Mr. Speaker, I move without notice—

Agreed to.

Mr. Speaker, before this debate was adjourned on Monday, I said that this hon. Minister of Finance was facing probably the most challenging situation which any Nationalist Minister of Finance has had to face. I believe that to be the case. I would now like to mention five elements in the situation, each of which on its own presents a considerable problem area. But when all five problems are aggregated together, the scene becomes a formidable one.

The first element which I would like to mention is the defence situation. Clearly the situation on our border and all that goes with it, such as the call-up of the Citizen Force and the maintenance of that Force, is going to cost money. It is going to cost a great deal of money as was foreshadowed by the hon. the Minister of Defence in the closing remarks of his speech in the no-confidence debate, when he warned the country that we would have to pay more and more and still more. Modem defence is expensive and we obviously must have the best weapons that we can obtain for our armed forces. It has been made a lot more expensive, however, particularly as far as imported weaponry is concerned, by the devaluation of the rand last September. There is another aspect of the defence situation that I should mention and that is that if we are to be militarily strong, as we must be, then we need to be economically strong as well. We need to have strong economic sinews in order to have military strength. We also need to be seen to be economically strong. This is something which deserves the earnest attention of the hon. the Minister of Finance and the Government.

The second element in the situation is that we continue to suffer from double-figure inflation. I think that it was very misleading of the hon. the Minister in his Second Reading speech to say that the inflation rate had already dropped substantially. There was some temporary relief from the increase in the inflation rate in the latter months of last year, but this temporary relief was caused by two main reasons. The first reason was the restraint on prices and wages which was part and parcel of the Pretoria manifesto. This voluntarily restraint on prices and wages is not the permanent answer to the fight against inflation. There is the danger that this type of restraint will merely dam up a flood of demands for increased wages and higher prices once the restraint has been removed. The second reason why there was temporary relief from inflation in the latter months of last year was that food prices rose at a less steep rate than other prices, and helped to keep down the cost-of-living index. Food prices did not rise so steeply for climatic reasons, for seasonal reasons, but mainly because there was a fierce price war being fought amongst the supermarkets. Unfortunately that price war appears to be over now and since the beginning of this year there have been steep rises in the prices of foodstuffs. The fact remains that the position of inflation has been greatly aggravated by the devaluation of last September and will continue to be increasingly so.

I believe that despite what the hon. the Minister said in his Second Reading speech and in the no-confidence debate, this devaluation was one of the major blunders of this Government. Even if we accept the figures which the hon. the Minister quoted in his Second Reading speech, as supplied by the Prime Minister’s Economic Adviser, to the effect that devaluation will only raise the overall price of consumer goods by 1,4%, capital goods by 2,9% and of stores by 2%, the position is still serious. I believe that those estimates are underestimates because I find them very difficult to reconcile with the fact that our imports amount to approximately one-third of our gross domestic product, and the fact that the cost of those imports to us as a result of devaluation has risen by 22%.

That is not correct.

Unfortunately the inflationary situation is also going to be aggravated by the amount which we are going to have to spend on defence. Defence expenditure by its very nature in the strictly economic sense is not productive. As such it aggravates the inflationary pressures. I believe that the Bureau of Economic Research of Stellenbosch University, which estimates the rate of inflation for this year to be 12%, is not very far off the mark and if anything may be underestimating the position.

The third element which is facing the hon. the Minister is that we are in the middle of the severest recession since the world depression of the early 1930s. Our growth rate has slowed down to virtually nil. Last year the gross domestic product rose by only 2% and the growth in the gross national product, which is the measure of what is available to sustain standards of living, was actually negative; it actually shrunk. Savings have been virtually static and investment, particularly by the private sector, has been stagnant.

As a result of this situation unemployment has become inevitable. One cannot have a growth rate which is lower than the rate of growth of the population without increasing unemployment. This is an axiomatic fact and it is not a very happy picture. Added to the problem of maintaining a healthy and strong economy, is the number of economically active men who are having to be withdrawn from the economy for military service. This is bound to cause dislocation. It is something the Government must give close attention to, to minimize the dislocation caused by this factor. I think the Government can take a leaf out of the book of the United Party and look at what happened during the last war, when it comes to keeping key men within the economy where they can do the best job for the country.

The fourth element in the situation is the continued vulnerability of our balance of payments situation, which is aggravated by the recession in world trade and by the low export prices that we have been getting for some of our key exports, for example, copper and platinum. It has also been aggravated by the fall in the price of gold and by the high prices we are having to pay for oil imports.

I do not share the hon. the Minister’s complacency in regard to the balance of payments situation. In the main both our imports and exports are of a relatively inelastic nature; in other words, they are not sensitive to price changes which can result from the devaluation situation. In fact, devaluation does not appear to have led to the improvement in the balance of trade—that is exports compared to imports—that the hon. the Minister predicted would happen at the time of devaluation. The hon. the Minister also does not appear to appreciate the shock to the confidence of foreign lenders, in particular foreign lenders to the private sector who lent money in rands—and I include amongst these the foreign parent companies of many South African subsidiaries—as a result of devaluation. It was also a shock to the confidence of foreign investors in securities and shares on the Stock Exchange. These lenders and investors are going to lose money as a result of devaluation when their dividends and interest are received and when their capital is repaid, or when they realize their investments. That is not the way to attract capital to this country.

The fifth and final factor facing the hon. the Minister is that due to the low growth in the economy and the lower profits that are being made, particularly by the gold mines, the real tax basis, which is the source of his revenue, is not expanding. The monetary tax base may well be expanding, and is expanding because of inflation. The monetary base is expanding because of the tax drag which brings income tax payers and estate duty payers into higher tax brackets. The monetary base for taxation is also expanding because both inflation and devaluation have given the Treasury a very nice little nest egg in higher dutiable values where ad valorem customs and ad valorem sales duties are concerned. But this is not a healthy situation; it is a very unhealthy situation because it is another way in which wealth is being transferred from the private sector to the public sector. In other words, it is another way in which the private sector is being impoverished. It is another example of inflation feeding on itself, which is something that requires urgent attention by this Government. Those five elements that I have identified, I believe are the main elements in the challenge which is facing the hon. the Minister of Finance. Because it is so necessary that proper steps be taken to meet these challenges, I move as an amendment—

In facing up to these challenges, I believe that there are three paths which must not be followed, which I shall call three “don’ts” and there is one path that should be followed, which I shall call “do”. The first “don’t” is: Do not try to beat inflation by too strong a dose of damping medicine. By all means keep a sensible and tight control over monetary and fiscal policies, and certainly keep a tight control on State expenditure. I am aware that other countries, notably America, Germany and more recently Britain, have had considerable success in reducing their inflation rates by applying damping policies, tight money policies, high interest policies and high taxation policies, but they have achieved success against inflation at the expense of massive unemployment. Massive unemployment with all the political, social and security implications and risks which it has in this country, is something which we simply cannot afford and must try strongly to avoid.

The second “don’t” is: Do not take the opposite path. Do not take deliberate steps to reflate and stimulate the economy by the classical methods of taking the brakes off the monetary supply, of creating credit, of encouraging spending or of increasing Govern ment expenditure, particularly on capital projects. That course of action might well put some temporary life into the economy, but it would do so at a disastrous price as far as inflation is concerned, because it would be doing all the things that should not be done to fight inflation and it would have a disastrous effect on the balance of payments situation because it would be encouraging imports without stimulating exports.

The third “don’t” which I want to put to the hon. the Minister is: Do not follow a negative colourless policy. Do not think that the challenge which is facing the hon. the Minister can be met by trying to walk a tightrope between the first and the second “don’ts”, the “don’t” of damping and the “don’t” of reflating, unless something positive is done to meet the situation as well. Such a middle course, of trying to walk a tightrope, unless it were accompanied by the necessary positive action, would lead to the worst of both worlds. It would mean a continuing low rate of growth and it would mean surrendering the initiative to do something about recovery and just waiting for recovery to result from a recovery in world trade. It would mean increasing unemployment. It would mean an ineffective fight against inflation, and in effect it would be the path to stagflation, which is not a happy picture.

Fortunately, although there are three “don’ts” in the situation, three paths which we should not follow, there is also a very powerful “do”, the path which should be followed, and which if followed and if coupled with the undoubted potential strength of the South African economy, will enable the economy to resume growth without pouring fuel on the fires of inflation and without putting too much of a strain on the balance of payments. The “do” to which I refer is: Do take steps in the widest and most imaginative and most courageous—I emphasize “courageous”—sense of the word to encourage productivity and to place in the hands of the private sector the wherewithal and the incentives to lead our economic revival. What we must do is to unshackle the economy from the measures, from the policies, from the chains, which are holding it back, which are holding back productivity, which are holding back incentives, and which are holding back investment. We must marshal the forces of the economy to be used primarily by the private sector, which can use them most productively. I think President Ford of the U.S.A., in his State of the Union address last month, put the philosophy that I am trying to put to this House very aptly when he said—

Mr. Speaker, when I speak about the unshackling of the economy, I mean that what is needed is a standstill on new ideological legislation; a slowing up or a revision or an actual stoppage or a reversal, whichever is most appropriate in each case, in the implementation and application of ideological policies of separate development and apartheid and the spending of money on those ideological policies. What we need is to free the economy so that the ideological fetters under which it suffers will be removed and entrepreneurs will be left free to run their businesses in the most economic and productive manner. This may sound platitudinous to hon. members opposite, so I will give a few practical examples of what I mean by unfettering and unshackling the economy.

The Government should call a halt to forced, subsidized border industrial development. It should allow industrialists to establish and expand their businesses where those industrialists decide are the most advantageous and productive locations for them to do so, whether those locations be in the metropolitan areas, in the border areas, in the homelands or elsewhere. It should scrap section 3 of the Physical Planning Act. It should administer influx control so that sufficient labour is available where that labour is needed. It should treat this labour, if this labour is needed in the so-called White areas, as permanently resident in those areas. It should provide and allow those things which go with permanent residence, such as family life and home ownership. It should remove job reservation, which is a much more powerful shackle on the economy than Government spokesmen try to indicate.

Job reservation, despite the fact that Government spokesmen say it covers only 2,8% of all workers, is in fact a major threat hanging over the heads of industrialists; it is a major threat and shackle preventing them from training Black labour for more productive jobs. The Government should substitute a real crash programme of training for the present small-scale training of Blacks which is being done. It should also relieve the private sector of other measures, primarily tax measures, which are inhibiting productivity. It should introduce higher incentives to invest, to help offset the erosion in capital values which is occurring as a result of inflation. It should help industrialists by these incentives to replace and modernize their plant at the higher costs which are required to do so today. It should introduce a less punishing scale of progression in the income tax scales, because the present scale is acting as a strong disincentive to productivity and to hard work at certain income levels. It should introduce a less punishing scale of estate duty, which is destroying too much of the capital in private hands.

I believe, Sir, that if this unshackling process took place and if it were coupled with sincere evidence that the Government wished to encourage the private sector, it would be followed by a wave of investment by the private sector which would lift the economy out of its present rut; and if these measures were also accompanied by a relative, but not necessarily absolute, reduction in State expenditure, a reduction which is so necessary, it need not impose too great a strain on our resources. Sir, this is what is needed to get the economy moving in a non-inflationary manner. This is what is needed to meet the challenges which I depicted earlier in what I had to say this afternoon. This is what is needed to expand the size of the South African economy, to raise the living standards of our people and to build a greater and stronger South Africa. However, to follow this path will need courage, and I do not hold out much hope that courage of that kind exists in those benches opposite. If it were to be displayed, it would be a test of the true patriotism of that side of the House.

Mr. Speaker, I have listened carefully to the speech of the hon. member for Constantia, the main spokesman on finance of the official Opposition. He is a man for whom I normally have a high regard. However, I must confess that I have listened today to a rather disappointing speech by the hon. member. It was rather one-sided, in a fashion, with very few refreshing and stimulating suggestions. He was guilty of making well-worn accusations by way of generalities, and there were very few, if any, constructive suggestions.

I bet you wrote that yesterday!

He contributed no positive formula apart from a few general suggestions. For example, he mentioned taking steps to encourage productivity in the economy and suggested that we should do away with our ideological legislation, and that we should modify influx control and do away with job reservation.

The old story!

Yes, the old story. He actually made very few constructive suggestions. He did, however, make a rather belated attempt to harass the Government and to exploit a delicate and difficult situation for party political purposes.

What is needed in these times, Mr. Speaker, is a pragmatic and sober approach to the solution of such problems as we have on a national level. We concede that in the present international set-up there is a downward cycle and that we have problems, but not problems of our making, not problems emanating from the Government’s blunders, as the hon. member for Constantia has said. They are, rather, the reflection of the problems of other countries. In the main they are problems we have inherited and which have their origin beyond the borders of South Africa.

Passing the buck!

I shall come to the question of “passing the buck”. In the final analysis, South Africa must be allergic to these problems—naturally. She could, in the light of her ranking—and thanks to the National Party she ranks twelfth in the world in respect of imports and exports—hardly expect to escape such influences.

*When trying to analyse the utterances of the main spokesman of the hon. the Opposition against the background of our economy, we must ask ourself what the crux of the criticism was that was levelled. Leaving aside irrelevant matters, we must admit that we appreciate the fact that the hon. member, on behalf of his party on this occasion, gave preference to the expenditure in regard to defence, a standpoint that was until recently not adopted by that party. [Interjections.] For instance, the hon. member for Hillbrow said in this House that we should not spend that money. [Interjections.] However, we notice with great appreciation that they have at least come to their senses this year and that they, too, realize that it is essential to vote money for defence.

What their criticism really amounts to, is that the Government is being held responsible for the state of inflation which exists in the country, the “double-figure inflation” which the hon. member for Constantia referred to. He alleged that no efficient measures were taken or are being taken by this Government to combat inflation. A further point of criticism is that there was an untimely devaluation of the rand and everything that goes with it. I shall deal with both points of criticism. The hon. member for Johannesburg North is sitting over there laughing. He must not misunderstand me. What I said was not meant as a joke. If he does not understand Afrikaans he should rather keep quiet altogether. The hon. member for Constantia did suggest alternatives, but also made the fatal allegation that we had lost the fight against inflation. This the hon. member said in a debate not so very long ago.

That is true.

The hon. member for Maitland says it is true. The hon. member also had something to say about growth and productivity, but I want to advise him not to mention it in the same breath, because one cannot refer to growth and productivity in the same breath. These are relative terms. One should not use them in general terms, because they can be distinguished from one another. We accept that positive growth is a priority, and in the same way productivity is also a priority we should endeavour to achieve. We accept this. However, it would be wrong to promote general productivity by artificially stimulating the growth rate—especially in the economic cycle in which we are moving at present—by applying improper measures. In this regard I have in mind State spending, for example.

You must throw in your reserves. [Interjections.]

Mr. Speaker, I have a problem, a real problem as far as the Opposition are concerned. Finances are a matter on which Opposition spokesmen can speak with authority. They can speak authoritatively on this matter in spite of their political impotence. I accept that they have access to considerable capital sources in South Africa, both in the private sector of our country and abroad. I accept that they also have at their disposal influential resources which may determine the direction they take.

Whom are you referring to now?

They do not represent the agricultural sector, but the industrialists, the mining magnates and the money magnates in South Africa. Their opinion may well carry weight abroad, but, Mr. Speaker, I have misgivings about their economic patriotism. [Interjections.] In this time when the Government needs help because we are experiencing difficult times and has to spend large amounts of money on defence, the Opposition derives some kind of sadistic pleasure from derogating our economy. The hon. member for Hillbrow is pre-eminently the person who does so. You must bear in mind, Sir, that in a recent debate the Opposition referred to the “mismanagement by the Government of the finances and economy of South Africa”. They say it “smacks of hoodwinking the population” and use phrases such as “passing the buck”, as the hon. member said again a moment ago. They say “devaluation was a panic measure”. This is the image of the economy of South Africa the Opposition holds out to the outside world. We have similar problems with certain financial publications circulating abroad. Instead of developing the financial image of South Africa, they derive pleasure from saying derogatory things about it. Regular emphasis is placed on the sombre side of the economy. I want to tell the hon. Opposition that instead of presenting this sombre image, they could proclaim the achievements of the South African economy to greater advantage to the outside world. They could tell the outside world that the South African economy is the most stable economy in the whole world. To support this statement, they can say that the capital inflow into South Africa amounted to altogether R1 900 million during the past year. According to the statement made by the hon. the Minister R500 million of this amount constitutes long-term capital. This is a fact they can proclaim to advantage to the outside world. Why do they not tell the outside world that Escom has just obtained a loan of R174 million abroad?

Surely, the outside world knows about it.

Under very tight foreign capital circumstances Escom was able to obtain this colossal amount, the largest single overseas loan recently granted to any part of the public sector, at effective rate of interest of 8%. This loan was underwritten by enormously large financial organizations such as the Civic Corporation International Bank, Chase Manhattan Bank, Manufacturers’ Hanover Trust, Barclays Bank and others. Apparently these organizations have more confidence in the economy of South Africa than the Opposition has. Why does the Opposition not tell the world that British trade with South Africa increased by 30% during the past year? Why do they not say that our exports to Britain during the past year amounted to R540 million, an increase of approximately 16%? Why do they not tell the world that “Sasol contacts prompt US policy review” with regard to loans granted for exports from America? Why do they not tell the world that, during December, the flow of money to building societies increased to R784 million, the highest figure ever? The second highest figure was R742 million in 1973. So far total investments with building societies in South Africa this month amount to R5 780 million.

Mr. Speaker, when one considers these achievements of the South African economy, especially in view of the fact that we are experiencing difficult circumstances, it does not look like the bankruptcy which the hon. member for Hillbrow referred to, it does not look like a “panic measure”, but to me it looks like stability and virility I first want to see elsewhere before believing it. Therefore it is interesting and significant to see this Budget with regard to aspects of our national financing. This proves what really can be done by means of sound and objective measures. It indicates a disciplined and balanced dispensation under very difficult circumstances. It indicates that the Government is in complete control of circumstances. It is remarkable when compared with the international monetary economic cycle existing at present. Whilst there are countries with a stable economy, countries with high productivity and potential, these countries nevertheless have a negative growth. I have in mind here, countries such as Germany and Britain. We appreciate the fact that in our country these achievements are being effected and have been effected in a world which is experiencing a recession worse than the one in the 1930s.

We can compare the unemployment which exists in other countries of the world with the position at present prevailing in South Africa. In Britain it is 5%, or 14% of its available manpower, i.e. millions are unemployed. According to the latest reports eight out of ten labourers only work half shift. It was interesting to note that during the period 1 November 1975 to 25 November 1975 the motor industry only worked full-time for eight days. 38 power stations were closed and the Chrysler factory in England also closed. The Southampton docks worked far below capacity. Germany also has a negative growth rate and 1½ million are unemployed; America has 8 500 000 unemployed, and so on. However, in South Africa we have a Government that was prepared for all these bottlenecks, and is therefore following purposeful guide-lines and does not allow “matters simply to develop”. This the Government achieved in the first place, by ensuring employment opportunities and through the creation of an infrastructure. Here one has in mind Richards Bay, the Sishen-Saldanha scheme and Sasol. These undertakings literally made the mouths of other countries water, and these undertakings are not socialistic. On the contrary, they show the capitalistic system in the highest gear. The Government devalued the rand at the right time, in a calculated manner and fully aware of the position. It was no “panic measure”. It did so with very good results. Since the devaluation of the rand the reserves increased to R926 million, while the reserves amounted to R776 million a year ago. This belies the arguments of the hon. member for Constantia. The fact that, as a result of devaluation, the reserves are increasing, is clear proof of this.

I have already pointed out that our capital inflow during the previous year amounted to R1 900 million. The major portion thereof was obtained during the last quarter. Our imports have already dropped and our exports have increased. To quote only Britain as an example: Our exports to Britain amounted to R540 million, which represents an increase of 16%. An increased value of gold, calculated in terms of the rand, has been brought about. Speculation against the rand was stopped and the attendant outflow of capital was reversed. We are aware of the fact that our foreign obligations have probably been increased as a result of these measures and that according to calculations, an amount of R145 million has to be found for this purpose. Therefore, devaluation was a positive measure taken by this Government in a calculated manner while fully aware of the position, a measure which has no disadvantages for us, but brought us some positive advantages. One could ask oneself what the position with regard to our capital outflow would have been had we not devalued. What would the position of our inflation rate have been had we not been able to launch this purposeful, organized and joint campaign against inflation with very positive results? In this regard the Government made a very positive and purposeful contribution towards combating the rate of inflation. One considers, among other things, the pruning of State expenditure in that the departments themselves absorb the increased costs. As has been announced by the hon. the Minister, State expenditure will be cut back by an amount of approximately R800 million in the coming year. This is no easy task, especially in view of the essential infrastructure which has to be created, homeland development which has to be given some degree of priority, and the fact that our defence expenditure has to be increased considerably. These measures were applied by the Government in a positive manner and because of this we were able to do what the hon. member had pleaded for. The Government acted in a positive manner and took measures which were able to achieve the results envisaged. While the hon. member for Constantia identified the problem and told us what we should not do, he could tell us very little by way of constructive suggestions as to what we should do. The little he suggested, he tried to say negatively in a positive manner. What it amounted to, was that he told us what we should not do.

In this way the Government also avoided bank credit and by means of State loans, it was able not only to overcome the deficits on the balance of payments in a non-inflationary way, but also to reduce the inflation spiral. In this regard I can only point out the boundless confidence with which these State loans, which are non-inflationary, were underwritten abroad. Also in South Africa loans were underwritten with boundless confidence. One thinks of the September loan which was underwritten to an amount of R300 million, the October loan to an amount of R43 million, the January three year loan, R376 million, the January sixteen year loan, R117 million. In yesterday’s or the day before yesterday’s Die Burger it was said that State issues had drawn R435 million. This is positive action. These are the measures in terms of which the Government has combated inflation and the inflation spiral. And these measures achieve positive results, unlike that which the hon. member for Constantia envisaged when he returned to the old hackneyed thought, the old refrain of ideological legislation which has to be stopped, and so on. In this major endeavour launched by the Government, it was once again belittled and discredited by the English Press before these loans had been underwritten. But these loans were underwritten in spite of this negative approach we had from the English Press. For that reason I just want to read to members what Mr. Aubrey Dickman, economic consultant for Anglo American, said in this regard. He is a colleague of the hon. member for Johannesburg North. He said—

We admit that there are bottlenecks in connection with the building and motor industries. There were price increases—one must not confuse it with price exploitation—against which the purchasing power of salaries has to struggle. There is also the question of housing. However, there are also favourable signs. Take, for example, a prediction like that of Hill Samuel, who said that there are indications that the economy may improve this year. This prediction is endorsed by the Bureau of Economic Research at the University of Stellenbosch, which also says that the economy is expected to improve this year. This can, of course, happen if we act in a disciplined way, if we cut down on our consumers’ as well as our State expenditure, and if we aim at more efficient performance and higher productivity. The economy can improve, because there are favourable signs.

However, there will also be prophets of doom. We accept that they will always be there. I want to classify the hon. member for Constantia and his colleagues among these prophets of doom. However, I will give them something to think about—something which was said by a person who does not sit on this side of the House, a person who is not in politics, but who is probably one of their spiritual compatriots. This person is Mr. Stephen Mulholland of the Sunday Times. This is what he said on 1 February, and I quote—

What does this prove? He sees it as a sad day. He is not a Nationalist; he supports the United Party. [Interjections.] Oh, he is a Progressive. He went on to say—

[Time expired.]

Mr. Speaker, I would like to congratulate the hon. member for Ermelo on being elected chairman of the Public Accounts Committee. I can only hope that he will perform better there than he has performed here this afternoon. [Interjections.] I would also like to extend my sympathy to his predecessor. It seems to happen too often that people are put ahead of you, who have not the same intelligence.

The hon. member for Ermelo said that we must take a pragmatic and sober line with regard to our problems in this country. We have no problem with that, Mr. Speaker. I am sorry to sound like a Jeremiah, but the hon. member stressed over and over again the confidence that outside countries have in South Africa. That is a highly desirable thing. It is a highly necessary thing, but it is doubtful whether it will continue in the way in which this Government has come to expect things to continue, particularly when one looks at the events that are taking place on our borders.

Mr. Speaker, all of us require an element of luck. That is equally true for all politicians, including those members sitting on the opposite benches, and most particularly for the hon. the Minister of Finance. Since his decisions and proposals affect the lives of each and every one of us, we should be concerned with the question as to whether the hon. Minister has that elusive element called luck. Unhappily for us, the track record to date would, I think, point to its total absence. However, it goes further than that. If too great a reliance is placed on fortuitous events to recur and to make a favourable impact on the economy, then, at some point, it becomes imprudence, and indeed a breach of the fiduciary responsibility to all the citizens of our country. That is exactly what that hon. Minister and his Government did in their budget last year. And the outcome—that should be absolutely clear—was the large devaluation of September last year.

Whatever the hon. the Minister may say, he cannot say that he was not warned, for we in fact, said this to the Government as far back as August 1974, and I quote (Hansard, Vol. 50, col. 1080—

We went further. In reply to the budget speech of the hon. the Minister, we said on 7 April 1975, in relation to the gamble taken by him, the following (Hansard, 1975, col. 3643)—

We have now had the one—lower growth. According to the hon. the Minister of Economic Affairs, who is not present, the growth rate last year was 2,25%, and it may well be that in the budget we may get the other, i.e. increased taxation. In February last year the hon. the Minister took it upon himself to chide me by telling me that he was surprised that I did not share his confidence in the future price of gold. I should like to quote the following in the light of the events which have occurred and more particularly in the light of what happened in September last year. This is what the hon. the Minister said on Monday, 24 February 1975 (Hansard, 1975, col. 1306)—

Further on (col. 1307) he said—

That was not a very good forecast.

Let us be quite clear about this. We have consistently expressed and still hold our cautious optimism that over time gold will continue to occupy the same role it has played for so long as a store of value. However, cautious optimism is one thing, but recklessness to the point of imprudence and foolhardiness is quite another. No housewife worth her salt would plan to spend on the basis that such windfall gains would tend to recur.

What do you know about housewives?

That is bad enough in itself for the family concerned, but that is the sin perpetrated on this country by that hon. Minister and by this Government and to which, when reality arrived, they had to plead guilty on 21 September. Yet this hon. Minister had the effrontery to say in the no-confidence debate that the Opposition had completely misread the signs. He said that the decision to devalue was not one of panic. All of us who sit on this side of the House think that he protests too much. Furthermore, when we asked him on what price of gold he based his budget estimates last year, we were told that it was not in the public interest to disclose that figure. It is clearly neither in the interest of that hon. Minister, nor of the Government, to disclose the price of gold on which they based their estimates, because that would simply serve to highlight the imprudence of the hon. the Minister and of the Government. It is equally clear that it is in the public interest of everybody who lives in South Africa because it is their standard of living that was cut by devaluation. One could have hoped, even after 27 years, that when reality finally came, the Government and the hon. the Minister would heed their lesson, but not a bit of it. The hon. the Minister charges around like an enraged bull to the defence of devaluation and has done it twice so far in this session of Parliament.

His behaviour is remarkably similar to that of the hon. the Minister of Defence. They are both clearly suffering from insecurity. Yet, in the case of this hon. Minister, one is left with the suspicion that he had advice contrary to the road down which he has taken this country. Not content with trying to sell the benefits of devaluation so that the innocent might believe that we should have it weekly, if not daily, the hon. the Minister made a remarkable statement, remarkable only in that it came from a Minister of Finance. As such it is without parallel, except possibly in the case of Mr. Harold Wilson, the present Prime Minister of Great Britain. And if the hon. the Minister wants to be equated with him, then we all know where he should go. I quote from the Eastern Province Herald:

This is nothing hasty; it is a question of reiteration. Therefore, what follows must be considered, deliberate statement after reflection. I quote—

It is a simple fact that by his devaluation this hon. Minister has changed the terms of trade between our country and those countries from which we buy and to which we sell. It is a simple fact that all South Africans will now have to work harder and sell more to other countries simply to maintain our standard of living.

I would now like to ask the hon. the Minister, or, for that matter, any other member sitting on those benches, whether he can nominate any set of circumstances where that does not immediately occur. It is axiomatic. It is, naturally, true that in time benefits may accrue, but in the immediate sense the result is a drop in the standard of living. As such, for the hon. the Minister to misrepresent the facts is something that only an extremely lazy Government which has sat here for 27 years would try to ride out.

The damage both here, and equally important elsewhere, cannot, of course, be repaired. It is a fact that this course has been most severe upon the Black population and the Brown population. Let us be clear: This Government and the hon. the Minister should take in and accept that even the White people of South Africa are not the Gadarene swine—they are not about to run off the cliff in the vain belief that by doing so they will preserve the status quo of the Whites which is now defined as patriotism. That is both futile and self-defeating. There is a much wider form of patriotism which embraces all the people who live in our land, and that is where we stand.

I would like to turn to the speech of the hon. the Minister in the no-confidence debate. However, before I do so I would like to make the following clear because it is obviously somewhat vague and opaque for members who sit on the Government benches. I want to make it clear before I come back later to devaluation.

Exports will earn more, but only in terms of rand. I emphasize that simply because the hon. the Minister, to put it no higher than this, has skated over reality. Because it is only in terms of rand, devaluation as such will not improve the balance of payments position to any noticeable extent. And to say that with imports being more costly, as indeed they are, local industry will benefit appreciably is doubtful both because local industry must rely to a greater extent on imported machinery to produce its goods, and because that machinery will now, of course, cost considerably more. As a result prices will rise in the end to the consumer. Nor is it necessarily desirable in itself, because it simply unfolds a greater degree of protectionism.

Let us come back to what the hon. the Minister said during the course of his no-confidence debate speech and on Monday when he introduced this Bill. The statements of the hon. the Minister tend to put such a fine gloss on the state of the economy of South Africa that some people may be taken in. The hon. the Minister said—

Fair enough, but it is still, of course, far too high at a level in excess of 10%. However, the hon. the Minister only shows us one side of the coin. Although he must be aware of the facts, he omits to mention that the wholesale price index fell from a cumulative rate of increase of 20% to 17,4% in October and that it increased again in November to 17,9%, and stayed in virtually the same place in December. The actual figures for the last four months were 14,8% in September, 16,2% in October, 16,5% in November and 16,8% in December. It is even more striking when the index for import prices is considered. The rate of increase had dropped to 15,6% in September, but it rose to 18,2% in October, to 21% in November and to 21,3% in December. In fact, the cumulative figure was 22,5%. There is little doubt that the pressure is building up in the system. The Public Service has had no increase and sooner or later they must have one. The private sector and trade unions have already made sacrifices under the collective programme to fight inflation. There will clearly be pressure from the public and semi-public sectors such as the Railways, Escom and Iscor. As we have pointed out too, the prices of essential imports are rising, even if their volume is not. If there is no real increase in the salaries of Whites, and inflation keeps going, something will have to give. There has, of course, been some redistribution of wages to the Black South Africans which is to be welcomed, but the economic scenario for 1976 does not engender confidence. I suspect, too, that all manner of means have been employed to stave off and to delay what otherwise would have increased the present rate of inflation, such as short-term borrowings.

We must not bluff ourselves; the cost pressures are there and are building up, and if this Government does not allow price increases where they are justified, then there will be distortions in the system which will inevitably reduce the profitability of the enterprises in those sectors and, in turn, lead to a decline in investment in the spheres concerned and therefore to rise in unemployment, with all the serious implications that that has for us in this country.

There are four other points which were raised by the hon. the Minister and which I would like to deal with. Firstly, there was the claim that our merchandise exports, four months after devaluation, were running at an annual rate of R4 000 million as against R3 300 million. One should note that the figures are quoted in rands, and therein lies the major part of the explanation. It is simply the outcome, in rands, of the devaluation, as there has not been much of an increase in their volume, but the hon. the Minister omits to mention that. Then he comes with his defence about the depreciation of our currency vis-à-vis that of other countries, and he chooses the period between October 1972 and January 1974 to compare the rand with all other currencies and then, for the German mark, he chooses February and September of last year. It is again gilding the lily, because what would be relevant would be to consider the performance of the rand in relation to our major trading partners since the date of the Smithsonian realignment of currencies in December 1971. The facts are quite simple. Against the dollar, the rand has gone down by 13,7%. Against the Deutsch-mark it has gone down by 29,7%, and against the French franc it has gone down by 24,1%. Only against the sick men of Europe, viz. the United Kingdom and Italy, have we improved respectively by 10,3% and 3%.

We now come to the hon. the Minister’s remarks about the reserves. He said that they now stood at R926 million, which is a figure quoted by the hon. member for Ermelo, as compared with R729 million this time last year. Here again there is no mention of the fact that they are now devalued rands. Nor do we know what the true net position is, or to put it in another way, how much window-dressing has been done by the Government.

The latest apparent net figure given by the S.A. Reserve Bank’s Quarterly Review shows a figure in September of R426 million, a substantial decline from the figure of R704 million at the end of 1974. But the hon. the Minister goes one further. He made great play of his success in attracting funds from the public in the form of voluntary loans. Note the word “voluntary”, Sir. He says nothing about the increased liquidity ratios required from the banks or the increase in part 1 assets for insurance companies, but simply says that they had great success. Of course they pulled in a lot of money under those circumstances from the private sector. They forced the transfer of these resources by putting the crunch on the banks, and as a result the deficit before borrowing slowed down but still rose in December. Sir, foreign loans have certainly been raised. In reply to a question the hon. the Minister gave the amount since 21 February 1975 as being of the order of R285 million, but the vast proportion of it was short term. Internally interest rates are going up, with all that that entails for investment and growth in the country.

Sir, the hon. the Minister has been less than frank with this House. He has attempted to gild the lily to the point where he has lost his credibility with the public at large and with the business and financial sectors. There is no doubt as to who has misread the signs. The Minister did. With the economy in recession and with the expectation that world recovery was in the offing, the budget for 1975-’6 was stimulatory, but as events unfolded things went very wrong indeed. In its latest Quarterly Bulletin the Reserve Bank, with its normal restraint, puts it quite plainly. It says—

It is made clear that the various official measures taken from August onwards to rectify that position came too late. The hon. the Minister not only failed to foresee in time the coming of the problems, or their nature or their severity, but when he finally did perceive them, or when they arrived, the actions he took could not contain them. He has reduced the flexibility open to our economy at this point in time to a growth rate below the safety margin, or to higher inflation. The Minister has already had to deny that we are going to have another devaluation. You would think, Sir, that South Africa has become one of the banana republics of South America. It has fallen into such financial ill repute that we have to deny yet another devaluation, and of course that is far from the truth, but it is a measure of where this Government and the Minister have brought us to. He and this Government have done nothing to get at the heart of the problem of inflation. They continue deliberately on the grounds of colour to prevent the majority of South Africans from being as productive as they could be and are only too willing to be. They hold to the policy of separate development. They have created the situation through their own expenditures where the country has been living beyond its means, with the result of devaluation. Sir, the hon. the Minister of Finance of this country, or indeed of any other country, is substantially paid in the hope that he has the ability to anticipate or to foresee economic trends. It is fundamental to the responsibility of any Minister of Finance, and in this connection this Minister has failed dismally. It is said that a prophet has no honour in his own land and on this occasion that is a just thing to say about this Minister.

As the economic scene now stands, we can look to a growth rate of about 2% in 1976, to continuing inflation, to high interest rates, to low investment by the private sector, and in the absence of wage increases, to the threat of labour unrest, and in the presence of wage increases, to higher inflation. Sir, the hon. member for Yeoville will deal with what should be done for the future and I will therefore not go into that apart from saying this. Our country stands in an hour of danger and it is no use, indeed it would be ultimately self-defeating, if it is to be put on a war footing or forced back into the laager simply to preserve the status quo. It is simply imperative to abolish now, and not tomorrow, all that stands in the way of developing a united country where all of our inhabitants will be involved and will participate in the decisions. The requirements for victory, and indeed for the future of our country in peace or in war, are that 20% of our efforts should be devoted to military commitments and 80% to getting the commitment of all the people of our land. To get that commitment from all South Africans requires the recognition that we are a multiracial country which must be based on equal opportunity throughout our land for all.

Mr. Speaker, I found it quite amusing this afternoon to see that the hon. member for Yeoville, who used to be the chief spokesman of the United Party and who found himself a new home, has not even been considered for the position of chief spokesman of his new party. There can be two reasons for this. The first is that he is no longer welcome in his party, and that they no longer want to recognize him. The second is that the hon. member, who knows a great deal about finance, would have had to speak against his better judgment if he had criticized this Government today. I think that this is the reason, because it is pathetic and tragic to listen to both parties of the Opposition today. Instead of praising the hon. the Minister and this party for what has been done for South Africa, they come up with all sorts of vague remarks. There have been a few general statements with which I agree, and I will speak of these again, but making only vague comments without being specific does not carry any weight in South Africa. I want to tell the Opposition that our people out there are informed; they are knowledgeable about finance and know how matters stand. The hon. member for Constantia made a few statements this afternoon, and during the course of my speech I will return to some of these, as well as to the hon. member for Johannesburg North.

One of the most important things which the hon. member for Constantia advocated was that the development of border industries should now be halted. Industrialists must be allowed to establish their industries wherever they wish; and then he made the ridiculous statement that labourers should be provided for them, together with their families, wherever they establish their factories. Did the hon. member think of what he was saying for one second when he asked this? Does the hon. member want the border industries of Rosslyn to now be established right in Church Street, for example? Where would all the families of the labourers who are now in the homeland then live? The Opposition must realize that when one establishes a factory in an area which is already densely populated, the land is almost impossibly expensive and that there are also transport problems, etc. And then he brings up the old request that job reservation should be abolished. As he rightly stated, only 2,8% of the labourers are involved in this. What about the other 97% who are not involved? Can 2,8% have any influence as against 97%? The hon. member should consider that percentage. If it were the other way round, then we would have reason to speak.

Sir, I wish to bring something else to the attention of the hon. member, and that is what he said here during the no-confidence debate. I do not want to let him get away with a few statements which he made. Amongst other things he said the following on 27 January, and I want to read it to the House in order to refresh our memories, and I shall deal with him concerning all this in the course of my speech. He said (Hansard, col. 155)—

According to that hon. member the public of South Africa, the industrialist and everyone else, are not at all responsible for combating inflation. The hon. member thinks that it is only the Government who is responsible, but he does not say what he thinks the Government should do. He makes a vague statement. Then he proceeds to say—

But he does not say which promises—

And then he proceeds quite amusingly to make three suggestions to us. Firstly, the exploitation of the public must be prevented where monopolistic or near monopolistic conditions exist. I am going to deal with each of these three points. He says that the Government must encourage competition. The State must live within its own means. Now these are three suggestions which he made during the no-confidence debate, besides these few statements which he made this afternoon. Furthermore, he levels the accusation at the Government that in the 1975-’76 Budget the Minister relied too much upon the gold price for that year’s revenue. This is also what the hon. member for Johannesburg North said. The hon. member for Johannesburg North wanted to know on which price the hon. the Minister based his budget. Now I want to ask the hon. member for Johannesburg North a question: If the hon. the Minister should say that he calculated it on 200 dollars an ounce, what would his comment be? What difference would it have made? Suppose the hon. the Minister told us that he calculated it at 100 dollars an ounce, what difference would it make? But if the hon. member had done a few sums, he could have made the calculation himself, because we know approximately what it is.

Tell us what it is.

The Minister mentioned what we had received from the gold mines, after all.

Then tell us if you are so clever.

I will answer the hon. member in a moment. I first want to quote from the hon. the Minister’s speech last year during the Budget debate. He said (page 7 of the Budget Speeches 1975-’76)—

The hon. the Minister stated this very clearly and unambiguously. The hon. member for Yeoville wants me to indicate which gold price was used as a basis for the calculations. This does not matter. The hon. member for Yeoville is now speaking to another member, and because he is so discourteous, I shall no longer answer him. It seems to me that the hon. member for Yeoville does not have any manners.

I now want to put a question to the hon. member for Constantia: he said that the Government should step in when the public is being exploited. However, the hon. member has not yet told us in which way the private sector is exploiting the public. He has not told us in this House, he has not told the hon. the Minister and he has not told the department. Now I ask him: Where is his loyalty as a South African and as a member of Parliament if, being aware of exploitation, he does not bring it to the attention of the House, of the hon. the Minister or of the department? Why did he not reveal it this afternoon? Is he perhaps gossiping around comers instead of doing his duty as a South African and telling the Government where people in this country are being exploited? I challenge him to cite one example of where this Government has neglected to counteract monopolistic or semi-monopolistic conditions. Why did his party grumble when the Government prevented a monopolistic situation which would have arisen in the Press? I am referring to the case when The Argus group wanted to take over South African Associated Newspapers. Why did they grumble so much? Now they are quiet, as quiet as the grave. A grave could speak much more loudly than they can.

If that hon. member wants to be honest, he should give us an answer now. He said that there should be greater competition in South Africa. I grant that. How wonderful these words sound! We all know that where there is healthy competition, prices will drop. However, he has never told anyone, here in the House or outside what the Government should do to create more competition. Will he please tell us what we should do? Perhaps the speakers who are to follow him can do this. They will probably discuss this in their financial group or somewhere. Competition with regard to goods is indeed important. It would be very easy to create a much larger supply of than a demand for goods, but under what circumstances? If we were to do this, conditions would at least have to be sound. How does that hon. member want to do this? Does he want to make more goods available by abolishing import control where this exists? Or does he want to relax import duties so that much more can be imported? Does he perhaps want to start a campaign—like “Buy Paris!”—thereby allowing more goods to enter the country? If the hon. member wants a much greater quantity of goods to be brought in from outside, may I ask him how he will pay for them? What about the balance of payments? If he wants more goods in South Africa, how should they get here? They will have to be produced. If we want more goods, there must be capital, raw products and labour to produce the consumer goods. South Africa imports too much as it is. Although 80% of our imports are capital goods and only 20% consumer goods, we do need those capital goods for our infrastructure in South Africa. We need those capital goods to provide basic services so that the industries can expand and produce. Now that hon. member must tell me in what respect the Government has ever been lax regarding the importation of capital goods. He cannot charge us with that. On the contrary, we are being criticized today because we import so much. However, which of these articles which are imported should not be imported?

Caviar!

If people no longer buy caviar, that hon. member will no longer be able to make a living. This National Party Government—and we do not make a secret of it—has done a great deal, and is still doing a great deal, to help South Africa with its industries, etc. This Government has, for example, gone out of its way to help the retailer to remain in the country districts so that he can make a living and sell his goods in the country districts. It has helped cooperatives to provide the farming community with goods so that we can produce food in this country. To have cheap food is one of the most important things in any country in the world. This Opposition has accused us repeatedly of helping the farming community in South Africa to produce cheap food.

Once again this afternoon we have had attacks on decentralization schemes, etc. We do indeed have a policy of decentralization, but this is not unique to South Africa; it occurs throughout the world, if the hon. members would just open their eyes and do a bit of homework or go and see for themselves. They travel abroad a great deal. They can therefore go and visit the immense decentralization schemes there and see how they work. The advantages of decentralization schemes, by which industries are scattered all over the country, are legion compared with the disadvantages involved. If I only think of all that this party, this Minister and the Minister of Economic Affairs have done to establish and assist industries in South Africa, I think we owe them a debt of gratitude for all that assistance rendered to our industrial and agricultural sectors. Just think of the assistance which has been rendered to the agricultural sector. We will discuss agriculture again this year and the hon. member can then accuse the hon. the Minister of Agriculture of having done too much. Just think of everything which is done with regard to the Land Bank.

I now want to refer to last year’s budget. Hon. members on the other side say that the Government must live within its means. This is what the hon. member for Constantia said during the no-confidence debate. He repeated it today. He said that this Government was not living within its means. This is also what these hon. members said in the Press after the devaluation of 22 September. I am strongly tempted to go through the hundreds of pages of the budget report and to give them an answer on every item. There may be items on which there was uneconomical expenditure. Take Parliament as an example and we could say that the salaries which are paid to the members of the Opposition are perhaps unproductive. Let us take the amount of nearly R1 000 million for defence. Do they have any objections to this? Now they must tell us where the State spent too much money in that respect. Where was money wasted? Those hon. members, indeed all hon. members of this House, owe it to South Africa to see that money is not wasted, and they must therefore give us an answer here. They must tell us here and elsewhere as well. Let us take the department of the hon. the Minister of Foreign Affairs.

Do not spend money if you do not have money.

I now want to put a question to the hon. member at the back who has suddenly become so talkative. Which moneys for foreign affairs should not have been budgeted for or spent? Is South Africa not supposed to carry its name out into the rest of the world? Is our country not supposed to take its rightful place? This Opposition, its henchmen and its newspapers, were the ones which slandered South Africa abroad years ago. However, they are now paying the same price for this as we are, although when we warned them not to slander South Africa at that time, they said that their attacks were not directed against South Africa but against the Nationalists. They forgot that the Government of a country represents all people in that country.

Why do you spend money on the UNO?

Then there is the Labour Vote. The Opposition must tell us where we squandered money there. Then I think of the Transport Vote, under which R22 million of the R84 million was appropriated for transport facilities for non-Whites. Should that money not have been spent? In this way I can go through the whole budget. During the Second Reading debate on the Appropriation Bill last year the Opposition did not point out a single item on which the Government had wasted money or on which we could have economized. On the contrary. The Opposition asked that more should be spent. They did not ask why we were not economizing. It was the hon. the Minister of Finance who produced the anti-inflation campaign and who said during his Second Reading speech on this Bill that he had forced departments to save R800 million. He mentioned several items on which we would have to economized. This is what the Government does. We keep to consistent and logical thinking and do not lapse into vagueness.

There are also a few other matters which I would like to mention. I return to the devaluation of 17,9% which was announced on 22 September last year. I wonder if I may advise the hon. member for Hillbrow rather to refrain from making economic statements. If one wants to make statements about economy and finance, one must at least know something about them and not be entirely stupid, because then one may say son thing so stupid that even one’s own people will laugh at one. [Interjections.] The hon. member said that as a result of devaluation there would be an uncontrollable price explosion, that the inflation rate would soar from 15% to 25%. This was the hon. member for Hillbrow’s prediction. But now? The hon. members criticize the hon. the Minister because his prediction was not 100% correct. But how do things stand now? I think that an inflation increase from 15% to 25% is rather a drastic jump. The hon. member further criticized the Government by saying that the Government had decided on devaluation in order to rectify the balance of payments and that it might subsequently prove to have aggravated the position. How can one make such a statement? Every economist in the country knows what devaluation means and what its aim is. It is something that is only resorted to when the balance of payments is threatened. No other reason for devaluation exists. The hon. member also said—

He left it at that. I am sorry that the hon. member is not here. Why does he make such a statement, a half-truth, and then leave it at that? He leaves it hanging in the air.

Order! The hon. member may not say that another hon. member has told a half-truth. He may say, however, that another hon. member has told a complete untruth. If he says that an hon. member has told a half-truth he is using unparliamentary language.

Then I withdraw that statement. I do not believe that the hon. member wanted to tell a complete lie. However, he only made half a statement and did not complete it, with the result that it has created a completely wrong impression. It reflects on the people to whom he refers, because it makes them seem ignorant. I want to refer the hon. member to one of the prominent people in our financial circles, Dr. Gerhard de Kock, who is a vice president of the Reserve Bank. I want to quote from a speech which he made before the Afrikaanse Sakekamer in Pretoria East shortly after devaluation. Perhaps we could all benefit from listening to what he said about exporting (translation)—

His concluding paragraph reads—

This is what is said by someone who knows the economy. He speaks the same language as the Minister, his department and all his advisers.

The hon. member for Yeoville also had something to say about devaluation. I want to give him credit for the fact that he was clever enough not to criticize and reject devaluation completely. He definitely knows better, more than the two hon. members of the official Opposition who made a statement here in Cape Town. He said—

This is all that he said.

No, there is a list of specific things which I suggested.

According to the newspaper report which I have here, this is all you said. [Interjections.] I am sorry that the hon. member did not have a turn to speak this afternoon, because if he had spoken, he would have been able to say something positive about this side of the House. He would not only have criticized; he would also have said something positive. I think it would be a good idea for the hon. member to enter the debate at a later stage and to spell out clearly why South Africa devaluated. There were only two reasons for this and these the hon. the Minister gave us. In the first place there was speculation against the rand. I refer to the amount of approximately R40 million which left the country over a weekend. In the second place there was the drop in the gold price. The hon. members want to accuse this Government and the hon. the Minister of being responsible for the drop in the gold price. What control do we have over the world gold price? The National Party and the hon. the Minister are strong and powerful indeed, but not so strong that we can regulate and control the gold price of the whole world. We are not yet that powerful. However, I must nevertheless thank the hon. members for the compliment. As I said, we have not yet managed this. Perhaps we will be able to do so in 25 years’ time.

I want to ask the hon. Opposition in clear straightforward language to say whether anything is going badly in South Africa. Is there any sector, any section of our economy, any financial institution or anything of this kind which is experiencing great difficulties? We can compare ourselves with the best in the world. If we consider that the countries, belonging to the Organization for Economic Co-operation and Development the 24 most powerful industrial countries in the world, had an average growth rate of minus 2% last year, our own 2,9% compares very favourably. In addition we must keep in mind that we have only 4 million Whites who also have to cater for approximately 20 million non-Whites in this country. In spite of all our problems and in spite of the negative contribution of the Opposition, South Africa’s growth rate reached an average of 2,9% as against the negative growth of 2% in the OECD countries.

What is important in a country? The unemployment figure is an important guideline. It does not matter whether you receive a good or a poor salary; if you are employed, you can live. Do we have any unemployment in South Africa? In South Africa the unemployment figure for Whites, Coloureds and Indians is 0,5%. Actually the crippled, the blind and the disabled must also be working for the unemployment figure to be so low. Unemployment of 2% is internationally accepted as standard unemployment, as normal. In South Africa there is employment for every Bantu who wants to work. The mines say that they cannot get enough employees. That is why they entice the farmers’ employees away from the farms. Attempts have even been made to recruit people abroad. The industries in the cities also struggle to obtain sufficient employees. Approximately 400 000 Bantu from neighbouring states work in our mines in South Africa. I think it was one of the Ministers of Lesotho who said that his people had obtained approximately R50 million from South Africa’s gold mines during 1975.

We in South Africa are very fortunate, because things are going well for us. What an amazingly high standard of living we maintain! Not one of the hon. members on the Opposition side has sacrificed so much as one cent during the past year or six months by way of a lower standard of living. [Interjections.] This holds for most people in South Africa. We admit that some prices have increased a great deal. We admit that there are problems, but this Government is on the alert. It faces up to the problems and works on them.

Let us look at what is said by foreigners who come to South Africa. The hon. members need not take any notice of what I or any other member on this side of the House say. Let us see what the outside world says. I want to refer hon. members to what was said by an American professor, Prof. Morris Matson, who paid a visit to this country, I quote from Suid Afrikaanse Oorsig of 14 November 1975. When he addressed the Bureau of Market Research of the University of South Africa in Pretoria, he said, according to the report, that South Africans enjoyed the highest standard of living which he had ever come across in the world. It is an American professor who says this. Do the hon. members maintain that he is stupid and does not know what he is talking about? No, Sir, that man knows what he is talking about. This is a man who has studied this specific subject. He knows his subject. He places the standard of living of the Whites in South Africa above that of the Americans, of the Swedes, and many other nations, and we all know how high the standard of living in America and Sweden is. However, he also said that this lifestyle cannot continue without an increase in productivity on the part of South Africans. He went on to say (translation)—

However, let us not only look at America. I want to refer hon. members to what was said by a politician and member of Parliament from Austria, Mr. Sepp Wille, who was a guest of South Africa. He is a member of the Socialist Party in Austria. He travelled through South Africa and saw everything. Amongst other things he went to look at the mines, and he must have had conversations with spokesmen of the Opposition, members of the Government and others. A great deal is said here about the alleged sufferings of the non-Whites in South Africa. After Mr. Wille had paid a visit to a mine in Johannesburg he said (see South African International of October 1975)—

He also said that although the buildings in which they live are not luxurious, they are nevertheless decent and clean. He added—

This is what visitors from outside think and say of South Africa. [Interjections.] Any hon. member who says that this is not so is talking a lot of rubbish. I want to give the hon. Opposition some advice this afternoon. I do this with reference to what President Kennedy said when he addressed the American people 15 years ago. He said to them—

Mr. Speaker, the hon. member for Sunnyside has followed his usual custom of putting up his own targets in order to shoot them down again. What is more, he missed most of them. Let me mention a few examples. He quoted from old speeches again, of course, and wrested the quotations from their context. He quoted the hon. member for Constantia, for example, and criticized him because he had advocated that the Physical Planning Act should be relaxed. The hon. member for Sunnyside said that it meant that the industrialists were to be given free rein to establish an industry in Adderley Street. What kind of argument is that to advance?

That is a lie; I said “Church Street”.

Order! The hon. member must withdraw the words “That is a lie.”

Mr. Speaker … [Interjections.] … on a point of order: The hon. member alleged that I had said “Adderley Street”, while in fact I had said “Church Street”. It is not true that I said “Adderley Street”. [Interjections.]

Order! The hon. member must withdraw his statement that it is a lie.

I withdraw it, Sir.

Let it be Church Street, as if that made any difference! Then the hon. member said that we were opposed to decentralization, while this was a world-wide phenomenon. That is correct, but nowhere in the world are people silly enough to say that for every 2½ non-Whites one employs, one has to employ one White—and this in a country where there is a shortage of labour!

The hon. member challenged us to say where this Government had spent money which should not have been spent. I want to ask the hon. member whether he considers it fair to use the money of the tax-payer of South Africa to build houses for R98 each for MEC’s in the Free State? [Interjections.] I am sorry. I mean a house of R98 000. When I consider what the MEC’s are worth, I do not think their houses should have cost more than R98. In addition, R114 000 was spent on repairs to the house of one MEC in the Free State. Is it fair to waste the tax-payer’s money in this way? Then the hon. member asked where they wasted money. The house of the Chief Justice in the Transkei cost more than R250 000. We also want these people to live in good houses, but to spend R250 000 on a house is really going too far. For the President of the Transkei, the Government built a house for R1 600 000. I believe that even the hon. member for Johannesburg North does not live in such a house. Then there were four houses that were built for Cabinet members in the Transkei. These cost R280 000, R280 000 each, not for all four.

The hon. member really is verkramp.

Indeed! If one is not prepared to waste money at this rate, one is verkramp! So one is supposed to waste the tax-payer’s money. In addition, they built an office block of R12 million in the Transkei. And I do not even know how many millions the stadium there cost. I see the hon. member for Carletonville, for one, agrees with me. He, at least, is worried about this. [Interjections.]

I shall get to you tomorrow when I speak.

Then I do not even want to inquire about the price of the television sets which were bought for the Ministers. [Interjections.] I understand that they have now received two each.

And three cars!

They received two each. Apparently they do pay R10 a month for each, though. And what about the cars? I have a newspaper cutting here in which I read that they have bought 98 Cadillacs. [Interjections.] I shall read it to you.

What about the Cadillacs?

It goes on to say—

[Interjections.] Now I want to ask …

What about the Cadillacs?

I am sorry, it should be Mercedes Benz cars.

What is the difference?

In any case, is a Mercedes Benz so much smaller than a Mercedes? [Interjections.] I mean Cadillacs. As far as I am concerned, they are both the same. However, I shall tell you why the hon. members are laughing. They had their Cadillacs. Then, however, they wanted two cars. So they bought a Jaguar and a Mercedes. That is supposed to be the smaller car. Now they each have two cars—one big one and one very big one.

They should get scooters!

Now I come to the hon. member for Ermelo. I see that he is not here, but I nevertheless want to congratulate him on his promotion to chief spokesman on the other side. I just want to say that Rapport asked a short while ago: “Bring Jan Haak back.” Now I want to predict that Rapport is going to write this weekend: “Bring Wynand Malan back.” [Interjections.]

Get rid of Van den Heever.

You kept trying in King William’s Town, but you will not succeed in doing so. [Interjections.] I now want to speak about the hon. member for Ermelo.

Why not rather speak about wool?

The hon. member for Ermelo admitted that the Government had economic problems. But according to him, the Government is not to blame for this. The very next moment he boasted that South Africa was one of the twelve largest export countries, and he alleged that we had the Government to thank for this. [Interjections.] The point I want to come to is this: If the country does not prosper, it is not the Government’s fault. However, all the positive things were achieved by the Government—this is the standpoint of hon. members opposite.

Just think of all the rain.

Then the hon. member for Ermelo referred to the achievements of the Government. One of the greatest achievements that he boasted of here was that the Government—or rather Escom—was able to borrow R174 million abroad. When the hon. member had no arguments left—for it is difficult to be a Nationalist, particularly in these circumstances—he raised the old argument again which the hon. the Minister of Economic Affairs also trotted out the other day. He said we were unpatriotic. Mr. Speaker, when one criticizes this Government, one has suddenly become unpatriotic. One is not allowed to criticize the Government.

We are being asked to approve an Additional Appropriation …

Not an Additional Appropriation.

Well, then, a Part Appropriation, if you like, a Part Appropriation of R2 300 million. [Interjections.] That is a substantial amount.

Please correct him!

It is a substantial amount. Not so many years ago, in 1970, when I came to this House, the total expenditure on current account for that year was R1 700 million. Now it is R2 300 million for only four months. [Interjections.] Mr. Speaker, this Government spends money so rapidly that one cannot keep track of the millions. [Interjections.] Mr. Speaker, I want to tell you quite frankly today that we, the Opposition, find ourselves in a very difficult situation. [Interjections.] Listen to the reason why we find ourselves in a difficult situation. We find ourselves in a difficult situation because of the position in which South Africa finds itself. When we think of our borders, of Angola … [Interjections.] Yes, go on, laugh! I suppose this, too, is a joke to you. [Interjections.] I am not thinking of the borders of Angola only, but also of the fact that our partners in détente—Kenneth Kaunda, Samora Machel, Seretse Khama and Julius Nyerere—declared in Lourenço Marques the other day that their priority was the liberation of South Africa, Rhodesia and South West Africa.

That is an HNP story.

Now they are HNP stories. Mr. Speaker, here it is in all the newspapers. The problem with that hon. member is that he never reads any newspapers. He is so caught up in the policy of the Nationalist Party that he never thinks of the interests of South Africa. [Interjections.] If this is the case, it puts us in a very difficult position. Everybody in South Africa knows that the Government must have money for defence, and we know that great sacrifices have to be made in South Africa. The UP will always provide the necessary money to meet South Africa’s requirements. [Interjections.] As far as the defence of the country is concerned, I want to make it clear that security cannot be measured in terms of money. Israel spends 50% of its budget on defence, Russia spends 25% and South Africa spends about 16%.

In what newspaper did you read that?

We are in a difficult position, for I do not think the people of South Africa want to withhold money from the Government. Nor are we able to do this. However, before one can vote money, one must have the assurance—and this is what the motion of the hon. member for Constantia asked for—that the Government, too, will contribute its share and will not just waste the money. [Interjections.] Now I want to ask in all seriousness whether hon. members can honestly say that this Government is not wasting South Africa’s money. Can you honestly say that the Government is contributing its share in utilizing the money we have available to us in the most profitable way, particularly in times such as these?

Yes, of course.

The hon. member says “yes”. If this is so, we do not want to read something like this—

From what newspaper are you reading now?

I am reading from the Sunday Times, Mr. Speaker. I am not saying I believe the Sunday Times, but a statement in this regard was issued by the Minister, and he did not deny the figures. The report goes on to say—

Mr. Speaker, a property valued at R127 000 is sold for R2 million! Then they go on to say—

I am not accusing Mr. Braam Raubenheimer of anything. I know him. But what I do want to accuse him of is imcompetence—nothing more. This transaction took place at a time, in September, when my constituents, the people of Frankfort and Braunschweig, had been waiting for their money for years. I want to tell you briefly what happened to these people. In 1952 that area was declared an area that had to be purchased for the expansion of the Ciskei. The people did not want to sell their land and sent deputations and begged to be allowed to keep their land. But the Government declared the area and forced them to sell their land. Then they were promised that their land would be bought in 1974. They did not want to sell, but they did eventually accept the position. Then the election year came, promises were made that the transactions would be finalized by June. Appraisers went around the farms to assess their value. Then came 1975, and in August 1975 offers were made for the farms. The offers were valid for 60 days, and the notices also said that the people were not to plough again, although the crops on the farms could be harvested. When these people received the offer from the Government, they believed that they could go and buy other land, because if the Government has made you an offer, you can count on it, after all. And then? Within 60 days they received a telegram to the effect that the offers had been withdrawn.

Disgraceful!

Strangely enough, one farmer received it on the 11th, a day before this Port St. Johns transaction took place. Then the people were in trouble, for in the meantime they had bought other land, they had sold their ploughs, their land was lying fallow. Now they have been without a harvest for a full year because they were told not to plough. I went to see the hon. the Minister in Pretoria. He shrugged his shoulders and said that he wanted to help me, but that he could not because he did not have the money. Where was their planning, Mr. Speaker? How does one plan to buy out an area if one does not have the money? How can one make offers if one does not have the money?

What about Port St. Johns?

But Port St. Johns can be bought out. Those speculators can be bought out, but the poor farmers … [Interjections.] So I went to the hon. the Minister of Agriculture, the man who has so much sympathy with the farmers, and I requested him to introduce a moratorium so that the farmers’ properties could not be sold off by creditors, because they had had to enter into obligations for the other farms which they had purchased. The hon. the Minister sent me a circular stating that it had been said in May that the people should not buy before the transaction had gone through. But, Mr. Speaker, if one has an assurance from the Government, an offer valid for 60 days, has the transaction not been finalized then? If I tell a man that I am making him an offer which will be valid for 60 days, then it means that it will be valid for 60 days. It does not mean that you can withdraw the offer and then swindle the farmer by using clever legal points. Now these farmers had to learn at this late stage that there was no money for them. They accepted this, because they are good patriots and they all belong to the Nationalist Party. They said that if the Government had got into trouble, well, that was that. But now they have to learn that speculators were paid, speculators who made R1 700 000. The farmers were thrown to the dogs and some of them will go bankrupt.

Boet Hertzog.

What did the hon. the Minister say?

You beat Albert Hertzog hands down.

Now I have suddenly become a Hertzogite because I am pleading for the farmers of South Africa and against the injustaces which were done to the people of Braunschweig and Frankfort. [Interjections.]

I now want to come to the other matter. The hon. the Minister of Economic Affairs said that he had done what he could to combat inflation in South Africa. In the meanwhile, the rand has been devalued by 17,9%. Only a few days after the devaluation the petrol companies said that their expenses had gone up and that they wanted an increase of 18% in the price of fuel. The hon. the Minister granted them the increase of 18%, because the argument that was advanced was that their expenses, too, had increased. But if this applies to the petrol companies, surely it applies to everyone else. Could the hon. the Minister not have argued with these persons and pointed out to them the amounts they spend on advertisements, for example? Whenever we go to the cinema or switch on the radio today, we hear “Ride the red horse” or “There is a tiger in your tank”. Who wants a “tiger in his tank”? There is only one petrol in South Africa, after all, and it is in short supply. Why then must these companies keep on advertising and cause the cost to increase still further? Could they not have absorbed some of the cost themselves? Mr. Speaker, when one filling station in Stellenbosch tried to sell cheaper petrol, the Minister prohibited him from doing so. It is a crime to reduce prices in South Africa. This was done by an hon. Minister, Mr. Speaker. He wants to combat inflation by increasing prices.

Mr. Speaker, I wanted very much to address an encouraging word to the hon. member for King William’s Town but the best I can do under the circumstances is to say that the contribution he has just made, might even have been a little poorer than the contribution he normally makes. At the beginning of his speech his facts were very muddled. First he was in Adderley Street when he should have been in Church Street, and after that he referred to houses in Bloemfontein which were sold for R98 each. After this he referred to 98 Ministerial Cadillacs and then became clear that it should have been Mercedes Benzes. I really think this hon. member most certainly went too far with what was, as far as I am concerned, an extremely reprehensible attack on the so-called wastage of money. It struck me that the hon. member made the notes for his speech on the expensive letterheads of Parliament while I use the ordinary notebook for the purpose. I find it very strange that the hon. member discussed extravagance while that was in the meantime what he himself was doing. Mr. Speaker, I also think he made an effort to engage in petty politicking on the question of Port St. Johns. I immediately want to ask the hon. member for King William’s Town whether he, when he decides to dispose of his farm one day, will also put that farm on the market at the divisional council valuation. He will certainly not give me a reply to that question this afternoon. This is the kind of argument we have here this afternoon when a member attacks the Minister on matters in respect of which he does not have the facts at his disposal. It is not worth spending more time on the hon. member because after this tremendous speech of his, it would do him good to rest awhile, and therefore I shall leave him at that.

In his 1975 Budget speech the hon. the Minister indicated that inflation was a very serious problem and that this problem was strongly influenced by economic conditions abroad. The economic conditions overseas deteriorated seriously and for long periods during the past year, without this having been expected. Recession, and in many cases depression have descended unawares upon most countries of Europe and North America, with the result that unemployment and low growth rates are prevalent. This has had a particularly harmful effect on our own exports.

The sudden and considerable fall in the gold price—in June it was $ 164 per fine ounce and in September $130—was caused by factors beyond our control. This also had a very harmful effect on our economy. Under those circumstances it was clear that a solution would have to be sought. The Government proceeded to search for the solution in devaluation and in the combating of inflation.

Of devaluation it can be said that this was the most obvious solution there was, although none of us would have wanted to devalue if this had not been essential. Under those circumstances it was, however, necessary to proceed to devalue. This was no panic measure or proof of a radical weakness in our economy. It was simply a logical step to counteract the strong negative influence on our balance of payments. We can now, after devaluation has taken place, ask ourselves whether it was the correct step. We know there were many doomsayers—many of them among those seated in the Opposition benches—who proclaimed that devaluation would cause a tremendous lowering of the standard of living, that it would cause serious recession conditions, that it would require sharp credit restrictions to counteract devaluation, that major price increases would be prevalent and that our balance of payments position would deteriorate drastically. None of these things happened. In fact, devaluation has already resulted in there being a remarkable increase in our reserves. In August 1975 the reserves were R988 million. These rose, and in September 1975 they stood at R1 070 million.

According to the Opposition devaluation would consequently have had a tremendously harmful effect on the rate of inflation. However, this too, is not quite true. The increased price of imported articles, something which had to follow inevitably on devaluation, would to a large extent be counterbalanced by the decrease in the volume of imports as a result of the higher prices of such imports. In this way the harmful effect of devaluation on the consumer price index is to a large extent being curbed. According to the hon. the Minister the rate of inflation declined from 18,2% in the third quarter of 1974 to 10,4% in the fourth quarter of 1975.

There was yet another solution, namely the solution which is being sought in the fight against inflation. Although the expected economic revival overseas—according to reports this revival is already discernible in the USA, while the signs are already there in West Germany and Japan—should have a favourable influence on our exports and therefore on our balance of payments as well, it still remains of cardinal importance to curb inflation and by so doing derive the greatest advantage from the increased exports. In the fight against inflation it is important, however, not to take such drastic measures that growth would be suppressed completely, thus forcing the economy to a halt. Therefore I am full of praise, and I believe every South African should be full of praise, for the hon. the Minister of Economic Affairs and the Government for the way in which they are launching this ambitious attempt to combat inflation.

I want to point out that no restrictive credit measures are being taken which are too strict and would cause a lack of liquidity at a stage when we need it most to stimulate the economy. Nor are there compulsory price and wage freezes which would disrupt the entire economy. All that is being done is to make the workers to show self-restraint when it comes to the formulation of their wage and salary demands. A request is also being made to undertakings to practise self-restraint when it comes to the determination of price increases. These should not be greater than the absolute minimum necessary to counteract the inevitable cost increases. The same appeal is also being made to professional people such as doctors, attorneys, engineers and others to keep their fees as low as possible. It is also a fact that the fight against inflation is not making an onslaught on reasonable and fair profits. In fact, the incentive for increased production and harder work should always be there.

The chief aim in combating inflation is to stimulate greater production and efficiency and to counteract unnecessary wastage and expenditure of money. This is not a task for the Government only. It is also the task of every member of the population. I am afraid the economic prosperity and the remarkably high growth rate of the years 1973-’74 in particular made our nation indolent and extravagant. Physical labour and maximum exertion to produce the highest possible growth and production decreased drastically. If this situation were to continue, we would lose the respect which many other countries had for us.

How should we combat inflation in practice? I believe that combating inflation is the task of all sectors. In the first place it is the task of the Government; we have no quarrel with the Opposition on that score. In the second place it is the task of the agriculture, mining, trade and industries. However, it is also the task of the ordinary individual in the street.

I should like to deal briefly with the tasks of the three different sectors. In the first place there is the task of the Government in the fight against inflation. The Government is very definitely doing its share. There has been no increase in the salaries of public servants during the past 18 months. There has also been a cut-down on Government spending. In the period 1971-’74 Government expenditure rose by 59%, defence excluded. However, this was as opposed to an increase of 65% in the gross national product. For 1976-’77 reductions of more than R800 million were made to the amounts which were requested by the various Government departments, as was mentioned earlier. There are also the efforts made by the Government in regard to the establishment of building norms for public buildings, universities and schools. There is also the commission that was appointed to investigate the finances of local governments.

I would also like to mention a further contribution of the Government to you, namely the financing of expenditure from non-inflationary sources. It is of the utmost importance that, if expenditure has to be financed in any case, even though there are restrictions on Government spending, that expenditure should be financed in such a way that it is not inflationary. And now we have already heard from the hon. the Minister that remarkable success has been achieved with Government loans. In September-October 1975 there was one of R343 million. In January 1976 there were two loans, one of three years and one of ten years, for R376 million and R117 million respectively. The requests made to the building societies to invest their negotiable deposit certificates in the public sector, was very effective. Insurance companies and pension funds were asked to invest the additional 2% of assets and liabilities in Government securities. By means of Government securities an amount of R90 million was collected in December last year. The fact that all these measures were successful, already indicates that there is a remarkable confidence in the measures which are being applied by the Government. There is also another task of the Government in regard to the fight against inflation which I want to mention to you, and in this regard I come to the effect of the détente policy. I believe the success of the détente policy, as revealed during the past 12 months, is creating confidence at home and abroad and therefore greater efficiency among our businessmen in this country. What is more, it is creating an attractive climate for investment by foreign investors in South Africa.

It is also the task of commerce and industry to combat inflation. To my mind, the biggest contribution which this sector can make, is to manifest trust in the economy of our country. I am convinced that if a person does not have the necessary confidence in himself, he most certainly will not be able to produce successfully. This is the case at all levels. In addition it is essential that this sector as well should have the highest possible utilization of its available manpower. I am afraid we sometimes use manpower in certain posts or jobs where they could be replaced by others who could do that work more effectively. They themselves could then move to another avenue of employment where they could make a greater contribution. I think it is for trade and industry to undertake the necessary studies in this connection with a view to placing the available manpower in the posts in which they are able to render maximum production. In this connection I think it is essential for the necessary work studies to be made to increase production in this way as well.

I said that the individual, the ordinary man in the street, also has a special task in the fight against inflation. I am afraid that the individual is not finding it easy in these times. Inflation encourages people to buy before the prices go up again. Every day we hear a man arguing that if he did not buy a particular article now, he might have to pay more for it in a few months’ time. This encourages inflation even further, and undermines the desire to save. I want to mention that in the mid-sixties the percentage of available personal income that was saved, was 12%. In 1973 this percentage dropped to 9%. I am pleased to say that it rose again slightly in 1974 when 10,6% of the total available income of the population went into savings. Dr. M. D. Marais said inter alia that the total personal income in 1973 rose by R1 210 million or 11,2%, while the total consumer spending rose by R1 463 million or 15,5%. This means that personal savings dropped by R274 million, or 20,6%. Therefore, too large a portion of people’s income is being spent, and too much money is being borrowed to buy goods which are not really necessary.

The ordinary consumer has a problem in this inflationary situation, because it is difficult to buy selectively, although this is definitely one solution. Judicious spending does not simply mean that less should be bought, but that buying should also be done more selectively. It is very difficult to buy sensibly today, because, in the first place, credit is freely available. We quite often find that the dealer urges the prospective buyer to buy an article since credit is available. In the second place there is a trap for the buyer. Advertisements are being presented in such a clever way these days that many people are tempted by them. Often, and precisely as a result of the advertisement, people buy an article which is not urgently necessary and without which they could easily have managed. A third problem facing the buyer, is the wide choice of products, which makes it difficult always to choose the right one. It is maintained that an average-sized supermarket today has between 7 000 and 12 000 articles on its shelves. This of course leads to confusion in the person who has to buy an article there. With reference to this, I want to argue that a reduction in the kinds and ranges of commodities will also lead to purchase prices and in particular the costs of repairs being drastically reduced. This would also contribute to combating inflation. I do not believe we can afford the numerous models and ranges of motor cars, and tractors, for example.

I want to conclude by saying that the fight against inflation requires the assistance of everybody. It will be of no avail to sit back and say it is a task of the Government only, and then to criticize the Government when matters do not turn out the way we all want them to. The achievements of Japan and its ability to achieve a high growth rate with limited inflation, can be traced back to the pride, loyalty and honesty of the Japanese worker. I believe the Afrikaner also has the inherent ability to accomplish this with discipline and pride in one’s work, and to win the fight against inflation in that way. The arms of the Government can be strengthened in that way.

Mr. Speaker, it is with mixed feelings that I rise to my feet in this House this afternoon. On the one hand it is an exceptional privilege and honour for me to be able to enter this House as the representative of the historic electoral division of Smithfield. A lasting imprint has undoubtedly been left in this House by this electoral division. On the other hand I am deeply aware of the responsibility which rests on my shoulders. During the past 65 years the electoral division of Smithfield has been represented by only four persons. In addition this electoral division has had the great distinction of having given South Africa, in its first four representatives, a Prime Minister—the late Gen. Hertzog—an Administrator of the Free State, a Minister, a State President of the Republic of South Africa—our beloved Oom Jim—an ambassador, Dr. Buks Fouché, and a Commissioner General of the South Sotho nation, Mr. J. S. Pansegrouw. I feel puny when I pay tribute here this afternoon to my four predecessors. In view of this you will realize, Sir, that as the fifth representative of this historical electoral division, I appreciate what great responsibilities rest on my shoulders. I trust that it will be granted to me to draw on the source of all strength, and if this is possible, I shall go to meet the future with confidence.

Since 1910 serious problems have been experienced in South Africa in respect of inter-governmental relations, and consequently a large number of commissions and committees of inquiry have devoted attention to these problems. In my opinion the Schumann Commission and the Borckenhagen Commission were the most important of these. In the first 60 years which elapsed since Union, it was not possible, however, to find a permanent basis for sound relations of this nature, particularly because no satisfactory solution could be found to the problem of provincial subsidization by the central Government. The basis on which the central Government subsidizes the provincial authorities in South Africa, is of key importance to the entire framework of inter-governmental relations in South Africa. The White Papers on the Schumann and Borckenhagen reports were a radically new attempt to place intergovernmental relations on a sounder basis. The new system was based on detailed and exhaustive research, and therefore it may now with justification be said, now that it has been in operation for five years already, that it meets most of the expectations. The most important feature of the framework within which the Government resolutions in the Schumann and Borckenhagen White Papers were contained, was the three-tier system of government, in other words, the central Government, the provincial administrations and the local authorities, and this was done because these are the three vertical levels of government which are recognized in South Africa. But it is an imperative condition for the maintenance of sound financial relations between these various levels of government that each should have an adequate income at its disposal to be able to carry out the functions entrusted to it. Inadequate funds can place a governmental body in a very unenviable position. To establish sound financial relations between the various levels of government, it is not only necessary that each level should have an adequate income at its disposal. What is particularly important is that there should be equal treatment of the various bodies on the same level of government, for otherwise it may justifiably be asked why certain governmental bodies are receiving preference above others.

The adverse effect of unequal treatment has been experienced in South Africa by certain provinces in particular. Attempts made during the first period of 60 years to ensure equal treatment miscarried primarily because of a lack of the necessary statistical data and analyses. In the formulation of the resolutions in the White Papers, these questions were squarely faced, and consequently a subsidy formula was drawn up for the provinces which succeeded to a large extent in ensuring equal treatment. As far as the provinces are concerned, therefore, the financial year 1 April 1971 to 31 March 1972 will be recorded in their annals as the year in which the finances of the provinces were placed on a completely new basis by the new Financial Relations Act. To demonstrate the difference between the years prior to 1971 and subsequent years, I should like to furnish certain statistics in respect of the income of the Orange Free State for the years between 1969 and 1976.

I shall first mention the years 1969 to 1971, in other words, the years prior to the new financial dispensation, and I am merely indicating the percentages to you. Firstly, the revenue obtained from personal tax. In 1969 this amounted to 16,7% of the total revenue of the province. In 1970 it amounted to 13,0% and in 1971 to 10,9% of the total revenue of the province, in other words there was a downward trend in respect of the revenue obtained from personal tax. Secondly, if we consider the revenue obtained from company tax, we find that in 1969 the revenue obtained from this source amounted to 3,7% of the total revenue, 3,8% in 1970, and 3,9% in 1971, in other words a small constant amount was obtained from the tax on company incomes. Thirdly, there is the subsidy on the contribution from the central Government. In 1969 this amounted to 43,3% of the total income of the province. In 1970 it amounted to 53,3% and in 1971 to 61,9% of the total income of this province, in other words there was an upward trend, a rapid upward trend in respect of the revenue obtained by way of a subsidy from the central Government. Since 1972 the revenue sources of personal tax and company tax have fallen away, and we find that the subsidy of the central Government, under the new Financial Relations Act, now amounted to the following: In 1972 it was 81,9% of the total income of the province; in 1973 it was 83,1%; in 1974-’75 it was 83,9% and in 1976 it was 81,2% of the total revenue of the province. In other words, a constant contribution of plus/minus 83% of the total revenue of the Free State that was obtained in the form of contributions by the central Government. If similar statistics were to be drawn for the other provinces, we would find that in the year 1970-’71 the contribution of the four provinces which they received from the central Government amounted to 64%. In 1971-’72, the new financial year under the new dispensation, it was 82%. In other words, these subsidies are therefore without any doubt the key factor in the finances of the provincial authorities.

However, there are a few important factors as far as the Free State is concerned which do not receive sufficient attention in the determination of these annual subsidies. Before dealing with these, I want to mention to you briefly the basic requirements set by the Schumann Commission for the determination of the subsidy formula for the provinces: Firstly, the determination of the needs of the various provinces in respect of the services they have to render, and secondly, the determination of the capacity to pay of the various provinces in respect of the revenue obtained from their own resources. When this calculation has been made, the deficit which arises when the revenue is deducted from the expenditure, must at least be covered by the subsidy. In the application of the formula the need of each province in respect of the services it has to render, is measured or expressed in terms of its standard expenditure, while its capacity to pay is measured against its standard revenue. In the calculation of the requirements or the standard expenditure, it is obvious that it is not possible to take every factor and every item which increases the expenditure of one province as against that of another into consideration. The standard expenditure, as well as the standard revenue, must, however, be determined in such a way that structural features influencing the expenditure of one province as compared to that of another significantly should in fact be taken into consideration.

As an example of these structural differences I want to refer to the education formula. To make allowance for the higher unit costs of education in the rural areas, urbanization, for educational purposes is calculated on the basis of the number of Whites in cities and towns with more than 2 000 White inhabitants. The following percentage of urbanization, in round figures, was obtained: The Transvaal, 82%; Natal, 77%; the Cape, 72%; and the Free State, 57%. These percentages were applied to make allowance for the higher unit costs of education in the rural areas. With a view to the calculation of the higher costs per pupil in the rural areas as compared to the cities, it was found that only 10,9% of the total education expenditure may be regarded as being constant. This 10,9% consists primarily of administrative costs and teacher training. In other words, the variation per pupil between the city and the rural areas is 89,1%. Therefore the rural pupils are additionally loaded by 89,1% by multiplying by the factor 1,891. To obtain the total number of standard pupils, therefore, the percentage of rural pupils is multiplied by the factor 1,891. These increased rural figures are then added to the urban figures, and in this way the total number of standard pupils is calculated. If this total number of standard pupils of the four provinces is divided into the net education expenditure of the four provinces, we obtain the average standard expenditure per standard pupil. The average standard expenditure per standard pupil is not the same as the average standard expenditure per ordinary pupil. The reason is obvious. The standard pupils have undergone a loading in respect of the rural areas. Here we can therefore see how provision is being made for structural differences between the provinces in regard to the degree of urbanization. Although provision is being made for the increased unit costs for education in rural areas, as I have tried to explain to this House, I nevertheless want to contend that in this formula, which is only based on the number of pupils, insufficient provision is being made for the greater increase in education expenditure as against the smaller increase—or even decrease—in the number of pupils. If we take the five-year period prior to 1971-’72 we find that the increase in the number of pupils in the Free State was only 11% as against an increase of 33% in the number of teachers. In the five-year period after 1971-’72 the number of pupils even diminished. There was a decrease of 1,8%, while there was a further increase of 2,1 % in the number of teachers. The application of differentiation, and the further expansion of the system, must and will inevitably encourage this trend even further in future. It is therefore clear: The fewer the pupils per teacher, the higher the standard expenditure per pupil. Therefore it is essential that the number of teachers should also, in some way or another, be included in the calculation as an additional factor.

In determining the requirements for road construction and road maintenance it is not very easy to find a uniform unit cost formula, as in the case of education which I have just dealt with, or even in the case of hospitals. It is considerably more complicated. The following basic factors, which determine the road requirements of one province as compared to those of another, are taken into consideration. Firstly: The total surface area served by roads per province; secondly: The weight of traffic on the roads, and thirdly: The density of traffic around the cities. In determining the net surface area of the provinces provision is only made for adjustment in respect of national parks and homelands. In my opinion further factors ought to be taken into consideration as well, inter alia, densely populated, intensive farming regions as opposed to extensive semi-desert regions. The needs of such regions differ vastly. As far as the weight of traffic on the roads and the density of traffic around the cities are concerned, I should like to ascertain whether provision has been made for the great percentage of vehicles which never drive on provincial roads, but only in the streets of the urban complexes or even on the national through ways. In determining the relative provincial road maintenance requirements, the total length of the roads is in fact taken into consideration. The Free State, however, as a highly productive agricultural area, has 22 000 km of proclaimed tertiary roads which are not included in the calculation of this formula which I am now dealing with. Owing to its tremendously high production, and the heavy traffic on these roads, the Free State Provincial Administration is obliged to subsidize these roads as well and to accept responsibility for them. Therefore provision should also be made in this formula for the maintenance of tertiary roads. To make provision for holiday trips 8% is deducted from the number of passenger cars in the Transvaal and the Free State, and of this 8%, 2% is added to the Cape and 6% to Natal. However a very large number—in fact the majority—of holiday trips are taken through the Free State. It is my humble opinion that this 8% of these holiday trips should not be deducted from the Free State. Instead, a certain percentage should be added, particularly in view of the fact that there is a considerable backlog in respect of national throughways in the Free State.

I am aware that there are fundamental problems involved in finding a formula for capital expenditure as well. However, it is essential that the provinces should in fact receive the necessary funds on an established basis. Capital expenditure extends over a period of years, and at present the provinces are committed to making annual estimates. Earlier on I mentioned an important factor, namely that to ensure sound financial relations between the various governmental levels, it is not only necessary for every level to have a sufficient income. What is more important is that there should also be equal treatment of the various bodies on the same level of government.

But there is one factor which the formula does not account for properly, and this is a very important factor. I am referring to the backlog in the base year. In respect of certain services, I am firmly convinced that the Free State had a tremendous backlog in the base year as compared to some other provinces. I want to quote one example. Let us draw a graph of the actual expenditure on road construction for the Free State from 1962 to 1971, in other words the ten-year period prior to the new financial dispensation. Now let us draw a second graph according to the apportionment of funds under the new subsidy formula. Let us first draw that graph for the period 1972 to 1976 and then back to 1962, as if this formula had already been in operation since 1962. We shall then find that there is a gap, an under-spending, of not less than R30 million on Free State roads. If one were to project that line forwards to cover a longer period than 10 years, the gap would become even wider. So there is no doubt at all that there was a backlog in respect of the Free State roads in the base year. It will never be possible to make up this backlog unless the backlog is included as an additional factor in the calculation of the subsidy formula. Then, and only then, will it be possible to speak of equal treatment between authorities on the same level. The Financial Relations Act has been in operation for five years now, and I want to advocate this afternoon that the base year be revised this year in view of the advantages and disadvantages and the problems, as well as of the experience of the past five years. Subsequently an annual grant may again be calculated, and again revised after a further five years if necessary.

Mr. Speaker, I should like to congratulate the hon. member for Smithfield on a fine and very interesting speech. I would say that it was an excellent maiden speech indeed. If the hon. member were to continue making his speeches after this style, I think he would make very valuable contributions in this House. He has proved that he has wide knowledge of matters concerning the provinces. This does not surprise me, because I understand that the hon. member is an ex-member as well as an ex-chairman of the Provincial Council of the Orange Free State. The hon. member was quite correct in saying that to a certain extent the provinces were receiving more money under the new dispensation, but that the money they received, as he quite rightly pointed out, was still insufficient to meet the needs of the provinces. In considering the enormous capital backlog of the provinces, I come to the conclusion that the hon. the Minister should make more money available to them so that the backlog may be eliminated. We hope the hon. member will have a happy stay in this House. Surely he does not expect me to wish him a long stay in this House. Nevertheless, I wish him a happy stay.

†The hon. member for Virginia who also comes from the Free State, failed to answer the charges of the hon. member for King William’s Town and he failed to answer the call of South Africa in these special times we live in. The hon. member for King William’s Town raised certain matters, for example the fact that speculators at Port St. Johns were paid out in preference to bona fide farmers in his constituency. There was no reply from the hon. member for Virginia; he ducked the questions. The only thing we heard from the hon. the Minister of Agriculture was a very flippant “mnr. Boet Hertzog”. If that is the most serious reply which we can expect from the hon. the Minister when he deals with the affairs of the farmers of South Africa, I think he should seriously reconsider his position. [Interjections.]

The hon. member for King William’s Town also raised the question of the houses bought for the Nationalist Party members of the Executive Committee of the Free State. On two houses there was an expenditure of over R200 000. I would have expected the hon. member for Virginia to answer the charge of the hon. member for King William’s Town. The hon. member for Virginia comes from the Free State and he knows the feeling of the people in that province. I should like to refer the hon. member to Rapport—I take it he reads Rapport—of 23 November 1975 which bears the following headline—

The report goes on—

How can it boil if it is Nat?

I read further—

I heard a very flippant remark there by the hon. Chief Whip.

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

No, I do not have time to waste on answering questions.

We want replies!

I heard that very flippant interjection by the hon. Chief Whip. I want to tell him that he should be ashamed of himself. South Africans are being bled white at this very time and they are asked to contribute towards the combating of inflation and yet the Nationalist Executive Committee of the Free State in an act of madness spends more than R200 000 at a time when we cannot afford it. I believe this is a public scandal that should be investigated. Luxury living seems to be the style of the members of the Free State Executive Committee. South Africa’s sons are dying on our borders and people in South Africa are battling to make ends meet, yet in the Free State there seems to be a surplus of money to spend on this form of luxury living. The members of the Free State Executive Committee should do their patriotic duty and resign. This is an absolutely scandalous state of affairs. One of these days the hon. the Minister of Finance will be negotiating with the Administrator and the members of the Executive Committee in the Free State about their financial allocation. I want to know from the hon. the Minister of Finance what he is going to do about the situation. Is he going to cut back their allocation by R200 000? Is he going to call them to book? I think the hon. the Minister must give the reply in this debate because the people of the Free State are desperately worried about the situation, notwithstanding the fact that the majority of them must be supporters of the Nationalist Party. [Interjections.]

I think the hon. member for Paarl should come out of retirement as his successor, the hon. member for Ermelo, put up a very poor show. The hon. the Minister of Finance shakes his head. He was of course impressed with the hon. member for Ermelo because the hon. member praised him. The hon. members for Ermelo, Sunnyside and Virginia made no contribution to this debate and they made no attempt to deal with the solutions to the problems facing South Africa. Instead they spent their time attacking the members of the Opposition. Surely the seriousness of the situation warrants our economy being treated more seriously. We had nothing but political smoke-screens by these hon. members. What solutions do the hon. members provide by attacking the members of the Opposition? Why do they not provide solutions and tell the people of South Africa what those solutions are?

The speakers on the other side refuse to come to terms with the realities of the South African situation. In order to meet our military obligations we have to be strong economically, but the Government speakers refuse to recognize the economic truths of the South African situation. To enable us to do our duty in ensuring the proper defence of South Africa it is essential that we have an economy that is so viable and strong that every South African can share in the fruits of participation in that economy. The people of South Africa have been bled white, economically speaking, as a result of the follies of the Nationalist Party. [Interjections.] The hon. the Minister of Finance has celebrated his first anniversary in this portfolio. Unfortunately for both the hon. the Minister and the country the financial chickens of the Nationalist Party have come home to roost during his first year in office.

They are looking pretty good.

The hon. the Minister says they are looking very good. I know what is looking very good—the cheap television set that he looks at every night while he should be worrying about the affairs of South Africa.

I said that the chickens are looking pretty good.

The hon. the Minister’s first year was disastrous, not only to himself but to the country as a whole. During the 12 months under review we saw the gold price take a tremendous drop. I, like the hon. the Minister, have a most optimistic attitude towards the future of gold. The difference between us, however, is that the hon. the Minister took the golden gamble when he had his head in the clouds instead of having his feet firmly on the ground. The hon. the Minister anticipated far greater revenue from gold than he received during 1975. I believe one must be optimistic with regard to gold, but recklessly to gamble on more income from gold is totally reprehensible. It is one thing to gamble with money you have, but to gamble with money you do not have is a most serious indictment when you are entrusted with the affairs of other people.

Very clever! Why do you not wait for the budget?

The hon. the Minister thought his income from gold would be R3 000 million in 1975. Will the hon. the Minister confirm that?

Wait for the budget. You are being very clever.

I am not being clever. The hon. the Minister anticipated R3 000 million from gold in 1975, but he received approximately R445 million less than that. The hon. the Minister is not alone to blame. He was led up the garden path by some of his colleagues in the Cabinet. [Interjections.]

He is very relieved now.

The hon. the Minister says it is absolute nonsense, but then he cannot have listened to the speech made by the hon. the Minister of Transport in this debate last year when he predicted that the income from gold would be R3 000 million in 1975. If the hon. the Minister says that that is nonsense, he is not contradicting me, but the hon. the Minister of Transport. The massive devaluation of nearly 18% during last year shows the extent to which the hon. the Minister lost control of the financial time-table of South Africa. In seven out of the eight studies undertaken in industry, productivity was only half of what it could be. I wonder whether the hon. the Minister of Finance agrees with that statement?

You are almost as bad as the hon. member for Johannesburg North; almost, but not quite.

Mr. Speaker, the statement that in seven out of eight industries studied productivity was only half of what it should be, is a statement that was issued by the hon. the Minister of Economic Affairs. [Interjections.] That shows that there is no liaison in the Cabinet; the left hand does not know what the right hand is doing. These statistics I have given, are statistics that were made available by the Minister of Economic Affairs according to a Press report in The Argus of 19 January 1976. For the benefit of the hon. the Minister of Finance: “The Minister of Economic Affairs expressed his concern at this state of affairs.” After 28 years of Nationalist Party rule, the Minister of Economic Affairs expresses his concern at the lack of productivity. It is a pity that this concern has not been translated into action over all these years. It is a sad indictment of the mismanagement of economy by the Nationalist Party over nearly three decades. What is the hon. the Minister of Finance doing about this state of affairs? He is doing absolutely nothing. There is one thing Government members are very adept at doing. I refer to their self-defence mechanism, the smoke-screen they set up; whenever they cannot answer the financial problems of South Africa, they shout at the Opposition that we are not being patriotic. What does lack of patriotism have to do with the management of the finances of South Africa? The electorate in South Africa will not accept the argument of the Nationalist Party that members on this side of the House are not patriotic when we attack them on the financial affairs of South Africa. The workers of South Africa have buckled and bent under the devastating increases in the cost of living. The hon. the Minister has kept the economy in the chains of Nationalist ideology. From April 1970 to November 1975 the price of food has gone up by 76,8%. Pensioners and others are literally starving and at their wits end through no fault of their own. The hon. the Minister must tell us how he is going to alleviate their plight. It is no use the hon. the Minister telling me that I am talking nonsense, because the evidence of people who are battling to make ends meet can be seen right throughout the length and breadth of South Africa.

The hon. the Minister of Finance must spell out his attitude towards possible requests from other Government departments for finance to build opera houses. I ask this because the hon. member for Waterberg, now the Deputy Minister of Bantu Administration and Education, and the hon. member for Namakwaland made it clear that they regard the opening of the Nico Malan theatre as temporary. The hon. the Deputy Minister, who is here, must tell me whether he still holds to that view that the opening of the Nico Malan is temporary.

Make your own speech.

The hon. the Deputy Minister will not answer that question, but in this regard we want an assurance from the hon. the Minister. The Nico Malan theatre cost approximately R12 million some years ago. To duplicate the Nico Malan will cost approximately R24 million today. South Africa cannot afford to spend R24 million on each of four Nico Malans in each province of South Africa. We want an assurance from the hon. the Minister that he rejects the viewpoint of the hon. the Deputy Minister of Bantu Administration and Education. The opening of the Nico Malan heralded a new milestone in White/Black relationships that augurs well for the future of South Africa.

We should like to appeal to all South Africans to work harder. It is essential that, when our young people are called up to go to the border and have to leave the firms for which they are working, these dedicated and loyal people suffer no loss of income whatsoever. To enable firms to pay these soldiers, it is essential that the remaining employees make a sacrifice in doing the work that the absentee employee would have done. If the other employees assist by making their contribution and doing this work without being paid for it, they would be making an enormous sacrifice and an enormous contribution in the fight against inflation. According to a director of the National Development and Management Foundation, if South Africa could increase its productivity by 10%, this would contribute R1 500 million in real wealth to the Republic’s economy. The young men at the border are prepared to make supreme sacrifices and, in the circumstances, every South African must immediately make a similar sacrifice by increasing his productivity by at least 10% to bring about the R1 500 million improvement to our economy. I think, too, of the number of competent, capable and efficient married women and the many top-earning qualified people who have either retired or are not working the hours they used to work. These people all defend their positions by saying the rate of tax is too high. I should like to appeal to the hon. the Minister to consider giving these people some concession to induce them to become far more productive in the economy than they are at the moment.

I should like to support the amendment so ably and responsibly introduced by the hon. member for Constantia. The Government has adopted a defeatist attitude towards inflation in particular and the economy in general. It is a direct result of Government ideological policy over the last 28 years of mismanagement of the South African economy that we are in such a sorry state. For the man in the street, for the pensioner, for the person with a fixed income and for the majority of our population there is no ray of sunshine. These people cannot make ends meet. The tragedy of the situation is that the Government is hamstrung by its own policies from providing the solution. By the massive devaluation in 1975, the Government has ensured that during this year and in all subsequent years there will be a vast increase in our cost structures. The impact of devaluation has not yet been felt properly in our cost structures. Devaluation to the extent that we have had, is an admission of failure and mismanagement on a scale that is almost unbelievable. We have in effect compromised with our creditors and admitted that our economy needs a form of judicious economic management. However, in private enterprise, when a company goes under judicial management, one brings in outside expertise; but in our case, although at the moment we are experiencing this strain with the result that our economy must be judiciously handled, we are still stuck with the same hon. Ministers who got us into the mess in the first place.

My time has now expired. May I just say that I hope the hon. the Minister will later on deal with all the queries I have posed to him.

Mr. Speaker, I should like to say a few words in reply to the speech made by the hon. member for Walmer. I think it was rather petty of him to attack the activities of the Free State Provincial Council in this House and to level criticism here at the houses and the prices of houses of members of the Executive Committee. I think that party would do better to make certain that it had representatives in that Provincial Council, who could state their cases on that level, on that floor and in that council chamber. [Interjections.]

Why don’t you come to Natal?

The hon. member for Walmer asked what this Government and this hon. Minister were doing to put our economy back on its feet? One cannot then help wondering whether he was ever present in this House or whether he has been listening to the debates here up to now.

He is very dense.

What more must we do than we have already done? The hon. member complained about the levelling-off of the gold price, as if South Africa is the only power which has an influence and which has a specific right to a say in the determination of the gold price. Gold is an international monetary commodity.

It seems to me you do not understand English.

You do not understand yourself. This hon. member referred to the increase in food prices during the seventies. I take it his figures were more or less correct. If he were to look up what the increase in salaries and wage structures during the same period was, he would discover that it had been twice as much. I shall leave the hon. member at that.

I now wish to refer to a debate which was conducted here last year. This was the debate on the Vote of the hon. Minister of Economic Affairs. In that debate I referred to the role and the position of women in the economic structure, to their task as housewives and as business women—their task in the field of labour—as a contributory factor to the fight against inflation. On that occasion the hon. member for Yeoville told me that it was a childish speech. I want to refer back to that speech briefly. I want to quote a few words of Dr. H. P. Langenhoven in regard to the role of women (translation)—

The hon. members of the Opposition refer so persistently to wastage. An important paragraph now follows, and this applies in particular to their little party opposite—

Now we can understand why they have a woman in their ranks as a front bencher. I think she is tougher and more remorseless than the male members of that party.

Look what Harry already looks like!

Harry is getting thinner by the day.

In addition Dr. Langenhoven says that women play a very important part in business life. According to available information almost half a million women were economically active in South Africa in 1970. For the sake of the hon. member for Yeoville I want to quote another passage—this time from a speech made by Mr. Kerneels Human, Vice-president of the Suid-Afrikaanse Handelsinstituut (translation)—

I want to quote to the hon. member sitting there a passage from a speech made by Mrs. Margaret Lessing, President of the South African Business and Professional Women’s Association (translation)—

I think that participation by and the place of women in our business and economic structure will become of ever greater importance in future. As far as the hon. member for Yeoville is concerned, it is also interesting for us to know what the political set-up is from this angle. As a politician for whom we have had appreciation I want to tell him that he should find his identity and accept that he is what he has become. He should not seek shelter under the cloak or the outer covering of another party.

Nobody wants him.

I should now like to express a few ideas on the economic circumstances in which we find ourselves. To begin with I again want to point out once again the golden rule that we cannot consume if we do not produce. We cannot produce if we do not invest. We cannot invest if we do not save or borrow. And if we borrow, we have to pay back. We are living in an era of an economy which is under treatment. The economy is a patient which has inflation disease. This patient must not be killed. This patient must live, for out of this economy and out of this possibility of growth inherent in it, this country has to discharge its obligations to its people—to every population group living and working here, to its White, Black and Brown people. Now it so happens that the world enjoyed the stage of soft inflation. The world enjoyed it because it was a stage during which money could be made rapidly. It was a period of making instead of earning money—earning money in a hard and honest way involving sweat.

It was at that stage that the big money countries so readily shied away from gold parity in their exchange rates of money as against money in exchange transactions, and held closer to the floating rates or to the purchasing value parity of money. It was at that stage that the value of gold as the backbone of the monetary unit was neglected. At that stage bills of exchange were discounted and rediscounted at high rates in the international monetary markets. This cost us dearly. From that situation we moved to a level which we can call hard inflation, and now we have begun to feel the pinch. Now we are asking for the drastic measures which the Opposition over there so badly wants. We are grateful that we have a Minister who is very systematically and very cautiously watching over the future of this economy. When we consider the future of our country—this is after all the most important component, the component which even the hon. member for Johannesburg North was able to recognize and credit—we see that it looks good. That is what is important. The immediate present is not very pleasant. The sick patient in bed is not feeling well at all. If he feels well, he is not sick. Surely that is logical. What is the future of our economy? We are posing the fundamental questions here, the first of which is whether there is confidence in the Government of such a country. Secondly, is there confidence in its economic policy? Thirdly, is there confidence in the application of the financial handling procedure? Fourthly, what are the labour conditions in that country, and what are the development possibilities of that country? Finally, who are the economic leaders in that country?

Let us consider the Government of this country. Where does one find a better continuity of enterprise and implementation of tasks than in this country? The hon. member for Walmer referred to the development of productivity and so on. He did not know the conditions prior to 1948. He did not live in the United Party time. Probably he was only born afterwards, in the prosperous time of this Government. We have confidence in the Government of this country. We are confident that this country will not become another Mozambique, Angola or Portugal. We know that this country is not part of the sick, tired and weary Europe, that it is not part of Britain which is dominated by trade unions. However, we are insolubly linked to the West. We have a Government which is permanent, and which accepts its challenges, which advocates détente abroad and which conducts an open dialogue with its people at home, and which wants to create opportunities for its people. Through its national corporations, inter alia, the Government wants to ensure the development of the Black people. Overseas countries have confidence in these conditions.

The second question is whether there is confidence in our economic policy. Let us consider the Johannesburg Stock Exchange, to which the hon. member for Johannesburg North referred. Did the Johannesburg Stock Exchange, which is a sensitive barometer, fluctuate slightly or show a little uneasiness or a slight downturn during our involvement in Angola? Nothing of the kind happened, and it proceeded calmly and peacefully with its work, as did the rest of our country as well. Our investors were not concerned. This stability and the confidence we have in our people is not going unnoticed by the outside world, and it is being observed on the Stock Exchange, the barometer, and the most sensitive instrument we have. So much so that our Government securities that were offered were over-subscribed, in spite of the doomsayers who foresaw problems for us.

We can quote further examples. What are the economic development possibilities in this country? We can wax lyrical over these. This young country with its challenges offers everyone in and outside this House the fresh challenge of innovations which may be created. There are creation opportunities for each one of us. There are eight Black peoples in our midst, with their own territories, with their own regions, and with the wonderful riches with which the Creator has provided them. Each one of us has a task and a duty to carry on with confidence. Those countries have been absolutely established, and that policy cannot be undone. However, enormous amounts of capital are required for the development of those countries, and in addition there are our own development projects, including Saldanha Bay, Richards Bay and Secunda in the Eastern Transvaal. As far as the wealth of the Eastern Transvaal is concerned, we have hardly scratched the surface. And we have hardly scratched the surface of the wealth of the Northern Cape. These are the future development possibilities this country offers us.

There is confidence in the labour conditions of our country. Is it not a wonderful endowment we have, with this multitude of peoples and languages, that we are able to enjoy this labour peace? As far as unemployment is concerned, there is no such thing in this country. What does exist is a measure of laziness. There is work for every man, Black, Brown or White, in this country if he wants to work. Do you know, Sir, that there is even work for a cripple if he wants to work. He can walk up to the front door of the nearest house and say that he wants to weed the lawn and he will be employed to enable him to earn his living. Then those people claim that there is no work here for our people. In our extensive country there is work and a place for everyone.

As far as confidence in our financial circumstances are concerned, where could we hope to find more generosity and spontaneity among our people than we in fact did with regard to the manifesto which the hon. the Minister launched when every component of our national life undertook to make its contribution to and its sacrifices in the fight against inflation.

I want to conclude with this brief idea: If you were to ask me whether we have the leadership potential to develop this country with its challenges I want to tell you that we do have the people to do so in all our population groups. At this early stage of the development of the Black homeland economies, strong capitalists have already emerged from among their own number. We could mention a few of these to you. In Gazankulu, one of our smallest homelands, there is a businessman with a fleet of 50 buses which he is operating on a sound basis. We can also consider the businessmen in the Indian population and we shall find marvellously developed business leaders. We find it, too, in our Coloured community. We can conclude by mentioning the names of a few of our White leaders, Dr. Anton Rupert, Dr. Jan Marais, Dr. Albert Wessels and Mr. Harry Oppenheimer. Finally, I want to mention another name, and here it is—

Mr. Speaker, with these people among our number and at our disposal to lead this young country with its challenges and responsibilities, we have nothing to fear.

Mr. Speaker, I should like to associate myself with what the hon. member for Ermelo had to say about productivity. I should just like to tell the hon. member for Constantia that the Government realizes the importance of productivity in all its facets, and the implementation thereof. Let us now take a look at productivity. Over the past decade there have been substantial changes in the world community. Rapid economic growth and a rapid increase in population, industrialization and the extension of developing areas, and in addition, a world-wide striving for a higher standard of living, have been characteristic of those changes. As human society changed and developed, the need for goods and services also grew. It is estimated that 80% of all manufactured goods are consumed by only 30% of the world population. Production will therefore have to be increased substantially in order to afford the remaining 70% of the world population anything like the same standard of living as the more well-off 30%. It is not enough merely to produce more. The increase in productivity is of as great importance in realizing this objective. Almost every day the necessity for increased efficiency and productivity in some sector of the South African economy is urged in articles or speeches. In recent years there have also been positive efforts to increase productivity in South Africa. Various institutes and organizations have become aware of the manifold problems involved in promotion of productivity and realized the necessity for systematic and purposeful productivity research. I should like to refer you to the Bureau for Productivity Research established in mid-1966. The aim of this Bureau is specifically to increase productivity in the South African public administration and industrial world by carrying out basic research in the sphere of organization and methods study and also by undertaking specific research projects. It is the smaller and medium-sized enterprises which need assistance since such enterprises do not enjoy the services of a fulltime O and M officer and furthermore are unable to afford the substantial fees charged by consultants. As regards productivity research, this institute has a panel of experts who are able to carry out efficiently specific tasks of investigation. The National Productivity Institute undertakes to assist enterprises to measure their productivity, identify causes of low productivity, furnish advice on productivity improvement and, with a view to increasing productivity, to identify their training requirements. The name of the National Development and Management Foundation can also be mentioned here. These people, too, are doing an outstanding job of making businessmen aware of the precise nature of the productivity problems they are faced with and the available methods of overcoming them. The Government realizes that the ability to measure productivity properly is essential, or even a pre-requisite for a successful programme for the promotion of productivity negotiation. With this in view, this Government has undertaken to request the National Productivity Institute to make its services available as widely as possible for the measurement of productivity. It is necessary for enterprises, and small enterprises in particular, to become aware of these matters and, in the national interest, to take appropriate positive action. Today, increased productivity is a matter of primary importance. In passing it is interesting to look back at the economic history of the world. According to the Larousse Etymological Dictionary the word productivity was used for the first time in an article written by one Quesnay, who at that time was head of the School of Physiocrats, as they were then called. The meaning given to the word then was “faculty to produce”.

Today it is a practical problem, and no longer a theoretical problem, a matter which has become a national objective, an objective which must also be promoted in all the sectors of our society. One can certainly state without fear of contradiction that the increase in productivity must necessarily be to the benefit of the country’s economy. The improvement in productivity is undoubtedly an inherent requirement for the strengthening of our country’s economy, the growth of the national product and the promotion of the welfare and the standard of living of all our population groups. An increase in production can contribute substantially towards an increase in the real per capita income of the population and can ensure that in the future, in the event of higher salary and wage demands, such increases will be compensated for by a corresponding or even greater increase in productivity. Never before has there been such rapid economic progress as there has been during the past decade. It is essential for us here in the Republic of South Africa to keep pace with modem trends, particularly those affecting the economy of our country and the welfare of our people. It is gratifying to see that techniques and methods are being applied which will lead to improved utilization of our national resources, and therefore to higher productivity as well. Mr. Speaker, this is of the utmost importance for economic development over the long term and not only for the manufacturer of products, but also for the provision of services, and all the other sectors of our economy. Every South African is faced with a challenge because owing to the local labour shortage, everyone is obliged to contribute more than his share. Every responsible citizen in the country and all responsible organizations and enterprises, too, ought to ask themselves the question: What can I do to measure up to expectations and, if possible, exceed them?

As this House knows, on 7 October 1975 a manifesto designed to achieve co-operation in laying low the inflation monster, was signed. It is a manifesto of firm undertakings given by the Government and the private sector organizations of the Republic with an interest in the matter, in order to launch a joint campaign against inflation. One of the major components of this manifesto is the plea for an increase in production and productivity. This is a joint campaign and the Government is determined to contribute its share to the campaign. It is gratifying, too, to see the large number of private enterprises here in South Africa which are also prepared to contribute their share. However, for any enterprise, even if the enterprise has an effective production and marketing plan, there is still a decisive factor which runs through them all like a golden thread and binds them together. It is a factor which, owing to its inconspicuous nature, is often ignored to the detriment of an enterprise and can be the determining factor in the progress and even the continued existence of an enterprise. It is therefore of cardinal importance that every enterprise should make the effort to measure their productivity, identify causes of low productivity and obtain advice in regard to improvement of productivity. Every enterprise should see this striving for high productivity, not as an end in itself, but as an effort to increase the welfare of the country. In any domestic economy, an increase in productivity is determined to a large extent by the productivity achievements of individual enterprises in that particular country. Since the welfare of a country is largely determined by the relationship between the total output and the total input of all enterprises in the country, productivity determines to a large extent the success of the country’s economy.

As an economic pointer, productivity is an efficiency yardstick of creative ability of scientists, inventors, engineers, managers, labourers and investors who are continually carrying out experiments, coming up with innovations, applying improved organization methods, developing efficient work methods and risking capital in new ventures. Every enterprise should know about this because in order to be able to produce economically, the most economical of production methods must be employed in manufacturing an article. If it is possible to succeed in manufacturing an article with less labour, improved utilization of machinery and fewer raw materials, the unutilized production factors may be used to manufacture additional articles or for some other purpose. In order to determine whether an industry is producing efficiently or not, it is necessary to consider the number of production factors utilized to achieve the result. Higher productivity should be synonymous with lower unit cost. In every enterprise there should be a continual striving, a striving to achieve the most effective employment of the production staff and the improved utilization of all production factors. This should serve as a measure of efficiency for every enterprise.

Furthermore, productivity is a concept, the meaning and definition of which has broadened substantially in recent years. Whereas in earlier years it was used to realize objectives such as improved training of workers, more standardization of production methods, improved aids and the improvement of manufacturing methods, today it covers the entire spectrum of economic life. Increasing attention is being paid to problems in the applied sciences, problems such as performance research, industrial engineering and particularly, too, in the sphere of human relations, in order to increase productivity.

In general, the field of economic activity of any undertaking should be closely bound up with the economic planning and development schemes of the country in which that industry is situated. Thus it appeared to be a powerful instrument as regards the implementation of the long-term economic policy and programme of any country. Like other industrial countries, South Africa is at present doing everything in its power to increase its exports by expanding its established markets and breaking into new ones. However, in order to save foreign exchange, South Africa is also attempting to compete more effectively with imported goods in the home market. Every undertaking must keep pace with this; if not, this can easily give rise to injudicious investment, which could have an unfavourable influence on the economy as a whole. The striving towards productivity of the individual enterprise can therefore be in conflict with the interests of the national economy, and such conflicting interests can involve avoidable losses for the enterprise concerned. These losses may be eliminated if the individual manager recognizes that the function of his enterprise is subordinate to that of the national economic policy of the country. As I have already stated, the increasing of productivity is largely responsible for increasing the general welfare of a community. Positive efforts to increase productivity on the part of the authorities, on the part of managements and on the part of every worker is vital for the economic progress of any country.

Above all, however, increasing of productivity is a state of mind, a continual striving for progress, a hankering after the improvement of what has already been achieved. It is the determination to do better today than yesterday, and to do even better tomorrow. It is the striving for the improvement of the present situation, irrespective of how good it may seem to be. It is the constant willingness to apply new techniques and methods. It is the belief in progress and the confidence which is expected of every South African citizen, the confidence in the economy of our country in all its aspects.

Mr. Speaker, the hon. member for Overvaal gave a good lecture on productivity, the economy and the duty of every South African. He will forgive me for not reacting to it, because I could find very little politics in his speech, and as the hon. members know, I like a type of political economy very much. However, with the hon. member for Standerton it was a completely different matter. At the beginning of his speech I found it difficult to establish exactly whether the purpose of his speech was to praise women, or to praise the Minister, or to praise the Lord, or to court Harry. Towards the end it almost seemed to be to praise Albert, because the word Hertzog very nearly came to the fore.

The hon. member said that our economy was one which must be doctored, that it was a patient suffering from inflation. Now these are true words and we can understand the reasons for it. I hope to get to it in the course of my speech and to be able to point out why our economy should be doctored and why it is ill.

†We of the official Opposition are South Africans like everybody else in this hon. House. We have our roots very deep in South African soil. We realize that we are living in dangerous and critical times in a dangerous world that is, throughout the Western hemisphere, suffering from inflation and also from the dangers of Russian incursions. We are prepared to vote the money that is required to provide the sinews of our defence. I would like to hear a clear enunciation of those two commitments by the hon. gentlemen and the hon. lady on my left. I believe that they owe it to South Africa to come out loud and clear on a firm South African platform. Having said this, I would also like to say that we require a firm guarantee and undertaking from the Government. It is no good the ambassador to the United Nations saying that we are moving away from discrimination if nothing is actually done about it. Throughout the world there are conventions which involve personal discrimination, for example choice of friends, choice of place of education and choice of entertainment. However, nowhere in the world has convention been so institutionalized by statute than in our own Republic of South Africa. Since the ambassador’s statement we have seen practically no movement away from statutory discrimination. What has been done has been half-hearted and back-to-front. As an example, let us look at what happened in my constituency in the town of Peddie, which has been zoned Black but is still White. There the Department of Posts and Telegraphs have suddenly decided that the White people still remaining in Peddie and in the Peddie district must be served by an all-Black staff.

We want guarantees from the Government that they will remove restrictions on our economic expansion by amending the Physical Planning and Utilization of Resources Act. We want guarantees that areas like the Uitenhage-Port Elizabeth triangle will be free from the restrictions imposed on it by the provisions of that Act. Growth in this area has been stultified because it is regarded as a Coloured labour preference area instead of an open area as it always was.

Whom are you quoting?

I am quoting myself and I talk more sense than you will ever do. The lifting of the restriction on the Uitenhage-Port Elizabeth triangle will generate growth in that area, and this could revolutionize the whole economy of the Eastern Cape. This must be done.

* While I am dealing with the shortcomings of the Government, I feel that I should use this opportunity to do away once and for all with certain misconceptions about my personal role in modem politics. It has been alleged repeatedly and ad nauseam that I, and certain of my colleagues in our Party, are making overtures to the Nationalist Party and that we will walk over to that side of the House one of these days. This is absolute nonsense and has no foundation in fact. If there are still hon. members who think that I am going to walk over, I want to give them the assurance that they can forget their wishful thinking once and for all. How can I give up the principles for which I have fought my whole life long? I am a politician, and the role of a politician is to persuade people that his policy and his views are the correct ones. It is his duty to draw people and votes to his party; this is politics. No member in this House can deny this. [Interjections.]

*Mr. Speaker: Order! Hon. members must give the hon. member an opportunity to deliver his speech.

If this is making overtures, and is regarded as making overtures, then I am guilty of it, along with every member in this House who is worth his salt. This is how politics work, after all. If every member should just sit here and not attempt to persuade people in politics, then he would be no politician and then he should not sit in this House. I will continue to advocate the wisdom of my party’s policy in the knowledge that members of the Nationalist Party and Progrefs will vote for my party and that they might cross over to us.

†I would now like to speak particularly on behalf of those people who are stuck, through the ideology of the Government and the lack of foresight of this Government, in released areas throughout the country. I would, however, particularly like to speak on behalf of the people in my constituency. From the very beginning I said to this House—and I say it again—that this Government has overextended itself in the proclamation of land under the Bantu Trust and Land Act of 1936 for the purposes of homeland consolidation. They have over-extended themselves, because they have proclaimed vast portions of land which, at this point of time, they are not in the position to purchase. Originally, when I made this statement, the Government was riding on the crest of the wave of revenue brought in by the high price of gold, and my warnings fell on deaf ears. The whole of the Peddie district, including the town, has been released for purchase by the South African Bantu Trust and by the Transkei Adjustment Committee. Valuations and a limited number of purchases have been made in the town. The southern section of the district had been valued and offers were expected in August 1975. Valuations of the northern section were to have been made now so that offers could be made during the forthcoming financial year. On 4 September the Farmers’ Association of Peddie was told that no offers could be made as there was no more money. Shortly after this came devaluation, and there has been no substantial improvement in the price of gold; in fact, the contrary is true. Many farmers in the southern area—and I believe in other areas in South Africa—have committed themselves to other properties, particularly those who farmed as companies because they had to have somewhere to put their stock. The hon. the Minister of Finance will realize that the company farmer is in a slightly different position from the farmer who farms as an individual. Last year there was no provision in the amendment to accommodate the companies in the area.

If one were a stock farmer one could not wait until one’s land was purchased before buying another farm. This is how these farmers have got into trouble. Many of them are facing bankruptcy as their assets are not fluid and it is virtually impossible for them to raise money from commercial banks and financial institutions. I have letters in my possession in which it is stated quite clearly that these institutions are not prepared to lend money to farmers in released areas. Their estates cannot be wound up since the Government, through the Bantu Trust, is the only willing purchaser of an estate when a farmer dies in those areas. In the Peddie district alone there are ten estates I know of that are waiting to be wound up. Some have been going on like that for three years. The people in this area are becoming desperate and are beginning to demand that their properties be either deproclaimed or that something is done immediately to solve the problem. I want to suggest to the hon. the Minister of Finance that he make adequate provision for these purchases in the Budget later this year, because it is not only the Whites who are becoming restless, but also the Blacks. The situation there is most unsatisfactory and most uncertain, and I think the hon. the Minister of Bantu Administration and Development realizes what the position is. The hon. the Minister of Finance should also make funds available to the Land Bank and to the Department of Agricultural Credit and Land Tenure for the specific purpose of rendering assistance to farmers who find themselves in difficulty as a direct result of finding themselves in released areas. I believe that it is absolutely essential that there should be short-term assistance available to farmers who find themselves in trouble in these areas. It is not their fault that the Government, in its wisdom, decided to declare their areas released, and they are in a terrible plight at this stage.

*If the hon. the Minister does not take these steps, he will never know for sure whether we shall continue to have peace and security inside the country. In these critical times it is essential for us to have that certainty.

†I have now spoken of the people in my own area, but there are probably other hon. members in this House who have the same situation in their areas but will probably say nothing. Therefore I believe we must make an appeal on behalf of these people. We know that the situation was created by the massive purchases of grain by Russia with their gold. That gold then came on to the market. It is the selling of that and other gold by the I. M. F. that has depressed gold at the moment. We realize that it is this which has adversely affected us. We realize that we have to spend more money on defence, and even that we will have to spend a lot more. However, these areas have been proclaimed, a policy has been declared and therefore something positive must to done to solve the plight of these farmers and to clear up the situation as soon as is humanly possible. I am very glad to see the hon. Minister of Indian Affairs here. Perhaps later on in this debate he can reply to a letter I wrote to him recently. Here we are in a stage of inflation …

I wrote you a letter too.

Oh, good! Here we are in a stage of inflation, and I have appealed to the hon. the Minister, as I am doing again now. I appealed to him when he was Minister of Indian Affairs but not Minister of Community Development, and now he is both. There is a traditional system of Indian businesses operating in the City of Grahamstown. Everybody—including the Indians—agrees to accept a separate residential area, but it has been decided, by the wisdom of previous Ministers, that those Indians must move 1,6 km out of the business area to the edges of the Bantu and Coloured area, businesses and all. I want to tell this hon. Minister that if he wants to save money for this Government, let us scrap this scheme and let these businesses stay where they are. It is going to cost a lot of money to buy those businesses and it is going to cost a lot of money to re-establish an adequate business centre to accommodate all the businessmen of Grahamstown. Nobody objects. I even think that if one asked the local branch of the Nationalist Party, they would say that they are quite happy to have the Indians remain there. These are factors that hurt and these are the factors—since the hon. Pik Botha talks of moving away from discrimination—which show that we can move away from discrimination without hurting any people or doing anything against their will. At the same time, we shall be saving a great deal of money. I make a very earnest appeal to that hon. Minister to think about this matter, because this is the sort of thing that makes people like me stand fast on this side of the House in order to point this out. We shall continue to do so for a long time yet, until members on that side of the House come to their senses …

How long?

A much shorter period than your stay on this side. Although hon. members on that side of the House do not understand and believe in the policies propagated by this side of the House, there is nothing un-South African in our policy. Our policies are humane, and I think this is something we have to think of in this world. We also believe that we, the White tribe in South Africa, must survive, but not through a policy of “baasskap” and not through a policy of shunting people around. I wholeheartedly support the amendment of the hon. member for Constantia, because I believe that we have to take these actions to improve our internal security so that if any attacks from outside are ever made on us, we shall be strong and united—not only the White people of South Africa, but all the people of South Africa.

Mr. Speaker, I think that out of decency I should refrain from replying to the hon. member who has just spoken. Consequently I shall not do so, and I think that that will satisfy him.

We are living in a time of change. Looking at the House, I see the changes which have taken place in the quarter of a century that I have been sitting here. There was a time when we had to drag members in here from their sick beds in order to win a division in Parliament. Today, however, our benches are overflowing. The hon. members for Zululand, Krugersdorp and Smithfield even have to sit on chairs which have been brought in, because there are insufficient chairs for all of us here. That mighty party has diminished in number, but their policies have increased. Their present policy contains the ideal characteristics of an outstanding large supermarket. It is a party in which change has been the most apparent factor. Here sits the Progressive Reform Party. They have increased in number, but their image has shrunk. However, I want to concede one point to them. It is the party which is focusing all political attention on itself at the moment due to the disappearance of the United Party as a meaningful Opposition.

That is wishful thinking.

Just look at the young members who are still willing to fight. With whom do they fight? They fight the Progressive Reform Party, not the United Party. I want to congratulate that party. They have achieved one thing, and that is to draw attention to themselves a little.

There is only a short time left before the House adjourns, and I still want to discuss four things. The first is the significance for us of the events in Angola. The second is inflation, the third detente and the fourth, the independence of the Transkei which is to occur this year. I think it is necessary also to say something about a word which is being bandied about here in the House, viz. discrimination. Because I want to discuss quite a number of matters, and because my speech will therefore be fairly long, I move—

Agreed to.

Mr. Speaker, I move—

Agreed to.