operatives go bankrupt, then each individual farmer, as a member of the co-operative, has a share in it. There are only these three co-operatives. I think the hon. member will understand this.

The hon. member for Rondebosch asked a few questions which I think are quite reasonable and I shall gladly furnish him with the information he requires. The hon. member wants to know whether the man could lose his job. Look, sometimes there are some of these agents who are not quite as honest as we politicians, or they might have been declared insolvent, who might be swindlers. In such a case the secretary has the power to refuse his registration. The agent may appeal to the Minister but I must say that this has not happened in my time. Under the old system we also had registration, but if a man comes forward and asks why his registration was refused, we will readily do so by telling him courteously, “My friend, we do not see our way clear to registering you.”

The hon. member went on to ask what the position was when the agent stopped operating. He said some registrations could be cancelled. There are some of these people who are operating without registration, but whom we are not going to stop immediately. The Act makes provision for us to accommodate these people, too, and that is why that clause is there, for they must all have the opportunity of registering. The hon. member must understand that we need these people. We just want to sift the wheat from the chaff, and there are not many of them who do not, in our view, belong in the industry. The issue is whether or not economic success is achieved by the agent. At a profit of 5% on the Johannesburg market, one must know how to hold one’s own in order to make a success of a commission agency. Some of these people even extend credit facilities to their buyers. Many of the Asiatic buyers obtain credit from the agent, but the little fellow simply disappears after he had bought an entire consignment of watermelons and the agent cannot find him again and must then recover everything from this 5 %. That is why I say that we need these people and the hon. member must not think we are trying to make it difficult for them.

Then the hon. member spoke about trust money. The person concerned does his share in order to help to build up his fund. In the past we said that if a man has a turnover of R1 million, his fidelity guarantee—i.e. the amount of money which we want as security—must be such that he can pay his people what he owes them within a week, for we do not want him to hold onto the farmer’s cheque for more than seven days. If things go wrong he can have a total of, say, R50 000. We try to keep his security in the vicinity of R50 000. Interest earned in the first year accrues to the fund, but is it really fair to allow a man to operate at 5%, let him build up a fidelity fund to cover a week’s turnover and then to tell him: “No, from now on we want that interest as well”. We feel that this has taken protection for the farmer far enough and that he can then proceed to make use of his interest.

Then the hon. member for Rondebosch rightly asked why we held the owner responsible for the actions of his employees. But now we have the problem that some of these people establish branches. There are agents that have a branch in Pietermaritzburg, Durban, Bloemfontein and Johannesburg and one even has five branches, here in Cape Town as well. He operates on a country-wide basis. There might be only one owner, but he has people on whom he is dependent. Now, he cannot take refuge behind the fact that he perhaps appointed a less honest man at the Epping Market and say, “But I have nothing to do with the matter; you must clamp down on the man I hired.” Then we tell him, “No, you as the owner are responsible.” That is why we have that clause, i.e. so that he cannot take refuge behind an employee. In the Public Service it is different; there one can sometimes take refuge behind an official, for the Minister really cannot have everything under his control, but one must not compare these two things, for this is a private business where the man concerned has to accept responsibility throughout.

I think I have replied to all the questions. I just want to express my gratitude to hon. members for the fine spirit of détente there has been in respect of this Bill.

Motion agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

Throughout the world serious attention is being given to the combating and prevention of all forms of pollution and, in particular, the danger pollution constitutes to human health. You will undoubtedly agree with me that the prevention of the pollution of foodstuffs and the spreading of diseases by means of polluted material, are certainly the most important facet in this struggle.

The existing legislation in respect of which I am submitting certain amendments to the hon. House today, is, for the most part, aimed at achieving this object in the meat industry. The implementation of this legislation presented a new challenge to the veterinarians of my Department of Agricultural Technical Services, and I am proud of the great measure of success which has already been achieved. This success has served as a further incentive to them, but as is the cae with all new undertakings, they have found certain deficiencies in the application of the Act. They have held thorough consultations with experts abroad, and I think that, after having applied this legislation for a period of five years, we have now gained sufficient knowledge and experience to try to rectify these matters. The rectifications are contained in the Bill which is being submitted to the hon. House for consideration today.

Standards of hygiene is an abstract concept which has different meanings for different people. In an abattoir hygiene is based on the available facilities, the way in which the abattoir is managed and maintained and the procedures which are adopted. In order to establish the required hygiene these three factors must be present in the correct proportion to the through put. I propose, therefore, that the abstract concept be substituted for these three factors and that it be possible for them to be defined by means of regulation. In this way every abattoir owner will know precisely what his position is, and it will be possible to obtain the require hygiene circumstances in the abattoir and related industries without any misunderstanding.

At present an abattoir may only be registered if it complies with the requirements in all respects. Because few abattoirs in the Republic comply with all the requirements they should not, strictly speaking, be registered. However, slaughtering at an unregistered abattoir is prohibited by law. An abattoir renders an essential service to the community and cannot be closed down without causing the public hardship. Therefore, I propose that it be possible for abattoirs with certain deficiencies to be registered conditionally so that abattoir owners are afforded the opportunity of continuing to slaughter while they gradually effect the necessary improvements. The way the old Act used to read, Sir, it was not possible for slaughtering to take place in an abattoir after it had been declared unsuitable, but such a provision would be unpractical, Some abattoirs have to be declared unsuitable from a hygienic point of view, but we now feel that we want to provide that the owner is gradually able to effect the rectifications in the abattoir. For the same reason I propose provisions to regulate the manner in which slaughtering may be continued, should the registered owner of an abattoir become incapable of operating the undertaking owing to death, insolvency or any other cause.

Meat and animal products are inspected at all abattoirs, whether under this legislation or under the regulations in terms of the Public Health Act. When meat or animal products are approved or rejected in terms of the latter regulation, such meat or products do not necessarily have to be marked. However, I do not deem it desirable that meat which is not marked, should be distributed and I therefore propose a provision in terms of which all meat and animal products will henceforth have to be marked after inspection and, also, that everything that is rejected has to be dealt with according to this legislation.

The spheres of action and powers of inspectors, authorized persons and designated officials are at present being defined in various provisions of the Act. Basically their duties do not differ. Each one of them strives to combat the distribution of polluted meat. Originally the limitation on the sphere of action of everyone was laid down with a view to absolute control of hygiene in the meat industry. Experience has taught us that the manpower to achieve this ideal is simply not available today. I therefore propose amendments which will have the effect of widening the spectrum of the utilization of available manpower and which will enhance the general level of efficiency of inspections.

The actions of inspectors employed by local authorities is aimed at promoting the objects of this legislation. In order to protect them against victimization which might flow from unpopular but nevertheless essential action in terms of this legislation, the Act at present provides that they may not be dismissed or that their salaries not be reduced unless I approve of such action. Because cases of this nature usually have to be investigated thoroughly, it is proposed that provision be made for a magistrate, designated for this purpose, to submit a report to me.

Apart from specific functions mentioned in various parts of the Act, a comprehensive definition of the duties of the Chief Meat Hygiene Officer is not to be found anywhere in the Act. On occasion this deficiency has created problems. I now propose a provision in terms of which the Chief Meat Hygiene Officer is clearly defined as the qualified central authority charged with hygiene in the meat industry.

At present the Act provides that owners of abattoirs should provide the necessary laboratory facilities in order to enable inspectors to determine whether an animal, meat or an animal product is infected with disease and whether it is suitable for human consumption. However, the establishment of such laboratory facilities is an expensive undertaking. Although the Act provides that it is possible for a portion of the erection costs to be paid out of funds appropriated by Parliament, it will probably take some time before adequate facilities will be provided everywhere. In order to ensure that meat hygiene is not adversely affected by the absence of facilities, it is proposed that provision be made for certain of these investigations to be undertaken in State laboratories upon payment of the prescribed fees.

When the legislation was drafted the Departments of Health and of Agricultural Technical Services agreed that the control over meat hygiene exercised by the latter department should extend to wholesale premises. Subsequently it became evident that the present definition was inadequate to include premises on which animal products are processed and stored if such premises are not centralized at an abattoir. These premises are at present not effectively subject to legal control and for that reason it is being proposed that the definition be extended to make it possible for such premises, for the purposes of the Act, to be regarded as “abattoirs” as well.

Sterilizing plants in which bone-meal, carcass-meal, blood-meal and so on, are manufactured are at present subject to control in terms of the Fertilizers. Farm Feeds. Agricultural Remedies and Stock Remedies Act, 1947. The latter Act was enacted primarily for the purpose of exercising control over the product of such plant and not the manufacturing processes. Since animal products are being processed there, it is proposed that such plants should also be regarded as abattoirs in order that control over the manufacturing process there could be exercised in terms of this Act.

The concentration of animals at the larger national abattoirs, in particular, inevitably entails that infectious objects, such as crates and hay, accumulate there. The arbitrary removal of such infectious objects from abattoirs creates a risk of animal diseases spreading and it is therefore being proposed that certain objects, as is the case in the Animal Diseases and Parasites Act, 1956, be declared infectious objects and to make it possible for such objects to be regulated.

Meat and animal products exported from the Republic have to be accompanied by a certificate, in terms of the requirements of foreign countries, to the effect that same are free from disease and are suitable for human consumption and so on, and such a certificate is required to be issued by a competent veterinary authority. Although meat is being exported to a limited extent at present, it is essential to regulate the conditions for the export thereof in accordance with internationally accepted norms, and a provision in this connection is therefore being proposed.

I am of the opinion that the amended provisions will contribute towards ensuring that it is possible to make available a healthy, safe, and, above, all hygienic meat supply without causing unnecessary inconvenience to the consumer or the trade. When the Bill was being drafted the interested parties were consulted, and the principles contained therein meet with their approval.

Mr. Speaker, we on this side of the House support the Second Reading of this Bill. It is one of the Bills we had on the Order Paper last year, but with which we were unable to proceed. We have never hesitated to support any step aimed at ensuring that the most hygienic facilities will be available at our abattoirs. I want to thank the hon. the Minister for his detailed explanation of this Bill, which contains quite a number of clauses. There is only one clause, clause 8, which seems strange to me. In terms of this clause abattoirs and the owners of abattoirs are expected to have laboratory facilities in which a proper inspection of meat can take place. The hon. the Minister rightly said that it would be a matter of impossibility for most of the abattoirs to have such laboratories because it would be too expensive for them. Where State laboratories have to be used and meat has to be sent there for inspection and treatment, the abattoirs will be expected to pay for the service. One should, however keep in mind the fact that the question of public health is an essential service, a service which is rendered to everyone. It is also essential that meat inspection be undertaken in terms of the legislation in connection with public health, but when an abattoir does not have a laboratory and therefore sends meat to a State laboratory for inspection, it will subsequently receive an account for services rendered.

The result of the inspection could indicate that the meat is not fit for human consumption because it could spread a serious disease. Surely this is an expense which should be borne by the State, for were State laboratories not instituted precisely for rendering a public service? I can well imagine that the amounts which will be charged when a laboratory renders such a service will not be very large, but even if the account is only R1, I still find it odd that the abattoir concerned should have to pay that amount, because the task of ensuring that meat is fit for human consumption is surely a task which, in terms of public health legislation, should be undertaken by the State. I think it is perhaps outrageous to expect that the abattoir concerned should bear he cost entailed by something of this nature. I think the hon. the Minister mentioned in his speech—but I may have misunderstood him—that money will be made available to abattoirs to enable them to equip such laboratories. If the State is prepared to do this, I find it strange that when abattoirs do not have such facilities, they will have to pay for services rendered to them by State laboratories. This is the only small point of criticism I can find in the legislation. Otherwise it is good.

Neither do I have any fault to find with the proposed amendment in respect of the owner who may become insolvent or die. The service he rendered has to be continued and in terms of the amendment it is now made possible for the service to be continued. Generally speaking, the legislation embodies good amendments. I also agree that crates, straw and other articles seen daily at abattoirs should be regarded as infectious items which could very easily spread germs and could be dangerous for the animals kept there, and, of course, for the consumer as well. In general, therefore, this side of the House agrees that this Bill is necessary.

Mr. Speaker, the Animal Slaughter, Meat and Animal Products Hygiene Act came into being as a result of the report of a commission of inquiry into abattoir activities, the so-called De Villiers Commission, some years ago. The commission found that abattoir activities—i.e., the activities directly concerned with animal slaughter—and the hygiene aspects should be separated. This appears to have been a very good recommendation. The Act accordingly provided for arrangements to this effect. The point I want to make is that the provisions on the hygiene aspect and on animal slaughter are very closely connected and occur together at an abattoir. The hon. the Minister has seen to it over the years that the necessary amendments to the main Act were brought about so that, among other things, the definition of “abattoir” could be amplified to include even premises situated outside an abattoir. Therefore provision was made for other activities and not only animal slaughter to be regarded as part of an abattoir. Such activities include, for example, the manufacture in factories of carcase-meal and blood-meal. Health control can therefore be exercised oyer such activities as well. Furthermore, the powers of the inspectors concerned have been extended considerably so that manpower could be saved.

I should like to refer to clause 3 of the legislation, which provides that the Minister may, through his inspectors, give provisional permission for certain abattoirs which do not necessarily comply with health regulations, to be operated in spite of this. The position today is that one has a variety of smaller abattoirs outside the controlled areas, mainly in the rural areas. If these health regulations were to be strictly applied to these abattoirs, most of them would not qualify because they could not comply with the hygiene requirements. The hon. the Minister is now able, in terms of this legislation, to grant provisional registration to such abattoirs to prevent a shortage of facilities from arising. The hon. the Minister also made it very clear in his Second Reading speech that hygiene is really an abstract concept and has three facets. These facets are: The facilities available, the management, and the maintenance of the abattoir. These facets are very important at any abattoir. I want to suggest to the hon. the Minister that, as far as the hygiene aspect is concerned, it is essential that rationalization should take place, especially in the country areas where there are smaller abattoirs. Perhaps we could consider solving the problem of hygiene by consolidating rural abattoirs, because there is an enormous degree of divided control in regard to these abattoirs. Not only the abattoir facilities should be consolidated, but also the hygiene services to be rendered by such an abattoir. Hon. members will understand that it will be easier to achieve proper management in an abattoir if the activities and the volume of operations are greater. In this way management and administration of high quality will be ensured. The quality of health control will also be better if the abattoirs were to be consolidated into rural regional abattoirs. I just want to suggest to the hon. the Minister that this is a way in which the health aspects in the abattoir industry, which is very important, could be further promoted. Having mentioned this idea, I now wish to move—

Agreed to.

Mr. Speaker, I move—

Agreed to.