Mr Speaker, Members of Parliament:

A cordial welcome to this Sixth Session of the Eighth Parliament of the Republic of South Africa.

It is a special occasion because it is being held in the new assembly hall of Parliament. Today the proud parliamentary history of South Africa has thus arrived at a new milestone on its long road. I trust that this parliamentary building will become one of the important symbols of our endeavours towards orderly and civilised government in the Republic of South Africa.

This is essential, not only for the sake of a stable South Africa, but also because stability in the Republic is a prerequisite for peace and prosperity in the rest of Southern Africa.

†Southern Africa

The chaos and general state of deterioration in other states of the Southern African region are largely an extension of problems existing worldwide.

The world is in a situation of turbulence and turmoil almost unprecedented in peace-time. The continent of Africa is increasingly being engulfed by almost insurmountable problems.

If Africa is to survive the serious difficulties facing almost all of its states, these problems have to be resolved soon, and by Africans themselves.

In the Southern African region, the Republic of South Africa is willing to play its part.

South Africa desires peace in Southern Africa, because we believe in co-operation and peaceful co-existence. We do not believe in war. We do not believe that war can solve any problems. However, there must be no uncertainty regarding South Africa’s ability and determination to defend itself and its interests against any aggression aimed at its sovereignty and integrity and at the safety of its citizens.

Consequently, we will not shirk our duty to act against international terrorism.

The Government is also determined to continue with the maintenance of internal order, and to neutralise those forces that are still actively involved in undermining authority and stability. I wish to pay a special tribute to all those who served and gave their lives for the worthy cause of promoting peace and security in South Africa.

War and conflict is not the course we desire for our region, because that would only worsen an already critical state of affairs. We wish to pursue a course of friendship and co-operation. South Africans are already making a valuable contribution to the process of finding solutions for Africa and our region. We are prepared to go further.

There are signs that countries on this continent are abandoning the sterile posture of blaming South Africa for all their ills—ills which are often of their own making.

Africa cannot isolate itself from South Africa, just as we do not wish to isolate ourselves from the rest of the continent. Co-operation is essential in the fields of the economy, social affairs, technology and education and training, and is becoming increasingly important in the field of health. The new threats posed to the peoples of the subcontinent by, for example, malaria and the dreaded AIDS, cannot be overestimated.

That is why we desire co-operation and peaceful co-existence, for the sake of improving the standards of living of all concerned.

We trust that all major powers who involve themselves in the affairs of our continent and our region will recognise the importance of South Africa in this regard.

South Africa and the other states of our region need positive interaction with the developed world.

In the circumstances prevailing here now, no one needs any posturing, hypocrisy, or punitive measures from foreign powers aimed at satisfying questionable motives at the expense of the peoples of Southern Africa.

Africa needs development. South Africa has the economic strength and expertise to be able to play a considerable part in the progress of this continent. Consequently I wish to propose again that a Southern African conference be held on matters of health, food production, economic development and measures to maintain peace and order, as well as non-interference in each other’s internal affairs.

*The Domestic Situation

Progress is a prerequisite in the Republic of South Africa. It goes without saying that constitutional development and renewal in South Africa have to take place in an evolutionary manner.

During this session and thereafter we shall accordingly proceed with the measures which have already been announced and which are under consideration.

However, reform also has economic and social facets which, equally, have to be given attention.

Economic Review

In the economic field, the recent improvement in the general situation in South Africa is to be welcomed.

During the past few years, South Africa has had to make difficult adjustments in its economy to adapt to changing world conditions and unfavourable developments at home.

Although these adjustment processes have not yet been completely finalised, it is encouraging that so many successes have already been achieved that there is now once again a better climate for economic growth. The private sector, in particular, has in recent times reacted favourably to these developments.

In 1988, economic policy will still be geared to further increasing the economic growth rate without aggravating balance of payments and inflationary problems.

At the same time, the implementation of the necessary structural adjustments to the economy will have to be continued. The management of State finances will play an important role in this process.

It is generally known that the growth rate of the gross domestic product amounted to less than 1% in 1986 and that, in all likelihood, it exceeded the 2% mark in 1987.

The recovery is currently extending to more and more sectors of the economy.

In the meantime, international financial conditions remain uncertain, as is apparent from the sharp movements on foreign stock exchanges and on the foreign exchange markets. South Africa cannot isolate itself completely from these events and this is another factor which makes a cautious and sound domestic economic policy essential.

Policy Renewal

Economic and financial policy is designed to serve the interests of a country in the best possible manner within a particular set of national and international circumstances.

Economic and financial conditions are continually subjected to local and foreign influences. Although policy and policy measures are continuously being adapted to changing circumstances, it is nevertheless necessary, from time to time, to analyse matters thoroughly and, as required, even to make drastic adjustments to one’s course. A variety of steps which the Government has taken over the past few years clearly indicate its seriousness in wishing to place the management of Government finances on a sound footing by means of well-considered reform.

An authoritative investigation was necessary to make changes to the system of taxation which would bring about a fairer distribution of the tax burden and which, in particular, would mean a better dispensation for the individual—hence the Margo Commission. Affordable limits for Government expenditure are determined by the contribution taxpayers are able to make plus the amount that can be borrowed. Since every need cannot be met, a determination of priorities has to be undertaken—hence the creation of specific mechanisms, such as the National Priorities Committee and the five-year expenditure guidelines.

The process of priority determination entails renewed consideration by the State of the nature and extent of the services which it renders.

In certain cases, those who use these services will have to make a larger contribution themselves because of the lower priority allotted to them, otherwise the costs would have to be recouped by means of general increases in taxation. Naturally, humanitarian services for the less privileged will enjoy a high degree of preference in the determination of priorities.

Nonetheless, the utilisation of the maximum affordable resources still leaves certain important capital requirements unsatisfied. Consequently, the utilisation of the country’s current assets also has to be subjected to thorough investigation and priority determination—hence the intensive investigations into privatisation.

Privatisation

Privatisation in its various forms is taking place today in almost every Western country and holds the promise of numerous advantages. Every country’s circumstances are however unique— those of South Africa too.

In contrast with the socialism and nationalisation which are accepted as policy in some other countries, the Republic is committed, in terms of the Preamble to the Constitution, to the promotion of private initiative and effective competition as well as to the protection of the ownership of property. Thus privatisation is also less necessary than in countries where enterprises have been nationalised on a large scale.

In pursuance of the White Paper which was tabled during the previous session, significant progress has been made with investigations into privatisation.

Toll Roads

The Government has been negotiating with the private sector for almost two years on the privatisation of certain sections of the national road network.

Privatisation of national roads means that private companies or consortiums will finance, build, maintain and run sections of road as toll roads for a period of 25 years. An agreement has now been reached with two consortiums.

• — Firstly, on the privatisation of the Hendrik Schoeman highway between Springs and Krugersdorp.
• — Secondly, on the privatisation of a section of the national route between Kroonstad and Johannesburg and a section of the national route between Pietermaritzburg and Alberton.

The eventual investment in this connection will amount to somne R2 150 million at 1987 money values. This should give a welcome additional impetus to the economic recovery. At the same time, I would like to emphasise that alternative routes will remain in existence.

Large Government Undertakings

The creation of infrastructure by Eskom, the South African Transport Services and Posts and Telecommunications has amounted to more than 30% of the total nett fixed investment in the Republic over the past five years. Tariff increases for these basic services to pay for the increased capital expenditure have also, of necessity, contributed to inflation.

Following a thorough inquiry which was completed in 1984, the control structure, strategy and investment pattern of Eskom were drastically adjusted. This has already borne fruit in the form of a lower rate in electricity tariff increases. This should have a favourable effect on the downward trend in the rate of inflation.

Similar investigations have been undertaken in co-operation with the SA Transport Services and with Posts and Telecommunications and are nearing completion.

The Government has already decided in principle to table the necessary legislative amendments in Parliament for the conversion of Eskom, the South African Transport Services and Posts and Telecommunications into tax-paying profit-seeking enterprises, either in their entirety or after subdivision into appropriate business undertakings.

The recommendations and intended action emanating from the investigations into the South African Transport Services and Posts and Telecommunications will be dealt with by the responsible Ministers in their budget speeches.

Given the successful reorganisation achieved in respect of Eskom, the necessary investigations aimed at listing on the Stock Exchange will be undertaken first in its case. However, the Government’s well-known approach to privatisation should be emphasised, namely that the Government will not privatise simply for the sake of privatisation, but will give precedence throughout to the broader national interest. At the same time, satisfactory arrangements will have to be found to deal with the interests of the personnel of these institutions.

†State Corporations

In principle, the Government is in favour of the privatisation of its shareholding in Foskor. Various options to overcome certain difficulties are at present being urgently investigated.

As far as Iscor is concerned, structural adaptations are at present being considered to make privatisation possible.

Similarly, it is the Government’s view that the development of the Mossel Bay Gas Project should in the main be a private sector development.

In the meantime, good progress has also been made with the privatisation of several functions of the Atomic Energy Corporation in which advanced technology is involved.

Industrial Development Corporation

Over many years, the Industrial Development Corporation has made an outstanding contribution to industrial development and has at its disposal a highly capable personnel corps.

In recent times, a growing need for the kind of assistance the IDC is able to render has developed among industries operating in the area falling between the fields of endeavour covered by the IDC and the Small Business Development Corporation (SBDC).

It would therefore appear to be the appropriate time to adapt the functions of the IDC to this need so that the original aim of industrial development may continue to be pursued, but with the accent increasingly on the development of small and medium-sized undertakings.

To be able to execute and finance this additional task properly, the IDC will sell off its present shareholdings in other companies insofar as this is desirable.

The Proceeds of Privatisation

The proceeds of privatisation will be allocated to the State’s Capital Revenue Fund and will not be used to finance current expenditure. They will be utilised, as a first choice, for the redemption of public debt.

In view of the urgent need for capital expenditure in numerous fields, this capital income will also be utilised for:

• — basic infrastructure and services in developing areas; and
• — the creation of capital funds for the development of small industries and small business enterprise by the IDC and the SBDC.

Deregulation

In July 1986, the Government committed itself to a policy of deregulation. Because vested interests are affected and systems frequently have to be redesigned, it is an illusion to believe that meaningful deregulation is possible overnight. Nevertheless, certain outstanding successes have been achieved, such as those in respect of close corporations, the taxi industry and industrial hives.

Other such developments are being considered, for example in respect of the legal prescriptions on trading rights and business premises which affect the activities of Black businessmen in their own areas; the revision of food-handling regulations; and trading hours and licences.

*State Finances

State finances, as like the rest of the economy, were naturally unable to escape the influences of a variety of internal and external occurrences during the past few years.

In the sluggish economic conditions experienced in 1985, 1986 and until early in 1987, a heavy responsibility rested on the authorities to stimulate the economy towards recovery in a responsible manner by means of increased Government spending. At the same time, the Government endeavoured to adapt the nature of this additional expenditure to the most pressing socioeconomic needs, such as in the fields of housing, basic infrastructure, temporary creation of employment and education and training.

While, on the one hand, the State’s own sources of revenue came under pressure during this period, further expenditure was unavoidable, on the other, because of a variety of factors. These included the drought, the Natal flood disaster, necessary actions in the interest of national security and the maintenance of law and order.

The Government is thoroughly aware that, however necessary it may be in the short term, the economy cannot bear the indefinite continuation of this stimulatory policy, without the rate of inflation and interest rates being adversely affected.

In the meantime, there have been welcome signs of recovery and moderate economic growth in the private sector, which have reduced the need for stimulation on the part of the authorities. The Government accordingly intends to bring the extent and composition of the Budget back within affordable limits and sound fiscal proportions within a reasonable period.

Against this background, renewed consideration had to be given to the extent of total Government expenditure, while taking into account what the economy could afford.

It is therefore essential, on the basis of a thorough system of priority determination, to

• — reconsider the necessity of existing services;
• — review the standard of services in the light of what is affordable;
• — bring tariffs and prices more into line with real costs; and
• — provide assistance and support, where it is justified, increasingly on the basis of individual needs instead of by means of generally applicable measures.

†The Margo Report

The Margo Report, which engendered great interest, has made several recommendations for far-reaching changes to the South African tax structure.

Extensive discussions have been held in this connection with representatives of the private sector, for example at the President’s Conference in November last year.

The most important element in the Margo Commission’s recommendations is the replacement of GST by value added tax. As far as the type of value added tax is concerned, the commission has made two recommendations, namely a comprehensive business tax, which is its first choice; and an invoice-based value added tax as the alternative.

In view of the Republic’s position regarding exports, the Government has decided to accept the working group’s recommendation that GST be replaced by an invoice-based value added tax. This is the same system of taxation that has been applied successfully in various countries for many years.

A few days ago, the Minister of Finance and I met with most of the members of the Margo Commission and consulted them on this recommendation. Having regard to the problem of exports the commission supported this decision.

Further discussions on its practical implications are to be held with organised commerce and industry and other interest groups.

A White Paper setting out the complete reaction of the Government will, in the near future, be tabled in Parliament by the Minister of Finance.

Where possible and practicable, the accepted proposals will be implemented in the fiscal year which begins on 1 March this year. However, because of practical considerations, further investigations and consultations and the implementation of legislative amendments, the remainder of the recommendations will be instituted from 1 March next year at the earliest.

Levy Funds

Levies by the central Government which at present flow directly to special funds outside the Budget, will henceforth be channelled unearmarked to the Exchequer and their application will be subjected to the process of priority determination together with all other revenue. This includes the fuel levies which at present flow directly to energy-related funds and the National Roads Fund. In the process, the levy itself will be the subject of periodic review.

*Limitation of Current Expenditure

In recent years, current expenditure has begun to constitute a growing part of Government expenditure. In its efforts to keep the growth in Government expenditure within affordable limits, the Government must therefore give serious attention to current expenditure.

All Ministers and their departments are at present thoroughly examining their own internal priorities.

With the emphasis very strongly on the restriction of current expenditure, it would appear to be necessary to expand further the activities of the National Priorities Committee.

As far as capital expenditure is concerned, a mechanism with the necessary technical expertise is at present being created through which all capital expenditure in the broader government sector will henceforth be subject to Cabinet approval after consideration by the National Priorities Committee.

With a view to reducing Government expenditure where at all possible, all of the State’s functions and services are at present being evaluated by means of a function evaluation program under the auspices of the Commission for Administration.

Personnel expenditure currently represents 32% of government spending. It is Government policy that Public Service personnel should receive a fair remuneration for their work. Nonetheless, restriction of the growth in current expenditure inevitably has implications in respect of salaries and wages.

Inflation

The consumer price index is showing an encouraging downward trend. The rate of increase in the consumer price index over a twelve-month period declined from 20,8% in January 1986 to 14,7% in December 1987.

Even so, the increase in prices remains higher than the average in the Western industrial countries with which South Africa primarily trades.

The Government is thoroughly aware of the disadvantages a high rate of inflation entails, not only in respect of the country’s competitiveness in international trade, but particularly for many undertakings and individuals as well.

Almost every consumer has in recent years had to experience a reduction in the purchasing power of his after-tax income.

Inflation impoverishes the farmer, the housewife, the worker, the salary-earner, the small businessman and the pensioner. The Government is concerned about this. The Government is accordingly giving urgent attention at present to the proposed Plan of Action for Combating Inflation which was recently drawn up by the Economic Advisory Council.

As indicated in the report, inflation is a complex problem caused by a variety of factors. The maintenance of discipline in Government finances is a key element in the fight against inflation.

The persistent increases in salaries and wages in every sector of the economy clearly contributes to the problems of inflation.

A disciplined approach which would be applicable throughout the economy is essential in this regard if we seriously wish to tackle the problem in respect of this aspect of inflation.

It also has to be borne in mind that the current economic upswing is in an early phase. Should Government expenditure increase drastically, especially as a result of the granting of a general salary increase to employees of the State, this would certainly entail tax implications which would seriously impair the economic recovery. This the country cannot afford.

Consequently, the Government has decided to take the essential step this year of not granting any general increases in salaries and wages. Provision will be made only for the normal incremental adjustments and specific professional adjustments. This coincides with other measures, including a drastic reduction in the creation of new posts and a revision of services and standards.

To be able to advance at all in combating inflation, a sustained and enthusiastic team effort between the public and the private sectors is required. We have no other option. In my opinion, this Parliament should make a united stand against the threat of inflation in South Africa.

In view of this, I held discussions yesterday with members of the Economic Advisory Council, representatives of organised commerce and industry, professional groups, consumer organisations, agriculture, women’s organisations, employees’ organisations, staff associations and the media.

During the discussion, an appeal was made to employers and employees for their full co-operation in combating inflation and to apply similar discipline in respect of the growth in personnel expenditure and increases in prices.

If the positive trends in the economy continue, the State’s tax revenue will eventually benefit as well, but the full advantages of the expected growth will not yet be available to the Treasury in the coming financial year.

To sum up: The objective which the Government is pursuing with all of these actions amounts to the authorities taking the smallest possible, but nevertheless fair and legitimate contribution from every taxpayer and using these contributions for the best possible benefit of the country as a whole.

Policy renewal often demands courageous decisions and a willingness to make sacrifices on the part of all concerned.

Come, let us do this together.

It is my prayer that the blessing of Almighty God may lead and support you in your work and deliberations.

I now declare this Sixth Session of the Eighth Parliament of the Republic of South Africa duly opened.

The Joint Sitting rose at 11h39.

Mr Chairman, I move:

Agreed to.

Mr Chairman, I move:

Agreed to.

Mr Chairman, I move:

Mr Chairman, with your permission I should like to take this opportunity to congratulate the newly elected member Mr A S Akoob who, on behalf of the National Peoples Party of South Africa, has scored a resounding victory. [Interjections.] Of course, one would have expected all the political parties represented in this House to have faced the electorate, irrespective of their size. Nevertheless, only two parties faced the electorate in this very significant by-election, namely the National Peoples Party of South Africa and Solidarity.

We scored an excellent success, not for any particular political party, but for the House of Delegates as a whole, because despite certain vituperations; despite the campaigns by the left wing, namely the United Democratic Front and the Transvaal Indian Congress, who have been looking only to the by-election of the House of Delegates and ignoring the fact that this component of the tricameral Parliament is having another by-election; and despite the fact that we have had campaigns, not by the Opposition candidate but by the Opposition party, the NPP has maintained a proud record in all the campaigns. [Interjections.] We projected our party. We promoted our product and did not run down either the Opposition or the Opposition candidate. [Interjections.] We only answered false statements about conscription, Prospecton, etc. [Interjections.] We also know, as Mr Akoob will concede, that the NPP scored this victory; that people have moved away from individualism, despite the fact that the NPP was denigrated in Opposition Party manifestos and in their advertisements which were disseminated across the length and breadth of this massive constituency, containing messages of bribery and corruption. In spite of that, in the Eastern Transvaal election you are dodging a commission.

I am dodging a commission?

Yes, we will show you on Monday. [Interjections.] You must remain here when we are talking about you.

That party ran an advertisement not projecting Solidarity, but instead running down the NPP and talking about bribery and corruption in all the pamphlets. If any political party in this campaign, in which Mr A S Akoob scored a resounding victory, cannot produce a single positive argument supporting the party, then that particular party is bankrupt. [Interjections.]

They are going into liquidation.

Nevertheless, these statistics are important for the left-wing forces and for Solidarity.

Let them work out the NPP’s voter strength, because they themselves have nothing positive to show. [Interjections.] The only thing that party can show is “wipe out”! When two parties present their products, there is a salesman’s rule to be followed: Do not sell your product by running down the other man’s product. [Interjections.] The public has passed judgment by electing Mr A S Akoob and bringing him to this House, and I congratulate him and praise him for his victory.

The public has passed judgment that the NPP believes in clean administration. The NPP consists of simple people. In the advert in the Sunday Times Extra preceding the election, Solidarity alleges bribery and corruption. Every point in that advert and every point in their manifesto is against the NPP. We did not highlight what is happening in Windmill Park. We did not highlight that during the election. It did count as an election issue, and as far as the UDF and the Transvaal Indian Congress is concerned, we fought against these allegations of bribery and corruption. What is more, we are going to deal with this on Monday, and deal with it here where the truth is going to be established. [Interjections.]

Despite that, when in the election campaign Mr A S Akoob’s name was being tarnished, the Chairman of the Ministers’ Council of the House of Delegates put his personal name in front in this election. The NPP put its party in front. The people have shown that there has been a change between 1984 and 1988. People are not looking at individualism, they are looking at a movement as a whole.

Despite these allegations—and these allegations come from a party which cannot produce a single positive fact about its achievements—that party has been shown to be bankrupt. The position of the House of Delegates increased from 2 932 in 1984 to 3 461. We believe that there are problems with the voters’ roll. We believe that the true percentage poll is really better than 1984, and the overall voting supporting the new dispensation, taking the 1984 voters’ roll into consideration, is in fact 49%

However, let us look at the voter support enjoyed by the NPP despite all these allegations and all this vituperation. Our voter strength increased from 580 to 2 619. Our increased supporting vote in that area amounting to a massive 519%. I do not think that in the history of the tricameral Parliament any party has increased its support in an electoral division by 519%. The voters of this country, where we have a final public accountability, have passed judgment.

Let us look at the miserable figure in respect of Solidarity: 1 336 in 1984 and a drop to 772—a decline of 45%. [Interjections.] The NPP, with the victory of Mr A S Akoob, has hit the jackpot, getting 4 out of 4 in these by-elections. [Interjections.] In the course of Mr A S Akoob’s campaign—I am going to deal with this at length during the no-confidence debate—they alleged that this party is creating apartheid in the Indian community. That is why they are not here. This is the first time—this has never happened before in the 125 years of our history.

Despite that, let us look at possible criticism. We had more votes on election day than the special votes. As far as Solidarity is concerned, 1 438 of their 3 461 votes were special votes. Despite the fact that we had the most irresponsible statements ever made by the national chairman of Solidarity threatening teachers, using epithets such as “despot” and “dictator in the making", teachers have the right to join political parties. Teachers can support Solidarity, and if anyone threatens them I can guarantee them that this side of the House will not bear any grudge, because it is their democratic right to take part in elections and to take sides.

Let us look at the situation, however. I want to furnish further statistics. 1 438 special votes were cast, and of those, the NPP received 1 122. Solidarity received 316. In every polling district—13 out of 13—the NPP beat Solidarity.

This is one of the two places where judgments are going to be passed. The other place where judgment is going to be passed is at the ballot box. Mr A S Akoob’s election on Tuesday indicate that the people have passed judgment.

I could write a thesis on all the details relating to this election, but there is another important factor which the country considered. It is that Solidarity is a bunch of sleepers. The NPP is a group of workers. The people have given recognition to the fact that this small group of people, who do not have big names, are not the kind of people who go and get harbour clearance licences and admit that they go and see the Director-General of the Department of Transport. They do not go and make allegations when a human being is sold a strip of land behind his yard.

These people do not tell the public that an attorney from this House has threatened me, saying that he will take me to court if I do not give a client of his—and the client is not a displaced trader—a petrol service station site—a particular site—in Phoenix within a prescribed time.

That is why he left.

They do not say, Mr Chairman, that they have repeated allegations outside this House. They issue written statements and they bluff the Press in the Eastern Transvaal that they have repeated their allegations outside this House; they say we are scared.

The NPP believes in clean administration, in public accountability, in truth and honesty, and it believes that this is the arena where there is going to be accountability next week. I hope that when the truth is divulged—and the truth was proven in the recent Transvaal by-election where we scored a great victory against lies and vituperation—that that is the message to the left-wing forces and to Solidarity. It is a great pity that the PRP found reasons not to field a candidate. [Interjections.] In Tongaat, too, they fielded a candidate, then withdrew him.

As far as we are concerned there is no difference between Solidarity and the PRP. However, if Solidarity wants to defeat us they must do it by means of the ballot box. If we should lose the election we would stand here and congratulate the Solidarity candidate if he should be the winner. We cannot go to a man’s house for 10 years and tell him that he must be our host, and then, when he dies, the mouths cannot function. The NPP does not believe in that and that is why during the campaign they wanted the chairman to step down. It is because we believe we will fight in the field of politics and not on a personal level.

I do not want to deal with the motion because I will then be ruled out of order but I hope that the hon members will sit here when I take the floor during the No-confidence debate. I want to give them a message and they must be prepared. I will deal with every sentence that they have uttered because I do not believe there is a difference between the PRP and Solidarity. I will deal with everything they said in court on 25 January and in yesterday’s Press statement where they pretended to be talking outside this House but actually said nothing.

I also want to congratulate Mr Akoob. His victory was not a personal one and neither was it one for the NPP but it was a victory for clean administration, honesty and truth. It is the recognition of a group of small and simple people, as well as a victory for the House of Delegates.

Question agreed to.