Mr. Speaker, I think last Wednesday must have been the first occasion for quite a long time when a Minister of Finance has not cast himself in the role of, or liberally sprinkled his budget speech with quotations from, some notable person. Last year this Minister liberally sprinkled his budget speech with quotations from Abraham Lincoln. In previous years we have had Aesop, Langenhoven, Confucius and many others. I made a mistake when I spoke in this debate last Wednesday after the hon. the Minister had sat down, because I likened him to the managing director of a company. I think that a far more correct casting for this hon. Minister on this occasion would be that of a doctor. I cast him in this role because he is having to deal with an economy which is suffering from a combination of severe ailments. Like any illness, that of our economy is manifested by a number of symptoms. No illness, however, is caused by symptoms. It is caused by root causes, and on this occasion those root causes go back a very long way. Also, like any other illness, there are various different types of treatment for it. There are palliative treatments aimed at relieving the suffering caused by symptoms, there are curative treatments which are aimed at eliminating the root causes of the illness, and there are preventative treatments aimed at guarding against the recurrence of the illness. Let me say that I regard it as very important that anyone who has the health of South Africa at heart should not confuse what are the symptoms of our problems with what are the root causes of those problems, and also should not confuse what the palliative treatments for them are with the curative treatments.

I want to deal firstly this afternoon with the symptoms of our illness, but do not let us run away from the fact that we are dealing this afternoon and in this debate with an economy that is sick. I do not want to hear any noises from that side of the House that I am being disloyal or that I am being unpatriotic when I say that we are dealing with a sick economy in South Africa. [Interjections.] I believe that it is being far more disloyal and far less patriotic if you put your head in the sand and do not face facts when those facts are unpleasant. If our economy were not so sick, why should the hon. the Minister of Finance have had to deal out such strong medicine for it last Wednesday? I believe, and I believe very fervently, that in times of crisis the people must be motivated by a frank approach to our problems and be taken into the Government’s confidence in regard to the effects of those problems. It is only then that you get the people unified and willingly behind the national effort. It is only then that you get the people ready and willing to make sacrifices and to put up with a spartan diet such as they are going to have to put up with, for any length of time.

It is only then when people will fully appreciate that in order to have a safe and secure country it is necessary to have a strong and healthy economy and be seen to have such an economy. I regret having to say this, but it is my observation, that true frankness is not one of the strong points of the hon. the Minister of Finance. I say this because I think he was less than frank with the country at the time of the devaluation last September. He emphasized what the advantages of that devaluation were, but he glossed over the very harmful consequences of it. I believe that in his budget speech of last Wednesday the hon. the Minister also glossed over the less pleasant conclusion which are to be drawn from our current situation. I do not propose to gloss them over one little bit.

What are the symptoms of our ailment? Obviously the most painful symptoms are stagflation—i.e. inflation at a double-figure rate—rapidly escalating cost of living coupled with a slow-down in employment and a slow-down in job opportunities. The rise in the cost of living is something that is causing real hardship particularly amongst those people who are at the lower end of the income scale, people who are mainly, but not entirely, members of our Black population. It is causing real hardship amongst people who have to live on fixed incomes, people who are primarily pensioners and are of an age when they are unable to supplement their income by working. It is causing hardship also to increasing numbers of salary and wage-earners whose salaries and wages are not keeping pace with the rise in the cost of living. I believe that the consensus of opinion amongst experts—and this is a consensus with which I concur—is that the rate of inflation is going to get worse this year when we start feeling more acutely the effect of last September’s devaluation, the effect of the increased rail tariffs which came into effect on the 1st of this month, the sales taxes, the excise duties and the savage increase in the price of petrol announced in last week’s budget. Food prices, which have been relatively stable for the past few months, are predicted by no-one else than the director of the Agricultural Union to go up sharply. Now with this budget and its hikes in the rate of income tax, the people are going to be left with less money in their pockets to pay for goods at higher prices. If this is not really asking for sacrifices, I do not know what is; if this is not going to lower living standards, I do not know what will. I believe it is inconceivable that there will not be a tremendous pressure by salary and wage-earners for increases in their salaries and wages as a result of this budget. If that pressure is conceded to, then we are going to see a further spiral of increases in costs and prices.

Mr. Speaker, if inflation is a hurtful symptom of our malady, so too is the lack of growth in the economy and the slow-down we are experiencing in business. Last year the GDP rose by only 2,2%, which was less than the rate of growth of the population of our country. Worse still, however, was the fact that the GNP, which includes our net income from abroad and is the real measure of what is available to sustain our standard of living, in real terms was virtually static and may even have shown a marginal decline. This means that our standard of living, the average per capita real income of our people, decreased last year, and all indications are that it is going to decrease again this year, probably more sharply than last year.

When we told him that, he said we were talking nonsense.

What is even more serious, however, is the fact that if the growth in the economy is less than the growth in the population, unemployment inevitably and axiomatically results. That is what is happening at present. Unemployment amongst Whites, Coloureds and Asians is measurable, and the figures show that over the past few months there has been an appreciable increase in that respect. However, there are no statistics for unemployment amongst the Blacks, although that is where the social and political consequences of unemployment are most serious. I know of an occurrence only last week where a firm in Johannesburg advertised for one African employee and received applications from over 500 people. If that is not an indication of unemployment, I do not know what is. [Interjections.] I think this Government would be very unwise and very irresponsible to underestimate the size or seriousness of this problem.

However, there are other serious symptoms of our present economic illness. We have a balance of payments problem because we are not earning enough from our exports and sales of gold to pay for our imports and we need some very essential imports to keep going. Business confidence has reached a low ebb with the result that the growth in investment, on which the whole future productive capacity of our country depends, has slowed down to a snail’s pace. I regard this as a particularly serious symptom, because our whole future revival depends on our capacity to grow.

I think I have identified the main symptoms of our economic illness, and I suggest that they add up to a very painful illness indeed. What, however, are the root causes of this situation? We have listened to arguments from that side of the House for a long time now that inflation is mainly an imported phenomenon. That is an argument that never did hold water. If it ever did hold any water, it is certainly not an argument that now holds any water whatsoever. South Africa is now ranked with the high inflation rate countries. With an inflation rate of roughly 11%, South Africa has a higher inflation rate than America with 4,8%, Switzerland with 3,4%, Germany with 5,3%, the Netherlands with 8,7% and France, Japan, Rhodesia, Canada and so forth. With one exception, and that is the United Kingdom, which has a higher inflation rate than we have, those trading partners I have mentioned all have lower inflation rates than we do. The conclusion to be drawn from these figures is that we are not an importer of inflation, but an exporter. [Interjections.]

What is the figure for Australia?

Can you give us five more examples?

In his budget speech last Wednesday the hon. the Minister put much of the blame for our sickness on the fact that overseas countries are going through a period of deep recession. The Government has placed much reliance on overseas recovery to lead our own economy back to the recovery trail. I do not think that we should exaggerate the effects of the overseas recession. Our exports have, in fact, held up remarkably well. Our balance of payments has been affected far more by the lower price of gold in the last year—which, in itself, is not directly attributable to recessionary factors overseas—and by capital movements, than it has by any slump in our exports. No, Sir, the root causes of our illness lie at home, not abroad. Our illness lies, and here I am going to use words which appeared in the leader in The Argus of 1 April dealing with the budget because I think those words are particularly apt—

That is putting it in a nutshell.

Here, of course, The Argus and I are referring to the whole gamut of the Government’s ideological policies of separate development and apartheid. I am referring to the inflexibly administered influx control, to the Physical Planning Act, to job reservation, to separate amenities, to forced border industrial development, to the insistence on a migratory labour system, to the paucity of educational and training facilities for our Black population, etc. These are the things which have got us into our economic mess. These are the things for which we are paying such a high price in this budget. However, I think an almost equally serious root cause of our present illness has been the profligate and extravagant spending by the Government over the last few years, spending which has been coupled to and partly financed by an unhealthily rapid expansion in the money supply. It is a fact that between 1972 and 1975 our GDP—i.e. the measure of what we produced in money terms—rose by 65% while Government expenditure over the same period rose by 82%—not 65%, but 82%—and the money supply rose by 77%. The hon. the Minister admitted in his budget speech that Government expenditure was mainly responsible for the growth of the economy last year. What a confession for any Minister of Finance to have to make! If these are not the ingredients of extravagance, of inflation, of inflationary financing, of strangulation of the private sector—the goose that lays the golden egg— and of an acute balance of payments problem, then I just do not know what are.

These are the root causes of the economic illness from which we are suffering. Let us not be hoodwinked and place all the blame on the level of our defence expenditure. In 1975, last year, our defence expenditure amounted to some 3¾% of our GDP. This is a high figure, but it should be a bearable figure by world standards; it is a figure we should be able to afford if we had a strong, healthy and growing economy. Sir, I think it is a terrible indictment of Government mismanagement that, lulled into a fool’s paradise by the high gold price, not foreseeing the inevitability of a downswing in the trade cycle and certainly not foreseeing the steepness of that down-swing, making no allowances for the contingencies of adversity such as the higher prices we have had to pay for oil, the Government embarked on a spending spree which was quite out of line with the productive capacity of our country and with the real ability of our country to pay.

I have dealt with the symptoms and causes of our illness. What is the treatment? The hon. the Minister of Finance in his budget speech last Wednesday opted for shock treatment. To try to reduce the temperature of the patient and to alleviate some of the symptoms of the illness, he has chosen harsh monetary measures and high taxes. However, like all drastic treatments of illness, this treatment has its side-effects, and some of those side-effects are very harmful. Let there be no doubt about the side-effects of higher taxes. The high marginal rate of income tax, including the loan levy, introduced in the budget, is going to hurt. It is going to mean less money in the pockets of the people to pay the higher prices for the goods they buy. It is going to inhibit productivity, particularly amongst the professional and entrepreneural classes whose productivity is already affected by the rate of marginal taxation which has been applicable to date. It is hardly worth their while to put extra effort into earning the extra rand because they are left with so little of that extra rand. It is going to exacerbate the position of married working women and it is certainly going to discourage them from offering their services in the labour market. It is going to limit severely the ability of people to save, particularly of those people who are in the best position to do so. I am concerned that there is a danger that, through its affecting the ability of people to save, it is going to prejudice the success of the Defence Bond issue which the hon. the Minister announced in his budget speech.

I hope that when the hon. the Minister gives us details of the loan levy, he is going to announce a higher rate of interest than has applied to loan levies in the past. I regard it as absolutely iniquitous that loan levies should carry interest at only 5% when the rate of inflation that occurs between the time they are paid and the time when they are repaid is more than double that rate with the result that the people who pay the loan levy get back in real value much less than they paid.

How much tax do you pay on the interest?

It does not help that you do not pay any tax on it if the interest is less than the rate of inflation. I would like to suggest to the hon. the Minister—after, I must say, a rather puerile interjection across the floor—that he should consider indexation for the loan levy so that when it is repaid it will be repaid in the same value, in real terms, as when it was paid by the taxpayer. The increase in companies tax and the loan levy on companies is going to play absolute havoc with companies’ liquidity, with their cash flows and with their ability to replace assets and to keep their plants up to date, and this will apply equally to large, medium and small companies. Many companies are already battling with liquidity problems. I believe that the substantial additional impost of this budget will be a mortal blow to many businesses. But, Sir, even more serious among the effects of this budget are the increases in the sales tax and the excise duty on petrol. These, coupled with the other increases which we know to be in the pipeline—those resulting from last September’s devaluation and those resulting from the higher rail tariffs in terms of the Railway budget this year—are going to give a sharp twist to the inflationary spiral, and I believe that they will largely negate any efforts which the Government has made to play its part in the anti-inflationary programme. Sir, yesterday in the Sunday Press there was a full page advertisement presumably inserted by the Anti-inflationary Committee. One of the things this advertisement had to say was to ask this question—

What sort of effect does a statement like that have on a person who has just filled up his tank with petrol and who has had to pay a rand or more for that petrol. The people are going to lose respect for this anti-inflationary campaign if advertisements of this kind appear in the Press. This was an ill-advised advertisement and misleading. It is absolute poppycock and a complete waste of money. The hon. the Minister of Economic Affairs will recall that last Friday this House passed the Trade Practices Bill. I question the legality of this advertisement in terms of that Bill, because that Bill outlaws false and misleading advertising.

Sir, I am afraid I am not yet at the end of the gloomy picture. Nearly all these measures which are included in this budget are going to have a damping effect on and are going to exacerbate the tendencies which already exist in the economy, i.e. slower growth and increased unemployment, with all, the social and political consequences of that situation. We are getting into a situation which the hon. the Prime Minister said some years ago would cause him sleepless nights. There has been no indication from the Government either in the budget speech or in any other statement by Ministers, as to how they propose to deal with this situation. The whole design of these tax proposals is hardly one which is going to propagate business confidence. Therefore we can look forward once again to another year of low investment and slump conditions.

I repeat: It is the Government that has dragged the Republic into this unhappy dilemma. It is the inevitable consequence of the root causes which I have described, and those root causes can be laid fairly and squarely at the door of the Government. I believe that the treatment of the economy meted out by this budget is too harsh in the circumstances and that the harmful side-effects which will result from this budget will prove me right. The Minister made this statement in the budget, and I presume he knew what he was talking about—

If he did know what he was talking about, then I believe that the harshness of this budget should have been softened—and softened substantially—by financing a larger part of the deficit by borrowing instead of by higher taxation. [Interjections.] The last harsh budget which we had in the Republic was in 1971, when income tax was put up to the level of 78% including loan levies. That was a budget which, inter alia, was designed to curb inflation and to deal with a balance of payments problem. It is now a matter of history that that harsh budget did not curb inflation. On the contrary, inflation has been escalating ever since. It did not help the balance of payments in 1971. On the contrary, the balance of payments deteriorated in this year until the devaluation of the Rand at the end of that year. I believe there is a lesson to be learnt from that harsh budget of 1971. I believe that the lesson is that palliatives of that nature, shock treatment of that nature, are not enough unless also accompanied by curative treatment. In other words, unless the Government undertakes the correct curative treatment, it is going to be faced with a regular recurrence, and a recurrence in an intensified form, of all of our present problems and everything that that entails.

I believe, Sir, that the long-term curative treatment of our illness falls broadly into three parts. The first part of the curative treatment must be for the Government, on a long-term basis, to curb its expenditure and to keep the growth of Government expenditure within the limits of the growth of the GNP. I hope that the Government may already have learnt that lesson. It has certainly cut its expenditure in this budget. But I suggest that it is early days yet, and that the Government is far from home yet in this regard. It appears to me that the cuts in expenditure in this budget are postponements of expenditure rather than actual economizing on expenditure. That certainly is the case in so far as there were no increases in the salaries of civil servants, and in so far as many capital projects have been postponed, property which ultimately must inevitably go forward. It is only in this way, i.e. by keeping a curb on Government expenditure, that the private sector, which is the dynamo for growth and development in the economy and on which the whole future prosperity of our country depends, can be given its head.

The second part of the long-term curative treatment is that the Government must keep the growth of the money supply within the growth of the GDP. I am by no means a slave to the thinking of that famous American economist who has just visited this country, namely Dr. Milton Friedman, who advocates the control of the money supply as being a major weapon in the control of inflation, but I do consider that it is an essential element in our financial stability, an element that has been sadly lacking in recent years. Even last year, 1975, after the Government had woken up to the importance of this factor, the money supply still continued to expand at the rate of 17,4% compared with a growth in the GDP in monetary terms of only 14% and in real terms of only 2,2%. This means that the growth in the monetary supply last year was mainly financing and perpetuating inflation.

The third part of the curative treatment for our ills, is the most important one, and there are few signs that the Government is doing anything about it or is likely to do anything about it. This is to loosen the chains by which ideological policies are restricting productivity and the growth in the economy. The Government is a prisoner of its own policies. It hangs on to job reservation, a factor which has a far larger impact and represents a far greater threat to employers than the figures of its application indicate. It hangs on to the Physical Planning Act, and to the harsh administration of influx control which prevents Africans from being employed where their services are needed. It hangs on to an inflexible attitude with regard to border industrial development which prevents the establishment and expansion of industries where those industries can operate most productively. It hangs on to outmoded and inhuman restrictions on Africans living in White areas, such as curbing family life and prohibiting home ownership, which not only affect the happiness of these people, but also affect their productivity. It hangs on to outmoded restrictions on business rights for Africans outside the homelands, preventing African entrepreneurs from being as productive as they could be. It hangs on to a lack of sense of any urgency in providing these training programmes for Blacks which are so necessary. That is by no means the complete list or the end of the list.

Mr. Speaker, I must conclude by saying … [Interjections.] that these policies must be changed if we in the Republic are going to realize our great potential, if we are going to have the economic strength and health which is necessary to secure the real safety and security of our country and if we are going to broaden the tax base so that the burden of taxation to finance State expenditure and expenditure to ensure our safety, does not continue to fall on the shoulders of such a small proportion of the taxpayers. These policies must also be changed if we are to have racial harmony and if we are to have a peaceful future in the Republic of South Africa. If they are not changed, we are going to continue to have to pay the price in harsh budgets, like the one before the House at present.

To sum up the attitude of this side of the House, I move as an amendment to the hon. the Minister’s proposals—

1. (a) persisted in policies which subordinate the economic needs of the people to the promotion of Government ideology and which inevitably result in increasingly harsh taxation;
2. (b) so mismanaged the economy that the cost of living continues to rise and adequate economic growth and improved standards of living cannot be achieved; and
3. (c) failed to adopt measures to provide for the full utilization of the immense human and material resources of the Republic for the benefit and security of all its peoples”.

Mr. Speaker, I have listened to the hon. member for Constantia and I think I agree with him in one respect, i.e. that I have never heard such a pessimistic, such a gloomy picture being painted in this House as the one he painted here. What did the hon. member really tell us? I have listened attentively to try and ascertain the alternatives he was able to offer. I am still waiting, because all we heard from the hon. member is that we should curtail State expenditure, that we should limit the supply of money, should do away with apartheid and separate development and all measures which exist in this connection. Work reservation, the Physical Planning Act—the lot—have to be abolished and once we have done all this, he says we should go and borrow the extra money. This is the solution which the hon. member for Constantia offers South Africa.

This budget is already well known throughout South Africa and we have therefore had the opportunity to learn what the public of South Africa think of this budget. Now I want to say immediately that this is a difficult budget. But I want to add that it is also a brilliant budget. [Interjections.] It is a difficult budget because I believe that since the year 1931 monetary and financial circumstances have never been as difficult as the circumstances prevailing throughout the world today. I say it is difficult because, as has correctly been said, the measures which can be taken are sometimes of a conflicting nature— one man’s meat is another man’s poison. I say it is a brilliant budget because I believe that the hon. the Minister of Finance—and this is his first budget—succeeded in an almost superhuman way in presenting this country with a budget which in its entirety complies with the position, the circumstances and the needs we have to face today.

Furthermore, I say that this budget complies with the norms and the provisions of the Prime Minister’s Economic Advisory Council in every respect. I say this as a result of a report which was recently presented to us by the Economic Advisory Council. In this report it is expressly mentioned that this advisory council met at the end of February and on that occasion suggested a budget which agrees in every detail with that which was presented last week. The Economic Advisory Council also expressed itself in no uncertain terms in favour of quite considerable tax increases in order to cover the cost of defence. The report states further that the advisory council is convinced that everyone in South Africa must be prepared to contribute their share towards strengthening the economy, and that in the present circumstances it is the duty of every member of the community to avoid being wasteful and not try and take from the economy more than they are prepared to put back into it.

Now I ask what the reaction of the hon. member for Constantia is. What is the reaction of the Official Opposition to this report, to this standpoint which was adopted? Here we have the standpoint of a body which represents practically the highest authority in the country as far as economy is concerned. We can learn what their reaction is if we read what the hon. member for Constantia said in this House last Wednesday. In his opening speech in the Second Reading debate he said—

[Interjections.] This, Mr. Speaker, is the answer of the Official Opposition in South Africa … [Interjections.] … when we are dealing with problems of an international nature, when we are dealing with a recessionary position in the world, when we in South Africa have to harness all our sources and all our energies in order to be able to maintain our position here in an orderly manner. [Interjections.] This, then, is the advice, this is the standpoint of the Official Opposition. Then they say “it takes the joy out of life”. [Interjections.] The hon. member for Constantia actually says that an increase of one cent on a packet of cigarettes, that an increase of one cent on a tot, is too much for him and for the Official Opposition to contribute towards the safeguarding of South Africa’s economy. [Interjections.]

Mr. Speaker, it has even become necessary for the Opposition to confuse the Government’s expenditure in respect of certain aspects, which they describe as apartheid ideology. However, I want to make it quite clear that we on this side of the House, when it comes to spending money—however expensive it may be—on separate development and the development of peoples in South Africa towards autonomous independence, are not prepared to apologize for it.

However, I want to return to the hon. member for Constantia, and I want to refer to the remarks he made in his speech here last week. One of those remarks was:

Then he continues, and in a sombre, depressing way, as he alone is capable of, he says (col. 4278)—

He was almost moved to tears when he said that. As a matter of fact, he was so sad he almost moved me to tears too.

He wanted to cry, but he could not find the tears!

Yes, he wanted to cry, but he could not find the tears! Mr. Speaker, what a lack of judgment this shows for the United Party’s chief speaker on finance! What a gross error of judgment on his part!

Only two days later the Financial Mail appeared, a publication which is certainly not the most enthusiastic supporter of the Government. And what does the Financial Mail say? In spite of what the hon. member for Constantia said on Wednesday—and I repeat that he made a gross error of judgment, that he attached a completely wrong interpretation to the political and financial position in South Africa—the Financial Mail says—

[Interjections.] Now I want to know who is the cleverer of the two: The Financial Mail or the hon. member for Constantia? [Interjections.] However, I want to tell the hon. member for Constantia that South Africa’s voters are a group of connoisseurs. They are able to separate the chaff from the wheat.

That is why there are so few UP members!

Yes, that is why there are so few UP members. Now I want to say that, when the hon. the Minister of Finance was presenting his budget speech on 31 March in this House, there was a by-election in Alberton. The hon. member for Alberton, who has just been sworn in, is sitting over there. [Interjections.] Mr. Speaker, at a quarter to four on that afternoon the contents of this year’s budget was known throughout South Africa. The United Party put up posters at the ballot-box at Alberton to try and frighten the people of South Africa with the contents of this budget. Sir, for weeks the English and Afrikaans newspapers, have been telling us what Horwood was going to do to us. According to the newspapers, what he was going to do was similar to what Jan Ellis said to the man behind him in Funny People. What happened on that day, Sir? On that day 6 801 Nationalists voted for the National Party and 952 for the United Party. Mr. Speaker, “it was indeed a gloomy day”. Economically it was a black day for the United Party because they also lost their deposit on that day. What should have been a sad day indeed for South Africa, became “a good day for South Africa and a black day for the United Party”.

The hon. member for Constantia alleged “that economic conditions have deteriorated within the last year.” Sir, I had a look around in order to determine what the position is; I took a few newspapers in order to determine whether his assertion is correct. Before me I have a few newspapers, from which I want to read a few extracts—

Then we read that Tedelex increased its profit by 600%. We read that the taxable profit of Marshall Industrials increased by 22% in the six months up to the end of December. Furthermore, we read that Gallo’s profit increased by 52%. The last one I want to quote, Anglo American Corporation, in spite of the drop in the gold price, increased its consolidated taxable profit for the year ending 31 December by almost 12% to the colossal amount of R84 million. Sir, it does not sound to me as if this is a reflection of poor conditions. It does not sound to me as if it should move us to tears. It does not sound to me as if this reflects a tragic situation as that hon. member would like to make out. Sir, let us quickly determine what the declared objectives and goals of this budget were. Firstly, it was to make adequate provision for defence; secondly, to bring about economic preparedness; and, thirdly to safeguard and strengthen our balance of payments position and to curb inflation. Let us measure these objectives according to the budget, bearing in mind the words of the hon. the Minister when he says that there is a time in the history of every nation when stronger forces, political as well as economic, necessitate a different approach. Sir, we say—and every good South African says this except for these cowards who are leaving the country, that if ever there was such a time it is now. We are pleased that the Opposition supports us this year as far as defence is concerned. Sir, this is a completely new note. Only last year the standpoint of the hon. member for Hillbrow was that one could buy 100 tractors for the price of one tank. Sir, this is a totally negative standpoint. I want to ask him if it is still his idea that we must safeguard South Africa’s borders by buying 100 tractors instead of one tank. Sir, I am pleased that the Opposition accepts this idea but I am sorry that they qualify it with reservations such as “apartheid marches on”, etc. If the hon. member for Constantia, instead of making the statements he made to The Cape Times, instead of saying “apartheid marches on”, rather told The Cape Times, that he appealed to all the supporters of the United Party and the people of South Africa to buy defence bonds, he would have made a positive contribution. Sir, the hon. member had a great deal to say about the question as to whether this Budget was inflationary.

In his statement to The Cape Times, if I interpreted it correctly, he says: “The budget is highly inflationary.” Then he continues: “The budget would again refuel inflation.” Sir, I think this was another error of judgment. I do not think he interpreted this budget correctly. I can call in no better witness in this connection than a person who is actively dealing with inflation, a man who eats, sleeps and drinks inflation, namely Dr. Lawrence McCrystal. What does Dr. McCrystal say? He says—

“A highly commendable effort.” In yesterday’s edition of The Sunday Tribune, Dr. McCrystal says—

This is the expressed opinion of Lawrence McCrystal. The hon. member may perhaps not have much confidence or faith in Lawrence McCrystal, but what does Aubrey Dickman of Anglo American say? He says—

What does Assocom, one of the authoritative bodies in South Africa, say? It says—

Sir, they accept the contents of this budget as anti-inflationary. What does the Federated Chamber of Industries say? It says—

I think that we can certainly accept the statements of all these authoritative bodies in preference to the statement of the hon. member for Constantia. These are people who know what they are talking about.

You know, Sir, Tielman Roos said: “A UP member is a strange thing. If you ask him ‘What is two times two?’ then he says ‘Five’. If you say to him, ‘but two times two is not five, it is four,’ then he says: ‘That may be so, but where were you during the Boer War?”’ This is the kind of argument one gets from hon. members on that side too. The idea has never been that this Budget should be deflationary; it has always been intended to be anti-inflationary. The idea has never been to present a “balanced budget” or a neutral budget. This would have smothered the economy completely. Therefore we have before us a conservative, realistic budget. The problems which confronted the Minister were a recessional condition in the world, the declining growth rate, the cost inflation and the low gold price. What was he asked to do? He had to tighten up defence; he had to honour the undertakings given by the State in terms of the anti-inflation manifest; he had to leave scope for a positive growth rate in at least production potential. The Minister had to sweat it out. What were the foreseeable options? They were only: possible State loans locally and abroad, withdrawals from the Stabilization Fund and fiscal measures. I think that Assocom’s final summary can be taken as correct when they say—

It is a fact that foreign loans do not have to be inflationary, because we can spend the amount we receive in that way, abroad. Internal loans do not have to be inflationary, and the direct taxes are indeed not inflationary. The indirect taxes do not have to be inflationary, except for a portion thereof, and except for the amount of R240 million taken from the Stabilization Account. May I in respect of the argument of the hon. member for Constantia to the effect that the higher taxes are inflationary, once again refer hon. members to the Financial Mail. As long ago as in February they said the following in connection with the increase of taxes—

Have we got demand inflation?

Sir, this is the opinion of these people, and I also think it answers the hon. member for Constantia in this connection, i.e. whether or not these tax increases are inflationary. Sir, the hon. member also spoke of “a broadening of the base”, and so on. We are aware of the fact that we have a narrow tax base in South Africa. We are aware of the fact that a great burden rests upon the shoulders of the White taxpayers. We know that all the Opposition’s solution amounts to is that they suggest that we do away with all restrictive measures, including apartheid, work reservation, etc. But, Sir, I want to tell the hon. member that although I agree that the taxes imposed on companies and the burden on business enterprise are heavy, I nevertheless believe that it is worth while. I believe that commerce and industry are also prepared and willing to contribute their share. I believe that it is a sounder policy to use one’s own capital resources instead of incurring loans and obligations. I believe that financial discipline is essential now. I believe that we should tackle our problems in a realistic way without running away from them. I believe that the sooner we get stuck in, the better it will be for us.

In conclusion I want to say in respect of the Budget that it is a pragmatic and realistic Budget. I believe that the Government did not hesitate to adopt the right standpoint. I believe that it is a Budget with which we shall inspire confidence both in and outside South Africa, because it proves to countries abroad that this Government is able to do what must be done. I believe that it is a budget which South Africa needs for an early recovery, and in this connection I want to quote what Dr. Jan Marais recently said in the Sunday Tribune. I quote—

Mr. Speaker, I conclude by agreeing with the Financial Mail for once in my life when I say: “Hats off to Horwood!”

Mr. Speaker, I read the other day that the hon. the Minister of Finance was born under the sign of Sagittarius. It struck me, therefore, that the budget could perhaps best be typified by using that sign and saying: “He shot an arrow in the air; where it fell, he did not care”. I think that really is a description one could give of this budget. The hon. member for Ermelo decided that as far as he was concerned this was a brilliant budget. I have had the experience in this House of having listened to three budgets. They have got worse as we have gone along, but the praise for them has become more and more extravagant. I also have a fairly good memory of the hon. the Minister of Finance talking about the Financial Mail. I remember him attacking it and saying that the sort of things it published should not be allowed to be published. He got quite carried away with what he regarded as being the incorrect statements that were published by the Financial Mail. For once it seems to me that the Minister is right in respect of this issue of the Financial Mail to which the hon. member for Ermelo referred. But, of course, the hon. member for Ermelo only referred to those portions of the Financial Mail which suited his particular purpose. He did not, for example, read that it also had the following to say—

I think that could not have been in the issue of the Financial Mail referred to by the hon. member for Ermelo, otherwise I am sure he would have been willing to quote it. Mr. Speaker, 20 months ago, in August 1974, we in this House listened to a budget speech. We were told that South Africa was powerful and that there was strong growth. We were told that the rand remained a strong monetary unit in an uncertain world. Reference was made to “another year of progress and prosperity”. That is what we were told. The hon. the Minister, during the last budget, said: “I am quite convinced that as far as gold is concerned, we are on a wonderful wicket.” That was on 14 April of last year. He said that there would be an upswing in 1976 and that he was therefore going to be moderately expansionist. On 14 April he said: “Output is increasing at 4½% at the moment.” On 26 March he had this to say: “The rand can today undoubtedly be regarded as a strong currency.” He went on to say, on 17 June, which is a significant date: “We have a balance of payments position which is sound right up to this moment.” Only a man who did not know the facts could have said that, and I have some doubt as to whether the hon. the Minister knew the facts or did not know them at that moment in time. He said also: “We are in a country whose economic growth is burgeoning.” He became all emotional about an article that had appeared in The Cape Times, in which Mr. Murray—not the hon. member for Green Point, but the trade unionist—was quoted as saying that living standards were shrinking steadily. He became all emotional and said it was “an absolutely incorrect statement”.

That is correct.

The truth is that we today have a growth rate of 2¼%, on the Minister’s own admission, while the population is increasing at a greater rate. Is that not reducing living standards, or has the Minister forgotten his economics? [Interjections.] The per capita situation in South Africa is negative, and the hon. the Minister knows it. It is no use pretending it is not. Sir, the unfortunate thing about the hon. the Minister is that he resents criticism. He is optimistic to an extent which is quite unrelated to reality. He has an inability to read the economic signs correctly. He seems to have no adequate economic model or policy on which to work, and no clear definition of what the priorities are to be. The hon. the Minister keeps talking about cyclical movements. If he looks at some of the writings which are available in South Africa on what in fact is involved in the business cycle, he will see that, in the present situation we are in, we do not have the classic symptoms which are associated with a business cycle, because at a time when we are at a low point in the business cycle, we do not have low imports, we do not have relatively low interest rates and we do not have a current account which is in surplus. The hon. Minister can yawn about it if he likes to. That might be his attitude towards this budget, but I want to tell him that he appears not to appreciate …

Why are you so personal?

Why does the hon. the Minister then yawn when an hon. member is making a speech? [Interjections.] If anything, I promise the hon. the Minister that I shall keep him awake. The fact is that the hon. the Minister is suffering from a great delusion if he believes that the difficulties we are in are cyclical or non-structural. This is the tragedy behind the whole budget, namely that the hon. the Minister fails to realize the structural problems we have to face. He thinks we are merely in a cyclical position and that everything will come right. He is like the master of a ship with the rudder not working, with the engines not working, but he has the sails up and is hoping for a favourable wind that will take his ship somewhere where it will be safe. In the meantime, all he is saying is: “All hands to the pumps; otherwise we are going to sink.” This is the tragedy of the hon. the Minister of Finance and his handling of the position at the moment.

Let us look at what I believe are 13 serious consequences, for South Africans, which flow from this budget.

It is a baker’s dozen.

Yes, it is 13. Thirteen is a lucky number both for the hon. the Prime Minister and myself. There is no doubt—although the hon. the Minister of Finance keeps denying it—that there is going to be a reduction in living standards for the average South African as a result of this budget. The issue which the hon. the Minister has not been able to deal with is whether this reduction in living standards is to be transient or whether it is now to be a long-term or even a permanent characteristic in the lives of South Africans. It is a question the hon. the Minister failed to answer in his budget speech, while South Africa was waiting for his answer. The hon. the Minister speaks very glibly of the fact that unemployment is not yet serious. But, with great respect, if we look at what is happening to the economy, the real danger of unemployment is there with all its social and political consequences for South Africa in the context in which we live. We talk about inflation and one thing is very clear—I have quoted from the Financial Mail with which the hon. the Minister is now so pleased. Sales tax, whichever way one looks at it, is inflationary, particularly if it is applied to essentials. Nobody can tell me that matches, razor-blades and household goods are not essentials in the community in which we live. What is happening, is that the issue as to what is becoming a luxury in South Africa is changing. What used to be regarded as an essential is now to be regarded as a luxury under the new régime. That is why the hon. member for Ermelo is able to speak quite so contemptuously of the ordinary man who wants to drink his glass of beer. That is now to be a luxury in the circumstances under which we live.

Let us look at petroleum products in particular. Thirty-six per cent of all petroleum is used by the private motorist, 36% by industry, 11% by agriculture, 10% by commerce, 5% by aviation and 2% by sundry others. The effect of this is that inflation will seep right through the system and will be felt in increasing measures as we go along. We talk about the fact that this is going to mean a reduction in disposable income. The hon. member for Ermelo said it was a very good thing to have a reduction in disposable income. Did the hon. member not say it? In fact, the hon. member quoted from an old issue of the Financial Mail in order to try and substantiate his point. A reduction in disposable income may be of assistance in reducing demand inflation, but even the hon. the Minister had to say that this was not the major inflation problem he was facing, but that he was faced with a cost-push situation. With great respect, to reduce disposable income at this stage, will be to have an adverse effect on not only the private individual, but also on industry and commerce. One will have a reduction in demand and price increases which will follow it.

I now come to the fifth point, that of salary increases. In his budget the hon. the Minister was dead silent about salary increases for the Public Service. Is the hon. the Minister, in reply to this debate going to say what is going to happen about public servants and their salaries, or must we wait for the, Additional estimates which may put a completely different complexion on what is going to happen during this financial year? I think the hon. the Minister has a duty—as he has always had—to get up in this House and say what is going to happen to public servants during the course of this year.

Then we come to the question of consumer confidence. I think the hon. the Minister is destroying consumer confidence in South Africa, and this will have a long-term effect on commerce and industry in the years that lie ahead. I have dealt with the lack of growth in the GNP, and I now come to the fact that the hon. the Minister relies for our future on the fact that if the economies of our trading partners improve, everything will come right. In other words, it is not what he is going to do that is going to put things right. He is, in fact, relying on what is going to happen in other parts of the world to determine the degree of prosperity we shall have in South Africa.

Then we come to the issue of the drop in after-tax profits in business. We already have liquidity problems, particularly with the credit ceiling that has been imposed. The public is going to be increasingly pushed as far as that debt is concerned. Periods for debts will have to become shorter because of the action that has been taken under this budget.

Then we come to what is perhaps the most important aspect, and here I am referring to the disillusionment which is endangering the confidence necessary for investment and progress. The hon. member for Ermelo attacked the hon. member for Constantia for his pessimism. But how can one not be pessimistic about a Government that introduces measures of this kind? We in these benches are optimistic about South Africa, but pessimistic when it comes to the handling of South Africa’s economy by the Nationalist Party.

Let me now deal with the events in southern Africa. The danger of events in southern Africa, political events, affecting overseas confidence, is something that cannot be ignored. However, the hon. the Minister passes this off as a remote possibility, as something one simply has to bear in mind. What we are actually faced with, however, is a very real situation, not merely an academic question. There is also, of course, the balance of payments position. At a low point in the economy, as every work on the subject reveals, one must be flush on current account or have a very small deficit. Yet contrary to all the economic rules, if this is indeed a cyclical situation, we have a balance of payments problem which has reached disconcerting proportions. Perhaps it should be mentioned that at a time when one should be giving people an incentive to work and should be encouraging productivity, the hon. the Minister does not give that encouragement. On the contrary, he puts up the marginal tax rates so that there will be an even greater lack of incentive than there is at the present moment. The hon. the Minister knows that South Africans are prepared to tighten belts if they have to, but there is another matter the hon. the Minister must take a look at, and that is that the public would like to see the Government doing the same. They do not want to see excessive Government expenditure all around them. Examples in the Press, over the past day or two, of extravagant entertainment are not examples that should be allowed to pass without mention. The chairman of the Board of Governors states that the money spent by the SABC does not come from the taxpayers. That is very strange, because my estimates have an amount under the Education Vote of R12 million for that purpose. Yet Dr. Meyer has the nerve to state that this money does not come from the taxpayer. When one asks members of the public to tighten their belts, one is obliged to set them an example. It should not be the other way around. However, this is something the hon. the Minister does not seem to appreciate. [Interjections.]

Let me ask, in respect of this budget, whether the members of the public really know the facts. When the budget was debated last year, the Exchequer Account was running at an abnormal deficit. The deficit for the June quarter was over R500 million. The hon. the Minister, however, should presumably know what is happening, at least on a monthly basis, but he said nothing. On the contrary, in the Third Reading of the budget last year, he confirmed his over-exuberance. He said not a word about this matter. This deficit continued and was, to a considerable extent, financed from the monetary banking sector. This is a classically inflationary procedure. If we also look at the deficit of R853 million on the Exchequer Account at the end of September, the drop in earnings from commodity exports, the drop in the gold price and the resultant anticipated drop in the tax earnings from these sources, we find that these constituted one of the reasons we were not told about for the devaluation. The reason was to improve the Exchequer receipts and to get more tax, the Government benefiting not only from taxation on higher rand export earnings but also from the higher import costs in rands. This caused inflation, thus increasing customs, excise and sales duties on imported goods which would otherwise not have increased in price but which did, in fact, increase in price by virtue of devaluation. It is significant that the hon. the Minister said in his budget speech that customs, exicse and sales duties realized R48 million more than was estimated.

There is a further point. The Exchequer payments appear to have dropped remarkably in the two months before the Budget, in a manner quite inconsistent with the pattern set in previous years. The Afrikaans Sunday newspaper Rapport yesterday suggested that payments were deliberately being withheld. However, there may be another possibility. Transit payments may have been dealt with in a particular manner. Will the hon. the Minister, however, tell us whether something went wrong with the Reserve Bank computer at a crucial time? What is the hon. the Minister’s explanation for all of this? What will the April and May payments now be? Are they now going to be extremely large? Perhaps he will give us the figures when we come to the Third Reading debate. Rapport yesterday virtually accused the hon. the Minister of window-dressing? It is quite remarkable how the picture seems to have changed completely in the last few months. I wonder what the picture is going to be like at the commencement of the new financial year? Perhaps the hon. the Minister will give us the net foreign reserves, and perhaps he will also give us the borrowings, particularly the short-term borrowing in the first quarter of this year. Perhaps he will also give us the terms, particularly the periods and the amounts, of the gold swap. Then we would be able to sit in judgment on the article in Rapport and be able to ascertain whether there has been or has not been any window-dressing.

Perhaps one has to look at these estimates with an eye to items that are going to be in the supplementary estimates. Perhaps that is how this budget has been presented. I think that the public is asking whether they have been told everything about this budget. They are perhaps wondering whether we have been told all the facts as they are.

We have the right to know.

Yes, we have the right to know. That hon. member is absolutely correct. I am indebted to the hon. member for Langlaagte.

That is the first time we have had a sensible statement from him in this House.

The hon. member for Constantia spoke about separate development. However, I should like to approach the matter from a slightly different angle. I believe that South Africa is paying the price of apartheid. When we talk about the structural defects in the economy, we must realize that this is what it is all about. Billion’s and billions are being spent on implementing apartheid, and this is now coming home to roost. The public must know that one cannot have an unproductive movement of people, that one cannot have an unnecessary duplication of services, that one cannot create a massive bureaucracy to implement an unending list of laws designed to perpetuate the very ideology that saps the economy and that one cannot seek to create jobs at abnormally high prices in ideologically selected areas without having to pay the price for all of this eventually.

There is another issue involved. In the present circumstances it seems that this budget should actually have been a watershed. People were looking to see whether this would be a turning point which would ensure the safety and security of South Africa. The hon. the Minister and the Government are pre-occupied with events taking place outside of South Africa. We do not underestimate the seriousness of those events, but we believe that events inside South Africa are more important and potentially more dangerous. The hon. the Minister quoted Adam Smith to the effect that defence comes before opulence. I believe that economic strength is essential to defence in South Africa. It is necessary not just to pay for the defence, not just to create the image of being the powerhouse of Africa, but to satisfy the reasonable expectations of the emergent communities. If one cannot maintain and, in fact, improve the living standards of the Black people and hold out hope for further advancement, I do not believe one can ensure racial peace in South Africa. The events of the past year and the state of our economy at this moment in time, and also the inability to convey confidence in future decisions and actions have created I believe, a crisis of confidence. There is no confidence in the ability of the Government to handle the economy. There is no confidence that the Government has adequate plans for the future. I believe that all that is happening is that the Government is plunging us into deeper recession at the present moment in time.

There may be palliatives for the situation created by the Government, but it does not give us the confidence that the future will in fact produce real solutions. The Secretary for Commerce has called for a national convention of all races on economic matters. We support this. However, there are more urgent plans needed. We have the Prime Minister’s Economic Advisory Council, but it does not meet frequently enough and has insufficient direct influence on the Minister of Finance. I believe South Africa needs a budgetary committee, comprising not only Parliamentarians of all parties, but also leading businessmen, industrialists, financiers and economists. Such a committee should not only consider the budget, but should also meet at regular intervals with the Minister of Finance to consider the budget and developments as they arise from time to time. I believe that, if the hon. the Minister were to act contrary to the recommendations of the majority of such a committee, he should be obliged to report such a fact to the House. I believe that we need all the best brains in the country to get the economy right. I would hope that the Government might be big enough to appreciate this.

It may be said of us that we only criticize and do not provide alternatives. Therefore I think we must put the alternative as we see it. Let me say immediately that I believe the Government cannot continue to ignore the facts that are coming to light in South Africa. That is the first thing we must pay attention to. I refer to such facts as bus strikes, factory strikes, unrest over lack of housing and the public utterances of Black leaders. These are facts the Government is ignoring. We believe that the economic well-being of the people is the major item of security in the country. To allow a drop in the standard of living of the under-privileged is, I believe, to play with fire. I believe the hon. the Minister of Finance is playing with fire at this moment in time. We also believe that the budget should show the path for the future. It should indicate the economic road and not merely deal ad hoc with current problems. There must be a plan; there must be objectives. Our objectives are: To use the economy as an instrument to safeguard our future; to safeguard the living standards and to give hope for the legitimate aspirations of the under-privileged; to create price stability and take effective and long-term steps against inflation; to preserve the foreign reserves and take short and long-term measures to safeguard the balance of payments position; to install confidence in South Africa overseas and in local businessmen and industrialists; to encourage investment and to set the rate of growth as soon as possible at a rate sufficient for our future.

How?

Hon. members ask “How?” What should we do? I believe that the first thing is to take steps to improve productivity and to give material incentives to workers to produce more. We should not just talk about productivity, but give people greater rewards for working longer hours and producing more. Secondly, we must utilize all the human resources that are available. One must remove the legal restrictions on their use and train and educate them in the right direction to ensure that bottlenecks do not occur. Thirdly, I believe that long-term steps must be taken to avoid the dangers to which our open economy is subject. This can be done, inter alia, by raising the purchasing power in the local market so as to employ the economies of scale and to make exports more competitive. Fourthly, we must utilize the business brains of South Africa in the economic planning and decision-making. I have referred to this already.

Let me deal specifically with certain individual aspects of the budget and indicate what we would have done and would not have done. Sir, we would not have increased the sales tax and thereby the cost of living. We would not have had an increase in the price of petrol, and we would not have removed the incentive to work by an additional tax burden. On the other hand, we would have had a sales tax on truly luxury items and we would also have had a sales tax payable at the retail level to avoid the additional mark-up on tax. To fight inflation, we would have avoided the tax increases of an inflationary nature. We would have introduced an index savings bond; we would not have used the inflationary form of financing which the Government used to a considerable extent in 1975. We would borrow more overseas and from non-monetary banking sectors in South Africa. We would use a zero-base budgeting system under which each item of the budget has to be justified anew. We would also cut down on Government expenditure in respect of non-productive ideological matters. Furthermore, we would not move people in the manner in which this Government does and we would eliminate the bureaucracy which implements discriminatory practices. As regards growth, we would not have growth in the broad sense for its own sake, but growth in the sectors which are of real benefit to the economy and the people. We would hurry up with the system of inflation accounting. We would cut back on the import of luxuries. We would standardize more in the production of local products and we would take more drastic steps to stop the leads and lags speculation. We would give the working married women a better tax deal to encourage them to work. We would also give greater relief to the private pensioner who saved for his old age, was hit by inflation and is being ignored by the hon. the Minister. We would encourage older people to work; we would abolish the means test. If we were the Government we would set an example to the public. We would not ask them to do things which we, as the Government, were not prepared to do ourselves.

I want to touch briefly on the balancing of the budget. The hon. the Minister spoke of loans and said he transferred a substantial portion to the Stabilization Fund. However, the major portion of those loans was actually raised in the second half of last year. By transferring them out at the last minute, the hon. the Minister now has a far smaller balance at the beginning of the financial year. If one looks at the budget as a whole and one allows the increased special price to fall away, if one applies the sales duty only to luxury items and if increases in company tax and personal tax were to fall away, one would need another R321 million. That one could find relatively easily by using the loans that were raised in the second half of last year—which were, I believe, wrongly transferred to the Stabilization Fund—and by borrowing another R90 million locally and another R75 million overseas. The increases in taxation are quite unjustified and are not warranted in the present circumstances.

Finally, I want to refer briefly to defence. I believe there is a strong case to be made out for a large professional army. I believe that the call-up system will become increasingly disruptive and is going to cost the economy more. I believe that a citizens’ army is necessary for emergencies, but also that we need what I should like to call a bushfire army of professionals. I should like to see two fully professional brigades which would be highly equipped, highly mobile and highly trained. I believe this would be cheaper and more effective for South Africa.

You believe that, but what about your friends?

They all believe it.

Mr. Speaker, it was my doubtful privilege this afternoon to listen to two great economists in South Africa—the hon. members for Yeoville and Constantia. The hon. the Minister of Finance referred the other day to Adam Smith when he said that defence was of far greater importance than wealth. We have already had great economists like Lord J. A. Keynes, a great British economist of the ‘thirties, and Mr. Milton Freedman of America, but I wonder what those people would say if they had to listen to those two hon. members and hear how they want to govern South Africa, how they want to pull our economy right and what they want to do. In the course of my speech I want to refer to matters raised by the hon. members, but I want at the outset to tell the hon. member for Yeoville that I am sorry that he was not a trifle more original. I am also very sorry that he was guilty of suspicion-mongering this afternoon. I should like him to elaborate further on his reference to “window dressing”.

Have you read this week’s Rapport?

I do not want to talk out of school but the hon. member and I were guests of honour at a symposium on Thursday evening. There was a certain amount of discord when the things were said which the hon. member also said this afternoon. He knows what remained of that speaker after the economists and other people had finished with him—absolutely nothing! I think that it is shameful of the hon. member to come along here and talk about “window dressing” and cast certain suspicions without mentioning anything specific.

What about Rapport?

Forget about Rapport. Why did the hon. member not refer to specific matters this afternoon? Why did he not put them point by point? He must not try to hide behind Rapport now. If one wants to have the courage of one’s convictions, one must stand up and put one’s case unequivocally; one must not act in the way that hon. member acted.

You are running away.

The hon. member asked a large number of questions in regard to what has to be done, but this is something which he did three years ago as well when he rattled off a large number of points in a row.

Like a rattletrap.

He may just as well make that rattletrap speech again next year.

Reply to my objections.

I cannot discuss all the points that he raised. There were of course a few matters which he raised which are quite logical, but inter alia, he also referred to an estimates committee. Does he now wish to give to understand that the Cabinet does not have its own estimates committee? The brain power of South Africa is used by the Cabinet.

Is all the brain power in the Cabinet?

The hon. member for Ermelo pointed out that the Economic Advisory Council of the hon. the Prime Minister met and that this is the body on which all the businessmen of South Africa are represented, including those supporting the parties of the hon. members of the Opposition. I do not wish to deal with this any further: I shall come to it again in the course of my speech. The Economic Advisory Council of the hon. the Prime Minister gave very clear guidance early this year. At the beginning of this year the hon. member for Yeoville made a great fuss about the fact that the hon. the Minister of Finance had apparently not kept pace with the true price of gold last year. Why did the hon. member not tell us what the true price of gold was going to be this year? Why did the hon. member not tell us this afternoon what the actual budget items should have been? Why did he not tell us what amount we should regard as being the price of gold and what revenue we were going to earn in the form of taxation on gold? He should also have indicated to us what revenue we were going to derive from customs and excise duties. I want to predict at this early stage that next year, after he has obtained all the facts of this year, he will again give to understand that he was all-knowing this year and predicted everything correctly. Why does he not come to light with those facts this year? We will note what he has to say next year. The hon. member made certain statements and said that a tremendous amount of growth would have to be brought about by various sectors. He also said that there would be no consumer confidence. The hon. member made a number of statements which are not economically justifiable.

Mention one of them.

I will mention a whole series of them. There is one point to which I want to return and I want to start with the very first portion of the budget speech of the hon. the Minister. The hon. the Minister mentioned three points with which the budget has to comply. The first one was the defence of the country. I am very pleased that the hon. Opposition as well as the hon. member for Yeoville intimated that they support the defence budget. The following statement of the hon. the Minister was that our economic defensibility had to be maintained, that our balance of payments position had to improve, that inflation had to be curbed and that our economic growth had to be maintained while we would also have to see to the needs of our less privileged people. The hon. the Minister did what President Woodrow Wilson prescribed at one time when he said that what one had to do was to give light and not heat. The hon. the Minister has given light in South Africa and it is now the task of the private sector, the consumer, the employees—yes, everyone—to follow the path indicated by the hon. the Minister.

Before I discuss the budget itself, I should like to refer to something that is happening in South Africa at the moment. We have a certain psychosis in South Africa today and I think that the time has come for one to refer to it. Hon. members of the Opposition also suffer from that psychosis. Everyone thinks that everything must be done by the Government—by the Government and only by the Government—and no citizen of this country, no employer, no employee, no viewholder or anybody at all has any responsibility or task. I also want to refer to our newspapers in South Africa. I am not referring to the reporters or to those who collect information, but to a certain small group who sit in their offices and, as we have learnt to know them and have heard of them, write headings for certain articles. This kind of heading writer tries to create a sensation or to see what he can do to promote the sale of the newspaper. However, I want to make an appeal to those people and ask them, before they write a heading, please to use their common sense and to consider the harm which such a heading might cause South Africa. When the Part Appropriation Bill was being discussed here earlier this year, we saw the following heading in a newspaper of 9 February—

The Second Reading speech on the Part Appropriation Bill was only to be made that afternoon, but here one of the midday newspapers was already telling us in advance that there were going to be tax shocks. Was there any shock? No! Why then this type of heading?

What newspaper was that?

I am not going to single out one newspaper; I want to deal with them all, irrespective of whether they are Afrikaans or English-language newspapers.

What are the names of the newspapers?

What difference does it make? They remain newspapers.

I am going to refer to Afrikaans as well as English language newspapers because the appeal that I make to them holds good for all of them. On the Sunday before the budget—the hon. member for Yeoville will be able to deduce from this that I am now referring to Rapport—we read—

Why should such headings be printed half a week before the time? The next heading appeared in large black letters—

This was a week before the time.

Was that also in Rapport?

I want to refer to the next heading—

This heading also appeared before the budget. On the day after the budget we read the following in one of our English language newspapers—

However, when one reads the report, one notices that the heading is completely out of place. Another heading read—

After the budget there was also the following heading—

Nothing further was written about it. Another heading read—

Fortunately, after that report, there appeared a few kind words—

Now you are fighting the Afrikaans Press.

I want to go still further. One of the English language newspapers also had this to say—

These are headings which I do not think do our newspapers any credit. I do not think that it is to their advantage or that of South Africa to print headings of this nature while the content of the articles to which they refer is completely different. I want now to mention the names of certain newspapers. I mention The Argus of 31 March with the heading—

This was positive. To people who understand this it shows that there is a necessity to have a budget to promote defence for the safeguarding of South Africa and all its people. The Star, on the other hand, had the following heading—

Sir, that is something positive. I do not wish to quote everything from the Financial Mail which was quoted by the hon. member for Ermelo, but this paper did say—

Sir, I want to make an appeal to those people today. I did not see one of the newspapers which said “Bravo!” for the budget, or made an appeal to people to make a positive contribution towards the promotion of the economy of our country, the question of defence and everything else I will deal with piecemeal here just now. The Opposition was again silent about certain matters. They said that the Government was simply taking everything away. I want just to refer to a speech which the hon. the Minister made in Durban on 17 November in which he made it very clear that 549 000 individuals had been repaid an amount of R48 million in loan levies, and that there were 24 700 companies which had been repaid an amount of R26 million, a total of R74 million. Why do they not mention these matters—that money that has been repaid? This is an amount of R74 million that has been ploughed back, and yet they complain about the few million rand in loan levies that is to be collected under this budget. We also heard the complaint about the power the hon. the Minister will have to be able to change tariffs in the year that lies ahead according to the recommendations of the Franzsen Commission and also in pursuance of the mission of the International Monetary Fund which was here last year and which stated that the hon. the Minister should definitely have that power. I just want to point out that the hon. the Minister is only asking for the power to change the loan levy to 10% of the basic tax. Sir, it can only be reduced and not increased because it is already 10% of the basic tax. If it were 5%, we could have said that the hon. the Minister could impose a further 5% levy, but it is already 10% and the power which the hon. the Minister is asking for is simply to increase it to 10% of the basic tax. In other words, all this talk directed at the outside world carries no weight. The hon. the Minister can only reduce taxation in order to advance South Africa further.

Sir, we in South Africa have a capitalistic system where profit is the great norm. I want to put this question to hon. members on the other side: Why do they not help us to defend this capitalistic system in South Africa? Why are they trying to break certain things down? In South Africa it is the task of the entrepreneur to make his capital and expertise and energy available, to harness all the production factors and to produce. He employs the labourer and he pays for his services. I want to say that the remuneration that the labourer in South Africa has received over the past 25 years—I am not going to mention all the figures here—has increased. He has received more of that cake than the entrepreneur has received. There is after all a difference and I think it is high time that we should tell these people that the labourer in South Africa must not imagine that he is receiving less. What is the State doing in this process, for example, to promote this capitalistic system through the medium of this budget and not to have the distribution of wealth which these hon. members have advocated and in regard to which they have not yet replied to the hon. the Prime Minister? The function and the task of the State is to establish an infrastructure. What does this involve? There is water, power, transport, communications, a defence force to protect the country, the administration of the country that has to be there, and so forth. The State makes all these things available to enable those people to produce. There is also the training of labour. This is in the interests of the labourer as well as of the employer and this is done through the medium of schools and universities and by the training of teachers, by technical training and immigration where we have a shortage of a certain kind of manpower. It is also the task of the Government to promote this capitalistic system by protecting the monetary system and preventing erosion, to combat inflation and to make food subsidies and so forth available so that the producer can continue to produce. If there were no subsidies I want to say very clearly that many of our sectors would not be able to continue because they would be priced out of the market. The consumer would not be able to afford those products and they would fall away. That is what the State does. There is however, a task and a responsibility which rests upon the employee as well as on the employer. They have to dovetail with one another. It is also the function of the employer to ensure that his workmen are trained and also to ensure that his own employees have a higher standard of living. That is not simply the task of the Government. The Government does not manage the factories. The employer and the employee have to ensure that they do everything to enable the consumer in this country to receive his share as well. Everyone, employer and employee, is a consumer of something. That is why it is necessary in this country for not only the Government but the Opposition as well to do something, and I want to ask them to encourage their people to ensure that this system is maintained and expanded.

The hon. member for Yeoville had a great deal to say about petrol prices that have been increased. Why did he neglect to tell this House what the petrol prices are in the rest of the world today? As the petrol price stands at the moment, here locally it will be 21,4 cents per litre at the coast and in Pretoria and on the Witwatersrand 23,8 cents per litre. This is in respect of the 93 octane rating petrol. But what is the price abroad? In France it is not 23,8 cents as in Pretoria and on the Reef; there it is 30,4 cents, our cents, per litre. In Great Britain it is 33,2 cents, in Italy 40,8 cents and in Portugal, 45,1 cents per litre. Those are the prices that those people pay, and we are a long way away from our import countries. After all, it is far easier for those countries to obtain oil. However, the hon. member neglected to tell us this. I want to tell him that if things are going so badly in South Africa, why is it that the Whites here have the second highest number of cars per 1 000 of the population in the entire world? In the USA it is 480 cars per 1 000 while here in South Africa it is 384 per 1 000. In Canada it is 356, West Germany 269, Britain 252 and Holland 243. We in this country certainly have no reason to complain and, when we speak of saving, all we need do is watch our roads every morning. If we do this we will see that most cars have only one occupant. These people do not make use of public transport, neither do they try to get a lift with each other to work. A man told me recently that he was one of a number of partners who stayed near to one another but that each one of them drove to work each morning in his own car. When I asked him why, he said that they could afford to do so and that it was also more convenient. That is the sort of psychosis prevailing in South Africa that has to be eliminated.

The hon. members for Yeoville and Constantia spoke this afternoon about the high taxes, but how high are our taxes really in South Africa? Take company tax. Here it is basically 40% plus the surcharge of 3% and a loan levy of 6%, and that loan is repaid to them with 5% interest. After all is said and done that is not a tax. In Britain they pay 52% in tax, and in France 50%. We can go on in this way. As far as income tax in South Africa is concerned it is also not so terribly high. In terms of the new tax plan a married man in South Africa will pay only R84 more over and above the R56 which he has to pay in respect of the loan levy, and he does so to be safe in South Africa. A married man with two children and earning R5 000 only pays R41 more while a man earning R10 000 will pay plus-minus R174 more. Is this something to complain about? I say that the taxpayers are prepared to pay these additional amounts. The only complaints one hears come from that group of politicians sitting here in front of me. They are the people who feel badly about this. However, they have nothing else to complain about; they have to look for something to complain about and that is why they come to light with this sort of complaint. The hon. member for Yeoville spoke about unemployment. I want to ask the hon. member whether he realizes that 24 members of the Organization for Economic Co-operation and Development have said that in May of last year 15 million of their economically active people were unemployed and that this figure had risen to 17 million this year? What is the position in South Africa? In December 1974 we had only 8 823 unemployed among the Whites, Coloureds and Asiatics.

And the Blacks?

This figure rose to 11 462 in December 1974. According to estimates, and now I come to the Blacks …

Whose estimates?

The hon. member need not be concerned. This Opposition has only one idea and that is that the world is black. They think only of the Black workers. According to estimates, from September 1974 to September 1975 unemployment among the Bantu increased by 1,3%.

Whose estimates?

The estimates of all the people who work with these things. It is certainly not the estimate of the hon. member. The hon. member must also remember that the number of people who entered the economic market at that time was very much higher than 1,3%

Where do you get those figures from?

We must look further at this position. The hon. member must just remember that in 1974 there were 482 000 Bantu employed here in South Africa who came here from elsewhere. These were not South African Bantu but foreign Bantu. They work on the mines and elsewhere. In 1975 this figure was 414 000. The mines experienced many problems with their employees and recruited local Bantu. Ninety-six per cent of their labour requirements have been satisfied today, but why did the mines not also employ that remaining 4%? I do not think that they are going to do so because the mines have mechanized. We find that the mining industry is mechanizing and replacing Bantu labour by this means. I do not wish to find fault with that. The Opposition always speak of the Bantu who work elsewhere. Does the hon. member realize that this is the way of life and tradition of the Bantu? I had a group of Bantu recently who simply took leave and said that they were going back to their homeland. They had worked enough; now they were going to rest.

You are living in the past.

The hon. member for Yeoville also said that this budget was inflationary. But, Sir, this budget is not at all inflationary. In the first place this budget is financed from taxes. That money is forthcoming from the community. There cannot be any greater demand. People will have less money. The money that is being borrowed, is being borrowed from the non-banking sector. This is not inflationary either. Furthermore, the foreign loans are not inflationary either. This budget is not expansionistic but neither is there anything in the budget which will prevent the economy from growing. What is more, the Government has economized apart from defence, and I want those hon. members to tell us in what other respect the Government could have economized any further. Let them mention to us any item in respect of which they should have economized. Hon. members opposite are annoyed because there have been no salary increases. Which Vote should have been further pruned? Probably Social Welfare and Pensions! I suppose the Government should not have paid out these pensions. Facilities have been created by the Government for the private sector, for the Post Office, the Railways, Escom and so forth, to borrow money abroad. We also see that the Sishen/Saldanha railway line will be financed to the extent of plus-minus 90% by foreign loans. This is not inflationary. I want to tell the hon. Opposition that besides those foreign loans, the budget in respect of defence is also not all intended for foreign purchases. The amount of R1 350 million spent on defence this year will also to a very large extent assist the economy in South Africa and promote it. The hon. member for Yeoville is, I am sure, not ignorant in this regard. Most companies and entrepreneurs in South Africa are involved in the whole defence project.

There are only certain things which will have to be imported, which are not manufactured here by the private sector. I want to mention one item as an example. The vehicles which form a large part of the budget are all manufactured by the private sector in South Africa. We know what the content has to be in respect of the vehicles manufactured locally. All these things are being provided by the private sector. I should just like to mention what was said by the economist. Mr. Milton Freedman, who is in South Africa. He said something with which I am in complete agreement, namely, that the fundamental source of prosperity is not determined by the monetary authority but that it depends upon the initiative and the ability of our people to work and the ability of our people to save. This is something which our people in South Africa will have to do, namely to save more. All the people cannot save. It is true that not all the people in the lower income groups can save. However, I think that we in South Africa are living quite prosperously enough. I do not wish to take it amiss of a man if he is prosperous and lives in luxury. However, I think that we in this country could save a great deal more. The hon. member also spoke of confidence. There is a tremendous amount of confidence on the part of the outside world in South Africa, particularly when we realize that this year Britain sent 19 trade missions to this country to promote their trade with us and there is also the possibility that Israel may send a number of trade missions here. This indicates confidence in South Africa because they know that the Republic has paid every cent of its debt in the past. They know that no matter what may have happened, every contract and every undertaking concluded by the Government on behalf of South Africa—even in the days of the United Party—has always been honoured. There is, therefore, absolute confidence in South Africa.

I want to conclude by saying that this budget, as the hon. the Minister said, shows us what these funds are required for. The new method of budgeting, namely, the aim-budget, and the consolidation of the Revenue and the Loan Account is going to enable the Government and the State to exercise better control over these funds. This is also an instrument in the hands of the authorities—the department, the Minister and the Government. By means of this budget priorities can be better determined and the policy of the Government can be better appreciated. A great deal of good can be done in the whole setup of planning. I think that I can thank the hon. the Minister very much indeed on behalf of this House for having started with this budget this year. There are five departments involved in this regard, namely, Defence, Agricultural Technical Services, Health, Treasury and Forestry. I want to express the hope and the wish that all the departments will in the not too distant future—say in two years time—be included in this budget to make matters easier for South Africa, and that we will also then be able to show the Opposition where the money is going which the taxpayers in this country are paying. I think that it is a great privilege for us to have a Minister who has the backbone, the courage and the vision to introduce a budget of this nature this year.

Mr. Speaker, we have heard the hon. member for Ermelo and the hon. member for Sunnyside defending the budget as best they could. We have heard apologetics, we have heard explanations and we have heard newspaper quotations. However, so far we have heard nothing which is truly convincing, and we shall have to wait with as much patience as we can muster until the hon. the Minister himself replies to the debate. When we heard the hon. the Minister introducing this debate, we were a little disappointed that he did not bring the usual spate of quotations. However, he did in fact amuse the House by quoting one economist. One might almost refer to him as an old testament economist. He is one of the original economists. The hon. the Minister quoted him I think effectively, by saying that defence was of much more importance than opulence. Of course, there is room for defence and there is room for opulence. I think if one looks at the writings of Adam Smith in The Wealth of Nations, the hon. the Minister would agree that what Adam Smith fundamentally tried to demonstrate in his thesis was that there is a logical case to be made for the concept that Government should renounce all interference with private initiative, except insofar as it may be necessary to prevent force and fraud, and to ensure national defence and domestic peace.

This is the essential theory or theme of Adam Smith’s Wealth of Nations, and, since the hon. the Minister has quoted him on the maintenance of defence, I hope that, on another occasion, the hon. the Minister will also be prepared to follow the precepts of Adam Smith in respect of private initiative and a free economy. The question before us is not whether or not the philosophy of Adam Smith, this old testament economist, is still valid today. In many respects it is not. The question is whether, in the state in which South Africa finds itself today, politically, internationally and economically, our finances are being administered in a manner which is sufficiently sound, sufficiently stable, sufficiently prudent to ensure that South Africa’s proper defence is being safeguarded. Let there be no mistake about this. We have had voices from the other side of the House talking about defence as though it were one thing, and talking about the economy of South Africa as though it were another thing. The two are wholly and inseparably tied together. The economy is our sinews of war. We cannot wage war, we cannot buy or make armaments, we cannot train men, we cannot maintain an army in the field, we cannot defend ourselves, or even give a credible imitation of defending ourselves if, behind the arms, behind the men, there is not a firm, strong, durable economy ready to sustain our men in the field, ready to sustain the credibility of our defence effort. This is essential. It is vital. If anybody thinks one can maintain defence while maintaining a shaky economy at home, such a person does not understand what modem warfare is about.

That is why we enter this debate accepting the need for the defence of this country, and prepared to accept the expenditures which are being incurred for its proper defence. We are, however, extremely critical, extremely suspicious, about the state of an economy which demands the kind of budget that has been presented to South Africa this year. It is our duty, it is our right, to enquire into that economy, precisely because we are concerned about South Africa’s defence. It is our duty to inquire into what kind of economy it is that necessitates the kind of budget that has been presented to South Africa in 1976.

The hon. the Minister has received some praise for producing a realistic and pragmatic budget. Well, in the situation in which he found himself, he did a balancing act. We saw him doing it, and it was a show of virtuosity. If he receives congratulations for that, we would not wish to detract from it. However, we have the right to ask whether the situation which he was covering up, the situation which he was having to deal with, reflects a sound economy and a strong economy. I think that anybody who listened to the hon. the Minister in his desperate task, must agree that he was having a devil of a job. In fact, Sir, he reminded me—and I do not mean it unkindly—of Salome and the Dance of the Seven Veils. As he went through his reserves, as he indicated his needs, and as he proceeded to muster his resources in order to meet those needs, one began to feel that here was Salome with only seven veils to cover her nakedness, and that the dance was an excellent contrived dance, because never once could one really see through. [Interjections.]

Sir, what were the hon. the Minister’s basic problems? He found that he had to meet demands for something like R7 500 million. He had to find the revenue and loan financing to meet the amount of R7 500 million, which is quite a large sum.

Well, he began to look for these revenues—and that is where the seven veils come in. He looked at customs, excise and sales duties, and there, I think, he was prudent, because in 1975 he took R1 136 million by these means, through these channels, and he very carefully assumed that in 1976 the sum would rise very slightly to R1 162 million. That, I think, was wise, and I think the target which he has set himself may be reached. But then, we come to inland revenue. In 1975 the hon. the Minister took R3 910 million by way of inland revenue. This year he sets himself the target, in order to cover his very large needs, of an amount of R4 890 million. This is a very large increase, approaching R1 000 million more than last year. I think the hon. the Minister is an optimist. It is true that he includes loan recoveries and loan levies in his inland revenue figure. He also, by way of a kind of trick with mirrors, includes the amount of R258 million, which is appropriated from State revenues in order to pay the Railways interest, and then …

There was no trick about it at all. It was the only thing I could do.

I agree, but it does not really add up to anything. One thing cancels the other out. That, Sir, is just in passing. However, the position is that, despite the fiscal plunder which is permitted by our inflation situation, the hon. the Minister has to find this amount before the new taxes are added, and I think that he is being highly optimistic if he imagines that he is going to get an increase of R1 000 million in his Inland Revenue Account before the new taxes are applied. I think he is over-optimistic, for several reasons. Firstly, as regards the defence bonds, which I regard as an admirable idea, because we obviously need the money, it is impossible to estimate how much money will be raised by these defence bonds, because the terms have not yet been stated. Nobody know as yet whether these bonds will be attractive, whether they will be insulated against inflation, and to what extent. Nobody knows what the period of the investment will be, what the interest rate will be, or any of the other conditions. We do not know, depending on these conditions, what their impact will be on other savings channels. There are other demands on peoples’ thrift. There are very necessary demands on peoples’ thrift. What is going to be the effect of the one on the other? The supply of money from the private sector is not unlimited, and I believe that the sum of R120 million may or may not be a realistic figure.

I now come to the question of company tax. The increase in company tax and the additional savings levy, in the case of many companies, may well be fatal. In many cases it will certainly be counter-productive, because there comes a time when one cannot squeeze any water out of a stone; it simply will not work. There are companies, precisely because of the conditions of inflation, precisely because of the effects of tax in an inflationary situation, which are already in desperate trouble; some of them surviving, or thinking that they survive while they are already almost commercially dead. They have not been able to maintain themselves on a basis that will ensure their survival, and I think that this extra push is in fact going to drive even more companies to the wall than are already going to the wall.

Sir, when we look at the gold mining companies, we find a rather remarkable thing here, because as the hon. the Minister well knows, gold mining companies work on a special formula. That formula is related to the age of the mine; it is a special formula which takes into account the condition of the mine. The formula I think is

Y = 60 −360/X

Here we have a formula specially tailored to meet the condition of each mine and which takes into account the conditions under which that mine works. When you arbitrarily add a figure such as the Minister proposes to add to a formula tax of that nature, then you distort the formula. While it is too early to predict yet what the effect is going to be on gold mines, I would like to suggest to the Minister that the result may well be highly detrimental in certain respects. I believe that one effect could well be that the mines will be forced to go to higher-grade ores, the effect being that more gold ore will be left underground, will not be mined, and will never be mineable in the future. That, Sir, is not in the interests of conservation of the gold resources of South Africa. There may well be a lower tax yield because of the fact that the mines are forced by this measure to restrict their production to certain shafts only. We may also find that if production decreases, as it already shows signs of doing, gold will make a lower contribution to our balance of payments or to our reserves. Sir, these are things which we cannot afford in our present situation, and I believe that this gold mining tax, which appears to be most arbitary in nature, may in fact also be destructive in nature. It could be killing the very goose that lays so many of our golden eggs.

With regard to foreign loans, the hon. the Minister has said that he believes it is economically feasible to get more foreign loans. We accept that with an economy such as the South African economy, with its basic resources, it should be possible to get more foreign loans. It is economically feasible, but is it politically feasible? Already I believe there is a drying-up of the willingness to invest in South Africa. Private investors abroad are no longer investing in South African companies or shares. They are extremely reluctant to do so. Sir, if they are reluctant to do so, is it likely that institutional lenders will be able to extend loans on other than a very short-term basis and possibly at unacceptable rates of interest? I believe, Sir, that the hon. the Minister may be very optimistic in assuming that he has in hand, to cover his expenditure, R320 million of renewable and new loans. I think the Minister, realistically, has his own doubts about this. He has taken the extraordinary measure of providing that he may impose, outside the parliamentary session, a 10% savings levy at his own discretion. He said that he must do this in view of the length of the parliamentary recess in South Africa. Well, Sir, we have already looked at certain defence implications in view of the length of the parliamentary recess in South Africa. We are concerned about the international situation in view of the length of the parliamentary recess in South Africa. I believe that we must begin to think seriously whether in fact, instead of Parliament abdicating its powers or delegating its powers to Ministers during the long recess, it might not be better in this modem age and with the urgencies and dangers of our times for Parliament to meet at regular intervals. Whatever inconveniences hon. members may experience in this regard, I believe that we must take South Africa seriously and that we must take our times seriously, and if we continue to use the present system, we are going to have to abdicate many of Parliament’s powers, including the fundamental power of voting supply, which is what Parliament is really about, simply because of the traditional long recess into which this Parliament goes. I think that this Parliament should say, “We cannot abdicate our powers; we cannot delegate the most important power of all”, which is the power to vote supplies to the Government, and I think one should add to that that neither can this Parliament abdicate the power to decide whether or not South Africa goes to war. I believe that we have got to look very hard at our parliamentary recesses.

Sir, it is quite clear from what has been said that the hon. the Minister feels that he has certain rising commitments, that he has got to try to meet these expenditure commitments and that he has to meet them out of uncertain revenues. He is obviously having difficulty in balancing the two. It is clear that in certain respects he is scraping the barrel and that in certain respects he may be using non-renewable resources. Sir, we admire his virtuosity, but we cannot afford this kind of spectacle year after year; something has got to be done about it. I think the times are too grave to afford the luxury of this kind of budgeting and that the time has come rigorously to examine and to rectify the fault. Sir, in our amendment we have tried to put these faults under three heads. We have referred to the need to put ideology behind the economic necessities of our times. We have referred to a degree of mismanagement in the financial administration of this country and we have referred to the inadequate development of the very enormous resources which are at South Africa’s disposal.

Let me come to the first one, the ideological one. Hon. members on that side say that we keep singing this refrain and they ask for examples. Sir, let me give them some examples. Why is South Africa, with its exceptional wealth, with its exceptional resources, left with a precarious balance of payments, a weak currency and a higher rate of inflation? Why South Africa in particular? South Africa is a great gold producer. We have an abundance of strategic minerals. We are richly endowed by a benign providence. Let us assume that a country like Switzerland or Austria or Belgium, or countries of similar size, were endowed with our natural wealth. Is it credible that they would today find themselves in the situation in which we find ourselves? Without these benefits, those countries today find themselves in a stronger financial position than we do. They lend us money; they invest here when the times are good in South Africa. What makes us so different? What single feature is it about South Africa which, in spite of its enormous advantages, makes us so vulnerable? The seed of this difficulty lies in apartheid, in separate development. I will now show you, Sir, exactly how much it costs.

Are you seriously saying that Western Europe’s economy is in better shape than South Africa’s?

I am saying that if those countries had our resources, they would be in marvellous shape, because without those resources they are in pretty good shape.

That was not a very good question.

Last year in South Africa, to take one example, there were 269 000 convictions for pass law offences. Sir, if you begin to consider what this costs in Police investigations, in administration, in court costs, imprisonment costs, in transport, in repatriation, in frustration, in resettlement, in creating jobs, in looking after these people …

And in loss of time.

Sir, 269 000 pass law convictions in one year stagger the imagination. This is just one single cost under this system. Sir, what is the cost in productivity?

Are you against influx control?

Let me just finish. What is the cost in productivity of refusing employers the right to give 92 000 jobs to African labourers? That figure was disclosed in answer to a question in the House during this session. This happened between January 1968 and January 1976, in terms of the Physical Planning Act; 92 000 job opportunities were not able to be taken because of the Physical Planning Act. What is the cost of that in productivity? What is the further cost of producing 82 000 jobs for Africans in border decentralization areas? We happen to know the answer. It costs R80 million of the taxpayers’ money. 92 000 jobs which were available, having been offered by private enterprise, were turned down, while we taxpayers are obliged to spend R80 million in order to create 82 000 jobs in the border areas. A further R37 million is spent on 24 000 jobs at certain growth points. This is how we are going about this matter. R201 million was spent by the Bantu Trust. R64 million was spent just last year in purchasing land, mainly in productive hands, in order for much of that land to lie fallow or to be used for subsistence farming. Now, never mind about the question of race. I wish we could get this question of race away from the land problem, because it is vital to South Africa’s future that we should be logical and sensible about this land. Only 12% of our land is arable, and we have a growing population.

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

Mr. Speaker, I am usually very happy to answer questions, but I really am pressed for time. The question is whether we can afford this kind of expenditure. Let us look at another example. 90 000 Coloureds and Indians have been moved in terms of the Group Areas Act. In fact, they have not just been moved. They have been taken away from where they lived. New homes and new job opportunities have to be created, all at vast cost. The Department of Community Development has spent R323 million to purchase properties. Of these it has so far disposed of R96 million’s worth of properties. That amount of R323 million was in fact calculated at original cost price. It has disposed of R96 million’s worth, which means that R227 million of the taxpayers’ money is lying unused. It is lying fallow and earning no interest. It is unproductive. The taxpayers’ money is being wasted on this sort of nonsense.

What is the cost of race classification? What is the extra cost for our prisons and our Police in running this terrible system? It is impossible to quantify it all. One can only boggle at the loss of productivity, the diversion of scarce resources to uneconomic places, the sheer misdirection of the products of the people of South Africa, the waste of time and money, the duplication of services and the vast bureaucracy created in South Africa, a proliferation of bureaucratic effort, the cost of which may well be of the order of magnitude of the product of our gold-mining industry. I say it may well be, because it is impossible to quantify. It is arguable, but it is a very large sum. What is unarguable is that apartheid is a great waste of our vital human resources and of our financial assets, and a great author of inflation. On this, economically speaking, there can be no argument whatsoever.

In the short time available to me I want to speak briefly of mismanagement. We have had an anti-inflation campaign. The Government has virtually admitted that it bears the main blame for what has happened with regard to over-expenditure and profligacy in the use of resources. There has been wild extravagance. There has been improvidence. It stands in the record books; it stands in the quarterly reports of the governor of the Reserve Bank. We have heard stories of the purchase of luxury cars, of the goings-on at the SABC and so forth. Can we afford this sort of nonsense in the economic difficulties in which we find ourselves in 1976? In the financial year 1975-’76 expenditure rose by R150 million over the amount budgeted. The amount budgeted, I may say, was a very large one. It was, in fact, part of the profligacy of which I was speaking. We went R150 million over that. For the year 1976-’77 the Minister comes to this House and says that as a result of the exercise of the sternest self-discipline, he has in fact been able to ensure that the further increase will only be 10½% over the profligate year of 1975-’76. He makes the claim that because inflation is so high, he has not in fact increased the real expenditure. Sir, where do these great savings occur? Are they savings on what was actually being spent, or are they savings on what they thought they would like to spend and then decided not to spend or to reduce? Sir, this is Bumstead economy. Dagwood Bumstead has problems with his wife, Blondie. Blondie says to Dagwood: “I want 1 000 dollars to buy a fur coat”. Dagwood practically turns a back somersault and says: “I do not have 1 000 dollars.” So she says: “Well, how about 500 dollars to buy a fur coat?” He replies: “Well, maybe I can borrow 500 dollars.” So she goes and buys a fur coat. She comes back and says: “Dagwood, you have saved 500 dollars. What shall we spend it on?” This is Bumstead economics, Sir. We find that more and more it is entering into the thinking of our economic system.

Sir, I could refer to the question of devaluation. I think the hon. the Minister, who is an intellectually honest man, is gradually coming to admit that devaluation in this day and age is no longer the great cure-all it used to be. We see very few benefits of it so far in our economy. On the other hand, we see many demerits and disadvantages flowing from devaluation. The hon. the Minister has to use these disadvantages almost as apologia in his budget speech. We have yet to see the final effects of devaluation. They are still coming on stream in our prices. When we look at our inflationary prices, we will be told in due course: “This is due to devaluation. This must be expected because we devalued.” Sir, I believe our forecasting has been bad. I believe that we were entirely wrong in our estimate and in our forecast of the gold price. I believe it will be prudent to assume, as the hon. the Minister does not, that there may be no increase in the gold price for quite a long time. We have doubts about the efficiency of statistics on our currency flows. The panic which gave rise to devaluation last year can no longer be found in the statistical tables. Whatever ripple occurred was not nearly as alarming as it then must have been. I think we need to look at that. I have spoken to the hon. the Minister about his exchange control machinery. When I spoke in January this year about the deficiencies in exchange control, the Minister shook his head at me in disbelief. I think he went back and had a look, because by February he announced very strict reforms.

I do not remember shaking my head at all, in belief or disbelief. I listened to you.

Be that as it may, the hon. the Minister went back and very soon announced important reforms in his exchange control system. I hope they are going to work.

Sir, my time has almost expired, and I come now to the third leg of the amendment. I would say that the gravest failure of all has been the Government’s omission to develop the enormous human resources and the enormous natural resources of this country in such a way as to make us one of the rich countries of this world. This could make us a powerful country, a country with the very sinews of war on which we will depend for our defence in desperate times. I believe that these things have got to be done. They have got to be done by getting rid of mismanagement. They have got to be done by ensuring that our true economic needs, which are in fact our very defence and our survival, are put before ideological luxuries. Nothing is more important, as Adam Smith said to the Minister the other day, than to maintain the defence of your country. We are saying to this Government and to this Minister that the defence of this country depends essentially on a strong economy, and a strong economy depends on getting things the right way around. A strong economy has to be put before a fanciful ideology if we are going to care for the real defence of this country and protect this country in the very dangerous times with which we are faced. That is the reason why, while accepting the higher expenditure needed for the defence of this country, we are deeply concerned. We believe there are grave issues at stake for South Africa, and unless these three things are remedied, South Africa’s true security and South Africa’s true defence is in grave danger. [Time expired.]

Mr. Speaker, the hon. member for Von Brandis started with the pretence that he would be dealing with the budget and economic matters, but then lapsed into a political account and reduced all the problems of South Africa which the Minister had to take into account in this budget, to the political situation in South Africa. The hon. member for Constantia did more or less the same. He mentioned “politically obstructionist policies”, and the hon. member for Von Brandis even asked how it was possible that a country like South Africa, with all its natural riches, could compare unfavourably with the economy of Switzerland, for instance. Imagine, Sir, the hon. member comparing South Africa, with its particular situation and its particular population structure of four million White people, two million Brown people and sixteen million Black people, with a few Western European countries and their particular situations. I think that if the hon. member were only to look at the budget and consider the amounts this Government spends on the development of Bantu homelands, which, from the nature of the matter are backward areas and where development is therefore essential, and if he were to look at the money which is being spent on the development of these population groups, on providing education, on the building up of an infrastructure, he would realize very clearly that we in South Africa have problems which cannot be compared in any way to those of any Western European country. I think the hon. member ought at least to know this. When hon. members argue, they start with the simple premise that the fault in South Africa really lies in our policy of separate development, or apartheid, with the accompanying limitation in the provision of employment, such as job reservation, etc. They maintain that if this could only be abolished, then we would have sound growth and we would also have political and economic stability. The hon. member is nodding. He might as well pay some attention now.

I said you were learning rapidly.

I just want to point out to hon. members that in any country which is in any way comparable to South Africa, where there is still a majority of underdeveloped people, one should constantly guard against disturbing the political stability, because if one were to disturb the political stability, one would also disturb the economic stability. I want to mention only one example. The hon. member for Hillbrow said that I was learning rapidly. I think he is correct, but not in respect of the matters he has in mind. I just want to point out to hon. members that there was a report recently concerning the situation in the Argentine, a country with great potential and a country which may certainly be compared with South Africa in more than one respect, but a country, too, with a population which, as we know, has recently found itself on the path of political instability. During the past 12 months the rate of inflation in the Argentine has been 475%. Now it is very easy for hon. members to wax lyrical and take short cuts when discussing development in South Africa and the weak aspects of the National Party’s policy of separate development, but one thing at least is irrefutable, and this is that the National Party government has succeeded in maintaining political stability. And whereas it has maintained political stability, it has also, to a large extent, maintained economic stability. We do indeed have a fairly high rate of inflation, but not nearly as high as in the Argentine or Brazil and other countries. Together with that political stability we also have economic stability, and today South Africa is still attracting considerable investments from the Western world which in itself attests to that confidence. I want hon. members to consider that. This at least was one foundation upon which the hon. the Minister of Finance could build when drawing up this budget, viz. that we shall have political stability here in South Africa. In other words, he foresaw, when drafting the budget at least, that the United Party would not come to power within the near future, something which was confirmed by the result in the Alberton constituency. [Interjections.] Yes, that hon. member is also learning fast; he is coming on.

In my discussion of the budget, with reference to what has been said here, I should like to introduce a measure of perspective to the discussion. While we were listening to the hon. the Minister of Finance giving his budget speech, it became very clear that he had to take certain hard facts into account. Among other things, he had to take into account a serious recession in the Western world which has been weighing heavily on the economies of those countries for a considerable time. This is the worst recession since the depression of the thirties. The hon. the Minister referred to that on more than one occasion. He could not escape it. He could not draw up a budget in isolation, as if South Africa was not part of this world, but had to take that into account. The second very important point is that he had to take account of the sharp drop in the gold price which has taken place since the previous budget. In September 1975 there was a drop of 164 dollars per ounce to 130 dollars per ounce. As is now apparent, this was not merely a short-term fluctuation in the gold price; it was a drop which was closely linked to what I am tempted to call the “crippling” recession in the Western world, and as this recession goes deeper and lasts longer, we must bear in mind, and the hon. the Minister of Finance must also bear in mind, that the gold price will not soon rise and recover from that low so easily. We may expect, and in his budget speech the hon. the Minister clearly showed that he was indeed expecting it, that gold would offer strong resistance and as that recession passed and economic recovery occurred in the Western world, the gold price would rise again too. However, he had to take into account the fact that this recession may still continue for some time and that the gold price may continue at its present level for even longer.

There is a third important fact which the hon. the Minister should have taken into account and this is the constant vulnerability of our country’s balance of payments, which is intimately bound up with factors in the Western world, inter alia, the recession to which we have referred, with lower prices for certain export products on the overseas markets, the lower gold price and conditions in the agricultural sector, which can fluctuate considerably from one year to the next and can have a substantial impact on the balance of payments. A fourth very important factor which the hon. the Minister had to take into account, was the political and military situation in Southern Africa. Even if he wanted to, he could not escape it. In any case it would have been very short-sighted not to have taken this into account. I should like to stress that the political and military situation in Southern Africa has changed dramatically since last year’s budget.

We know about the developments in Angola—by this time they are history. What we should bear in mind in this regard is that we in Southern Africa are experiencing a development of Russian military strategy and, one would almost say, an exhibition of its weaponry, and that a new power factor has come into operation in our part of the world. The government and the hon. the Minister had to acquaint themselves with this hard fact and take it fully into account. May I just point out that I recently read in a publication issued by the Brookings Institute in Washington, a publication called “The Sizing up of the Soviet Army”, that Russian military power is to an increasing extent reliant on the development of conventional weapons. People have started toying with the idea of a nuclear war and reducing the number of conventional weapons. They point out that the available figures and all indications reveal that the Russians are in the process of building up a vast arsenal of conventional weapons, an arsenal of tanks, cannons, armoured vehicles, fighter aircraft, submarines, etc. Added to this was the important fact which has been illustrated in Angola, namely that the West is simply not prepared to run the risk of a war in Southern Africa and is not prepared to supply money and arms on a large scale or to involve its military power to safeguard us against a communist onslaught. The Government and the hon. the Minister had to take account of these hard facts. Not only did they have to take into account the fact that Russian forces were deploying in the sea around us and had landed in Angola, they also had to take into account the fact that South Africa was finding itself in the position of having itself become responsible for the safety of Southern Africa, and that South Africa had been thrown on its own resources. When hon. members opposite are being clever about this or that aspect of the budget and when they pay lip-service in passing to the necessity for increased defence expenditure, I wonder whether they have really taken note of the situation and the responsibility and duty resting upon the Republic of South Africa to take vigorous action in this respect.

That is the background of this budget. I have referred to the recession, the drop in the gold price, fluctuations concerning our balance of payment and the different factors which influence it and the military situation in Southern Africa. This is the background of the budget. If we are to judge the budget, I want to ask hon. members opposite to look specifically at those matters and not to come along once again with the story of apartheid laws and the internal policy which supposedly makes such a big difference. I think Mr. Jan Haak, the present president of the Suid-Afrikaanse Handelsinstituut, summarized the budget well when he said: “Die begroting is ontwerp om die huidige situaste in ons land met realisme te hanteer en die ekonomie op die langer termyn op ’n gesonde grondslag te plaas.” To my mind this is an objective viewpoint which is completely appropriate to this budget.

All these factors I have mentioned, especially the two first mentioned, definitely caused a levelling-out of the graph of the State’s internal revenue. The further situation which arose, especially as regards the deployment of communist forces in Southern Africa, made it essential that an additional amount of R953 million be found by the Receiver of Revenue. The question arises as to whether the hon. the Minister is trying to collect the additional revenue required in a responsible, well-balanced manner. My reply to that is: Yes, definitely. The hon. members opposite pointed out that the basis of our tax structure was so narrow, but who has tried to widen it in the face of criticism from the Opposition in years past. It was this government which introduced a system of sales tax, with the specific aim of bringing the ordinary man into the picture and compelling him, too, to make a contribution—the man who does not pay any income tax and nevertheless lays claim to the facilities and opportunities which are there for him. It was members opposite who then complained that the ordinary poor man, too, now had to bear a burden, that he was being oppressed. I recall that on one occasion the hon. member for Durban Point displayed a loaf of bread here to indicate how the poor people had to pay more for everything.

As I have said, these are some of the matters which the hon. the Minister had to take into account. They were facts which he had to face squarely. Not only was there a levelling-off of the revenue graph, there was also an pressing need for more funds, particularly for certain essential services. The hon. the Minister did this by means of customs and excise and sales duty, and by means of an increased surcharge on income tax and an increased loan levy. I should like to ask hon. members opposite whether they could mention a part of the population apart perhaps from the pensioners, the aged and the infirm, which the hon. the Minister had ignored or singled out in his effort to find these funds. He did not. The facts prove that his approach was very responsible and very careful and that he made a point of obtaining the required funds. Almost half the amount concerned represents an increase in our defence expenditure. I should like to tell hon. members opposite that they are underestimating the willingness of the ordinary man to accept this budget. They are underestimating the willingness of the ordinary man to contribute more towards the defence of our country. Already, on the day of the by-election in Alberton, we heard how attempts were immediately made to profit from this by means of posters stating: What more is the Minister of Finance asking? What does he want? The majority of the electorate voted after that and said: We are going forward on the road of South Africa; we are willing to meet our obligations. I want to tell hon. members opposite that an aspect I found striking in the speeches of the hon. members for Constantia and Von Brandis, was that they were utterly lacking in motivation as regards the problems of South Africa. I come to the conclusion that not only do they belong to a party which is suffering from political frustration, but that they themselves have in fact lost interest in the challenges of South Africa. The man in the street, however, is reacting favourably to this budget, as several speakers on this side have already pointed out. In the meantime the hon. the Minister of Finance and the Government are continuing to broaden the infrastructure in South Africa. The second Sasol is forging ahead, as is the Sishen/Saldanha project. Development is taking place across a very wide front. Richards Bay and the numerous railway lines leading to it, are forging ahead. There is the further development of practically all our harbours. These are things which are creating long-term prospects for the whole population of South Africa. Therefore, I should like to conclude by saying that the criticism levelled by the hon. members opposite is very superficial and frivolous. I want to give the hon. members the assurance that the taxpayers are accepting this budget and that they are willing to make the sacrifices, because they are in the interests of South Africa; this is the premium we are willing to pay for the safeguarding of the future of the Republic of South Africa.

Mr. Speaker, we have listened to some strange speeches in the course of the afternoon. We have listened to the maiden speech of a Progref, the hon. member for Von Brandis, and to the hon. member for Yeoville. The latter hon. member quoted from a newspaper to show how much had been spent on the occasion of the reception by the Broadcasting Corporation. This surprised me, coming from a person such as he, because he is the hon. member, after all, who always makes such a fuss about our image abroad and about foreign loans. If one thinks of the amount that was spent on the reception and one relates it to the amount that was spent on the project as such, I cannot understand why the hon. member for Yeoville should quote such a newspaper report. [Interjections.]

In looking at the budget, one must bear in mind that the purpose of the budget is not to balance revenue and expenditure, but rather to lay down general guide-lines for the development of the national economy. In his budget speech, the hon. the Minister made it very clear to us that he was faced with special circumstances. The economy has sustained a number of shocks over the past 18 months and the previous speaker referred to a few of them. There have been the continued depression conditions and the high rate of inflation in many of the countries with whom we trade. In addition, there has been the sharp decline in the price of gold, which I believe to have been largely influenced by the enormous grain purchases of the Russians, because they use gold on a large scale to pay for their imported grain. Perhaps we can find some consolation in the possibility that if agricultural conditions in Russia were to improve, we would also be in a more favourable situation as far as our gold position is concerned. Furthermore, there have been the events on our national borders, the political conditions in countries of Southern Africa, the essential credit restrictions on the commercial banks in order to stabilize our balance of payments and the necessity for a considerable devaluation of the rand. All the factors I have mentioned combined to have a very adverse effect on our national economy. The general expectation may have been that fiscal measures should be taken to encourage growth, but the hon. the Minister of Finance has pointed out very clearly that something of this nature would have a most unfavourable effect on our inflation rate. Apart from that, it would certainly not be compatible with the Government’s undertakings as far as the anti-inflation manifesto is concerned. Instead of stimulating growth, the hon. the Minister decided to combat factors which have an inhibiting effect on the development of our economy, to strengthen the value of the rand and to create the right climate for considerable economic growth if conditions in the countries that are our trading partners improve as it now seems that they will. Consequently, the responsibility for stimulating our growth now rests on the shoulders of the industrialists. At the moment there is a very low occupation— only approximately 88%—of the total production capacity of our industry.

Therefore we have further production capacity available, and with the advantages to be derived from devaluation, as well as the possible upsurge in the countries that are our trading partners, there is a considerable possibility that our position may improve if the industrialists are energetic enough. If this happens and the hon. the Minister succeeds, by means of his efforts in this budget, in bringing down our inflation rate, we shall be entitled to say at a later stage that the budget we are discussing now was a budget for the future.

The budget has been called inflationary. However, the Financial Times thinks otherwise …

Is it the Financial Times or the Financial Mail?

It is the Financial Mail.

Well, get your facts straight.

I do not know the newspapers, because I do not read them very regularly; I only read them when they write the truth. This is what is written by the Financial Mail—

Then it goes on to say—

What about the increase in the price of petrol?

I am coming to that. This budget is not only important for the industrialist and the businessman. It is important for every South African, and although the hon. the Minister did not discuss this matter in detail in his budget speech, I think we must take cognizance of the fact that our balance of trade and balance of payments are being affected to a very large extent by the high price we have to pay for imported petroleum products. I think that much too much emphasis is being laid on the fact that we depend on imported oil for only 25% of our energy requirements. Because of the great size of our country and the long journeys that are undertaken by car, we use almost as much imported fuel as many of our trading partners in Europe, in spite of our favourable position. I think our private sector is able to make a definite contribution here and to use fuel even more sparingly and more efficiently with a view to our balance of payments. The increase in the price of fuel is a further reason for us to economize on it in order to make a contribution.

In order to achieve his purpose, the hon. the Minister of Finance made his tax base as wide as possible. With the exception of pensioners and people over the age of 60 years, there is really no person in the community who is not affected by this budget. It is striking that people talk about tax relief in certain categories. The hon. member for Constantia, for example, wants the taxation of married women to be eased to draw women to the labour market. However, I wonder whether it really is morally justifiable to draw people to the labour market in this way. Would it not be better, if we want to draw them, to pay them proper salaries? According to the report of this commission, the group earning less than R1 000 constitutes 29% of the total. What relief would have been afforded by the tax reduction we could have granted them if they earn a pittance of less than R1 000? The group earning between R1 000 and R2 500 represents 43% of the total, the one between R2 500 and R5 000 represents 25% of the total and the group earning more than R5 000 constitutes only 3% of the total. Since these are the facts, I believe that the blame must be laid elsewhere. I find it a great pity that people in this House should try to lay the blame on the shoulders of the Government, as do so many others outside, for according to this report, the reason for the adverse position of the married woman is definitely not the tax she has to pay, but the salary she is paid in the open market.

The PRP happens to be the party that speaks of distribution of wealth, but the hon. member for Houghton said in The Argus of 1 April—

However, her facts are not correct. According to the report from which she quoted, only 3% of the economically active married women are in the category above R5 000. Consequently, their influence on the total income of R15 000 is very small. However, we must approach this matter from a different angle. It is very clearly shown in this report that the category that would be adversely affected if the income were to be split would in fact be the group with a joint income or less than R10 000 a year. They constitute 92% of the total number of taxpayers. To a greater or lesser extent, these people would all have to pay more than they are paying at the moment if their incomes were to be separated, while the 8% earning more than R10 000 would benefit from it. For that reason I feel that the hon. the Minister acted correctly in accepting this recommendation of the commission, in deciding that the status quo should be maintained and that the married woman should be taxed jointly with her husband as long as the present system of taxation is retained.

With these few words I want to congratulate the hon. the Minister of Finance on his budget.

I believe that it will have the right effect. I believe that in looking back at this budget in the years of growth that lie ahead, everyone will be able to say that it was not a budget for the moment, but a budget for the future, which in fact it is.

Mr. Speaker, the hon. member for Losberg has made a plea for the retention of our present system of taxation, in terms of which wives are taxed jointly with their husbands. He added that we should rather pay the women more. The largest employer of women in this country is the State. Is the hon. member prepared to tell the Government to pay the women of South Africa more?

Now I want to deal with what the hon. member for Piketberg said. He alleged that the Government was creating political stability. He said that this was necessary, because we should compare ourselves with Argentina. I concede that point to him. This Government consists of the best politicians I know. All they can think of is making politics of South African affairs, but when it comes to the national economy, or to matters which concern South Africa, they are nowhere to be seen. The hon. member went on to allege that the Government had created economic stability and that we had economic stability in South Africa. That depends on your norms, of course, because if anyone wants to believe that a balance of payments shortage of R1 600 million, a growth rate of only 2¾%, as against a target of 6,4% set by the economic development programme, and an inflation rate of 11% add up to economic stability, he is free to believe this. The hon. member also alleged that we had underestimated the ordinary man’s willingness to pay for the defence of South Africa. By saying that, he wanted to imply that the reason for this difficult budget was to be found in the fact that we have to pay for our defence. That is what he tried to give out. In other words, he wanted to cover up the inefficiency of the Government by dragging in the patriotism of the people of South Africa. The defence expenditure amounts to only R400 million.

How much?

The increase is only R400 million out of a budget of R7 800 million. This is a trifling amount. And if the growth rate of South Africa had not been impeded by this Government as it has been over the years, that R400 million would have been nothing. That is not the argument.

What do you suggest?

Now the hon. member asks: What do we suggest? This question has been asked here repeatedly: What is your alternative? What would you have done under the circumstances? The point is that these circumstances would never have arisen under a United Party Government. [Interjections.] Where does the trouble lie? What caused this position which exists today? It was caused by the policy of the Government. What is the true reason for it? The reason is that we have too small a number of taxpayers in South Africa. According to the Franzsen Commission, only 8% of the South African population pays income tax. Out of that 8%, 6% pays two-thirds of the income tax in South Africa. [Interjections.] I am talking about income tax. Those people can no longer bear the burden. The fact is that the major part of our population in South Africa is unproductive, for what reason? Because of the Government’s policy in not having trained these people. Mr. Speaker, can you believe that there was a Government in this country that fixed the expenditure on Bantu education at R13 million up to 1972? Now they do not know why we do not have taxpayers in South Africa. Talk to any industrialist today, talk to any farmer, talk to any man who has to produce in South Africa and ask what his trouble is. Every time the reply will be “Labour”: unqualified labour and restrictions on labour. For what reason? Because of the policy of this Government. When the hon. member for Von Brandis spoke of job reservation, those hon. members laughed. In the Western world, where people are not prepared to work, we must be glad and we must go down on our knees every night if there are people who want to work. But what does this Government do? It makes a law to prohibit a man from doing the work for which he is qualified. Then one wonders why the economy finds itself in this plight. [Interjections.]

Order! This debate will continue until Friday, so hon. members must not make so many interjections.

If this Budget had been intended to destroy growth and to encourage inflation, it could not have been bettered, because that is exactly what it does. What is the position of the industrialist today? What happens to every company in South Africa? We find that our companies have virtually been nationalized by this Government, that the Government has now become a partner in the companies. It now takes 49% of the profits of any company. Nor is this all. A company now has to pay tax on undistributed profits as well if its accumulated profits exceed R50 000. Everyone has an accumulated profit of R50 000. This means that if an industrialist earns R1, he must give 49 cents to the Government, and he must pay another 16 cents in taxation on undistributed profits, which leaves only 17 cents. Now I ask: Who on earth is going to invest in the industries in South Africa? Who is going to invest in them now? That is why we see that our manufacturing volume increased by only 2,2% last year. We have nothing to export and this is a consequence of this inhibiting policy.

Forget about politics and rather talk about finance.

The other day the hon. the Prime Minister attacked the Progressive Party, rightly, I think. He accused them of standing for a redistribution of land, wealth and power. Now I want to ask: What does this budget mean? Is this not the most socialist budget we have ever had? In listening to the hon. the Minister, I was not sure whether Harold Wilson or Samora Machel had taken over.

To get back to inflation, the hon. member for Losberg said that this budget would not be inflationary. If one takes the increase of 33% in sales tax, i.e. R660 million, together with the increase of R200 million in railway tariffs, 50% on livestock, one can see what will become of the cost of living under this Government. When there is an increase of 33⅓% in sales tax, it does not only mean 33⅓% more, because the wholesaler can take 50% on that amount. The retailer can also take 50%, and by that time the increase amounts to 75%. The R660 million then becomes R1 485 million, which is to be taken from the pockets of the consumer in South Africa. But the hon. the Minister says that it is not inflationary and that the cost of living will not rise. That is why we had demands for salary increases before the budget of the hon. the Minister of Finance was even cold. Mr. A. Nieuwoudt, chairman of the S. A. Confederation of Labour said the following yesterday—

Can hon. members see what it is going to mean if new wage demands are made? Because no provision is made in this budget for wage demands. Can hon. members see what may happen in South Africa? Then hon. members on the other side of the House still say that this is a good budget. But we have to be realistic. We have to forget about politics and think in the interests of South Africa! [Interjections.]

Another matter I want to discuss is the political games played by this Government and the suffering which the people of South Africa are made to undergo. We have been forced into this position by the actions of this Government. We shall have to save the situation and the people of South Africa will in fact save the situation, but what is the price we shall have to pay for it? What is the price which my voters, the landowners of Braunschweig, Frankfort and Stutterheim, had to pay for the incompetence of this Government? I do not want to tell the House again what this Government did to the voters of that area, because I discussed that last time. In 1972 that area was declared Black, against the will of the people. They begged to be allowed to keep their land, but this Government declared the area Black. These people had to accept this, for what else could they do? In a circular the promise was made that they would be bought out in 1974. The election took place, promises were made, 1974 passed, 1975 passed, their land was valued and offers were made to them that were valid for 60 days. Those offers were withdrawn within 60 days’ time …

And then came Alberton.

You see, Mr. Speaker, there you have it. All that hon. Deputy Minister can think of is politics. In that miserable little job of his, all he thinks of is Alberton and how many votes he can draw, instead of thinking of the interests of South Africa. I want to return to my voters. Those offers to them were withdrawn. Hon. members must remember that this is the area that was the first to be declared in 1972. The mass declarations last year of places such as Port St. Johns, parts of Natal and parts of the Transvaal only came three years later. We look forward to the reply to a question asked here by the hon. member for Sea Point, with reference to the fact that land to the value of R57 million was bought last year, of which 212 000 ha was situated in the Transvaal and only 33 ha in the Cape Province. This in spite of the fact that those people in my constituency were on the priority list. We also have to learn …

Now they have been silenced.

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

The hon. member should rather make his own speech. He only makes a ten minute speech once every three years anyway. We must remember that in September there was no money with which to pay these people. However, we find that two speculators were bought out in Port St. Johns in November—there was no money in September—and that they made a profit of R1 772 000.

That stinks!

Yes, but there is no money for our people. [Interjections.] When I questioned the hon. the Minister here about the matter, he asked me why those farmers had not accepted the offers. They were unable to accept them because the offers were not correct. They were given 60 days and the offers were withdrawn within 60 days. The Government has made purchases all over the place.

Another case is in Amabela, where two farmers, whose land did not even fall in the proclaimed area, were bought out. I just want to say in passing that the one man had bought his land for R70 000 and that he got R146 000 for it 18 months later. However, that is not the point. I put the following question on the Order Paper—

The reply read as follows—

However, when I spoke to the people in my constituency, they said that his was not so at all. I then asked the following question in this House—

The reply read as follows—

[Interjections.] Why did I have to draw this out of them? Then I went on to ask—

The reply was as follows—

Now the hon. the Minister no longer wants to reply to it; it must be kept a secret. I went on to ask—

Do you know, Mr. Speaker, what reply was given? It was exactly the same: The hon. the Minister refused to reply. I then asked: “Whether any offers were withheld?” Surely this is simple. There cannot have been many in my constituency. In the Frankfort area, only 62 farms were involved. But again it was the same: the hon. the Minister refused to reply to my question.

According to the Sunday Times, Mr. Attwell’s farm was bought on 16 September 1975. The report reads as follows—

I am not talking about the price. I am concerned with the date, because that is important to me. I asked the hon. the Minister (Question 315)—

1. (ii) On what date were they (the Amabela farms) purchased?

The reply was—

The date is not furnished, but the date is important to me because we have to know when the offers in my constituency were withdrawn and we have asked the hon. the Minister to tell us repeatedly and he does not want to do so. However, we know that certain offers were withdrawn on 11 September; that is the one date I have. I do not have the other dates, because the hon. the Minister refuses to tell. The hon. the Minister then made a statement which reads as follows—

The report appeared in the Daily Despatch of 10 March 1976. I should have read the whole report, but I should prefer to give it to the hon. the Minister. I then asked the hon. the Minister another question—

The reply to this was—

Now we still do not know where we stand, because the hon. the Minister still refuses to say when he withdrew the offers. I then asked the hon. the Minister another question—

1. (a) How many properties have been purchased;
2. (b) how many owners (i) have received offers which have been withheld and (ii) have still to receive offers;
3. (c) how many offers were approved but withheld and
4. (d) on what date was each offer (i) withdrawn or (ii) withheld.

Do you know, Sir, what the reply to this question was? The hon. the Minister said—

Is it unreasonable to ask how many owners received offers? Is that unreasonable?

Yes.

Why is it unreasonable? In Frankfort only 60 persons were involved, in Braunschweig even fewer, and the number in Stutterheim was even smaller. There cannot have been more than 100 in all. However, the hon. the Minister is not prepared to tell. Is it unreasonable to ask—

Is it unreasonable to ask these things?

Yes.

No, it is not. Senator O’Connell then said—

Did he fight an election against you?

Yes, and he suffered the defeat of his life, as he will suffer again in spite of the fact that the hon. the Deputy Minister protects him. Furthermore—

Mr. Speaker, we then asked a question. I then asked—

What was the reply?

No reply was given to my question! No reply! This was all. And when the hon. member for Griqualand East asked the hon. the Deputy Minister of Bantu Affairs a further question, the reply was—

The Deputy Minister: I am sticking to the facts that I have given now.

Mr. Speaker, is this any way to treat the voters of South Africa? That is why I say that it will be in the interests of South Africa to appoint a commission of inquiry into this matter. [Interjections.] It will be in the interests of the Government. It will be in the interests of the Minister concerned. It will be in the interests of the voters of South Africa and of the tax-payers whose money it is. The money which the hon. the Minister spends is not his own. It is the money of the tax-payers of South Africa. [Interjections.]

Mr. Speaker, one thing about which no doubt can exist in this House is that the hon. member for King William’s Town can do calculations. This is really one of his specialities. According to him the tax which a company pays is 49 cents in the rand. This is the company tax. Furthermore, he says the tax on distributed profits is 16 cents in the rand. Then he comes to the conclusion that the company keeps 17 cents in the rand. Mr. Speaker, according to that calculation 18 cents is missing. I do not know if the hon. member perhaps put it aside to pay the extra costs … [Interjections.] … to pay the additional tax which the hon. the Minister imposed on beer and other luxuries. [Interjections.]

Mr. Speaker, when the hon. member for King William’s Town makes calculations, it reminds me of what Langenhoven said, namely that it is better if people think one is—with your permission, Sir, I take the liberty of softening Langenhoven’s words a little—ignorant, than to open one’s mouth and remove all doubt. [Interjections.]

Then you should rather sit down.

Mr. Speaker, when it comes to making calculations, the hon. member for King William’s Town reminds me of the man who was asked how much was two times two. His answer was: Before I can give the answer, you must first tell me whether I am buying or selling. [Interjections.]

That is an old one!

Furthermore, Mr. Speaker, the hon. member made a great fuss here about the purchase of land and according to him the correct procedure was not followed. However, I want to tell you that if we listen to the manner in which this hon. member makes calculations, we must also get the impression that we cannot attach too much value to the manner in which he put this case here—probably from this own point of view. I believe that the hon. the Minister will answer him on that score in due course.