Mr. Chairman, when the hon. member for Cape Town Gardens spoke last night, he suggested that general sales tax should be used as a means to relieve the financial burden of local authorities. He then went on to launch a very unfair attack on the Browne Committee’s report, an attack which made it clear to us that the hon. member has no knowledge whatsoever of the contents of the report or of the activities presently surrounding it. I should therefore like to refer to a few aspects mentioned in the report and also to react to a few of the remarks made by the hon. member.

*The first allegation made was that the Browne Report was a poor one and that it had been generally criticized. This morning I want to rectify the matter categorically in this hotel …

In this hotel? [Interjections.]

… in this House and point out that the investigation by the Browne Committee is probably one of the most scientific, detailed and comprehensive investigations into the affairs and problems of local authorities ever undertaken in the history of South Africa.

[Inaudible.]

I challenge anyone—including the hon. member for Cape Town Gardens and the hon. member for Constantia, who is trying to put his oar in—to prove that the report is not scientific and that it is not an outstanding basis from which to carry out further investigations into …

That is the point.

I did not interrupt that hon. member once when he was busy with his nonsense. He must just give me a chance now so that I can give him the facts. If he had only taken the trouble to speak to Mr. Croeser for three minutes before making his speech he would have made an entirely different speech. It is recognized by everyone, including the local authorities themselves—and I shall mention the names of the people involved in a moment—that the Browne report is one of the most comprehensive and scientific documents on the affairs of local authorities ever published in South Africa.

However, what happened after that? After we had made a study of the contents of the Browne report, and due to the time that has elapsed after the publication of the report and the implementation of the recommendations, we decided that we wanted to hold discussions with the bodies involved and that we would reconsider the recommendations of the report, using the Browne report as a basis, without either accepting or rejecting them. What happened then? Late last year we held discussions with a very large number of people. They were a very large group and comprised officials of the Commission for Administration, the Office of the Prime Minister and the Department of Co-operation and Development. Apart from that there were the provincial administrations that were represented on a large scale. Then, too, there were representatives of the United Municipal Executive with their legal advisers and their technical advisers. There were also officials of the Department of Finance and several representatives of virtually all the major municipalities in South Africa. We held a conference at Jan Smuts Airport. Having held discussions in the hon. the Minister’s office with the deputation sent by the UME, we decided on a joint modus operandi, and it was on that that the Croeser working group was based. I want to refer briefly to the composition of the Croeser working group to indicate that the Browne report is not a report which is neither here nor there. I believe that there is a reason why the hon. member is now dragging the Browne report across the floor of this House. Indeed, I think he has only one aim in doing so. He is seeking to create a political climate for the next general election of members of local managements because he knows that initially there was opposition to the recommendations, not to the Browne report itself but to the recommendations. Let us consider how the Croeser working group was constituted. The chairman is Mr. Croeser, the Chief Director of Finance. The House must please bear with me while I deal with the matter in depth. I dealt with it in a previous speech, but those hon. members were apparently not listening. Therefore I want to deal with it now in detail so that there need be no more such ridiculous speeches concerning this matter because it is an extremely sensitive and important matter.

Why is it sensitive?

Because local authorities have financial problems, that is why it is sensitive. It is not politically sensitive, as that hon. member would like to have it.

It is sensitive because it has taken you six years to do something.

As I said, Mr. Croeser, Chief Director of Finance, is the chairman. Then there is Mr. Dednam, of the Department of Finance; Dr. J. C. du Plessis, a special adviser: Mr. P. R. Nel of the United Municipal Executive; Mr. P. D. Rossouw of the Office of the Prime Minister; Mr. P. H. Robson of the Commission for Administration; Mr. F. Cronjé of the Department of Co-operation and Development; Mr. F. Brits, Director of Local Authorities of the Transvaal; Mr. C. Meintjes, Director of Local Authorities in Natal; Mr. P. de Wet, Director of Local Authorities in the Cape; Mr. L. Haasbroek, Director of Local Authorities in the OFS; Mr. S. Davis, Department of Finance, and Mr. Nel of the city council of Pretoria. As advisers to these people there are also Mr. Ossie Gorman, the City Treasurer of Durban, probably one of the most able people in the field of local authorities in the Republic of South Africa. We need have no doubt on that score. The contribution made by this man is of inestimable value. Then, too, there is Mr. Venter, the City Treasurer of Johannesburg, who is equally competent; Mr. Delport, town clerk of Pretoria and Dr. J. Hattingh, town clerk of Sandton. They are equally competent people. These people are advisers possessing technical skills which other people in South Africa do not possess. I should like to point out that the requests received by this working group from experts throughout the Republic to be appointed to this work group are legion. Only yesterday the hon. member for Boksburg submitted another such request to me from an extremely capable man who is offering his help and would like to serve on this extremely important committee.

Let us consider what the terms of reference of the committee are, viz. what the committee has to do. That hon. member must listen very carefully now. Using this outstanding document as a basis, the terms of reference of the working group are as follows—

I repeat “die kommentaar daarop” received from all parts of the Republic—

The second instruction is the following—

In other words, if still further bottlenecks become apparent from this investigation, the working group has the right to initiate additional investigations. It goes on—

Order! I regret that the time of the hon. the Deputy Minister has expired.

Mr. Chairman, I merely rise to afford the hon. Deputy Minister an opportunity to complete his speech.

Mr. Chairman, I thank the hon. Chief Whip for this concession and I hope to complete what I have to say within the next ten minutes.

*The work of the Browne Committee was disposed of before the Government began its rationalization programme, and it is therefore important that the recommendations should also be pared down to fit in with the new rationalization approach. They must also determine priorities and work out programmes of implementation taking specific priorities into account. We do not want the recommendations of the Croeser group to be neither here nor there and never to be implemented. A programme of implementation is to be drawn up by this group and what is more, the progress made in carrying out the programme of implementation will have to be monitored constantly. Therefore these people will be monitored to ensure that they keep to the time scales of the implementation programme.

Then, too, the hon. member put certain questions to the hon. the Minister relating to the announcements that had been made. The first concerns the principle that has now been accepted by the Cabinet and the Government, viz. that Government properties in the areas of local authorities be liable to payment of rates. I want to point out that all Government properties will be liable to rates payments. At the moment, R9 million is already available for this purpose in the budget and an additional R20 million is to be made available, and it will be split up among the various local authorities in terms of a formula in order to compensate them for the loss of rates.

On the basis of what formulas will that be?

A committee has already been appointed which will consider the division, the qualification and the method of taxation with regard to the various types of State property, for example schools, post offices, churches, police stations, etc. The Committee has already sent out circulars to obtain returns from the local authorities in order to determine how many properties are within the area of each and what type of properties they are. Subsequently the committee, in co-operation with those bodies, will determine what formulae will be used for the payment of rates and every kind of property.

The hon. member also referred to the ambulance service and asked when the recommendation in question would be put into effect.

No.

As I understood the hon. member, he asked from which date it would be put into effect.

No, I asked whether a subsidy of 87½% or of a 100% will apply.

I am coming to that. Of the next two points which were apparently not at all clear to the hon. member, the first related to ambulance services. From as early as 1 October this year, ambulance services will be compensated on a basis of the real expenditure in terms of a specific percentage formula. I think the percentage is 80%. How the expenditure is to be made up is however a practical consideration which I cannot give to the House at the moment. The local authorities will have to decide for themselves what their current expenditures are. This will then be submitted to the provincial administration and 80% of the expenditures submitted to the State by the provincial administration will be repaid. It is not possible for me at this point to tell the hon. member that the depreciation cost of equipment will form part of current expenditure. Therefore this is a formula which the local authorities will have to determine in co-operation with the provincial administration.

So are Cape municipalities actually going to lose out?

Order! Does the hon. member want to ask a question?

Mr. Chairman, may I ask the hon. the Deputy Minister whether, in view of the fact that Cape municipalities, such as that of Cape Town are at present getting a 100% refund, they are now in fact going to have to contribute?

The Cape Province is getting R7,5 million this year. As soon as this system comes into operation on 1 October, all the provincial administrations will be dealt with on the same basis.

The system with regard to the fire services comes into operation on 1 April 1982. In this regard the subsidy will be on the same basis but at 40%. For the rest, the procedure followed will be precisely the same.

I also want to say to the hon. member that as has already been said in this House, 97 of the 133 recommendations of the Browne Committee have been evaluated and reconsidered in the light of the new rationalization programme. Moreover, the recommendations have already been agreed to by the Government and will be implemented within the foreseeable future.

I now come to the final point. It relates to remaining matters which we are still considering. Certain aspects of the Browne report have not yet been dealt with, viz. those aspects which basically concern the provision of additional funds to local authorities. Certain working groups have been appointed. The first is a working group relating to rates and additional sources of revenue for local authorities. A specific working group is investigating this matter and I do not wish to waste the time of the House by mentioning all the names of members of the group. The chairman is Mr. Croeser of the Department of Finance. This working group will look at the issue as to whether GST should be used or not and will make recommendations in this connection. The second working group has been appointed in terms of the decision taken on 15 January 1981 and will investigate and report on the financing and procedures with regard to township development because this directly affects local authorities. Dr. J. C. du Plessis is the chairman of this working group. Then, too, there is a working group concerned with additional sources of revenue and with transport affairs within local authorities and metropolitan areas. The chairman of that group has just been designated; it is the hon. member Prof. Org Marais. Then, too, there are two other working groups which will consider administrative matters.

To conclude, I want to say that what we have here is an outstanding scientific document as a basis to work from. We also have the co-operation of all the local authorities in South Africa, and there is no reason to try to create an atmosphere by maintaining that there are conflicts between the contents of the Browne report and the local authorities; there is no such thing. There is only the finest co-operation. We hope that this task will be disposed of by the end of the year and we hope to have recommendations which we shall be able to submit to the hon. the Minister, the Cabinet Committee and the Cabinet for final approval. Having received all the recommendations, we shall decide in what form we shall make them known to the public, viz. whether they should be in a form of a circular or in the form of a White Paper or a report tabled here. [Time expired.]

Mr. Chairman, I wish to thank the hon. the Deputy Minister of Finance sincerely for the exposition he has just given the House of the position with regard to the report of the Browne Committee itself as well as all the work that has been done in close co-operation with the municipalities and the local authorities in order to implement these important recommendations and to make a further study of quite a number of them. I believe it will be of great benefit to the local authorities themselves. The work which has been in progress for quite a while will be continued. The hon. the Deputy Minister is making a major contribution himself, and so are Mr. Croeser and his committee, together with the various advisers who are giving us such a generous amount of their time. One greatly appreciates that.

†The hon. member for Cape Town Gardens was critical of the Browne Committee report. I think the hon. member should be rather careful in rushing in to criticize people of the calibre of Dr. Gerald Browne, who was one of the most able and dedicated public servants with whom I had the good fortune to work most closely, a man who for 17 years was Secretary for Finance of this country and who to this day enjoys the very highest rating and the very highest acclaim in the outside world in the best financial circles one can find, apart from this country itself. Dr. J. C. du Plessis is, among other things, a brilliant statistician and a man who simply never stops working. I have never come across another person with the capacity for work that Dr. Du Plessis has. There was also Mr. Schickerling, and then Mr. Van der Walt as Commissioner for Inland Revenue, as well as the Commissioner for Customs and Excise, Mr. Odendal. These are all people of the highest calibre and experience and knowledge in these fields. As the hon. the Deputy Minister has said, we also have had the benefit of authorities such as Mr. Gorven and many others. I believe that this report is one of the finest reports I have ever had the good fortune to read in regard to local government finance anywhere, and I have studied quite a few. I think the clear implication of that report—in fact, this was mentioned in places—was that obviously certain aspects of local government finance would have to be taken further because it is a huge field. I think that this is being done in the most thorough and able manner by the so-called Croeser Committee in very close association at all times with the local authorities themselves. I think that what we have already been able to announce and are implementing are steps of the greatest possible importance for local government in South Africa and more about this will be heard from time to time as we proceed along these constructive lines. I want to leave this matter at that for the moment. I think that the results that are being placed before the country at the moment speak for themselves.

I understand that the hon. member for Yeoville wishes to elaborate on some of the views he expressed last night in regard to what one might call the economic system and so I shall not deal with that matter now. I hope to have an opportunity perhaps later today to return briefly to that subject.

I appreciate the sort of reaction that one continues to receive on the budget.

*I have here, for example, a telegram received from the chairman of the Wool Board—

Brotherly greetings. [Interjections.]

It may be brotherly greetings, but this is a man who knows his business. I happen to know him very well. He farmed in Natal for years. I must say there is a very curious phenomenon which is manifesting itself in this country as well as in this House, and that is that when anything constructive is said about the Government, it is regarded as ridiculous by some of the hon. members on that side of the House. This is very petty-minded, but I wish to be constructive today. In order to be constructive I shall read another telegram. This telegram comes from the director of the National Woolgrowers’ Association. He says—

What is wrong with that? [Interjections.]

Why don’t you laugh, Bamford?

Are hon. members opposed to the provision of aid by us? [Interjections.] The hon. Chief Whip of the official Opposition seems to think it is very funny. [Interjections.]

Why do you think it is funny, Brian? [Interjections.]

Furthermore, I wish to say that the hon. the Minister of Agriculture and Fisheries has been having talks with me over the past day or two. More problems have been brought to my notice, problems resulting from the serious drought in some areas, as well as problems caused by the serious flood damage earlier this year. As far as the lucerne industry is concerned, there certainly are problems. As a result of the serious drought conditions in the lucerne seed production area, and the subsequent unprecedented flood damage earlier this year, a considerable shortage of lucerne seed has arisen. To help finance imports, which are made at prices which are considerably higher than the domestic price, the Government has already made almost R0,75 million—actually R745 000—available to the industry in the form of a subsidy. However, there is still a shortage of lucerne seed, and the Government has therefore decided to allocate a further amount of R255 000 to the Lucerne Board as a subsidy for the imports, which will increase the total aid for this purpose to a good R1 million.

In order to afford the Potato Board some relief with respect to urgent interim financing required for stabilising the potato market, the Government has also decided to guarantee a R2 million loan, repayable over five years, which the board intends to negotiate from the Land Bank, and to subsidise the interest on the loan by 5% a year.

As regards the karakul industry, which is also experiencing major problems because of the serious drought conditions in the production area, together with a drop in the prices of pelts, representations have been made to the Government by the karakul industry for financial assistance. At the recommendation of the Jacobs Committee, which investigated the matter, it has been decided that in addition to the recently announced further drought assistance to small-stock farmers in the North-Western Cape, a once-only allocation of R250 000 will be made to the industry to be used on a rand-for-rand basis in this emergency for the promotion of advertising to improve the market for karakul pelts. This may bring the amount to R0,5 million in all. If it appears that this is something that can be used very effectively for this purpose—and the feeling was that a case had been made out for the contention that funds can be used effectively for this purpose—the Treasury will be sympathetic towards further representations.

Consequently I take pleasure in making these three brief announcements. I recently said, in my reply to the Second Reading debate on the Appropriation Bill, that the interest rate on Treasury bonds and national defence bonds had been raised and that steps would be taken soon in order to make it effective as from 15 September this year.

This matter is not fully understood in some circles, and in order to remove all doubt, I wish to say a little more about it. Firstly, only individual natural persons may invest in Treasury bonds. Each application must be in multiples of R100, with a minimum of R500. The maximum investment per taxpayer, including 7% and 8% Treasury bonds and the second series of 8% Treasury bonds, must not exceed R60 000. It used to be R40 000. National defence bonds are offered in multiples of R50 per subscription by any investor, except non-residents and financial institutions. Interest rates on both these new series may be adjusted from time to time in accordance with prevailing interest rates and investors in the new series will automatically receive the benefit of the increased rate. Interest rates on subscriptions from 15 September 1981 is 8¾% on Treasury bonds and 11% on national defence bonds, until further notice. Interest is payable half-yearly, on 15 March and 15 September for Treasury bonds and on 15 January and 15 July for national defence bonds. The term for both issues will be indefinite, with the proviso that investors may redeem their bonds at any time after 12 months from the date of investment or after a change in the interest rate. If it is deemed necessary, a maturity date can be specified on which all investments in the series concerned will be repayable. I just wish to emphasize that investments in current 7% and 8% and the second series of 8% bonds or 9% national defence bonds cannot be automatically transferred to the new series, but that they can be redeemed at any time after 18 months from the date of investment and the proceeds can be re-invested in the new series. From several inquiries it appears that there are investors who are labouring under certain false impressions, especially the mistaken belief that their existing bonds can be transferred to the new series. This is something I just wanted to make clear.

†I now wish to deal with a few of the points that have been raised so far, so that they do not accumulate too much. The hon. member for Edenvale is unfortunately not here at the moment.

He is in the other Chamber.

He spoke on insurance, and I think that he made a constructive contribution. From our side I think that we can go along with a great deal that he said. He stressed the important role that the intermediaries play in the very important insurance industry. Among those bodies we have the South African Insurance Brokers’ Association and the Life Underwriters’ Association. I have received considerable representations, more recently particularly, that there should be some sort of registration of these intermediaries so that this part of the profession can be put on a more regular basis, as some of them say. I should merely like to say that this is receiving our attention at this moment and we shall be in a position very shortly to say something in public about that. The hon. member made a humorous reference to insurance salesmen who could be bracketed with car salesmen and tax-gatherers. He mentioned them in the same breath. Tax-gatherers are usually not the most popular people in society. Yet they receive very honourable mention in the New Testament. I would not like to say that I am a great authority on this subject, but as I read the New Testament, the tax-gatherers are the only public servants who receive honourable mention in that famous Book. Romans, chap. 13, refers to the gathering of tribute for the authorities. Verse 3 states—

In Romans 13 verse 6 Paul says, apropos tribute being paid to the authorities—

In verse 7 we read—

This is singularly appropriate, and I thank the hon. member for giving me this opportunity to go somewhat outside the narrow confines of rands and cents and to talk more generally on this rather elevated plane. [Interjections.]

There is a proviso too.

The hon. member Mr. Arenson, spoke about gold, the importance of gold, and the importance of having some authoritative decision taken in the world at large about the monetary role of gold. We are, of course, all looking forward to see what the outcome of the gold commission in the USA will be. He also talked about the possibility of setting up an international company for the marketing of gold. From time to time we receive very interesting suggestions in this connection, also from overseas, and we try to study all suggestions very carefully in an effort to see whether we can improve upon the marketing of gold as it is done under the aegis and authority of the Reserve Bank. The bank will therefore also look very closely at the thoughts expressed by the hon. member. My first reaction is that, obviously, the risks that a company of this nature would face are very considerable. One would, for instance, have to see whether it would be possible to attract a consortium of various undertakings, and possibly banks, also from abroad, to engage in marketing and financing transactions really on quite a big scale. I thank the hon. member for his interest, and perhaps we could talk further about this as it is a subject that lies very close to our hearts.

The hon. member for Amanzimtoti mentioned the importance of economic growth and the need to fight inflation. Obviously, there is no gainsaying either of those priorities. I think the hon. member was rather pessimistic about our growth prospects, but one has to look at the world we are living in. Where on earth does one today see economic growth? If one looks at the latest calculations, estimates and predictions of bodies like the OECD in Paris, the IMF and the World Bank, it is clear that there is pessimism right down the line. Until recently, West Germany had possibly the strongest economy in the world, but now they are seriously wondering whether they will have any growth at all this year. In view of this, one obviously realizes that the economic world has very much taken a turn for the worse. It is in that context that we must view our economic growth because, after all, we trade on a very big scale. I think I mentioned in this House on another occasion that the value of our imports and exports must be at least 60% of the value of the gross domestic product and, of course, we have capital transactions moving in and out all the time. We cannot therefore close our eyes to what is happening in the world at large by any stretch of the imagination. However, I think our growth performance is something for which we can be very thankful. Indeed, I think it is impressive. As far as inflation is concerned, there is no need to stress again how serious we regard it. We are making every effort to counter it in a world which is absolutely ravaged by inflation. The hon. member has had an opportunity to read the very interesting speech of the Governor of the Reserve Bank which was delivered at the annual meeting on Tuesday. In it he will see how much the position is now improving with regard to control of the money supply, which is of course a very big factor in this whole scenario. Therefore one hopes that we shall gradually get into a stronger and stronger position to counter inflation, because it is an absolute curse. The hon. member sent me a copy of Milton Friedman’s article about “simple tax reform” in Newsweek of 18 August 1981. We have not had much opportunity to study this. Milton Friedman is a very concise writer. On one page of an article he packs in what others pack in a long chapter. However, I think one has to be a little careful here. As he sums it up, the idea is, and I quote, that—

What he is suggesting is that one really has to bring marginal rates right down, and if one does that, even though one makes a big reduction in those rates, the total revenue may in fact still be bigger than before. It is saying a lot in a few words. What Friedman is saying is that cutting down the top marginal rates so that the highest rate will be 25%, will not lead to a great loss of revenue, but would in fact yield extra revenue due mainly to the disclosure of bigger income than would otherwise take place. This could be partly true, if it is accepted that the non-disclosure now taking place is already of big proportions. It is something which I am very doubtful about. I think that, on the whole, we are in fact having a very substantial disclosure of income on the part of the public. However, I have not had the time to study this article in full. My department will certainly go into this, particularly to test the first part of the theory, namely the effect of the current yield of tax. Perhaps we can talk to the hon. member again.

However, I may say that when the same drastic measures are applied in the South African context, it will mean that persons earning less than R14 000 will not enjoy a reduction in tax. This will mean that 90% of the tax-paying population will be dissatisfied. To carry the theory to its conclusion, it will further mean that people earning more than R14 000 are presently not disclosing very big parts of their income. This is something one would not very readily accept with our experience of the position. I also find it difficult to accept that they will suddenly drop their current practices and make what amounts virtually to a full disclosure, if in fact they are not doing so. This is a question of human nature …

But he is also talking about people who put money in tax havens, who search for tax avoidance schemes and who employ many highly-trained people in this activity.

This is obviously a point that needs very careful study. However, I thank the hon. member for drawing our attention to it. Milton Friedman is an extremely stimulating and an extremely interesting economist, as the hon. member knows. He has a waggish wit and humour, and one has to be quite sure that he is at all times completely serious about some of these things.

*I wish to thank the hon. member for Malmesbury sincerely for his kind reference to this book which we call the Estimate of Expenditure. I think it is an enormous piece of work, and therefore I believe that the Treasury really deserves that praise. They will grately appreciate it. I am glad this has been said.

We all know the hon. member for Smith-field as a person who always makes a very thorough study of taxation matters. He quoted quite a number of figures relating to estate duty in his speech. I must say that the cattle to which he referred must really be fine cattle, and the sheep as well! I am sure there has been no drought on that farm, for the prices he mentioned are very favourable ones. On the other hand, the prices are certainly not unrealistic. However, I think the hon. member will concede to me that the values for 1980 are probably the highest in many years. This applies to property valuations as well. It is virtually the peak of a cyclical development, and one should keep in mind that those figures are excessively high. I do not know whether it will be possible to maintain such values in the next few years. However, let us consider the estate duty that is payable in the case of a person who leaves his wife and two children. Let us suppose that the net value of the estate is R150 000. In that case it will not be taxed. In 1979 the tax was just under R8 000. On an estate of R200 000, under the same circumstances, the tax two years ago was R18 250. Now it is R2 000, which represents 1%. On an estate of R500 000, 22% tax was payable two years ago, amounting to approximately R110 000. Now it is 11,6%, amounting to R58 000. What is interesting, however, is to consider an estate of R200 000 two years ago. At that time the tax rate was 9,1%. Today, two years later, the tax rate on an estate of R500 000 is 11,6%. Two years ago it was 9,1% on an amount of R200 000 and now it is 11,6% on an amount of R500 000. Two years ago, the tax rate applicable to an estate of R500 000 was 22%. On an estate of R1 million today, the tax rate is virtually identical, i.e. 22,9%. So one must bear these figures in mind as well, for there has been a very great measure of relief over the past two years.

There is something else that is also very interesting. I have figures here which were furnished by the South African Agricultural Union. In a table which I have before me, the consumer index is indicated, with 1955 as the starting date. It includes figures relating to the primary rebate on estate duty and the index which goes with it, as well as the rebate for dependants, and this is also represented as an index figure. There is also an indication of policies and bonds which can be used, as the hon. member knows, to provide for the payment of estate duty. Then there are figures relating to land prices. As far as the consumer index is concerned, 1955 is represented by an index figure of 100 and 1980 by a figure of 417. So it is approximately four times as high. The primary rebate for estates in 1955 was R10 000, and if we take this as an index figure of 100, the primary rebate has risen to an index figure of 375, an increase which is a little less than the one relating to the consumer price index. This brings me to the rebate for dependants. This has risen from R4 000 in 1955, which is represented by the index figure of 100, to R37 500 in 1981, and this means an index figure of 938. The amount in policies and bonds which could be used for paying estate duty was R20 000 in 1955, and this is represented by an index figure of 100. The amount applicable today is R100 000, which is represented by an index figure of 500. According to this table, land prices have risen from an index figure of 100 to a figure of 638. This is based on an estimated increase of 20%, but the increases since 1979 have of course been disproportionately great. In respect of relief in the form of primary rebates and rebates for dependants and in respect of the machinery which has been created, as it were, to provide for the payment of estate duty, I believe that the Government’s record is not at all bad. However, I suppose we shall have much more to say about estate duty in the future.

†I am sorry that the hon. member for Durban North is not here. In the budget debate he raised a matter with which I simply did not have the time to deal at that stage. I could not then deal with all the issues raised. The hon. member for Durban North made a plea for income tax on individuals to be replaced by what he called a tax on expenditure. Many people would call that a consumption tax. I have here a brief little note to the effect that a progressive tax on expenditure or consumption which, in its simplest form, is leviable on all income less all savings, must not be confused with the sales tax such as we have in South Africa at the moment. That is not what he was asking for. He wanted a tax on expenditure of persons rather than on their incomes. From the contents of his speech one can deduce that the hon. member is perhaps not entirely conversant with the distinction in this respect and that he may in fact have a modified sales tax in mind. I do nt wish to delve too deeply into the matter—there has been very extensive literature on this subject for about a 100 years—but I can point out that the introduction of an expenditure tax has been debated at regular intervals for a very long time, possibly ever since the famous exchanges in the House of Commons between Mr. Gladstone when he was the Chancellor of the Exchequer and John Stuart Mill, who was the leading economist of the day. That started in 1861, 120 years ago. It was in fact again proposed as recently as 1978 in the Meade Report which was published in the United Kingdom. Prof. Meade made that recommendation, given certain conditions. So, although the matter has been under consideration for a long time, I should like to say that the demerits of the system as far as we can see—the department has looked at this very closely for a long time, as well as the Commission on Taxation Policy—seem to us so far to outweigh the advantages that it has in fact never been put into operation, except, as far as I know, in an experimental form in India and Ceylon during the late 1950s. What is interesting is that those two experiments were very quickly abandoned. They ran into enormous problems, including administrative problems. I just wanted to draw that to the hon. member’s attention and to say that it is not something we have not looked at closely, but there are certainly problems in that regard.

*I want to be brief. The hon. member for Brits spoke about the progress that had been made in the field of planning and about certain financial implications of this. He requested that any new development plan be expedited, especially in his area, i.e. the area from Rustenburg all the way to Bronkhorstspruit. He said that we should first occupy the development points which already existed before embarking on a new plan on too large a scale. Of course, we shall go into that very thoroughly.

†I have dealt with the hon. member for Edenvale. He spoke of insurance. As he talked in a lighthearted vein about some aspects of insurance, it reminded me of the Scotsman who took out a very big policy on his life. He was very fit at the time, but the very next day, to everyone’s surprise, he had a heart attack and, as he lay dying, he turned to those around him and with a rather wry smile said: “I have always been a lucky chap.”

I have already dealt with the hon. member, Mr. Aronson.

*I think the standpoint of the hon. member for Vasco was that we should all accept the capitalist system in South Africa and that we should unite to protect the system and to improve it where necessary, and that we should not be too ready to believe that socialism, or any variation of socialism, would produce a better system.

†The hon. member for Cape Town Gardens has been answered by the hon. the Deputy Minister of Finance. I have also dealt with the hon. member for Amanzimtoti.

*I wish to conclude my reply, because I know that the hon. member for Yeoville would like to develop his ideas further.

Mr. Chairman, there are a couple of small points—even though they are not unimportant points—that I should like to deal with before coming back to my theme. I am particularly pleased that the hon. the Deputy Minister is here, because he is Deputy Minister in two capacities, and his other Minister is also here. I want to come to the question of inflation and touch on it briefly, bearing in mind what the hon. the Minister and other speakers have said.

Every day one sees a series of price increases hitting the community. Just this morning two things were discussed on the radio, viz. the question of the increase in medical fees and, quite away from it, the increase in the price of chickens. This cannot go on. It is not enough to take the measures which the hon. the Minister has taken, for example in regard to the money supply. There is one fundamental thing—and attention was drawn to it again today—and that is that a high degree of exploitation is taking place. I believe people are taking advantage of an inflationary climate where they believe the public will accept everything, and they are increasing prices in view of that. Unless the Government takes some very strict steps in order to stop that exploitation, investigates these price increases and, in fact, does something about them, we are getting into an inflationary spiral where inflationary expectations are being exploited at the expense of the consumer. I want to make that appeal to the hon. the Minister.

What steps? Price control?

I make no secret of it that where people in a particular industry are exploiting the consumer, I believe one has to impose price control on them and teach them a lesson so that the rest of the community will know that one cannot get away with it. I make no secret of that. I am not afraid of it, and I am going to deal also with the question of what the responsibilities of the State are in regard to the interference in the market mechanism, because there is no doubt that the market mechanism is, at the present moment, being abused in South Africa at the expense of the consumer. In this regard I appeal to the hon. the Deputy Minister because he also is the Deputy Minister for Industries and Commerce, which is actually very convenient in relation to this issue. I ask him to take action.

There is another point I wish to raise with the hon. the Minister. In his budget speech, and again later, he made comparisons between inflation rates in South Africa and elsewhere. I do not know whether the hon. the Minister saw recently a comparison between the inflation index which exists in the United States and the inflation index in South Africa. It is quite clear that the composition of that index is completely different, and an analysis which has been made, shows that if we use the same composition of the index as is used in the United States, our inflation rate would be very much higher, in other words, the statistic would be higher, and if the United States used the composition of our index, their inflation rate would be lower. Each country uses a composition of an index which it compiles bearing in mind its particular population and its needs. The remark has been made that it would be very convenient if, for example, every country in Europe and everywhere else were using the same form of composition, but it is impractical, because the communities’ purchasing activities are quite different.

I didn’t quote any comparisons.

It is being said all the time. Every one of the speakers on that side of the House gets up and says: “Look at the terrible inflation rate here and look at the terrible inflation rate there.” One cannot make these comparisons; people are concerned with what is happening in South Africa. That is what the issue is, Sir, and that is what we are concerned about.

There is one small point that I wish to mention here. The hon. the Minister announced new terms in respect of Treasury Bonds and Defence Bonds. It was obvious that interest rates had to be increased in the light of prevailing circumstances but I want to express my disappointment at the fact that the hon. the Minister is not encouraging the long-term saver in these securities. In the past, if one held one’s security for a period of time, the rate of interest paid was higher at a later stage than it was initially. That position has now been abandoned. It still exists to some extent in regard to National Savings Certificates but they fall into a different category and the amounts are relatively small. I would like to appeal to the hon. the Minister to reconsider the question of the bonus concept in respect of both the Defence Bond and the Treasury Bond so that, if one does not use it as a short-term investment for a year or so and one holds it for a period of time, there will be a bonus paid at the end of the road. This will encourage long-term saving and I believe that the hon. the Minister would actually like to see long-term saving in South Africa.

I discussed the question of broad economic policy yesterday, Sir, and I wish to return to it now. I specifically raised the issue with regard to the financing needs the community was going to experience in the future. I mentioned specifically the question of education in regard to which there is a commitment on the part of the Government and the reason why I did so is because I would like to hear from the Government, from the hon. the Minister, in regard to what his philosophy is in respect of the financing of these requirements that we will have. It is no good our saying that we are going to have education of equal quality unless the money is going to be available in order to provide that education of equal quality. There is no point in talking about the removal of discrimination in regard to other social services such as, for example, pensions, unless one is going to have the money; and, dependent upon the economic philosophy that the Government applies, that money will or will not become available. If we follow the philosophy advocated by those people who use the word “capitalism” so loosely—I want to refer to the hon. member for Vasco in this regard—then we should actually accept some of the ideas that have been advanced by the hon. member for Amanzimtoti who seems to be a Friedmanite. One must have reduced taxation, an absolutely free market, one must not have interference by the Government and one must not provide the social services.

I want to say, Sir, that we would be heading for disaster in South Africa if we were to follow that course. We have to accept the realities. When we have had a certain level of social services for one section of the community and then we say that we are going to have equal social services for the entire community it would be a most dishonourable act to say: Well, we do not really like social services and we really think that we should all go back to a Friedmanite approach to this whole concept and do away with them. The question of how one is going to finance this is fundamental. Certainly, incomes are going to increase. We are certainly all committed to growth. However, there are other problems in regard to this matter. The real issue is if we are going to have social services, how we are going to finance those social services. So that there will be no misunderstanding between us in this regard I want to say that I do not believe that we should reduce the level of social services which one section of the community is enjoying but rather raise the level of social services of the other section, services which the community has not been enjoying. That is the crucial question and that is the economic philosophy we have to debate—how we are in fact going to finance this. It is all very well, Sir, to talk in an airy-fairy manner about capitalism and free markets. I want to come back to the hon. member for Vasco in this regard. He talks like a Friedmanite and then, in the end, he says that the policy of this Government is not a policy of “one man, one vote” but “one man, one job”, and that this Government has to see that this policy of “one man, one job” comes about. Is that correct?

In preference, yes.

Of course, Sir. In other words he actually accepts the keystone of the Keynesian thinking which is to the effect that the major political and social aim is to ensure that there is full employment. In other words, they are not now Friedmanites; they are actually supporters of Keynes. There they are with me. I make no secret of my philosophy in this regard, but one has to make up one’s mind where one wants to go, what are one’s social objectives and how is one going to finance these objectives.

This is the debate which is long overdue in South Africa, because in South Africa they are all talking about constitutional models and in fact they are not talking about the economic realities of what South Africa is all about, and what South Africa is going to be about in the future.

But are you not going to make a positive contribution to this debate?

I am coming to that; do not worry.

I want to pose to the hon. the Minister specifically the problems of what I regard spatially unequal distributions of wealth in South Africa together with unequal distributions of power, both spatially and racially in South Africa. The question is how those are going to be solved, how one is going to deal with those problems, how one is going to deal with spatial decentralization which is a problem in the political field, and, what is perhaps more important, the unequal spatial distribution of wealth and resources in South Africa.

Let us look at some of the figures before we try to produce some of the answers. One tries to get figures which are based on the latest census, but they are not available. I have tried by question and other means to obtain them, but I have to rely on figures which may be a little out of date, but the pattern will be the same. In the census before the last one, there were 262 magisterial districts and nine Black States—there has been another one created since then. At that time 54 districts in South Africa had average incomes of the persons who were resident there below R200 per annum—not per month; per annum. Average per capita output in the area which comprise the poorest one-fifth of the districts was R56 per annum …

Is that 1970?

Yes, that is 1970.… and in the lowest it went to R22 per capita per annum. If we include the incomes of the migrant workers, it went to a total of approximately R10 per annum. These figures are adjusted from the 1970 census to 1977. The poorest areas were predominantly agricultural and the average productivity in subsistence agriculture was only R59 per worker per year. The national average for modern agriculture was R1 298 per year at the same time. We get another problem. The single richest district in South Africa contained only 6,5% of the population, but produced 19% of the GDP. The ten poorest districts of South Africa contained 33,5% of the population and produced 2,9% of the GDP. If ever there has been an example of spatial unequal distribution of wealth, this is the classic example anywhere that one can get.

It is not only a problem of the distribution of wealth, but it is also a problem of distribution of power. If one looks at the White population, one finds that the White population comprised about 17% of the total population, but it was responsible for and added 68% of the gross domestic product, and it had all the political power. If one takes the other groups, one notices that they comprised 83% of the population and only contributed 32% of the GDP. If one then looks at that situation and also to a geographic situation unrelated to race, one finds that, for example, Johannesburg with 7% of the population contributed 19% of the GDP; the Vaal triangle with 20% of the population, contributed 41% of the GDP; the metropolitan areas as a whole had 35% of the population and they contributed 67% of the GDP.

Those are very old figures.

No, all one can do about these figures is to have them brought up to date relatively. It is my contention that the pattern remains the same; the proportion remains the same, except for one factor. That is that it is perfectly true that, in relative terms, Black incomes have increased in real terms at a greater rate than White incomes over a period of approximately seven years. That is the factor which will in fact change these figures to some degree. [Interjections.] The pattern, however, will remain identical and when the 1980 figures become available we will see exactly the same thing.

Let us take another set of figures, those in respect of the Black homelands. The Black homelands had approximately 35% of the population and 3% of the gross domestic product; if one included the migrant workers and commuters—this was in 1977—the figure was 11% of the gross domestic product. We are thus faced with a situation in which we do have a dramatic gap in the whole distribution of wealth in South Africa, a spatial problem in respect of a whole series of matters which have to be solved.

Decentralization has not solved the problem. There is no doubt about it. We are finding ourselves now in a new position, a position in which we talk about the deconcentration of industry in order to try to solve this problem. I raised this issue the other day and I want to raise it again today with the hon. the Minister because it is fundamental to all of us. If what the hon. member for Vasco says is correct, that the attitude should be one of one man, one job, I back him to the hilt that employment is the fundamental thing with which we have to deal in South Africa. If that is the philosophy I have to ask specifically whether we can pretend that we are not going to be able to create those jobs cheaper in certain metropolitan areas …

No.

When the hon. member for Klip River says no, it shows his ignorance. It shows that he has no idea about the facts. The reality is that we cannot afford to be in a position in which we can create one job at one price, while we can create three jobs at the same price somewhere else. That cannot be done in the kind of situation in which South Africa finds itself. And in this respect the hon. member for Brits is far more intelligent than the hon. member for Klip River. He also has a far more extensive knowledge of the facts, because he made the same point.

The tragedy of the South African situation is that we are lacking in time. I wish we had 100 years in which to plan this. I wish we had 100 years, but the reality is that we have not. We are with a situation which is, within the next ten years or more, going to become a crisis situation in South Africa in respect of jobs. Therefore it is clear that we have to create the jobs where we can, and we have to create them at the cheapest possible price.

The planning report for the PWV area envisages amongst other things that 110 000 jobs are going to be shifted away during a period of 20 years, jobs which would otherwise come to that area. Those jobs are now going to be shifted away to some other place, where they are going to cost us more, where they are going to consume more of the money which we have to find for this purpose. The hon. the Minister is absolutely correct when he says that we have limited resources, that we have to arrange our priorities, that we cannot have everything at the same time.

That is not the only problem.

That is the problem. What worries me in no uncertain fashion in respect of the policy is something I should like to tell hon. members now. The money has to be found somewhere, and this vote is concerned with the raising of money, with the raising of taxation, with the raising of loans, with growth, with all these things. I want to refer now to the hon. the Prime Minister’s statement in connection with what is now called deconcentration. In this regard I Want to refer to the statement he made. I am not going to quote his statement in full. I merely want to quote the crucial sentence—

I also raised this with the hon. the Minister of Internal Affairs, who in some way appeared to be in charge of the major portion of planning. I quoted it to him. I used those same words and I also said the following—

What was the hon. the Minister’s answer? He said—

But the hon. the Minister of Internal Affairs goes one further. Last night in Worcester he spoke about deconcentration and said—

I want to tell hon. members, and I want to say it with great respect to the hon. the Minister who is responsible for the economy of South Africa, that if we are now going to have a situation where this kind of feeling is going to be created amongst the industrialists of the PWV-area and of other metropolitan areas where one can create jobs cheaply, where land is available, where the infrastructure is available and where it is admitted we can expand, and the people there are going to be made to pay full costs in respect of transport, for instance, the subsidizing of bus services, and the question of housing, and in addition deal with investment allowances, as appears to have been conveyed by the hon. the Minister of Internal Affairs, then one will be doing the South African economy tremendous harm and us as South Africans a great disservice.

The alternative is a very simple one. Accept the reality of urbanization. Plan for the reality of urbanization. Accept that that is the reality of South African life. One cannot provide the jobs for the people in these poor areas that I have mentioned, except at enormous cost to South Africa. One cannot do it. It is not physically possible. South Africa does not have the resources. Therefore accept the reality of urbanization and do not get so excited about cities the size of Johannesburg, Cape Town, Durban, Bloemfontein and Pretoria. They are small in a world context. I say let us actually create the jobs where we can create them cheaply where we can provide the facilities and the social services. The PWV-area is not in the tremendous problem situation that people talk about. There is opportunity there, there is land there, there are people there and one can deal with the situation there. My appeal to the hon. the Minister of Finance is that for the sake of South Africa, on the basis of dealing with the very point that the hon. member mentioned, if he wants to give every man a job, give it to him where it can be created in the easiest fashion, and accept the realities of economic life in South Africa. Do not live in a dream-world that is again going to cost us millions, in the same way that the decentralization programme has already cost us millions. Accept the reality of life and plan for reality. Then South Africa will have a future.

Mr. Chairman, at the beginning of his speech the hon. member referred to high prices. He puts forward as a solution that price control of those commodities should be introduced. Here again we have the typical equivocation of the official Opposition. They are supposed to be the champions of the free market mechanism, but at the same time they want to control the market with price control measures. In the course of my speech I should like to refer to some of the reasons why prices are continuing to rise, and I shall try to suggest one possible solution. South Africa is good to its inhabitants. South Africa is a country of prosperity, a country flowing with milk and honey. South Africa affords its inhabitants tranquillity, peace, prosperity and economic stability. Everyone can share in this economic stability, particularly those who are prepared to play their part. Unfortunately it is true that those who do not contribute to the economic stability also enjoy these benefits and privileges. Stability and economic prosperity are not, however, something which should be taken for granted. The fundamental principle and condition for healthy growth and stability is that all development should take place in terms of economic laws and as efficiently as possible. Indeed, it is a fact that sound economic growth and development form the basis for long-term prosperity. To achieve growth, certain elements must be present, namely sound exports, mineral resources, sustained employment, a healthy demand for goods, and in particular, a steadily growing productivity. It is the latter in particular, viz. productivity, which forms the basis for sustained growth. The USA is endowed with a diversity of resources but nevertheless up to six months ago there was an increase in unemployment and economic stagnation specifically due to the fact that the minimum wage was not in line with the productivity margin. Due to strong trade unions, an unrealistically high minimum wage was imposed without any justification for such a wage in terms of productivity. Japan, on the other hand, which lacks any natural resources and is forced to import all its raw materials, nevertheless succeeds in conquering the markets of the world. This success must be chiefly ascribed to the fact that Japan rewards skilled and hard working labour with economic wages.

I do not wish to contend that we in South Africa pay too much for labour, but I do want to put it that we must regard this as an evil and should not simply allow it to happen. We are rapidly narrowing the wage gap and this has resulted in labour having become an expensive commodity in the course of a few years, so expensive that it has had and will continue to have a real influence on the price of goods. This is another of the reasons for the excessive increase in the rate of inflation, something which the hon. member for Yeoville has overlooked. Consumer expenditure has increased exceptionally rapidly. Dr. De Kock, president of the S.A. Reserve Bank, put it as follows in his speech during the annual general meeting of the bank, and I quote from the annual report—

He goes on to say—

It is with regard to this production factor, viz. labour, that I want to exchange a few ideas. Due to various reasons, some of which I have already referred to, labour has become exceptionally expensive in South Africa, so much so that as a production factor it has had a substantial influence on production costs. We hear daily how prices are rising and how inflation is on the increase. I think it is time for us to ask ourselves what the influence of these dramatic increases in wages and compensation is on the price of goods. I quote again from Dr. De Kock’s annual report. He says, inter alia, the following—

This is the comment of the president of the Reserve Bank. Now it is true—and we all know this—that it is not solely the increase in wages and salaries that is responsible for the exceptional increase in the money supply. Reduced taxation, the high gold price of recent times and other factors were jointly responsible. The influence of the increase of salaries and wages can be neutralized in one way only, and in my humble opinion that is by way of an increase in productivity. South Africa cannot afford the situation in which its workers, skilled, semi-skilled and even the unskilled workers, work at half speed. If we do not recognize that productivity must increase in proportion with remuneration, and if we are not going to see to it that productivity is given greater importance in our economic activities, we shall not succeed in maintaining a reasonable level of growth while at the same time containing inflation. Every worker in South Africa, White, Coloured and Black, will have to ask himself whether he is in step with his wage or salary. Measured in terms of his wage or salary, the employee must determine whether he works hard enough to justify that remuneration. The employer, too, will have to see to it that his employees contribute their share at their full capacity. For South Africa to remain the fine and prosperous country that it is, its workers will have to put their shoulders to the wheel to be able to survive.

Mr. Chairman, as usual the hon. member for Gezina made a very sound contribution to this debate. As it happens, my speech links up with his to a great extent. Today I wish to discuss the great international epidemic, inflation.

Inflation is like a swarm of locusts crossing a field. When they have passed, the field is bare. Like the swarm of locusts, throughout the world inflation is eating away at people’s savings, causing pension benefits to dwindle, eroding the purchasing power of money and undermining confidence in monetary units. What is more, inflation is creating grave concern among the less privileged people and among the elderly who are no longer able to increase their income. There are many who go to bed every night gravely worried due to inflation. This is not confined to South Africa alone. The whole world is defenceless and powerless in the face of inflation. I want to say to the hon. member for Yeoville who has just resumed his seat that the Jews of Israel, people known for their business flair, are just as powerless in the face of inflation because at this moment they have a rate of inflation of 34,5%, more than twice as high as that of South Africa. [Interjections.] At times, however, that rate of inflation has been far higher, because it has been more than 100%. Fortunately we have an hon. Minister and a Government that understand the distress of the people in this country. The Government always extends a helping hand to our people. That is why salaries, wages and pensions in South Africa have increased more rapidly than the rate of inflation over the past decade. The Government and the hon. the Minister in particular have proved over and over again that they regard the problem of inflation in a very serious light.

However, South Africa has unique problems in this connection. The curbing of inflation in South Africa is an exceptionally difficult problem because the circumstances are substantially different to those in other industrial countries. While the majority of other industrial countries have static or slowly increasing populations, South Africa is saddled with a rapidly growing non-White population for which employment opportunities must be created and whose claims to a higher standard of living will have to be satisfied more rapidly. South Africa cannot, therefore, afford to grow slowly and reduce inflation in that way. We must continue to grow and we must grow rapidly in order to provide those people with employment.

There are various schools of thought as to how inflation can be combated. Monetary experts belonging to various schools of thought differ in this regard. One has one idea and the other has a different idea. The economic policy to combat inflation can be geared to achieve five broad objectives. First is a satisfactory growth rate, the second, the full employment of the labour force, the third, a stable general price level in the country, the fourth an equilibrium in the balance of payments and the fifth, an equilibrium in the economic structure. There are simply no instant solutions for inflation. Countermeasures are cumbersome and painful. Whatever is done, financial discipline is still the key to the success of an anti-inflation strategy. It is here that the problem lies, and that is what I should like to discuss today.

The roots of inflation run deep, right down to the fundamental values of the community. The community wants unlimited freedom, freedom to do as it likes, without concerning itself about the disciplines that are required for economic stability. Here lies the root of the evil. In the vast majority of countries there is no longer any financial discipline. There is a spirit of “let us eat, drink and be merry, because tomorrow we die” among the people. People are living beyond their means. They are living on credit; in other words, their lifestyle is inflationary. Easy credit and easy-to-obtain credit cards are inflationary because people buy without exercising discipline. The secretary of a buy-aid association told me that he did not give his credit card to his wife when she went shopping because if he did, she bought too much. The temptation for the woman pushing her trolley through the supermarket, to pack it fuller and fuller is far too great, particularly if she knows that she has a credit card with which she can purchase at will. Nowadays credit cards are handed out left and right. I myself have received half a dozen unsolicited cards and I can tell you, Sir, that I threw all of them in the wastepaper basket. Credit cards have their advantages, but there is no gainsaying the fact that they are inflationary. People are too quick to buy with credit cards.

Avarice and greediness in commerce is another cause of inflation. There are people in commerce whom we could call economic gluttons, sharks and misers. These people are pushing up their prices unrealistically in order to exploit the public. They are not satisfied with a good profit. Their profits must go higher and higher. Looking at the fat balance sheets of certain business enterprises, one realizes why the public complains, and that they have reason to complain.

A good example of how the public is being exploited is being encountered in this country at the moment. We have been blessed with a record potato harvest. The markets are overloaded with potatoes and prices have dropped. A pocket of potatoes of a good grade can be purchased on the market for as little as R1,50, while last year they cost from R3 to R4 a pocket. But do not think that the benefit of this was passed on from the dealer to the consumer. For a smaller packet of 5 kg one pays R1,25 in the trade, almost as much as one pays on the market today for a whole pocket of potatoes. The price of potato crisps has remained unchanged at 40c for a small packet of 130 gr despite the low price of potatoes. This is the case despite the substantial drop in the price of potatoes. Dealers in this country will have to abandon their greediness. They are too much inclined to pocket everything at the cost of the consumer. They would do well to contribute towards containing inflation by keeping prices low.

I wish to conclude. A country like Taiwan has minimal inflation because they are prepared to literally work inflation to death. Higher productivity is one of the best remedies for inflation, but for various reasons—I cannot dwell on them today—productivity in South Africa is among the lowest in the world. The root of the evil here, too, is a lack of discipline, a lack of labour discipline. We shall have to waste no time in overhauling disciplines in this country if we are to curb inflation to a significant extent. Nor should people look to the Government as far as these things are concerned; they will have to search their own hearts. For a long time now the Government has been imposing a policy of stringent financial discipline. The Government has long been setting an example in this field. [Time expired.]

Mr. Chairman, I am very pleased to see quite a number of hon. members during this debate talking about inflation, the need to control inflation and the need for growth. I am pleased about this because we in this party feel that that is the main thrust of our contribution in financial debates during this Parliamentary session. As I have repeatedly said, without growth we will not achieve the things we want for South Africa in the future.

The hon. member for Bloemfontein North spoke about Taiwan. I agree with what he said. I have had the privilege of visiting Taiwan twice, the first time in 1968 and again last year. The one thing that struck me on both occasions was the desire of those people to work. There is no such thing as living off the dole in Taiwan. I believe that the people of Taiwan are self-sufficient. They have pride in the work ethic and they believe in it. I believe that that is what has created the tremendous growth which Taiwan has enjoyed in recent years. The same happened in Germany and Japan after the war. There one finds a national spirit amongst the people despite their defeat and their whole economy virtually having been destroyed in the Second World War. They lifted themselves up by their boot-straps. Certainly, there was a lot of investment capital poured in by the United States, but the people there were prepared to work and I think that that is one of the most important ingredients in the battle against inflation.

I want to say to the hon. the Minister that we do tend to try to make comparisons with other countries and, as someone said, comparisons are odious. I say this because of what the hon. the Minister said earlier, namely that the whole world is in a recessionary stage and that South Africa must therefore realize that there is going to be a fall-off in the growth rate this coming year. I should like to submit to him that last year South Africa had a growth rate of 8%, while in West Germany the growth rate was negative. Four years ago, however, South Africa had a negative growth rate of 2% while the growth rate in West Germany was 8% or 9%.

I did not say the growth rate was going to fall further.

No, but what the hon. the Minister did say, was that because of the world recession, South Africa could not expect to maintain a high growth rate, and I disagree with him in this regard.

I did not say that at all.

I should also like to submit to the hon. the Minister that South Africa has not had such a great growth rate during the last ten years. During the last five years we had an average growth rate of only 3%, and during the last ten years, the average was only 3,4%. We must stop trying to find excuses and should rather concentrate on achieving the objective which we set ourselves, and that is a minimum of 5% growth rate, and preferably 6% or 7%.

The hon. member for Yeoville made a very interesting speech. I agree with him. It is a pity we cannot debate broader economic policy, as he put it. The hon. member asked how we are going to meet the financing needs of the future in respect of things like education. He asked where the money will come from. Those are the questions which the hon. member for Yeoville asked. Then he turned round and, with reference to myself, said that I am a Friedmanite, whereas he is a follower of Keynesian theory. He said that those who believe in what Friedman believes in, do not believe in providing social services. I want to disagree with the hon. member on that point. I do not think Friedman has ever said that one should not provide certain social services. I suppose it depends on what one calls “social services”.

You give vouchers for education.

How can you agree with him? He is a social democrat.

Yes, he claims to be a social democrat. It depends on the way in which one interprets Friedman and Keynes, but I do believe that Friedman would agree that education is essential in order to obtain the economic growth we need. The question I should like to put to the hon. member for Yeoville, however, is: What are the social services he is talking about? Should the social services be directed at the production of wealth, or should they be directed at the spending of wealth? If one refers to such things as education, training and the incentive to build up the economy, and so on, I am prepared to concede that these are the sort of things which the State has to provide in order to obtain the growth we need. If, however, the social welfare services which the hon. member for Yeoville is talking about are subsidies …

Are you against old-age pensions?

No, I am not against old-age pensions.

Are you against unemployment insurance?

If the worker pays for unemployment insurance, pensions, housing schemes, I am in favour of it.

So the NRP are against old-age pensions.

The hon. member is putting words into my mouth. What we are for, is an economy that will provide people with work so that they can, through their work, earn money that will pay for their homes, their future pensions and their health services. This is the distinction between the Keynesian people and the Friedmanites. The hon. member for Yeoville believes in providing subsidies for food, housing and transport, and he even believes in …

You are against it. You are against subsidies.

He never said that.

The members of the PFP are social democrats, as the hon. member for Maitland has said. They believe in providing social welfare services which can only come from the working man, and this is the point. They are the people who discourage work. One only has to look at Britain today. My wife has family in Britain whom we visit quite regularly, and I know there are young people in Britain today who say: “Why work? One can live off the dole and squat in a subsidized council house.”

Is that your family?

No, it is not my family. We believe in the work ethic!

Order! The hon. member for Yeoville must give the hon. member for Amanzimtoti an opportunity to continue with his speech.

I gave him a chance, Sir, but that is the trouble with the PFP, Sir. They mouth philosophies and policies but they will not live up to the consequences of their policies. I believe in the work ethic; I believe that every man should have a job; I believe—and this is what Friedman says—that there should be a free economy and free markets so that everybody will have the ability and the opportunity to work.

No protection.

Mr. Chairman, let me concede this point. We are a country and an economy in transition and there are many people in this country to whom I believe special consideration will have to be given at this time in our history. However, if this country has to follow the proposals of the PFP …

It would be a very happy place.

A very happy place! We will have an inflation rate of 20% to 30%. They are the people who are continually calling for increased subsidies on food.

That is right.

Why do they not say—and this is what we would say—that if there are people in this country who are starving, if there are people who do not have the income to feed themselves then …

There are.

… perhaps those are the people who should be subsidized. But why should everybody be subsidized, Mr. Chairman? Why should I be subsidized when I buy a loaf of bread? Why should I be subsidized when I travel on a bus?

You are against the main subsidies. [Interjections.]

Order! The hon. member for Wynberg must give the hon. member for Amanzimtoti an opportunity to make his speech.

Mr. Chairman, the people of South Africa should be told quite clearly of the consequences of across-the-board subsidies. Somebody has to pay for these subsidies and the people who have to pay for them are the people who are working. This is as much a disincentive to work as inflation is a disincentive to save. We in this party believe that this country has to get its entire available work-force to work. Once they are in that work situation they have to be paid the rate for the job and they must be trained to be efficient workers. Labour unions certainly have a role to play to ensure that such workers are not exploited and, as workers, they should have the pride and self-respect to be able to pay their rentals, pay for their transportation and pay for their food. We in this party do not believe that the average person in South Africa should, or in fact, wants to live off charity. We believe rather that they should be given the opportunity to receive the necessary education and training to enable them to obtain a job.

And starve in the meantime.

No, Sir, I do not say that they must starve in the meantime.

That is what you are saying.

No, he is not saying that.

Mr. Chairman, the hon. member for Yeoville says that I say that they can starve in the meantime. That is not what I am saying. This is always the reaction of the PFP. They wrongly accuse other people of saying things that are not correct. That is typical of the PFP. I did not say these people should starve in the meantime. I said earlier on that South Africa’s economy is in a transitional stage, and if there are people in South Africa who are underprivaleged or starving then the State should take care of them. [Time expired.]

Mr. Chairman, I find this debate very interesting. The hon. member for Amanzimtoti said at the beginning of his speech that the NRP in fact accepts responsibility for the discussion on inflation. I only want to say that there is one kind of inflation he would certainly like and that is a bit of inflation in the numbers of the NRP.

At the end of his speech the hon. member made a few interesting remarks about subsidies and the like. However, I should like to return to the statement made by the hon. member for Yeoville—not really a statement but rather an idea he wants to debate. It concerns inequality of incomes and the more equal distribution of wealth. I agree with the hon. member for Yeoville that this remains one of the great problems in the Western world, but now the hon. member for Yeoville is not listening when I want to talk to him. He is talking to the hon. the Minister.

He always does that.

This is a private conversation we are having here.

I should very much like to continue with my speech once the private conversations across the floor have come to an end.

The problem with the distribution of wealth is a problem with which the Western world and not only the Western world but the entire world is grappling. As a matter of fact, the origin of economic systems lies in the distribution of wealth. One can consider the history of every economic cum political system in the world and one will find that problem at the root of it. There are no simplistic solutions to the problem. Over the centuries a number of systems have developed—some good and others less good —some acceptable to us and others unacceptable to us. The extreme form of the equality of incomes is of course the communistic system, but this is not acceptable to us. We have had national socialism as well as various forms of it. In the Western economic system today, the free capitalistic system, a little of each of these systems has crept into the free market system. We have to accept this today.

When the hon. member for Amanzimtoti talked about subsidies and we consider the entire concept of subsidies, this is precisely what is involved. We give subsidies and the Government gives aid to ensure the more equal distribution of income and a more equal way of life for everyone. I do not believe this is wrong, but it should not be taken to extremes. Once one exaggerates this, one tends towards socialism or eventually to communistic idioms.

Where I should like to agree with the hon. member for Yeoville is when he says that we are beginning to suffer from an inflation psychosis. These are not his words but mine which I have used before. I think this inflation psychosis is very dangerous. If one refers to this article—I referred to it yesterday, but by coincidence it is still on my desk—one finds that Mr. Steyn, president of the AHI, warns against this very thing. He writes—

This is so. We had the situation that the hon. the Minister increased the excise duty on brandy the other day …

By 2 cents a tot.

Yes, by 2 cents a tot, but what did the hotels do? They increased their price, not by 2 cents but by 4 cents. They took double.

But what does the Government do?

And the Railways?

This is not only happening in respect of excise increases; it happens in respect of every price increase. The dealer is always inclined to multiply the price increase. I say this is a very dangerous psychosis and we must take a look at it.

How do we do that? I should like to have a word on this matter with the hon. member for Yeoville. He says he believes we should control prices, but the Government is in fact being accused of controlling too many prices. We are being reproached about having control boards, and told that we control prices too much. But now the hon. member tells us that we should control prices. A few years ago the Americans introduced price and wage control, and did it work?

It did.

It did not work; they have moved away from it again. As soon as one begins to use the price control mechanism, one creates so many other problems for oneself. Have we not found that in certain industries we have controlled prices for such a long time …

What is the solution?

In this argument the hon. member for Yeoville did not offer us any solutions either. He posited the problems and I am replying to some of the statements he made.

Absolute price controls and freezing of wages are not the final answer. We are in fact trying to move as far away as possible from Government intervention in the free market mechanism so that the free market mechanism itself can determine the prices. I agree with the hon. member that one can control prices in the short term, but in the long term one is creating problems for oneself from which one simply cannot escape in the end. We had this situation with coal, in the fertilizer industry and in many other fields where we over-administered our prices.

Business suspended at 12h45 and resumed at 14h15.

Afternoon Sitting

Mr. Chairman, before business was suspended we were considering the whole question of price control, and I was telling the hon. member for Yeoville that I did not believe that price control was the solution to our problems. I then tried to show that by introducing price control one could be creating so many other problems for oneself. I also pointed out that wherever people had tried this it had not been successful. I also indicated that as a result of price control and price controls, we had already placed some of our industries in very difficult positions.

There is another matter which the hon. member for Yeoville raised. He spoke about the entire question of decentralization or deconcentration. The hon. member said we must indicate whether we have the means to carry out our programme of deconcentration or decentralization. I hope I understood the hon. member correctly. I think that is what he said. He also said that he believed that we should accept that urbanization was the solution, the eventual solution. According to him this was the cheapest, most practical, and immediately implementable solution. However, I should like to put it to the hon. member that urbanization also costs money. We shall obviously have to spend money if we want to establish new industries in our urban complexes, to provide housing, etc. Whether we establish these things here or elsewhere, surely it would not be free of charge. Moreover, by accepting a short-term solution, by accepting urbanization now, are we not going to create problems for ourselves in the future for which posterity will hate us.

What has happened in the rest of the world? Centralization is the natural direction of the economy. Decentralization is unnatural. That we have to accept. Decentralization is not the natural tendency of the economy. Every country which decentralizes industries is turning the normal economic law upside down, so to speak. This must be paid for in monetary terms, and we are doing so. That is why the Government has created an infrastructure in so many places.

But you are doing so for political reasons. [Interjections.]

Oh please, Harry. Surely you know that is not true.

No, we are not doing so for political reasons. We are doing so in order to find long-term solutions to the problems in our country. In addition we must not forget that in this country—and the hon. member for Yeoville will agree with me on this—we actually have two economies side by side. We have a First World economy and a Third World economy. [Time expired.]

Mr. Chairman, I am sure the hon. member for Amanzinttoti will not take it amiss if I do not react to his speech, because I should like to come back to what the hon. member for Yeoville said earlier in this debate. The hon. member for Yeoville has spoken for 33 minutes in the debate so far.

So, you timed me?

Harry wants to become Whip. [Interjections.]

He began his speech last night by saying that he was seeking to debate with the hon. the Minister the long-term economic policy for South Africa and the economic philosophies on which such a policy should be based. He was seeking a debate, and he has now already spoken for 33 minutes …

35 minutes.

… or 35 minutes. [Interjections.]

Any other guesses? [Interjections.]

The hon. member stressed the necessity for such a debate, but when he sat down the last time I still did not know—and I am sure nobody else knew …

He does not even know himself.

I am sure he does not know himself whether …

And you will also never know.

Because Harry will never tell us. [Interjections.]

We will never know whether he is in favour of a free market system or not.

I have said it at least 100 times that I am in favour of a free market system. [Interjections.]

The hon. member has said many things; that is the problem. Today he says one thing and tomorrow he says exactly the opposite. On certain days he says the opposite the same day. How can one come to a conclusion as to what the hon. member really stands for? The hon. member has denounced other hon. members here for being supporters of Keynes or Friedman.

I never did that. That is absolutely untrue. I congratulated an hon. member for being a Keynesian.

The hon. member says he congratulated another hon. member. It is one and the same thing. Last night the hon. member for Yeoville said that the hon. the Prime Minister was committed to a free enterprise system in South Africa.

That is what he says.

The hon. member went on to say however, (Hansard, 27 August)—

Do you deny it?

He went on to say—

The hon. member makes these statements, but he has never told us whether he is indeed a social democrat or not.

He is a Schwarzite.

He has failed to tell us whether he is in favour of the redistribution of wealth. He has furthermore failed to indicate to us if he is indeed in favour of the redistribution of wealth, on what basis wealth should be redistributed.

The biggest redistributor of wealth is the State.

The hon. member, as the hon. member for Amanzimtoti pointed out earlier, just makes bland statements but expects other people to state their philosophies and policies in the finest detail and then he tries to play politics with it, as he has done in the case of the hon. member for Amanzimtoti.

*What is the true situation as regards economic and financial policy? The hon. the Prime Minister has clearly spelled out that he is committed to a free market economy.

Tell us what you know about a free market economy.

If the hon. member will just keep quiet, I shall do just that.

*It is in this party’s 12-point plan. It is stated clearly here—

What does it mean?

Our political dispensation in South Africa has been based on the Westminster model all these years, but with a view to the unique circumstances of South Africa we have adapted that model in our own way. For the same reason it is obvious that the capitalist or free market system as it evolved and developed elsewhere in the world, cannot be applied in South Africa without further ado. Volumes have been written concerning, and explanations given as to what precisely is meant by capitalism and the free market economy. With a view to the unique circumstances of South Africa we put our own distinctive stamp on this concept too. The hon. the Leader of the Opposition can laugh if he wants to. He probably knows the saying: “It is the loud laugh that denotes the vacant mind.” We in South Africa have given a distinctive, unique meaning to the concept of capitalism and the free market economy, because there are special circumstances in our country which must be taken into account. The hon. member for Yeoville also expressly admitted this. He says: “We must accept the reality of urbanization.” I agree with him and I find no fault with that.

†We must accept the reality of urbanization. But, Sir, that is not the only reality that we must accept in South Africa.

*There are other social and political realities which we must accept as well. We cannot run the economy in South Africa in vacuo. We also have to take the social and political consequences of our economic policy into consideration, and as a result we cannot formulate our economic policy precisely according to the 19th century concepts of capitalism, of supply and demand. We have to consider what the implications of that policy are going to be, because after all, an economic policy, just like any other policy, is not an aim in itself. Surely we do not formulate policy for the sake of policy. We formulate policy for the sake of the people of this country. If a policy does not succeed in promoting the interests of the people of the country, or if it is not in their interests, we cannot continue to cling to academic concepts, but must adapt that policy to the country’s circumstances and in the interests of all its people. [Time expired.]

Mr. Chairman, the hon. member for Mossel Bay enlightened us on one of the points in the 12-point plan of his party and said their policy was that we should base our economy on the free market mechanism. However, as long as we continue to deny equality of opportunity to various people in terms of being allowed to trade, for instance, in central business districts, to own factories in any area, and basically to operate in a way that would normally be understood to be according to the free market policy or philosophy, then I cannot agree that that party is carrying out its own objectives. This, however, is only in passing.

The hon. the Minister referred to a speech made by the hon. member for Edenvale, apparently in connection with insurance salesmen, motot-car salesmen and tax gatherers. The hon. the Minister sought to justify the position of the tax gatherer by referring to the New Testament. As a garage owner I feel I must come to the aid of motor-car salesmen, but unfortunately it is a bit difficult to find anything relating to them in either the Old or the New Testament.

In the days of the Bible the traders used to carry their goods on their backs and the robbers were able to catch the traders because they had these heavy packs on their backs. Then the traders started using donkeys, but ultimately the robbers used don keys as well and again they were able to rob the traders. Finally the traders used horses, but then the robbers used horses as well and they were again able to catch the traders. This went on until the days of the internal combustion engine. The traders then acquired motorcars while the robbers bought garages.

How many garages do you have?

Mr. Chairman, can I answer that question outside the House? I am sorry that the hon. members on the other side, with the exception of the hon. member for Malmesbury, have not taken up the point raised by the hon. member for Yeoville a little further. I thought a subject such as the cost of job creation in South Africa and the recognition of the tendency of urbanization with all that is derived therefrom, is a subject that could profitably have been taken up by the other side. The hon. member for Malmesbury was the only hon. member who attempted to come to grips with it. I hope that the hon. the Minister will in due course see fit to react to the remarks of the hon. member for Yeoville. I want to stress the point once again that if our basic idea is the creation of jobs and this overrides anything else, then the creation of jobs is of overriding importance regardless of where we create them. If we can create them at less cost to the country and the economy as a whole in urban areas, it then becomes purely a matter of politics if we decide to create them in other areas rather than at the expense of the centralized or decontrolled areas. I think this is a very valid point which needs to be taken further. One must also realize that in many of the areas the need for decentralization has been created by Government policy. I do not say this in a derogatory sense, but let me point out that a town such as Mdantsane on the outskirts of East London, where there is tremendous unemployment, has been created because of the homeland policy of the Government in terms of which many of the Black population were removed from the areas where they were living and placed in Mdantsane. This created a specific problem in respect of job opportunities in that area.

The whole matter is therefore a vicious circle.

Perhaps one of the most interesting things which happened in this debate was the attack of the hon. member for Amanzimtoti on the hon. member for Yeoville on the subject of social democracy. He seemed to say—and I have asked him to clarify this—that he was not in favour of food subsidies unless it was for the very wealthy people, such as himself. He did not want a food subsidy. Do I understand that this is correct?

Read my Hansard. I said we were in a state of transition. Certain things we will have to do now, but that is not what I said.

All right. He denies it. Secondly, he seemed not to be in favour of social pensions. As I recall his speech, he said for instance that he did not believe in unemployment insurance unless people pay for it themselves and that he did not believe in pensions either unless people paid for it themselves.

No, I did not say that.

We will check his Hansard in due course and see. During the Second Reading debate I spoke on inflation and my subject was not what caused inflation, nor what could be done to reduce it, but rather the fact that it always appears to be with us. We have it and we have had it, despite the best efforts of the hon. the Minister, for a considerable number of years. It is escalating rather than decreasing. I do not want to talk about inflation as such and what causes it, but rather stress that we must recognize its presence and the inevitable results in terms of the budget and taxation levels. I suggested various measures that could be taken to overcome the problem of fiscal drag, but unfortunately I did not get any answers from the hon. the Minister. He suggested in his reply to the Second Reading that we could go to the various heads of departments and talk to them about it. However, I asked the hon. the Minister public questions and I made a public statement about what I thought should happen in terms of indexing the tax paid to the CPI. I would like a response from the hon. the Minister on this subject. That query of course, affected the individual taxpayer.

I now want to expand on the theme by referring to companies and to shareholders in companies. These days companies are put under increasing pressure by inflation. Firstly, this must be seen against the background of the fact that for every R100 they make, their sleeping partner, the Government, takes R42 from them. With the remaining R58 they still have to pay for three other things. Firstly there is the replacement of plant and machinery, i.e. various movable and immovable assets. Secondly, any normal business wishes to expand and grow and requires finance for this purpose and, thirdly, with current inflationary trends, large sums of money are required to finance current assets which inevitably escalate at the rate of inflation. Stocks of raw materials inevitably cost more, are sold for more and, of course, one’s debtors increase as a result. Only after these three areas of expenditure have been covered, is the shareholder paid a dividend. I therefore believe that the hon. the Minister should increase investment allowances and, for what it is worth, I would suggest that in future the industrial building allowance be increased from 2% to 5% on a straight-line basis. For all machinery, furniture and fittings it should be increased from 10% on the decreasing balance to 20% on a straight-line basis, whilst vehicles are dealt with on a 25% straight-line basis. This, we hope, will increase investment in new factories in South Africa. We also hope it will lead to the speedier replacement of old and perhaps inefficient equipment, thus leading to higher productivity and perhaps even reducing or stabilizing prices.

This brings me to dividends. I suspect that this aspect has not been looked at for a number of years, and in my view it badly needs attention. At present dividends are totally tax free, provided the taxable income, including the dividends of the individual, does not exceed R2 600. From R2 600 to R4 600 there is a sliding scale, and from there onwards one-third of the dividends are tax free. I therefore wish to ask the hon. the Minister when these margins were last altered, and by what amount. The effect of this is that from certain taxpayers the Government collects in excess of 60% of each R1 earned by a company and paid to its shareholders. 42% is paid by the company directly and 19% by the shareholder whose income from other sources puts him at the maximum marginal rate. The difference in the past was, of course, not as great when individual taxation was at a much higher level, but with the reduction of individual tax, it has become more marked.

I therefore recommend that dividends should be tax free to a maximum taxable figure of R5 000 and that the sliding scale should operate from R5 000 to R15 000, at which stage the figure should become 33%. [Time expired.]

Mr. Chairman, about five years ago it was my task to congratulate the hon. member for Port Elizabeth Central on his maiden speech in the provincial council. Since then he has changed his party and also his seat, so I think I will change the subject because he has changed his tune on decentralization completely since he left East London. [Interjections.]

Not at all.

The hon. member referred to the hon. the Minister’s reference to the very first civil servant who was the tax gatherer. I wonder whether that hon. member realizes, however, that the motor industry, which he represents, is one of the oldest industries in the world. In fact, it dates back to Old Testament times.

That is very interesting.

If he reads the first book of the Old Testament he will find a reference to it there, because it is said that Moses went forth in his triumph.

*Even tennis dates from those early days, for there is a reference to it there because it is said that “Joseph served in the court of Pharaoh”.

I should very much like to refer to a matter of deep concern to me. In the recent budget debate frequent reference was made to priorities to which attention was given in the budget. I do not doubt that the priorities in connection with defence, housing and the combating of inflation were the correct priorities. However, in this Vote I should like to break a lance for a matter which is perhaps not one of the country’s top priorities, but is nevertheless of the greatest importance. I am referring to Vote 7, programme 3, which regards fiscal transfers to public authorities in terms of various statutory provisions and particularly transfers to the provinces. Now I find it very interesting that the total subsidy to the provinces is R2 586 million which in actual fact represents the greatest single expenditure in the budget. This is about R100 million more than the total budget for defence. And this is apart from the other special grants to the provinces. I think that most of the hon. members in this House have served in the provincial councils of South Africa at some time or other. Some also served on the executive committees. They therefore have first-hand knowledge of the excellent work done by the provincial authorities and especially of the extremely important link which the councils form between the central Government and the public. I have no doubt that the man in the street has a great deal more to do with the second tier of government than the first, and for this reason I think it is of the greatest importance that the second tier must be efficient at all times and must have a good image.

The man in the street has far more to do with his child’s school and teachers, the hospital, the roads, the local authority providing him with electricity and water, etc. He takes books out of the provincial library, learns history at the provincial museum, and in the Transvaal and the Free State he relaxes at the provincial resorts. In contrast the bigger matters with which this House is concerned are frequently a bit beyond the man in the street. He therefore measures the efficiency of the State not against these bigger issues, but against the things which he has to cope with every day and which cost him money. He is more upset about an increased property tax or an increased water account than about policy decisions taken in this House.

I therefore believe that the efficiency of the second, and through the second also the third tier of government, is very important. I therefore welcome the fact that this year there is an increase of 20% in the subsidies to provinces. Of these subsidies R218 million is for capital works. Provinces are therefore being compelled to impose very stringent restrictions on their capital spending. As regards current expenditure, not only have the amounts of the subsidies risen considerably over the years, but the subsidies as percentages of the total provincial revenue have also increased considerably. This is partly as a result of the fact that the provinces’ own resources have diminished over the years. One thinks for example of provincial personal income tax which has fallen away. In the Cape entertainment tax has now been abolished. Today the provinces’ own sources of revenue are therefore now limited to a few items such as licence fees, hospital and board and lodging fees, etc. The result is that the provinces are at present dependent far more than 85% of their income on the central Government.

In the past there was frequently speculation on the future of the second tier of government in South Africa. It was argued that in the process of rationalization of the South African Government machinery serious attention would have to be given to the elimination of the second tier because there would then be unnecessary duplication. People supporting this idea cite the example of other countries where there is no second tier and where the third tier, that of local authorities, is directly answerable to the central Government’s department of local government. The mere fact that the subsidies to the provinces have been increased by more than 20% is to me more than sufficient proof that the Government still considers the second tier of government in South Africa to be important. In this connection I should like to advocate in great earnest that we should not deviate lightly from the present system. This does not mean that in the process certain adjustments should be made. While on the one hand we are striving for greater efficiency in the State machinery, it is equally essential that we in South Africa should also try to get away from ever increasing centralization of the State machinery and move in the direction of greater decentralization. A definite result of the elimination of the second tier would be an equalizing or levelling effect, and it will then be much more difficult to accommodate the unique characteristics and needs of provinces or areas. The present dispensation has made a great contribution in giving South Africa a unique character, which must be retained at all costs.

I am convinced that our provincial authorities are fully aware of the necessity for financial discipline and that they cannot and will not under any circumstances draw up their budgets and make their demands for subsidies and financial aid without having thorough regard to the overall budget of the country as a whole, just as the main budget cannot be prepared in isolation from the economic situation in the rest of the world.

Where it may be possible in future to consider new constitutional dispensations in South Africa, the important role which the second tier of government played in the past may never be overlooked. There is certainly room for rationalization and the elimination of duplication, but the problem can be solved by greater co-ordination. The provinces all have O and M sections which are paying particular attention to the productivity of their staff.

On this occasion I should very much like to pay tribute to our provinces, provincial administrations, Administrators and provincial officials who offer their services in the interests of the provinces. In this connection I think one must extend a particular word of thanks to our colleagues in the provincial council who often form the link between us and our voters, as MPs are frequently away from their constituencies for half a year.

I wish to advocate that the provinces should continue to be placed in a position where they are able to provide an effective and purposeful service in the interests of the general public. However they can only do this if the necessary funds are placed at their disposal and one is very grateful that in the present situation, where we have to tighten our belts and where financial discipline is the watchword, it is still possible to make these increased subsidies available to the provinces in respect of the current year.

Mr. Chairman, it is a pleasure for me to follow the hon. member for Paarl, as he made such a solid contribution, but we are accustomed to his regularly doing so and for this reason we are not surprised at it. In my opinion, what he said merits serious attention, and I should like to emphasize it. I think he touched on essential facts which to us in the Cape are of course very serious matters, and we must agree with what he said.

I should like to bring three matters to the attention of the hon. the Minister in this debate. In the first place I should like to ask him whether he knows that this year, apparently for the first time, a new school of thought has emerged on the Stock Exchange, with regard to the take-over of certain companies. It was recently alleged that when Trio Rand was taken over by Hortors—I state this as an allegation, not as a fact—a lump sum was apparently paid to one of the main officials of Trio Rand in order to introduce a clause prohibiting that person from again operating in the same trade. I wish to put it to the hon. the Minister that if this is so I believe that in the first place, this constitutes circumvention of one of the regulations of the Stock Exchange which prohibits this. On the other hand it is not only a circumvention; in point of fact it is directly to the detriment of the general individual small shareholder in such a company. In such take-overs one usually has the situation that one major dominant shareholder holds the greater percentage of shares in such a company. If any amount is payable to him in addition to the open offer normally made to all shareholders, then this must in fact entail an equivalent scaling-down of the value of the individual shareholder’s share.

In my opinion this could be dangerous not only for the individual shareholder but also for the entire system of our Stock Exchange. I should like to draw the hon. the Minister’s attention to this and hear his comments on this type of action which has reared its head for the first time during the past year.

In the second place I wish to draw the hon. the Minister’s attention to a certain matter and ask him a question in this connection. It is alleged that when he opened the Star Homes Festival on 14 May of this year at Lone Hill in Johannesburg the hon. the Minister made the following statement—

†Mr. Chairman, this is a new concept which was not acceptable in the past and, if what this report states is true, I think it could assist to alleviate the shortage of housing. One wonders, however, whether at the outset this tax deduction should be given only to the individual. The point that I wish to make, Sir, is that I think it will be impossible to alleviate the housing shortage if we only give encouragement to the individual. We will have to go much further than that. We shall have to try to encourage the whole of the private sector to build houses by means of some form of stimulation.

I should like to tell hon. members about my experience a week ago when I visited a very large factory in Natal where housing was apparently provided for all the employees. This housing was provided either free of charge or for a nominal amount and the result was that instead of those employees saving the money that they were not having to spend on rentals, the vast majority of those employees were inclined to spend those savings on luxury goods. I mention this, Mr. Chairman, because I should like the hon. the Minister to give us his views in regard to this matter. I should like to ask him whether it is not possible for him to introduce some or other system by means of which the individual who receives free accommodation or housing at a very nominal figure will be encouraged to save the money he would otherwise be spending, so that eventually, if he leaves that job, he will be able to make some sort of provision for himself in that regard.

*I think this is a situation we must consider to ensure that this concession does not apply only to the individual, but that we also extend that possibility to our manufacturing industry, so that where they supply housing and where they subsidize their employees’ housing, it will also be to their advantage and will therefore encourage them to make housing available for their employees.

The last matter I wish to bring to the attention of the hon. the Minister is the question of regional concessions or regional aid. The hon. member for Malmesbury thanked the hon. the Minister yesterday for the concessions made in respect of the Western Cape in connection with the deciduous fruit industry and other matters. I should like to add my thanks and endorse that. However, I, too, have a problem in this connection. Where one is faced with a crisis situation, one realizes that one must come up with a crisis solution, or at least grant once-only ad hoc relief. However, the Western Cape has another problem. If one considers the position of the Western Cape since the ’seventies, one sees that whereas in 1970 we were more or less on an equal footing with the rest of the country, since then we have lagged behind by about 13% in contrast with the rate of development of the rest of the country.

Now the Western Cape is in the unique position that the composition of its development and potential is unique in our country. We have a few decent things such as the Western Province rugby team and the University of Stellenbosch, and then we have a natural population structure. [Interjections.] Yes, there is of course also wine. However, what I want to say is that one of the greatest assets of the Western Cape is its people. I wish to illustrate this by quoting a remark made recently at the diesel plant in Atlantis by a visiting German industrialist—

This underlines what I am trying to say, namely that its human material is one of the Western Cape’s most important aspects. On the one hand this is one of our assets, but on the other we have a few problems, because we have no mineral resources. We do of course have assets afforded us by nature, for example viticulture.

Because we are saddled with this limitation, I think that instead of this constant granting of ad hoc assistance to the Western Cape from time to time the hon. the Minister should consider designing an ongoing system for the Western Cape on a pre-planned regional basis in order to bring us into line, in the first place, with the rest of the country.

Let us consider the composition of farming in the Western Cape. One finds a different pattern here to the rest of the country. The wine industry and the vegetable industry, to mention only two, are labour-intensive. One is now faced with the problem that relatively speaking, all the farmers in the Western Cape have a larger labour force of people of colour than is generally found. What deduction in the form of income tax is granted in respect of the housing of these people? Even for the housing of one’s farm manager one can deduct R2 000 from one’s income. In other words, this is aid to the farmer to provide housing for his workers. Nevertheless the farmers of the Western Cape are experiencing problems with these benefits. Where one has a labour force of such a size and one must give them housing and other benefits, it is necessary that special provision be made for this. [Time expired.]

Mr. Chairman, the hon. member for Vasco will forgive me if I do not pursue his Western Cape issue. All that I can tell him when he speaks about the people of the Western Cape is—to coin a phrase—that some of my best friends come from the Western Cape.

I am happy to hear that.

The issue has been raised, not only by Government speakers, but also by the financial spokesman of the NRP, as to where we stand in relation to Government intervention in the free market. So that there should be no misunderstanding, perhaps I should deal with that issue specifically.

Firstly, I want to put the submission that man in fact produces best when he has an incentive. The incentive which I think history has established as being the most attractive to man, is that of wealth and of status. Therefore one must have incentives in one’s economic system.

Then you are going to socialize it.

The market system as such is concerned with investment, production which satisfies demand and the making of profit. Something more is however, required in order to achieve a real social purpose. Left unbridled, individuals might well seek to exploit the market system and, in fact, do exploit the market system. Therefore, in the same manner as there have been evolved over thousands of years ground rules for human conduct in other spheres, there should, in my view, be certain basic rules for economic activity. While many of the countries of the Western world have people who argue—I think with some force, as we do often—to move away from governmental control and regulation, I think that many of these people confuse this approach with a return to a laissez-faire situation. Perhaps I could do no better than to refer to the Columbia University Research Institute on Future Change and their conclusion that the shift away from government regulation “does not mean that the world is returning to the simplicities of Adam Smith’s era or even to the period before the great depression”. It means something quite different. They point out that the West German economic model, which is accepted even today, I think, in spite of West Germany’s economic problems, has been the most effective in the West, but is not a laissez-faire model, and that they in fact find no desire in Western Europe to return to a laissez-faire model. There is no real desire in Western Europe to do that.

I think someone who has written and spoken quite a lot about this is Professor S. J. Terreblanche of the University of Stellenbosch. He has a favourite author whom he often quotes, a man called Arthur Oken, who puts it in the following manner, which I should like to endorse. He says the market has a place and the market needs to be kept in its place because one cannot allow the whole thing to get out of hand. Whereas, in the main, productive activities are, in our view, left to the initiative of the private sector, there is a role for the government to play, a role for the government in that certain activities related to the economy either need to be encouraged by the state or by means of incentives, while others might even have to be conducted by the state as otherwise they might not exist at all, or if they did exist they would not exist in the appropriate form. The advocates of Adam Smith often forget that even Adam Smith conceded that roads and sewers were best run by public authorities and not by private enterprise, very often for very good reasons, obviously. Furthermore, even Adam Smith conceded that assistance had to be given to infant industries. It is therefore no use people quoting Adam Smith to say that everything should be free and that there should be a free for all jungle in which all could operate.

I should like to make it quite clear that as far as we are concerned nationalization of industry is not acceptable. We certainly do not believe in nationalization of industries unless there are very, very exceptional circumstances, and we certainly do not see any such exceptional circumstances at this particular time in our economy. What is interesting is that the nationalization concept—and we have lots of examples of nationally owned industries in South Africa—which is actually the concept of privately owned industries being taken over by the state, was abandoned as long ago as 1959 by the Social Democratic Party in West Germany, in the famous Bad Godesheim programme. They accepted, as a major party principle, that they would abandon nationalization and they preferred to have industrial democracy to nationalization. That, as I say, was abandoned by the Social Democratic Party in West Germany already in 1959.

We also accept that economic action, whether it be of a stimulating or a cooling-off nature, might have to be taken by the government from time to time. The Keynesian theory that government can and should influence supply and demand has, to our mind, still some application in these times, though it does not, in our view, provide ultimate or complete answers. Actions, such as regulation of money supply is, in our view, an ingredient of the process, but not a complete solution to economic management, as are also protection of local industry, safeguarding of foreign exchange reserves and action against inflation. All these are part and parcel of the whole process.

We also believe that the state has the function of ensuring quality of bargaining power in the market place, and to achieve this there must be legislative protection, inter alia, against exploitation, against monopoly, against combines, and there must also be consumer protection legislation generally. I want to stress that the economy is not a jungle in which there is purely a survival of the fittest. In exactly the same way as there are rules of conduct for every form of human behaviour there is no reason why there should not be rules of conduct for behaviour in the economic sphere. I believe that needs to be done.

I also want to stress that the state has responsibilities, responsibilities which do not apply, as is sometimes suggested by some of the extreme Friedmanites, only to the spheres of defence and police matters. The state also has social functions, inter alia, in respect of education and training and also, as far as we are concerned, in respect of the sick, the aged, the unemployed and other disadvantaged people.

And in respect of the rich.

The problems that exist in South Africa, as I tried to point out earlier here today, pertain particularly to income and wealth gaps. Those income and wealth gaps, as I have tried to point out, do not only exist between the races but there is also a concentration of wealth in a particular group. One can take any particular group and one will find that there is a concentration of wealth there. There is also a concentration of wealth, as I have pointed out, on a regional basis. This is not a matter that we can ignore. It is not a matter that we can pretend does not exist because this requires action both by the public and the private sector. If there are dramatic gaps in wealth and dramatic gaps in income they are not stabilizing factors in any economy or in any political situation. I believe that a failure to deal with these problems, and to deal with them speedily, will have very serious social and political consequences for South Africa. As I indicated earlier today, I think those require very urgent action.

I also tried to indicate, and I hope I did, the need to alleviate rural poverty. This means that the people who stay there may well in the main be employed to a greater extent in more effective agricultural activities. There are many forms of agricultural activities that I think we have to look at and that we have to encourage in order that there is a proper utilization of the agricultural resources of South Africa by all the people of South Africa. It is no use having a situation where a piece of land is well used by one person and not well used by another person. It has to be well used by everybody and those who do not know how to use it well must be educated to use it well so that we will have a situation where all the natural resources of South Africa are utilized to the best advantage of all its people. That is absolutely fundamental and it is something in regard to which an education process needs to be set in motion.

The concept of self-help, the concept of communal activity in adapting the Black communal ownership and work concepts to the requirements of a modern situation, must be looked at. [Time expired.]

Mr. Chairman, I believe that we have virtually come to the end of the discussion of this Vote. I want to thank hon. members on both side of this House who participated, for their interest. I think we had interesting speeches and I should just like to comment briefly on various arguments and points.

†I shall come back to the hon. member for Yeoville because he started this morning with some references to the economic system that apparently should apply and he asked me what I thought about that subject. Since then he has commented on the cost-of-living index and he also talked about how we will finance a whole number of services etc. And now he has explained some of the points that were referred to this morning. Before dealing with that, however, I should just like to say that in regard to the hon. member for Amanzimtoti I did not say that because the world economy was in a very weak state that therefore we would expect a lower growth rate. What I was saying was that in discussing budgetary policy one has to take into account the state of the world economy, and it was in a parlous state. My whole point was that in contrast to that I stressed the strength of the South African economy and I want to come back to that very briefly at the end, if I may.

*The hon. member for Bloemfontein North and others discussed inflation, and it is a good thing that thorough attention should be given to this important and urgent matter. When we discuss inflation we should, however, bear in mind that it is a world-wide phenomenon, whether we like it or not. I did not in any way mention a number of figures pertaining to other countries, but I did say that it was a world-wide phenomenon and I did so merely to rectify something which the hon. member for Yeoville said about it. I did not really quote any other figures. The fact of the matter is that we must remember that our deliberate policy of at least the past five years of narrowing the so-called wage gap, is a policy which we can justify on very important grounds. Seen in a strictly economic content, though, it is inflationistic, for one cannot in the short-term obtain the same measure of productivity which is necessary to combat inflation. Consequently we must remember this undoubtedly plays an important part in the inflation rate. On the other hand there are other good reasons why, in our opinion, it is important for us to try to narrow the wage gap.

†In regard to inflation I should also point out that the closing of the so-called “gold window” by the United States in August 1971, when the convertibility of the dollar was stopped was, in my view, a very serious matter in respect of inflation as well. If one looks at the position in one country after the other, one will find that it was really after that time that inflation tended to become rampant. I think that that discipline which that link of the dollar with gold certainly exercised, disappeared at that point in time and nothing remotely comparable has been put in its place. That, in my opinion, is a very serious factor which affects all countries, including South Africa.

*The hon. member for Gezina as well as the hon. members for Malmesbury, Mossel Bay, Paarl and Vasco made very interesting speeches. As regards the speech I made in Lone Hill on the mortgage loan rates or the interest one has to pay on a mortgage loan, I want to point out that I did not say that it should be deductible for tax purposes. However, various persons and bodies had asked me what the Government’s attitude in this regard was, and I said that we had referred that matter to the Standing Commission on Tax Policy. I expect a report and recommendation on this matter soon, and consequently this is, as far as I am concerned, an entirely open matter.

The hon. member for Paarl made a very interesting speech on the importance of the provinces. It is true that the amount which has been appropriated for the provinces in the latest budget is the largest single amount and is a little more than that for defence. We regard second tier government as an integral part of our Government system, and consequently the hon. member may be very sure we are thoroughly aware of its importance as well as that of third-tier government, for these two are related. In reality one hopes that the ties between the two will be closer in future.

The hon. member for Vasco referred to a matter in connection with the Stock Exchange. I have no personal knowledge of that matter, but we shall go into it at once and inform the hon. member about what we find there.

†Before I come to the economic system, I should like to remind the House of some of the ramifications of the Department of Finance. This is a very large and wide-ranging department. There is Finance itself and, if one likes, one can talk of the old Department of Finance in the generic sense, to subsume all the others, or one can talk of the Treasury, as many countries do in the generic sense, and the Treasury would simply include everything.

You have Finance as such, you have the Treasury, you have Inland Revenue, Customs and Excise, the office of the Registrar of Financial Institutions which has the responsibility from the Government side to oversee various matters affecting banks, insurance companies, building societies, participation bond schemes, pension funds, trust schemes and many other things. There is the S.A. Reserve Bank the importance of which I do not have to stress. There is the Land and Agricultural Bank which has become a very big institution. There is the Tender Board, another very important institution. There is the S.A. Mint about which I should like to say something more in a moment. There is the Johannesburg Stock Exchange which is, of course, a perfectly good private enterprise undertaking but I am mentioning it because the Registrar of Financial Institutions has a seat on the committee of the Exchange and takes a close interest in its activities. Then, of course, there is the extremely important Auditor-General’s office. These are just some of the ramifications of this whole idea of the Treasury, if you like.

If one looks at the more recent activities one finds that at the moment there is a very important commission sitting, the De Kock Commission on Monetary Policy and the Monetary System. I very much hope that we may receive the final report round about the end of the year. There is the Interdepartmental Committee on Pension Fund Matters which the recently retired Registrar of Financial Institutions, Mr. Wynand Louw, chaired and which we in the department are dealing with at present. There is the Commission of Inquiry into Building Societies chaired by Dr. J. C. du Plessis, recently Deputy Chairman of the Reserve Bank and now adviser to the Treasury. There is the so-called Browne Committee on Local Authority Financing which is now having a number of its activities carried further by the Croeser Committee. A good deal more will be heard about that. Then there are certain important standing commissions, one under the chairmanship of the Director-General of Finance on Tax Policy which is a committee which sits very regularly. There is the Technical Committee on Banks and Building Societies. There is the Jacobs Committee on Agriculture which is a joint standing committee of the Departments of Finance and of Agriculture and Fisheries and which I think is doing excellent work. Then there is the standing committee for the co-ordinating of the development of the South African money transmission service which is a very technical thing. To my mind this committee has been doing work of a very high calibre.

I can mention a few other things but all these things are taking place. Some of these commissions and committees have come to a very late stage of their activities. I think that the work that is being done in the course of those inquiries is of a very high order.

*Occasionally one hears about the Mint, but I do not know whether we always realize what exceptionally valuable work is being done by the Mint. The work being done there is of a highly technical nature. I should just like to inform this House that despite the large stocks of coins which were accumulated by the commercial banks during 1977 and 1978 and despite the fact that coins are no longer being minted for Zimbabwe, the Mint is experiencing a lively demand for subsidiary coins and sales this year will exceed R200 million. Coins for Zimbabwe are now being supplied by the Royal Mint in the United Kingdom. The ongoing planned programme for the modernization of the Mint over the past few years is at present being finalized with the installation of a modern rolling mill at a cost of more than R1 million. In view of the heavy demand for low denomination bronze coins, this is an essential step. In spite of the present low gold price, the demand for gold proof coins remains on a high level. Furthermore there is considerable interest in the new, smaller half, quarter and one-tenth ounce Kruger rand. In 1981 the number of gold proof coins minted was as follows: Kruger rands, 12 800; half-ounce Kruger rands, 9 000; quarter-ounce Kruger rands, 7 500; and one-tenth-ounce Kruger rands, 7 500. The total number of Kruger rands, from 1967 to 1981, amounts to 136 277. The supply of ordinary, uncirculated Kruger rands from the Chamber of Mines, including the new smaller Kruger rands, continuous in accordance with the demand. The total number of ordinary Kruger rands minted since the introduction of these coins in 1967, amounts to 32 801 796. This is almost 33 million coins. The total figure for the smaller Kruger rands which were introduced during 1980, is 543 000 for the half-ounce Kruger rand, 1 058 000 for the quarter-ounce Kruger rand and 1 828 000 for the one-tenth-ounce Kruger rand. This is, of course, only one part of the Mint’s activities, but I wanted to furnish this House with this information.

†This brings me to the hon. member for Yeoville who asked me to say what I thought the economic system should look like. My concept, I think, is very clear. I am a strong advocate of the notion of a capitalist economy as against say a socialist economy. I think one should have strong incentives for private initiative and I also believe very strongly in the institution of private property. This is incidentally one of the very big problems in a country like South Africa, in fact right through Africa and also in other parts of the undeveloped world. It is the system of private property that does not exist in so many places. One has the communal system of landownership in large parts of Black Africa, including parts of South Africa. It is a very involved question, as hon. members will know. It is certainly not just an economic issue. It is a very broad, political, social and economic issue and one will have to take that into account. That is certainly not making it easy to develop the less developed parts of the country.

The hon. member for Yeoville quoted Mr. Etheridge of the mining industry on the Blacks’ attitude to capitalism. He said there is considerable doubt about it and regarded the system as one which could be selfish and so on. I do not, however, think that is so much a question of the failings of capitalism. I think it is rather an aberration from or an abuse of capitalism which makes people doubtful. If the system of private enterprise, based on the institution of private property, is properly put into practice, particularly if sufficient emphasis is placed on competition, I think one will find that many of those difficulties tend to disappear. So I do not think it is so much a question of the system, such as we have in South Africa, being at fault. I think it is rather the departures from the system, the abuses in the implementation of the system, which cause the problems. Competition is extremely important. The hon. member was worried about the exploitation that takes place in the system by various undertakings, entrepreneurs and others. He suggested that a case might be made out for price control.

Not generally.

Perhaps not, but he did mention price control as, at least, part of the answer, and he also mentioned Government intervention. He was rightly tackled on this by the hon. member for Mossel Bay and others. Then, when he spoke again this afternoon, I think he did depart a little from the way he put it this morning. However, the point is that the hon. member will remember that about two years ago he waxed very eloquent here in one or two debates on social democracy, but we heard nothing more about that today.

I have not changed my mind.

Well, it is interesting that while the hon. member spoke for a long time—he spoke for 35 minutes and then another 10—he never once mentioned being a social democrat. Has he departed from that rather strange notion?

I set out my policy. What is it?

I see. Social democracy is certaintly a very odd system to propagate in South Africa and it certainly has caused havoc in many important parts of the world.

Tell them that in Germany.

The interesting part is, that under the influence of the sound policies and approaches he hears from this side of the House, the hon. member is probably improving. He has stopped being a social democrat, I hope.

Do not get it wrong. I am not. You are wrong.

He now says we must still make out a case for price control and Government intervention. I think we must be very careful about price control. We do have price control to a limited extent and, once one has had price control operating for a long time, it is not the easiest thing in the world simply to lift it.

Look what happened to rent control.

That is correct. That applies to many countries. The point is that one has to take into account the reality of things. I do not think, however, that the Government is wedded to price control as a solution to these abuses and this exploitation which the hon. member referred to and which I spoke about in my budget speech.

How then are you going to deal with it?

In the first place, I think we must strengthen the whole system of private enterprise by wherever possible introducing more competition into it. If one has adequate competition in any particular industry …

Like beer.

… or part of the system, one will find that there will not be much opportunity for exploitation because if a man then does exploit the public, they will soon turn away from him and deal with his competitors. That is a great ideal we must all continue to push, stimulate and encourage.

Then the hon. member said that he did not wish any of the existing social services to be, as it were, reduced. He did not wish people who had the benefit of various services to lose them but he wanted them extended on a large scale to others who might not be in the same advantageous position. However, when I asked him across the floor how he would finance that, he turned and said to me he wanted to know how I would finance it! Why should I try to get him out of his own fix?

Look at your neighbour there. He has committed himself to it. Are you repudiating him? Are you repudiating the Minister of National Education?

I am coming to that. We have already committed ourselves, for example, to the very costly exercise of narrowing the wage gap. It is costing a lot of money but we think it is a very important objective. So we have to finance that and we are doing so in the budget. Last year when the budget was introduced, hon. members came along and said it did not do enough for the Blacks. Then no less a person in the business world of South Africa than Mr. Harry Oppenheimer made a speech in which he said that what he liked about the budget was that it really did a lot for the Blacks. That was the end of that criticism. Now I have again come across a very interesting comment. As a matter of fact, it is an extremely refreshing comment on the budget. I refer to Martin Spring’s South African Newsletter.

Are you subscribing to that to get investment advice from it?

No, this appeared in September whereas my budget was weeks ago. I have seen this only recently.

Are you a subscriber?

I received it. It says here: “Secret strategy behind the budget.” It is extremely interesting. There are a few things here which I did not know were part of my strategy but they are very good. They have given me some ideas! [Interjections.] In all modesty, he starts—

I thank him very much. Then he says—

He is absolutely right: that is exactly what we have tried to do. Then he says—

He says The Cape Times in a misguided way said it was a “war or siege budget” and he discounts that. He says the budget was criticized for “far too little social spending on Blacks and Browns”. He goes on to say—

There is my answer to the hon. member for Yeoville who said to me: “If you are going to continue with these social services, how are you going to finance them in the budget as put before the country?” Here I have quoted a critic who says that astonishingly large amounts have been provided.

Do you know who this chap is? He was the editor of The Citizen.

The hon. member must give me a chance. I sat remarkably quiet when he was speaking, but the hon. member has an unfortunate habit: He speaks for 45 minutes and then, when I am speaking, he never stops talking. He must give me an opportunity to develop my point. I am trying to do it quietly and decently. The hon. member must give me an opportunity and I will try to put my case.

What was said here? The article goes on to state—

I cannot fault any of those figures. Then he says—

Then he talks with great appreciation of what is put aside for food subsidies. It is worth reading this little critique of the budget; it is authoritative, the figures are right and I think the conclusions are completely correct. But the hon. member for Yeoville is under an obligation. He said that the social services which exist must remain but they must be extended on a wide scale to others. The hon. member must now say how he will finance his idea. My financing of what we are doing is open for the whole world to see; it is in this book, it is everywhere else. The hon. member—and that was a surprising omission—did not give any indication of how he would finance his idea.

The hon. member also attacked the Government’s policy on the so-called deconcentration of industry and used the PWV area as an example of the unequal distribution of wealth which he said was a very bad thing. He called that a very good example of a case where a proportionally small part of the population earned a proportionally very big part of incomes and wealths. Thereafter he immediately said that we must bring more people into the area and have more concentration. He used this as the classic example of the unequal distribution of wealth he does not want but says we must now bring more people in. In other words, more people will then be subjected to this very substantial inequality in wealth and income. He then criticized my colleague the hon. Minister of Internal Affairs about his views on this.

With respect, I want to put this right because we often discuss these things. What did the hon. the Minister of Internal Affairs say? What he was saying, was that we are not going to break down what we have in the important metropolitan areas. What government would be so crazy? We are going to maintain the economic strength of that area and of areas such as Durban and Pinetown, Port Elizabeth and Uitenhage, the Cape and any other area that builds up. At the same time, however, we want a better distribution of economic activity towards the underdeveloped areas of the economy. We do not accept uncritically the assumption the hon. member makes, and I think that is fair. The hon. member says that it is a matter of clear assumption, which is a correct assumption, an assumption that he can accept without qualm, that in the large metropolitan areas it is cheaper to have manufacturing activity and economic activity rather than in the less concentrated, decentralized areas. One cannot just make such an easy assumption. One can say that with certain activities it is no doubt so but it certainly is not so in regard to all activities. It has been shown in one study after the other not only in this country but abroad, from the vast volume of literature on economic development which is full of these studies, that in some of the large metropolitan concentrations today there are greater diseconomies than so-called economies of scale. Let us just take one example. In some of the large cities of the world where there is a great deal of industrial development and large populations the traffic congestion has become such that the cost of moving people and goods from one point to another is already prohibitive owing to the delays and the vast amount of energy involved. That is one example. There are others that are also set out and one has to weigh these things up. One cannot generalize. I am prepared to say that as far as certain activities are concerned, studies have shown that in terms of pure economics one could probably say that they would be more economically viable in a larger concentration than in a smaller one. However, there are other important activities where the reverse holds good. What we are doing in our whole review of the decentralization policy is in fact to try to identify those activities and then, by doing the best we can with the resources we have, to encourage the movement of those activities and the location of those activities to the more decentralized areas. Moreover, where we already have these decentralized areas, we are giving them preference because at least we have something there to work on and we do not have to build from scratch. Then again, some of the other advantages perhaps of labour and transport and location may be so great that it may even still pay to put some activities in areas where there is in fact very little infrastructure. My whole point is that one cannot generalize. One has to study this thing industry by industry and area by area and consider the economies and the diseconomies. That was what my hon. colleague was saying because this is exactly how we discussed it. I think that that is a fair statement. We must bear all these things in mind and not imagine that we can oversimplify in respect of these very important issues. I do not wish to take this matter any further. One can talk a great deal about these issues.

The hon. member knows that the South African economy is characterized by its dualism. It is like all developing economies to a greater or lesser extent a dual economy. On the one hand we have an economically powerful, modern, industrial economy using a great deal of capital, skilled labour and modern techniques of management—the hon. member for Amanzimtoti mentioned the importance of management as against labour productivity; it was a very good point and it was well taken—and on the other hand, running alongside this highly developed and productive economy, there is a much less developed economy. That economy is where the great challenge lies for all of us. There is far less capital available there, less skilled labour, less machinery being used and in the general sense there is less development than is usually the case. The great challenge is to uplift the people there and to develop that economy. However, this costs a great deal of money and it takes time. If there is one thing that the world has learned from all the schemes that have been developed and applied, particularly during the past generation—and Africa is no exception; in fact, it is a very good example—it is the fact that one cannot rush the application of these modern techniques overnight. If I may say so, Sir, I think that one of the biggest mistakes that has been made in many underdeveloped countries is to overlook the overriding importance of agriculture and to think that the whole solution to the problem is to establish industry and then everything will come right. That has been one of the biggest mistakes that these people have made. We are doing our level best in those areas to develop agriculture and to strengthen it in every way we can. It costs a great deal of money and it calls for a great deal of co-operation.

I want to put it to the Opposition today that I believe this is a magnificent effort this country is making under the leadership of the hon. the Prime Minister. I am not talking party politics now. I think that the whole private sector and the Opposition should throw themselves into this effort to develop the country in its entirety and not in little sections that might benefit vested interests. I think this is a tremendous challenge. I think the hon. member for Yeoville who has spoken on this today will be prepared to look at this carefully. I think he has enough experience and understanding of these things to see that there is a great challenge here, but no Government can do this on its own. Therefore I believe that we can say with absolute justification that we believe that the whole country should back this effort to develop the country and all the peoples of this country and to improve the quality of life, improve living standards—call it what you will. However, it is going to be a tremendous effort and it is going to call for the absolute 100% participation of the private sector.

The private sector in this country has done better than the private sectors in many, many countries of the world for a long, long time. Look at their achievements, which are very much to their credit, in business. Look particularly at the past couple of years—the enormous profits and dividends. I think at this juncture in a country like South Africa which is a bastion against communism, a bastion for the West, the time is absolutely now for the whole country—let us have whatever differences we like on some other issues—to stand together on these issues of the cardinal, basic development of this country for all its people and to draw up a blue-print which everybody can understand and in which everybody can be proud to participate.

I believe this is a fair appeal to make because the time is past when anybody can say that the Government must provide all the housing, the Government must provide all the infrastructure for transport, hospitals, schools, etc. The Government is a small part. The public sector is a small part of the total economy of this country. If one takes it very roughly, what would the public sector really amount to? Would it be a quarter of the total? Probably, roughly. What about the other three-quarters that has done so well for generations in this country in mining, agriculture, manufacturing, trade and all these huge activities where we have a wonderful record in this country? I think the time has come for private enterprise, this Parliament and all our people to stand together on this issue and to back this idea. If they do not like the term “constellation of States”, they can call it something else but it is development and co-operation and those are the two key words for the future. I believe it can be done and I believe all people of goodwill can come together to meet this great challenge. Then our future will be assured because the other things will fall into place with good will and with hard work.

Our economy is basic one of the finest in the world. At the moment with the growth rate of one country after the other collapsing, so that that of Germany is 0% today, South Africa’s growth rate is close to 5%, on 8% last year, so on average for two years it could very easily be 6%, probably the highest in the whole world in real terms. We have an investment boom in this country. That means there is a tremendous confidence among investors internally and from abroad. We have a construction industry that is booming. I am referring to the long term. We have record motor-car sales. We have huge increases, very high increases in real wages and salaries as I mentioned in my budget speech—3%, 4%, 4,5% in real terms. In many countries they are down—negative! So one can go on listing these things. We have a gold industry. Some people say because the price was $850 a little while ago and it is now $425, apparently this is a calamity.

It is not a calamity by any means. It is much more than one third higher than it was, for instance, two years ago, when we did not think it was too bad. These things are relative and we can build on these tremendous strengths. I think that where our two big sections in this country, the Afrikaans-speaking and the English-speaking sections, are now on so much better terms than they have ever been, the Government has had a little part to play in that too. I can say that, I believe, without talking politics. The fact that this national unity is, to my mind, becoming a reality, is incredibly important. Why do we not use all these God-given assets and build this country as it has never been built before. That is my plea and that is my message.

Votes agreed to.

Chairman directed to report progress and ask leave to sit again.

Mr. Chairman, during Second Reading we already discussed the problem we on this side of the House had in respect of clause 2, and I do not think that much more can be said in this respect. Nevertheless, I should like to ask the hon. the Minister once more to think very carefully about this. I believe that only medical aid schemes will benefit from this. I should like the hon. the Minister to know that the medical profession is not happy about this. I believe that quite a number of medical practitioners will contract out as a result of this. Therefore, I again urge the hon. the Minister to think very carefully about it.

Mr. Chairman, once again it is a mystery to me why the hon. member for Parktown objects to this clause. It is a fact that the S.A. Medical and Dental Council also believes that patients are entitled to have their accounts submitted to them. After all, when one has received a medical service and one’s account is being paid, one is still liable for 20% of that account, in the case of most medical aid schemes.

I simply cannot believe that anyone would not wish to be informed of the nature and the cost of the service he has received. Therefore I believe that the account should go to the patient. As we argued during the Second Reading debate, this surely remains a normal, sound principle. It is after all a contractual agreement between the patient and the doctor. The medical aid fund merely provides financial assistance to the patient, but the agreement remains between the patient and the doctor. That is why I feel that the arrangement as it has now been amended is the most meaningful one. The original idea was in any event that this should be the case. Therefore I am convinced that the Medical Association as well as the Dental Association would support the principle of this and would want matters to be handled in this way. Therefore I should like to express my support for this clause.

Mr. Chairman, I want to point out to the hon. member for Parktown exactly what the hon. member for Pietersburg has just said. The hon. member for Parktown said that the medical people would not agree with this, but the Medical Association indicated that they accepted the amendment. However, they had their reservations as to whether they should not be allowed to send a second account direct to the scheme. But that was not what we put to them. What we did put to them was whether we should amend the Act so as to enable the doctor-patient relationship to be improved, for the very reason that the hon. member for Pietersburg has just given. This is not a relationship between the doctor and the scheme; it is a medical relationship between the doctor and the patient. The Medical Association actually accepted this and I therefore cannot understand how the hon. member can say that the doctors do not want this and that they now want to contract out. In fact, after the last increase in the medical scheme tariff not many doctors contracted back into the scheme. I do not think that one will now find doctors contracting out for a reason like this. Therefore I disagree with the hon. member. As the Medical Association has accepted the amendment I cannot see that the hon. member can now speak on behalf of the doctors.

Clause agreed to (Official Opposition and New Republic Party dissenting).

House Resumed:

Bill reported without amendment.

Third Reading

Mr. Speaker, I move, subject to Standing Order No. 56—

Mr. Speaker, we have heard many arguments during the short debate we have had on this amendment and one of the arguments that I cannot understand is that sending the account to the patient in the first instance will improve the doctor-patient relationship. The doctor-patient relationship depends on how the doctor treats the patient and the patient’s feeling towards the doctor and not who gets the account first. We on this side of the House have never said that the patient should not get the account. We feel that in the first instance an account should go to the patient and to the medical aid scheme. The medical aid schemes object to this because, according to them, it will result in increased expenditure and confusion in regard to their financial matters. I must admit that that could be true and that a small amount could be spent but, if the first account has to be sent to the patient, the second account has to be sent to the patient and only the third account to the medical aid scheme, and the medical aid scheme has then to pay within six weeks, it will mean that the doctor will often have to wait for 2½, three or even four months before he is paid. I can tell hon. members that many doctors object to this. Most people would like to be paid at the end of the month. However, the medical profession is used to waiting for a long time for their accounts to be met. I once read a rhyme, as follows—

When doctors contract in as far as medical aid schemes are concerned they hope that they will receive prompt payment of their accounts. Therefore I cannot see any reason why the account cannot first be sent to the medical aid scheme and another account to the patient explaining that the account has already been sent to the medical aid scheme and confirming what the doctor has done, as the hon. member for Potgietersrus suggested. I cannot see how that can affect doctor-patient relationships at all. Not only doctors are involved in this; there are also hospitals and chemists.

Is it fair that a medical scheme can sit with the money while chemists must wait for months before they are paid? This means that the medical scheme keeps a large amount of capital, and I therefore feel that amounts should be paid over more promptly.

Finally, I once again should like to tell the hon. the Minister that after speaking to a number of people, I believe that everybody concerned, the doctors, pharmacists and hospitals are not satisfied with this position.

Mr. Speaker, I wish to refer to one or two matters raised by the hon. member for Parktown. It is no use discussing the doctor-patient relationship again. The hon. member for Pietersburg has already explained it, but it would appear that the hon. member for Parktown sees it in a different light, and I do not think I could make him change his mind.

I have just gone through the Hansard of the previous discussion, and I notice that the hon. member for Hillbrow actually welcomes the appointment of the Browne Commission which is to investigate the whole health aspect. In a preliminary report, this commission has indicated how the various committees work, and I quoted this at an early stage of the debate. The Browne Commission, which consists of knowledgeable people, had to go into the whole question of medical schemes, and in their preliminary report they say that this section should immediately—“onverwyld” was the word they used, and this has been my first opportunity to do so—be amended, and that the first account should be sent to the patient. I appointed knowledgeable people to the commission and I accept their recommendations. The hon. member for Hillbrow also welcomed the appointment of the people concerned with enthusiasm. I accept the recommendation of the commission that we should immediately amend the section concerned. The hon. member says he has discussed the matter with several doctors, but I cannot see why we should comply with his request and retain the section in its present form just because, according to him, the doctors are going to be very unhappy about the amendment.

I have also pointed out that the medical associations have indicated that they accept this, and they are after all the mouthpiece of doctors in this country. The South African Medical and Dental Council have in fact said the doctor-patient relationship is being disturbed and should be rectified. Therefore we are trying to comply with the wishes of people who are entitled to speak on behalf of the profession, and that is why I appointed the commission concerned. More than this I cannot do, and I am afraid I must tell the hon. member for Parktown that I cannot accept that he is speaking on behalf of the doctors. He may speak on behalf of his party and be their mouthpiece, but he must not create the impression that he is speaking on behalf of the entire medical profession. I therefore ask the House to approve the Third Reading of the Bill.

Question agreed to (Official Opposition dissenting).

Bill read a Third Time.

Mr. Speaker, before the debate was interrupted, I had pointed out that this Bill is in complete harmony with the Government’s philosophy with regard to the free enterprise system in South Africa.

The hon. member for Durban Point attacked me about the depopulation of the rural areas amongst other things, as if it was the fault of the Government. I pointed out to him that it is in fact a characteristic of a country with a strong economy, particularly of a country with a powerful agricultural sector. There is very little that a Government can do in this regard, except to ensure that enough people enter the field of agriculture so that the agricultural industry can remain strong and powerful in the future as well. I feel that the Bill complies fully with that requirement.

At the moment it is true that it is the policy of the Agricultural Credit Board to make agricultural credit loan facilities available to bona fide farmers only. These are farmers who live on their farms on a full-time basis, farm full-time and are exclusively dependent on farming for their income. I want to say with all due respect that I think that this policy has become a little obsolete at this stage of our development, and I want to ask the hon. the Deputy Minister to discuss with the Agricultural Credit Board the possibility of looking at the financing of part-time farmers in particular, specifically certain types of part-time farmers.

Research has been carried out in South Africa on the subject of part-time farmers. This research is supported by the findings of recent research throughout the world. I am also aware of the fact that at this stage the department is involved in its own extensive research on part-time farmers and I do not doubt that those results will bear out the findings that have already been reached.

In the first place, it is interesting to note that approximately 20% of all the farmers in South Africa can be classified as part-time farmers. In the European countries, America, Canada and even in Japan, the figure is as high as 60%. It is not only in countries with a capitalist economy, but also in countries with a socialist economy that those figures are so high. As I said, here it is 20%. For interest’s sake, I took a look at the list of members. I counted 33 members in the House who could also be classified as part-time farmers. This is approximately 20% too.

And how many officials?

A very important finding is that part-time farmers are not necessarily inefficient producers. A further important aspect is that there are different types of part-time farmers. Probably one of the reasons why tremendous debates have generally been conducted and are being conducted in agricultural circles on this matter, is that every person has his own idea of what part-time farmers are. It has been established that there are mainly four kinds.

The first of these is those who receive their main source of income outside agriculture. One can call them cheque book farmers, weekend farmers or whatever. They comprise 40% of the part-time farmers in total, i.e. 8% of the total number of entrepreneurs in South African agriculture. It is true that not all of these farmers utilize their land very effectively. There are various reasons why businessmen, professional people, etc. purchase land. One of them is to evade the effect of inflation and in previous years in particular, it was to evade income tax. However, this is capital that is flowing into agriculture from outside and this makes it very important for us in this case. As in other parts of the world—I have no doubt about this—in future, a greater distinction will also have to be drawn in our country between the owners of land and the users of land. These farmers can probably contribute towards more tenants entering our agricultural industry, although this does not fit in so well with our cultural historical background in South Africa.

The second group that can be identified, is that group that receives its main source of income from within the farming industry. They are usually medium or smaller farmers who have landed in financial difficulty for some reason or other, whether as a result of droughts or other natural disasters, which have plunged them so deeply into debt that either the farmer himself or his wife is obliged to seek work elsewhere in order to supplement the income of the family so that they can continue to maintain the same standard of living. Here I am referring to efficient producers, and I think the Agricultural Credit Board would do well to take a look at their position too. I know that in these times of drought, concessions are being granted to farmers. I nevertheless think that this whole matter can be looked at to good effect once again, particularly in the case of farmers on farms which can be called marginal, but nevertheless which may in the past have provided the family with an adequate income, and now, as a result of various changed circumstances, can no longer comply with the necessary requirements. These farmers comprise 30% of the number of part-time farmers.

The third group that can be identified consists of those farmers who use part-time farming as an interim measure for migrating to other sectors of the economy. They are usually less desirable entrepreneurs in agriculture and usually one finds that they do not utilize the land very well.

The fourth type of part-time farmer should, in my opinion, play a very important role in this regard. I am referring to the type of part-time farmer who uses part-time farming as an interim step for entering the agricultural industry. Regardless of the fact that the Agricultural Credit Board and the Land Bank discriminate against them—although the Land Bank is not at issue here—they comprise 20% of all part-time farmers, i.e. 4% of the total number of entrepreneurs in South African agriculture. They are usually young people who start farming with a tremendous debt. Often they want to create the necessary facilities on the farm for themselves and their families—especially for their wives—for instance, a decent house with a freezer, electricity, etc. For the first few years they use their part-time farming to bridge a difficult interim period. I should like to make a request of the hon. the Deputy Minister to take a specific look at the position of this type of part-time farmer. I have no doubt that if we can implement this change in policy successfully, the number of people entering agriculture will increase. In this way the Government and the State will be able to ensure that the agriculture of the 21st century will also provide enough food and fibre to feed and clothe the population of that era.

I support this Bill with enthusiasm.

Mr. Speaker, I am glad to be able to reply to what has just been said by the hon. member Dr. Odendaal because I think we both have a very similar thing in mind. I actually want to take the subject a little further by focussing on a very specific type of part-time farmer. So in supporting the principle of the Bill, I want to highlight the problem that has developed around many of our towns and cities in the past few years. I am referring to the phenomenon of the smallholdings or what we have always referred to as “plotte”.

I specifically want to refer to the difficult position in which some of these owners find themselves. We all know that there was a time when these smallholdings were really in vogue when many of the farms on the outskirts of towns and cities were carved up into what was basically uneconomic farming units. They did, however, afford people the opportunity of living some sort of country life whilst still working in an urban environment.

The object was often to be self-supporting as far as food was concerned. In many instances profitable market gardens and other agricultural activities were carried out on these plots. As time went by many of these smallholdings were caught up in the urban sprawl and, although many owners were able to get into the very profitable township development field, as many, or perhaps more owners now experience the intolerable burden of having to pay rates and levies for sewerage, water etc. to local authorities, their land being regarded as residential or potential residential land, while certain townplanning restrictions and the oversupply of residential plots in other areas as well as delays in township establishment make it impossible for them to realize the residential value of the land in the short or medium term. Many owners have been caught in this trap and have in fact been driven off their land while the big speculators cash in on their predicament.

*Many of the owners of smallholdings would like to turn them into a profitable investment, and would be able to do so if their access to credit was not so limited. We know that building societies consider these people to be peri-urban and that is why they do not want to grant loans to them. Because they are not bona fide farmers or economic units either, agricultural credit, co-operative benefits or Landbank credit is not available to them either. Of course, the smallholdings do not have to be a millstone around the necks of the owners. I think there are many advantages to these so-called uneconomic units which are of tremendous value not only to the owners, but to the country as well. One thinks for instance of the flower farmers who make a tremendous contribution with regard to the currency that they earn for the country. There are also the people who farm with vegetables, fruit, chickens, cats, rabbits, etc. on these smallholdings and who have proved that they are economically viable provided that they can obtain the necessary credit or capital.

Another advantage is that this type of farming activity is usually very labour-intensive which, of course, can provide a living particularly for the less skilled labourer that we find around our cities. As the hon. member Dr. Odendaal said, smallholdings can also serve as a springboard for young people who want to enter agriculture, but do not have the capital to buy a large agricultural unit or are not so fortunate as to inherit one. Therefore, on these smallholdings they can have access to the agricultural sector as part-time farmers. If credit was in fact available to them, it could speed up the process a little so that they could enter the agricultural sector within a reasonable time.

The sums that are necessary to provide financing for this type of agricultural sector, are not so enormous. Therefore, I hope that the hon. the Minister will be able to put aside a small percentage of the amount that is being created in the Agricultural Credit Account in terms of the legislation, specifically for granting loans to these type of people.

Mr. Speaker, part of the discussion of this Bill took place quite some time ago, and there is a possibility that some of it has been forgotten. However, I want to reply briefly to some very interesting points that were raised during this debate. There are certain remarks that will definitely require further research. Certain matters were also raised in which I do have a strong belief, but I shall come back to them later.

I want to begin with the hon. member for Wynberg and thank him for supporting this Bill on behalf of his party. I think the hon. member proved by means of his speech how strongly he and his party feel about the role of agricultural credit in agriculture. I want to thank him for this, because I think it is necessary, when we are dealing with the less affluent agriculturist, that we should not try to make political capital out of steps that are taken. It must be a unanimous effort and I want to extend my hearty thanks to the hon. member for Wynberg for the few good ideas that he expressed.

With reference to the question of labourers houses, the hon. member asked whether there are adequate funds for this purpose. There are in fact adequate funds. Of course, this account now makes it possible for one to determine one’s priorities oneself; in other words, say a drought should strike the country, one can immediately shift one’s priorities to drought aid, for instance to the consolidation of debts, and so on in order to comply at once with a problem that may arise in agriculture in any given year. This is the beauty of this account, viz. that one can adjust one’s priorities immediately.

As far as labourers houses are concerned, I just want to repeat that we have adequate funds, but because we also had to lay down certain limits as far as this matter is concerned, in order to ensure that part of the farmers did not swallow up all the money, we determined that a maximum of ten houses be allocated per farming unit per year. If someone has received ten houses this year, he is free to apply for ten houses again next year. In other words, if he has 30 labourers for instance, he can provide for his total needs within a matter of three years. We had to establish a limit in order to ensure that we could distribute the funds that we had put aside for labourers’ housing, on a more or less fair basis.

The hon. member also made the statement—I should like to agree with him—that the Agricultural Credit Board has a tremendously responsible job. The hon. member quoted figures in connection with a number of applications that have been handled by the Agricultural Credit Board. I can tell the hon. member that those people work extremely hard. In the mornings they are at the office at 06h45 and begin their council meetings as early as that. The number of applicants has increased tremendously as a result of a few factors.

The first, and possibly the most important, is the drought which, as the hon. member knows, has struck a large portion of the country. This section of the department deals with all the drought aid—i.e. requests for loans for the purchase of feed—the subsidy scheme etc. This particular section deals with all work in that regard.

In the second place, the hon. member is probably also aware of the fact that some of the areas of agronomy have also experienced droughts. The requests for production loans have also increased tremendously over the past few years. As a result of the particularly good agricultural year this year, we hope that the number of applications will drop again. The norm that is set at Agricultural Credit for production loans, is that the farmer must prove a failed harvest in the previous year.

These are the reasons why the number of requests has increased so tremendously. Therefore, the hon. member is quite correct in saying that the board is doing a particularly responsible job in this regard. One must also pay tribute to them for the work that they have done and for the numbers of farmers that they have kept on the land by means of the steps that they have taken.

The hon. member also spoke about the scheme for assisting farmers in the border areas. There is no shortage of funds. I should also like to pay tribute to the hon. the Minister of Finance today. I had to go to him on three occasions last year to ask him whether we could not have more funds for this particular scheme, and the hon. the Minister never sent me away empty-handed. I can tell the hon. member today that we have never in fact had a shortage of funds for this purpose. We achieved excellent results. I do not want to say more in this regard on this occasion. Perhaps it will be a good thing, in the discussion of the Agriculture and Fisheries Vote, if I am given the opportunity to say something more about this particular matter.

The hon. member for Beaufort West also made a contribution. I am grateful for the fact that he has an understanding for what we are doing here. His constituency is the very one that was affected most during the recent drought.

There are many good people who come from there.

Yes, there are many good people in Beaufort West. Some of them turned out bad. I do not know why! The hon. member for Beaufort West has a great deal of understanding for this because his constituency was hard hit. He raised one point which I should just like to dwell on briefly. It also has a bearing on what the hon. member Dr. Odendaal said. The hon. member spoke about the medium farmer. The Agricultural Credit Board was criticized for their conservative policy with regard to economic units. I want to tell you at once that I too am sometimes involved in a confrontation—at least it is a pleasant confrontation—-with our Agricultural Credit Board, in the sense that I think they are excessively conservative at times. I think one should look ahead a little. What is an uneconomic unit today, may possibly no longer be an uneconomic unit in ten years time. Then one also has cases in which someone may have an uneconomic unit. Adjacent to his unit, however, he can then purchase a unit which is in total much larger than the recognized economic unit. In this respect one has to treat every case on merit. There are certain farmers in our country—and I want to choose my words very carefully—who think that they must own the whole country. I do not want to detract from the contribution which these people make towards our economy, but I do in fact want to put a big question mark behind their contribution to the provision of food in our country. I want to allege that, up to a certain size, one can utilize a farm economically and that, when one enlarges it, one can no longer run it economically. I want to issue a warning in this debate today, particularly since the hon. member for Beaufort West raised the matter, that we must be careful that the title deeds of South Africa do not belong to a few people only one day. That would be a sorry day. My task and my aim—I shall come back to this later, when I answer the hon. member Dr. Odendaal—is to ensure that as many farmers should be kept on the land as possible. This must be our most important task. I think the hon. the Minister has also expressed an opinion with regard to this matter. Therefore I say thank you to the member for his great understanding with regard to this matter.

The hon. member for Durban Point apparently had to rise to his feet because there was no one else to say anything about this Bill. [Interjections.] However, I want to say thank you very much to him for supporting the Bill, but then he supported the Bill in such a way that after a while we did not actually know whether he was supporting it or not. He made quite a fuss about it. Nevertheless, I do not want to disturb the fine spirit in which we are discussing this Bill this afternoon. I think the hon. member Dr. Odendaal furnished the hon. member for Durban Point with an adequate reply. I do not think it is necessary for me to say anything further about it.

The hon. the Deputy Minister must watch out because I am speaking on the next one too!

I just want to say I think the hon. member for Durban Point should devote himself to his own activities, because the agricultural sphere is a very dangerous one for him!

I now come to the hon. member Dr. Odendaal. He is a newcomer to the House and I was really impressed by his speech. He showed a great understanding for an knowledge of this subject. Perhaps I can point out to hon. members that his doctoral thesis dealt with part-time farmers. This is why he has such a thorough knowledge of the subject. I really want to tell him today that I personally will still make a great deal of use of his knowledge. I shall call him in from time to time to advise me on matters, because I realize from his speech that he has a very extensive knowledge of these matters.

Then I want to refer to a few things that he said in the course of his argument. There is the question of weekend farmers. I was denounced throughout the entire country when I started speaking about weekend farmers. I did so in a very specific context. I alleged—if I am not mistaken, it was on the occasion of the Transvaal Agricultural Congress—that the department’s efforts in the border areas are being negated completely as a result of the fact that there are so many farmers who own land there and do not utilize it, but simply use it over weekends to hunt there or to take friends there for a braaivleis. I do not begrudge them this. My norm for a farm—there I agree with the hon. member Dr. Odendaal—is whether it is being used economically and optimally. I have evidence that there are several farms situated on our borders that are totally unutilized. The wild animals are grazing on those farms. The owners go there now and again to hunt and this is as far as they get. It is not in the interest of South Africa for this to happen, and the time will come when we shall have to grasp these people by the throats and tell them: So far and no further. I hope that we shall also have the support of hon. members opposite on such an occasion, because we shall simply have to do this.

The hon. member spoke about the four categories of part-time farmers—I found this very informative. I do not want to reply to everything now, but as far as I am concerned, I want to admit that there are shortcomings with regard to financing. In the first place—I say it at once—I find a shortcoming here. If someone applies for a loan in order to buy a piece of land, even though it may not be an economical unit, we must be prepared to help him. I shall say why, and I think the hon. member raised this point. Everyone must begin somewhere, and if one has the opportunity of obtaining a unit which does not comply fully with the requirements of an economical unit, we should not be so absolutely rigid as to say that we do not want to help him because it is not an economical unit. If one helps that man in good time, he will be in a position to expand within five or six years, as a result of the subsidized rate of interest. It is my standpoint.—I have already said it several times to the board and therefore I can say with pleasure that the board agrees with it—that if someone can make a start somewhere, one must help him to do so.

I should now like to come to the following point at once—it is a point which the hon. member made very effectively—by asking whether one should now force such a person to farm full time. I have my reservations about this, and I shall say why. In the case of cattle farming, our norm for an economical unit today is a unit of 1 300 small stock. However, there are certain types of cattle farming—there are many cattle farmers in the House—which one can practise without it being necessary to be on the farm full time, even though it may be only just an economical unit or a unit with just less than 1 000 small stock. Even though one does not have to be on the farm full time, one can nevertheless manage it extremely efficiently. This is the type of man that I want to allow to continue working on a temporary basis, because if he continues working on a temporary basis and does not neglect his farming, he is less of a risk to me than he would be if I forced him to be on the farm full time. He is less of a risk for me because he has an income from which he can finance his expenditure with regard to the farming. This is a matter on which I am wholeheartedly in agreement with the hon. member. However, it is a matter of policy which has yet to be cleared with the board. It is a matter that we shall probably have to look at.

The following aspect to which the hon. member referred, is the interim step to entering agriculture. This also forms part of the aspect that I have just dealt with. Once again, I want to agree with the hon. member. We shall have to take a careful look at the question of part-time farmers. We shall have to take careful note of what the hon. member said, as well as what will emanate from the investigation. The investigation is still in progress, but I hope that we shall receive the report shortly. On that occasion I shall definitely make use of the hon. member’s very good knowledge of this matter. I think that the hon. member raised a few extremely relevant arguments in this debate today with regard to part-time farmers.

The hon. member for Greytown is next. I think that I have already partially informed him of my philosophy regarding this matter. However, the hon. member must realize that we should just be careful with regard to smallholders. I am now referring to people on smallholdings of one or two hectares. A piece of land like this is really not a farming unit. My problem in this case is simply where to draw the line. However, I know what the hon. member means. I do not think that he had these smallholdings of one or two hectares in mind.

I am actually talking about a farming activity.

A farming activity, yes. Then the hon. member and I understand one another. I agree with the hon. member. This actually follows on from what the hon. member Dr. Odendaal said. After completion of the investigation that we have appointed with regard to part-time farmers, and after we have studied the reports, I believe that we will definitely be able to conduct a more meaningful debate on this matter, and we shall also be able to take more meaningful decisions. However, I have my ideas on this matter. From my experience of almost three years in this department, in the Agricultural Credit section, I can probably organize my ideas at this stage. However, I really feel very strongly about this matter. I believe that we shall have to move away from our rigid policy with regard to full-time farming. We shall have to look a little further with regard to this entire matter. I believe that this was a very good, fruitful discussion and I thank hon. members for their participation in the debate.

Committee Stage

Clause 5:

Mr. Chairman, I believe that the extent to which the department will from time to time have to intervene in order to buy up land which has to be sold due to the inability of the owner to pay his interest, will be a good barometer of how things are going in the agricultural industry. That is why I felt that it is necessary for us to move an amendment in which we request the department to submit an annual report to Parliament in which the department will indicate what land had to be bought up and what amount was spent on it, so that hon. members of this House may keep abreast of conditions in the agricultural industry.

Consequently I move the amendment printed in my name on the Order Paper, as follows—

Mr. Chairman, I have already informed the hon. member for Wynberg that I am quite prepared to accept his amendment. For the information of the hon. member I should just like to furnish him with certain figures and announce a few policy statements, to enable him to consider the possible withdrawal of his amendment. Actually I want to try to persuade the hon. member to withdraw his amendment because, as far as I am concerned, it is very impractical. Every year the department publishes an annual report in which these matters are reported in any event. As a result of two factors—firstly the conservatism in the allocation of loans to farmers, and secondly the increasing market value of land, which one really has to consider in conjunction—it happens very, very seldom that the department is required to purchase land. In 1979-’80 only 14 properties were purchased, for an amount of R684 000. As the hon. member knows, however, land prices subsequently began to rise immediately after that. In 1980-’81 no land was purchased. We did attend many sales in execution, where we made our bid, but as a result of the increasing market value it was not necessary to buy up the land. Up to the present, 1981, no land has yet been purchased. This just shows the hon. member that I am not unwilling to adopt the amendment but I just wonder whether it is practical, owing to the fact that there is very little land involved and that this happens very seldom, particularly with the present higher land prices, that the department is required to buy up land.

Mr. Chairman, I thank the hon. the Deputy Minister for his explanation. I must point out that it has happened over the past few years that the value of land has increased tremendously. This is true, and the hon. the Minister explained that because the market value had increased in this way, it was very seldom necessary for the department to have to intervene. However, we cannot be sure that this will remain the case in future. If I look at the amounts of money which the department has had to spend over the past three years, I just want to remind this House that the department spent just over R18 million during 1978. The next year that amount rose to R54 million, and the following year to more than R90 million. This is an indication to me that everything is not well in the industry and as one would like to see it. I am afraid that increasing pressure could be exercised on the department in future, in the sense, too, that the department will have to buy up land.

The farmers will not go bankrupt.

In terms of the policy statement of the hon. the Deputy Minister himself, viz. that the buying up of land and the consolidation of uneconomic units are specifically being done with the purpose of making the land available to young farmers who are struggling, and specifically because he has just said that it might be necessary for him to have to intervene in certain border areas, this could mean that land will also have to be bought up there. Under those circumstances I feel that I must stand by my amendment and I should very much like the hon. the Deputy Minister to accept it.

House Resumed:

Bill reported with an amendment.

Third Reading

Mr. Speaker, I move, subject to Standing Order No. 56—

Since we have now come to the end of the discussion of this Bill and have enjoyed the support of the whole House, I just wish to add a few points to what I said during the Second Reading. The passing of this Bill has been my life-long ideal. In 1973 I advocated this matter at a Cape Agricultural Union Congress and asked that the department should operate in the same way as the Land Bank. Because this was an ideal of mine, I am grateful that the hon. the Minister has allowed me to deal with this legislation today. I believe that, after the passing of this Bill, the department is in future going to play a far greater part in agricultural financing in South Africa, something which it will indeed have to do.

Another ideal I cherish is to establish as many young farmers as possible by means of this department, farmers who will ensure that our country will not be without food in the years which lie ahead.

The success of the new dispensation in the Agricultural Credit section of the department will depend on how farmers repay their instalments to this department. Consequently I am making an appeal to our agriculturists and the clients of Agricultural Credit today to meet their obligations to this department conscientiously, for by doing so, they will ensure that this new dispensation will be a success. There is tendency for farmers to put off paying what they owe the Government for a while and to attend to these matters last. To ensure that this great effort we are now going to make is successful, I consequently ask farmers once again to place the accounts of Agricultural Credit at the very top of their list for payment. Only if they do so shall we make a success of this excellent legislation which has been agreed to today, with the support of all three parties, and then the Government will undoubtedly make the necessary contribution to the establishment of young farmers.

Mr. Speaker, I move—

The present Co-operative Societies Act has been on the Statute Book for 42 years now, and therefore it goes without saying that the legislation which regulates co-operatives in this country ought to be modernized in order to accommodate the phenomenal development which has taken place in both the agricultural industry as well as the cooperatives during these 42 years. The introduction of this Bill has, in fact, been a long-felt need which unfortunately could not be met earlier due to the intensive investigation into the country’s co-operatives by the so-called Steenkamp commission and the subsequent deliberations in this regard be tween various interested persons and bodies. This investigation extended over a number of years. Fortunately a reasonable measure of consensus was achieved between the Government and the other interested parties on those aspects of co-operatives about which conflicting standpoints were initially held, and the introduction of this Bill has now at last become possible.

For the convenience of hon. members I saw fit to arrange that a thorough explanatory memorandum would be published at the same time as the Bill. Hon. members undoubtedly made use of the opportunity to study the Bill and the memorandum. Consequently it would merely amount to repetition if I, too, were now to try to elucidate the provisions of the Bill verbally, and consequently I should at this stage like to suffice with the elucidation which is furnished in the memorandum.

It is an exceptional privilege for me to submit this important piece of legislation to this House and I sincerely trust that hon. members will support me when I pilot through this Bill, which is of the utmost importance for a healthy agricultural industry.

The Co-operative Act is one of the cornerstones, one of the pillars on which agriculture in South Africa is built. I want to tell you that we can to a very large extent attribute the phenomenal progress which has been made in agriculture in South Africa to the co-operative movement. A co-operative enables the individual producer as well as the small farmer, to whom the hon. the Deputy Minister was referring a moment ago, to have bargaining power when obtaining his inputs and marketing of his products. Consequently I want to make it clear that this legislation is of the utmost importance to agriculture in South Africa.

I want to avail myself of this opportunity to express my sincere gratitude and to pay tribute to my predecessor, the present hon. Minister of Transport Affairs, for his contribution over the years in respect of negotiation and the achievement of a package agreement on this proposed legislation.

I am introducing this Bill with the full support of the S.A. Agricultural Union, and on behalf of all the farmers of South Africa.

Mr. Speaker, I believe that one should not look at this Bill in isolation but that one should consider the role the co-operative movement has played in agriculture in general over many years. Initially, when the movement started shortly after the formation of Union, the farmers’ position in South Africa was very different to the position in which the farmers find themselves today. The main difference between then and now is in the one instance the tremendous number of farmers we had on the land at that time. At that time, however, we had a very poor system of communication, and transportation was not as good as it could have been. In addition, the markets to which the farmer had to supply his products were widely dispersed and the farmer had great difficulty in bringing the product and the consumer together. He was therefore largely dependent on a group of middlemen who purchased his products for redistribution. While the role of those men was often decried in the past, one must nevertheless recognize that the role which they played in agriculture and in the agricultural industry was probably as important as that of the farmer himself. The co-operative movement had as its basis the desire among the farmers to strengthen their bargaining position and to eliminate the profit taking in which the middleman was involved because the farmer perceived that man, or rather those people, as being a stumbling block in his path to a better and sounder financial position. So over the years the co-operative movement grew and increased in strength. There can be no doubt that this movement has helped very substantially indeed to stabilize the position in agriculture as we find it today. We on this side of the House therefore trust that the co-operatives will continue to play the role that they have played and are still playing.

In considering the legislation before us, I believe that we should give thought to certain specific aspects. Firstly, as we know, in most of the Third World countries, and even in some of the older, developed European countries, there is today a desperate shortage of food. That is a fact. Not only are there inflated prices that consumers have to pay for food but in many countries there is no food to be had at all; there is starvation. In our country we have a different problem. In spite of the fact that we do not have ideal agricultural conditions, we have, over the past few years, had sufficient production, even to the extent of being able to export food. While we do have sufficient knowledge and the necessary skills to produce agricultural products in abundance, for various reasons we have not been able to contain production and distribution costs adequately. In every agricultural debate we have been involved in in this House, there has been mention of continued and rapid increases in production costs, and obviously something has to be done to contain these costs. I believe therefore that everything possible should be done, during the next few years, to maximize our efficiency in agriculture, in processing as well as in distribution. This, of course, applies as much to the co-operative movement as it does to any other industry dealing with agricultural products.

The basis of the Bill under discussion is to be found in the report of the Steenkamp Commission, to which the hon. the Minister has referred. It was appointed in 1963 and reported in 1967. I think it behoves us to have a look at the commission’s report and more specifically at its terms of reference and at some of its findings. I should like to quote the terms of reference, as stated in the report—

1. (a) the role which societies and companies, registered or deemed to be registered under the Co-operative Societies Act, 1939, as amended at present, play in the national economy, and the spheres in which, and the terms on which, co-operative practice can best serve the country’s interests;
2. (b) the privileges and limitations of co-operative undertakings arising from legal provisions, Government measures or commercial practices, as compared with undertakings …

And this is important—

1. (c) the basis on which credit is granted by, and the financing of, co-operative undertakings, and the modifications, if any, necessary to do justice to sound economic principles;
2. (e) the equity, or otherwise, of the present system of income tax relating to the various types of co-operatives and the amendments, if any, which ought to be made;

Finally, there is the following—

So, we find that the terms of reference were fairly wide and that the commission was given a very comprehensive task. What is important is that the role of, shall I say, the proprietary companies in agriculture certainly had to be looked at as well.

The findings of the Steenkamp Commission, which I think are important and have a very direct bearing on this Bill, should be looked at as well. I think it behoves us to do so. In paragraph 211, by way of summary, the commission reports as follows—

The next paragraph reads—

Then the commission proceeds to give a summary of its findings on the possible creation of a monopoly in the industry. I think that the findings of the commission contain a warning on the ease with which monopolies could be formed, against which we have to guard. I think we must guard against these tendencies in the Bill before us before we make our decisions.

In paragraph 838 there is a further summary of a finding which I think is important and which the hon. the Minister should be aware of as well. This concerns the recommendation on the automatic lien in favour of co-operatives. In paragraph 837 the commission says the following—

There are a number of other paragraphs dealing with this which I shall not read out now but which I think have a bearing on the debate today. I refer specifically to paragraphs 838, 839 and 842. The lastmentioned in part reads as follows—

We find therefore that in these paragraphs the commission was very much aware of the problems which could be and in fact had already been created by the automatic lien. From what I have read and also from what is stated in other parts of the commission’s report, one can gather that the commission was not in favour of extending this but had rather the opposite in mind.

The third area which I think should be noted with regard to the Bill under consideration, is the position regarding the taxability of co-operatives. Here the commission sought to create a position in which the co-operatives and companies in the private sector would basically be taxed in the same manner. I think it is important that I should, in this respect, refer to paragraph 106.9 where the commission recommends the following—

So we see that as far as taxability is concerned, it was the intention of the commission that there should be parity between the co-operative movement and what I shall refer to as the private sector.

To put it in a nutshell, there were three basic problem areas highlighted by the commission, and these were: Firstly, the threat of monopolies in the agricultural industry; secondly, the effect of the automatic lien; and, thirdly, the danger with regard to unequal taxability between the co-operatives and private companies. Added to this, there is the question, which was also dealt with by the commission, of unfair competition which is brought about by the captive nature of the co-operative’s market and, linked to that, the automatic lien to which reference has already been made. It is against this background that a so-called package deal was devised in order to reconcile the conflicting interests of organized commerce and industry on the one hand and the co-operative movement on the other hand. This Bill has taken many years to reach the point of discussion in this House and the main reason for this delay has been the inability of the hon. the Minister—not only this hon. Minister but also his predecessors—to comprehensively include the provisions of the so-called package deal in the Bill before us today. Hon. members may well ask: What is this package deal? It is actually vital to understand this in order to be able to deal with the Bill adequately.

The package deal was an agreement between the Ministers of Agriculture and Finance on the one hand and organized commerce and industry on the other hand. This package deal contains certain ingredients and I wish to deal with these ingredients in some detail. I believe that the components of this package deal are today morally binding on this Government.

Would you mind repeating that last sentence?

I said, Sir, that the hon. the Minister had a moral duty to ensure that the components of the package deal were incorporated in the Bill or, perhaps, in some other piece of legislation. What were these components of the package deal? In the first instance co-operatives would in future be financed by the Land Bank at two levels. Certain co-operative actions would be financed by the Land Bank at a preferential interest rate, a lower rate, while other activities which up to that point in time—when the package deal was in fact made—had been beyond the scope of the Land Bank because it was not permitted in terms of its own rules and regulations, or so I believe, to be active in that area. The package deal meant, therefore, that there would be two levels of interest, a lower level of interest and a second level of interest which was at a market related rate.

In the second instance, on the basis that co-operatives and companies would be subject to the same tax levels, the earlier restriction on the activities of co-operatives would be removed. Earlier there were certain restrictions on co-operatives with regard to the type of produce they were permitted to handle. In future co-operatives would be allowed to become involved in all activities in regard to the production and handling of agricultural products, including the processing, marketing and supply to the farmer of all his farming requisites. The restriction on the percentage of non-member business was to remain. This is quite important because there have been certain developments over the past few years that have caused a certain amount of doubt to arise in my mind in regard to this aspect. I am referring now to the percentage of non-member business that co-operatives were allowed to undertake in terms of the Bill.

The third point of interest in this package deal was that payment of bonuses on a transaction basis was to remain the prerogative of co-operatives but that this right would not be extended to non-co-operative organizations. The hon. the Minister is frowning at me. Is the hon. the Minister having some difficulty in regard to my understanding of this package deal or do we agree with each other so far? I think it is important that we should understand each other.

No, the hon. member may proceed. [Interjections.]

Thank you. Mr. Speaker, Sir, I just wanted to make sure that the hon. the Minister will not at a later stage come along and say that what I understood by the package deal was totally different to what he understood by it. That is the reason why I wish to deal with these aspects one by one. We are actually trying to find common ground here.

I shall reply to the hon. member.

The fourth point that was contained in the package deal stated that the automatic lien would not be extended. This is very important, Sir. It would not be extended. Finally, the package deal made provision for what I would refer to as a watchdog committee on which there would be representation by various departments, one department being the Department of Finance and the others being the Department of Industry, Commerce and Tourism and the Department of Agriculture and Fisheries—organized agriculture and also organized industry. This watchdog committee would ensure that no unfair competitive situations would arise which would favour either organized commerce or, on the other hand, the co-operative movement. I think those five points are most important and they contain the agreement reached between the hon. the Minister or his predecessors and the private sector.

When the Bill, together with the explanatory memorandum to which the hon. the Minister referred, was published, the impression was created that organized industry and commerce had accepted the manner in which the package deal had been incorporated in the Bill. Perhaps I could just refer to that. It is stated in paragraph 3.3 of the explanatory memorandum on this Bill that—

I understand that when the Bill was finally published those bodies, which in theory had agreed that the components of the package deal were included in the provisions of the Bill, felt that that was not factually the case.

In what respect?

I am dealing with it now. Perhaps the hon. member should just listen. These organizations maintain that this is not true. They responded immediately after the Bill had been published and we on this side of the House had meetings with gentlemen representing these organizations. As I understand the position, they also had meetings with members on that side of the House. When we held our discussions with them they were absolutely adamant that the provisions of the package deal had not been included and they were extremely worried about this.

The organizations to which I refer held a meeting not so long ago with the department and the Registrar of Co-operatives. I am not sure of the date but I think it was last Friday afternoon that these matters were discussed. Before that, however, the organizations sent a telex to the hon. the Minister in which they brought certain matters to his attention. I shall now quote from a copy of the telex which has come into our possession. Firstly they say—

They go on to say—

1. (a) Co-operatives would be effectively taxed on all surpluses not distributed by way of bonuses to their members to avoid the building up of untaxed reserves, thus unfairly strengthening the competitive position of co-operatives competing against the proprietary companies;
2. (b) In turn co-operatives would be permitted to compete with proprietary companies in all areas subject to the terms of competition being equitable;
3. (c) The competitive relationship between co-operatives and the proprietary sector would be held continuously under surveillance by a committee of departmental heads.

That committee is the one to which I refer as the watch-dog committee. Then they also make some other points. They say—

The hon. the Minister has the telex to which I refer. They say further, and this is their fifth point—

I think this is a very important point of debate, viz. that the automatic lien has been extended further. They say—

Then they go on to say—

There are other points which they mention as well in their telex. I feel very strongly that in the light of the fact that this Bill has taken such a long time to get to this House it can be accepted that there is no absolute urgency for it to be passed within the next few days. That is the one point I want to make. Secondly, because there appears to be an agreement between the Government and the private sector and because it also appears to me that the terms of that agreement have not been adhered to, and, thirdly, because of the need to ensure an equitable situation regarding competition in the business sphere in this country—something we have referred to in many debates, even during this current session—I want to suggest that this Bill be kept in abeyance and that it be referred to a Select Committee for review on the agreed basis of the package deal.

Therefore, I move as an amendment—

Mr. Speaker, I listened attentively to the hon. member for Wynberg. During the first 20 minutes of his speech it was not quite clear to me whether or not he and his party were supporting the Bill.

But now you know.

I have a vague suspicion that the hon. member himself—I do not know about his party—supports the Bill as we have it before us.

In the first place I should like to associate myself with the hon. the Minister of Agriculture and state that, in my opinion, we are indebted to the former Minister of Agriculture, the present hon. the Minister of Transport Affairs, for having completed most of the preparations, and for virtually finalizing the Bill during his term of office as Minister of Agriculture. I believe that it was his heartfelt desire that the Bill before this House at present would be placed on the Statute Book during his term as Minister, but unfortunately this was not to be. On behalf of the Agricultural Group of this party and the farmers of South Africa I want to thank the hon. the Minister of Transport Affairs for his part in it. In addition we thank the present hon. Minister of Agriculture.

The hon. member for Wynberg allowed himself to be misled by his use of words into contrasting the co-operative sector with the so-called private sector. The co-operative sector most definitely forms part of the private sector. As far as this side of the House is concerned, we allow ourselves, on considering the Bill, to be led primarily by one consideration only …

The NP?

Our norm is: What is in the interests of the farmers of South Africa? Agricultural financing in South Africa has assumed a specific pattern and one cannot today wish away the part which the cooperatives are playing in agricultural financing in South Africa without causing agricultural financing in South Africa in its entirety to collapse. This is a fact and anyone who knows anything at all about agriculture in South Africa as it is being practised at present will agree with me in this respect. That is why it is essential, since we are dealing with a developing pattern of agricultural financing in South Africa and are aware of the present role our co-operatives are playing in this regard, that important provision be made in this Bill, as has in fact been done in the existing Act as well, for the proper making available of agricultural financing.

In the short time at my disposal I want to refer briefly to the lien, to which objections are apparently being raised on the part of organized commerce, as well as by the hon. member for Wynberg. Suppose that it would no longer be possible for the existing form of financing of production costs to be done by the agricultural co-operatives, can hon. members imagine that any so-called private person or body will provide the farmers of South Africa with the same financing without any security? Surely something like that is totally unthinkable.

It was against the expansion of that financing that I adopted a standpoint.

Since the financing pattern for production costs is at present of such a nature that most of the farmers of South Africa are completely dependent on cooperatives for the financing of their production costs, it is only ordinary common sense and sound practice that the cooperatives should be afforded security for the provision of financing to specific farmers by way of legislation. In addition it is also a requirement which the Land Bank lays down in the provision of capital to the cooperatives that the co-operatives in turn have to insure that capital by means of proper coverage, and such coverage is provided by this specific lien.

We constantly hear the argument that the co-operatives have been favoured by the low interest rate at which the Land Bank provides them with capital. However, this is not money with which the Land Bank is providing the co-operative for the co-operative’s sake. This may be true directly, but the co-operatives are being provided with that money in the interests of the farmers of South Africa. For this reason there is an existing arrangement that the Land Bank provides the co-operatives with capital at a specific interest rate so that they in turn can grant the farmers advances and means of production on credit at a low interest rate, which will enable the farmer to keep his head above water in the specific agricultural circumstances of South Africa.

Therefore, to speak of the unfair benefiting of co-operatives in these specific circumstances, is no valid argument, for if there can be benefiting—and I want to concede this—it is in the first and last instance not a benefiting of the co-operatives but a benefiting of the specific farmers who make use of the facilities of a co-operative.

People who are objecting to this legislation, do not in the first place have the interests of the farmer at heart, but their own personal gain, which weighs more heavily with them than the interests of the farmers of South Africa.