On 20 July 1970, during the session of the South African Parliament, I announced that scientists of the Atomic Energy Board at Pelindaba had developed a unique process for the enrichment of uranium and that a pilot plant to prove the process in practice was being erected. Since then the Uranium Enrichment Corporation of South Africa has been established as a State corporation to undertake research and development in connection with uranium enrichment, including the erection of the pilot plant at Valindaba.

At the end of last year the Minister of Mines, Dr. Koornhof, announced that the stage had been reached where part of the plant was put into operation. He gave details of the magnitude of the task involved in putting into operation a system of uranium enrichment based on a new process, taking into consideration the sophisticated nature of the technology involved in uranium enrichment.

It now gives me pleasure to announce that the part of the pilot plant, to which the Minister referred, has been brought into operation successfully. As can be expected with the bringing into operation of such a highly complicated and sophisticated system, problems have been encountered on the way which, however, have been solved and the final phase of putting it in operation was accomplished on Saturday afternoon, 5 April 1975, a few weeks before the scheduled date.

What is even more remarkable is the fact that the performance of the system conforms in all respects to the theorectical forecasts. The new South African process has therefore not only been proved in practice but it also enables us to proceed with confidence with the erection of a large scale plant with a view to the marketing of a large portion of our uranium supplies in enriched form for commercial purposes. Further announcements on this subject will be made by me in course of time.

For this outstanding achievement I wish to express my sincere appreciation to the engineers and scientists and all those who assisted them as well as the many South African industries and consultants who were involved in carrying out this task. That this achievement could be reached without any assistance from foreign countries inspires enormous confidence for the future scientific and technological development of our country. The trust placed by South Africa in its nuclear scientists has been completely vindicated and the result is cause for much gratitude.

Mr. Speaker, when this debate was adjourned on the 26th of last month, reacting on first impressions of the Budget speech, I indicated that while we on this side of the House approved the increased expenditure on defence and the provision of finance for an adequate infra-structure, the two priorities which the hon. the Minister of Finance set forth in this Budget speech, we felt at the same time that sufficient emphasis had not been placed in the Budget on other priorities which we considered to be equally if not more important, namely the stimulation of growth in the economy, the combating of inflation which has reached a critically high level approaching 15% and the alleviation of the crushing pressures which high prices present to so many of our population who can ill afford them. Mr. Speaker, after the 12 days we have had to study and analyse this Budget, let me say that in very few respects has it improved with closer acquaintance. Sir, let us be quite frank about it. This Budget fails to pass the vital tests which any budget should pass. It fails to give a clear indication of what its objectives and what its priorities should be, and having failed to give that clear indication of objectives and priorities, it fails to contain the measures which Would be required to meet those priorities had they been clearly laid down. Put in other words, words which hon. members on that side of the House can understand, this Budget fails to provide a stimulus for real growth; it fails miserably to fight inflation—in fact, the effects of this Budget are likely to begin the opposite direction of adding fuel to the fires of inflation—and it does precious little for the man in the street to help him in his struggle to make ends meet. For these reasons, Mr. Speaker, I move the following amendment to the Minister’s Second Reading proposal—

1. (a) to introduce measures which will effectively reduce the present high rate of inflation;
2. (b) to give effective relief from the crushing burden of high prices, particularly those of foodstuffs; and
3. (c) to take steps to ensure a satisfactory rate of real growth in the economy and rising living standards for all our people.”.

Mr. Speaker, as I said before the adjournment, we on this side of the House had hoped that with a new chairman of the board in charge of our finances we would have had fresh approach, some new thinking and some new initiatives. We certainly thought that we would have from a new chairman of the board a policy laid down, a strategy laid down, and an indication as to how the new chairman proposed to reach the objectives and the strategy which he should have laid down. That and then controlling the situation, after all, is what management is all about. Perhaps, Sir, we were expecting too much. Perhaps we did not make sufficient allowances for the fact that the hon. the Minister has had a relatively short period in his office, but I must express, on behalf of the official Opposition, deep disappointment at the overall picture presented by the hon. the Minister’s first Budget. This is an ad hoc Budget. This is a Budget that does not look ahead. This is a Budget that fails to meet realities and fails to come to grips with the real problems of the country. The Minister, by not doing these things, by not looking ahead, is only piling up problems in future years, not only for himself but also for the country as a whole. He was fairly liberal in his quotations, at the end of his speech, from Abraham Lincoln. I believe, Sir, that the following quotation from Abraham Lincoln would have been much more appropriate than some of those which the Minister actually used: “I claim not to have controlled events but confess plainly that events have controlled me.”

Mr. Speaker, I propose discussing this afternoon the three legs of my amendment in the order in which they are set out The first is the impact which this Budget is going to have on the rate of inflation. I believe that the most serious aspect of this Budget in so far as inflation is concerned is without any doubt the estimated level of Government expenditure. Overall, if you take revenue expenditure plus loan expenditure into account, this expenditure this year is expected to increase by no less than 19%. In a year when the real growth in the economy is expected among a consensus of economists to be between 3½% and 4%, when real growth, in other words, is at a low ebb, to have an increase of 19% in Government expenditure means only one of two things. It means either that the Government is planning, and planning deliberately, to spend the larger slice of the economic cake and to leave the smaller slice to the private sector or it is anticipating an inflation rate of 15 or more which, when applied as a value deflector to the proposed increase of 19% in expenditure, would mean bringing the increase in real terms into line with the real growth of the economy. Now in either case, whichever of these two alternatives you choose, the prospect for this year is a grim one. The Minister has been silent as to what he expects the growth rate and what he expects the inflation rate to be, so that we on this side have to make our own assumptions. If, as I believe, the Government is planning to spend a higher proportion of the national income, then we can only reach the conclusion that this is a wickedly inflationary Budget. I believe that the figures of expenditure contained in the estimates are potentially even more inflationary than appears on the surface. This is a year when increases in civil servants’ salaries are not going to be a major factor accounting for the increase in Government expenditure. The current level of civil servants’ salaries were paid for three-quarters of last year and as no further increases in the level of these salaries is budgeted for this year, only one-quarter of the increase which was granted last year actually affects the increase in Government expenditure this year. For that reason, the 19% increase estimated for Government expenditure this year, is a disproportionate drain on resources other than civil servants’ salaries,

I believe too that the increase in expenditure is more than appears on the surface and is likely to have a more inflationary effect than appears on the surface, because this 19% estimated for this year comes on top of two years when we have had exceptionally high increases, in 1973 of 20% and in 1974 of 23%, so that this year we are already putting our increase on a very enlarged base. And this is not the end either. There are bound to be estimates of additional expenditure and the hon. the Minister also foreshadowed in his Budget the possibility of additional expenditure in connection with the Commission of Inquiry into Urban Transport. Mr. Speaker, the time is arriving in the history of Western countries these days where Government expenditure so alters the structure of the economy of countries and the society in countries, that they get caught up in the web of Socialism, and there is no going back. Several European countries have had that experience already. I hope that South Africa is not going to follow that line, but the way in which Government expenditure is expanding every year places us in grave danger of following a line towards Socialism. Let there be no doubt that part of the price of the high Government expenditure which we have had for the past two years and which is now estimated for this year is going to be a further dose of inflation.

Mr. Speaker, there are other features of this Budget that are inflationary, besides the feature of increased expenditure. The Minister quoted again from Abraham Lincoln when he said:“You cannot keep out of trouble by spending more than you earn.” And then he proceeded to do just that. He proceeded to spend the tidy sum of R254 million out of the kitty, R29 million from the Stabilization Account and R225 million in reducing the Treasury’s cash balances. The “trouble”, to quote Abraham Lincoln again, out of which the Minister is not keeping, is yet another twist to the inflationary spiral.

Following very closely on increased Government expenditure as a major factor causing inflation, we have had in this Budget the 2 cent imposition on petrol, coupled with a 3,7 cent per kg imposition on liquid petroleum gas. Already we have had experience in this country of how sensitive inflation is to fuel prices. There is a snowball effect because fuel is such an important ingredient in the economy as a whole. Now we are going to have another dose of fuel injected inflation, and unnecessarily so. I believe that it would have been perfectly possible to finance Sasol No. 2 from Loan Funds. This is how Sasol No. 1 was financed; this is how the Railways are financed; this is how Escom is financed; this is how Iscor, while it is making losses, is financed; this is how the pipeline was financed. I believe it would have been perfectly possible to finance Sasol No. 2 in the same way. This view is reinforced by the very welcome increase, which we have seen in the Statistical Survey, in domestic savings which, although they are, I believe, to some extent artificially created at the moment on account of paper profits, nevertheless reflect an increase in personal savings. I should like to say to the Government that if it is not possible to finance Sasol No. 2 and the other huge programme of capital projects on public corporations from Loan Account, then the whole position of priorities should be rethought, and we should rethink whether we are not overdoing capital expenditure in respect of public corporations. I cannot condemn too strongly this method of financing Sasol No. 2, at a time when every possible step should be taken to reduce and not to encourage the rate of inflation and when every possible step should be avoided which does exacerbate the inflation rate, as does this imposition of an additional petrol tax.

This Budget is equally notable, or should I say notorious, for what it fails to do in the fight against inflation. Apart from the increased abatement for married working women, the increased investment allowances to industry and the increased plough-back for private companies in respect of undistributed profits tax about which I am going to say something a little later, there is absolutely no encouragement in this Budget to greater productivity in the economy. Primary and secondary education and technical training for our non-White population remain hopelessly inadequate. Herein lies the real long-term answer to productivity and to our fight against inflation. The provision of these facilities should be regarded as a matter of urgency and of top priority, and should not be treated in the pedestrian manner in which this Government is treating it. What we need is what my leader has so often described as a crash training programme.

There is something more I want to say about productivity. If we are to attain the economic development programme’s projected growth rate of 6,4% over the next five years—and we already have leeway to make up—we have to train our Black population to do skilled work at a much faster rate than is happening at the moment, because there are just not going to be the Whites available to do the work. We also need to expand our tax base. At the moment less than 10% of the population are paying income tax. If we were to expand our working population through training, and especially our skilled working population, we would at the same time be expanding our tax base and giving ourselves the opportunity of making the tax concessions which are so necessary if we are going to effectively fight inflation. Yet on this subject the Budget is completely silent.

This Budget is also silent on another tax angle, another factor which I regard as important and as inhibiting productivity, viz. the high rate of marginal personal tax and the tax drag which comes into play as a result of the ascending tax scale. It is a fact that the high marginal rate of tax discourages additional effort by many taxpayers, particularly professional men in the higher tax brackets, who find it just not worth while making the effort to get the reward which is available to them after taxation. It is also a fact that the ascending tax scale means that in order for real incomes to keep pace with the rate of inflation, monetary incomes have to rise at a higher rate than the rate of inflation, because they continually get into higher tax brackets. This in itself is a highly inflationary feature of our economy.

There are still other anti-inflationary steps which the Government should take and I would like to come back to one which we on this side of the House have advocated on several previous occasions, viz. the appreciation of the rand. By world standards, our currency is a strong currency, a currency backed by a strong and certainly potentially a very strong economy, by a relatively healthy balance of payments situation and by adequate currency reserves, particularly if the gold content in them is valued at a realistic figure. Why do we not use this strength of the rand to help neutralize the effects of high import prices, which speakers on the Government side are continually blaming as being the main cause of our inflation? I do not agree with that but it is a fact that they do so blame them. I am not advocating a sudden upward jump in the value of the rand. This would hurt exporters. What I am advocating, however, is a gradual phased appreciation of the rand over a period, a situation which would allow exporters to adjust their businesses and would allow time for the cushioning of any side-effects.

By how much should it be appreciated?

I am aware of the fact that the hon. the Minister is not in favour of the appreciation of the rand, but I would like to say to him that I am unimpressed by his arguments against this step thus far.

By how much should we appreciate the rand?

Over a period I would like to see the rand appreciated by 7½% to 10%.

While I welcome the announcement which the hon. the Prime Minister made recently to the Press that the Government was going to look into the functioning of our anti-monopolistic legislation and was going to appoint a commission to see whether any adjustments to the anti-monopolistic legislation were needed, I do believe, in relation to inflation, that this is an area where the Government has been culpable in that it has been dragging its feet. I raised this subject under the Commerce and Industries Vote in October last, i.e. nearly six months ago, when I indicated areas and industries where I believe that investigation into anti-monopolistic situations was justified. Yet until now there has been virtually complete inactivity on this front.

That is Nat policy.

I believe that there is every reason to suspect that cartel arrangements, collusion over price fixing and monopolistic situations are a major factor causing prices to remain high and therefore a major factor in our inflationary situation. There is nothing—I repeat, nothing like competition for keeping prices down. The fiercer the competition, the better it is as far as I am concerned. On the other hand, there is nothing like a monopoly for keeping prices up. If our legislation needs sharper teeth, it must be given sharper teeth. For God’s sake, however, let us stop this dillydallying on this important aspect of inflation. I would like to ask the Government whether they are happy about the situation, the situation prevailing in the newsprint industry for example. Newsprint is not subject to price control, nor has there been any investigation under the monopolistic regulations Act into the industry. Between 1973 and 1974 the price of newsprint rose from R140 to R202 per ton. Now it is R269 per ton and a further rise is reported as probable later this year. In the past year the price of newspapers has doubled. There are only two producers of newsprint in the country and during this period of rising prices the profits before tax of one of the producers rose by 148% to a level at which, by any person’s standards, the handsome return of 40% on shareholders’ funds was earned. There is a significant passage in the report of the chairman of this company which expresses “appreciation for the co-operation of our fellow newsprint producer”. This to me smacks of collusion. I repeat: Is the Government satisfied that such a situation is in the public interest?

I come to the next objective at which the Budget should have aimed and that is to provide relief from the crushing burden which high prices put on those members of the population who can afford it least. We on this side of the House welcome the improvement in the social pensions, modest though it is, as well as the other improvements contained in the Budget which affect the aged. There are, however, many people in South Africa who will not benefit from these concessions. Civil pensioners do not benefit and many people who are having to struggle to make ends meet are excluded from social pensions by the means test. In our view the position calls for increased food subsidies to try to cushion the effect of the increased costs of producing food. We need food subsidies on bread, on maize and on dairy products and I think we need a new subsidy on milk. We need a reduced rate of sales tax to keep the prices of necessities on which sales tax is paid lower than they are at present. I refer to items such as household goods. This House should take note, as should the country outside, that these concessions, which are so highly desirable and which would be welcomed by all, are precluded only for the reason that Government expenditure has risen to a level which allows no room for making concessions.

Now I come to the third objective which this Budget should have contained, namely the stimulation of real growth in the economy. In a country like ours where we have poverty on such a wide scale—and who can argue with the fact that we have it on a wide scale when the latest figure for the average per capita income of africans is R10 per month—where we have a rapidly growing population which needs to be fed and to be housed and which needs jobs, where we have the ever present possibility of racial friction and where we need the funds to sustain a strong defence force, it cannot be sufficiently emphasized how important the need is for real economic growth. The only way to improve our standards of living and the only way to ensure a contented population through better standards of living is through economic growth. For that reason I find the prospect of a year of low growth—such as we are going to have this year where the rate is estimated to be between 3½% and 4%— to be very disturbing. I do not under-estimate the problem of stimulating growth particularly in a situation where our trading partners are going through a recessionary period but for that reason I find it even more disturbing that more positive steps were not contained in this Budget to do just that. The hon. the Minister reached the conclusion that the Budget should be a moderately stimulatory one. I find it very difficult to see on balance how this Budget is stimulatory at all. This Budget seems to rely for stimulation firstly on the increase in Government expenditure, but let me say that the main effect of the increase in Government expenditure is going to be an inflationary effect; the multiplier effect of Government expenditure on growth is very limited. The Budget, as a stimulant for growth, also seems to rely, hopefully, on increased real investment as a result of the higher investment allowances and the larger plough-back allowed to private companies under the undistributed profits tax. In the opposite direction, that of dampening down growth, we have an additional tax imposition of R184 million. That is bound to have a dampening effect on growth. One wonders how much effect the investment allowances on which this Budget seems to depend so heavily, will have when businesses have to consider their cash flows and the availability of finance to finance investments and have to weigh up the effects of the investment allowances against the additional loan levy burden which has been placed on them. I doubt very much whether there will be many companies that will be better off cashwise after this Budget than they were before. I believe that as far as stimulating growth in the economy is concerned, if this Budget it taken in conjunction with the monetary policy that is being followed by the Reserve Bank and the Government, this Budget is woefully inadequate as a stimulatory measure. I believe there is a need to stimulate real investment, but with spare capacity developing in our industries I believe there is also a need to loosen the reins on demand. The main stumbling blocks as far as investments are concerned, are both financial and psychological. There is a lack of liquidity and funds and a lack of confidence. For this reason the position as far as business is concerned, calls not for additional impositions which mop up liquidity, impositions such as the added loan levy, but it calls for some assistance to help the liquidity position of businesses, assistance in the form of a reduction in the rate of company tax or in the already imposed loan levy. I do not believe the Government should leave it to the banking system alone to help businesses overcome their liquidity problems. Few businesses have capital structures of a kind that allow them to borrow ad lib without getting into trouble. The Government should have made some concessions to meet what is probably one of the most critical business problems facing the business community, and that is low liquidity. Here again, as with every other aspect of this Budget, it has been the high level of Government expenditure which has precluded concessions being made that are so badly needed by the business community.

To sum up our views on this Budget, I would like to say that it is a Budget that scores very few points as a fiscal policy measure designed to solve the country’s economic problems and to promote the prosperity and welfare of our people. That, afterall, is what the objective of any major economic measure should be.

At the very best this Budget can be described as an accounting exercise. It is an accounting exercise which sets forth the level of expenditure the Government would like to apply, a level which, I maintain, must be very closely examined at the Committee Stage. It then provides ways and means—through taxation, through loans and through deficit budgeting—of financing the expenditure required.

During the Third Reading of the Part Appropriation Bill earlier this session, we on this side of the House put forward eighteen proposals which we foreshadowed the Budget should contain. As far as we are concerned, the hon. the Minister has not covered himself with glory because out of our eighteen points the hon. the Minister has scored four and a quarter. We give him one point—and this I must admit is a doubtful point—for the concessions in regard to social pensions. We give him another point—hopefully the hon. the Minister is going to earn this point—for narrowing the gap between the rate of social pensions of the different races. We give the hon. the Minister a full point for the increase in investment allowances and we give him another full point for the increased plough-back allowed to private companies under the undistributed profits tax. I am afraid, however, that we can only allow him a quarter of a point for the miserly relief he has given to married working women. We on this side of the House sincerely hope that the hon. the Minister will score better on the next scoring board.

Before I conclude, I would like to remind the hon. the Minister of one further Lincoln saying, namely: You can fool some of the people some of the time, but you cannot fool all of the people all of the time.

Mr. Speaker, one of the most unpleasant consequences of the fact that the Opposition has remained in opposition for 27 years is that this has utterly destroyed its ability to think positively. This afternoon the hon. member for Constantia spoke of an ’“ad hoc Budget”. In the process he allowed a very good opportunity of paying tribute to Dr. Ampie Roux and his brilliant team of scientists, technologists and engineers, who made the announcement of the hon. the Prime Minister here in this House this afternoon possible, to pass. We were dealing here with an announcement which would have the most extensive repercussions, but in his blindness of negative thinking caused by 27 years in opposition, the hon. member for Constantia did not even see it. Allow me then, on behalf of this side of the House, to pay tribute to a Government which made this brilliant work possible, and to Dr. Ampie Roux and his team of engineers, technologists and scientist, who accomplished this magnificent achievement.

Sir, I listened with scrupulous attention to the hon. member for Constantia to hear whether any new positive sound at all would come from the Opposition this afternoon, but I was bitterly disappointed for in the entire speech of the hon. member for Constantia there was not a single positive new thought on the Budget speech. Talk about an “ad hoc Budget”, Sir! Here one has an ad hoc Opposition levelling ad hoc criticism at the Budget. Take, for example, the question of the increased excise duty on petrol to help pay for the financing of the second Sasol. My father tried to impress upon us, as children from an early age that one can measure the extent of a person’s patriotism by his reaction to the amount of tax he has to pay. Touch a person’s pocket, and his patriotism flies out the window. [Interjection.] In fact, here we again have the annual lamentation. I have seldom seen an Opposition and its Press allow such a golden opportunity to slip through its fingers, as we saw here in this case of the increase in the excise duty on petrol. Sir, a few days before the Budget I had a couple of visitors from Spain. As it happens, they were two brothers who are the biggest champagne makers in the world. These two men, on their way back after a visit to New Zealand, arrived in this country to pay a visit to my farm. At the D.F. Malan Airport they rented a motor car to drive out to my farm, and one of the first things that struck them was the very fair price of petrol in this country. That was the very first thing that struck them. Their immediate reaction to that was to say to me: “How on earth are you going to win this oil crisis struggle with such a low petrol price?” Sir, I did not go to the Minister and tell him what these two overseas visitors had said to me, but it does fit very nicely into my argument: “How on earth are you going to win the struggle in this oil crisis with such a low petrol price?”

Should it increase even further?

We are dealing here with an oil crisis which was forced on us by the outside world, and it is probably having a more serious effect on us than on most other countries of the world because at this stage we are still on the official boycott list of the oil producers of the world. Sir, at the end of last year the Government announced that in the face of the oil crisis it had decided to cause a second Sasol to be established. This announcement was universally welcomed, by the Opposition Press as well; it was very enthusiastically welcomed by everyone in our petro-chemical industry. They welcome this announcement very sincerely. The hon. member for Johannesburg-North will be able to confirm what I am saying here, for he is associated with the petro-chemical industry himself, or if he is not personally associated with it, he could ask his father-in-law. Then he would be able to say to what extent the announcement was welcomed by the petro-chemical industry. The hon. member for Constantia stated that they welcome it, but that the cost should be financed from loan funds. The same hon. member for Constantia quoted this afternoon from the White Paper which we received with the Budget. If he had examined it a little more closely, he would have learned something from it. I want to refer him to page 27 of this document. There we find the profit appropriation of certain groups of companies. We find that in 1971-’72 the retained earnings of companies in manufacturing was 30,9%. Two years later this had risen to 37,7%. In the case of commercial companies this figure was 29,5% in 1971-’72. Two years later this had risen to 39,6%. What do these figures teach, us? Simply this; In times of high and rising interest rates, the private sector turns to an increasing extent to undistributed profits for its capital expansion requirements. It is a simple financial principle in the private sector that in times of high interest rates a company makes increasing use of undistributed profits to finance its expansion programme. Ask the hon. member for Johannesburg North; he will know what I am talking about. I think the hon. member for Constantia will also know. The Government is now applying this principle to the expansion of a sector of industry, i.e. to the establishment of the second Sasol, therefor, it is making use of undistributed profits to meet its capital requirements. The Opposition finds this an unforgivable sin. But when the private sector, such, as the companies of the hon. member for Johannesburg North, uses this technique, there is nothing wrong with it. If the Government uses it, however, it is complete anathema. This is just another typical example of what happens when one has been sitting in opposition for so long; one is no longer able to think positively.

With this Budget and with this method of financing the second Sasol, a second bird is being killed with one stone. The low petrol price which we have enjoyed up to now has most certainly not contributed to our using petrol economically. May I give you an extreme example. A certain elderly lady, with whom I am acquainted, drives 100 km each way every year to fetch five boxes of apples in the apple-producing area of Grabouw, for in Grabouw she can buy apples at 80 cents per box cheaper than she is able to buy them in her home town. Oh well, it is probably commendable if a person tries to see where he can buy something at the most advantageous price. On those five boxes of apples she saves five times 80 cents. If my arithmetic is correct, this amounts to R4, but at the same time that trip costs her R14. Now is that a judicious use of petrol? Mr. Speaker, you will tell me that this is a ridiculous example. Yes, it is indeed ridiculous, but I wonder whether we should not, each one of us, again examine our own conscience and ask ourselves whether we are using our motor vehicles judiciously. Are we using this extremely scarce and strategic material, viz. petrol, judiciously? I am certain that once we have looked into this matter ourselves we shall find that we are able to use petrol far more judiciously. I am convinced that this increase in the petrol price as a result of the increase in the excise duty on petrol will contribute to helping us to reflect carefully once again on whether we are really using this strategic material judiciously.

Evidently you are pleased about this.

Recently I read a report of the Ministry of Commerce and Industry of the West German Government in which it was stated that when the petrol saving measures were introduced in their country, they had hoped for a 5% saving on oil, but that, after these measures had been in operation in that country for just over a year, it was a pleasure for them to announce that their public had reacted so well that the saving was not 5%, but in fact 10%. Now I ask you, Sir: Is our public less patriotic? Do we pay less heed when appeals are made to us by the authorities, in the face of an international crisis, to use fuel more judiciously? Sir, I do not think that our public is less patriotic and consequently pays less heed to an appeal by the authorities. This is where the Opposition can, and indeed does, exercise such a major influence. If everyone, the Government, the Opposition, the Press and the radio, all work together to create a psychosis among our public that we are dealing with an international crisis situation, our people would react far more easily and far more favourably to such an appeal on the part of the authorities. But what do we find? Instead of the Opposition emphasizing this crisis situation with us to ensure the greatest possible saving, we simply have senseless, negative criticism from the Opposition. Last session a great deal was said and this session a great deal has been said in this House about the matter of patriotism. The Opposition is very sensitive when it is being insinuated that its patriotism is suspect. Here we now have an example where the Opposition may demonstrate its patriotism and show the world that in the face of an international crisis situation it is willing to contribute its share to encouraging that patriotism among our people.

I want to leave the hon. member for Constantia at that because, as I have said, I did not hear from him a single new, positive sound, a sound which had not previously been raised ad nauseam in this House. Therefore, in the second part of my speech, I want to turn to the hon. the Minister of Finance with what I hope will appear to be a positive contribution to budgeting. I want to discuss the cumulative effect of inflation on our finances as a whole. The high inflation rate is bringing more and more of our people into the higher categories of income tax payments. I do not want to elaborate at length on the effect which the higher marginal rate has on our taxpayers, for a great deal has already been said about this in the past. When I refer to the higher marginal rate which taxpayers in the high income groups have to pay, I include at once the joint income of a husband and wife. One could become dramatic about the effect of the higher marginal rate on the taxpayer, but, I do not intend doing so. All I want to say is that on an income, joint or individual, of R22 000, the marginal rate is already 50,4%. From there it increases very rapidly until the marginal rate on a taxable income of R28 000 is already 63%. As I have said, I do not want to dramatize the effect this has, but perhaps I should nevertheless point out that it is in fact the people in the “competent” sectors of our economy who are affected by this and whose productivity is prejudiced. It is the married woman in the more “competent” sectors who is now asking whether it is worth her while to go out to work. It is the professional person who does not even have the advantage of a company to acquire tax benefits, who asks himself whether he should not play golf two or three times a week instead of only once a week. I am merely mentioning these things in passing. They have been spelt out so frequently here that it is not necessary for me to elaborate on them. This afternoon I want to make a suggestion to the hon. the Minister of Finance. I know that I cannot at this stage suggest that changes be effected to the Budget, nor do I want to do so, but I want to ask him to instruct the Permanent Committee on Income Tax to institute an investigation and establish whether it is not perhaps desirable for greater concessions to be made to income tax payers in respect of donations to universities and similar institutions. This is the first request I want to make. At present individuals may donate R500 per annum, or 2% of their taxable income, to such institutions free of tax. I want to request that this amount be increased considerably. Secondly, I want to ask for an investigation into whether we should not expand this principle to other institutions, for example to welfare institutions doing welfare work. I realize that we are dealing here with a very thorny issue, and for that reason I have laid down two criteria for myself which we must apply if we wish to extend this principle of tax-free deductions from income in respect of donations to universities to other institutions. The first of the two criteria which I shall apply is that the donation should entail that the State’s contribution to that institution may consequently be reduced. The donation which lays claim to a tax concession should make it possible for the State’s contribution to be reduced to the same extent. If a university, for example, receives an amount of RX from the State and quite a number of donors are going to donate an amount of RA to that university, the university should then receive an amount of RX less RA as the State’s contribution. The second criterion I want to apply, is that the functions of the institution receiving the donation, whether a university or a welfare body, should be to make people better equipped for their task. This will entail their being able to earn a larger income, on which they will then in turn pay more tax. Criterion No. 1 therefore excludes all non-State aided institutions, for only an institution which receives State aid can benefit from the donations of individuals. Included in this are universities, colleges, welfare organizations, etc. The benefit to the State here is a direct benefit. As the taxpayer makes donations to these institutions, the contribution by the State could be reduced. Criterion No. 2 is necessary to ensure that the State receives value for its concession in an indirect way as well. Every person who is being better equipped for his work is a potential higher tax payer. The concession which is being made is therefore nothing less than good business for the fiscus. I have good reason to believe that the hon. the Minister and his staff will give the necessary attention to this proposal of mine. My reason for putting forward this suggestion is my deep concern at the many-tentacled grip which creeping socialism is getting on our freedom throughout the entire Western world, It is to an increasing extent depriving the free individual of his initiative and incentive to the greatest efforts. It is regrettable, but not all of us are altruistic to the highest degree. Each of us wants to be rewarded for the greater efforts he makes. Give the husband and the wife who are prepared to make greater efforts a greater say in the application of his/her increased earnings, which he/she can relingquish for the benefit of the community. In that way one would have many more satisfied taxpayers. After all, we all have our interests. For me it is the support of a university out of gratitude for what a university education has meant to myself and to my children. Another person may, on the other hand, have a greater interest in welfare services. According to these two criteria which I have indicated for the granting of tax concessions, registered welfare services qualify for the concessions I am proposing. Firstly: Because they are State-aided institutions they can manage with less money from the State if they receive these donations from the public. Secondly: They put the fallen back on their feet again, and equip such people more satisfactorily for the economic community. For example, a person who is an alcoholic could be saved by welfare work. He then makes a greater contribution to the economic life, and he would find it gratifying to make a greater contribution to similar welfare care. I could continue in this vein, but time would catch up with me, and for that reason I shall have to content myself with these few examples of what I mean when I say that we should make greater concessions on income so that State-aided bodies could attract greater contributions from the public. The motive for this I should like to formulate as follows: Give the husband and the wife who are prepared to make such greater efforts a greater say in the application of that part of his/her increased earnings which he/she has to surrender to the community. Because time did not permit, I mentioned only a few examples to indicate what I had in mind. In the sphere of welfare care these examples could be multiplied, but there are several other bodies which could also be included under the umbrella of the two criteria which I mentioned. The application of these criteria will of course not be without problems. Consequently I ask, firstly, for the acceptance of the principle that far greater income deductions in respect of donations to a wide series of institutions which satisfy the above two criteria should be allowed. Secondly. I am asking for an investigation to be instituted by the Permanent Committee on Income Tax in order to ensure its feasibility. For the formulation of conditions under which particular institutions will be accorded a right or a claim to such concessions, the assistance of the institutions will have to be called in. I realize full well that my proposal is a drastic one, but hon. members will agree with, me, and I am convinced that the hon. the Minister of Finance will also agree with me, that it constitutes sound financial policy, for what applies to private bodies also applies to the State, namely that every action should be aimed at evoking an economic counter-reaction or counter-achievement. I am firmly convinced that these proposals of mine will evoke the desirable counter-reaction. The central idea is that it should promote productivity while it creates more satisfied taxpayers. In these days of high inflation rates, there is probably no more important aspect which could be emphasized than this aspect, that whatever we do in the fiscal sphere, it has to promote productivity. [Time expired.]

Mr. Speaker. I rise to support the amendment moved by the hon. member for Constantia, but before proceeding, I want readily and happily to associate myself and hon. members on this side of the House with the congratulations expressed by the hon. member for Paarl on the announcement of the hon. the Prime Minister on the subject of the enrichment of uranium. I want to go further and congratulate the Government also on the enrichment of its Cabinet by the addition of two ex-United Party members to the senior ranks, i.e. the hon. the Minister of Indian Affairs and the hon. the Minister of Finance.

Rejects!

I believe that the business world who will be watching this debate as an historic one in the closest detail, will be gratified to realize that today we are bringing under the microscope an examination of the plans of the hon. the Minister of Finance to spend some R6 000 million of the money of the people of South Africa. I think that we as an Opposition have a responsibility to ensure that those moneys are properly spent. Too often, I think, we believe that Parliament is the only body which is relevant and that those who are outside must merely take their medicine and smile and come to the polls. It is against this background that the hon. the Prime Minister recently after a meeting of the Economic Advisory Council forestalled the announcements of the hon. the Minister of Finance by indicating, prior to the Budget speech, his concern at the serious situation which faced our economy because of what we may now describe as “rampant inflation”. Then we have no less important an individual than Mr. Van der Horst, the chairman of the Old Mutual, in the weekend Press warning against hyper-inflation as one of the dangers facing this world. When we go further and find that in both the Afrikaans and English Sunday newspapers political news has been relegated to the background and that the concern of the people of South Africa is the uncontrollable inflation which is now wrecking our country, we as politicians must examine our position and ask ourselves once and for all whether the time has not come for this Government not to advise palliatives but to declare total war on inflation. I believe that with this project it has the right to demand, expect and receive the support of all Opposition parties and I can assure the hon. the Minister that we of the finance and economic affairs groups of the United Party will give him every possible support.

When one examines the ravages of inflation, it becomes more and more apparent that if we are to support a Defence vote of over R1 000 million, which we readily do, to ensure the safety of the State and the individual and if we are to support the spending of many millions of rand to expand our infrastructure in order to help the less fortunate people in South Africa, we must be realists and accept that this can only be done if our economy is strong and progressive and is not in a state of recession. I would submit, Sir, that food is probably the most important weapon that we have in South Africa to win friends and to support the hon. the Prime Minister’s policy of détente. We can do more to save the starving millions of Africa by being strong economically and by making optimum use of our own population’s ability and initiatives than we can by endeavouring to damp the economic growth of this country. However, if we are to do this, we have to face up to economic facts, such as the fact that private enterprise and private initiative are the only source from which we obtain real tangible wealth in South Africa. I want to compliment the hon. the Minister of Finance on the stand he took in his speech when he indicated that it was the philosophy of the Government to back and to continue to back the concept and philosophy of private initiative and private enterprise. In one of the more recent speeches made by his predecessor, Dr. Diederichs, he indicated that he believed that both official parties in this House had joint motives for accepting the fact that we South Africans are proud of the fact and accept that private initiative and private enterprise, which has as its mainspring the profit motive, is the oil that turns the wheels of our economic machine. But it is not sufficient for the Government merely to indicate that it supports private initiative and private enterprise when, sadly, we have to highlight the fact that so much of the Government’s industrial legislation is binding not only the Minister of Labour and the Minister of Economic Affairs, but also the Minister of Finance.

Restrictive regulations which place restraints on our labour mobility, our endeavour to trade and the rights of the individual to trade freely and economically, are a cause for great regret. This is so much so, that no less a South African and Afrikaner than Mr. Len Abrahamse, when speaking in London only recently, indicated that it was his genuine belief that we in this country stand on the verge of an economic boom, but that he had to admit that if we were to proceed with this boom, we must first of all develop a mentality where we as a country regard ourselves as a potential market of 24 million South Africans and not merely four million South Africans. He indicated that what was stopping the progress of this boom was the fact that we still regarded skilled labour as the prerogative of the Whites and that we were being too tardy in bringing along the non-Europeans, the Indians and Africans, to become a full contributive source of economic wealth in South Africa. He felt that this was the one factor that was our Achilles heel in any negotiations with the outside world. He also indicated that our internal policies were the one stumbling-block in the path of our becoming a really great nation. I want to say to the hon. the Minister of Finance, therefore, that we are disappointed that he has not given more positive guidelines, more inspiration to the industrialist and the commercial man in this country. We go along with the hon. the Minister in the belief that in South Africa we have a great country with a great economic potential which has in the past been rivalled only by countries such as West Germany and Japan and, more recently, the South American States. If the Budget would only permit us to have the economic growth rate necessary to make maximum use of all our population groups, we will have a future to look forward to which will be the envy of most countries in the world.

We must not allow ourselves to be blinkered. The majority of our population in this country is still living at, near or below the poverty datum line. In this regard I am referring not only to the Whites but to all our people. Those people who are earning fixed incomes, the professional classes, teachers, pensioners, the aged and the ordinary wage-earner are seeing the purchasing power of their money being eroded daily by our great enemy inflation. I believe it is the responsibility of any Government in any part of the world to protect the purchasing power of money. This it should do by ensuring that the economy itself does not become overstimulated through the creation of unnecessary moneys by the State itself and by ensuring that the economic cake is of such a size that all sections of the population can enjoy a slice of it. I believe that at the moment one of our problems is that our Civil Service has grown too fast in relation to the size of our country. Let me say immediately that we on this side of the House regard the senior civil servants in all departments as dedicated men. We have no criticism of them; we have only the highest praise for them. However, when we realize that between 28% and 30% of the viable White population in South Africa is employed in Government service then, in relation to other countries such as America, Britain, Germany and France, we are top heavy. The time has come for us to put our Civil Service under a microscope and to prune it where necessary. We must increase the wages of those who do the work but free those who can be spared so that they can become part of our economy and take their place as leaders in trade, industry and commerce. I think it must be realized that as far as the lower income groups among our population are concerned the present rising cost of living has become almost insupportable. We have the rises which were announced only a week ago. There is the potential rise in the price of milk and the rise in the price of white bread, butter cereals and maize. With these in mind we realize that our cost-of-living index which is influenced heavily by rising food prices bears more heavily on the less fortunate sections of our population than on our richer sections.

I want to deal specifically with the intimation of the hon. the Minister that petrol prices are to be increased. We accept his motivation for the increase but we learn now that the motor industry as such will be calling for a higher increase. I think that we should deal with the position of the motorist in toto today. The motorist would appear to be milked too heavily at all levels.

We must realize that South Africa is not a country of motorists simply because we are a wealthy country. We are a country of motorists because the State has not been able to provide adequately a public infrastructure of transport to enable us to leave our cars at home. Because of this, we in commerce and industry in the private sector use our motor cars as a necessity. When we see the growth of the second-hand car market as our non-Whites become owners of these vehicles we realize that these people are not simply buying these motor cars because they want them. They are buying them because they need them as a form of transport. All along the line Government policy in the motor industry has rightly or wrongly decided that we will have an industry of our own and that we will manufacture cars as fully as we can in this country. Because of this policy the price of motoring to the public, with few exceptions, has increased inordinately.

Nevertheless, it may be argued, as the Government does, that this has been a drive to create economic viability and to create job opportunities in South Africa. Sir, all too frequently the motorist is taxed either by means of additional excise duty, additional duty on imported vehicles, sales taxes, taxes on tyres, taxes on petrol and taxes on batteries, and now we have an additional tax on fuel. We have reached the stage where it has become almost impossible for the working man to run a motor-car, because whenever the Government requires additional revenue the first person to be hit is the motorist. Sir, to say that the man in the street has had a poor deal in this Budget is to say the least, because although the system of indirect taxation allows a man to avoid taxation by not using commodities such as cigarettes or beer or liquor, it is nevertheless a fact of life that South Africans enjoy their beer and their cigarettes. As a sportsman, it makes me sad to see to what extent beer is being taxed. The tax on beer has been increased to such an extent that today it is more expensive than brandy and whisky. I believe that this is driving our young sportsmen away from beer to hard tack, which does them no good at all. I think the hon. the Minister should take this into account in any future Budget before he pushes up the price of beer any further.

Sir, I believe that I must also refer to the great concern which has been expressed by businessmen at the inroads into private enterprise presently being made by the Government itself and by State corporations When I talk about businessmen, I refer not to businessmen on this side of the House but to the leaders of industry such as the chairmen of the Chamber of Commerce, the Federated Chamber of Industries, the Afrikaanse Handelsinstituut, the Johannesburg Afrikaanse Sakekamer and others. It is not good saying that this is a hardy annual. We on this side of the House have expressed our belief that State corporations are necessary in those instances where private enterprise either cannot or will not play its part, and we give full credit to such great corporations as Iscor, Escom and others for the role that they have played in promoting industry. But, Sir, there are indications today that the efforts of private industry to increase productivity in the national interest are being stifled because of the fact that scarce capital, scarce labour, scarce skills and scarce resources needed by private industry are having to be diverted to the State itself for the purpose of increasing the size of the State corporations. In these circumstances, the time may have come, as the hon. member for Constantia has said, for us to get our priorities right. Can we have everything that we want at the same time? Can we have Richards Bay, Saldanha Bay, a second Sasol and a third Iscor at the same time unless we are prepared to make the necessary arrangements for more effective training of our labour force? Sir, we want to express our regret that in this Budget almost no provision is being made to allow imployers the advantages that should accrue to those employers who are prepared to institute a crash training programme for our non-Whites. It is not right for us as Whites to demand that the non-White worker should work harder. We must realize that the White worker, too, most work harder. Unless we are prepared to do so, the Whites will gain no advantage from merely raising the wages of the non-Whites as an act of charity. There is every indication, as the hon. the Minister mentioned in his speech, that non-White wages are today rising faster than White wages, but they are not rising fast enough in relation to their increased productivity, and unless this is put right we as White workers will merely be getting poorer instead of getting richer. I would therefore appeal to the hon. the Minister to realize, in any future Budget that he may present to this House, that our biggest investment for prosperity will be an investment in education at all levels—in our universities, in our schools, in our technical colleges and particularly in training institutions for Blacks, Coloureds and Indians. If we then achieve our objective, we will be able to look upon this country as one where we have an effective, viable working population of 24 million people, and we will immediately come out of the small-time league and emerge as one of the large industrial countries of the world. I think this is one of the hopes being expressed by the rest of Africa, who realize that we as South Africans, when we can establish the détente which is the earnest endeavour of the hon. the Prime Minister, can become the workshop of Africa. We can also produce all the skills necessary for Africa. These skilled men will not only be White, but also non-White; they could provide the skills for Africa. In fact, Africa, which today is in such a desperate situation with starvation, poverty and malnutrition facing millions and millions of Africans, may well yet come to realize that its association with South Africa could be its salvation. So I want to appeal to the hon. the Minister to accept the fact that the criticism we voice today is not destructive. We believe he should have been more specific in his speech in dealing particularly with the subject of gold. We all recall that the hon. Dr. Diederichs was known as “Mr. Gold” during his brilliant and long career in this House. It was a disappointment to me that the hon. the Minister of Finance did not tell this House more about his initiatives, about his endeavours and his intentions in so far as securing the present price of gold is concerned and about his fears that it might drop in price. I see that a London economist has indicated that it may well drop to 148 dollars an ounce within the next three months. Now, our economy—and we are fortunate—depends for its prosperity on the price of gold, as well as on the price of our industrial products and our other mining articles and our agricultural products. But we cannot go faster than we are going at the moment if we do not know what role gold will play in the international sense. I only hope that the hon. the Minister of Finance will follow in the footsteps of his predecessor and make frequent visits to the World Bank and to the International Monetary Fund to continue our endeavours to secure gold as an instrument of exchange in world commerce and industry. If we do this, if we proceed with the enrichment and benefication of the minerals which are available to us, if we make use of the resources available to us, and if we use the time available to us more productively than we are doing at the moment, then we in South Africa will have a wonderful future. But I do reiterate that I believe two things must be done if we are to be able to grow at the necessary rate. The one is that there must be a lowering of the private income tax rate so that the marginal rate does not remain 63% for the professional man. I believe, too, that we must examine every item of Government expenditure in detail, and I recommend to the hon. the Minister that he proceeds with the Cabinet Committee in regard to the investigation of State finances, so that before any amount is passed for submission to this hon. House, it is pruned to the absolute maximum before it is proceeded with. I took one look at the report of the Auditor-General for 1972-’73 and I was amazed to see just how many funds were returned to the Treasury as unused after official sanction had been given by the Government and by Parliament for the expenditure of those funds. I found that in that year some R150 million was unused. In one case I think 56% of the funds voted for the Department of Economic Affairs was returned unused. That is a high figure. It had to do with our export promotion programme which was not as successful as it could have been. I believe that when the hon. Ministers of various departments submit their budgets they themselves should use the utmost caution in order not to over-estimate, for these moneys after all are frozen for the purposes for which they are voted, and if R150 million lies unused in the Government coffers for one year, then the taxpayer is being unduly burdened.

I want to speak for a few moments on behalf of the pensioner. The hon. member for Constantia has indicated that he has only recently been given an increase of some R7 a month. But can we not make hon. members on that side of the House realized that on the small amounts that accrue to pensioners, and particularly to the non-Europeans, the African, the Indian and the Coloured pensioner, the addition of R7 only prevents the man from starving and keeps him alive a little longer? I do recommend to the hon. the Minister that he should investigate the possibility of creating a State pension fund. This is a hardy annual which we, and my friend, the hon. member for Umbilo, in particular, have motivated over many, many years. I believe that if we study the position in other countries, it should not be beyond the ingenuity of this Government to devise a pension scheme to which all workers throughout their working lives can contribute. When they change from one job to another they will not have the contributions to their existing pension fund returned with a mere increment of 2% or 3% on the capital less the amount contributed by the firm. We shall then have a national fund which will ensure that when a man goes on pension in his later years, he will go on pension as a senior citizen and will receive a pension as a right and not as a charity or a privilege. If we achieve this, then the Budget which the hon. the Minister has presented this year will at least have served some purpose. It is my pleasure to support the amendment moved by the hon. member for Constantia.

Mr. Speaker, it really put me in a good mood this afternoon when the hon. member for Cape Town Gardens started his speech on a positive and also, to a degree, constructive note and did not sound the sour note we heard from the hon. member for Constantia. I am grateful for what he said. He said that he and the official Opposition pledged themselves to wage war on inflation and to assist the Government in all respects in this regard. We are grateful for that co-operation. It is fitting for an Opposition to give an assurance of this kind

But we have always said that.

The hon. member for Constantia did not say it. We are also grateful that the hon. member mentioned that food is a major weapon in the hands of the Government. Later in my speech I shall have a great deal to say about that. These are aspects concerning which one expects an Opposition to act positively. The hon. member also conveyed his thanks to the hon. the Minister for stimulating private initiative. This is something which the Government is always doing and we are grateful that the hon. member said, on behalf of his party, that they support us in that. It is surely in the interests of South Africa that we do these things. I shall talk to the hon. member for Constantia later. However, I want to point out now that he made totally unfounded statements. He said that only 10% of the inhabitants of South Africa pay tax. He then said that if many more people were to pay tax, we should be better able to combat inflation. From where does the hon. member get a statement like that? It is not only those who pay direct tax who pay tax: indirect tax is paid by everyone. I should like that hon. member to explain to us how we would combat inflation merely by having more people pay tax.

I should also like to refer to the hon. the Minister. There is something which, I think, cannot go by unnoticed. I want to thank him for an outstanding Budget, but I shall have more to say about that later. When the hon. the Minister of Finance entered the Cabinet as Minister of Economic Affairs, one of the first things he did was to pay a visit to France and other countries in Europe. There he held discussions with ministers and others. What was the result of that visit by the hon. the Minister? What did it mean for South Africa? As a result of that we found that one of the biggest trade deputations ever to come to South Africa from France visited our country. As a result of the visit of this deputation, major economic links have been forged and major trade transactions concluded. That, however, is not all, because in the past week, when the hon. the Minister of the Interior was making a speech at a banquet in France, we heard that the French Minister of Information paid tribute to South Africa for the sound economic links and trade existing between the two countries. This morning we heard over the news that one of the French Ministers will head a trade mission that is coming to visit South Africa. This is the first occasion in history that a French Minister is coming to this country at the head of a deputation. This is as a result of the actions of this Government, more specifically the Minister of Finance, who visited that country in his capacity as Minister of Economic Affairs. I think that we should thank him and pay tribute to him for this.

I should now like to come back to the Budget and say a few positive things in this regard. In the past. Budgets were often described in a single word. Budgets have been referred to us “growth Budgets”, “neutral Budgets”, “moderate Budgets”, “stimulating Budgets”, and so on. I want to describe this Budget as an insurance Budget. This Budget will go down in the annals of the economic history of the country as a Budget that created security for the future and as one that will establish and create greater prosperity for South Africa and for all the population groups of this country. A Budget must be seen against the economic background in which it appears and also in the light of the priorities with a view to the future. These two factors, namely the economic background or economic climate, and the priorities or objectives, form the basis on which this Budget must be judged. We cannot ignore certain facts. There are certain facts about the economy that are very important. In this regard I want to mention four such facts.

The first is that South Africa has an unfavourable balance of payments. Secondly: South Africa tends to import a great deal. Last year the Republic imported 49,7% more goods than the previous year, an indication of South Africa’s enormous tendency to import. Thirdly: As is the case with all other countries of the world, South Africa is also faced with inflation, although our rate of inflation is the lowest in the world. Fourthly: South Africa is at present going through a phase of contraction. We must not lose sight of these four facts. In some circles it is being said that the Government has not stimulated the economy sufficiently. The hon. the Opposition, too, accused the Government of this this afternoon. It is being said that the Government should have risked greater stimulation of the economy because, so the argument goes, if the economy were stimulated to a greater, degree, the benefits that would be derived would outweigh the disadvantages. The fact that the Government did not do so indicates that it did not want to kick against the pricks. Surely the facts cry out against any effort to stimulate the economy excessively at this stage; we simply cannot do that. The recent experience both here in South Africa and abroad is that too strong an expansionary programme would only result in a higher rate of inflation. The hon. the Opposition will agree with me on this score. Secondly, it would bring about a low real growth rate which, in turn, would exercise unnecessary pressure on our production factors. Let us analyse this Budget and look at the motive behind it and what it means to us. The hon. member for Constantia levelled the accusation: “That it is not a Budget that looks ahead.” As far as I am concerned, this is precisely what it is: a Budget that secures the future for us. Instead of stimulating growth, the course adopted has been the creation of an adequate infrastructure, with a view to future growth and South Africa’s ability to be self-sufficient. That is of great importance. In this regard we should bear in mind the old Chinese saying, namely: “Give a man a fish and he will only eat for a day; teach him to fish and he will eat every day.” This Budget could have stimulated the economy to enable us to have a good growth rate this year, but establishing the infrastructure, as the hon. the Minister has done, will enable us to maintain an extremely high growth potential in the future. This, too, is of importance. To use the language of the insurer, one could say that an insurance policy has been taken out to ensure that the most important economic objective, namely continued growth, will be possible in the future as well. Inflation had to be constantly borne in mind, and this the hon. the Minister has done in this Budget as well. The premium on this policy is not being financed in an inflationary way. The financing could have been done by means of high personal tax but in this regard, too, responsible action has been taken. This method of financing would decidedly have had an influence on productivity, viz. if it had been derived from higher taxation. Financing could also have been effected by means of domestic loans, but this, in turn, would have caused unnecessary pressure on the domestic capital market. I could point out that only ten companies—inter alia, Escom, Iscor, St. Croix, Sasol, the Durban refineries, Centrachem, Triomf, Fedmis, A.E. & C.I. and Foscor—alone require R1 100 million as their estimated expenditure for 1975. The amount from the authorities is not included in this figure. If we were to have borrowed even more, we should have disrupted the domestic capital market entirely. The financing could also have been aquired by means of foreign loans, and here, too, we want to thank the hon. the Minister for his very responsible action in not borrowing abroad. South Africa’s incomparably good position in regard to its foreign debt is therefore being maintained. In his Budget speech the hon. the Minister said—

We in South Africa are self-sufficient in this regard and we must remain so. We must not enslave ourselves to foreign loans to such an extent that later we are unable to repay them, because that capital has to be repaid, with interest. What has occurred here now? The course has been adopted of financing from our own resources and the premium that is being asked, is slight. It is a premium that is aimed at future growth and stability, something which we surely all want. South Africa wants growth and it wants stability and security.

How does our economy compare with those of other countries in the world? The growth pattern of our economy differs substantially from those of other large industrial countries. What is more, one cannot have only continual and unfailing growth. There are trade cycles and the upward and downward curves. It is true that in developing economies the periods of prosperity are followed by periods of negative growth, for example in regard to industrial production, joint economic activities and consumer spending. We have a typical example in the USA which has now been experiencing a negative growth for three consecutive quarters and is going through a serious recession. In addition they are experiencing the highest rate of inflation they have ever had and the highest unemployment rate, too, namely 82%. The United Kingdom and Japan, too, have no growth prospects for 1975. France and Germany, two mighty countries, are still experiencing problems owing to a tendency towards recession in the world. In contrast, South Africa does not have these problems.

It is in this light that we should judge this Budget. We are therefore grateful that the hon. the Minister should have come up with such a fine Budget. South Africa has never, in any of the post-war contraction phases, shown a drop in the real gross domestic product, in contrast to the position in certain other countries. Where a drop in industrial production and consumer spending has occurred, it has been minor, and furthermore this has only been for fairly short periods. The Government is aware of the fact that over the past decade, the downward phases of the business cycle have only lasted for 16, 8, 7 and 21 months respectively. These are fairly short periods. Thanks to a thoroughgoing stable and economic policy which was followed by the Government and the hon. the Minister and which is being continued with, with this insight and knowledge as a background, a premium is being asked of us which is a contribution towards the further expansion of our infrastructure. We are grateful for that. This premium will give rise to the emergence of a strong underlying growth pattern as soon as the appropriate moment arrives when the Government can again release the forces of growth. The Government with all its departments, the Reserve Bank and all the officials who co-operate will do this when they realize that the time is ripe for it to be done.

This Budget has been introduced against the background of inflation, which continues to be one of our most vexatious problems. Recently the hon. the Prime Minister made a very clear appeal to South Africans, and I want to quote what he said in that part of his statement which was released after the 38th meeting of the Economic Advisory Council. He said (translation)—

The hon. member for Cape Town Gardens associates himself with this in part and we are very grateful for that. It must be realized that we in this country need, within the socio-economic programme that has to combat inflation, the co-operation of every employer, employee and every living soul within the borders of this country. Everyone must contribute towards this.

I want to differ with, the hon. member for Constantia who, unfortunately, is not present at the moment. I want to tell him that our imports constitute one of the most important components of our rate of inflation. He cannot come along now and say that he differs with us. As I have said, in 1974 South Africa imported 49,7% more than in 1973. Each 1 % of the increase in the price of imported goods results in an increase of 0,02% in our consumer index. During the year November 1973 to November 1974 the wholesale price index of imported goods rose by no less than 28%. Consequently this signifies an increase of 6.16% in the domestic consumer index. After all, this is an extremely high percentage. Our present rate of inflation is about 14% and imported inflation is responsible for about 44% of this rate of inflation. This shows us that we shall have to undertake an urgent investigation into South Africa’s imports. Why should we import so much? Can nothing be done about it? I want to appeal to the hon. the Minister to consider whether he can do anything for us in the future. We have had a Green Heritage Year and a Water Year. I now want to ask that we should launch a “Buy South African” year or a “Buy locally manufactured products” year. South Africa can manufacture virtually everything it is importing at present, itself. Our people have the know-how, the ability and the entrepreneuring spirit to do this. I ask myself the question whether the time is not already ripe for the benefits of “Buy South African” to be spelt out clearly and unambiguously to our consumers. This is an opportunity for the authorities, for organized trade, for the Opposition, for the Government—in fact, for all of us—to launch a major project. By adopting this course there is a chance that we shall be able to combat one of the most important components of inflation and also to make a contribution towards realizing our long cherished aim of full employment, because by selling and using our own product, we create a far greater internal market for the local manufacturer. It goes without saying that in this way we can also save a great deal of foreign exchange. In this way we could achieve a great deal for South Africa. This is a positive step we could take to combat inflation. I advocate a socioeconomic programme against inflation, to complement the traditional instruments of fiscal and monetary policy. To an increasing extent, leading world economists are expressing doubt about the effectiveness of these old measures of combating inflation. This problem has become too complex in a world in which the operation of economic forces, political instability and power groups have continually disturbed the orderly course of affairs and in which economic laws no longer apply, either. I therefore say that if the old measures no longer work, we shall have to think up new measures to combat inflation in a more pragmatic way, measures which will support the overall monetary and fiscal measures. In this way we, and the world, could perhaps attempt to combat inflation. The arsenal of non-monetary measures must be supplemented with new weapons to combat inflation.

How can all this be done? Within this programme of action there must, firstly, be a purposeful programme of information for the consumers, a programme of information which, just like inflation, will be continuous. The consumer must be informed at all times about the dangers of inflation. I feel that we speak about inflation far too lightly. We must inform the people far more forcefully about the dangers of inflation. The dangers to every adherent of capitalistic norms that are inherent in inflation, for example the freedom of consumption, of saving, investing, possession and training, are not always recognized by the man in the street. The man in the street does not realize that inflation-destroys the being of capitalism. According to the economist Keynes, Lenin said that the best way of wringing the neck of capitalism was to cause people to lose their confidence in money. What was the argument Keynes advanced against this? I also want to quote what he said. He said—

We must bring these dangers to the attention of the public. Only through a purposeful and continuous programme of information will the trade union leader be prevailed upon to oppose excessive or unjustified wage claims, will the voter be prepared to accept unpopular measures and will the Government be in a position to take steps to combat inflation. Instant solutions simply do not exist. There is no such thing. We shall have to do something else to expedite this matter.

I could tell you that the community will only co-operate if it is fully informed about the dangers threatening it In addition to such an information programme, there is another means we could adopt. I want to call it a controlling function that would also have to be continuous. This function would be to do something which has thus far been done by the Price Controller to a certain extent, but which, is not, however, adequate. Price determinations cannot be effected ad hoc. This is something which must be studied continuously. This function must be performed by an autonomous council, a council comprising experts who will continually receive voluntary reports from the public, the Consumer Council and other interested organizations and consumers. A council of this kind must have the employer to investigate wage increases and profit margins. It could also have the function of acquainting the public and the Government with the information programme to which I referred, and so on. I do not know whether our people are aware of this, but a cost of living council as already operative in the USA. That there has already been some movement in this direction in South Africa is proved by the fact that we have a South African Co-ordinating Consumer Council. However, this is not enough. We must do a great deal more. The council which I am advocating must have more powers. Technical social and economic expertise must be made available for utilization by this council. Only in this way will authoritative publications concerning consumption and consumer matters be published. Research and information programmes that are fragmented owing to bodies and individuals operating separately can never combat inflation.

I just want to refer hon. members to what President Johnson of the United States said in 1964 when he established the President’s Committee for Consumer Interest. That committee attempted to do something and achieved some real success. His words were—

All this we can do.

In conclusion I just want to point out to the hon. the Minister, as regards my proposal that we have an export year, that next year we have an industrial exhibition at the show grounds at Milner Park from 20-28 February. The Government has announced that the Transvaal Chamber of Industries will arrange this exhibition in conjunction with the major employer organizations in the Transvaal. South Africa has never yet had a really large-scale industrial show representing all sectors. South Africans are not yet aware of everything that is and can be manufactured here. Nor are they aware of the quality products being produced here in South Africa by our own people. Furthermore, South Africans are still unaware of the fact that we ought to produce a sufficient amount to be able to export as well.

Another big show, too, is going to take place, namely the international food and products Expo which will be held in Pretoria from 13-22 May 1976. This is to be the most highly specialized show ever presented in the Republic of South Africa. The attention both of South Africans and of the rest of the world will be drawn to the value of food as well as to other agricultural products and everything required to produce sufficient food. We must produce sufficient food to be able to export, as the hon. member said. This is an instrument and a weapon in our hands. It is calculated that at present there are 500 million hungry people in the world, and this when 40%, or R500 million, in agricultural products is wasted in South Africa annually. If South Africa could only waste 1 % less food, this would result in an annual saving of R5 million. It was said by Mr. J. W. Marais, Director of Agricultural Information at the Department of Agricultural Technical Services, and I too want to say that South Africa must not be satisfied with a 12% utilization of agricultural capacity. There must be further development.

I should like to ask the question whether, with reference to these two exhibitions, we could not make a further small joint effort next year by making 1976 a major export year for South Africa. By doing so we should be able to combat inflation, promote exports, save foreign exchange and, what is more, show the world that South Africa is prepared to provide the world with food.

In conclusion I want to appeal to every South African to work for this fine country, South Africa, with might and main, with inspiration and enthusiasm, whatever his job or field of work—whether he produces or whether he does administrative work. Internationally speaking we can become a great asset. We can become providers of raw materials, we can become exporters of food and we can be a country in which large investments can be made which can be profitable for the outside world. I think that the hon. the Minister presented his Budget in this light. This is how I see this Budget and this is how I see the future of South Africa and this is how I see what the Opposition and all of us can do. I therefore say, thank you very, very much for this fine Budget.

I do not intend to follow the hon. member for Sunnyside directly, but I will in the course of my speech touch on a number of points raised by him, such as the necessity for private enterprise, the expenditure of public corporations and the question of inflation. Sir, our initial reaction on these benches to the hon. the Minister’s Budget is that of grave disappointment and indeed alarm. It may be, of course, that we had expected too much, but it is to be regretted that after further careful consideration and analysis we can find no reasonable cause to change our view. This Budget clearly sets out—and there can be no gainsaying it —the picture of this Government as remaining bound within its ideological strait-jacket, and there is minimal, if any, evidence that it has set its priorities with a view to building the prosperous and productive country where all South Africans, irrespective of colour, could enjoy the increasing real standards of living that would then be available to us. Indeed, Mr. Speaker, it seems to be intended more as a deterrent to those who live without rather than to give satisfaction to any of us who live within the country.

Sir, this Budget, like any other—though of course its constituent parts are estimates of the future through to March 1976— sets out factually as the Government now sees it the answers to the following questions: Firstly, where and on what the Government intends to spend money; secondly, how much it intends to spend, and, thirdly, how it intends to make up the shortfall, if any, between its total expenditure and its anticipated revenue. It therefore strips bare the priorities as determined by this Government and as such should be brought to the attention of every one of us living in this land. It is an accurate and cold, factual image of the economic policies that this Government intends to pursue within our country, and as such it will directly affect the life of every one of us both immediately and in the longer term. We on these benches, as a result, would like to examine this portrait of the future by the Government, as they see it, as it is one of those rare occasions when the figures produced by this Government itself speak louder than any exhortations, any declarations of intent or any speeches or, indeed, barracking from that source. We intend to do so, Sir, by analysing its size, the main elements of its composition and the method by which the hon. the Minister intends to finance his deficit, as he now sees it, and then measuring what we find against the following criteria, which have been set out by this Government itself: Does it serve to dampen or increase the fires of inflation; does it accord with the policy of separate but equal development within South Africa; will it improve our standing and relations with Southern Africa and elsewhere and, finally, is it the correct medicine in the interests of the majority of us who live in this country in either the short or the long term? Most of the factors that we shall look at cannot, of course, be totally separated the one from the other but must rather be seen as reacting upon each other to produce a composite picture. At the same time it will be possible to identify the major factors at work and to reach a judgment in terms of the criteria we have set out. Finally, we shall put forward certain concrete alternatives both in regard to what has been proposed by the Minister and, of equal importance, what he has omitted, and which amount to the pursuit of a quite different course of action which should be followed and which would be in the best interests of all those who live within our country’s borders, both now and in the future.

On a cash basis this Budget estimates an expenditure of R6 562 million. There is to be an increase of expenditure on Revenue Account of 16%, and on Loan Account of 25%—an increase of no less than R997 million or nearly a billion rand. This, of course, represents an overall increase on last year of 18,5.% There is no way that this can be seen as an exercise in self-discipline on the part of this Government. In fact, as has happened so often in the past, it is noticeable only for its absence. This is no demonstration by example—no model that can be held out to others to exercise self-restraint. Yet the hon. the Minister stated in his speech, and I quote—

True words indeed, but they do not square with the facts. It is of no use for the Government to make pious statements calling upon others to exercise forebearance, when at the same time it commits deeds which expose that, in so far as it itself is concerned, it has no intention of doing so.

It is a mockery which can be seen for what it is. It serves to highlight yet again that a major cause of the inflation from which we are now suffering is the level and increase of expenditure by this Government. This is unfortunately not new, as we on these benches have pointed out. It has been so each year with few, if any, exceptions since 1960. The fact that the Government pays no heed to the fact that the current level of inflation is 14,7%, if you take February 1974 to February 1975, and must even on an average basis, to use the Minister’s favourite way of calculation, be around 12%, but carries on regardless, must now be seen by every South African for what it is. It is a tragic crime of omission for which we are all going to have to continue to pay and, what is more, at an increased price. It is not only that such expenditures by the Government have more or less continuously outrun the growth of the gross domestic product, but they are overall of course not as productive either in the short or the long terms as compared to what we might have enjoyed if the Government’s policies and priorities were different. I am not arguing that essential infrastructure should not be provided, but expenditure for that, its timing and the priorities attached to the various projects, must be seen in the context of the interest of the majority of all who live here. I do not want to let pass unnoticed either two other factors which may result in still further significant increases in the level of Government expenditure. One of these was mentioned by the hon. the Minister, but the other was not except possibly by implication.

The first is Iscor, where a further R70 million is to be appropriated from the taxpayer and the Minister also said that a substantial further amount might have to be provided. As I have said before, I appreciate the difficulties that Iscor faces now as in the past in carrying out the role ascribed to it by the Government, but this is simply further evidence that the time is overdue where the consumers of its products should pay a realistic price and not be subsidized by taxpayers.

The second point is that there is no explicit mention of salary increases for those who work in the public sector. Sir, those who work in the public sector, if you include within that category those who depend on it for their living, now constitute some 40% of the White male working force in our country. In our situation, in so far as the Whites are concerned, there is of course little, if any, unemployment, but these people are bound to want compensation for the fact that their cost of living has risen and that they will now have to-pay more for petrol, cigarettes and drink. It would not be unreasonable for them to ask, in view of the Government’s performance, why they should pay the price by accepting a lower standard of living. If they do not, it will simply be left to the remainder to do so, and that would both be grossly inequitable and indeed intolerable for both the Whites and the majority in numbers of Black and Brown South Africans who work in the private sector. The simple truth is that so long as the Government itself fans the fires of inflation, it cannot expect others not to do what they can to avoid being consumed by the flames. Does the hon. the Minister really believe that his concessions amounting to some 68% over the last five years have succeeded in keeping the old and the aged, irrespective of colour, from suffering at least third degree burns from inflation? If he does, let him go and ask them. The answer will be an emphatic “No”. It is their past labours which have built this country, and it is an obligation upon all of us to look after them when they are, as they now are, defenceless and unable to protect themselves. I was delighted to hear from the hon. the Minister that further steps have been taken to narrow the gap between Black, Brown and White pensions, but I would like to ask the hon. the Minister in his reply to this debate to be specific and say by how many rands a month this has been done.

Mr. Speaker. I should now like to look from another aspect at what the hon. the Minister’s proposals amount to. Given that defence expenditure has to rise by R300 million, a supposition which we do not accept and will come back to later—nevertheless for the moment let us take it for granted, together with the fact of the priority given to increases in infra-structure expenditure what is being made clear to us? It is the fact that the private sector, unlike the public sector, is being asked to accept a period of consolidation. Within that sector it will be a cause for dissatisfaction that corporate income tax has effectively been increased by 2% due to the imposition of the loan levy, and this at a time when the Government is reaping substantial increases from the effects of inflation which has produced the illusion or fiction of very large additional profits which in reality are not there. The hon. the Minister will no doubt be aware of the recently published survey by the University of Stellenbosch, on 139 South African companies quoted on the Stock Exchange, to whose annual reports the principles of current purchasing power were applied—even given the limitations at this point in time of that particular device—with the result that 96 of them, 69% of them, showed a decline in real earnings. The hon. the Minister will also be aware that Iscor has for a number of years recognized the effects of inflation by, in addition to depreciation, charging against annual production costs an amount based on the current wholesale price index, to provide for the estimated increased replacement cost of its fixed assets arising during the year. In this context the increases in investment allowances are to be weland certainly they are neither an immediate nor significant remedy for the problems of corporate liquidity which are being experienced with the prevailing rate of inflation.

It is evident that the hon. the Minister has decided that the only way he can try and balance his books—and let us be clear, he has not done so—is to get the private sector to cool off. The fact that he has not succeeded in balancing his books can be seen form the fact that he has had to provide some R274 million from past surpluses and treasury bills. It is a moot guestion as to the extent this will bring comfort to the private sector, because we do not know, as we have not been given the information, how the money will be spent as between here and elsewhere in the world. To the extent that it is spent abroad on submarines or aircraft, and particularly if that is the major portion, it will serve as no stimulus to business confidence as it will simply reduce our reserves. Indeed. I would have hoped to see a greater degree of borrowing abroad, but I should like to come back to that later, as I suspect it may be the necessity for the public corporations and local authorities to borrow in that sphere which underlies the hon. the Minister’s proposal to borrow R140 million overseas.

No, Mr. Speaker, it appears that the hon. the Minister has taken a gamble in that his proposals to finance the increased expenditures of the Government by the injection of R274 million of new money— whichever way, too, that it is spent either here or overseas—can only come off if certain other things happen which will improve the balance of payments, business liquidity and therefore confidence. If these things do not happen then the nerve and initiative of the private sector will suffer grave injury. For the Minister’s strategy to succeed, we will require reasonable prices both for our gold and other exports— something to be desired by all—but there do not appear to be any immediate signs of economic recovery on which to base such a presumption—leaving gold on one side for the moment—and in any event there is likely to be a time lag before it works through to our economy. It will also require a levelling off in imports both in regard to quantity and price, in the sense of a decrease in the rate of inflation overseas, but that in general is not unreasonable in the light of the huge increase we saw last year. Finally, it will require a continued capital inflow and, most important of all, the acceptance, as I have said earlier, by the general public of a cut in their standard of living. If there is a renewal of demand inflation, if people succeed through wage or price increases in getting the compensation they will surely want to maintain their standard of living, then the hon. the Minister’s gamble will fail. The petrol price is an excellent example. Motorists are now being asked to pay R1021 million for Sasol No. 2. That figure is in 1974 money terms; in other words, it does not include an estimate of any escalation in costs over the period in respect of its erection. The motorists will have to pay it whether they like it or not, but if they succeed in getting compensation through wage demands so that they can use their cars in the same way as they have in the past, then the hon. the Minister’s gamble will fail. If that happens we shall simply find ourselves in the position that we have to pay a far greater amount even than that which we are already paying for excessive Government spending; because if demand inflation returns and the private or Government sector for that matter puts the reserves under pressure, then inevitably it will subsequently lead to a further clamp-down—lower growth, or increased taxation, or both.

I should like to turn to the constituent parts which highlight the main thrust of this Budget as opposed to the overall picture with which I have just dealt. Here, of course, we find that the striking increases lie in defence, including the Armaments Board where expenditure will rise by near enough 40% to R1 055 million, and in the S.A. Railways and Harbours where the increase is 47,5% to R472 million. The actual increase in expenditure for these two alone amounts to some R450 million. This should be compared with the aggregate increase of expenditure on education, health, housing and community services of R124 million. The hon. the Minister will no doubt argue that there was no increase last year whereas there was a big increase in the private sector—12% as compared to 8,5% overall. But it is important for us to remember that the increase in real fixed capital stock of 6.4%, which has been cited by the hon. the Minister, was the first in three or four years and that in last year’s increase in spending overall real private consumption expenditure rose by only 5.2% as compared with the Government’s expenditure on consumption of 10,9%, rather more than double. These are illuminating figures and underline for all to see the dilemma in which this Government finds itself. This is the divide between the political ideology of the Government and the economic development of the country. No one of the 25 million people who live within the borders of our country is going to deny or fail to support the idea that we should be in a more than adequate position to defend ourselves against aggression, real or threatened, from without. Let us be clear, however, that the real reason which underlies the fact that the Government has felt impelled to quadruple expenditure on defence within three years and bring it in excess of R1 billion, is that its policies are unacceptable to any country or Government without our borders. The figures amount to no more and no less than that. They also amount to an admission by this Government, though no doubt they will deny it, that even if détente is successful—by détente I mean the establishment of harmonious relationships between the countries which comprise Southern Africa —for it to have permanence it will require changes in the Government’s policy internally. Is the hon. the Minister telling us that even if the policies of this Government were acceptable elsewhere, he would still propose expenditure at such a level?

We on these benches would also like to question, as we have in the past, whether, given the recognized necessity to be able to defend ourselves, expenditure of this nature will produce the optimal return. The best bulwark against aggression is surely to give those who live within our borders an increasing stake in the development of our country. It is not only in the economic sphere that this must happen, but this is the first need. But there is no evidence at all in the Budget of the Government’s determination to move in this direction. As such, it has got its judgment wrong. In addition to the additional R1 billion of expenditure presaged by the Budget, the following expenditure, which has already been announced in respect of the public sector, must be borne in mind—

This gives us a total of R17 billion. It may be that it was after the consideration of these figures that the hon. the Minister decided only to include the raising of R140 million from overseas in his estimates, so that that sphere of potential finance could be left open to provide help for the cost of these projects.

We quite agree with the cost of these projects.

We quite agree with the hon. the Minister when he says that the impression held by some that we have borrowed too much from abroad is mistaken. We would think that in fact South Africa’s total foreign borrowings are conservative as compared with those of most other countries. Indeed, we would have thought that the quality of South Africa’s earnings of foreign exchange, primarily based as they are on gold, metals and minerals and agricultural produce, are such that leaving aside the undoubted potential to increase them, they give us the standing and ability to substantially increase the level of our borrowings. Indeed, except for the possible reason we have mentioned, we are surprised that the hon. the Minister did not assume that he would raise much more from overseas to cushion the risk that may be imposed on the level of reserves by defence purchases, as presumably one of the purposes of such expenditure it to give the foreign investor further confidence in our land through the maintenance of its reserves at an adequate level, and also to the extent that he succeeds, reduce the constraints under which the private sector will have to operate.

I want to return to the figures of expenditure both within and without this Budget, though I accept that the latter will, to some extent, be financed internally although ultimately all of us will have to pay for them, in one way or another, and to put them alongside the hon. the Minister’s proposals for expenditure for the benefit directly of Black and Brown South Africans. I calculate the following from the Estimates that have been tabled: For the Coloured population R171 million; for the Black South Africans R600 million—and I include in that the Education Vote from Bantu Administration; for South African Indians R61 million. That gives us a total, including education, of R832 million or between 11% and 12% of the Budget or 3% to 4% of the gross domestic product.

Mr. Speaker, may the hon. member keep on reading his speech?

Order! The hon. member must consult his notes less frequently.

I appreciate that those groups of the population receive further indirect benefits, but the contrast is quite striking. I wish to highlight that aspect again, and this time I intend to quote:

The figure for the expenditure on the education of Black South Africans is to rise by the princely sum of R9 million to nearly R69 million or just over 1% of the Budget or just over one-third of 1% of the gross domestic product.

Is it possible to describe that in any way except as being grossly inequitable? It certainly is not separate but equal development. The Government has of late—and this is, of course, long overdue, but better late than never—laid great stress on the need for greater productivity. This is a most notable omission from this Budget, however, in that no provision is being made to create this greater productivity. It is, of course, common cause that we face a critical shortage of skilled labour, a shortage which will increase in time unless the appropriate action is taken. The prerequisite, however, for producing skilled workers, or to increase the productivity of our labour force is formal and technical education. The hon. Minister, however, is notable only for his silence. The increase of R150 in the deduction allowed to married women cannot be seen either as having anything but a marginal effect. It is therefore to be hoped that the hon. the Minister will be in a position to announce the result of the inquiry which he has already announced and to incorporate its recommendations into his next Budget.

To sum up, the Budget will give no comfort to anyone. It takes from the public’s pocket an amount of the order of R244 million and gives concessions in return which will amount to some R13 million in this financial year. It is highly inflationary in that it injects into the system some R274 million in new money and it is grossly inequitable. The hon. the Minister asked me, in the course of the debate on the Part Appropriation Bill, to be specific and to put forward concrete proposals. He asked us to do our best to help. We are now going to try to help him because there are, of course, huge problems to be solved. A start must be made now, however, and we would therefore recommend the following course of action to the hon. the Minister. Firstly, cut back present Government expenditure as set out in the Estimates, as I shall indicate presently. This will release money which can either be used for other purposes or be in effect a genuine reduction. Secondly, divert from the other public expenditure of some R17 billion, which is in any event ultimately borne by the general public so that 15% of it becomes available for other uses since it will, in any event, either be raised internally from the public or externally, in which case it will rest on the country’s financial standing. Thirdly we would like to recommend to the hon. the Minister that he use the moneys that will thus become available either to replace revenues at present received or to implement the following: Firstly, he should remove the tax differential as between Black and White South Africans. Secondly, the expenditure on formal and technical education for Black and Brown South Africans should be increased by R70 million per annum. That will in effect mean that the expenditure will be doubled. This amount should come off the defence budget. Thirdly, a housing programme should be financed to reduce and eradicate the shortage which is being experienced at present. Fourthly, any wage differential between people of different colour should be removed where the people carry the same responsibility and it should be applied on the basis of scientifically evaluated wage scales. Fifthly, recognition should be given to the permanence of Black and Brown South Africans in the urban areas. He should realize the need to create a social infra-structure for them within those areas to make life at least bearable for them. Sixthly, expenditure on social welfare and pensions for White, Black and Brown South Africans should be increased by 50% overall at a cost of some R140 million. The hon. the Minister should state in public that he intends to remove the differential within a certain time. The last recommendation which we should like to make is to allow, under appropriate safeguards, married people who are both in employment to choose if they wish to be taxed separately on their earned income. Items 3, 4 and 5 should be financed by the moneys raised by the Government but which are diverted from their original purpose, be it for Escom, the Railways or whoever. The sixth item should be financed from the money raised by the increased taxation which would otherwise be held back to finance Sasol 2 which is in any event not required immediately. Once this year’s defence expenditure has been incurred, which we assume includes a number of one-off items, the revenue could in future years be used for the other purposes.

This list is by no means perfect or exhaustive, but it would serve to demonstrate that we, unlike the Government, have our priorities right and it would give proof that a start has been made on the road which will build an increasingly prosperous South Africa for all. This is the best bulwark against aggression from without and against frustration and discontent within.

Mr. Speaker, if the hon. member for Johannesburg North wrote his speech himself, I want to say that it was a well written speech. However, to us on this side of the House who listed to it, his speech was unconvincing, totally unoriginal and a rattling off of a quotation of a lengthy nature.

In a monotone.

Yes, he delivered it in a monotone. I wanted very much to follow what he was saying …

Did you understand it?

Exactly. I wanted very much to follow what the hon. member was saying, but the Lord knows, it was totally impossible to understand anything of it. I do not envy the hon. the Minister’s task of saying something about it at all. The hon. member for Johannesburg North made me think of the days when he was still a fly-half and when he was continually off-side. All that I can remember of his speech of today, is his “off-sides”, his offside remarks when he had to fall back on his old and only theme. He plays in one place only and he cannot get away from that. The old theme is to fall back on the idea of “ideological policies”, the “colour policies”, etc.

With that I want to leave the speech of the hon. member. I should like to associate myself with what the hon. member for Sunnyside said in respect of the hon. the Minister’s activities, also with reference to what the hon. member for Cape Town Gardens said. The hon. member for Cape Town Gardens expressed the hope that this hon. Minister would follow in the footsteps of his predecessor by making contact with the outside world. I want to tell the hon. member for Cape Town Gardens that he is completely old-fashioned and that he is completely behind the times when he says something of this nature. If the hon. member had listened to the news today, he would have known that our hon. the Minister met the French Minister of Trade at Jan Smuts Airport this morning. That meeting was the outcome of an invitation which this hon. Minister made to France when he visited France last year in July. Therefore we have a wide awake Minister who knows his priorities and who knows how he should approach his work. Therefore we are dealing here with a Budget which, in the light of the present world business cycle, is extremely refreshing. Other countries are at present caught up in an uncertain, gloomy monetary situation. They have landed in a recession, in an oil crisis, and with an unfavourable balance of payments. Some of these countries have reached the verge of bankruptcy. Others have found themselves with obligations in respect of their oil accounts, obligations which they will probably never be able to meet from their national incomes in their entire existence. Some of these countries owe up to 90% of their national income for the fuel which they had to buy at high prices in these times. In spite of the serious monetary problems which the rest of the world are experiencing we find inherent in this Budget that which is worthy of a mature, leading country with a stable economy which is equal to the best in the world. It is indeed a model of stability and of equilibrium. Therefore it is fitting that I quote what Dr. De Kock of the Reserve Bank said in this connection, according to Die Volkshandel of September 1974, viz. (translation)—

This is indeed a testimonial to the stability and steadiness of the economy of this country from one of the experts, a testimonial by one of the specialists in the monetary sphere in South Africa.

This Budget stimulates, in fact, that which has to be stimulated, regardless of what was said by the hon. member for Constantia and other speakers after him. This Budget stimulates investment in this country. Thus one has already been able to read in the local Press in the past few days that the money market has expanded and that there has been an increase in the liquidity of banking institutions. That is the logical consequence of the stimulatory effect which this Budget has already had on the economy of South Africa. It has already brought about an expansion of capacity and of the liquidity position. Furthermore, this Budget makes provision for concessions where these are appropriate and deserved. We think of the investment allowances for the replacement of capital assets, as is being envisaged in the Budget; we think of the ploughing back of distributed profits which has been increased from 45% to 55%; and we also think of the expansion of pension benefits for the aged for which this group of people are extremely grateful.

[Inaudible.]

You should not talk about that; you know what pensioners received in your time.

That was very long ago.

It might have been a century ago, but it still remains true. We are also grateful for the concessions which have been made in respect of estate duties.

This Budget is not restrictive in the sense that it is negative; in fact, it contains no restraining, enforced fiscal measures. As the hon. the Minister said in his Budget speech, the Budget is moderately expansionary in respect of productivity and makes provision for the infrastructure which is so essential to this country, especially in order to stimulate the economy. We think of the expenditure by the South African Railways; we think of Iscor; we think of Sasol No. 2; we think of the expenditure and appropriation of funds for roads, hospitals, education, Bantu administration, and so on. These are tremendous undertakings in South Africa and bear witness to a spirit of enterprise in this dark monetary world in which we are living at the moment. Now, not only the Opposition, but also bodies such as Assocom, say that this is a neutral Budget and has a strongly inflationary tendency. I can regard that as a complete overstatement. A Budget which is stimulatory, however moderately, has to be inflationary to some extent. If it is expansionary, there must also be a degree of inflation inherent in it. It is a commonplace and a recognized norm in finance that if one can keep inflation moderate and stimulate it moderately, that is actually advantageous for one’s economy. That is exactly what this Budget envisages in the phase of the business cycle in which we are at the moment, i.e. in the phase of the business cycle where it is necessary for us to consolidate and for us to eliminate tensions. Therefore I say that it is advantageos. I say that it is moderately stimulatory and because is is moderately stimulatory, because it stimulates growth moderately and because it stimulates productivity moderately, it will influence the inflation spiral moderately and it is possible that perhaps— we hope that this will appear to be the case—we shall be able to say in the course of time that we have reached the turning point of our inflation spiral.

This Budget also states its priorities, regardless of what the hon. member for Constantia said. Our major priority, which is obviously staring us in the face, is defence and the funds which have to be spent on that. That is priority number one in the Budget. This fact is emphasized by the colossal amount of R948 million. We are grateful that we in South Africa are in a position and have the means at our disposal, in these times in which we are living, to be able to spend this money in the promotion of our defence. In the same breath I must say that we are grateful that we have a Defence Force in respect of which and on which this money can be spent. We are also glad that we have a Minister who can utilize that money to the fullest extent. Other nations will probably envy us this. We think of a nation such as Israel, which at present has to spend about 30% of its national income on military preparedness. We also think of how our expenditure in this connection in the year 1973-’74 was merely 2.6% of the gross national product, merely 3.2% in 1974-75 and is estimated to be merely 3,7% for 1975-’76. Therefore we say that this is a Budget with a very sensible approach in the present phase of the business cycle, sensible in this respect that it takes into consideration the problems with which not only we, but the whole world today, are struggling. In this connection we think especially of the oil crisis. We say that if we are able to overcome this oil crisis through the establishment of a second Sasol, and if we are able to do this by increasing our petrol price by two cents per litre—which would cost the ordinary taxpayer about an average of approximately R75 per year—it would be the best contribution the taxpayers of South Africa will ever have made or could ever make in respect of the economy. I think that the question which the Opposition asked in this connection, viz. why this financing cannot take place by means of a loan account, is a very poor question. It is not a good question at all. In any case, it can be answered very easily. Have they calculated for us what the interest on it would be? Have they calculated what a colossal obligation it would mean for us? Have they calculated where and how we should obtain the money? I think it is short-sighted to make a proposal of this nature. It is completely clear that this a very sensible Budget and I think that it will be seen in this light by South Africa.

In its reaction to the Budget, Assocom asks for the purposeful training of our labour force. This has also been requested repeatedly here this afternoon by the Opposition. But if there is any Government which is moving absolutely purposefully in this connection, it is this very Government. I want to point out that the real increase in wages for the year 1974, as against 1973, was 4% in respect of all population groups. The increase of the wage of the non-White workers alone was over 9%. In addition to that, opportunities are being created which assure all sections of the population of work. I refer especially to that part of the Budget speech of the hon. the Minister in which he said that although the number of registered unemployed persons increased slightly after August, it is still very small. Let us compare this position with that of foreign countries. Here in South Africa the hon. the Minister tells us officially that we have practically no unemployment and that the number of unemployed persons who are registered, is very small. One should compare with this the United States of America where seven or eight million people are unemployed, about 7% of its total labour force. Austrialia’s figure of 3,5% is the highest in 40 years. Germany shows an increase in one year of 250% In Denmark, in one year, there was an increase of 110%. In France the increase was 50%. One should compare that with the position we have in this happy, flourishing and prosperous South Africa. Then we accept the risks which are attached to this. We accept that we might not even be able to maintain this growth rate of 4,5%, but in that phase of the business cycle in which we are living and in which we have to consolidate and prepare for the upsurge which is coming, it will not be disastrous.

In the time at my disposal there is something else I want to mention. I want to say that recently—it has already been mentioned here this afternoon—a great deal of criticism has been expressed by the private sector. It is being alleged that there is too much State control. In fact, in an article I read recently the Government is openly accused of bureaucracy in this connection. I read in The Star of 19 March of a speech made by Mr. C. R. Bisschoff of the Afrikaanse Handelsinstituut in which he supposedly said—

Sir, when these things are said, and especially when they are said by Afrikaans businessmen, they enjoy tremendous prominence. This varies from the rubbish which is sometimes written by “Ferdinand” of Tegniek to the assertions of many responsible businessmen. This criticism is aimed in particular at the activities of the State corporations, linked with the allegation that politics prescribes to economics, to a large extent. As far as State corporations are concerned, I do not think that we need to argue with each other about the right of such corporations to exist in the public interest. Good examples have been mentioned here: Escom, Iscor, IDC, etc. My present task. Sir, is not to hold out the prospect of demarcation of the functions and activities of State corporations either. Effective machinery has already been created in this connection, viz. the Standing Advisory Committee on State Competition. As far as the allegation that politics prescribes to economics is concerned, I just want to say that these State corporations are indeed linked to the implementation of the political motive. Therefore, it is logical that their functions will be prescribed to a very great extent by the political motive. After all, it is the practical implementation of Government policy which is concerned here. It is, in fact, the purpose and the reason for their creation, viz. to create the necessary capital structure in this connection. This concern is also expressed by economists who say that the economic discipline does not carry enough weight in the running of our country. Sir, I want to allege that the reverse of that is also true, viz. that orderly discipline, in the implementation of Government policy, is sometimes totally disregarded and negated by the economy. Therefore, if it is advanced, as is being done, that we should approach these problems in co-ordination and in co-operation with emphasis on the hard economic facts, then I say that it is indeed true, but that the emphasis should also fall on the hard political facts with which we are concerned in this country. Therefore, although I am appreciative of the achievements of the economy, although I accept that the economy is important, I say that when one determines one’s priorities, the running of one’s country is priority number one, and this is followed by the economy.

Mr. Speaker, we have listened with some interest and perhaps a degree of impatience to the arguments of hon. members on that side of the House. Sir, we are engaged here in a debate dealing with the Budget, not as an arithmetic exercise, but essentially as an instrument of policy, and it is as an instrument of policy and with regard to its effectiveness as an instrument of policy that it needs to be judged. A Budget is a very powerful mechanism. It is perhaps the most powerful mechanism that the Government has in its possession in order to direct the economy, in order to create an equilibrium between the ups and downs of trade cycles, and generally to produce conditions in which the economy of the country will flourish for the benefit of all the citizens of the country. It is most important that a Budget should ensure that there is stability of money in relation to prices and that this relationship or this equilibrium of money and prices should exist in conditions of adequate employment. Sir, in all these respects we find that this Budget is entirely inadequate. It does not touch these essential qualities; it does not attempt to meet these essential needs, and I find myself in total agreement with the hon. member for Constantia when he condemns the Budget on three main grounds. Sir, it has done nothing to contain inflation; it has done nothing, or very little, to relieve people of the burden of inflation, and it has done very little to promote growth. I propose to deal with these three items and to show exactly in what respects the Government has failed and to give some examples of its more extravagant failures. But before doing this I would like to refer again to the dangers of inflation. We have heard speeches here today from hon. members on that side, and not least from the hon. member for Ermelo, who talk of inflation in the sense of gardeners discussing the irrigation of their gardens, when in fact there is a tidal wave coming along that is liable to wipe out the entire agricultural plan. Inflation is the most destructive factor in our economy today. It will destroy our economic, our social and eventually our political system if something is not done to control this terrible scourge that is eroding our wealth and our prospects for the future. It is impossible, Sir, to state too seriously, to underline too heavily, the nature of the danger which, our economy faces. But here we have this casual approach to inflation as though it were nothing of very great importance. Even the hon. the Minister uses words such as these; he says—

Sir, this is a most masterly understatement. Of course inflation is an unsatisfactory characteristic. He does not say, however, that it is a scourge, that it is a destroyer, that it is going to wipe out our way of life and indeed possibly our civilization in this country unless it is brought under control. That, Sir, is the measure of the danger. It is not merely an unsatisfactory feature. We find that recently certain conservative businessmen directing conservative firms have started using the kind of language which we on these benches have used consistently for the last three years since inflation started running its devastating course. I quote from a statement made by one of these gentleman this last weekend—

Sir, this is what is done by inflation running mildly, but—

Sir, the more vocal and powerful sections of the population sit in this very House. They have been vocal and powerful; they have in fact based it on the splendid Budgets produced by the Minister of Finance while inflation gathered for the spring, while inflation gathered for its destructive task. What we see now, Sir, is not the first phase of inflation described by Mr. Van der Horst of the Old Mutual and which merely destroys the means of distribution of wealth; we are in the stage of hyperinflation where the social, economic and political system is being destroyed. Sir, this is the measure of inflation.

I want to come now to a few examples of the way in which this very grave problem is being handled in order to illustrate that the Government does not in fact have the measure of the danger. The first point I want to raise is that of the control of the oil situation. Sir, I believe that the oil problem in South Africa has been most clumsily and inefficiently handled, and I use these words in measured terms; it has been clumsily and inefficiently handled. When the oil crisis first arose it was seen briefly as a crisis of supply. It was believed that a situation had arisen in the Middle East in which the oil taps would be closed and the West would be deprived of its oil, and none the more so than South Africa for certain political reasons. At that time, very briefly, it appeared to be true and there was in fact some truth in it. We had reason to accept that a crisis of that nature had arisen. However, it became clear over the succeeding months that the crisis was not a crisis of supply or of quantity; it was a crisis of price. The crisis which the West now faces is not that of a shortage of oil; it is a shortage on balance of payments. Sir, this is the nature of the oil crisis, and if one does not understand that, there is no remedy for any country against the oil crisis. This is what it is about. Now, the public of South Africa were in fact called upon to make a patriotic contribution, to help save South Africa from the shortage of oil, from the alleged boycott.

Why do you say it is an “alleged” boycott?

I said it in the past tense. There was a boycott, but it is now little more than an alleged boycott, because oil is pretty freely available. However, the public have never been fully informed by this Government or taken into the confidence of the Government as to the real nature of the oil crisis as it now exists. The public has had to suffer the imposition by the Government of a series of punitive measures, a series of threats, a series of compulsions, to oblige it to save oil and petrol in support of an attitude or a policy or an explanation that is no longer valid. I believe there has been a complete breakdown in communications between the Government and the public. The Department of Information, which should have played a major role if this thing is important, and I believe it is important, broke down completely and it has not in fact informed the public of the true nature of the crisis. The true nature of the crisis, Sir, in simple words is this, that the more you waste oil and petrol the higher you push inflation; the more you disrupt the balance of payments, the more difficult you make it for this Government to contain the economic disorder which is growing through, inflation. Now, if it were put to the public in these terms, then it would surely be obvious to the public that they could make a real contribution and that it would be worth while making that contribution. I believe, Sir, that the public is fed up with the Government’s handling of this thing. It is not playing ball with, the Government any more since it knows that the Government has not played a straight game with it. This last Easter we had scenes of the pre-OPEC slaughter on our roads. It is a fact that the public is driving fast; it is driving recklsssly and it is wasting petrol and oil at a time when we cannot afford it. I would be the first to support this Government if it tried to control the situation by rational and fair dealing. It will not succeed by creating animosity in the minds of the public. It will not succeed if it alienates the public. The public simply does not believe that there is not enough petrol available to enable it to motor at speed.

And you are not helping very much either.

I say that your system has broken down. The public are not co-operating with you; you have played this thing entirely wrongly and it serves you right because you should have realized that the problem was of a different nature. [Interjections.] Now, if we look at the statistical tables, on which in parenthesis I want to congratulate the hon. the Minister and the Ministry of Finance because they are extremely well presented, we find that in the composition of our imports, our consumption, that part of our consumption which relates to oil, petrol and greases, is about 3% of the total. Now, the costs of these imports have increased. They have increased by about R100 million in the past year. Sir, if one allows for natural growth, the natural tendency to grow, consistent with what happened in previous years, the actual increase is of the order of R50 million. Now, in terms of the order of money the Government talks about, this is not a great deal, but nevertheless it is important in relation to our balance of payments and it is certainly important in relation to our cost of living, that is to say, imported inflation. I believe that the Government has the entire thing out of proportion. It should deal with this matter on its merits. It should instruct and inform the public as to what the real nature of the problem is and it should enlist the co-operation of the public. Maybe then we will not have the kind of slaughter caused by irresponsible and wanton drivers we saw during the past Easter weekend. In so far as the Government’s attitude is concerned, I believe it has been wrong in logic, costly in method, clumsy in execution and disastrous in the result

I come now to another aspect of the Government’s policy. I come to the question of the lack of skilled labour. I believe that at this stage in our debate nobody will question any longer that one of the major causes of inflation in South Africa is in fact low productivity. This is surely common ground now on both sides of the House. Low productivity is caused very largely by the inadequacy of skilled labour. In fact, the two terms are virtually synonymous. Sir, if one reads the Economic Development Plan, there is eloquent reference throughout to the grave problems that will be caused if in fact there is not full employment and the employment, in particular, of skilled, properly trained labour. On this rest our plans for the future. On this rest our hopes for a prosperous future in South Africa which is essential to détente, to peace and to progress. Sir, what has this Budget done about this particular problem? We know from the Economic Development Plan and from the figures of the Department of Statistics that the population of South Africa is already over 25 million people and that it will be 50 million people within 25 years. If we have 50 million people in this country, as we will, we will need at least 5 million skilled people to occupy the main managerial, technical and other jobs of that calibre—5 million to serve 50 million in skilled jobs. The White population will be 6 million, of whom at best 2 million can be economically active. Let us assume that the whole 2 million will in fact be in top managerial jobs. This still leaves 3 million skilled jobs to be filled by Black and Brown people, managerial jobs, technical jobs, scientific jobs and professional jobs. These will have to be filled by Black and Brown people. So we will need 3 million such people by the year 2000. Let us assume that their age at their highest level of productivity is 40 years by the year 2000. What age are those people now, in 1975? They are already 15 years old if they are going to be 40 years old in the year 2000. Sir, how many people. Black and Brown, of 15 years of age in South Africa at present, are provided with facilities for secondary education and for technical education? That is the measure of the problem and I recommend that every member on that side of the House should go home tonight and think about it, because unless that demand is met South Africa will not be able to meet the demands of her population, she will not meet the rising expectations of her people, she will not meet the economic demands and she will not in fact meet the economic development plan. [Interjections.]

Order!

Sir, I am not sure which debate I am taking part in. The fact is that apartheid itself is one of the most inflationary aspects of Government policy.

Nonsense!

It is all very well for hon. members at that end of the House to say “nonsense”, but it is equally easy for me to prove this. I have done so before in this House and I can do it again. To put it very briefly on this occasion I shall put it as a proposition, which I challenge anybody on that side of the House to contradict, that the diversion of scarce and valuable means in this country into areas of low yield is inflationary. Is there anybody on that side of the House who is prepared to stand up and contradict the statement that the investment of valuable and scarce means, the investment of hard earned money, in areas of low yield is inflationary? Surely, that is a contention that nobody can deny. It is simple economic fact. If we look at the kind of investment which is going on, the quantities invested and the kind of yield that is coming from that investment, then we have, in fact, before us living and visible proof that the implementation of apartheid in this country is inflationary. Let us take the example of the Transkei. It was stated this weekend over the radio—it comes from the SABC and therefore it must be correct —[Interjections.]—that the Xhosa Development Corporation have announced that if private enterprise played its full part in the investments planned for the Transkei, then the additional employment opportunities to be created in the Transkei would be 80 000 extra jobs in two decades. This is official—SABC. If that is not a low rate of return, then I have yet to hear of one, because if we turn to the Economic Development Plan, we find that the figures of people requiring employment are infinitely higher than the kind or the order of figure which I have just quoted. We find that the economic development plan is now demanding that there should be a growth rate of 6,4% per annum in this country in order, not just that South Africa should survive economically, but in order that sufficient jobs will be created to maintain social order and progress in South Africa. We have heard people boasting of 3,5% and even 5,5% which is, in fact, what we have produced over the past 10 years, but we expect a fall in the next year. But we have got to maintain—not just achieve at the peaks but maintain—a growth rate of 6,4% in this country in order to achieve the minimum requirements imposed by the economic development plan.

These are the things which cause one to wonder what exactly this Budget is about. The Budget has not touched on these problems; it does not mention them. There is no provision whatsoever in the Budget to remedy these matters. Where are we going?

I want to deal with yet another aspect. Let us look at the exchange rates policy of the Government. The hon. the Minister says he is very happy that we have a strong rand and that the rand is doing the job that we should expect of it. I have been looking at some of the figures. The first remark I want to make is that according to the figures in the Statistical Survey the United Kingdom, the United States of America and Canada combined—that is the dollar and sterling areas—now take one-third of our exports and export to us one-third of our imports; in other words, one-third in and one-third out. For a number of years our currency had been tied to sterling and then it was tied to the dollar. We have allowed the rand to fluctuate helplessly in a kind of financial colonialistic relationship, first with sterling and then with the dollar— with the currencies of countries which, in fact, have a declining trade with South Africa. It is perfectly true that this happened after the Smithsonian Agreement had been entered into. However, since then we have tied our rand to a mixed bag of currencies. We have what is now, euphemistically called managed floating. The effect of managed floating has been that during the past couple of years the rand has been moving steadily down. It is true that there were a few minor upward adjustments, but the net effect has been to move down.

We find now that our trade with the European Common Market, the EEC countries, has moved up to something like 32,4%. We bought 32,4% of all our requirements from the EEC countries, that is from the Western European countries. The rand in relation to the currencies of those countries has been growing steadily weaker.

Including Britain?

No, Britain is not included. According to your own statistical tables Britain is excluded from the EEC complex mentioned here. I have used the tables produced by the Department of Finance. The EEC countries, excluding Britain, now send us 32,4% of our imports. This is an increase of 60% compared with 1973. The EEC is now the biggest source of South African imports. Therefore, the relationship of the rand to the EEC currencies is most important if we are concerned about importing goods for South Africa at reasonable prices. Obviously, if the rand is weak in relation to the Deutsche mark, is weak in relation to the French franc, is weak in relation to the Swiss franc, as it is, then we are paying very high prices for goods which comprise 32,4% of our imports from abroad. Why is this happening? We know that only last week again the Reserve Bank announced a further weakening of the rand against the dollar. Why? Because the dollar suddenly shown an upsurge, it had grown stronger against the European currencies.

Instead of accepting that this strengthens the rand against European currencies that if we move up with the dollar we shall be buying 32,4% of our imports more cheaply from Europe, we panicked immediately and dropped the value of the rand by 1,34%, thereby, of course, weakening the rand once again against the Deutsche mark, against the French franc, and against the Swiss franc and so on, thereby increasing the cost of goods in South Africa and assisting inflation to make yet furthere strides ahead. I want to ask the hon. the Minister when he replies to tell us please what the basis is of this managed currency. How does the managed float work? What is the percentage of the dollar, the pound sterling and the European currencies in this mixed basket of currencies? It seems to us that this managed float is something like a lottery run in Pretoria. It seems to us to be a very arbitrary thing. Why is it that if the dollar moves up, shall we say 1½%, and other currencies do not move up equally because the dollar has grown stronger in relation to them, the rand should then be weakened by approximately the same amount? After all, we are supposed to be dealing with a basket of currencies. We are supposed to be dealing with a selection of currencies and I would have assumed that this selection of currencies would have been weighted roughly according to our trade with the countries concerned. This is the only kind of valid weighting that would make sense. We would like to know some more about this. What are the percentages? Why are these sudden adjustments made? What is the end purpose of all this? Are the percentages, that is to say, the currency components of this basket of currencies, changed arbitrarily on each occasion or are they in fact constant? We would like to know how this thing works, because it seems to us to be a most extraordinary procedure.

I have a number of other things I would like to raise the hon. the Minister, but my time is short. First of all, I would like to deal with the second point raised by the hon. member for Constantia, and that is that the Government has done so little to relieve the hardships of inflation. We would have hoped that this Budget would at least have made some attempt to relieve the impact of inflation on those who were hardest hit. I have spoken in this House before on the merit of some degree of indexation. I do not refer to indexation as a universal practice, because I know that indexation as a universal practice will not in fact cure inflation. Nevertheless, I look upon it as a means of relieving the hardship on taxpayers who, because of the falling value of the currency, are in fact seeking higher salaries and are being paid higher salaries. As they move into these nominally higher salaries which have the same original real value as was the case a few years before, and into higher tax brackets they are pursued by the tax collector to the extent that they are paying ever higher proportions of their salary into the hands of the tax collector. Inflation linked to a fiscal policy of this kind, gives a most marvellous free ride for the Treasury. It means that inflation pays the Treasury, inflation is the Treasury’s best friend. Here we have a secret kind of taxation since no laws have to be passed and one does not have to come to Parliament to impose new taxes. The Government merely rides on the back of inflation. I believe that some degree of indexation to protect the taxpayer is now necessary and we would like to see this. We greatly regret the fact that there is no mention of this in the Budget.

I also want to refer to subsidies for the low income groups, food subsidies in particular. We have a cost-of-living index which consists of various components. For the ordinary well-to-do person, the person with a moderate income in this country, food is but a modest proportion—I do not know the exact figure, let us say 20%—of the total weighted cost-of-living figure. Black people, Brown people and very often even White people, pensioners for example, spend up to 75% of their income on food. We all know that food prices are the biggest component of a cost-of-living increase. The major contributor to high costs in the cost-of-living index is foodstuffs. Therefore the person who is being hit hardest by the rising cost of living is, in fact, the poor man. He is spending almost the whole of his income on basic foodstuffs to keep alive. I believe that a subsidy on these basic foodstuffs, including bread, milk wheat, etc., has now become an indisputable necessity. We find it astonishing that this Budget does not seriously even look at that possibility.

Could the hon. member tell us what the subsidy on those items should be?

There will be … [Interjections.]

Order!

There will be an opportunity during this parliamentary session to go very fully into that question.

I have very little time left and I still want to refer to the question of growth. This is the third missing factor in the Budget equation. Geoffrey Crowther in his book An Outline of Money points out that inflation is usually associated with rising activity, and employment and deflation with the reverse. The association, however, is not an absolute one. It is possible to have rising activity and employment, for which we may use the word recovery, without inflation, and we can have inflation without recovery. In fact, in South Africa we now have the highest inflation in our history and we also have a falling growth rate. We have got the worst of both worlds. [Time expired.]

Mr. Speaker, at this stage I do not intend following up on the arguments of the hon. member for Von Brandis, although I shall also, in the course of my speech, touch upon most of the matters which he raised and shall probably contradict him on quite a number of points.

I believe that we have a Budget before us today which was drawn up in the interests of this country and its people. When one has to assess a Budget, one has to apply certain norms. In my opinion these norms may be academically financial or politically financial. In fact, I am of the opinion that the speaker who has just resumed his seat assessed the Budget primarily from a politically financial point of view. When it is alleged that the Government’s policy of separate development is geared to inflation, I say that it is a purely politically financial view. Before one passes judgment, one has to consider the local economic background against which a Budget is drawn up, and subsequently the international economic background. In general, I would say that the hon. the Minister of Finance had a tremendous task when he drew up this Budget because certain accepted economic principles simply do not hold good any more in our modern times. I want to mention examples of this. The first is that it has always been an accepted principle that in times of inflationary conditions the economy did not have to contend with unemployment. What do we find today? We find an alarming situation of unemployment in most of the Western countries. We are linkeed to the international economy and what is happening in the U.S.A. or in Europe today, could therefore happen in our country as well. This is a phenomenon we have to take into consideration when we examine a Budget. I want to mention a further example. A recession has always been accompanied by surpluses, a decline in demand and drop in prices. What do we find, in 1975, in the international sphere? We find that there are shortages of raw materials, and that import prices are continuing to rise. We could quote further examples of economic anomalies which exist today. These are questions with which economists throughout the entire world are struggling and to which answers have by no means been found yet. Nor do I think that any hon. member on the opposite side of the House who spoke today gave us any answers whatsoever to these problems.

This is the international background against which the hon. the Minister had to draw up his Budget. One could also say that he had to contend with international pessimism concerning the world economy. When one reads economic periodicals, when one studies economic journals from abroad, one sees there is almost no doubt that the spirit abroad in respect of economic conditions is one of pessimism. Countries are struggling with balance of payments problems which, as we know, arose from the shock which was caused by the quadrupling of oil prices, which in its turn paralysed production in many countries. In this way, for example, there was a negative growth rate of 2,2% in the U.S. last year, while a developed country such as Germany was only able to maintain a growth rate of 4 %. Balance of payments problems as a result of the instability of monetary units is a factor which has to be taken into account. People who occupy responsible positions are grabbing at the proverbial straw to solve this problem. On 25 March 1975 an article appeared in which it was reported that Senator Barry Goldwater of the United States had made an appeal to his Government to restore the dollar to the old gold standard for the sake of economic stability. After America had left the gold standard as long ago as 1933 and very little attention had probably been given since then to a return to the gold standard, Senator Barry Goldwater comes forward in 1975 and says: “Let us return to the old gold standard; perhaps this will bring us economic stability.” This is proof that the world is seeking solutions to its economic problems. It is doubtful whether the appeal made by Senator Goldwater will meet with much approval, but it is nevertheless a demonstration to us of the search for stability in the economic sphere. The economic leaders of the world are facing the problem of inflation on the one hand and recession on the other, and what is good for the one is harmful to the other. It is against this background of international economy that the hon. the Minister had to draw up his Budget.

When we consider the national background, it is a fact that the hon. the Minister, in drawing up this Budget, has to take certain economic facts into consideration. For example, he had to take into consideration that we are not isolated in the economic world. He also had to take the specific problems of South Africa into consideration. This is what he did. In addition, he had to take into consideration that the defence and the protection of our national borders is of the utmost importance. For that purpose a large amount was appropriated for defence. This is something in regard to which we have no quarrel with the hon. members on that side. But the hon. the Minister also had to take into consideration the fact that South Africa is a developing country with a great future, provided the necessary infrastructure is established. We need great projects in this country and we are in fact working on great projects. We are safeguarding the economic future of this country. That is why it was necessary to make provision for the financing of a great new project such as that of the second Sasol. Hence the priorities, as he clearly stated them.

As regards the first priority of the hon. the Minister, namely defence, hon. members opposite do not differ with us. As regards his second priority, there is, however, a difference of opinion between this side and that side of the House. The cry of the Opposition is that production should be stimulated. We are not opposed to that; It is simply that the Government wants to do this in a responsible manner, responsible in the sense that a Budget is not drawn up for one year only. The principle of budgeting for longer periods has been recognized by economists for many years. Years ago Prof. Jacob Viner said—

This Budget is a Budget for the future of South Africa. It is also a triumph for and the confirmation of the National Party Government’s policy for South Africa over 27 years.

Let us consider the figures for our gross domestic product. In 1964 it was R7 209 million and in 1974 it was R22 382 million. Let us consider our real gross domestic product per capita: In 1964 it was R366 and in 1974 it was R477. Let us consider private consumer spending. In 1964 it was R4 463 million, and in 1974 R12 963 million. The Government has ensured over the years, and has done so this year as well, that the structure of private consumer spending remains in equilibrium. It is important that private consumer spending remains in equilibrium. In 1964 the nation spent 10,4% of its total consumption on durable goods. Ten years later, in 1974, he percentage was 10,2%. As far as semi-durable goods are concerned, the nation spent 17,9% in 1964 and 17,6% in 1974. On non-durable goods the nation spent 42,9% in 1964 and 42,7% in 1974. On services 28,9% was spent in 1964 and 29,4% in 1974. It is a responsible Government which ensures this equilibrium in the spending of a nation.

What picture does our foreign trade present? Firstly, the constant upward tendency in the export graph is a triumph for the National Party Government. Unfortunately it is also true that our volume of imports has increased—and if I may say so has increased excessively—but there are reasons for this and these have already been indicated. We have already been given the reasons for the high import rate. There was, for example the enormous increase in the import price of fuel, and there was the increased prices of other imported goods as a result of inflationary conditions abroad. What I find to be particularly important, in the present situation is that our volume of exports to the African states, which I regard as the natural market for South Africa’s products, increased from R113,9 million in 1964 to R451 million in 1974. It is an achievement for the National Party to have succeeded, in spite of a hostile world and in spite of all the problems, in increasing our volume of exports, particularly to the African states, in this way.

The National Party Government takes good care of South Africa and its people. This, taking good care of South Africa and its people, is the principal requirement in regard to a Budget and a financial policy. The hon. member for Ermelo referred to the amounts which are being apportioned in the Budget to the various sectors, and I therefore do not want to repeat this. I want to state today that the country’s citizens are proud to be able to pay tax. Economists and politicians are agreed that although taxation is usually seen as a nuisance, something we do not like—no taxation is ever popular—it nevertheless engenders a measure of pride in the payer that he is a citizen of a country and is able to pay tax.

The combating of inflation is a matter for each one of us and not only a matter for the Government. There are many ways in which each citizen and each business concern, each entrepreneur, in this country could combat inflation. The recent Easter week-end proved to be another revelation of how extravagantly our people live, how they drive on our roads and how much money they spend. It was worse than Christmas. Saving is the only way in which capital may be created. If we have a task, then it is to encourage our people to save, and it is possible to save in spite of the high cost of living.