Mr. Speaker, I am sure you will allow me to refer to a speech made yesterday by a young member of this House, a member who has only been sitting here a short while, viz. the hon. member for Florida. His speech followed that of the chief Opposition spokesman on financial affairs, the hon. member for Constantia, and in my opinion it was an exceptionally effective speech. I want to convey to him my sincere congratulations and I want to say that he is an hon. member who will be giving the Opposition a lot of headaches in this field.

†Mr. Speaker, I should like immediately to come to grips with the hon. member for Constantia, who yesterday castigated the Government for what he called our failure to deal with inflation. In that connection he specifically referred, amongst other things, to excessive Government spending, the excessive issue of credit and money, and so on. I do not propose to talk on inflation as such. I am sure that my colleague, the hon. the Minister of Economic Affairs, will be saying a good deal about that. The hon. member for Constantia himself had to concede that there has been a fall in the rate of inflation of late. That is undoubtedly so. The rate has in fact steadily fallen since the last quarter of 1974.

1974?

As far as the money supply and credit are concerned, I honestly do not know what the hon. member was referring to. If you look at the official statistics you will find that the growth rate of the economy in 1975, measured in current rand, was something like 14%—this is a preliminary figure. Against that the increase in bank credit to the private sector in 1975 was 16%. In 1973 it was 36%, in 1974 it was 19% and last year it was 16%, against a growth rate of at least 14%. I would very much like to know from the hon. member what this issue of bank credit should have been. Should it have been curtailed still more, when we were in a downward phase of the business cycle, and in a world which is wallowing in an enormous depression? What would have happened to our growth rate? Exactly the same goes for the quantity of money, the money supply. In 1973 and 1974 the increase in the supply of money was 23% each year, and last year it was 15%. Now, what is the hon. member getting at when he refers to this excessive issue of money and credit? And talking about that, the hon. member also referred to Government spending. It is perfectly correct that in the 1974 budget Government spending increased very substantially, but the hon. member knows that the Government had a very substantial backlog to make up on Defence expenditure and equipment and on essential economic infrastructure. These are crucial things. If the Government had not taken that step 18 months ago I wonder what the position would have been today. And, in the subsequent budget, which I had the honour to introduce last March, there was also a fairly substantial increase in Government expenditure, though not as high as the year before, for the same reasons. I have, however, placed myself on record in the last few months as saying that it is my policy and the Government’s policy that in the next budget we are going to see to it that Government expenditure in real terms will in fact be reduced. Sir, that takes some doing. [Interjections.] It takes some doing because you cannot simply turn the tap off.

The hon. member, after all, must know that the Government has very big and very many contractual obligations which it has to honour. There are also escalations in costs. Is the hon. member suggesting that we must retrench the Public Service? Is the hon. member suggesting that we must reduce public servants’ pay? This is a very big part of Government expenditure. As far as the Public Service is concerned, I take my hat off to them, because for 18 months the Public Service has had no general increase in salaries at all.

Are you proud of the situation?

That shows a very fine attitude on the part of the Public Service, and therefore I query and reject the criticism of the Opposition that the Government is simply indulging in a spending spree. I reject it, on the facts, out of hand. I would like to go further and say that there has been a great deal of criticism in certain parts and certain newspapers and amongst certain Opposition members during the recess to the effect that a huge deficit has apparently been built up in the Government’s finances. But what are the facts? In the last budget we said that the deficit—this is the deficit before borrowing, in other words the deficit before Capital Account receipts are taken into account—i.e. if total expenditure is put against current revenue plus loan recoveries—would be R1 125 million. In the very difficult financial situation that has emerged world-wide, this has increased; of course the deficit of R1 125 million has increased. However, on the facts I can today make the statement that the Government has this situation completely under control and we will cover the deficit in a substantially non-inflationary manner. Many governments in that situation run to their central bank. It is a great temptation to borrow on short term from your central bank, but that is, of course, an extremely inflationary thing to do. We have set our minds against that from the start and we are doing everything possible to cover and finance this deficit in as non-inflationary a manner as possible. I would like to inform the House that we are succeeding very well indeed.

Since we last met we have in fact obtained twice the amount we budgeted for in March from the public in voluntary loans. We issued a 25-year loan a few months ago. How many people did not tell me that we would be lucky if we got R50 million? We got R200 million. What is a finer and more convincing proof of the public’s faith in the Government of their country than the financial support they give it in this way? Exactly the same thing happened with the 4-year loan of 8¼% we issued in December. I can refer the House to at least two reports in Johannesburg newspapers in which it was said that we would be lucky if we got R20 to R25 million. We got R90 million. The same goes for overseas. When one has to sit and listen to the derogatory way in which some of our friends here talk about our economy, I wish these gentlemen could be with me when I talk to the top bankers in one country after the other, as I have had the honour to do. In America, for example, one of the leading banks in the world organized a syndicate for us to raise a very big loan in the United States. I have the printed report which this bank drew up after sending qualified people here to study the economy first. They do not simply do these things in a vacuum. When one contrasts this report, a careful and objective report by experts from America on the South African economy, with the sort of thing one hears in this debate and elsewhere from Opposition quarters, I can only say that we cannot be speaking of the same country.

The same thing goes for the International Monetary Fund. A few months ago the IMF sent a very highly qualified team of investigators to investigate the South African economy, as they do from time to time in member countries. I can tell this House today that it does one’s heart good to read that report. That report was drawn up just after the time of devaluation and there is not a single word in that whole report criticizing the Government for having devalued. Not once throughout this very thorough and careful report do they criticize the Government, but will come back to devaluation in a moment.

What has the Opposition done? They have completely misread the signs and they have completely forgotten that the world is in the greatest depression that it has been in since the great depression of the 1930s. This is absolutely generally conceded. They have forgotten that there is such a thing as a business cycle and that at times one moves up on the cycle while at other times one moves down. The Opposition has also forgotten that we were in the downward phase of the business cycle last year. [Interjections.] Of course we were. Many countries were in the same position, but we did not go half as far down as they did. If one looks at the position—I have official statistics here—of the growth rates in all these countries, one finds that they are negative, negative, negative as one goes down the list. These are countries which led the world. In other words, their standards of living are falling to this day. Some of them have been falling for 18 months successively and they still are. I do not have to mention the unemployment figures, but the unemployment figure in Western Europe and America is running into 10 to 12 million. In America alone it is 8½ million. These are figures that have not been seen since 1930, 1931 and 1932. This is the position in the world. This is the world in which we are living, trading and in which we are taking our part.

There is another grave error of judgment which the Opposition made and that is that they reckoned without the South African economy. They reckoned without the strength, resilience and versatility of the South African economy. Where does South Africa stand in this world of depression? There is no country that I know of, and I have done my best to study the statistics fully, which in this world depression has had a more magnificent economic performance than South Africa in the last 18 months. I can give you the figures on employment, growth, balance of payments and on all the other important indices that we use as a criterion for such a statement. That is the fact, but what happened? As we went along last year, we got to about mid-year and we found that the Russians were selling gold on a big scale and the price tended to be depressed. It went down to the 160 or 164 dollar mark at about mid-June. What further happened at that time was that world authorities like the OECD and others revised their estimates of the prospects for the world economy and came out with a much more serious forecast of the prospects ahead. Where, by the middle of June, it had been authoritatively stated that America would be well on its way to recovery and that there would be signs of a recovery in Western Europe, there was nothing of the kind to be seen. It was that fact and the fact that Russia was selling gold on a big scale which made things difficult for us. So we continued, but we had the situation in hand. We could have continued on the basis of our export trade, gold and our import policy. We could have handled the situation on that basis, but round about September we had the interim committee of the IMF dealing with gold, exchange rates and so on. This committee came to an understanding on gold which I shall not have time to handle today, although I hope to do so very shortly in this House. The results of that were that central banks for the first time would now be able to buy gold and banks or monetary authorities would now be able to use gold as official collateral security for loans. Those facts mean quite clearly that gold’s position as a monetary asset was being strengthened. That fact was put to the world completely the other way around and the world was told that gold was now being phased out of the system, or demonetized, and down went the price. We were in Washington and we reacted within hours. We issued a statement to say that this was not correct in our view. Since then I think I can say that practically every informed authority on these matters has come round to agree with us that gold’s official position has in fact been strengthened as a monetary asset.

It stands at the moment at R126.

Of course, but that does not mean to say that when you have a huge psychological onslaught with all the mass media aimed at one thing, and that is to depress the price, the price does not tend to be depressed. We said too it would unfortunately be depressed. I shall come back to that. I at once want to say here that my confidence in the longer term prospects for gold remains completely unshaken. I shall give my detailed views to the House on that at the first opportunity. The misinterpretation which went worldwide of what in fact transpired in Washington at the IMF—forced the gold price down and it was forced down again by the events at Jamaica. The IMF interim committee earlier this month said they were now finally going to sell 25 million fine ounces of gold over a period of four years but they could not tell us how. They still do not even know when they are going to start. And of course these factors have been disadvantageous for gold in the short run. The effect of that was that the price fell from June to September by 30 dollars a fine ounce. Can you imagine what difference that makes to the balance of payments in this country and indeed to the revenue, the profits of the gold mines and therefore to the State’s revenue? That was the situation which suddenly hit us. When that happened, what did people do? A number of people in and outside South Africa speculated against the rand on a large scale—so much so that we lost more than a hundred million rand a week in certain weeks. No matter what the Opposition say as to what we could have done other than to devalue, they have not dealt with that fact. The hon. the Prime Minister singled that out when he explained on a particular occasion why we had to devalue. We were faced with this very serious disadvantageous position on the leads and lags together with the speculation against the rand and the tremendous drain on our foreign reserves. We had to handle that and we had to reverse that. It is no use talking about deflating to contain that position. You cannot do it. It is no use talking about import control because in these circumstances it does not work. We immediately had to take action which would reverse the leads and lags and safeguard those reserves that were going out by the hundred million. That is why, when it came to 20 September, we had already been discussing this with the Reserve Bank, the financial sector and all our best people in great detail, and we had no hesitation whatsoever, reluctant as we were, to do it—it was the last thing we wanted to do—we devalued the rand. The hon. member for Hillbrow—just as a little diversion I see he is in a very happy mood today—at one stage said: “Mr. Vorster says fatuously that if you seek advice from five economists you get five different answers”. Mr. Speaker, I can only say thank goodness he was not one of the five because then you would have got six answers, two conflicting answers on the same problem. Respecting that, the hon. member for Yeoville—I do not see him—has been extremely quiet this session. I do not know what is wrong with him. He appears to be speechless in the fact of the hon. member for Sea Point and the hon. member for Houghton. But, talking about inflation, the hon. member for Yeoville inter alia said: “We must not devalue” and amongst the remedies given to us as alternatives he said: “We must campaign to encourage the public to buy South African products.” That is one of the things he said in that famous article in The Sunday Tribune of 28 September. And then on Saturday The Cape Times, in reporting on some of the personalities and events at the opening of Parliament, had this to say—remember, the hon. member said we must campaign to encourage people to buy South African products:

When was I last in Paris? Years ago, my friend.

But that is not all:

Then The Cape Times added this little touch:

At least she has good taste.

To come back to devaluation, Mr. Speaker, I want to make a very brief reference to what I said when we devalued in September:

Devaluation, within four months, has done both those things. I have the facts. I went on to say—

It has done exactly that, but it has done it far more effectively than even I could have hoped. What are the facts after four months? In the last quarter of 1975 our merchandise exports were running at a seasonally adjusted annual rate of R4 000 million, as against R3 300 million in the quarters before that. Our current account deficit, which had been running at R1 900 million per quarter, dropped to R1 300 million, which includes the seasonal adjustment, during the last quarter of last year. As a result the deficit on the current account of the balance of payments for the whole year is less than R1 700 million and is in fact declining. That is the position. I was criticized after saying this. I said further—

What would have been the position of the gold mines had we not devalued? The gold price today is something like $125-126 an ounce. If we take into account the rand value as a result of devaluation, we know that the gold price in South Africa today is about what it was on the average for the whole of 1974. It is very little below that because we devalued and gave the gold mines that benefit. That has given the gold mines a new lease on life. [Interjections.] The hon. member for Houghton who knows something about these things will agree with me. It is generally agreed that this has given them a new lease on life.

It has meant that their profit position has been safeguarded, and that again has assisted the Government with its own finances. I hope that is not what is worrying the Opposition, Sir. That is the position. I also said several other things. I want to come to the Capital Account. Let me say that this devaluation was not a panic measure, as my hon. friend said yesterday. It was not as the result of any mismanagement or of misjudging the signs. Sir, it was a deliberate and carefully taken policy decision after weeks and weeks of study by the best people we have at our disposal. There was complete agreement that this was the only thing we could do and I say it was a common-sense thing, indeed the only thing we could have done. I can call to my aid in this, if I need it, some of the most authoritative opinions both here and abroad with whom we have discussed the matter time and again. That is the position. Sir, take the Capital Account. Last year we received R1 800 million of capital in this country, and this at a time of great capital stringency in the whole world, where some countries have not been able to obtain their capital requirements by far, and this is one of the highest figures we have ever had. [Interjections.] And in the fourth quarter we got the biggest capital inflow of any of the quarters of last year, and a big part of this capital has been private capital, a very substantial part of it. Sir, I say this is cause for great gratitude in a country like South Africa. Is this not a sign of international confidence in this country? Is it not one of the best indices of confidence in a country when people are prepared to invest their savings in that country?

And look at the reserves, Sir. The Reserve Bank’s gold and foreign exchange reserves were R729 million at this time last year, in the beginning of 1975. Sir, in the beginning of 1976 they were R940 million and today, despite the big drop in the gold price again, they are R926 million, on Friday last. You see, Sir, when we devalued by nearly 18%, we deliberately did that in order to provide for any subsequent fall in the gold price. Had we not done so, how would we have stood today where the gold price, as the result of Jamaica, has fallen again? I say this is to the credit of the Government. What is this excessive devaluation of 18%? The great German mark, between February and September last year, depreciated 15% against the American dollar, i.e. in seven or eight months. That is not mentioned. What is this tremendous devaluation? If we had not done that, where would we have stood today? But in all conscience, everything we said we thought would be the result of this devaluation, has already come to pass in four months.

The hon. member for Hillbrow said on 28 September that the result would certainly be that the rate of inflation would go to 20%. Sir, the rate of inflation in the last quarter of the last year has fallen. The hon. member for Yeoville was not much better. In the same newspaper, right alongside, he also said that unless the Government did all sorts of things it would be 20%. But we are nowhere near it; so the Government must have done the right things. But the hon. member for Hillbrow, talking for the Opposition, excelled himself, because he said that what we were doing was that we were heading for bankruptcy. That is what he said on 28 September, that we were heading for bankruptcy. [Interjections.] The newspaper said so. Is the hon. member denying that he said it? Because in quotes it said that Dr. Jacobs said we were heading for international insolvency. Here the words are. Sir, I am sorry to say it, but it is a very scandalous thing to have said. These are the things that get bandied about. They are not true. I know my time has virtually expired, but I want to say that despite this onslaught on gold and despite this derogatory sort of criticism of this Government, even by members of the Opposition, the finances of this country are sound; they are stable and the economy is in very good shape indeed, in a hopeless economic world. Our economy is still sound and strong, and the prospects ahead are excellent All it needs is a little faith in your own country, and I ask the Opposition to show it. I say it is not too late for them to show that faith which we show every day.

Mr. Speaker, we have heard from the hon. the Minister of Finance a classic defence of the obsolescent economic and financial administration of this country. We are all aware, from the events of past months and from the discussions of past days, that things have changed fundamentally for South Africa in this continent and in the world. The hon. member for Bezuidenhout suggested yesterday that we need a new foreign policy in the sense that fundamental adaptations have got to be made to our foreign policy. I want to say that our financial and economic policies also need a new look. They need a hard new look. Listening to the hon. the Minister, who, as I say, made a spirited defence of obsolescent policies, one was reminded of an old film melodrama where the handsome hero goes running around trying to save the girl and her old homestead against a diabolical plot of a couple of dark villains—who have now been identified as the leads and lags—who threaten the homestead, and eventually are driven away at the cost of enormous damage, all damage being justified as long as they are chased away. Sir, this old-fashioned melodrama has got to end. I believe the time has come to modernize our financial and economic policies and to take a new look at them.

Sir, I have said that we are living in changing times and that the lessons of Angola should have taught us to take a radical new look at our situation. We certainly need a strong economy if we are going to meet the demands that are being made upon us. I believe we must be ready to meet greatly increased defence expenditure. We must obviously be ready to meet growing demands for infrastructural and growth capital. We must be prepared to meet very heavy demands on social development costs in order to create a new society in South Africa. These things must be done, and they can only be done if we are able to draw on a powerful economy. Here we find ourselves in total agreement with the hon. the Minister. We on this side of the House believe that South Africa has an inherently powerful economy. Our complaint is not about the quality of the South African economy; our complaint is about the manner in which it is being administered through our economic and financial policies.

We have been asked to accept the most improbable proposition, viz. that you can have a strong economy and a weak currency, that these things go together. Sir, nothing could be more inconsistent or incongruous than to suggest that a strong economy goes hand in hand with a weak currency. It is palpably ridiculous. We believe that the weaknesses of our currency are due to nothing but the serious mismanagement of our monetary policies.

Let us look at the recent history of the rand. Let us look merely at the past four years. In 1971 there was a devaluation of over 12% and it took place under conditions of slow growth, high Government spending financed by inflationary methods. It was in these conditions that that devaluation took place. The Minister of Finance of that period produced the same classic arguments in defence of devaluation as we now hear. He also said the following on 14 February 1972 (Hansard Vol. 37, col. 953)—

I repeat “regarded as final”. That was at the commencement of 1972. In June 1975 we had another devaluation of about 5%. This was described as part of a new exchange rate policy which did not imply any significant devaluation of the rand, but which should be seen as a precautionary move to prevent an undue appreciation of the rand in the period ahead. However, at that stage the Minister did not say that the move was large enough to be regarded as final. That was just as well, because in September we had a further devaluation of 18%, again in a period of low growth and high Government spending, financed by inflationary methods. In this “mature” situation we decided to devalue again. The three devaluations in four years represent a total devaluation of 35%. In compensating for devaluation, in relation to other currencies, we find ourselves at a disadvantage of between 40% and 50% in relation to most foreign currencies and at a disadvantage of 20% in relation to the dollar. This was all happening in spite of a fourfold increase in the price of gold. This devaluation, this weakening of our currency, took place in a period when the value of gold was being increased fourfold. The rand is weaker now even than the Italian lira or the Portuguese escudo. This is the case in a period of mounting inflation when imports constitute 35% of our consumption. The hon. the Minister says it is misleading to assume that devaluation will lead to a fall in living standards. This is like saying “your arm is not in very good shape; let me take it off; you will feel better after the amputation”. Devaluation is, in fact, an open admission of the defeat of the Government’s monetary policies. Devaluation is the price we pay for the Government’s mistakes and the consequences of those mistakes are being rectified at a time when inflation is riding high and when any further increase in inflation would be an intolerable imposition. I would agree with the hon. the Minister that he is correct in saying that inflation was being reduced as from about the fourth quarter of 1974. There were beginning to be hopeful signs that we might even get into single-figure inflation. It was at this time that inflation was given a further boost by devaluation, the effect of which has not yet been fully seen.

Let us look at some of the events and mistakes that made devaluation necessary in the Minister’s opinion. In the last two years we have had a growth rate in our domestic product of the order of 2% per annum. In the year 1973-’74 public spending went up by 23%. In the next year, 1974-’75, it increased on that figure by 24%, and in the budget for 1975-’76 an increase of 19% was budgeted for. At the same time the quantity of money was increased by the amount of 19%, and all this in a period of slow economic growth.

Let us look at the question of gold. I am only going to touch upon these matters briefly in the time available to me. One of the gravest mistakes that was made was that this Government, which made propaganda for an ever-increasing price of gold—and no doubt was well motivated in making that propaganda—made the cardinal mistake of beginning to believe its own propaganda. It became so convinced of the rightness of its own propaganda that it remained immune to the realities that were beginning to appear on the horizon. The necessity for the Russians to buy wheat did not occur only in June. It was foreseen by a number of experts in America and elsewhere who began to prepare for precisely that harvest shortage. We all know, because it has happened on numerous occasions, that when Russian wheat harvests fail, they come on to the Western market and buy wheat for gold. When they buy wheat for gold, invariably there is an enormous reduction in the demand for gold. There must be. It is a classic case and I remember reading about it some 15 years ago when the Bank of France produced an analysis of Russian gold sales. World gold sales were related then, as one of the cardinal principles, to the success or otherwise of the Russian wheat harvest. There is a correlation between the Russian wheat harvest and the appearance of Russian gold, platinum and diamonds on the world market. This is a fact of economic life we have to recognize and use as an indicator or signpost for our future conduct in this regard. There was the IMF indicator. Here again there was evidence that the American Treasury and the IMF were in fact trying to put pressure on gold through the international monetary system. There again was reason for caution. However, we continued to talk and spend as though gold were going to go up and up forever.

Let me now come to the question of reserves. The hon. the Minister said a little while ago that there had been an improvement in our reserves to a level of something like R900 million. Our reserves have stood at approximately R900 million or R1 000 million for the past four or five years and I want to ask whether this is, in fact, an adequate reserve for a country like South Africa. There is a rule of thumb system used in most countries. I do not say it is a fool-proof system, but by rule of thumb it is usually said that one’s reserves should be equal to about three months’ imports. Our reserves have thus far stood at or below R1 000 million. Our imports have risen from R800 million per quarter to R2 000 million per quarter. This means to say that our reserves do not, in any way, accord with the three months’ rule. Even if one concedes that this is a very arbitrary rule, let us look at the reserves in relation to the balance of payments situation. Our balance of payments deficit has been growing steadily. If the figures hold good for the last quarter, I believe this year we must expect a balance of payments deficit of R2 000 million for the year. This is an approximate figure.

On current account?

Yes, on current account.

For 1975?

For 1975. We have the figures up to the third quarter of this year and the total for the year looks very much to be approaching the R2 000 million mark. The hon. the Minister mentioned a figure of something like R1 700 million, and I believe that give or take a slight improvement or a slight falling off, the figure cannot be very short of R2 000 million for the year.

No.

Be that as it may, the exactitude of the figure is not all that important. I am relating it to the question of our reserves. I believe that at a time when we were doing well on gold, when, in fact, we were getting a good revenue from gold, when we were in a safe position, instead of using these revenues for a bout of wild extravagance and over-budgeting, we should have built up our reserves to a situation which is more in line with the degree of our need for savings, the volume of our trading and the nature of our situation in the world, including the uncertainties of which the hon. the Minister has spoken: the uncertainty about the price of gold and the uncertainty of the economic cycle. I believe a reserve figure of R1 000 million is totally inadequate for South Africa in this day and age.

The hon. the Minister has spoken about leads and lags. We know that leads and lags are the villain in the piece, but are they really as villainous as he imagines? After all, they tend to come and go. They also have a cyclic effect and in the long term leads must be roughly equal to lags; the effects must roughly equal out. It is in the very short term that they do not. Here again adequate reserves would in fact provide a safeguard. Where I believe that the administration of the hon. the Minister has fallen down is that there is not sufficient thought given to the possible effects of leads and lags, there is not sufficient prediction taking place and there is not sufficient exchange control to keep these things in line.

If one looks at the balance of payments situation over this past year, again to the extent that figures are available in the Reserve Bank Bulletin, one finds that there was not a major run on the rand. On current account one finds that the figures up to the end of September proceed more or less in accordance with the general trend. On capital account there was an improvement up to the end of September. There was not a heavy run on the rand of any length of time, of any period, which is disclosed in these figures as being disastrous in effect.

Short term loans.

Yes, short term loans. In so far as the South African trader is concerned this surely falls under the control of the exchange control regulations. One admits that there is a degree of flexibility and there must be. However, to pretend that leads and lags are wholly uncontrollable, wholly unpredictable and cannot be dealt with except by these drastic measures of devaluation, I simply cannot accept. I believe that the hon. the Minister must have another look at his administration. We are living in difficult times, we are living in dangerous times and we cannot go along with these obsolescent methods. He needs a good, hard look at the administration of these matters.

There is the question of foreign loans. I believe that shortly before devaluation the hon. the Minister not only borrowed heavily, but also encouraged the private sector to borrow heavily. We now have the situation that having devalued in respect of obligations incurred also by those new foreign loans, we have to meet charges on loans amounting to R48 million per annum on service charges and additional repayment costs totalling R145 million. These figures were received by courtesy of the hon. the Minister. We also asked for the figures for the Post Office and the State corporations. My colleague, the hon. member for Constantia, sent his question in during November; we have not yet received replies from the State corporations.

That is one of the lags.

There is a lead or a lag for you. I should like to know whether the absence of a reply is due to the fact that they still do not know. Have they still not calculated the cost of these loans in terms of devaluation? It looks as if they have not calculated them and if that is the case, then surely there is a sad lack of control by the Treasury and a sad lack of control by themselves. How can we enter into these commitments if we do not count the cost? They simply do not know what the cost is. I cannot believe that they are wilfully withholding from us information which they have at their disposal.

The hon. the Minister of Economic Affairs will reply. [Interjections.]

In some degree the hon. the Minister has my sympathy. He is trying to conduct a financial and monetary policy against conditions which really make things appallingly difficult for him. There is the Bantustan policy which he has to accept where, according to the Economic Advisory Council, the increase of expenditure through the development corporations and other service funds is rising at the rate of 21,5% per annum. There is a 21,5% increase per annum going on right now while the Bantustans’ contribution to the total gross domestic product of South Africa in all these years since 1959, in respect of which these figures have been calculated, is still under 3%. There is unproductive expenditure of money on a scale that makes one’s hair stand on end. This is what is going on.

One could refer to the Physical Planning Act. In terms of that Act we have the work forces being pegged down to levels established in 1968. They established certain levels of employment and manufacturers, producers, entrepreneurs, developers of the South African economy, are still obliged to stick to labour figures established in 1968. There have been cases where, if they departed from these figures, they were fined R10 per worker per day. This is an economy in a strait-jacket.

My time has nearly expired, but I want to say that South Africa has natural reserves and resources to make it one of the strongest economies in the world, and there we totally agree with the hon. the Minister. If we are to achieve the effects of this strength, if we are to exploit this strength, if we are to become one of the strongest economies in the world, then we must seek our answer through productivity. Productivity is what is needed.

We believe that devaluation is an act of retreat, an act of failure, an act which provides only brief relief from a situation created by maladministration. Devaluation is classically described as a method of improving your exports and reducing your imports. When one looks at the figures shown on the balance of trade following last devaluation, one finds that in so far as imports are concerned the devaluation in the South African situation makes very little difference because the situation in South Africa is inelastic. It is inelastic because most of our imports are in fact necessities. They are machine tools and other materials which are essential to our economy. If the hon. the Minister would take the trouble to look at the figures of the Reserve Bank he would find that over the years there has been a steady increase in our imports from abroad despite devaluation. There is no great fluctuation in spite of devaluation.

Has the volume not been falling since devaluation? Of course it has.

It is all very well to talk about the volume. If one is trying to rectify a financial situation and you then talk about a change in volume but end up with precisely the same financial situation, then what good have you done? You are back at square one.

I am sorry, but you are completely wrong. The figures do not say that.

I am prepared to discuss the figures with the hon. the Minister at his leisure. As regards exports we find that there is in fact a steady improvement going on and one finds that in the case of the year 1972 there was quite a marked improvement in exports. Improvement since then has been steady—I believe it will continue going up steadily—very largely by virtue of improved inducements and incentives to exporters. I believe if you look at these factors and you were to draw a graph, you would find that in the South African situation devaluation does not make an awful lot of difference. You will find, that a lot of our major exports are in fact commodities such as minerals. Minerals are sold very largely on long-term contract. They are sold in terms of commodity prices fixed abroad. The fact that they bring in additional rands, more devalued rands, does not mean to say that there is an improvement in our real financial position.

You cannot argue the facts away.

The fact is that the hon. the Minister is applying a method that, on the evidence of the published figures, shows that devaluation in South Africa is an outmoded remedy which does not bring about the effective results one expects of it. What it does is to increase the cost of imported goods and hence add greatly to inflation.

We have in South Africa the makings of a very powerful economy. We have a private sector which is extremely powerful and has the ingenuity and skills to add new life to our economy. It is restricted and shackled by Government policies in many important directions. Nevertheless it struggles forward and has been making steady progress. What it does not need is an economic and financial administration that brings the economy to its knees from time to time by such measures as devaluation. The hon. the Minister may argue as much as he pleases, but nobody in this world will believe that a strong flourishing economy, an economy that must be strong, has to go hand-in-hand with a weak currency. That is an incongruity we simply cannot accept.

Therefore we say that, despite all the arguments of the hon. the Minister, it is time for him to take a fresh look at the financial administration of this country. He must review the monetary policies. Whatever the classic justification for these policies may have been, they need a good, hard, new look taken at them in the times in which we now live. I believe these policies have to be radically revised. We cannot go on having recourse to devaluation and then justifying such devaluation in terms of outmoded classic arguments. How many more devaluations are we going to have? We have had three in the last four years. How many are we going to have in the next four years? Each time we have one, it is said that it is the final one. Well, I hope that this one is the final one because devaluation should not be necessary in an economy such as the South African economy. It does not work very well in the South African economy; it does an enormous amount of harm. I believe that we in this House and in this country are no longer prepared to listen to the explanations given for such desperate remedies. We are no longer prepared to listen to the constant deviations and improvisations which are backed by wordy explanations and justifications of what should not be happening in the South African economy. We have a strong economy and do not need a weak currency. We do not need these devaluations except as a desperate remedy for maladministration of our financial system. That is the only justification that can be valid in an economy such as the South African economy.

Mr. Speaker, I shall refer in general terms to the contribution by the hon. member for Von Brandis. In my opinion there are at this stage two matters in respect of which the record should, in all fairness, be set straight. In his criticism of devaluation the hon. member makes the qualitative statement that since 1971 the rand has been devalued by 35% to 40%. If that indicates the depth of his financial argument, I want to point out to him at once that since 1974 there have been at least seven appreciations and six devaluations of the rand. Apparently he has failed entirely to take these into account. One asks oneself with what motive he has done so.

There were only minor adjustments.

The fact remains that the effective, in other words the weighed, exchange rate of the rand, measured against all other monetary units, remained constant from 1972 to 1974. The hon. member merely added the depreciation percentages on the three occasions together to get the figure he quoted. A second important statement was made. The hon. the Minister said that one of the reasons for devaluation was to be found in the speculation against the rand. The hon. member links this to a low or high growth rate, but surely that has nothing to do with the current account. Surely that has nothing to do with high or low growth rates. After all, it refers to transfers of capital which led to devaluation.

I did not link them.

The question which then arises is what the hon. members opposite propose we should have done, since alternative measure were possible. However the hon. members did not discuss the alternatives, they merely adopted a negative attitude.

I want to say in general that to me, the fact that hon. members are using the No-confidence Debate as an opportunity to express financial and economic criticism of the Government is quite reasonable. One cannot object to that. What I do object to, is not the fact of the criticism, but the way in which it is being done. I want to say at once that I want to describe it as irresponsible and I should like to motivate my statement in this regard. It is transparently obvious that the political prejudices of those hon. members opposite who have taken part in the debate thus far, have entirely overshadowed their supposed financial objectivity and that their contributions thus far, to put it euphemistically, have been nothing more than a stream of stereotyped banalities and superficial contradictions. Let me prove this by referring to two statements only. One of the statements was made by the hon. member for Constantia and the other by the hon. member for Cape Town Gardens. Let me just test their arguments. The hon. member for Cape Town Gardens states that he charges the Government with not using the increased revenue from the higher gold price to aid the man in the street. On the other hand he criticizes the Government for having in fact utilized it for the expansion of infrastructure services which form the basis of the growth which they advocate. There is a second facet I want to mention. The hon. member for Constantia, in turn, states that the world recession and the drop in the gold price caught the Government napping. He maintains that these things were foreseeable. I want to ask the hon. member whether it was foreseeable when the hon. the Minister introduced his budget last year. If the hon. member for Constantia possesses the exceptional ability to be able to see into the future, then he possesses an exceptional ability to hide his insight in this particular regard. I have difficulty in imagining an attitude more negative than the display we had yesterday, and even today.

I have difficulty in imagining a more negative attitude than the contribution of the hon. members who have tried to sabotage the joint effort on the part of the private and public sectors to win the economic war against our biggest economic foe, namely inflation. It is pointless for the hon. member for Constantia to say that they support the steps taken by the Government and the private sector in the fight against inflation if he immediately goes on to slate it as a fraud and a pretence and to state directly that it is the Government alone which is to blame for the rates of inflation which we are experiencing.

What does the hon. member do? Having paid lip service to the principles contained in the programme, he requests the other participants not to take part, not to make a contribution. He says that they are not the cause of the problem and that they have no contribution to make to its solution. I think this is scandalous. It is pointless for the hon. member for Von Brandis to refer in such terms to the new demands which the situation in Africa makes on us. It is pointless, too, for him to appeal for a sound economy if his colleagues on the other side of the House continue, as they have been doing, to disparage, here and in public, the steps we are taking to ensure that which he is pleading for.

What is the essence of the criticism, the conclusion to which we are forced after having listened to all the hon. members on the other side of the House who have spoken thus far. It is that the present situation of inflation is ascribable in the first place to financial and economic mismanagement by the Government and that it derives from the creation by the State of excessive money supplies, from over-expenditure, from the financing of over-expenditure in an inflationary manner and the State’s failure to protect the public against exploitation. If the State alone were to be responsible for inflation, then surely it would also be the State which was exploiting the public, because according to the hon. members on the other side of the House, the private sector has not contributed towards the development of the problem.

In the second place they criticize the hon. the Minister in regard to what they call the unjustified devaluation of the rand. Another important aspect of their criticism is the alleged failure on the part of the Government to maintain the economy at a higher rate of growth, particularly in view of the increased defence expenditures they expect. As usual they cover themselves on both fronts. I am pleased that they have given defence expenditure a high priority. I hope that they will approach all security measures which may be introduced, in an equally patriotic spirit. There is no doubt that inflation is one of the most serious economic problems in the country, in fact in the whole world. I do not believe that the end is in sight in this regard. I believe that as growth rates in other countries increase, their rates of inflation will accelerate and their problems will become more serious. Let the hon. members for Constantia and Cape Town Gardens try to make political capital out of this situation. I do not believe that this will lead to rational and sober thought or action.

The hon. members say that they support the action programme against inflation. However I want to ask what they have done to associate themselves with that programme. What have they done to associate themselves with a national effort to combat a national threat? If, in the expression of their opinions, the hon. members opposite were to exercise the same self-control which is such an important component of the action programme, then we would have progressed a long way. Let me emphasize this, because it seems to me that the hon. members opposite see South Africa as being totally isolated. Surely it is a fact that South Africa is a far more important and far bigger trading country than is generally accepted. It is a fact that of the 129 countries of which the International Monetary Fund is made up, South Africa is among the first 16 trading powers. Let me qualify what this means. During 1974 our exports, expressed as a percentage of our gross domestic product, amounted to 35% and our imports to 31%. Surely, then, it is axiomatic and goes without saying that South Africa is unable to escape developments in the world and that economic and other events in the world must necessarily have an influence. In this particular respect the developments are passed on to South Africa via the balance of payments. I do not have time to go into detail. I am merely stating the fact that South Africa comprises a large and important part of the world economy. Over the past two years, South Africa and the world economy have simultaneously been faced with three economic “diseases”, namely recession, inflation and balance of payments deficits. The hon. members opposite argue as if they are able to isolate themselves entirely from the existence of these developments. Let me refer to the first of these, namely the most serious economic recession which the world has experienced since the thirties. About this there should be no doubt: Of course there will always be fluctuations in our economic system. Never before, however, has the recession been so deep, nor has it lasted as long as the present one. I ask myself what sadistic pleasure hon. members opposite derive from referring only to the dark side of the picture when talking about South Africa. [Interjections.] I ask myself what confidence the outside world will have in our country if they are to hear and read the pronouncements of hon. members opposite.

Particularly Hill-brow.

I ask myself why hon. members omit to mention the relative achievements of South Africa in difficult circumstances. What are they? Let us take a brief look at the growth rates. The world’s most important industrial countries belonging to the Organization for Economic Cooperation and Development experienced a joint average negative growth rate of 1% in 1974, and a negative growth rate of 2% in 1975. Let us look at South Africa, which is a younger country in terms of development in these fields. In 1974 the rate in South Africa was 7% in real terms and last year 2,25% as against these mighty economies of the world. But this is not the only yardstick. What is the position as regards unemployment, the factor which is not mentioned by hon. members on the other side of the House when they are attempting to present an objective picture of their view of South Africa and its economy? My hon. colleague referred to that. The negative growth rate of these same countries coincided with rising unemployment. In October 1975 the percentage of unemployed was 8,6% in the USA, a total of 8½% million people. In Japan the figure was 2,6% of the work force, numbering 1 million people. In Great Britain the figure was 5,1%, or 1,1 million people.

In spite of the negative growth rate in South Africa, this country has no unemployment worth mentioning. For the Whites, Indians and Coloureds it was less than 0,5%. Let me concede at once that there may be a higher percentage of unemployment among the Bantu. On the other hand, however, the employment of Bantu, the growing numbers in this regard, should be considered. I repeat my question: Why do they not present a balanced picture of the conditions in our country?

Inflation is a second aspect. In contrast with former periods of recession which coincided with price stability or with a drop in prices, in most industrial countries the rate of inflation has risen over the past two years in spite of the more active growth and in spite of mounting unemployment. During the period from November 1974 to November 1975 the price level in the following countries rose as follows: West Germany, 5,4%; the USA, 7,3%; Japan, 8,8%; Italy, 11,3%; and the United Kingdom, 25,2%. During the same period we still maintained a real growth rate and experienced no unemployment worth mentioning, while the rate of inflation during this period was 12,3%, whereas from December 1974 to December 1975 it was 11,7%. Now the hon. member for Constantia comes along and maintains that we have lost the fight against inflation. He accuses the Government of having done nothing to protect the consumer against exploitation and monopolistic conditions. If that were true, the criticism would have been justified. However, grave doubts arise as to the hon. member’s credibility as a result of his statements, because they are untrue. I am going to tell the hon. member who does not agree with him, apart from the hon. members on this side of the House. The Federated Chamber of Industries does not agree with him, the Associated Chambers of Commerce do not agree with him, the Handelsinstituut does not agree with him, the workers’ trade unions do not agree with him, the Chamber of Mines does not agree with him, the private sector does not agree with him, the Consumer Council does not agree with him and the public does not agree with him either. They have joined the Government in this fight, a fight which is not a dramatic one and which is not always reported in a positive way. The only people who have thus far stood aloof from the national effort are hon. members on the other side of the House. I want to emphasize that in spite of the wilful and one-sided view of hon. members on the other side of the House, every responsible sector in the country accepts that all of us have a share in the cause and consequently a share in the solution as well. The Government is co-operating with these people and they must assist us without recrimination, i.e. without trying to determine who is supposedly responsible for inflation. They must co-operate with us in a national effort. I want to give hon. members the assurance that the Government intends to carry out to the letter every commitment it enters into, and not merely as a task for the future, but as a task for the present as well. It would be foolish to assume that every increase in price constitutes exploitation on the part of the entrepreneur, or that the Government, where they have to allow increases in price, are insensitive to the effect of price increases on the purchasing power of the earnings of consumers or their standard of living. It would be foolish to believe that the Government could rectify the constant stream of price increases by means of drastic interference in the economy by exercising control over prices, wages and profits. The point of departure of the Government in this regard is clear and it is that where such exploitation occurs and is identified, it will not allow it to be continued. I therefore deny the allegation by the hon. member, because the Government has adopted measures to deal with exploitation. It does so under the Price Control Act, under the Hire Purchase Act and it does so by means of negotiations, for example in the furniture industry, in the motor industry, the parts industry and by means of the Monopolistic Conditions Act. Similarly, there are malpractices or undesirable practices in commerce. There are unjustified forms of granting credit. I have given notice of a Bill dealing with the first facet and I hope to come up with further legislation concerning the second facet. The Government has appointed a commission to investigate monopolistic conditions. It has also appointed a commission to investigate alleged malpractices in the pharmaceutical industry. How then can the hon. member for Constantia accuse us of passiveness or even coldness towards the interests of the consumer and say that we have taken no steps? Surely that is untrue. I want to say that if we were to have the growth which everyone is asking for and about which we are criticized, then I believe that we are going to get it through the private enterprises in our economy. That is the proven system which will have to ensure development and possibilities of development in the future as well.

In conclusion I want to say that this effort on the part of the Government—and it is one that is succeeding—does not constitute an anti-growth campaign, because for obvious reasons, growth remains an important policy priority. We made a start with a programme to combat inflation and apart from the monetary and fiscal measures, the control and the Hire Purchase Act, price control, etc., the other steps include the positive part which I want to emphasize.

What is the Government doing to increase production. I should like to urge the hon. Opposition to study the programme, because at this stage I am still under the impression that they have not even read it yet. It contains positive measures which aim to increase productivity in the private and public sectors. Let me list them: The maintenance of a high level of immigration; accelerated utilization of White workers in productive occupations and the reclassification of skilled work without prejudicing the security of employment of the people involved; the accelerated expansion of training facilities, while making them available to adults of all population groups; the expansion of technical training for Black pupils; extension of the care of pre-school children in order to enable women to play a more productive role in our economic activity. Then, too, there are the measures to promote stablization, procedures to determine priorities in regard to the State’s major development schemes, the laying down of cost norms for public buildings which my colleague announced and the investigation into the tax on women to which I have referred. I do not want to make an exhaustive list. I just want to say that in this effort to counter the threat, the State has not hesitated to take a critical look at itself. We are also investigating all restrictions of free competition in the economy of the private employers and the employees’ organizations as representatives of their organizations. The Government regarded this link as so important and genuine that it has committed itself to take upon itself part of the rising costs in salaries and wages and profits. What have hon. members opposite done in regard to this national effort? There has not even been praise for people—they are not sitting in these benches—who have succeeded, by means of difficult and laborious negotiations, in getting the various sectors to sit down together to co-operate in order to counter a national threat. I ask myself whether we should take cognizance of the words or the actions of the hon. members. Of course, many of the steps taken will be long-term ones. They will be contributing towards keeping the cost levels low or lower for many years. I have emphasized that despite the Opposition, the Government is determined to meet its commitments. The programme places a heavy burden on the improvement of managerial efficiency, which must lead to increased production and which will lead to lower unit costs and favourable prices for the consumer. The private sector has committed itself to co-operate in this regard. The entrepreneuring groups have also been prepared to search their own hearts and to acknowledge that they have not reached the levels of production that could be expected of them in view of the input into their enterprises. If the hon. member for Gardens states, quoting from the Bureau of Economic Research at Stellenbosch, that a community cannot take more out of the economy than it puts back, then this does not apply to the public sector only. It applies to the private sector as well. At this stage I want to ask you whether hon. members do not want to commit themselves to what I believe is a great effort to counter this problem, since the consequences of this threat could damage the political and social structure of our country in the long term.

The debate has been taken away by the official Opposition from the major issue of Angola, South West Africa and our security, to economics. We have now had three speakers from the official Opposition on economics and finance. We have had two Cabinet Ministers participating in the debate on this subject. What is in fact quite remarkable is that except for a passing reference by the hon. the Minister who has just sat down, nobody has in fact sought really to get to grips with the effect of the new situation in which South Africa finds itself in so far as the economy of this country is concerned. I would have imagined that that would have been the major topic which would have been debated in the economic and financial field in this House today. The issues of Angola and economics to my mind go together. South Africa is regarded as the power house of the African continent. We are rich in gold and base metals. We are in fact more highly industrialized than virtually any other country in Africa and we have been regarded as a force to be reckoned with in the economic field. This is by reason of the fact that economic might is respected. We have also been regarded as a strong military power in Africa, so strong that in fact our enemies have realistically in the past discarded the possibility of an assault upon us from without. I think it is important to stress at this stage that these two images are vital to South Africa in Africa and in the world in which we are living today, because if anything is done to destroy those two images a tremendous disservice will be done to our country. The poet has said that troubles do not come singly but in battalions. As far as South Africa is concerned, the troubles have come in battalions. I hold the Government responsible for many of our economic problems but I do not say they are responsible for every one of the problems. Far from it.

Gold and base metal prices have taken a tumble. The rand, which has been the epitome of strength in a world of turbulent currencies, has been humiliated by a massive devaluation. Our economy is in a down-turn and our inflation rate gives us the dubious distinction of now being a member of the double figure club. To this we must add a changed situation in so far as our geographic boundaries are concerned, in that we now have to the east a doctrinaire Communist government. We have Rhodesia battling for a settlement in the north. We have South West Africa in the west becoming an increasingly embarrassing international issue. Finally, we have the debacle of a Portuguese government leaving Angola, not to a government chosen by the indigenous people, but leaving a political vacuum. These certainly are troubles in battalions which have beset our country.

There is also no doubt that this type of development has necessitated an increase in expenditure in our defence and that this will necessitate further increases in expenditure on defence. Perhaps it is not inappropriate to draw attention to the fact that as at December 1975 the Exchequer had already paid out R707 million, compared with a figure of R370 million for the same period in 1974.

Sir, there is also no doubt that in so far as this situation is concerned it will add to our inflation problems, and that increased defence expenditure must cause increased inflation. It must also have further economic effects in so far as our young men have to be called up from their jobs and from their training. This must have an obvious effect on our economy. There are perhaps also other effects which in the national interest one does not want to list at this stage. Economies prosper only in times of peace and stability and what is needed is that we should in these debates endeavour to establish how we can contribute towards the peace and stability of South Africa and how we can in fact achieve a situation where that peace can be assured. Sir, this debate has been heralded as being one of the most momentous in South Africa’s history for many a day and we are now in the third day of it. On the issue of Angola it has certainly been established that the Government has disengaged our forces and withdrawn them except for the border areas, and certain issues arise from that which we need to pose today.

The first is that now that the South African forces have substantially been withdrawn not, I believe—and I think I am right in saying this—because of any defeat but by reason of a political decision to withdraw them, will the Western powers and will the African States who objected to the presence of Russians and Cubans now be able to exert enough diplomatic and other pressure to persuade those forces to leave? That is what we have to look at in the next few days to see whether in fact there is able to be exercised this kind of diplomatic pressure. I, Sir, have some doubts about it, particularly in view of the decision in the American House of Representatives of which we are all now aware. But one lives in hope that the affairs may in fact take a better turn by reason of the activities of certain African statesmen at the present moment.

The second is that I believe that South Africa must not be under a misapprehension that the withdrawal from Angola is the end of the matter. I believe it is only the beginning. When we read in the newspapers expressions of pleasure, which we can well understand, at the fact that our troops will be coming home, because it is a natural reaction that we should think so, there should, however, be no misunderstanding that having gone into Angola and having withdrawn, in the absence of a solution, which seems unlikely at the moment, a solution which will bring about a Government which is not hostile to us, our withdrawal is no permanent solution to the problems which arise by reason of Angola. Until now we have had relatively peaceful borders but this seems now to be at an end. Sir, we are likely to have substantial hostile forces on the South West African border for many a day. The arguments which have been used, wrongly, to justify the presence of Russians and Cubans may well be used to justify a similar support for Swapo by the same people, and in both cases the allegation will be made that in fact South Africa’s presence is or was illegal. Hopes that our border areas will not be threatened, I think we must all have, but I think optimism must be tinged with realism and South Africa must therefore not only reconcile itself to having a substantial portion of its military forces on the alert on a continuous basis, but it must also expect to have its forces in strength in the border areas. But the question which I think needs to be asked—and perhaps the important one—is not to examine only what has happened in Angola, but to ask where in fact we go from here. One believes that these new developments require major reassessments of diplomatic, of military and of economic policies. In the diplomatic field the presence of Cuban armies with Russian weapons on the African Continent is something which must be regarded in a most serious light not only by us but by everyone in Africa. This now means not that Governments are chosen by one man one vote, as African leaders have demanded; it is the rocket and the gun which determine who shall rule. And then it is not only the rocket and the gun carried by an African; it is now a Russian gun carried by a Cuban soldier which can decide who shall rule an African State. This should send shivers down the spine of every ruler of a Black African State because this may now be the new politics in Africa. Sir, if ever there has been a need for a Monroe Doctrine for Africa it is certainly now. One hopes that one can make an appeal that African States should unite to let Africa’s affairs be determined by Africans. We should agree, as White and Black Africans, that super powers with imperialistic aspirations should be kept out of this continent and certainly out of Southern Africa. Sir, the United States has a desire not to be involved in foreign wars, but it should be prepared to use its influence to ensure that Africans and not Cubans with Russian rockets decide Africa’s destiny. I believe there should be a major diplomatic offensive to achieve a Monroe Doctrine for Africa and that this Government should launch it and that the dangers to the Governments of Black States from this new development should be spelt out in no uncertain terms.

The third issue is the issue of South West Africa and I believe here that we should not allow ourselves to be overtaken by events. The process towards self-determination clearly needs to be accelerated and a major issue which we cannot avoid discussing is the issue of Swapo. The question which must be posed is: Does Swapo in fact, as is alleged by UN, represent the people of South West Africa? Must we not now take another look to see whether there is a distinction between an external wing of Swapo and an internal wing of Swapo, an external wing which in fact seeks only to use violence and terrorism and an internal wing which perhaps is prepared to sit down and talk in a reasonable fashion? It has been demonstrated that that can happen, as has happened recently in Rhodesia. Sir, the Government of South Africa believes, and it is supported in this by others and other organizations, that Swapo does not in fact represent South West Africa or its people. There are other powers in the world which have accepted that in fact in so far as Swapo is concerned it is not the only representative of the South West African people. But is it not in the interest of South Africa and of South West Africa that this issue should be clearly settled in a manner which leaves no room for dispute? How can we lead South West Africa to independence and leave it with an inheritance where it may well be faced with a civil war on its hands immediately it becomes independent? Sir, the Government, and the Prime Minister in particular, have on occasion referred to the fact that there should be a referendum in South West Africa. Is it not perhaps one of the solutions which should again be considered at the moment, that a form of referendum should be held in order to determine what support there is in fact for Swapo in South West Africa? If it is true, as we are told by Government supporters, that in fact Swapo has no support, then we should be able to demonstrate it and we should do it by a referendum which is in the circumstances supervised, so that it cannot be challenged, by observers from the USA, Great Britain and France. Then we will have a situation where you demonstrate whether in fact Swapo has or does not have support. If it has not got support, as the Government believes, that, I think, should at least put and end to that argument. But if it has substantial support from the various groups then, whether the authorities like it or not, it will have to take cognizance of this fact because South West Africa cannot be sent into the future with what is called ahereditas damnosa, the type of inheritance which will in fact result here in a civil war coming about when it becomes independent.

I should now like to turn if I may to the military side. I think we are all satisfied in this House that our men are courageous and that our officers are able. Many people, however, require reassurance about the capabilities of our military hardware, particularly in view of some of the statements that have been authoritatively made including one by the hon. the Prime Minister. No soldier of South Africa must find himself out-gunned, or out-ranged, and no airman must be out-distanced or out-manoeuvred. We who have the responsibility for voting the money must realize that the Air Force, the Navy and the Army need modern, sophisticated weapons. This does not mean that we must enter into an arms race with Russia. It does mean, however, that we must, under no circumstances, put our young men at a disadvantage when they are actually risking their lives to defend our safety. The hon. the Minister of Defence has challenged me to say publicly that we will vote for more money for modern weapons. If there is a danger of being out-gunned or out-ranged, the weapons must be made or must be bought and the price must be paid. I accept his challenge, and I make this statement publicly; in fact, I now wait for him to respond in the manner he said he would when he gave me the undertaking at the time.

There is one matter arising from this defence expenditure that I would like to refer to. There is a method of paying for these additional weapons which I think we could use. I believe that the hon. the Minister of Finance should have a Defence Bond issue marketed through the Post Office. I believe that it would be well received. The bond issue could carry for the individual investor a tax-free interest rate, and not only would this be attractive to the investor, but it could also form part of the package offered by the Collective Action Movement against inflation, a movement whose activities have largely been directed towards savings. Institutions might look at this purely as an investment, but I believe that the ordinary men in the street would prefer to know that their savings were being directed towards a purpose of which they approved and that their own sons might be better armed because they have saved by investing in this scheme.

Some of us have been called hawks, but I am a dove with a desire for peace. However, I believe that one can only be a dove if one has the weapons and the strength of a hawk. I believe that this is what we need. We in these benches, who stand for peaceful change in South Africa, are regarded as greater enemies of the radicals and the communists than the reactionaries are. This is so because they seek confrontation with reaction. In us they recognize the danger to their plans, since our policies are to avoid confrontation and to bring about change without violence. This is why we in these benches believe that we must be strong, defend the borders and maintain law and order so that time-tables for change can be controlled and the essential ingredients of our policy, which is change by peaceful means, can be implemented. Defence expenditure can be regarded as inflationary, and is regarded as non-productive by many. There are, in fact, examples of rampant inflation which is caused by armaments being bought in excess of the normal capabilities of the economy of a country. To avoid hyperinflation caused by increased defence expenditure, we need to produce more in other fields. For every rand we spend on defence, we need to produce more in other fields. For every rand that is spent on defending us, we need, in fact, to work harder. The key to all of this is productivity. Productivity, I hope, will be recognized by the hon. the Minister of Finance when he presents his budget, because those who work harder and those who contribute more to society should be rewarded. Defence expenditure can be regarded as unproductive. It may be very productive, however, if it ensures peace and order so as to permit the society as a whole to develop. It is then an investment to be encouraged. Expenditure on arms alone is, however, not enough to ensure our survival. Expenditure must also be incurred to ensure that there is equality of opportunity. The provision of education and decent living conditions is just as essential as is defence expenditure by only defending ourselves externally. We can only defend South Africa if we have a society here in which everyone has opportunity, in which everyone can participate and in which everyone has something to lose. It must be a society in which everyone, whether Black, Coloured, White or Indian, can say: I am a South African; I have a say in the determination of the destiny of my country; I have opportunity in this country and by virtue of that fact I have something to lose. Whereas one would support efforts to ensure that there is defence, there can never be a proper and final solution, there can only be an indefinite conflict, if we do not solve the internal problems of South Africa.

Finally, much is said in this House about patriotism. Many are the breasts that are beaten, and by virtue of that many are said to be patriots. However, sometimes one has to stand up and say things that are unpopular, be prepared to have mud slung at one and be prepared to be attacked when it is necessary for one’s country to do so. I believe that in these benches, of which I am proud to be a part, we have patriots for South Africa.

Mr. Speaker, I found the first few sentences of the speech made by the hon. member for Yeoville very interesting. We are reminded of the occasion last year when he walked out rather than cast his vote, although he had said that he would support the Government as much as he could when it was acting in the interests of South Africa. I was surprised, and he mentioned a few points here this afternoon which really shocked me. I think someone else was also shocked about what the hon. member said concerning the situation in Angola. I am now referring to the hon. member for Rondebosch. I do not think that the hon. member for Rondebosch, who was so critical about what we should do and should have done, agreed with the point of view of the hon. member for Yeoville. May I just mention one point before I continue. The hon. member for Yeoville advocated a larger expenditure on defence. We have good reason to believe that South Africa will indeed have to spend more on defence in the future. However, I differ from the hon. member in so far as he says that the defence expenditure is to a large extent inflationary. I think he knows that this expenditure stimulates the electronic and engineering industry as well as other facets of our economy. Therefore I do not think that we can consider the expenditure on defence to be largely inflationary.

I wonder why the hon. member asked whether the Government was sure of the power of Swapo in South West Africa. Does he not know that Swapo was invited to participate in the elections in Owambo? Does he not know that Swapo was originally known as the Owambo People’s Organization, because it was established there? The organization was invited to participate in the election, but they did not. There is no representative of Swapo in the Owambo Government. Why then is the hon. member for Yeoville concerned about the possibility that Swapo could be a powerful factor in South West? Let me set the hon. member’s mind at rest immediately: South West Africa will not become a second Angola. This Government has promised to guarantee the stability and safety of South West Africa. This Government will not do what a colonial power did in Angola, namely to leave people there unprotected: I shall leave the hon. member at that for the moment. Later on in my speech I shall return to his ‘‘ open society’’ and to the political story of this party and of the party on his right.

I wish to return to the economic aspect of this debate. If there are two people in this House who deserve South Africa’s congratulations on their achievements, work, insight and planning, they are our hon. Ministers of Finance and of Economic Affairs. Over the past few months these two men and their advisers have produced splendid achievements under very difficult circumstances. This afternoon we listened to the scientific exposition given by the hon. the Minister of Finance. While he was dealing with it, the hon. members on the other side became bored, held their hands over their ears or laughed cynically. It is a pity that people who profess to be patriotic towards South Africa and who pose as authorities on economy become cynical when expert knowledge is presented to them. The hon. the Minister of Economic Affairs also delivered a balanced report. The touching appeal at the end of his speech moved me. The time has come, not only for those in this House, but also for the people outside, to start thinking more realistically about the efforts of our Government to win the battle against inflation. Somebody once said that the wish is father to the thought. I have an idea that the hon. member for Constantia wishes that things should go badly for South Africa. As an individual he is a good person, but politically speaking I feel that he is hoping that things will go badly in our economy. I am not even talking about the Jeremiah of Cape Town Gardens. I think that the hon. member for Gardens is an economic Jeremiah, because he is always complaining. The hon. member for Constantia said that we were losing the fight against inflation. I am now going to give the hon. member figures which will prove that we are not losing this battle but making splendid headway. The course taken by the consumer price index has been as follows over the previous five quarters for the third quarter of 1974 it was 18,2% at the seasonally adjusted growth rate; for the fourth quarter of 1974 and the first quarter of 1975 it was 13,8%; for the second quarter of 1975, 12,4%; for the third quarter of 1975, 11,9%; and for the fourth quarter of 1975, 10,4%. What does this mean? This mean that it is important to notice that during these five quarters the increase in the consumer price index dropped from 18,2% to 10,4%. Because this is important I must also point out that the figure of 10,4% during the fourth quarter of 1975 was reached in spite of devaluation in September 1975. These facts indicate an excellent achievement.

The hon. member for Constantia’s favourite complaint is that the State spends too much. Where are we to cut down? Are we to continue with Sasol 2? Are we to continue with the Richards Bay project and the Saldanha Bay project, or any of the other large construction schemes? To these questions the hon. member usually answers: “Yes, but …” He always adds a “but”. The hon. member does not have the courage to tell us which schemes we should discontinue and which we should proceed with. The hon. member for Gardens, in particular, likes telling the man in the street what a hard time he is having, but I have figures available which tell a different story. The Association of Building Societies reports that capital and deposits increased by R55 million during November 1975, savings by R18 million, fixed deposits by more than R17 million and share capital by more than R20 million. People had saved that hug amount of money in one month. The Christmas season is just over and I have here an extract from The Argus of 29 December which reports the following—

A spokesman for a third group of shops made the following comment—

Why have I read these quotations? I do it to show the hon. member for Gardens that when he tells the man in the street that he is having a hard time he is exaggerating. We admit that there are people who cannot make ends meet and that there are people who are suffering because they have a fixed income. However, these people are a minority in our country. The hon. member for Gardens cannot tell us that the standard of living of the ordinary man is going down alarmingly. I can also disprove his statement by means of other information from the business world. During the third and fourth quarters of 1975 wholesalers experienced “very good business conditions”. I quote—

No, Sir, I think we can say one thing: Even though we have inflationary conditions in South Africa, good progress is being made, because in economic matters as well South Africa is marching firmly ahead. One would have expected that the hon. members of the Opposition would have been rather more patriotic in connection with devaluation and the fight against inflation. They too are South Africans, after all; they too are people who have a stake in the growth and stability of South Africa. However, The Argus and the Sunday Times had to teach them a lesson in patriotism. An editorial appeared in The Argus of 12 August 1975—and The Argus is not a supporter of this Government—from which I wish to read the following—

Despite the Government.

No, not despite the Government, but because of the Government.

*A country’s economy is also built up and manipulated by its government. I like what was said by the Sunday Times. On that day I felt that I could almost love the Sunday Times for saying something like that. [Interjections.] Yes, I must admit that it is rather difficult. Listen to what the Sunday Times says—

This is wonderful! Why can the hon. members of the Opposition not also speak in this way? However, they talk about “a savage onslaught”. The hon. member for Gardens used those words. According to them this Government made a savage onslaught by means of devaluation on the savings and the standard of living of our people. Once again I have to ask the English newspapers: “What are you telling the Opposition?” I have before me The Cape Times which is not a friend of ours either. In The Cape Times of 22 September 1975 there was an excellent article about what is called the “plus factors” in devaluation. This article mentions six important “plus factors” or advantages which devaluation has brought and will bring to South Africa. The hon. the Minister of Finance also pointed out the advantages this afternoon. During the past four months, these “plus factors” have already become a reality. We have not found the patriotism which we expected from our Opposition in this matter.

If one were to believe what the hon. members on the other side have been saying for the past three days, one would get the impression that the Government is sending South Africa to its doom and takes no interest in the well-being of the people, whether Brown, White or Black. One would have the impression that the hon. the Prime Minister, the Government and the party by which the Government has been appointed here to rule think only of themselves and not of the importance of the interests of South Africa as a whole and that they plan and do things on an ad hoc basis only, then to perform an about-face and do something quite different. As I have said, I have gained the impression from the Opposition during this debate that they feel that the Government does not look to the interests of South Africa. This makes me ask: What are the interests of South Africa? My answer to this is very short. I think that the interests of South Africa are that we should have an orderly, stable government; therefore order and stability. Now there are people in this House who accuse the Government of being a security risk. There are people in this House who say that the political policy of the Government is preparing South Africa for a bloodbath. There are people who say that what the Government is doing will cause internal revolt and that the excellent relationships which exist within the country will be ruined. I apologize, Mr. Speaker, but this afternoon I have to quote many newspapers and not one of them is a friend of ours. I have here an Afrikaans translation of an editorial in the London Daily Telegraph of 17 January 1976. Once more the question is: Is the Government neglecting the interests of South Africa by means of its political and economic policy?

Is the Government destroying the interests of South Africa, interests in creating a South Africa where White, Brown and Black people will be able to live together in peace and happiness? There are hon. members on the other side who say that our policy of separate development will lead to a revolution. There are people who advocate an “open society”, a multi-racial democracy. What does the London Daily Telegraph say? (Translation)—

This is also the policy which is proclaimed by the Progressive Party. Now the London Daily Telegraph asks—

I asked: What are the interests of South Africa? The answer to this question is: Stability and an orderly government. As I said, there are people in this House who advocate a multi-racial democracy. I want to try and prove that they are undermining the stability which we have; or at least that they are trying to do so. I have another extract here from one of our Afrikaans newspapers which appeared last weekend, on 25 January 1976. It is a letter written by a man living in Oregon, America. He has a very strange surname, but his name is not important. What is important is that he quotes in his letter from an editorial of the very well-known financial weekly in America, Barron’s. The editorial said—

An important American financial publication says in an editorial that South Africa is a “striking exception” as regards its stability and growth and the peace which reigns in the country. The Government with the National Party as its foundation had a leader many years ago, who on an occasion in 1937 used these words which I would like to read to you. I want to add that since those years, the Government and the politicians within the Government have been aware of what that man said. I am referring to the great D. F. Malan. He said: “The task which will be faced by our descendants will be more difficult than the task with which we are now faced and more difficult even than that which the Voortrekkers had to face.”

Why do I read this to you? Because I want to say that our aim, our duty, our policy in South Africa is still order, development and peace. That is why we have this policy which we are applying. The responsibility which rests on your and my shoulders today is important because we are able to build, in fact we are engaged in building, a South Africa in which we can all live together in peace and amity. Unfortunately we cannot say this about the hon. members on the other side of the House. I would like to put a question to the hon. member for …

Put it to anyone of them!

… to the hon. member for Houghton.

†I want to ask her a question, but first I want to quote from South Africa International of October 1975. I am quoting from an article by Mr. Sepp Wille, socialist member of the Austrian Parliament and former editor of the periodical Welt der Arbeit. He gives his impressions of his visit to South Africa in 1975 and says—

I want to ask the hon. member for Houghton whether that is in fact their policy. I would like her to tell this House whether that is indeed the policy of her party. I think it is very important for us to know whether her party is standing for a policy of “one man, one vote”. They cannot, they will not give an answer, not publicly! We want to know whether their policy is indeed one of “one man, one vote”.

Eventually.

Eventually?

What about now?

Mr. Speaker, I have been given an answer. The Progressive Reformist Party’s policy is therefore one of “one man, one vote”.

Eventually.

No, not eventually! They will never come into power, and thank the Lord for that! But think of the harm that they are doing. The hon. member for Houghton has just told me: “Eventually.” On an occasion about two years ago—when she was asked whether she could guarantee that the Whites in South Africa would be safe under her policy and whether the constitution would be maintained under her régime—she said, “It ought to work, but I cannot guarantee that they will always keep to this.” The hon. member for Houghton need not feel unhappy, because her senior partner, the hon. member for Yeoville, said recently in connection with the political policy of his party: “We believe that if you have a federal constitution, you cannot hide from people the inevitability that the central federal government must eventually exercise all the powers and that there will be a Black majority.” In other words, “one man, one vote”.

Then the hon. leader of the Progressive Party has the audacity to ask the hon. the Prime Minister in a recent article to tell him what his South Africa is going to look like.

Who wrote the letter?

The hon. member for Sea Point. He says in an article that he has no guarantee and will give no guarantee that our life-style, cultural heritage, level of civilization, property and right to privacy will be safe and protected. Now he has the audacity to ask the Government: What is your policy? What do you think South Africa will be like in the future? The National Government has been building up South Africa for the past 30 years and the hon. member for Houghton is reaping the fruits of that, namely a stronghold of security in this country. [Interjections.] They are reaping the fruits of a South Africa where peace prevails. The attitude of the ordinary man on the street, whether he is Brown, White or Black, is one of goodwill. It is a positive attitude.

Those hon. members are the ones who are bedevilling it.

The hon. the Minister of Economic Affairs has taken the words out of my mouth. There are certain people who try to spoil and bedevil those attitudes. The hon. member for Sea Point must not ask me what my South Africa will look like in the future. He is living in a South Africa which the Government has created.

I want to return to the hon. member for Sea Point. I want to challenge him and The Cape Times… [Time expired.]

In the provocative speech he made yesterday, the hon. member for Worcester said, amongst other things, that the relationship between White and Brown was good. I do not know exactly what he was referring to, but I am sure he was not referring to the recent developments in connection with the CRC. If he was referring to that, surely he would not have alleged that the relationship between Brown and White is good. I think it is just the opposite. [Interjections.] The hon. member should make a few inquires to find out how the Brown people feel about that fiasco. Then he might be able to make a speech in the next no-confidence debate and to tell us exactly what the feelings of the Brown people towards the Whites are.

He will never have another chance.

I should also like to suggest that the hon. member get acquainted with the Coloured people in the meanwhile and that he tell us during the next no-confidence debate what he learned about them. He is one of those members of the Nationalist Party who is always talking about the Coloured people but who never talks to them.

The hon. member alleged that the hon. member for Constantia was hoping that our country would have a bad time economically speaking. I do not know what made him say that. I think that whenever the hon. member encounters any criticism here, he develops a kind of complex. I think the hon. member has a complex about criticism. He cannot stand being criticized or having the Government criticized. Surely it is the duty of the Opposition to criticize the Government. That is what the hon. member for Constantia did, and moreover, he did it very well. In fact, he did it so well that the hon. member for Worcester was touched on the raw and I am glad that the hon. member was touched on the raw for with his provocative attitude he may be able to persuade the Cabinet to do better in future.

Mr. Speaker, the hon. member for Worcester went on to tell us something about devaluation as well. One of the things he told us was that he had read a commendable editorial in The Cape Times of 22 September 1975. It dealt with the “plus factors of devaluation”. I now want to tell the hon. member that if The Cape Times did write about the “plus factors of devaluation”, I do not know whether The Cape Times could have been writing about the devaluation which took place on that day. Perhaps The Cape Times wrote an editorial about minor adjustments which had been made earlier that year. But no matter what The Cape Times said in that article about the plus factors, I want to tell the hon. member for Worcester that the plus factors emphasized by The Cape Times would have been bigger plus factors if we had not devalued. I am sure that devaluation had no further plus factors in the sense in which the hon. member believed that it had.

†Mr. Speaker, the devaluation of 22 September 1975 was a massive 17,9%. It has already been mentioned here that it had been preceded by a previous devaluation of 4,7% on 27 June 1975. I can understand that perhaps the devaluation of 27 June was really just a question of readjustment. However, I do believe this must also be taken into the picture because as a result within a period of less than three months a total devaluation of over 22% took place. I do not believe that the hon. the Minister of Economic Affairs can say that because there were small revaluations and small devaluations one cannot add them all up and say there is a total devaluation of over 30%. I believe that one can add together the devaluation of 27 June and that which took place a mere six or seven weeks later. In those circumstances one can regard the total devaluation as being almost 23%.

One can add anything as long as it is right.

Mr. Speaker, the most important reason given by the hon. the Minister of Finance for his devaluation was that it was intended to curb speculation against the rand. This is not the only time that the hon. the Minister of Finance said this. He said this earlier too, e.g. on 27 June. This is when he devalued by 4,7%. I am under the impression, and I believe that I am correct, that this devaluation of 4,7% on 27 June was not just a minor adjustment, as the hon. the Minister of Economic Affairs believed it to be. The hon. the Minister of Finance used our ailing economy as reason to devalue. He made this his most important reason. He said he had to devalue and the first reason he gave was that it was to curb speculation against the rand. Now, we know that there are speculators at all times speculating against various currencies. We understand that the hon. the Minister is well aware of this fact. What I am worried about, and what I think hon. members on this side of the House are worried about, is whether any greater success against speculation against the rand will be achieved by this recent devaluation, or whether the chronic deficit on the balance of payments current account will lead to further speculation and enforce further devaluation. If one uses that as a reason, if one says that it is to curb speculation against the rand, we know that this is constantly taking place. I will not say that this takes place day by day, but there are always currency operators speculating against the currency. In fact, there are people who, when there is money coming to them from a foreign country, leave it in that foreign country for a little longer in case the rand should devalue, and that happens all the time. We do not want to be in the position that the hon. the Minister of Finance can create the impression that he is open to devaluation at the drop of a hat. There are many who say that if devaluation is the Minister’s only tool to improve the balance of payments situation, he will have to use it again. As there has been no strengthening of the position with regard to the balance of payments, this is probably something which we may look forward to. In fact, there is speculation taking place at this very moment, as to whether the rand will devalue again. The deficit on the balance of payments account at present is an appreciable R1 500 million. This is a level which I believe is a dangerous one, and I think the hon. the Minister of Finance should be in a position to tell us what he regards as being a dangerous position when he goes in for a devaluation.

The hon. the Minister of Economic Affairs had an opportunity of dealing with this matter when he spoke, but he left it severely alone. I notice that he is now leaving the Chamber. Apparently he wants to have nothing to do with this matter. The balance of payments account alone is sufficient for the currency speculators to keep on speculating in anticipation of a further devaluation. From what the hon. the Minister said this afternoon, it does not seem as if the hon. the Minister has any other measures to prevent speculation, and that his only policy in this regard will lead to a series of devaluations.

We believe that devaluation does incalculable harm to the country’s financial image. It also does a great deal of harm to its credit-worthiness. The financial stability of our country, of which so much has been said by the hon. the Minister of Finance and the hon. the Minister of Economic Affairs, in our opinion can only be achieved, inter alia, when the chronic balance of payments deficit is brought to acceptable proportions and a stronger reserve position in relation to foreign assets is built up. You will remember, Mr. Speaker, that the hon. member for Von Brandis dealt with this very matter this afternoon. He said that the way in which the hon. the Minister was now handling the reserve position, was outmoded. The time had now arrived, he said, where the reserve position should be taken into reconsideration and that there were now other considerations which should obtain in regard to what the reserve position should be. The hon. member for Von Brandis suggested that R1 000 million was not by any means a sufficient reserve at this stage. He suggested that it ought to be R2 000 million. The hon. the Minister of Economic Affairs was the next speaker in this debate, but he left the matter severely alone. I do not know why he left it alone, but I can only come to the conclusion that he does not know the answer. I do not know whether the hon. the Minister of Finance knows the answer either. I believe that this is one of the reasons why our economy is being mismanaged. It is because those two gentlemen whom we have in most responsible positions in this Government do not know what the answers are to the reserve position of the country.

Another aspect which we believe should be taken into consideration by the Government, is proper planning of the country’s finances. We believe that proper planning of the country’s finances is essential if a further devaluation is to be avoided. We also believe that such planning must be based on a system of financial priorities. I was amazed to hear the hon. the Minister of Economic Affairs say this afternoon that he now has a system of financial priorities. Last year during the Budget debate it became clear to us that that hon. Minister had no system of financial priorities and neither did the hon. the Minister of Finance. It is quite clear to me that if there is one benefit to be derived from this great inflation manifesto it is that a certain amount of criticism was directed at the Government because the whole manifesto was only concerned with the private sector. As a result of this, the Cabinet did take a look at themselves for the first time and realized that they had no priorities in regard to financial undertakings. For the first time they looked at themselves in the mirror and saw themselves without any system of financial priorities. I was going to say a great deal about this system of financial priorities this afternoon but I have realized that what we said during the 1975 session has in fact had some effect, in that one of the matters we suggested, one of the ways in which the economy could be managed properly, has at last been adopted by the Government. I personally am very glad about this and I know that all of us sitting on this side of the House are very glad to hear that that is the case. We believe that it is madness to embark on many grandiose schemes simultaneously. I think that this was also dealt with by the hon. the Minister of Economic Affairs this afternoon. He said that we had a large number of projects that we have to deal with and that it is extremely difficult to stop dealing with them once one has embarked upon them. Our answer in this regard is simply that one does not embark on schemes of this nature unless they have been planned beforehand. One has to know how much they are going to cost and how long they are going to take. It is only after all those things are settled that one can embark on the following scheme. This Government embarked on schemes like Richards Bay and Saldanha Bay at the same time, which is complete madness. The scheme at Saldanha Bay should not have been embarked on until such time as the Richards Bay development had reached the stage where it was no longer a drain on our finances. I do not say that these schemes are not good ones. They are both excellent schemes. However, they should be dealt with according to priority. They cannot be dealt with simultaneously.

Another point that we would like to make in regard to the conduct of the economy is that there must be an end to Government gambling on the gold price. We also believe that there must be an end to over-expenditure. We do not believe that the Government can continue to spend more than the country can afford. While the country has to pay this money, the Government unfortunately spends it. We hope the time has now come when the Government will wake up finally and decide that it cannot spend more money than we can afford. These are matters that are not being raised for a first time. If hon. members opposite say that they have heard all these arguments before, I shall willingly concede that they have. However, these arguments have fallen on deaf ears. The United Party has been warning the Government about these matters over a period of years. We warned the Government specifically again during the 1975 session. It is interesting to note that the United Party is not alone in these views. I wish to quote the opinions of several gentlemen in this regard. I think, Mr. Speaker, that you will agree with me that the thinking of these gentlemen is in line with ours and that they hold the same views in this regard as the United Party.

*The first gentleman I want to quote is Mr. Albert Marais, Senior Vice President of the Afrikaanse Handelsinstituut. He says (translation)—

He goes on to say—

He also says—

He goes even further and says—

Is this not exactly what I have been saying here this afternoon? It is almost word for word what I have been saying here this afternoon. Are these not the words we have been using in this House for many years? The hon. member for Von Brandis once again underlined the question of the development and strengthening of our reserve position in the House this afternoon. What did we have from the hon. the Minister of Finance? Nothing at all. The hon. the Minister of Economic Affairs simply left the Chamber and showed no interest whatsoever in the matter.

There is another gentleman I want to quote, Mr. Jan de Necker, the chairman of Rand Bank. He says (translation)—

I want to ask the hon. members opposite, those who laughed a short while when I said that, whether they are still prepared to laugh about this. Do they think that Mr. De Necker made a fool of himself by saying this? No, Sir, these gentlemen know what it is all about. I want to advise hon. members opposite to have a talk with Mr. Jan de Necker and with Mr. Marais if they do not know what it is all about. Those gentlemen will put hon. members opposite into the picture, but those hon. members must not try to administer the affairs of this country in an outdated fashion. That leads only to devaluation and further devaluation.

We have been hearing about devaluation and its effect, but I have not said how devaluation affects the man in the street. In the first place, devaluation increased the prices of imported goods by at least 20%. I believe that everyone will accept this. This did not only affect goods imported after devaluation. It also affected goods imported before devaluation. I am referring to goods which were imported shortly before devaluation and which had not yet been paid for. Most of these goods are imported on a payment basis of at least 90 days and sometimes much longer. There are many cases where goods imported before devaluation had already been sold, but not yet paid for. These goods were a dead loss to the persons who imported and sold them. The position relating to car parts, amongst other things, was of such a kind that the sellers of these parts were able to make out such a strong case that two days after devaluation had been announced, they were allowed to increase their prices by 20%. The prices of groceries rose by 8% over a wide front at the beginning of this year, and the most important reason for this is devaluation. The full effects of devaluation on the cost of living will only be felt much later. The hon. member for Worcester, who told us how beautifully the inflation rate had been going down over the past few months, is in for a rude awakening when the effects of devaluation have made themselves felt throughout the economy. Then he will see the effect it will have on all the items he mentioned here this afternoon. The trouble with devaluation is that eventually there is a vicious circle and the cost of living keeps rising. Salaries and wages throughout the country will have to be increased fairly soon, and only if salaries and wages are increased will people be able to keep up with inflation. This increase in the cost of living will eventually lead to an increase in tariffs as well. We know that his has always happened in the past and that it will happen again. To mention only two tariffs: Railway tariffs and Post Office tariffs will most certainly go up. We heard the other day that one of the Post Office tariffs had been reduced by one cent, but I think it will be the last one to be reduced. Most tariffs will soon increase, for when wages and salaries are paid, money will have to be found for this purpose, and the only solution will be to increase the tariffs. Devaluation will serve as a further stimulus to cost inflation and these rising costs will lead to demands for higher wages. In other words, we do not know yet what the results of the latest devaluation are. Most of its results will be felt in the course of this year and perhaps next year. To say that this devaluation is such a wonderful way of solving all our difficulties is absolute nonsense. The reaction to it will contribute greatly to further insecurity concerning the financial situation of the country. This will result in more speculation as to whether we are about to have a further devaluation, and it will serve as an incentive for stockpiling supplies, which will cause the reserves to go down once again. Fear of devaluation will cause the public to buy things they do not really need. This devaluation is merely the precursor of further devaluations with which we are faced. Why can we not apply a different method to save the economy? The reason is the disease in the economy, and this disease is caused by the fact that the Government wants to bend the economy to fit into its ideological policy. The Government is prepared to bend it because it is not prepared to abandon that ideology. The Government tells us that it wants to compensate through devaluation for the damage done to the country by its ideological policy. That is the only method available to it. It sees no other alternative. Sir, this process has no end and will continue as along as this Government goes on implementing its policy.

You should have put on a mourning band.

No, it is not necessary for me to put on a mourning band. The hon. the Minister should rather put on a mourning band himself. He is the only Minister who is here at the moment to represent the Government. The others have all left. They are sick and tired of these arguments against devaluation. They cannot answer them. That is why they asked the Minister of Social Welfare to stay here. I am glad the Minister is here. He will have a lot of contact with the people outside. There will be many applications for social services as a result of devaluation.

The trouble with our economy is that we have to import such a lot of things. It has already been said here that our imports are tremendous. They need not be so high. However, we do not have the skilled manpower which would enable us to manufacture for ourselves the goods we have to import. That is the reason why we have to import them. Why do we not have the necessary manpower? The reason is that the great reservoir of manpower is not being properly trained. You will remember, Sir, that for many years this Government followed a policy in terms of which only R13 million was spent on Bantu education. For many years it was only R13 million. This was only changed in 1972, a mere four years ago. If there had been proper Bantu education in the years before 1972, the number of skilled Bantu labourers would have been much greater today. But this Government’s policy of spending only R13 million has resulted in the present situation.

That is simply not true.

It is true, and the hon. Chief Whip can say whatever he likes. He knows perfectly well that it is true.

†Sir, the 1975 budget was based on an over-optimistic gold price speculation. It does not matter what the hon. the Minister says; I believe that to be a fact. The only reason why so much money was voted for so many things simultaneously was because the Minister of Finance felt that the sky was the limit in so far as the gold price was concerned and that he would have a tremendous nest-egg to spend and for which he would not have to save. If he had only taken the advice of the hon. member for Von Brandis and put the extra income from gold into reserves, we would not have had this difficulty. The United Party warned them. [Time expired.]

Mr. Speaker, the hon. member for Wynberg advanced no new arguments in regard to the national economy in comparison with those he has already raised in previous years. He made no new contribution. All I wish to say to him is that if the economy of the country were to be left in his hands, I see only a sorry prospect ahead of us. The hon. member for Wynberg referred here to the hon. member for Worcester and said that he should go to Mr. Sonny Leon and ask him about certain aspects of the Coloureds. But the hon. member was quite right in saying that the hon. member for Worcester should go to Mr. Sonny Leon and ask him, for has he heard what Mr. Sonny Leon has to say? He says in public that his Labour Party is the only opposition party in South Africa, because the United Party and the Progref Party are constantly coming to consult him before every No-confidence Debate, before every budget debate and before every Coloured affairs debate to hear what they should say in Parliament about the Coloureds. Then surely he is correct in saying that one should ask Mr. Sonny Leon.

With reference to this very point I now want to come to the third leg of the No-confidence Motion of the hon. the Leader of the Opposition, i.e. that portion which deals with ethnic relations in South Africa. In this regard I want to refer in particular to the plea advanced here yesterday by the hon. member for Rondebosch for a so-called change which should take place in South Africa to alter the consequences of the events in Angola and South West Africa or at least to alleviate them for South Africa, if I understood him correctly. But he did not tell us what changes he envisaged in South Africa. However, I have a suspicion that it has a bearing on ethnic relations in South Africa, in other words, this third leg in the motion of no confidence of the Leader of the Opposition, and I shall in the course of my speech refer in detail to the standpoint which the hon. member for Rondebosch stated in public on ethnic relations in South Africa.

But, Sir, on an occasion such as this, in a No-confidence Debate, one should also consider the parties here in the House of Assembly which are competing among themselves to be known as the official opposition of South Africa. I think it is right that we should, for a while, focus the attention of the public on these two warring parties. What appearance do the people who have moved the motion of no confidence in the Government present? What is their political credibility? I think we ought to know this. I shall tell you what appearance they present. To me they do not appear to be possible rulers, for they are a tom and divided Opposition, with no hope of coming into office because they are devouring one another. If they do not want to believe me when I say this, we can see what the Sunday Times has to say, that mighty bastion of anti-national, yes, anti-South African, feeling and conduct.

I am almost unable to resist the temptation to say that the hon. the Leader of the Opposition and Mr. Louis Luyt almost caused this group, to which the Sunday Times belongs, to see stars. The Sunday Times of 9 November 1975 had the following to say about those people sitting over there—

This is the appearance presented by these people, even in the eyes of their own admirers, and their own admirers we find at the Sunday Times. No one has confidence in them as the official Opposition. But now they are the people who have moved a motion of no confidence in the Government! If this is the appearance they present, what then of their credibility, for people who move a motion of no confidence in the Government must surely be politically credible, not so?

I begin with the Progrefs. I wish they would choose a new name for it is difficult to pronounce the word “Progref’ correctly. One stumbles over the word each time one refers to them. According to Die Volksblad of 10 September 1975 the hon. member for Rondebosch had the following to say at a PRP meeting in Fish Hoek (translation)—

I agree with him entirely. The White people should be prepared to accept the consequences of their stated policies. In fact, the hon. the Prime Minister has said this repeatedly. Therefore, this is ancient news in South African politics. However, there is a world of difference between the policy of the Progrefs and the policy of the National Party in this regard. For the former the consequences of their policy is a Black majority government, while for the National Party it means separate development, with the preservation of our own sovereignty and a separate identity. When the hon. member for Rondebosch therefore states that there should be a large number of White people who will accept the consequences of this Progref policy, all he is really doing is to address the Leftist liberals in his party, for on our side we accept the consequences of the statement of policy of the National Party.

What is your policy with regard to the Coloureds?

According to the same report the hon. member for Rondebosch went on to say (translation)—

May I ask the hon. member what he means when he relates Black majority to how it should be dealt with constitutionally? He is hinting at a Black majority government for South Africa. The hon. member for Worcester, too, has just referred to quotations which the hon. member for Yeoville made in the same context. A Black majority government is therefore not a political problem, but a demographic fact which has to be dealt with correctly, according to the hon. member, but then they refuse, however, to allow a simple, insignificant facility like the Windsor swimming baths in Randburg …

That is not true.

… to be thrown open to the non-Whites, because it would prejudice the provincial election in Bryanston to their disadvantage. Where are the people who refuse to play White politics now? Where are these fearless men now? And where are the people now who refuse to bluff the voters? I shall tell you where they are. They have run away and are hiding behind accusations to the effect that the United Party is crying “Black peril” when they were threatened by such a simple and insignificant thing as a swimming bath. And what a threat!

I must say at once that the result of that election was a hard blow to the United Party. This is the party which, in South African politics, is the epitome of pathetic decline.

The statement of the hon. member for Rondebosch that a Black majority government is a demographic fact, and the refusal to throw open the Windsor swimming baths on the eve of the provincial election in Bryanston, are the greatest political bluffs I have ever encountered. It is an unprecedented example of people who fled apprehensively from the consequences of their policy. By so doing they risked their credibility in respect of the Black people of this country, and in the sight of the Black people of this country, and lost it disgracefully. Then they are the people who come forward with a motion of no confidence in this Government. Instead of acting fearlessly, and instead of a large number of Progref Whites who would be prepared to accept the consequences of the policy, they skittered across the water of the Windsor swimming baths like coots, too afraid to leave behind any trace of the Progref policy of a Black majority government. For the sake of interest one should just mention that the Sunday Times, true to its policy of disparaging the United Party and boosting the Progrefs, neatly tossed this Windsor swimming bath incident back into the laps of the United Party.

Your information is completely wrong.

The hon. member has never told the newspapers that they were wrong.

I did.

The Sunday Times neatly tossed this incident back into the lap of the United Party, to the political advantage of the Progrefs.

†Under the heading “Windsor”, the Sunday Times of 9 November 1975 wrote the following:

This is how the United Party and the Progrefs quarrelled over a small, simple issue, a swimming pool, when integration and Black domination through a sharing of power and through Black majority rule are respectively their policies. Now, Mr. Speaker, you must judge for yourself whether these two Opposition parties are still politically credible in the eyes of all the Black peoples of South Africa.

These are forces of chaos and siren voices which will lead to affliction and death, such as those which have surfaced again during the past year, and for which the hon. member for Houghton grieved so bitterly. How can one have confidence in a party and its leaders which participate in demonstrations against the maintenance of law and order and in that way, by implication, support the overthrow of the State by means of force and agitation? [Interjections.]

It is your …

Over the years we have come to know the hon. member for Houghton as the champion of all elements subversive of the State. [Interjections.]

Mr. Speaker, on a point of order …

Order! The hon. member may not allege that. He must withdraw it.

I withdraw it. The hon. member collects them like a hen her chickens, if one may use a Biblical image in respect of that objectionable behaviour. I wonder on whose side the hon. member for Houghton would have been if she had lived in Israel and had been a member of the Government there, for whom Zionism and the security of the State of Israel is a matter of the gravest concern. Would she also have been such a champion of the Palestinian insurgents, communist agents and terrorists, who also desire nothing but to overthrow the State of Israel by force? These people demand nothing less from Israel than certain parts of her territory, as well as so-called human rights which the State of Israel must grant to all kinds of monsters. After all, she is such a champion of human rights. Let her now tell us on whose side she would have been ranged. I want her to tell us, but now she is as silent as a sheep before its shearers, if I may use another Biblical image.

In contrast with these forces of chaos and siren voices which will lead to affliction and death, one of the most striking phenomena of recent times is the calm spirit of expectation and joyful optimism with which the Black people of this country look to the future, our future and theirs. The days when their statements were characterized by a sombre pessimism and frustration are gone. Those days are gone primarily as a result of the policy of this Government, which wants to offer everyone in this country, Black and White, a safe refuge, if only Black people would realize this. It would be a safe refuge where everyone could live with pleasure and dedication, and occupy themselves with creative and constructive work. The upsurge of new hope and pleasant prospects among the Black people is primarily the product of this Government’s policy, a Government which realizes only too well that there can be no hope of a stable and peaceful future if the people who comprise the bulk of its national economy are restlessly caught in the pincers of absolute frustration and embitterment. I want to say at once that it has not been apprehensive and unreliable White people, who skitter across the water of the Windsor swimming bath like coots, who have brought about this new frame of mind among the Black people. This has only been achieved by the sincerity of the endeavours of the National Party leaders and their policy. It is the desire of the National Party to create a national pride among the Black people, to encourage in them the desire to build a nation and to help and share in the establishment of independent homelands with stable governments. This has only been achieved by the sincere desire of the National Party to lead the Black people to new horizons and to share with them in the excitement of the new and great things which are coming. Surely this is an illustration of the actions of White people who are not afraid of their policy and who are not running away from the consequences of their policy, but who believe and know that a high premium is placed on political credibility. Unfortunately I cannot say this of the Progrefs.

But what about the United Party? I quote what the hon. the Leader of the Opposition himself had to say at the central annual congress of the United Party in Bloemfontein on 14 November 1975. In Die Volksblad of 15 November I read the following (translation)—

Year after year we tried to force this admission from the United Party and they refused to concede that it was true. Here the hon. Leader of the Opposition himself stated that it was a fact. Let me now ask the hon. Leader of the Opposition whether they now trust one another. Does the hon. member for Bezuidenhout trust the hon. member for Mooi River? They do not reply, and I shall not insist on one.

I have referred to the new hope and the new expectations among the non-Whites, but unfortunately one is forced to observe that this awakening is accompanied by large-scale emotional exploitation and irresponsibility. There are people and bodies that do not want to accept orderly change and peaceful coexistence as a solution to South Africa’s distinctive and unique problems. I have not yet heard the joint Opposition declaring themselves opposed to this phenomenon.

In contrast to the passage I have already quoted from the leading article in Die Volksblad of 12 August, which was phrased in a very responsible manner, on co-operation between White, Black and Brown people in South Africa or the ghastly alternative, one finds an irresponsible emotional incitement and exploitation by a body such as the South African Council of Churches. During the congress of the Council of Churches, Mr. John Reeves, their chief secretary, stated in an absolutely provocative way on 23 July 1975 that the day of the Black man had now dawned in South Africa. He said that the future of South Africa was now in the hands of the Black man. “The only question is”, he said, “how they are going to deal with this responsibility with Christian grace”. I want to ask the hon. the Leader of the Opposition whether he agrees with Mr. John Reeves. The hon. Leader of the Progrefs is not here; I should like to ask him the same question. The hon. the Leader of the Opposition does not want to reply to every question. I want to tell Mr. John Reeves that to stir up feelings and to create false and vain expectation among people is no great feat if it is not one’s responsibility to ensure the welfare of various peoples and the preservation of a fatherland. The survival of a nation and the preservation of a fatherland is the task and responsibility of this Government and it will perform this task at all costs. Surely it is madness to believe that an ultimate destination of progress, prosperity, peace and order can be achieved here in South Africa without the White man, too, consistently playing a significant part in this. Thanks to the leadership of the Whites, under the policy of the National Party, great progress has already been made towards peaceful co-existence in South Africa, and great progress has also been made with the granting of self-determination to the Black peoples of South Africa. However, it is a short-sighted view to think that the Whites are in this way relinquishing their rights and can therefore be eliminated in certain areas of South Africa, or from Africa. It is just as short-sighted as the defeatist Black majority government story of the hon. member for Rondebosch, which is supposedly a demographic fact. That hon. member places emphasis on how the establishment of a Black majority Government will be dealt with constitutionally, while John Reeves wishes to do this with Christian grace. These are the people to whom we have to pay heed. These are the people who supposedly refuse to bluff the voters of South Africa, just as though we were still dealing with an uninformed electorate. I want to ask the hon. member for Rondebosch whether he thinks we are dealing with an uninformed electorate in South Africa.

What about Angola?

We do not have any voters in Angola. Our voters are in South Africa. These are also the people who supposedly refuse to play White politics, but then skitter across the waters of the Windsor swimming baths like coots. They are the people who want the general public to support them in their motion of no confidence against the Government. I can tell them that the voters of South Africa have during the past 28 years constantly refused, at every election, to commit political hara-kiri, for that is precisely what the Opposition is calling upon them to do with their policy of power sharing and of a Black majority government, respectively. I want to tell them that the voters of South Africa not only reject them, but also despise them. The sooner they realize this and try to become a credit, also through the Government, to South Africa and its people, the sooner they may perhaps occupy a meaningful position.

Mr. Speaker, the hon. member who has just sat down spent a great deal of his time way back in the past criticizing members in these benches. I am quite sure the members to the right of me can answer him in his criticism of them. Therefore I shall just for a moment take up one or two of the points he has raised. In the first place he has great difficulty with the name of this party. This, of course, is a problem which the hon. the Minister of the Interior also had. He was kind enough to suggest an alternative name, to wit the Spinola Party. I want to remind the hon. the Minister of the Interior and other hon. members on that side that Spinola, amongst other things, opposed a totalitarian régime in his own country; so do we. Therefore, I suppose, it has some relevance. In the second instance Spinola opposed colonialism in Africa; so do we. Thirdly, it was Spinola who reminded the people of his own country—they learnt only at their own peril—that if you want to win the loyalty of all your people, that cannot be achieved solely with force and arms, for one has to win the hearts and minds of the people too. We agree with that.

Spinola fled. Are you going to flee as well?

If this is so startling to hon. members, they must of course tell me that they are in favour of totalitarianism, that they favour colonialism in South Africa and in Africa and that they are not concerned with winning the hearts and minds of the people.

The hon. member suggested that we were afraid to follow out the consequences of our policy. I want to assure him, and all hon. members in this House, and anyone else for that matter, that we have no intention of running away from the consequences of our policy. What I think is more to the point is whether, with the two major themes running through this debate, viz. that of Angola and that of inflation and the economic affairs in this country, hon. members on that side are prepared to follow through, accept and face the consequences of their own policies. Both what is happening in Angola and the inflationary conditions in South Africa dramatically demonstrate the tragic disunity and divisiveness which is part and parcel of South Africa. [Interjections.] The hon. the Minister of Defence referred to the fact that there were some Black people involved in the Defence Force. The hon. the Minister of Indian Affairs, in his turn, made a very pathetic reference to the fact that he was approached by a group of Indians in Durban, offering to serve in the Defence Force. I say “pathetic”, because it is pathetic that people living in South Africa should come almost with cap in hand and ask: “Can we participate in the defence of our own country?” Of course they should be given the opportunity to do that without ever having to beg and plead. Despite these references by the hon. Ministers, it is clear to anyone who has eyes to see that the confrontation in and escapade of Angola was an all-White affair. The disunity that is demonstrated by the fact that White South Africa has to defend the whole of South Africa is there for all to see. At every railway station, on every television set, in every newspaper and in every report we are reminded that we do not stand united in this country as one people. Where is that great watchword of the past: “Unity is strength?” It is gone! There is disunity between Black and White in this country because of the policies of this Government. The disunity is very clear for all to see in terms of the Angolan episode. However, what is much more serious is that when one talks with Black people they all say: “We do not know what is going on in Angola, and, in any case, we are not involved because you have never trusted us sufficiently to allow us to participate either in the decision-making regarding defence matters or in training and fighting in defence of our own country.” This is the truth and it is the consequence of the policy of that side of the House. Are they prepared to face that kind of consequence? That member who has now run away after his last speech—is he prepared to face up to that kind of consequence of this policy?

There is a more serious aspect to this. I almost hesitate to raise it and yet we must face it because it is the truth. That is that there are a great number of Black people in this country who, when they look to the north, are concerned about two issues. On the one hand they are not really clear in their minds as to whether there is an opponent or a foe or a friend. That is the seriousness of the situation, that there is divided opinion and disunity. One knows full well that no one in South Africa can remain unaffected by what is happening in Angola and what may yet happen there—no one, White or Black, young or old, English speaking or Afrikaans speaking.

Nevertheless, there is the feeling within the hearts and minds of a great number of people living in this country that what is taking place there, and even on our borders, has nothing really to do with them; that it is a White affair. That is the consequence of the policies of this Government.

The second major theme running throughout this debate has been the whole question of inflation, and on the home front here we have been exhorted, understandably and rightly, to fight inflation. I want to ask the hon. the Minister of Economic Affairs and the hon. the Minister of Finance how many Black or Brown or Indian citizens of South Africa were asked to participate in the anti-inflation programme. How many people were asked for advice? How many people actually signed the manifesto? And as a result of this, when people are excluded in this way and have no part in the planning, is it any wonder at all that a vast portion of our population, who happen to be Black, who are vital in the industry of our country, have very little concern about this massive problem of inflation which is facing all of us?

It is because of that lack of involvement that very little use is made of the enormous potential that is available in the work and in the contribution of our Black people within South Africa.

In our shops and in our mines and factories, over countless years, people, because of the colour of their skin, have been prevented from moving up the lader, have been prevented from moving into positions where they could influence so many other people, both in this fight in terms of war and in the fight against inflation in the times of peace. Even the whole mass of Black workers are by design—not by accident, but by design according to the policy of this Government—excluded from the Industrial Conciliation Act. They are not even employees, and yet we expect them to co-operate and to support the fight against inflation. The Government will not get that kind of support until such time as their policies have changed.

Are you now agitating on behalf of the Blacks?

Mr. Speaker, the Angolan war and the inflation problem require the united efforts of every South African, but enshrined in this Government’s policy is separatism and division. When we should be standing together, we are being fragmented. When we ought to stress by word and by action our common interests and our common loyalty, we are being divided on tribal grounds, on language grounds, on race grounds, on ethnic grounds—everywhere one can see the hallmark of that Government’s policy of separatism and division at a time when South Africa desperately needs, as never before, to be united in the face of a common enemy. When we ought to be standing shoulder to shoulder in the face of the growing hostility on our very borders, in the face of Russian imperialism, the Government still persists in talking about White South Africa. There is no such thing. Let us get this into our minds, once and for all. There is no such thing as White South Africa. There is only one South Africa, and it is high time that we learned to know and to recognize that we will have to learn to live together if we are going to survive together.

The policy of this Government can no longer merely be described as misguided and unrealistic; it must be seen now to be dangerous, because it puts at enormous risk the future security of all South Africans, Black and White. For what we are talking about, is our very survival. Everyone agrees that it is not a question of whether, but of when and of how, Black liberation from discrimination will come in South Africa. It is not a question of whether it is going to come, but of how and when it is going to come. I want to quote a prominent Black South African who said these words:

But, he continues—

To conclude I want to list the kind of changes, the kind of new initiatives, which I believe are absolutely imperative if we are going to strive for the kind of unity which is so urgently required in South Africa today. In the first instance we need a change of direction in policies and plans for the future, with the overriding emphasis on unity rather than fragmentation. The fundamental question that the Government and this side of the House must ask themselves, is: What makes for unity? In peace and in war are we one South Africa, or are we going to go on dividing and cutting up the whole country so that the emphasis is on ethnic differences and on tribalism and on racism, instead of on one South Africa in which we are prepared to stand together?

Secondly, we need a new deal for urban Blacks, which will reverse the status quo. We must accept once and for all that the urban Black is a permanent part of South Africa. This means, at least, home ownership without strings attached, without the famous “Catch 22”, which is now being introduced and which makes it almost impossible for them to take over that 30-year lease. It also means free possession of property, which is one of the basic human rights, and the removal of pass laws, which remains the tangible sign of inferior status.

Thirdly, what is needed is education, not merely in terms of increased quantity, but education in terms of quality as well—education which is not Black or White or Coloured or Indian, but education which gives every child in this country an opportunity to develop physically and mentally and spiritually to his or her full potential. That is a fundamental new initiative which must be made if we are going to cultivate and develop the kind of hopes to which I referred earlier. Above all, they need meaningful political and social rights and responsibilities.

One need merely refer to the urban Bantu council in Soweto. I know that the hon. the Minister of Bantu Administration and Development will probably rap me over the knuckles before tire session is over for going into Soweto without his permission and without a permit. [Interjections.] But when one is invited by the chairman of the urban Bantu council one assumes that one should be allowed to go there. Having been denied the opportunity to address that council, I nevertheless met some of the members of the council and I had the privilege of sitting inside that council and listening to its deliberations together with some of the officials. The chairman of that urban Bantu council told the officials inside the council chamber that the council, in their judgment, was nothing more than a castrated bull. [Interjections.] I deliberately paused here because I know that the seriousness of that remark will be lost upon those people on my right who can see nothing but jokes in everything. This is in reality a very serious matter. They are saying that this council is nothing else but a rubber stamp for baasskap. That is the kind of power the Government is giving the urban Black man in South Africa. Thirdly, there are the restoration of the Coloureds in South Africa to the common roll with full citizen rights and responsibilities, and the acceleration of the movement away from racial discrimination. The aim of these new initiatives is unity as opposed to division which is so rife in our land. The prerequisite for that is justice, and the end result is the birth in South Africa of a new patriotism, patriotism which is so urgently needed and which depends so utterly on consultation, participation and a genuine share in the country by all its peoples in time of peace or of war. I believe that this Government has the power and the resources which will help to dispel the ever-growing frustration amongst the Black people and the ever-mounting fear of the White people of South Africa. I believe that this Government has the power and the resources to usher in a new era of hope. The only burning question that remains, a question which the Government itself must answer in this session, is whether it has the will to do this. It can demonstrate this by courageous action in this session.

Mr. Speaker, in the course of my speech I shall come back to the Progressive Reform Party. At this stage I only want to say two things to the hon. member who has just resumed his seat. I have listened to three members of his party today. The hon. member for Houghton admitted that her party’s policy would be “one man, one vote”, but she qualified this with “eventually”. The hon. member for Yeoville, as far as I am concerned, made an extremely good speech. I agree with the greater part of it, but there are a few points with which I do not agree. He simply could not help bringing in the Swapo element. Now I have again listened to the hon. member for Pinelands. I want to ask these hon. members: Why these vague generalities? Why do they not say to the public openly that they want “one man, one vote”, that they want to give up and get it done with? This is in fact their policy. I know why they do not say this.

“One man, one vote” is the Nationalist Party’s policy. [Interjections.]

Of course it is the Nationalist Party’s policy, but we believe in multi-nationalism, something you do not believe in. This is the difference. We say, allow every nation its “one man, one vote”, but they are different nations and this is the basic difference. I shall tell you why they cannot say this. It is very clear. They think they can bluff the electorate of South Africa with their vague stories to the effect that they can come to power and that if they do come to power they can carry out this policy of theirs. However the electorate of South Africa will not allow itself to be bluffed by that.

I fully support what Mr. Willem van Heerden, a very well-known politician—I would say a scientific politician—said about the Progressive Reform Party. On 7 August 1974 he addressed the Institute vir Suid-Afrikaanse Politiek at Potchefstroom during an introductory meeting. The subject he discussed was: “South Africa’s population problem—is there a solution?” Mr. Van Heerden analysed the National Party and the United Party very critically. When he had finished he said to those present that they would have noticed that he had not said anything about the Progressive Party. He said that by doing so he had not wishes to indicate that the policy of this party was not important or that the Progressive Reform Party could not gain ground in South Africa. In fact he indicated that should the peaceful and autogenous coexistence envisaged by the political philosophy of the Nationalist Party did not succeed, South Africa would probably resort to the Progressive Party’s concept. He went on to say that he had no doubt about the result, because if we were ever to make a political stew of our people in South Africa, it would not be possible for personal freedom and democracy to continue to exist. One military dictatorship after another, as is the case in most South American States, would then be our fate. It would be as well for not only the Whites, but also our Coloured and Indian countrymen and our Black neighbouring states to bear this in mind.

Africa is the second largest continent. It comprises an area of 11 700 000 sq. miles, is 5 000 miles long and 4 500 miles wide. In 1971 Africa had a population of 365 million, a population which will double by the end of this century. The Africa of which we also form part, increased tremendously in importance during the past few decades, in world politics, in world trends and in world violence. I regard the third element the hon. the Leader of the Opposition mentioned in his motion, namely human relations, as being extremely important. Because we are part of Africa, Africa is extremely important to us and human relations in Africa are extremely important as well.

Africa has its problems and South Africa has its problems. I want to mention two problems to you very briefly. In 1652 the Whites came to Africa and moved up into Africa while at the same time the Blacks moved down. The Whites basically did three things: They took private possession of land and consolidated it. Today there are approximately 100 000 farms in South Africa and approximately 65 000 small holdings. The Whites consolidated land and took private possession of it to such an extent that today they own approximately 87% of the land. Furthermore they consolidated the economy by creating basic structures, by establishing infrastructures, by the developing its potential and developing the mining industry. In the third instance the Europeans consolidated politically, so that the Union could be established in 1910 and the Republic in 1961. With the Blacks it was precisely the opposite. They had communal possession of land, tribal possession and not private possession. They had a subsistence economy and did not consolidate economically or politically, except perhaps in the ten years of Chaka’s reign. On the contrary, they fragmented land through tribal possession. This is the position in South Africa today and this is the problem we are battling with. Africa has other problems too. I said that Africa had a population of 365 million which may be 700 million by the end of the century. We find in a country of average development that 25% of the population is below the age of 15. Now we find that 45% of the population in Africa is below the age of 15. This is extremely important in regard to dealing with that problem within the next few years. We find for example that in 1956 in Kenya only 55% of the children of primary school age were in fact attending school. It is estimated that in 1990, 62% of the children of primary school age in Kenya will be attending school. Since by that time Kenya’s population will have increased from 12 million to 30 million, the number of children not attending school will be greater than it is today although the percentage will be lower. This is one of the problems that have to be solved and with which Africa is burdened. Africa needs technical assistance; Africa needs food, etc. It is possibly as a result of the fact that the colonial powers withdrew too readily and too rapidly that a gap or vacuum arose and it is this gap that is being exploited by the Russians and others today. We in this Parliament should help Africa in order to help ourselves and in so doing resist the communistic world.

Today I do not wish to discuss the other things Africa needs, nor do I want to discuss Angola today. If I understood the hon. the Minister of Defence correctly, he made an offer, and what it amounted to was that people could go to Angola to lose weight. I too should like to go. Today I really want to talk about something Africa does not need. Africa, South Africa and the rest of the world do not need this. I am referring to extremism. We do not need extremism in South Africa. Whatever one’s colour or aim or credo might be, whichever side of the Magaliesberg one lives, we do not need extremism in South Africa or in Africa.

It is a fact that both the National Party and the United Party have had to do with extremism during the past few years. There are two major and basic differences between the National Party and the United Party concerning the extremism which each dealt with. The National Party dealt with ultra-rightist and unbalanced extremism within its own ranks in the form of the Hertzogites while the United Party had to do with far leftist extremism in the form of the Progs and after them the Young Turks. There is, however, also a second major and basic difference, namely that the National Party is a strong and powerful party with an even stronger and more powerful leader and was therefore able to get rid of the extremists in its ranks. Those people are no longer in Parliament today, because the National Party had the courage of its convictions to get rid of them.

The United Party still has Japie.

Have a look around you.

The same did not happen in the United Party, and the other day the hon. member for Durban Point quite correctly discussed these people who got together. The world is round, after all. If one person goes far enough left and another goes far enough right they will meet each other, and then one finds Jaap and Japie under the same blanket, the blanket of anti-South African extremism. I repeat: South Africa does not need extremism.

I do not want to try and teach the hon. the Leader of the Opposition his politics; he practised his politics before I was born, and, what is more, the politics of the hon. the Leader of the Opposition suits us very well, because it has not achieved anything over the past 26 years and I am quite happy that he should continue in this way. However, I have great appreciation for the Leader of the Opposition as a person. I regard him as a gentleman. There are a number of other men in the ranks of the Opposition for whom I have the greatest respect. That is why on the one hand I am sorry for them, but on the other I am sorry for my country and I should like to have an opposition without extremists in our country. The human relations to which I referred are bedevilled more by extremists than by anything else, whether leftist or rightist extremists. I should like to say to the hon. the Leader of the Opposition that they were dealing with leftist movements, that although the Progs went and although some of the Young Turks went, the spring-cleaning was inadequate.

I was a barefoot little boy on a cattle farm in South West Africa when I first began to enjoy the antics and pranks of the hon. member for Bezuidenhout. My father was the chairman of the divisional management committee of the National Party when Japie became a Nat. I enjoyed his antics tremendously.

How old was he then?

I do not want to express an opinion as to the political age of his brain. I take it that the hon. the Leader of the Opposition enjoyed the pranks and antics of this member tremendously when he became a United Party supporter again, as I did then. I take it that the hon. member for Yeoville, in his turn, enjoyed the pranks and antics of the hon. member for Bezuidenhout when he was the leader of the Young Turks. However, what do we find today? We find the same member—and we know him—still with the hon. Leader of the Opposition. I shall not take it amiss of the hon. the Leader of the Opposition now if he should say that this member is one of them. It is only politics to say that he is one of them. They said this about the hon. member for Yeoville and his followers, too.

I have never yet quoted one Stanley Uys in this House. It is not only I who know the hon. member for Bezuidenhout well. Certain leftists know him too. That is why I want to quote Mr. Stanley Uys in this Parliament today, because he knows the hon. member for Bezuidenhout very well. In an column under the heading “Focus” in the Sunday Times of 14 September 1975, Mr. Stanley Uys wrote as follows …

Who is Mr. Stanley Uys?

He is one of the leftists about whom I want to warn you and the hon. the Leader of the Opposition. The title of the article is “What makes Japie run?” He begins—

That is so, Sir, it is bizarre. Is it possible to believe that such things do happen in real life? The author of the article goes on to speculate on how the Old Guard could support such a man. He continues—

I should like to ask those hon. members in the United Party of whom I have said that I respect them a great deal—I could mention their names if anyone should want me to—the hon. member for Durban Point, for example, and the hon. member for Simonstown—what this hon. member would do if he were to take over the leadership of the United Party. What would he do with the United Party? We must ask ourselves that question because it is important that we should know. We have a “right to know”. The author of the article goes on—

However, listen to the following—

He goes on—

Now it is the hon. member for Edenvale, his right or left hand, depending on the time, place and situation. Here is something else which I find splendid and which I want to quote to you. They now ask speculatively: “Why did Nic and Japie do it.” In other words, why did they remain there? I also want to quote an expert, one of the leftists, but first I just want to read this to you: “But Japie was the spiritual father of our movement. ’’ How could he have stayed there then?

Take Graaff as our Leader, it is more up to date.

No, wait, he is not so very much out of date. Many of the things I am reading tonight are going to come about. “And Nic was so insistent that Graaff should go, that at times we had to restrain him.” This is placed between inverted commas, because they are now quoting one of the Progrefs. I am now going to read one more thing to you …

I should like to ask the hon. member whether he has any contribution of a serious nature to make to this debate. [Interjections.]

I have a very important contribution to make and that is to say that we have no difficulty in spotting these extremists who are operating openly. Leftist elements which bedevil human relations must be eradicated in our country, whether they are White, Black or Red, and even if they are in the United Party. We do not want leftist elements and extremist elements in our country.

Let me conclude by quoting to you why “Japie and Nic” stayed—

I wonder whether the hon. the Leader of the Opposition should not seriously consider finally switching this hon. member off. I just want to tell you that I always find it very easy to canvass for votes in Krugersdorp, because I have always just said that that party which opposed me had the hon. member for Yeoville as a member, and then the people in Krugersdorp did not vote for that party. It is just as easy to tell them that the party to which my opponent belongs, is the party of which the hon. member for Bezuidenhout is a member, because then, too, the people do not vote for that party. Listening to the utterances of these leftist people and comparing it with what Black leaders say, one finds what Die Vaderland of June 1974 found when a newspaperman conducted an interview with a Black leader, and the following was said (translation)—

Those are words uttered by Black leaders. I could read to you what Capt. Cornelius Njoba of the Ovambos said on 19 December 1975. He referred to the army which he wanted established (translation): “The Ovambo soldiers will protect the homeland against the threat of terrorists from across the border together with South Africa, as full and equal allies. The establishment of an army and a police force is a natural process in the political development which is leading Owambo to independence.” Then these words follow (translation): “The Portuguese could get out of Angola and go back to Portugal, Brazil and elsewhere. We of Owambo, in the same way as you from South Africa, have no other country to fly to; we are going to stay here and defend the country.” That is what Black leaders are saying and now we can compare this with utterances by the leaders of that party.

We do not need White extremists or Black extremists. I think it would be as well if I were to say at this stage that we believe in détente and dialogue, but there are Black leaders in our country who think that what dialogue involves is that they can make certain demands and that we must then carry them out immediately. That is not dialogue; it is monologue, and very often it is only “logue”. I conclude by repeating that the policy of the Leader of the Opposition suits us well, but I want to sound a grave warning about extremism. We have had problems with it, but we had a strong leader and a strong party and that is why we got rid of them. The greatest achievement which a Hertzogite can accomplish is not to lose his deposit. That is an outstanding achievement. However, what has happened to the splinters of those hon. members? They fill the House and they are still sitting with them. Before they have put their house in order, they will become progressively weaker, and that does our country no good, but evil. I appeal in all seriousness to hon. members that we solve this problem to the benefit of our country. This is a serious appeal, because human relations are being bedevilled, as a result of hon. members such as the hon. member for Bryanston, shouting in the House about “fourth-class citizens with tags around their necks”, etc. This does enormous damage to human relations and it is our common duty as Nationalists, United Party supporters, Opposition and whoever else may be involved, to get rid of those members.

Mr. Speaker, in this time of serious problems in this country I do not believe that anybody should waste any time in trying to reply to the hon. member who has just sat down. We have tried for three days now to bring to the attention of this Nationalist Government the fact that South Africa is involved in three wars, a shooting war, an economic war and an ideological war. We are trying to bring the seriousness of the situation to the attention of this Government, but then we have the sort of speech that we have heard from that hon. member now, which contributed absolutely nothing to the debate. Since yesterday afternoon we on this side of the House have tried to bring home to the Government the seriousness of the economic war which we are fighting at the moment. I want to point out the seriousness with which this Government views that situation. The hon. the Minister of Finance spoke this afternoon and the hon. the Minister of Economic Affairs spoke this afternoon, and since then we have not seen either of those gentlemen in the House. They have not been here to hear what other members have had to say and they are not interested now in what is happening. We do not even have a Deputy Minister here.

He has only just come in.

They tell me that the hon. the Minister of Economic Affairs has just come in and I am glad to see that he has because I want to talk to him now, but I would like to have the other half of that unholy alliance here also to hear what is to be said.

Sir, I want to take your mind back to the day in March last year when the budget for 1975-’76 was introduced in this House. My friend, the hon. member for Constantia, led the attack in the debate on that budget, and we on this side of the House pointed out the inflationary effect that it would have. It was a record budget in a time of inflation when the Government ought to have been aware, if they had any ability at all, of the inflationary conditions that existed. However, they still came with a record budget for record expenditure, most of it being unproductive expenditure. And then, after all the advice that we on this side of the House had given them and all the warnings that had been issued, not only by us but by people from outside who supported our point of view, as the hon. member for Wynberg pointed out this afternoon, this Government indulged in a wild spending spree, and that in a time of galloping inflation. What do we find? Not clichés—I am now going to quote the facts. We find that for the first six months of last year this Government spent R3 589 million. When one compares that with what they spent in the previous year, 1974-’75, when they spent R2 359 million only, we find that the expenditure by the Government in the first six months of this year was up by R1 230 million, or over 50%, and that in a time of inflation, when they should have been saving, at a time when that hon. Minister of Economic Affairs was trying to tell the people in September of last year that the Government was in fact saving, at a time when the then Deputy Minister of Bantu Development told the people of the Ciskei that he could no longer buy any more land because he had already spent all the money that had been allocated to him for the whole year. At that rate of spending, this Government is heading for a massive additional appropriation, and we are going to be asked here in this Parliament, in the next few weeks, to vote even more money for this Government on top of the record budget they asked us to pass in March/April of last year. The hon. the Minister of Economic Affairs is busy with something else at the moment, but I wonder whether he will tell us whether we can, in fact, anticipate an additional appropriation this year. I believe it would be scandalous for this Government, at this time, with all the policies they have formulated, to come to this House and ask us to vote more money for the fiscal year 1975-’76. I believe this would be scandalous. I want to make a prognostication, however, if I may. In two to three weeks’ time we are going to be asked to vote another R1 000 million, for this Government, to cover what they have over-expended this year. I do not hear any denials from the other side. Here I am not talking about defence expenditure either. I am talking about unnecessary, ideological, unproductive expenditure on the part of this Government. At the same time, if we look at the other side of the balance sheet, we find that in actual fact taxation has increased by only 11,6%, and that this shows a deficit in the first six months of nearly R1 000 million which they are going to have to ask us to vote. The hon. the Minister of Finance has told us that he intends to prune R800 million from next year’s budget, that he has, in fact, already pruned it from the Estimates. If this is true, if he has done so, will he then tell the civil servants, the pensioners and the people on fixed wages that they can expect some relief next year? I am not going to lodge a plea for an increase in the pay for civil servants because, from the hon. the Prime Minister down, the Government has told us it is not going to give it to them. I believe, however, that some relief must be afforded these people, in particular the civil servants. This is one way the Government can give them some relief and one way in which we can have some concrete evidence of the way the Government feels towards the civil servants. We had the Minister of Finance this afternoon thanking and praising them, saying what a wonderful job of work they have done and saying how he appreciates the fact that it is 18 months since they last had an increase in pay. However, I believe it is time this Government gave them some concrete evidence of their appreciation, not just words. The Government has already said it is not going to give them the paper that crackles, and I believe the Government should give it to them in some other way, and this could be a decrease in direct and indirect taxation. If the Government is serious—and now the hon. the Minister of Economic Affairs shakes his head—and intends to prune its expenditure next year, what does it need the taxation for? Why must the present rate of taxation be maintained? Why should there not be a pruning of taxation as well, if there is to be a pruning of expenditure? Once again I want to predict what is going to happen next year. I know what is going to happen. The hon. the Minister of Finance is going to come with a budget in which he has, in fact, pruned certain amounts, and he is going to stick his chest out and say what a good boy he has been. He is not, however, going to cut taxation. I believe that the people of South Africa can look forward, not to the present rate of taxation, but to an increase in taxation. That increase is not only going to be for the defence budget. I do not think I have to repeat that we on this side of the House will not oppose the defence budget.