as Chairman, presented the First Report of the Select Committee on Co-operation and Development.

Report and proceedings to be printed and considered.

as Chairman, presented the Second Report of the Select Committee on Co-operation and Development.

Report and proceedings to be printed and considered.

as Chairman, presented the Report of the Select Committee on the Defence Amendment Bill [B. 74—‘82.]

Report and proceedings to be printed.

Mr. Speaker, when the House adjourned yesterday evening I had moved an amendment to this Bill in which I referred to the tremendous burden placed on individuals and to the very adverse effect this Bill would have on the ordinary man in the street. I had also noted the problems of bracket creep as a result of inflation which is currently running at a higher rate—the hon. the Minister of Finance can correct me if I am wrong—than at any previous stage. It is, I believe, running in excess of 16% at the moment.

I had also touched upon the question of estate duty, particularly as it affects the farmers of this country. In this respect I want to draw to the attention of the hon. the Minister an article in The Farmer of July 1981. I should like to give the hon. the Minister a few quotes from this article written by the economist Johan Willemse. On discussing the S.A. Agricultural Union’s viewpoint, he writes—

In this country, of course, we are very proud of the job that our farmers have done. We are proud of the fact that we are one of the foremost food exporting nations in the world. Yet, here the S.A. Agricultural Union itself says that for the sound continuation thereof a prerequisite is the effective utilization of agricultural resources. The article goes on to say—

Therefore I have very little doubt that it would be to the benefit of South Africa in general, and of the farming community in particular, if the hon. the Minister could do something about the estate duty situation in South Africa today.

There are other items also which are affected by this inflation that is with us. On 31 August last year I asked the hon. the Minister a question, and I should like to repeat just part of his answer because, I believe, these few points are important. I asked the hon. the Minister what the latest specified date was on which the rates of donations tax had been altered. The answer was that they had never been altered. I further asked the hon. the Minister what amount a taxpayer could donate to his children free of donations tax. I then found that the last increase had put it up to R15 000, with effect from 1 April 1978—more than four years ago. In that period of four years that R15 000 has probably depreciated to the tune of some 40% because of inflation, and yet the allowable figure remains constant. These items need to be looked at annually, and that has not happened.

Thirdly I asked the hon. the Minister what amount a taxpayer could donate on a casual annual basis, to which the reply was R1 000. The last change in that amount was made as long ago as 1 July 1955—no less than 27 years ago. That particular amount is ludicrous by today’s standards. If one wants to put it on an equivalent basis to what it was in 1955, one would probably have to treble it. We know that in many of the amending Bills which come before this House the Government increases amounts because of inflation. Sir, Tax Allowances also definitely need to be increased, and I hope the hon. the Minister will give this his attention in next year’s budget.

Before getting on to the actual details of the Bill itself, there is one last question I want to ask the hon. the Minister and that involves the position relating to the taxation of Blacks. As I understand the situation the hon. the Minister told this House some time ago that the intention was to put the Black population and the White population on an equal footing in terms of the taxation laws and the taxation levied. As I understand the situation, however, that has not yet happened. At the moment, as far as I know the Black who is well-off pays less tax than the White who is well-off, whereas the Black who is not as well-off pays more tax than the White who is in an equivalent position. I would like the hon. the Minister’s comment on whether that is indeed the case and what he and his Department intend to do about it and, secondly, when they expect to be able to get Black taxation on a par with White taxation.

When one looks at the Bill itself, one notes that some loopholes have been closed, but in clause 4 there is a limitation placed on the amount a man may get as a so-called “golden handshake”, in the form of a special rate of tax. That amount is limited, in terms of clause 4, to three times the man’s annual salary over the preceding three years. Once again we are rather concerned about the fact that this discriminates against the poor man, because three times his earnings obviously constitutes a far smaller figure than three times the earnings of a managing director. Three times the earnings of a managing director could be R180 000 while three times the earnings of the lower-paid employee could be less than half of that. We do not think that this is equitable and therefore believe that there should be inserted into this clause—irrespective of the consideration of three years’ earnings—a minimum amount that a man may be allowed on the basis of the special rate of tax. It is not that the money is not taxable, it is merely taxable at a special rate. The hon. member for Yeoville has an amendment on the Order Paper, and I hope he will be back in time to move it in the Committee Stage, but in case we do not get to the Committee Stage, let me say now that that is the motivation for it. We believe that the figure should be pegged to R100 000.

The Bill before us also makes allowance for a final deduction system whereby a number of taxpayers—I understand the figure is an enormous one; something like 600 000—will not have to submit tax returns. Basically if a person’s income is less than R7 000 the tax is deducted by the employer. It is indeed quite interesting to have a look at this Bill and see how many areas of taxation are affected by this new system that has been introduced and how many amendments have had to be made to the Income Tax Act in order to create this situation. We realize that this is, to a degree, experimental at this particular stage. I have no doubt, however, that the R7 000 limit is going to have to be increased considerably, not immediately, but in due course. The first thing that is going to affect it is, as I have suggested, bracket creep. With inflation, more and more people are going to be earning more than R7 000, and in due course they will all have to submit returns, which would defeat the objective of this particular provision. Secondly, I also have no doubt that there are many people who could earn more than twice R7 000 or even triple R7 000, people whose only source of income is basically their employer. One should also, perhaps, consider freeing those people from the necessity of submitting tax returns. What I am saying is that we approve the system, but we look forward to it being expanded considerably in the future.

I should also like to draw to the hon. the Minister’s attention the fact that in other countries they even tax interest and dividends at source. This is something else that we could well consider in this country to prevent people continually having to submit tax returns. This obviously saves them a lot of time and trouble. What is more important, however, is that it is obviously going to save the taxation authorities in this country a tremendous amount of work. 600 000 fewer returns should make a material difference to the amount of work they have to do. We hope that this will lead to a reduction in staff and that, ultimately, the taxpayer will get an even bigger benefit from this because in due course that department will not need as much money to pay its staff.

The next clause I particularly want to comment on is clause 13 which relates to housing. We welcome what the hon. the Minister has done in this regard. He has allowed people, firstly, a primary reduction of 10% and, secondly, an annual depreciation of 2% on the properties they erect. However, I want to point out to the House that the properties concerned have to consist of a minimum of five Units and have to be properties that were built for, shall we say, profitable purposes in terms of letting or to house employees. Hopefully, this will encourage more people to invest in this type of housing and encourage employers to invest in housing for their employees. I regret to say, however, that we believe that this is a drop in the ocean. In view of the tremendous housing problem we have in this country amongst all population groups, we believe that these allowances should be extended considerably further, because once again it is the man in the street who is being left out. These housing regulations basically cover employers and people who put up multi-housing developments consisting of at least five units.

However, a tremendous number of the houses built in this country are built by owner-builders and the ultimate ownership of the houses inevitably goes to the private individual. For many years the plea has been made in this House, a plea which unfortunately has fallen on deaf ears, that we should allow interest repayments on bonds to be tax deductible in the taxpayers, hands. We believe that this is absolutely essential in South Africa’s situation today, more particularly because of the tremendous increase in the interest rates on bonds over the last few months. That is not the end of it: One understands that there is going to be another increase of 1% in bond rates, probably in August. This is a tremendous burden on the man in the street. He is finding it increasingly difficult to keep up his bond repayments. The interest is eating up a tremendous portion of his monthly or annual income. I am quite certain that an allowance of the nature I have suggested would do housing in South Africa a tremendous amount of good and I would ask the hon. the Minister please to consider this very, very seriously.

The educational provisions are also extended in this Bill. Once again, we welcome these provisions. We think they were necessary and, certainly, we are very happy that they have been introduced. There is, however, another group of educational institutions to which I want to draw the hon. the Minister’s attention. These are the institutions which bring out leadership qualities in the youth of today and encourage them to take part in outdoor activities. I am obviously referring to organizations such as Veld and Vlei, Adventure Trusts, Boy Scouts, Girl Guides and organizations of that kind. I am sure that these organizations are educational organizations in everybody’s eyes. Education does not only encompass academic education. In fact, the training of the mind and promoting leadership qualities in the open air are, I would say, of equal importance to academic education. These organizations are, however, not included in this tax relaxation. I should like to ask the hon. the Minister whether he would not very seriously consider allowing that type of educational institution also to benefit from the provisions of this Bill.

This is all I want to comment on at this stage. Other speakers on this side will go into more detail on a number of these items.

I want to end, as I began, by saying that we do not believe that this Bill should be passed in its present form. We believe it should be amended to alleviate the burden on individuals in these difficult economic times.

Mr. Speaker, it is interesting that just as in previous financial debates, the hon. member for Port Elizabeth Central did not really confine himself to the Bill, but tried to conduct bread-and-butter politics of a sort. The hon. the Deputy Minister of Finance and the hon. member for Witbank yesterday dealt most effectively with speakers on that side in those debates. Through the official Opposition’s boycott politics with regard to the President’s Council, they have excluded themselves from the present political debate, and that is why they are now trying to conduct bread-and-butter politics while we are discussing financial measures. It is interesting that after the hon. member for Port Elizabeth Central had moved his amendment yesterday, he made a plea on behalf of those persons falling within the highest tax bracket, namely the 50% rate. He condemned the fact that this group’s tax rate will supposedly be increased by the 5% loan levy to 52,5%. He also had a great deal to say about the 10% surcharge on company tax. It was quite clear from his behaviour that he was more concerned about the “fat cats” in his party than about the State’s finances. He purposely neglected to mention those people who will not have to pay levies at all, namely people whose taxable incomes do not exceed R7 000, people whose normal tax is less than R150 and also people over 70 years of age whose taxable income does not exceed R15 000.

In addition, what are the financial implications with regard to certain items in the budget? Taxation and lease payments by the gold-mines to the State during the past few years have been as follows: In 1977-’78 they amounted to R466 million; in 1978-’79, R1 501 million; in 1980-’81, R3 6333 million and in 1981-’82 it is estimated that it will only be R2 100 million. In other words, R1 500 million less will be earned from the gold mines than in the previous year. In addition, the gold price is even lower this year.

In contrast, in this year’s budget significant concessions have been granted, particularly for the lower income groups. The hon. member did not mention this. What are these concessions? Among other things, social pensions were increased by R16, R12 and R9 per month for Whites, Coloureds and Blacks respectively, plus two further bonuses of R30, R24 and R18 respectively. Military and civil pensions were also increased accordingly. The final LBS deduction system to which I shall refer in more detail later, has meant that this group of people, with an income of less than R7 000 per year, will have to pay R109 million less. Local authorities are given R92 million in aid, and the allowable deduction in respect of the remuneration of working married women is being increased by R200 to R1 600.

These few concessions I have just mentioned already total R158 million, and the improvements in the conditions of service in the Public Service total a record amount of R800 million. The loss in income from the gold mines of R1 500 million and the extra expenditure I have just mentioned briefly of R1 427 million, already make a difference of almost R3 000 million as against the previous year, and this is not the only drop in the revenue and increase in the expenditure. Instead of advancing constructive criticism and positive contributions in connection with this Bill, the official Opposition resort to petty politics. They are incapable of making a positive contribution. That is all I have to say about the hon. member.

I want to start by expressing my thanks and appreciation to the hon. the Minister and the officials for the detailed explanatory memorandum submitted to us and also for the discussions we were able to hold with them. The Bill determines the scales of normal tax payable by individuals and companies and also introduces further amendments to the Income Tax Act, 1962. Some of these amendments involve far-reaching changes, particularly in two important fields. The first concerns the fiscal incentives to industrialists in economic development areas. Another hon. member on this side of the House will elaborate further on this. The second relates to the way in which liability for income tax of a considerable number of taxpayers is in future to be determined and collected. In terms of the relevant provisions of the principal Act every taxpayer is obliged to furnish an annual return of his income which is processed by the Commissioner of Inland Revenue. After this a notice of assessment is sent to the taxpayer. It was found that if certain slight adjustments were made in the existing system, the amount collected for income tax of a large number of taxpayers—I am told up to 58%—whose incomes consist almost entirely of salaries or wages, will be sufficient to cover their total liability for the year, so that the furnishing of a return will actually be unnecessary.

The taxpayer in question will therefore no longer need to complete and hand in a return. The Commissioner will benefit from this because it will no longer be necessary for him to issue thousands of forms and process returns. Except under certain circumstances, persons who are not preliminary taxpayers and whose taxable incomes do not exceed R7 000 and are chiefly comprised of salaries, wages and other remuneration (which subject to the deductions of employee’s tax), will no longer be obliged to submit annual return of income. Every taxpayer whose taxable income is less than R7 000 and who need not therefore submit a return will, however, still have a right to claim repayment of part of his employee’s tax if too much was deducted, provided he can show that the standard deduction is less than the amount actually deducted from his salary. He will also be entitled to claim repayment if, for example, he married during the year, a child was born or he only worked for part of that year.

In terms of clauses 1 and 2 and the annexure, persons, excluding companies, are also liable to a loan levy equal to 5% of the amount payable in normal tax. What is important, and I have already referred to this, is that this loan levy is not payable if the taxpayer’s taxable income does not exceed R7 000, or the amount of normal tax payable is less than R150, or he is over 70 years old and his income does not exceed R15 000.

The rates of company tax are determined at 42 cents on every rand of taxable income of a company, provided that to this tax a surcharge of 10% on such tax is added. In terms of section 28(1) of the principal Act, the taxable income of a long-term insurer is deemed to be an amount equal to 30% of the taxpayer’s investment income, less certain exemptions. Clause 19(1)(a) provides that such percentage is being increased from 30% to 40%. Yesterday in his Second Reading speech the hon. the Minister pointed out that further negotiations in this regard will be conducted with long-term insurers.

In clause 5 the primary rebate in respect of married persons is increased from R200 to R320 and for unmarried persons, from R120 to R200. This is another concession which the hon. member for Port Elizabeth Central did not even mention.

In clause 6 there is a further concession in that exemption is being granted in respect of interest payable on certain investments at the Post Office, and the first R100 of every taxpayers investment income is being exempted from tax. In terms of section 20A of the principal Act the first R1 400 of a married woman’s remuneration is excluded from the taxable income of her husband. Clause 16 of the Bill increases this amount from R1 400 to R1 600.

Other hon. members on this side of the House will discuss other provisions of the Bill.

Mr. Speaker, the hon. member for Smithfield discussed a number of clauses in detail, and I do not intend to react to his speech. However, I want to join him in expressing thanks and appreciation for the detailed memorandum placed at our disposal. We appreciate the fact that the hon. the Minister and his department spent so much time explaining these technical matters by means of a memorandum. On behalf of my party I should like to express gratitude for this.

As far as the official Opposition is concerned, the hon. member for Port Elizabeth Central moved an amendment. We do not have much fault to find with the tax being levied. What is the tax philosophy in South Africa? After all, there must be taxation. However, we believe that people must not be over-taxed or under-taxed. The English saying “what the traffic can bear” also applies in this connection. There must therefore be a fair dispensation and a fair system of taxation. The hon. member for Port Elizabeth Central should rather, therefore, concentrate on ascertaining whether the tax being collected is spent fairly and justly. This is the important problem we must consider in South Africa today. I shall return to this again later.

I want to tell the hon. the Minister that the step taken this year when it was provided that those persons with an income lower than R7 000 per annum need no longer submit returns, was an excellent one.

I want to make two remarks in this connection. As the hon. the Minister and officials of his department told us, it is actually to some extent unnecessary for these people to submit tax returns, because in terms of the present tax system tax is collected from them and paid into the Treasury. However, I want to sound a word of warning that we must keep our eyes open for tax evasion, not tax avoidance, because if the Act allows one to get past certain things, it is not an offence. However, when people evade certain things, we must investigate. I also want to bring it to the attention of the hon. the Minister that at present there is a total misconception in the country with regard to this matter. The hon. the Minister must make this matter quite clear. People are under the impression—I have been finding this recently at meetings—that everyone earning less then R7 000 per annum need not pay tax. I believe there is a slight misunderstanding in this connection, and it would be as well if this aspect were spelt out so that people know exactly where they stand.

I want to refer the hon. the Minister to a headline in the Hoofstad of 1 June this year, which read: “Personeeltekort raak sorgwekkend, Jan Taks sal nie gou betaal nie”. It is true that there is a tremendous shortage of staff. I feel it is a pity that it took so long to see to it that this department had the right people, and enough of them, to collect the money. The officers involved in this are technical officers. The fact is that as far as technical officers are concerned, special steps have to be taken to obtain such officers. In this newspaper report this is referred to quite clearly. The report is not merely negative; as a matter of fact, it is very positive. Mr. C. J. Venter, the Chief Director of Inland Revenue, is quoted as conceding that the position gives cause for concern. I thank that officer for bringing this serious state of affairs to the attention not only of the Government, but also of the public. I think it is as well that the public should also know what conditions prevail in this regard.

In order to be able to speak about matters involving staff, I drew two comparisons. I must point out that my comparisons are approximations and that it is therefore possible that I could have made mistakes in my calculations. The appropriation for the relevant programme of the Department of Internal Revenue is R34 653 000, whereas the number of staff involved totals 3 520. If one divides 3 520 into R34 653 000, this gives one an annual average of R9 845. However, if I take another item, viz. the Human Sciences Research Council, I note that its budget totals R13 369 600, whereas it employs 855 persons. If one divides 855 into R13 369 600, one finds that those people’s average annual income totals R15 637. These people do research. I concede that research is an important aspect, not only in South Africa but throughout the world, but nevertheless in my opinion this indicates that there is something completely wrong here. Highly technical people are needed to collect income tax for the State, but there is a tremendous difference between the salaries they earn and those earned by certain researchers.

Perhaps it is true that I am making light of research, because certain research requires highly skilled and trained persons. Nevertheless in my opinion, the comparison I made was an indication that insufficient attention is being given to the work involved in collecting tax. I am not suggesting that the other departments are unimportant, but if the State does not get money, it cannot exist, let alone make progress. For this reason, on behalf of this side I insist that attention be given to this matter.

In the report reference is also made to people who pay too much income tax and have to wait a long time before the money owing to them is repaid. Anyone who pays tax is not very happy when he has to wait a long time for the money owing to him to be repaid. I therefore want to ask that this aspect receive attention. People who have overpaid must be repaid within a reasonable time. What happens if a person who has overpaid, finds that he has to wait a long time before being repaid? In future he will be unwilling to make his payments on time. This will mean that the State will not receive its money in time.

There are many good aspects of the Bill. The hon. the Minister mentioned six points to be considered. Among other things, inter alia, there is the question of regional development incentives. It is a good thing that there will be such incentives. We are therefore on the right path. There can even be cash payments. The industrialist is also being given a choice with regard to the system he wants to adopt. I want to express the hope that arrangements in this connection will not be very complicated so that people will know exactly what the position is. The industrialist must know exactly what he can ask for and how he must set about asking for it. However, if such a system becomes too complicated, these people will eventually need experts to inform them as to what they are entitled to.

As far as the income tax scales for individuals are concerned, I consider them most reasonable, bearing in mind the fact that the State must collect money, that a loan levy of only 5% is being imposed on the individual taxpayer and that the tax has not been increased further. Of course, we must not kill the goose that lays the golden egg. The tax rate for companies has increased from 42 cents to 46,2 cents. I feel this is still considerably lower than it was before, although everyone is constantly asking for lower taxes. However, when one takes into consideration the state of the country at present with regard to imports, our balance of payments and the unemployment rate, in my opinion it is fair that this tax should be paid. Particularly if one bears in mind the profits made by some companies, one is convinced that they, too, must make a contribution.

I welcome the tax deduction proposed with regard to manpower training in terms of clause 9, because it is of the greatest importance that employees be trained. However, training must not be limited to one population group. All population groups must be involved. There is a tendency in South Africa for people suddenly to begin feeling guilty, because it is alleged in the past certain population groups were cheated, or did not get what they were entitled to. However, this will get us nowhere, because a feeling of guilt will merely detract from the fact that we are acting fairly and justly.

We are also grateful for the deduction with regard to dwelling units, but I am afraid that this concession may not have the effect of relieving the housing shortage in South Africa, in any way and here I have in mind in particular the housing shortage for Whites in Pretoria. I am not quite convinced that this concession is really going to be of help, and I believe that other steps will have to be taken, although we concede that a great deal has already been done in this connection.

We also welcome the increased deduction, from R1 400 to R1 600 in regard to married women. This is a good step, because there are many married women, professional women and others who have been trained and can go out and work.

What is the philosophy of taxation in South Africa? As I stated at the beginning of my speech, the levying of tax must be fair and just, and must be distributed over a wide spectrum so that everyone who can pay tax makes a contribution. However, we must guard against smothering the entrepreneur, in other words, the former of capital and supplier of work. We are therefore sounding a timeous word of warning against a too sharp increase in the basic scale. On the other hand, of course, we must also be careful that we do not end up with a few large monopolies which could lead to large-scale exploitation.

I now come back once again to the issue of staff. A few years ago it was announced that rationalization would take place in the Public Service, but at that stage I already had my doubts, because what have we actually achieved with this rationalization? Actually I feel extremely sceptical about any so-called improvements which have been made in this connection. As far as I can see, all it has amounted to is several changes in name, because almost every department’s name has been changed. About three years ago my constituency had a discussion in this connection before the NP congress—I believe this was the first point discussed—and in reply to the hon. the Prime Minister said that the Cabinet was not responsible for it, but that it fell under the Public Service Commission. However, in my opinion it is the responsibility of the Cabinet, and I believe that these constant changes in name must stop, because they merely lead to extra expenditure. In addition, they also lead to confusion, because eventually no-one knows which department is responsible for which task. I therefore ask that we do not continue with these changes in name.

In conclusion, I want to know what all the money collected from the tax-payers is to be used for. As an example, I just want to refer to the budget of the President’s Council. The function of this council is mainly to give advice. Its budget for the 1981-’82 year was R3,4 million, and for 1982-’83, it was R3,62 million. This totals R7 027 300. To this we still have to add the chairman’s salary for two years, travel allowances and other expenditure and housing. If the taxes collected must also be used to defray the above expenses, one could argue that if the State does not wish to continue to incur such heavy expenses, and if the proposals of the President’s Council are not accepted, the council must be disbanded. In contrast, if the expenses are justified, the proposals of the President’s Council must be accepted, and cannot therefore be criticized. For this reason I want to suggest to the hon. members of the official Opposition that we be somewhat more observant in connection with where our expenditure ends up; how our money is spent.

We in the CP support the Bill under discussion. The discussion of this Bill does not, of course, leave much room for criticism of certain expenditures. For this reason we in the CP shall support this Bill as it stands.

Mr. Speaker, the hon. member for Sunnyside made an interesting speech, however I ask him to please excuse me for not commenting on it, because I should like to refer back to the speech made by the hon. member for Smithfield, who said that in moving his amendment the hon. member for Port Elizabeth Central was playing a little bit of bread-and-butter politics. I hope I understood the hon. member for Smithfield correctly.

I was not referring to his amendment alone, but to his complete speech. [Interjections.]

Well, his speech then. I should, however, just like to remind the hon. member for Smithfield that his party came to power in 1948 because of their playing a bit of bread-and-butter politics. [Interjections.] I should also like to remind the hon. member for Smithfield that one of the main functions of Parliament is to act as a watchdog on Ceasar, in order to ensure that what is rendered unto Caesar is not only fair and equitable, but also bearable and in the best interests of the country as a whole. It is for this very reason, Mr. Speaker, that I move a further amendment, as follows—

Mr. Speaker, I am prepared to acknowledge the fact that most of the provisions contained in the Bill before the House now are acceptable to hon. members of this House. Here I particularly refer to the final deduction system, and also the regional development incentives, and I wish to say to the hon. the Minister of Finance that we in the NRP will always welcome amendments to the tax system, such as the introduction of the final deduction system, which reduces both the costs and the administrative burden on the tax authorities, while, at the same time, it frees several thousands of taxpayers whose taxable incomes are less than R7 000 a year from the time-consuming and often burdensome task of having to complete their annual tax returns.

The hon. the Minister will, I am sure, agree that the NRP has repeatedly over the years called for a review of our entire taxation system with a view to achieving greater efficiency and less expense in administering the collection of tax revenue. The provisions contained in this Bill which are designed to achieve this objective are, I believe, an intelligent approach to this problem, and I sincerely hope that there will be further initiatives of a similar nature in the future. As I have already said, the Bill also provides for the introduction of the regional development incentives which include a wide range of subsidies to those enterprises which establish themselves in the so-called development areas. We in the NRP find this to be acceptable since we believe there is an urgent need for the decentralization of economic development, especially in view of the employment and housing needs throughout rural South Africa.

I should, however, like to ask the hon. the Minister whether it is not possible to provide greater incentives of a similar nature for agricultural development in these areas. We are all aware that, relatively speaking, agriculture is a large employer of untrained labour, and usually these people are employed at a much lower capital cost per job created than one usually find in industrial enterprises. We in the NRP believe that a greater effort should be made to develop the agricultural potential of the less-developed areas of South Africa.

By and large the Bill before the House contains many technical provisions that are required for the implementation of the many rebates, exemptions, deductions and allowances involved in determining the taxable income of individuals and companies. As has already been said, there are also provisions for closing the loopholes in the existing Act, loopholes that are at present being used by some people to avoid paying tax. As I have already mentioned, these provisions, which are of a technical nature, are provisions that we can support.

There are also other provisions that we can support, for example in clause 14(1), which will now allow donations to universities and other educational institutions also to be used to defray current expenditure, whereas in the past such donations were limited to expenditure of a capital nature. This is particularly welcomed by the NRP because as a party we realize that in the future, especially with the rising aspirations of our Blacks and their increasing educational needs, educational costs are going to place an ever-increasing burden on the fiscus. I therefore believe that the State should, wherever possible, encourage private individuals and companies to make donations to educational institutions of whatever form.

There are two clauses I wish to draw to the attention of hon. members. I believe they have already been referred to. Clause 7(l)(e) increases the allowance for the construction of housing for employees by certain businesses from an amount of R4 000 to an amount of R6 000. A similar provision in clause 28(1)(b) increases the housing allowance for the erection of housing for agricultural workers from R5 000 to R6 000 per employee. Whilst these increases barely compensate for the rise in building costs resulting from inflation in recent years, we in these benches welcome them. I do, however, want to stress that our agricultural sector is coming under increasing pressure to improve the housing facilities of its employees. I am sure the hon. the Minister is aware of the fact that there are action groups that are actively pursuing these ends. At the same time the rising educational level and living standards of agricultural workers themselves necessitate substantial improvements in housing conditions in agriculture. If these action groups have their way, then an increasing burden is going to be placed on the agricultural community. So any relief the hon. the Minister can give in this regard would be most welcome. I appeal to him to keep this particular matter under constant review, especially in the next few years when I believe—and I am speaking as a farmer on behalf of the farmers of South Africa—we are going to have to spend an increasing amount on housing our employees.

Although I have said that there are certain provisions in the Bill which are welcome and which can be supported by this party, especially provisions such as those making adjustments to cater for inflation—e.g. those concerning housing for employees, which I have just mentioned—our main objection to the Bill is that the hon. the Minister has made no adjustment whatsoever to the income tax and estate duty brackets, especially for those people at the middle and upper levels, to compensate taxpayers for the erosion of their income tax income as a result of ever-increasing inflation. This means that despite the claims of the hon. the Minister and other hon. members in the Government benches, the tax rates have not been increased. In reality, the tax burden on the individual taxpayer has been increased by so-called fiscal drag, for as employees’ incomes are increased to compensate for a loss in earning capacity as a result of inflation, the salaries move into a higher income tax bracket. We are opposing this Bill because the Minister has made no effort whatsoever to relieve this burden on our people, which he could do by adjusting the tax tables in an upward direction.

Finally, we also oppose this Bill because there has been no adjustment of the estate duty to compensate for the reduction in the real value of estates due to the eroding effects of inflation. This means that the State is taking an ever-increasing proportion of a person’s lifelong earnings and, in so doing, is placing many people, especially small businesses, family businesses and farmers, in great financial difficulty. I appeal to the hon. the Minister to have a good look at this because there is nothing worse than to find, when in a family business or in a farming business the father passes away, that the business is suddenly heavily burdened by estate duty to the extent that the heirs for instance, have to borrow money or possibly sell off portion of the farm or, in these days of high interest rates, has to borrow money in order to pay the estate duty. One finds that this places many farmers in an unenviable position and that in some cases they are actually forced out of the farming business.

While, as I have said, we accept many of the provisions in the Bill, which are improvements, for the reason that the hon. the Minister has not made these adjustments we find ourselves unable to approve the Second Reading of the Bill and have moved an amendment.

Mr. Speaker, the hon. member for Amanzimtoti started off by saying that the NP came into power in 1948 because of its bread-and-butter policy. The NP came into power not because of that, but because of the mistakes made by the previous Government, of which his party was then a part, and because of the poor administration of the previous Government. They made so many mistakes that they did not have a hope of being re-elected.

You were part of it, Owen. [Interjections.] You were our adviser on finance. [Interjections.]

The hon. member for Amanzimtoti supports several measures contained in this Bill. Despite that, he moved an amendment which I find rather strange, because he did not succeed in motivating it.

*He spoke about incentives, similar to the incentives now being given to the development areas, that should be given to the agricultural sector, but for many years the Government has been giving the agricultural sector certain incentives. One should not overlook the benefits the agricultural sector enjoys and for which it is grateful, for example the Land Bank system, bank loans at low interest rates and the aid given to farmers by the Department of Agriculture and Fisheries through the Agricultural Credit Division. I do not think the hon. member for Amanzimtoti is being quite fair when he says that there are no incentives for the agricultural sector.

I should like to apologize to the hon. the Minister because I was not here yesterday when he made his Second Reading speech. However, I think he understands the reason for it. I think the hon. member for Smith field replied very well to the arguments of the hon. member for Port Elizabeth Central. The hon. member for Smithfield pointed out all the benefits for the man in the street. He referred, inter alia, to the pension benefits which should also be seen in the context of the entire tax situation. He also referred to the loss in revenue to the State as a result of a whole series of circumstances, including the drop in the gold price and the resultant lower income from the gold mines. I think the hon. member for Smithfield is to be congratulated on a very good speech.

The hon. member for Sunnyside referred to the staff shortage. This is true and we know that the Department of Inland Revenue is experiencing a major problem in this connection. I think we must congratulate the Department on still being able, in spite of the staff shortage, to do such excellent work. However, when the hon. member for Sunnyside refers to the staff shortage in the Public Service I think he should look slightly to his right, at the hon. member for Waterberg, because he was in control of the staff situation in the Public Service.

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

No, Sir. I am not prepared to reply to a question now. [Interjections.] When we consider the legislation we are dealing with at the moment it is quite clear that the Bill is aimed at achieving a number of things. In the first place it gives effect to the tax proposals of the hon. the Minister as put forward by him in his budget speech. This is the essence of this Bill. In addition to determining the rates of tax, it also deals with a number of very important matters. In the first place the Bill deals with the new final deduction system in order to streamline the administration. I feel, and I shall return to this later, that this is an important amendment that is being made to our Income Tax Act, one of the most important in several years. In the second place this Bill contains certain regional development measures. What is basically involved here is the reconciliation of the tax measures and the proposed incentive measures. Here we must take cognizance of the information document which appeared and in which all the benefits in connection with the decentralization or regional development programme were announced. Whereas in the past we relied heavily on tax concessions as incentives for decentralization, the emphasis has now shifted to cash incentives. It is a fact that where a new undertaking is established, particularly if it is a small undertaking, it usually does not have tax problems during the first year or two. However, it does have cash flow problems. This problem has been identified, and that is why we are now trying to overcome it by making greater use of cash incentives.

As the White Paper makes quite clear, in this legislation we are dealing only with tax incentives. Metropolitan areas are in no way affected by these changes. I do not want to go into the merits of the decentralization effort now, but it is nevertheless necessary to point out that we must distinguish between three types of development areas, namely de-concentration points, industrial development points and other industrial points. It is important that we study this information document which deals with this matter. It is also interesting to note that, in spite of the fact that the official Opposition said here in a previous debate that we could distort our development with these incentives, a great deal of attention is also being given in overseas countries to incentives for regional development if one may call it that. If one considers the situation in a city like Berlin for example—and we know the circumstances prevailing in Berlin—one finds that special incentives apply there. For example every person working in Berlin receives a 8% tax-free bonus based on his gross salary. This is an incentive. I should like to quote from a brochure of The German Tribune which reads—

This is an indication that throughout the world it is felt that industrial development aid must be given in certain areas. Even in a highly developed economy such as that of West Germany the Government still finds it necessary to introduce certain incentives. I think it is a very fair arrangement that existing undertakings may choose whether they want to retain the existing incentives, those which are available to them now, or whether they want to change over to the new incentives for the remaining part of their concession period. I think it is very fair that they have until 31 March 1983 to decide about this. Of course, new undertakings will be required under the Act to fall in with the new measures.

The explanatory memorandum—for which we want to thank the department very sincerely because we feel it is a very neat piece of work—indicates, with reference to the information document I mentioned previously, which cash payments and subsidies industrialists will be able to obtain and, as has always been the case with subsidies, this is considered to be income and is obviously taxable. This Bill also makes provision for this. Every farmer will know that if he has received a subsidy on soil conservation works or on fertilizer, for example, this is considered to be income and he has to pay tax on it. The same principle is merely being applied here. For example, in the case of an industrial consumer who receives subsidized power direct from Escom via the Decentralization Board, tax will be payable on that subsidy. Interest subsidies paid by the Decentralization Board in respect of housing loans will not be tax-free either. The same principle applies for subsidies in connection with interest on loans for new projects, and on rental subsidies and resettlement expenditure. I think this is fair. The man enjoys the benefit of the subsidy and it is then considered to be income and he has to pay tax on it. Incentives for industrial development are really significant. Although clause 3 makes provision primarily for tax on subsidies, two very important tax exemptions are being granted. The first is in connection with training expenditure. In this connection I should like to refer to the information document to which mention is also made in the explanatory memorandum. For the sake of the record, I should like to quote paragraph 3.3.7. It reads—

In the present economic climate in which we must give a tremendous amount of attention to training, this is a most significant concession.

I should also like to quote paragraph 3.4.1, under the heading “Incentive pertaining to labour” of the information document. It reads as follows—

This is also a tax exemption.

A further very important deduction for income tax purposes is the deduction allowed in respect of the cost of consultants which is of a preliminary and capital nature and would therefore not normally be deductible. Particularly since we are dealing here with the establishment of industries, it is absolutely essential that new undertakings appoint qualified and properly trained consultants to advise them so that they will not be established in a haphazard way. These consultants are usually expensive; they make one pay for their advice. I have always felt that it is better to pay for good advice rather than to establish an industry in a haphazard way and find out afterwards that one’s planning was wrong.

I want to return briefly to the new final deduction system. The explanatory memorandum sets this out very clearly. My personal opinion is that the group of taxpayers whose taxable income is less than R7 000 per year are mainly taxpayers who pay tax according to the PAYE system. The fact that they are now being exempted from submitting a return is a great relief to them. For the man in the street it is undoubtedly a nuisance to have to fill in a form. And when it is an income tax form, it is even more of a nuisance. The new system will also lead to better administration. In this connection we have already referred to our limited available manpower. The system will definitely entail benefits for the State. We shall save staff, it will be cheaper and the losses will not be so great. I have been told that 58% of our taxpayers contribute 9% of the State’s income. It is in fact this group of people who have a taxable income of less than R7 000 per annum. It is true that if their investment income exceeds R100, they will still have to submit a return. For administration purposes, matters will be facilitated because only one scale, viz. 10%, will apply from R1 to R7 000. The liability to pay tax of a person with a taxable income of less than R6 000 has increased by 2%, but the additional rebate of R120 will leave him better off than before, as is indicated in the explanatory memorandum. The permanent deduction of R300 in respect of medical expenses and donations to educational institutions is an improvement. In addition, the allowance for married women has been increased from R1 400 to R1 600, and this is also an improvement. It may well be—and I feel it will be—that taxpayers in the category below R7 000 are in some cases going to be over-taxed, but then they may claim a refund.

I have here a document compiled by Prof. Silke, who is known to all of us. I think it is a very positive and very neat explanation of the tax proposals. [Interjections.] I agree that the Opposition could have used it to good effect in their debating. Prof. Silke raised one small point of criticism—I think this is probably the only point of criticism he had—and this was that where a person is over-taxed and he has to claim a refund from the State, he will probably not do so because he will feel that it is too much trouble. However, this merely confirms how much individual taxpayers dislike completing forms. If he is really anxious to get back the extra tax he paid, he will not consider it too much trouble. I therefore cannot quite agree with Prof. Silke’s argument in this connection.

I have elaborated on two very important aspects of the Income Tax Bill. Other important matters dealt with in the legislation are the expansion of the scope of donations to educational institutions, about which one of my colleagues will have more to say, and the tax changes with regard to insurance premiums which the hon. the Minister in my opinion explained very fully in his introductory speech. In addition there are concessions in connection with the building of houses, which also affect farmers when they build houses for their employees. The amount in this connection has been increased to R6 000. Further concessions have also been made in respect of housing projects, about which some of my colleagues will have more to say.

It is not possible for us to accept the amendments moved by the hon. members for Port Elizabeth Central and Amanzimtoti. Those amendments are totally unacceptable to us and we should like to support the Bill.

Mr. Speaker, it was amusing to hear the hon. member for Malmesbury saying that the NP came to power in 1948 because of the mistakes of the Smuts Government. I think there is some truth in this. There is a saying that governments lose power, opposition do not gain power. By that test the present Government is not going to be in power much longer. I think there is some truth too in what the hon. member for Amanzimtoti said about bread and butter politics. Of course, there was a third aspect to the NP victory, and that was the vigorous beating of the sectional interest drum. That, however, is something for another debate.

I must say in passing that that the amendment of the NRP is acceptable to this party.

I should like to focus very briefly on the question of the final deduction system and the incentives to develop residential housing units. The final deduction system certainly helps to lift the burden on the small man in respect of filling in forms. It lifts the burden on the Receiver, too, but what is also important is that it also opens the door potentially to creating a non-racial tax system in South Africa. I am sorry the hon. the Minister did not elaborate on his tantalizing comments of last year when he referred to certain consultations he was having with certain Black States. He said last October that he was trying to reach the stage of complete equality in respect of the taxation of all taxpayers. Perhaps the hon. the Minister will tell us a little more in this regard when he replies to this debate. To the extent that the final deduction system may clear the way for a non-racial system, we shall certainly welcome it. We feel that it is something that is long overdue.

The problems of this final deduction system have been identified. Bracket creep is the one and there are the special cases that were mentioned by the hon. the Minister himself in his budget speech.

I should like to make a suggestion in regard to the problem of bracket creep. This is going to present us with a serious problem. There are people I know of who will be advised that they are coming off the list this year although in fact they will go onto the list again by the end of the tax year because of increases at the year’s end. Therefore, the ceiling is going to create administrative foul-ups as it stands. I want to suggest that the department simply remove the ceiling. I think that the ceiling of R7 000 is rather arbitrary. I feel that the hon. the Minister should simply take the view, to use his words, that everybody whose income consists almost entirely of salary or wages should be freed from the burden of filling in a tax form. I maintain that this should mean everybody, no matter what his income. There are people in very high income brackets whose sole source of income is a salary, whose major investment is a house, and who have fairly modest nest-eggs set aside earning in many cases tax-free interest, who could qualify to be freed under such a system. I think it would be a sensible move on the part of the hon. the Minister simply to remove the ceiling and allow such taxpayers to submit an annual declaration to the effect that their taxable income from any other source does not exceed a certain figure which this year is R100. Any taxpayer who submitted such a declaration would be freed from filling in a tax return. This may, of course, drive a large number of people into tax-free investments but that would not necessarily be a bad thing at all. I feel that one could free the department from a tremendous burden by this means including a large number of taxpayers as well.

I want now to raise the second point I have to discuss and that is the principle of incentives for residential housing. Once again, we welcome the principle that is being adopted in this regard by the Government but we feel frankly that this is far from being an effective proposal. The incentives available to businessmen at the moment to develop residential housing units, and flats in particular, are so far from being viable that something far more dramatic is required. When one considers a group of five units such as being proposed at R40 000 per unit, one sees that one would need to invest some R200 000 to qualify for the incentives that have been proposed. However, if one were to rent those units, each of which would be a very modest unit of 60 metres consisting of one bedroom and a lounge/diningroom with a very basic finish, one would have to rent each unit out at R400 per month as well as passing on all maintenance costs connected with that unit, in order to receive a 12% pretax return. What the hon. the Minister is proposing is that only in the first year will the person who has made that type of investment enjoy a tax-free return of 12%. Thereafter, however, his only incentive will be that instead of receiving 6,5% after tax on his money, he will receive 7,4% after tax which to my mind is an absolutely insignificant attraction to any investor. When one compares the situation with that in regard to industrial or business property, one sees that if one invests in a factory, one gets a 20% initial allowance, as compared with a 10% allowance on residential property, and a 2% annual allowance. Moreover, the rental one can achieve for office premises per square metre is at the moment approximately R12 on a new building, whereas in terms of the example that I gave of a residential unit, the rental would be only R6,70 per sq metre. So what incentive is there for a businessman to invest in a block of flats when there is such a divergence in returns? I think the argument of the hon. the Minister is wrong when he says that the proposed incentives must not be read on their own, but that they must be read together with allowances available to businessmen in regard to their staff. It is really not acceptable, because the idea of having maximum incentives for businesses to provide housing for their staff is a somewhat socialistic idea.

Business interrupted in accordance with Standing Order No. 74.

Mr. Speaker, I have listened to the debate with interest. It has obviously been an important debate, because an income tax Bill is, I believe, a basic measure. It is a pity, perhaps, that because of the time limit, we shall not be able to debate the amendments, for like my own amendments, the others are probably important as well.

In the course of this debate, reference was made to the way in which this party came into power many years ago, and several reasons were advanced for this. Whatever the reason was, it must have been a very good one, because we have been in power ever since. [Interjections.]

†it was also said across the floor that I at one time apparently gave some assistance to the old United Party in regard to financial policy. That, however, was a long, long time ago, before I really came to my full senses. [Interjections.] However, I think the one thing that all hon. members will probably agree with is that at that time that party had a very good financial policy! [Interjections.]

I shall now deal with some of the issues that were raised. A great deal of time and effort has been put into this Income Tax Bill, and I should immediately like to express my appreciation to the Commissioner for Inland Revenue and his staff who, I think, are doing an exceptional job of work. [Interjections.] These are technical and, for the most part, rather complicated issues. I should also like at this moment to express my appreciation for the work done by the members of the Standing Commission on Tax Policy. This also is of great value to us.

*Then I should also like to convey my sincere thanks to our own parliamentary team, the finance group of the caucus, for the way in which they are discharging their obligations. It was evident from a few of the speeches to which we listened today that these hon. members had done their homework well and knew all about these matters. I can assure them that their support is very valuable to me.

†I appreciate also the interest taken by the Opposition parties and their participation in debates of this kind.

I should like to point out at once that we see this Bill before the House as an extension—I believe an important extension—of our comprehensive system of tax reform in this country, particularly since 1978. It is being done is a systematic way. It is obvious that one cannot make all the improvements which one wants to make within the space of one single year. I do believe, however, that any objective assessment of this Bill will probably lead to a consensus that we have achieved a great deal.

Coming now to the hon. member for Port Elizabeth Central, I have a few comments to make. I am sorry the hon. member for Yeoville could not be here today. He explained why he had to be away, but I think the vagaries of the weather have also compounded his problems.

The vagaries of his motor-car, I am afraid.

The vagaries of his motor-car then. However, I believe the hon. member for Port Elizabeth Central made a valiant attempt to stand in for the hon. member for Yeoville. I do, however, want to take issue with him on a few matters. First of all, he gave the impression to us that the Government was taxing people in this country more than it should. I believe that is really a very unjustified statement. If we compare our taxation and our methods of taxation and our incidence of taxation in this country—with what?—obviously with what the money is required for, I believe we will agree that we manage to keep taxation as a whole to remarkably moderate proportions. We are a developing country, and there are endless claims for funds on the Exchequer. Those claims are increasing by the year.

I believe it is not necessary for me to talk about defence. It is clearly understood by everybody that in these difficult circumstances this country has to be kept safe, and that it costs an enormous amount of money to achieve that. Then we also have South West Africa, where we are doing everything possible in order to bring matters there to a successful constitutional conclusion. The people of South West Africa, however, ask us and expect us to keep them safe at this stage. The amounts of money that we have to find for South West Africa alone are enormous. They have also increased enormously over the last few years.

Moreover, we are a developing country, and hon. members of the official Opposition are constantly pressing me to provide more money for education. They are also constantly pressing me to provide more money for housing. The hon. member for Constantia queried whether the further concessions we had made for housing would be adequate. It costs money, however. Every time we make a tax concession it is directly costing the Government and the Exchequer money, and all the time we have to provide the basics for this country. It is not only housing, and also not only education which we have to provide for. It is also the aged, the senior citizens. Pensions increase by record amounts. We have never had such pension increases as we have this year. I am only too happy that it is so. Social expenditure of all kinds has increased tremendously. We also have to help develop the different sectors of the population; all the different national groups, as well. In that respect there is also a constant demand on us for money.

When we assess then what the total is which the State receives by way of taxation, I believe, it is, in the circumstances, remarkably moderate. It is so that we have this year a 5% loan levy on individuals. That is levy on the normal tax. That is temporary, however. If we could obtain an improvement in revenue from other sources, well and good, because I am very determined to keep the basic rate of tax at the top, if I can, at not more than 50%. I want to keep basic marginal tax at 50%. That is on amounts above R40 000, and not, as they were for years, on amounts above R28 000. That is of course another improvement over the last couple of years.

That brings me to the question of company tax. Our basic company tax is roughly 42%. I think that in a country like South Africa that is a moderate rate.

[Inaudible.]

No, I am saying that the basic tax is 42%. There is a surcharge, and the surcharge brings the figure up to just over 46%. That is the truth of the matter. There are technical problems, however, if there is too big a gap between the rate of personal tax and the rate of company tax, as the hon. member knows. If one is not careful, this could give rise to all sorts of schemes for tax avoidance. These are therefore things that the department and the Standing Commission on Tax Policy have to take into account. What I am saying is that all taxes obviously involve some kind of hardship or sacrifice. There is not a tax in this world that does not. What we have constantly to bear in mind is that the first essential is equity or equality in taxation as far as possible. I think we do succeed very substantially in implementing that basic canon of taxation.

One could, of course, so easily come back on this issue and ask the hon. Opposition, particularly the hon. member for Port Elizabeth Central: If you want more and more money spent on so many things, tell us in what way the taxes must be levied. Must we simply borrow more and more money?

There are basically three ways in which a Government can obtain its revenue. The first is by way of taxation. That is a compulsory impost. The second is by way of borrowing money. The third is by way of the Government producing something that can be sold in saleable units for which a specific price can be charged. [Interjections.]

Change your policy and save millions.

No, we are now dealing with basic, important issues. We are not dealing with nonsense. We are not dealing with nonsensical, cheap political issues. We are dealing with basic issues. [Interjections.]

That is a basic issue.

We are dealing with what tax should be levied on this population to keep this country great…

It is the most basic issue of our time in South Africa.

… and to assure our future. That is what it is all about. [Interjections.] There is obviously a limit to what a Government can obtain by making and selling things, especially in a private-enterprise economy where we obviously want to give the private sector as much scope as possible.

Then what about borrowing? There are certain people who say: Why not keep taxes all constant and simply borrow money for all the extra things you want this year? Could hon. members imagine what would then happen to interest rates? Already the state of the economy—in fact, the world economy—is such that interest rates are high, having risen substantially in the past year. Despite that, however, we are being told by some people simply to borrow as much as we want, even using long-term loans for current expenditure, for example even paying salaries out of long-term loans. [Interjections.] What sort of financing is that?

We would go bankrupt.

This is the sort of thing that is being bandied about in certain quarters. A Government may hear about this or read about it, but a Government cannot involve itself in that kind of financing. What would happen to the country in a case like that? So what I am saying is that we must keep these things in perspective. Whatever else we may be, let us at least be realistic.

*Mention has been made of estate duty once again. This Bill—with all due respect—has absolutely nothing to do with estate duty. Where does estate duty come into the picture? Since the subject was raised, I just want to say that whenever the Opposition has nothing else to talk about—I am referring in particular to the official Opposition—they come up with something like this and they associate it with the farming community. Then they always say it is in the interests of the farming community that this should be done. However, there is no need for anyone to tell this Government what its responsibility towards our farmers is. [Interjections.] This has never been necessary throughout the years, nor is it necessary today. Therefore they must not produce that kind of pathetic argument. It does not hold water. [Interjections.]

While we are on the subject, let us just examine this story about estate duty for a minute or two.

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

No, just a moment. I have just said that I want to furnish a few facts. They may help the hon. member to such an extent that his question may not even be necessary. [Interjections.] However, we shall see. The hon. member must just give me a chance. I just want to make a few comparisons, in connection with estate duty, between the position as it was in 1970 and the position in 1978 and after April 1980. In the case of a surviving spouse with the one child—I am just using this as a basis—the tax on an estate of R150 000 was R3 250 in 1970. Today an estate of R150 000 is not taxed at all. On an estate of R200 000, the tax in 1970 would have been R12 600; today it is R3 700. Where the rate used to be 6,3% therefore, it is today 1,8%. On an estate of R400 000, the tax in 1970 would have been almost R68 000, or virtually 17%; today, the tax on it is R37 000, which is equivalent to 9%.

Those figures are misleading.

I beg your pardon.

They are misleading because they do not take into account the effect of inflation on the value of the estate.

I am coming to the question of fiscal drag in a moment. These figures are absolutely correct. On an estate of R600 000, the tax in 1970 was R137 000 or 23%; today it is R95 000 or 15%. In this way, the position has improved over the years. Even in the case of an estate of R1 million, the tax 10 years ago was R277 000 or almost 28%, as against R235 000 or 23% today. There is another point I want to refer to in this connection. The valuations can be based on agricultural values. So they are not based on market values, but on the values determined by the Land Bank. That makes an enormous difference. In the case of a farmer’s estate, therefore, this will also become relevant.

Then I may point out that in 1976, 7Y2% of all estates were subject to estate duty, as against 4Vi% today. What is the big problem, then? Then people tell met that this tax should be abolished altogether. What would then happen with regard to the R60 million to R70 million whioh is today collected from this very moderate tax, if it is to be abolished? Then I would have to find it somewhere else, and the Opposition would probably criticize that as well.

†I come to the question of fiscal drag or, as the hon. member said, bracket-creeping. I answered the hon. member earlier on this matter and I want to say again that every tax of course involves some kind of sacrifice because there is an incidence involved in a tax. However, if a man gets an increase in salary and goes into a higher bracket as a result of which his income attracts a higher rate of tax under a progressive system—this does not only apply in South Africa, but in many, many countries—the fact is that he is still better off after paying the tax than he was before. There can be no question about that.

The increase then does not compensate him for inflation.

The hon. member must wait a bit. He must listen to the whole story. I am simply making that point because the way it is being put is that everybody is worse off. Such a person is of course not worse off. If he is at the very top and earns more than R40 000, he still only pays 50%. That is the first point.

How does he then get an increase higher than the rate of inflation?

Let us look at a few figures over a period of five years between 1978 and 1983. Let us consider the position of a married person, although it does not matter whom one takes. Supposing there was an income of R1 800 in 1978. Let us say—this is a rough calculation—we allow for an inflation rate of 66% over that period. One can say that it should be slightly more or slightly less. I am simply taking 66%. If that person earned a remuneration commensurate with that increase in the cost of living, his salary would go up to R2 988 in 1983. This is before tax has been deducted. After tax has been deducted in 1978, the R1 800 would have been R1 746. Mr. Speaker, may I give you the following figures: If you take the increase from 1978 to 1983, the cash on an income of R1 800, before tax has been deducted, would have been R1 188. After tax has been deducted, it would in fact be R1 242. Therefore he is in fact getting more than he is losing on account of inflation. I have a whole series of figures for unmarried and married people which I am quite prepared to give to the hon. member. I am not so sure that I did not give it to him before. [Interjections.] You get the same thing each time, even with incomes of R7 000 or R10 000, that the cost of living increases by 66%, but after tax is deducted, the net income increases by more than 66%, even on an income of R70 000. Again the people are better off. In other words, the tax has more than compensated for the cost of living.

Yes, but he can buy less with his money.

No. The point is that one cannot just take the cost of living in isolation. One has to take an actual case. The modifications to the tax system are such that they more than cancel that out. There is fiscal drag. But there are other very big improvements that have been left out of the hon. member’s argument. That is my point. It is being taken in isolation and it is being put in a form which I do not think can possibly be accepted.

[Inaudible.]

That hon. member can see this whole memorandum. It is all set out here. However, I have to get a move on, because there are a number of other points here that I would like to discuss.

There is for instance the taxation being paid by Blacks. The hon. member for Port Elizabeth Central surprised me by asking what the position was. But earlier this year I said precisely what the position was. Our policy is quite clear, namely that we want to bring all the groups into the same basic system, and we have made a great deal of headway already. I had hoped that we could have done it and the department had hoped that we could have done it completely in three years’ time, but it was physically just not possible, because of the need for very careful consultation with the people involved. It takes time.

However, I issued a statement on 2 February. It is not long: So let me just read it. I said—

We have made very good progress in the last few months. I continued—

I cannot add to or subtract from that statement, except to say that the matter is receiving constant attention and that these consultations are taking place with a view to disposing of this matter as soon as possible.

*The hon. member for Sunnyside raised a very important matter when he spoke about the staff position in the department. We are concerned, of course, not only about the situation within the department as such, but actually about the Public Service as a whole, although, as a result of the very significant salary improvements effected over the past two or three years, as well as the introduction of vocational differentiation, there are clear signs of improvement. With regard to the situation in the Department of Inland Revenue, I want to point once again that while the shortages are disquieting, the work is still being done with a reasonable degree of efficiency, in fact, with an efficiency which is surprising under the circumstances, thanks to a loyal and hardworking staff. Here, too, a better dispensation is being introduced at the moment, a dispensation which is career orientated. It is being introduced at the moment. A great deal is expected of it, not only with regard to the recruitment of people, but also with regard to the recruitment of people of the right calibre. Another thing which the department has recently done is that we have succeeded, in co-operation with the Department of Defence—and I want to convey my sincere thanks to them for this—in employing a number of national servicemen with the necessary qualifications at the Department of Inland Revenue and the Department of Customs and Excise. This happened quite recently, but already the indications are that it will be highly successful. We shall continue to do so. So we are very well aware of this matter.

The hon. member for Sunnyside also said that we should try to make the incentives for regional development provided by the Government fairly simple. I quite agree with him. This is in fact our intention. If he would examine the set of recommendations which is applicable at the moment, he might agree with me that this is indeed the case. While I am on the subject, I want to convey my sincere thanks to the hon. member for Smithfield, the hon. member for Malmesbury, the hon. member for Amanzimtoti, the hon. member for Sunnyside and the hon. member for Port Elizabeth Central for the appreciation which they expressed for the documents which had been made available. I, too, have reason to express my sincere thanks, because they are a great help to me as well. I believe that where the explanatory memorandum deals with the new system of taxation for taxpayers who earn less than R7 000 a year, the explanation is particularly outstanding, as it is with regard to the concessions for regional development. I think that this is the best concise explanation of the matter I have ever seen. I take great pleasure in saying so in this House.

The hon. member doubted whether the concessions in respect of dwelling units would be adequate. We shall have to see what happens in practice.

†The hon. member for Constantia also expressed doubt as to whether we had gone far enough with housing concessions. One must, of course, remember that we cannot in this way pay for the whole cost of the house. This is a tax concession. What we are trying to do is to give as much alleviation in respect of the cost load as we can possibly afford at the moment. Increasing the amount from R4 000 to R6 000, and in the case of farmers from R5 000 to R6 000, is a meaningful improvement. I also think that in regard to the other concession, where we are talking about making allowances in respect of five-unit projects, we must not be too hasty in condemning it by saying that it is not going to make much difference. Let us rather see what is going to happen. We look at these things all the time. The department and the Standing Commission on Taxation Policy watch these things as an on-going process, and we are not quite as pessimistic as that. The first indications have certainly been highly appreciative.

The appreciation has not been built in.

It may not, but if a man who is in the trade thanks me and tells me that this means something, then I take note of it. The hon. member is not an expert on everything. So I say let us leave it and test it and see. Now the hon. member makes a remark to try to dispute that. What is wrong with my statement that we should first test it to see how effective it is? If it proves to be inadequate, we will try to do our best under the circumstances to make it adequate. [Interjections.]

*The hon. member also referred to the taxation of married women. That is his hardy annual. However, I think the hon. member, as well as other members, will agree with me that the most important aspect in this connection is not so much the fact that the husband and wife must be taxed separately. To me, the basic consideration is: What is the marginal rate? I believe we have effected a great improvement here, for until quite recently, the top rate at R28 000 was fixed at 66%. That is without the loan levy. Today it is 50%. This means a great deal to everyone, including married women. In addition, there is the concession to married women in the sense that the tax-free deduction has been increased from R1 400 to R1 600. This is also progress in the right direction. This is the furthest we can go at the moment. I must say this is not such a simple matter as some people may think. In Britain, where married women can choose whether they want to be taxed jointly with their husbands or separately, only 3% or 4% of married women prefer to be taxed separately. The matter is not as simple as it may sometimes appear.

I have already referred to the contribution of the hon. member for Smithfield. I greatly appreciate the constructive and realistic contribution of the hon. member for Malmesbury.

†The hon. member for Amanzimtoti started by appearing to tangle with the hon. member for Smithfield. I must tell him that on tax matters the one man he must not tangle with is the hon. member for Smithfield. He knows what he is talking about. So the hon. member must be very careful.

We are talking about bread-and-butter politics.

Yes, I know. Whether it is bread-or-butter or whether it is tax, I am merely giving the hon. member a friendly hint. The hon. member said he would like to see a revision—as I understood him—of the whole tax system. That is what we are doing, but one cannot do it in one year. Rome was not built in one day. I think the hon. Member will agree with me on this that in the last four or five years we have really gone a very long way. The other day I asked the department to set out to me in a memorandum, chronologically, since we started these basic reforms to the tax system, what had actually been done. Just the headings of what have been done runs into two pages. I am quite happy to let the hon. member have this because he takes a constructive interest in these matters.

I would like to have it.

I am not criticizing him for asking for a revision, but I say it takes some time. In any event, we are making very considerable progress in this regard.

The hon. member also wanted more generous provisions for training, particularly in agriculture.

And also for housing.

Again my answer to the hon. member for Constantia applies here. We have to do these things in steps simply because we have to, in the end, provide for a sufficient amount of revenue to meet what we regard as the absolutely inescapable expenditure of the Government. However, I am not taking issue with the hon. member. This is a perfectly clear point to raise.

The hon. member for Constantia referred to the final deduction system and he suggested that the ceiling be removed in respect of all taxpayers the bulk of whose incomes is obtained from salary, pension or wages. As a kick-off, I want to say that this is rather drastic. We have to handle this matter with the means at our disposal. We can perhaps bear it in mind for a more ideal stage in the future. I have made a note of it and I shall discuss it to see how much of it is practicable but I must say that I do not think we can put it into operation immediately. It is something that will involve a very large number of people because there is a great deal of work involved when one changes a system.

The hon. member also referred to the taxation of Blacks. I have already dealt with that matter. He also referred to the question of residential housing concessions and I think I have also dealt with that subject.

As far as the hon. member for Port Elizabeth Central is concerned, he referred, inter alia, to donations tax. What one has to remember in this regard is that one really has to look at the question of donations tax in conjunction with a tax like death duties or estate duty. One does not want to find oneself in the position where people can simply evade a tax by making all sorts of donations during their lifetime. The purpose of this tax is not simply to ensure that a person’s estate is not distributed very substantially during his lifetime without payment of tax if there was no donations tax. It is also an income tax avoidance measure because this could take place by means of the division of income-earning assets among the children. In this regard the hon. member said that the abatements had not been altered for a very long time. However, I want to say that I do not think that the abatement in respect of children should be too high otherwise its effect tends to be lost. We can, however, look at the matter again although at the last assessment we felt that the abatements were still realistic.

The hon. member also referred to the interest on mortgage bonds. I think he suggested that we could perhaps make interest on mortgage bonds tax free. We must be very careful in this regard. In the first instance, we must consider where the vast majority of mortgage bonds come from. They come from the building societies and over the years Governments in this country have placed building societies in a very preferred position in certain respects but very much so taxationwise. As far as the question of building society deposits is concerned, there are tax-free deposits. For instance, a person can deposit money in a building society today and earn a tax-free interest of 9,5%. All these matters are very important. If it were not for this preferred position accorded building societies over the years there is no doubt at all that bond interest rates would have been a good deal higher than they are at present. We must therefore bear this in mind. This is also something which the Standing Commission on Tax Policy to which I referred this matter about two years ago viewed as a very important one. For various reasons, particularly the one I have just mentioned, we have not seen our way clear to making that concession. We think that that would be a very far-reaching thing to do under the present circumstances.

The hon. member for Port Elizabeth Central also referred to the question of the deduction at source of tax on dividends and interest. This has been considered and it is obviously a matter which will continue to receive attention. In fact, as the hon. member may recall, I did refer to it briefly during my introductory speech. There are practical issues involved in this case as well and we have not been able to go as far as doing that.

I think the hon. member for Port Elizabeth Central also referred to the question of educational donations. The hon. member mentioned organizations like the Boy Scouts, Veld and Vlei, the Voortrekkers and so forth. These organizations are obviously extremely important and they also obviously have a very important educational function. They provide services which are additional and supplementary to our ordinary more formal kind of education systems. Let us talk about schools. While their objects and achievements are laudable, it is felt by the taxing authorities that at this stage the need for ordinary educational facilities is far more pressing and the extension of any concessions we can grant at that level must have further priority at this time. When we possibly one day get to the happy position where there is consensus that for ordinary educational purposes and school education and so on, we have gone so far that people say it is quite adequate, well then I suggest we shall obviously try to look at further extensions. At the moment, however, where we have certain leeways to make up in this respect, we must be very careful of our priorities. This then is my answer on that issue.

I think I have dealt with most of the issues that were raised. I obviously cannot deal with every single one.

In conclusion I should once again like to thank the hon. members for their contributions to this debate. It is obviously a very basic debate.

We shall not be able to come to the Committee Stage as such, but there are amendments on the Order Paper. I just want to refer, in a matter of a minute or two, to amendments from my side. They affect particularly this very serious loophole that tax experts find in tax legislation throughout the world. Then unfortunately tax schemes are adopted which tend to cause an avoidance of tax that should be paid. In this case it refers particularly to policies taken out by companies on the life of an employee or a director. What he set out in the first instance to do in terms of this legislation was to restrict the type of policy because of the abuse. There is no doubt that there has been a good deal of abuse here; even senior representatives of insurance companies, I may say, have expressed their concern. In the first draft of the legislation we tried to restrict the type of policy to what is normally called a term policy for a given number of years. The policy ends either at death or retirement or at the end of that term. There have been representations that we might go a little further and broaden that, and what we have done is that we have said that we are prepared to consider that and to make provision in this amendment that by regulation we can go further, if deemed necessary and in the light of representations and so on, than simply confine the type of policy to an orthodox term policy. Provision is being made for that. Certain other aspects too are involved.

As there is not going to be a Committee Stage in the true sense of the word, I should like to refer to an amendment which the hon. member for Yeoville has on the Order Paper. In terms of his amendment the hon. member wants us to insert in clause 4 “or R100 000 whichever may be the greater”. This will then result in three times the average salary or R100 000 being provided for. We think we should not put down a fixed figure. If one looks at most of these amounts, one sees that they are often equal to twice the average salary. The hon. member for Port Elizabeth Central talked about bearing in mind the case of the poor, but that is not involved; not in any way at all. It is a question of what is reasonable. After all, if one wants to talk about the poor, then one must look at the salaries. All we are saying is that we want to put an upper limit on so many times the average salaries—in fact, three times.

*If anything is lacking when we are talking about the poor, one should look at the salaries, but that has nothing to do with us. All we are saying is that we think there should be a limit, and therefore we are making it three times the average of the salaries of the preceding three years. I think this is sufficient and very realistic. So much for that amendment.

I am sorry that the hon. members on the other side will not be able to debate their amendments, but my senior officials and I have examined them very thoroughly, for if we can accept any amendment which in our opinion is realistic and will improve the legislation, we do so. As far as these amendments are concerned, however, I do not believe it would be desirable to accept them. However, I thank hon. members for their interest and I give them the assurance that this does not mean that we did not consider all the proposals thoroughly. Finally, my heartfelt thanks to all the hon. members who participated in the debate.

Question put: That all the words after “That” stand part of the Question.

Upon which the House divided:

Mr. Chairman, I move the amendments printed in my name on the Order Paper, as follows—

1. (1) On page 3, in line 30, after the first “of’ to insert:
   , or by way of any loan or advance granted on or after 1 July 1982 by the insurer concerned under or upon the security of,
2. (2) on page 5, in line 8, after “11” to insert:
   : Provided that where any amount received or accrued under or upon the surrender or disposal of any such policy falls to be included in the taxpayer’s gross income, the amount so to be included in his gross income shall be reduced by the amount of any loan or advance under or upon security of that policy which has been included in his gross income, whether in the current or any previous year of assessment
3. (3) on page 5, in fine 26, to omit “25 May” and to substitute “1 June”.

Amendments agreed to.

Clause, as amended, agreed to.

Clause 7:

Mr. Chairman, I move the amendments printed in my name on the Order Paper, as follows—

1. (1) On page 15, line 65, to omit “and”
2. (2) on page 17, in lines 1 to 10, to omit paragraph (f) and to substitute:
   1. (f) by the substitution of subparagraph (B) of paragraph (bb) of the proviso to paragraph (w) of the following subparagraph:

1. (g) by the addition to the proviso to paragraph (w) of the following paragraphs:

1. (A) such policy was effected in terms of a written proposal accepted by the insurer before 1 June 1982; or
2. (B) the only benefit payable under the policy is a benefit payable within a period fixed in such policy upon or by reason of the death or disablement of the employee or director whose life is insured under the policy; or
3. (C) the State President has by regulation prescribed requirements in regard to terms and conditions with which insurance policies shall conform for the purposes of this subparagraph and the policy conforms with such requirements;

1. (A) in the case of premiums paid under a policy referred to in subparagraph (A) of paragraph (dd) of this proviso, to so much of such premiums as were payable in terms of the conditions contained in that policy on 31 May 1982; or
2. (B) in the case of premiums paid under one or more policies referred to in subparagraph (C) of the said paragraph (dd) upon the life of a particular employee or director, to an amount equal to 10 per cent of the remuneration (as defined in the definition of “remuneration” in paragraph 1 of the Fourth Schedule, but including any amount referred to in paragraph (iv) or (vii) of that definition) derived by such employee or director from the taxpayer during the said year of assessment;

1. (3) on page 17, in line 26, to omit “amendment effected by subsection (1)(f)” and to substitute “amendments effected by subsection (1)(f) and (g)”;
2. (4) on page 17, in line 30, to omit “25 May” and to substitute “1 June”.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 14:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 15:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

House Resumed:

Bill, as amended, reported.

Bill read a Third Time.

Mr. Speaker, I want to continue my Second Reading speech by asking the hon. the Minister for his opinion and interpretation regarding some of the aspects of this Nuclear Energy Amendment Bill.

The first aspect I should like to raise with the hon. the Minister revolves around the financing of the corporation as such, as proposed in terms of the Bill. The Bill indicates that the sole shareholder in the corporation will in fact be the State, and that finances required for this project would be forthcoming from moneys appropriated by Parliament. I should like the hon. the Minister to comment on this. Firstly, I should like to know whether the hon. the Minister visualizes that quite considerable sums of working and investment capital will be required in the near future, and, if so, whether he visualizes any possibility of private enterprise somehow becoming involved in the financing operations of this corporation. I believe that there are certain entrepreneurs in the private sector, such as mining houses, who are already full participants in the recovery and processing of uranium fuel. It is quite possible that the corporation would benefit, not only financially, but also from their expertise and guidance, if they were permitted to participate in the management and the raising of finances for the Atomic Energy Corporation. I should like to ask the hon. the Minister whether any thought has been given to this and what his opinion on this matter is, because I believe that there are considerable benefits to be derived from getting private enterprise to participate.

The difficulty, of course, is that one is not aware of the fact that this corporation, which will become a utility corporation in the sense that it will concentrate on the manufacture of component parts, will have dividends forthcoming to attract private industry. As is the case with Iscor and Escom, if it is foreseen that this corporation will aim at becoming self-sufficient, it is very possible that it will go to sources outside Parliament to raise loans for its programmes, and if loans are arranged in any way, interest is, of course, payable. Instead of raising loans, however, it may be possible to issue share capital to private enterprise, with Parliament only being responsible for the payment of the interest on the capital so invested or the dividends in lieu of interest. This is a relatively new trend in the financing of utility corporations around the world. Instead of borrowing money, they ask their shareholders to put money in, and instead of paying interest on money borrowed, they then pay a dividend that is slightly less than the interest they would have paid.

Secondly I should like to refer to the Nuclear Safety Council, and ask the hon. the Minister whether any thought has been given to this council performing a very vital and important educational function. When I say educational, I not only mean the education of the people directly involved in safety procedures, but also the public at large, the purpose being to widen their horizons and to create a better understanding of what nuclear energy is all about. I say this in the light of the experience of countries such as Japan and Germany where the whole question of nuclear energy has been totally politicized and is being used as a bandwagon for radical groups who want to interfere with the logical process of extending our energy resources to nuclear fuels and power. Certainly in the interests of the corporation, and South Africa as a whole, it would pay very handsome dividends if, at this very early stage, we could make either the corporation or the safety council specifically responsible—with a budget calculated for them—for public education. One recalls the re-’ cent—within the past few days—programme on SABC-TV which dealt, to some extent, with the application of nuclear energy in South Africa. It was very informative as far as the man in the street was concerned, to some extent having given him an idea of what nuclear energy is all about and how it could be applied in South Africa. Let me ask the hon. the Minister whether he has given any thought to this and whether he would, in fact, consider making it the specific responsibility of that council to embark on a public education programme.

I should also like to ask the hon. the Minister, as far as the Nuclear Safety Council is concerned, to what extent he visualizes organizations such as the SABS, Escom and the mining interests being represented on the board of 14. The Bill itself specifies only four specific interest groups which should be represented i.e. the Prime Minister’s Office, the Department of Health, the Department of Transport Affairs and the Department of Environment Affairs. That would leave 10 additional vacancies to be filled, presumably by outside interest groups. Here one thinks specifically of the role that the SABS could play in the specification of vessels, containers and mechanisms for transporting and handling nuclear fuels and component parts. This could well become the prerogative of the SABS, or the SABS could at least make some contribution, because the SABS does have the necessary infrastructure for the development of such safety standards. Escom, of course, would be vitally involved in this in the light of its operation of Koeberg, and the mining interests cannot be left out as participants in the safety council.

With these few words, let me just reiterate that my party fully supports this Bill and we look forward to receiving the hon. the Minister’s reply.

Mr. Speaker, at the outset I should like to convey my very sincere thanks to all the hon. members who took part in the discussion for their support for this Bill and for their constructive contributions. I think we have had an instructive debate and that all hon. members acquitted themselves well of their task and made responsible contributions. I should like in particular to convey my very sincere thanks to hon. members on this side of the House who took part. I should like to associate myself with the observations and arguments of the hon. member for Namakwaland, and I thank him for a good contribution. Likewise I associate myself with the interesting contribution of the hon. member for Stilfontein about safety at and the technology of nuclear installations. In particular he also highlighted the storage of radio-active waste. We thank him sincerely for his contribution.

†The hon. member for Port Elizabeth Central spent some time on various matters and I want to reply in some detail to him. Firstly, he complained, to a certain extent, that the time allowed was insufficient. I want to say immediately that I realize that at this late stage there was not the amount of time available which we would have liked to afford the official Opposition. I do think, however, that he should have made mention of the fact, firstly, that there is really very little that is new in the Bill before the House. In that sense I do not think we strained his powers of understanding too much. Secondly, I think he should have mentioned that I had arranged for expert guidance. I want to thank Dr. Wynand de Villiers for providing expert guidance to all the parties to facilitate their task in working through this voluminous Bill.

Hear, hear!

Then, the hon. member questioned the economic viability of Ucor and asked me to make some comments in that regard. I want to deal with that aspect a little more widely. I want to address myself to the subject of investment in a nuclear energy programme and the economic considerations surrounding that. In Europe and in the USA nuclear electricity is being generated at approximately half the cost of electricity from coal-fired stations and at about one-third of the cost of electricity from oil-fired stations. Because of the relatively low cost of coal for electricity generation in South Africa—it is R9,71 per ton this year compared with more than R40 per ton in Europe—nuclear energy will not be competitive for some time to come with electricity from coal in those parts of South Africa where our coal deposits occur. However, in the coastal regions, far removed from the coal fields, if the cost of coal transportation or of transmission lines is added, nuclear energy can be competitive with electricity from coal. For this reason the joint studies of the Atomic Energy Board and Escom made in 1974 showed that nuclear electricity would be competitive with electricity from coal in the Western Cape and thus Escom decided to erect the Koeberg nuclear power station in the Western Cape. Although the capital cost of nuclear power stations is higher than that of coal-fired power stations, the incremental fuel cost is very much lower. Thus, a doubling of the uranium price will only add about 5% to 8% to the cost of nuclear electricity while a doubling of the coal price would result in an increase of nearly 60% in the price of electricity from coal. It can be expected, therefore, that, if coal and uranium prices rise at approximately the same rate, nuclear electricity will become competitive with electricity from coal also in the Eastern Cape and the Natal coastal area.

The Western Cape alone, if one analyses the load of the three areas where we think that nuclear energy in the longer term may become competitive, accounts for 10% of the total, whilst the Eastern Cape and Natal account for about 15%. Thus, where Escom estimates that the total installed capacity will be some 65 000 megawatts by the end of the century, nuclear power capacity could on an economically competitive basis still rise to 25% of the total, i.e. to some 16 000 megawatts by the year 2000. It is still a possibility. If such a capacity of nuclear power should be installed, it would become economically viable to increase the size of the enrichment plant to meet our own requirements. At the same time the erection of fuel fabrication facilities of the size needed for local requirements, would become economically justifiable. However, before a decision can be made to proceed with the erection of commercially viable enrichment and fuel fabrication facilities, the economic studies started in 1974 should be continued in order to establish a basis for a nuclear power development programme for South Africa. This is one of the tasks which the Atomic Energy Corporation will be asked to undertake. In the meantime the establishment of a semi-commercial enrichment facility which, admittedly, would meet our present requirements at a higher cost than from overseas suppliers, and the research and development into fuel fabrication technology should proceed in order to establish these technologies locally so that if the decision should be made to proceed with nuclear power on the scale mentioned above, South Africa would be well placed to remain independent as far as her fuel requirements for the generation of electricity are concerned. Although in the interim period locally enriched fuel would be more expensive, one should also take into account all the other advantages of a nuclear energy research and development programme. In that regard I refer the hon. member to the annual report of the Atomic Energy Board in which he will find valuable information. The present investment in nuclear research and development thus become fully justified. In fact where South Africa possesses uranium resources of considerable energy content compared with our coal resources, it would be unthinkable not to develop the technology which is necessary for the utilization of these resources to the best advantage for South Africa.

*I shall now quote a number of reliable statistics for the information of the hon. member and other hon. members.

From what is taking place in the world, in spite of what one reads in the newspapers, in respect of nuclear energy, one realizes that South Africa, with our uranium reserves and with the technology we already possess, has absolutely no alternative but to look to this as a dynamic possibility for the future. At the moment there are 264 nuclear power stations in operation throughout the world. In the Western world France is the leader as far as switching to nuclear electricity is concerned, with 26 nuclear power stations already in operation, a capacity of 32% of its total electricity generating capacity. A further 26 nuclear power stations are under construction, which would bring France’s nuclear power capacity to 45% of its total electricity supply. Then a further 22 nuclear power stations are being planned, which would bring its total nuclear power capacity to approximately 83 000 megawatts by the turn of the century, which would constitute more than 60% of France’s total electricity supply.

The corresponding figures for a few of the other large industrial countries are as follows: Belgium has three nuclear power stations in operation, representing 14% of its total capacity. West Germany has 14 nuclear power stations, representing 9,8% of the total contribution, and a further 10 are under construction. Switzerland has four nuclear power stations in operation, comprising 14,3% of the total capacity, and another is under construction. The United Kingdom has 32 power stations in operation, representing 9,4% of the total capacity. In addition to that another 10 stations are under construction. Japan has 24 nuclear power stations in operation, representing 11,4% of its total capacity, and 11 more stations are under construction. Sweden has nine stations in operation, representing 24% of its total capacity, while two stations are under construction. The USA has 74 nuclear power stations in operation, representing 8,9% of its total capacity, while a further 83 stations are under construction and 21 in the planning stage.

It is clear, therefore, that the prosperous industrial countries of the Western world are relying more and more on nuclear power as the sole proven alternative economical source of power. We in South Africa must not lag behind, and therefore we are proceeding with our programme because we believe that it is in South Africa’s interests.

Secondly, the hon. member asked what the purpose was of the third company referred to.

†I think I can in a nutshell inform the hon. member that should that come into being the main purpose behind that would be the rationalization of services. We see that possihoibility as, maybe, the creation of a vehicle to avoid duplication and to ensure the best utilization of manpower and knowledge in such a family of organizations.

*The hon. member went on to refer to objectivity in respect of the licensing machinery and procedures. I should like to thank him and other hon. members for pointing out that much more objectivity was built into this measure. I want to reply to the hon. member by saying that that is the maximum objectivity we can incorporate with the manpower at our disposal. I want to give the assurance that the Council will function as an independent body, with direct access to the Minister of the relevant department. In essence, the Council will have a right of veto as far as the issuing of nuclear licences is concerned. This is also spelt out in the Bill. The assessment of the nuclear installations operated by the corporation and its subsidiary companies will from a health point of view, so far as the use of nuclear-hazard material is concerned, also be undertaken by this Council, and consequently the right of veto over the operation of such installations is also vested in the Council. The Council is composed of persons from four relevant State departments and 10 other experts from the private sector, universities and other scientific institutions. Both the hon. member for Port Elizabeth Central and the hon. member for Durban North referred to the composition of the Council. I want to give them the assurance that, with the final composition of the Council, I shall give thorough consideration to their suggestions as to who, in their view, should be considered for appointment to the Council. However, I cannot commit myself at this stage. I shall not be able to accommodate all the suggestions. The Council is too small for that and I may also wish to make my own contribution as to how the Council should be composed. I shall, however, give careful consideration to the suggestions. Nevertheless, I thank hon. members for their constructive advice in this regard.

The hon. member also referred to clause 50, which relates to the transfer of powers from this ministry to other ministries. The hon. member wanted to know what was behind it. The answer to that is that the Commission for Administration is at the moment conducting an investigation with a view to rationalization, to determine who should control issues such as radio-active nuclides used in agriculture, medicine and for industrial research. As soon as the investigation is completed we shall transfer some of these powers to the relevant ministries by virtue of this enabling provision.

Finally, the hon. member referred to clause 68. That deals with the question of secrecy. Since there is an amendment on the Order Paper—I shall not be able to accept it—we should rather discuss this matter in the Committee Stage in order to avoid duplication of the debate.

The hon. member for Langlaagte referred to clause 53(2) and requested that, like the Department of Mineral and Energy Affairs and the Nuclear Power Corporation, landowners, too, should have access to information about gold and other mineral values. In his speech the hon. member quite rightly mentioned that it was the attitude of the department that information of this nature should not simply be made freely available to people. Presumably, therefore, he will recall the reasons advanced last year during the Second Reading debate on the Mining Rights Amendment Bill as to why information of this nature should not be made available to outsiders without further ado.

Owners only.

I am coming to that. I shall give the hon. member an explanation. Mineral rights which are worthwhile, are purchased for enormous sums of money, and from a legal as well as an ethical and moral point of view it is not justified to supply landowners who are not themselves the holders of mineral rights in respect of their land, with information about rights which do not belong to them. As regards the owner who is still the holder of the mineral rights in respect of his land, the Geological Survey of the department provides a professional service in regard to the analysis of samples, and he is free to be in possession of such information. It can, therefore, be obtained. However, that owner cannot expect a statutory arrangement to be made to enable him to peruse information confidential to a company after he has alienated his mineral rights. If he desires such information, he should stipulate that contractually when he alienates his rights or allows them to be utilized by someone else. The State should not be brought into such issues afterwards, because that would amount to the unlawful benefiting of one party as against another. The information supplied to the department and the corporation by virtue of the provisions of the Mining Rights Act and the clause under discussion, is required for viability and other studies in regard to mineral reserves, including source material or matters which may have a bearing on this. The one object of clause 53(2), therefore, is to serve the national interest, and consequently I regret that I cannot comply with the hon. member’s request to grant landowners access to mineral values, either in terms of this clause or in terms of the provisions of the Mining Rights Act.

†In conclusion, Mr. Speaker, the hon. member for Durban North referred to a number of matters. I have already dealt with the question of the composition of the board. He also asked me whether I visualized that private enterprise would have the opportunity to become involved in atomic energy by investment. We must be practical in this regard. In the first instance, I do not think that at this point in time this matter has developed sufficiently to capture the interest of the private sector. Secondly, we must realize that it is inherent in our legislation that electricity must be supplied on a non-profit basis by Escom. Because of economic reasons and not of its own volition, Escom has for all practical purposes become the sole supplier of electricity in South Africa.

That is a bad thing.

Therefore I do not think there will be any interest shown by the private sector in this regard. I want to tell the hon. member who has just made that interjection that it is a strange thing that no word of criticism was expressed in regard to Escom during the discussion of my Vote. As a matter of fact, all I received were compliments in respect of the tremendous job that Escom is doing at the moment in the face of heavy odds. Obviously it is open to criticism but when one considers its expansion programme I feel that Escom deserves a bouquet rather than remarks of that nature.

*In this regard I also believe that we could perhaps consider this possibility at a later stage. What is important, however, is that private sector involvement in the total picture of the discipline we are dealing with is of course of a tremendous magnitude. The hon. member himself referred to the fact that the mining of uranium is totally in the hands of the private sector. That they benefit tremendously by this development in the form of capital orders placed with them, the development of machinery, building contracts etc., is also true. So there is a great deal of benefit for the private sector. Although they cannot necessarily be achieved by means of direct investment, this activity still entails tremendous benefits for the private sector. However, the possibility is not excluded that at a later stage, when we have progressed further with the development, and if there should be real evidence of interest, I may reconsider the matter. The hon. member will realize that that would require a statutory amendment, and one would have to examine very closely the possibilities in this regard.

†In conclusion the hon. member asked me to launch in some way or another and also through the new Energy Corporation a public educational programme. I think there is some merit in this suggestion, and therefore I shall look carefully at it. It is already part and parcel of the policy in this regard to inform people as much as possible. Round and about the time of the actual starting up of Koeberg a lot of attention will obviously be given to education on safety aspects surrounding Koeberg. In general I think, however, that the hon. member will agree that in recent months we have opened up to a certain extent although we have not embarked upon what may be called a specific programme. We are trying our very best, where there is real interest, to furnish particulars within the framework of the general test of what is in the interest of the country. I agree with the principle advanced by him, and we shall look very carefully at that.

I thank hon. members for their support.

Question agreed to.

Bill read a Second Time.

Mr. Chairman, I do not intend wasting any time on this clause. There obviously is not a Department of External Affairs and Information; the department concerned is obviously the Department of Foreign Affairs and Information, and I therefore move the amendment printed in my name on the Order Paper, as follows—

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

I also wish to state that the amendment of the hon. member for Port Elizabeth Central is acceptable to me.

Amendments agreed to.

Clause, as amended, agreed to.

Clause 7:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

1. (1) The quorum for any meeting of the council shall be the majority of the members of the council.

The amendment is aimed at bringing the procedure for the holding of meetings of the council into line with that laid down in certain other Acts. I refer in this regard to section 8 of the Mineral Technology Act, 1981, in which it is provided that a quorum for any meeting of the council is a majority of the members of the council. In that case the chairman has a casting vote. In the Standards Act, 1982, section 6 provides that the quorum is four of the seven members of the council; in other words, again the majority of members and in that case too, the chairman has a casting vote. Provision is also made in clause 7(2) of the Bill that the chair man has a casting vote, and my amendment is simply aimed at inserting a clause which is similar to the one in the Mineral Technology Act.

Mr. Chairman, I accept the amendment.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 10:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 14:

Mr. Chairman, I move the amendments printed in my name on the Order Paper, as follows—

1. (1) On page 19, in lines 56 to 58, to omit “, or shall dispose thereof in such other manner as the Minister, with the concurrence of the Minister of Finance, shall determine”;
2. (2) on page 21, in line 10, to omit “, or be contrary to the public interest”.

I did not refer to these amendments during the Second Reading debate, and I therefore do need to motivate them now. This clause basically sets out that “The corporation shall invest money not required for immediate use… with the Public Debt Commissioners, or shall dispose thereof in such other manner as the Minister, with the concurrence of the Minister of Finance, shall determine.” One must bear in mind that the funds that go into the corporation are public funds voted on an annual basis, and there should be no long-term investments invisaged in terms of these funds. We believe, therefore, that in view of the fact that they are public funds, they should only be invested with the Public Debt Commissioners. If the first amendment that I proposed is accepted, it would mean that the money could only be invested with the Public Debt Commissioners. We are aware that there has been an unfortunate precedent in this regard, and I hasten to add that it is not with the Atomic Energy Board but with certain other public institutions that invested their money with a financial institution and unfortunately had problems with that.

Subsection (5) provides that the Minister shall table certain reports unless a disclosure, in the opinion of the Minister, jeopardizes the security of the State. We accept that. However, the subsection further states “or being contrary to the public interest”. We believe that this is a very inexact term. The concept of what is in the public interest differs considerably, depending on what side of the political spectrum one finds oneself, and we do not believe that the public interest, in this case, should be brought into this Bill. We feel that the security of the State is what is important here, and it is for this reason that I have moved my second amendment.

Mr. Chairman, we have very little difficulty with the first amendment of the hon. member for Port Elizabeth Central regarding the deletion of the concurrence of the Minister of Finance, and therefore leaving the matter with the Public Debt Commissioners, but we shall see what the hon. the Minister has to say.

Regarding the second amendment on this clause, we would just like to tell the hon. member that we shall not be supporting his amendment, and let me give the reasons: The question of jeopardizing the security of the State may have a time connotation which makes it impossible, at any particular time, to establish the consequences of a particular action or to reveal certain information even when the jeopardy to the security of the State is not immediately obvious or proven, i.e. it cannot be proved immediately because of the time-factor involved.

The clause states “may” jeopardize it.

Yes, “may” jeopardize the security of the State. We believe, therefore, that if one were to delete the words “or be contrary to the public interest”, one would in fact have a large amount of information being revealed only because one could not prove conclusively that it would jeopardize the security of the State. What we have to consider is the probability of the misuse of this particular subsection, as compared with the positive use that can be made of that particular provision. We believe that the probability is fairly low of that particular aspect being misused in reporting to Parliament, and that therefore the removal of that particular stipulation would be prejudicial to the interests of the Atomic Energy Board.

Mr. Chairman, the hon. member for Port Elizabeth Central is objecting to the fact that, as provided in clause 14(2), surplus funds may be invested in a manner other than with the Public Debt Commissioners, with the concurrence of the Minister of Mineral and Energy Affairs and the Minister of Finance. However, if the hon. member were to take note of clause 4(1)(a) and (b), he would see that the corporation has considerable powers enabling it to work with money. In terms of clause 4(1)(a) the corporation, with the concurrence of the Minister, may invest money over a wide field. In terms of clause 4(1)(b), the corporation may, with the same sanction, lend money to every person or body specified here.

It therefore seems to me as if this will be a case of straining at a gnat and swallowing a camel. This is precisely what seems to be happening here when one has to make a tremendous provision relating to the limited reserve funds left over at the end of year, while in reality the corporation has far wider powers in terms of clause 4(1)(a) and (b).

Now I want to say something about the question of “public interest” and “security of the State”. In this regard I should like to associate myself with what the hon. member for Durban North said. I believe that there is too wide a gap between the security of the State and public interest to simply exclude public interest. The fact of the matter is that in this industry the interests of the producers of source material, dealers, and foreign clients in particular, should be taken into account. That is why I think that the amendments of the hon. member for Port Elizabeth Central should not be accepted.

Mr. Chairman, I have given very careful consideration to the two amendments moved by the hon. member for Port Elizabeth Central, and I regret to have to inform the hon. member that I cannot accept either of them.

I should like to point out that both the provisions he should like to see amended, have formed part of our legislation since 1970. After experiencing the implementation of the provisions as they are now contained in the Bill for 12 years, we have found that they work well, and that they are, in fact, essential. As far as the hon. member’s first amendment is concerned, I wish to indicate that, apart from the arguments that have already been raised, it may specifically be necessary with a view to obtaining certain facilities or equipment, to invest money in a manner other than with the Public Debt Commissioners. If I should therefore accept the hon. member’s amendment in this regard, this would constitute an unnecessary restriction on the corporation as far as the exercise of its powers are concerned, particularly its powers in terms of clause 4(1)(a) and (b).

Mr. Chairman, allow me to point out that we are, after all dealing here with a State corporation, and not merely with a statutory board. It is a State corporation which may operate in the financial trade. So I really do not think that the hon. member need be concerned about this. We shall also ensure that there are financial experts, who will provide sound advice so that incorrect investments are not made, serving on this council.

As long as they are Nationalists! [Interjections.]

As far as the hon. member’s second amendment is concerned, I wish to point out that the provision contained in this clause, is also to be found in existing legislation. I should like to point out to the hon. member that this report may contain the kind of information referred to in the clause concerned, information concerning co-operation with other countries, loans procured from foreign institutions, etc. Consequently there are reasons, commercial or political reasons, why it may not be advisable to disclose this information. Although it may not be antagonistic to the security of the Republic, in the true sense of the word, the disclosure of such information may be very detrimental to the activities of the corporation.

We should realize that when confidentiality is at stake—which we are probably going to discuss in greater detail just now—the whole question of nuclear energy, and everything connected with it, is a sensitive matter, a matter which has been identified by the enemies of South Africa as one of the fields on which they should concentrate.

There are people who have sound relations with us in this regard, and we owe them confidentiality so that they do not become the victims of the enemies of South Africa.

Amendments negatived (Official Opposition dissenting).

Clause agreed to.

Clause 29:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

The hon. the Minister indicated, in his Second Reading speech, that he would accept this amendment.

Mr. Chairman, as I have indicated I accept the amendment, but I myself move as an amendment—

Amendments agreed to.

Clause, as amended, agreed to.

Clause 45:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

The purpose of this amendment is to suggest that the hon. the Minister should only be able to act on the advice of the Nuclear Safety Council, which this very legislation sets up, in cases where there has ceased to be any risk of nuclear damage. We have gone to the trouble of setting up this council to look after nuclear safety. Therefore to give the hon. the Minister the right to give “notice in writing to the corporation that in his opinion there has ceased to be any risk of nuclear damage from anything at or in the nuclear installation or on the site” without first getting the advice of the council, is not, in my view, at all reasonable. I have no reason to believe that the hon. the Minister will act irresponsibly in any shape or form with regard to the power he is getting. I simply believe that it is better for him and for the people who subsequently hold that post and who may well be from different parties.

Mr. Chairman, I rise simply to indicate that I am prepared to accept this amendment.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 49:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 53:

Mr. Chairman, I want to ask the hon. the Minister a question. I do not know whether he misunderstood me, but I asked him at least to have the owner of the mineral rights, the man who has mineral rights on his property, notified as to whether the ore or quartz which has been extracted will be returned to him and whether he can keep it in his possession so that he can go to a university to determine what the mineral value of the ore is. This applies especially in the case of gold. It is not easy to amend the clause because there are certain minerals about which information cannot, in the interests of South Africa, be made available to other people. Since the State has the right to enter a man’s land at any time to carry out prospecting I do, however, think that the person who owns the mineral rights and who is also the owner of the property, should be informed of what was found on his property, especially in the case of gold and other minerals which are not of material interest to the State. The reason advanced with regard to the workableness of the gold I do not regard as a good reason.

†A feasibility study has never been a reason why the Government should have knowledge of something or not. It is very important that the owner of the land should have the right to know what minerals are on his land. This is true even if he is just the owner of the land. The person with the mineral rights on that land, the Government, or someone who has information can come along and say to this man: “You are in the Kalahari; you can never farm this land; it may be expropriated; it is worth nothing.” The possibility exists, however, that one of the biggest companies will set up operations on that farm which will result in his eventually getting a tremendous price for that land. It is therefore altogether wrong to say that the company is entitled to that information but not the farmer himself.

*I just want to ask that where a person is the owner of mineral rights on a piece of land, that that information be made available to him.

Mr. Chairman, I think the hon. member is a little confused. I think I should explain the matter to him step by step. There can be no question of the involvement of a mining or developing company if the owner of the land is, in addition, the owner of the mineral rights in the ordinary sense of the word. If someone still has his land and mineral rights, no mining company has anything to do with it. The mining company or the development company only becomes involved if the owner of both the land and the mineral rights has signed a contract of some kind …

Mr. Chairman, may I put a question to the hon. the Minister? If, for example, the State is drilling for uranium at a certain place, the mineral rights still belong to the owner of the land at that stage. In terms of this legislation I believe that the Government is then entitled to drill there, to remove the ore, to exploit it, and not even notify the owner, who is still the owner of the minerals. They do not even have to return those ore parts to him. My question was concerned with this aspect, and not with whether the mineral rights are in the hands of someone else.

The hon. member was talking about companies. I am sorry, but that is what he said. He implied that we had a system in terms of which a company is in a privileged position. Firstly, let me explain that, I shall reply to the other question of the hon. member as well. When someone enters into a contract—this is what I said in my reply to the Second Reading debate—he has to safeguard himself. If he gives a mining company an option, and if he wants access to the information they obtain, he has to make a contractual arrangement in this respect with the company which he has authorized to prospect on his land. Since the hon. member has referred to investigations by the State, I firstly wish to point out that the State does not prospect. The kind of survey the State makes, proves nothing. The kind of survey which the State makes, merely proves that it may be worth while prospecting in a certain area. On the basis of this information, the State then indicates to the private sector whether or not it would be worth while searching for specific things in that area. Then the private sector takes over.

Yes, they take an option.

The owner of the land still has his mineral rights, and the mining company does not have any rights as yet. Then negotiations take place.

The one has information which the other does not have.

No, no one has more information than the other. They start off on a completely equal footing. In fact I said it would be unfair to favour the one by giving him information the other does not have. We should maintain a balance.

Clause agreed to.

Clause 66:

Mr. Chairman, this clause has to do with patents. At the moment it reads—

We do not think that this is entirely correct. I seek to amend this clause so that any person who is normally resident in South Africa, whether he is a South African citizen or not, will be covered by the provisions of this clause. However, a South African citizen who lives in another country would not be precluded from applying for a patent in that other country, or in any other country, because of this clause. What one can do in terms of this clause is that one could turn a highly eminent scientist who is a South African citizen into a criminal in South Africa if he patents something that he has discovered while working for an institution, a university or some other type of organization overseas. We are aware that South African citizens do leave South Africa, some for political reasons and others to further their studies, and in the course of furthering their studies overseas—let us face it, in the field of atomic energy and nuclear physics they could certainly benefit by studies overseas—it is quite possible that they might be working for an organization which is doing research and development and the patent would then be registered in their names overseas.

Therefore the sense of my amendment is to remove South African citizens who happen to live overseas from the provisions of this clause. The alternative is not so easy—one would not like them to do it—namely for them to become citizens of the country in which they are living and thereby giving up their South African citizenship. I do not, however, believe that that is in anyone’s interest.

I want to give one example of a case where this could have applied. Perhaps the hon. the Minister has heard of the case of one Basil Schönland who was very eminent in the scientific field. He was a South African but he worked for many years for the Atomic Energy Board in Britain where he did very good work indeed.

So, I hope the hon. the Minister will see his way clear to accepting the amendment printed in my name on the Order Paper and which I now move, as follows—

Mr. Chairman, the hon. member for Port Elizabeth Central wants the prohibition to apply only in respect of persons who are normally resident in South Africa. He correctly referred to the South African who still has South African citizenship, but who is no longer normally resident in South Africa. Such a person is still under the jurisdiction of this country the moment he enters the country. It could happen that that South African citizen who is no longer normally resident in South Africa, has, in South Africa, acquired certain knowledge with regard to nuclear energy and that he wishes to register it abroad.

It is in your hands to prevent his doing it.

This clause envisages only the best for South Africa and in bona fide cases, as in the case to which the hon. member referred, where a South African citizen acquires knowledge abroad, the clause specifically makes provision for his obtaining permission from the corporation to register the patent in his name abroad. Therefore I, too, cannot agree that this is a good amendment.

Mr. Chairman, I think the hon. member for Namakwaland and the hon. the Minister have missed the purport of the hon. member’s amendment. A South African citizen on a scholarship to an overseas institution, which deals with nuclear processes and other facets of atomic energy, may well be obliged to take out a patent in respect of his employment contract with that particular organization. I think it is not morally defensible that both should then have to be responsible to the Minister of Mineral and Energy Affairs in South Africa in order to exercise their legitimate right. This will create problems. However, we can overcome the problem very easily by accepting the hon. member’s amendment which adds “who he is normally resident in the Republic”. Under those circumstances I believe it would be an improvement, without trying to suggest to another organization, let alone the South African citizen overseas, that it should obtain this hon. Minister’s permission to take out patents for research work done exclusively outside South Africa. If a person is used as a South African citizen in that research work that will of course cause problems for us.

Mr. Chairman, unfortunately I do not see my way clear to accepting the amendment. I think the hon. member for Namakwaland presented the matter correctly. The fact of the matter is that we are dealing here with a secret process which is part of what is covered by this clause. We have developed our own process, and a large number of people have access to that information. Although it is ensured contractually and otherwise, that employees are bound by discipline to protect that information, it is, after all, not practicable to prevent, at all times, the disclosure of specific information. It is therefore necessary that we have stringent measures surrounding this process which we jealously guard and keep secret.

I wish to give an example in this regard. A South African citizen who, for example, has worked for 10 years at Ucor, and who has obtained information there, may settle abroad permanently and may then apply for patents in respect of those matters concerning which he obtained information in his work at the corporation. All he needs to prove is that he is now permanently resident there. However, it would not be in the interests of South Africa, and it would also not be correct to exempt such a person from his duty to keep that information to which he had access by virtue of his involvement while still working there, secret and to allow him to use it so as to defeat the whole purpose of the secrecy surrounding our own processes. That is why we think we should insert this provision. Of course, we have no jurisdiction over persons who are not South African citizens and who are no longer resident in South Africa. This is why it is confined to South African citizens. As long as one is a South African citizen, one is subject to the overall authority of the State of which one is a citizen, and it has certain powers in respect of one.

Of course it is not the intention to prevent a person who makes his own bona fide discovery during the course of his involvement as an employee with a completely different company without any information at all from us, from applying for patents. That is why we have that exemption clause and I wish to give hon. members the assurance that this exemption clause will be applied on the basis I have just set out.

Mr. Chairman, I do not think I can agree with the hon. the Minister’s setting out of this particular case. The person whom the hon. the Minister gave as an example, the person who has worked for Ucor for 10 years and who then goes overseas and takes out a patent on a process developed at Ucor, is basically a scoundrel. He has stolen the process and is now utilizing it for his own advantage overseas. The hon. the Minister is not going to prevent that sort of thing happening by means of this legislation. I do not think that a person can be extradited for that sort of thing. They were not going to be able to charge such a person overseas. If he wants to be a scoundrel and steal Ucor’s secrets, take them overseas and patent them in his own name, then there is nothing to stop his doing so. It is only if and when he comes back to South Africa that this particular provision will apply in which case he can be prosecuted in terms of this provision. However, if he is prepared to stay out of South Africa under those circumstances, there is nothing that the hon. the Minister or anybody else can do about it.

The same thing applies to South African citizens working overseas. In fact, this clause could prevent people returning to this country, the knowledge that perhaps patents have been taken out in their name overseas on research work that they have done overseas. I want to ask the hon. the Minister whether he is prepared to tell this House that a South African citizen working overseas and who overseas, whether or not in conjunction with other persons or oganizations, develops a patent, will be given permission to patent automatically without the hon. the Minister’s first wanting to know what the patent is all about and what it deals with. If it is obviously a process that has not been stolen from South Africa or been based upon South African knowledge in any way, will he be prepared to tell this House that those people will automatically have his permission to patent?

Mr. Chairman, one cannot give the assurance that a person will have something automatically. The assurance that I can give, is that the procedure will be fair and that we shall not abuse these procedures. I do not believe that the corporation, as a State corporation, is geared to stealing the secrets of other people. All it seeks to do is preserve its own secrets.

When we talk about the community that would ever apply for a patent in this field, then we are talking of a very small and very exclusive community. One does not find a nuclear scientist under every bush; they are very scarce. I can assure the hon. member that each person that could ever be affected by this clause will be aware of its existence, will be well-informed about this clause and will form part of this exclusive group of nuclear scientists of whom we have such a shortage that we cannot even effect total separation between the licensing power and the Nuclear Energy Corporation itself, because our manpower position does not allow us to do so. I do not believe that this will entail any hardship for anyone. I want to assure him that it will be applied sympathetically. The purpose is merely to protect South Africa’s interests.

Mr. Chairman, I think the hon. the Minister will appreciate that we have full appreciation for what he intends doing with this clause and we support him totally. It is, however, going to create certain difficulties. There are two difficulties here. Firstly there is the one on which we have already elaborated and it concerns the South African who works outside South Africa but is still responsible to the Minister for permission. The second problem concerns an overseas scientist who is working here. I should imagine that there are times when overseas scientists do work here. Such citizens of other countries are in fact free to take out patents as the result of experience which they gain here, but not the South African.

I should like to suggest to the hon. the Minister that we can get around this problem and fulfil the objective of the clause as follows: We accept the amendment of the hon. member and then the corporation writes into its employment contract a prohibition on taking out patents related to the experience which the individual gains in South Africa. This is in line with the common practice we find in a large number of companies. Chemical companies and engineering companies employ staff who sign a contract with the company that should they leave the employ of the organization, they would for a period of say two years not be involved in the same field or take advantage of what they have learnt by taking out a patent within a period of two years. That seems to be sufficient to ensure that they do not take advantage of their experience here. Within a period of two years things change to such an extent that other scientists are involved, and therefore one can do it in this way. I suggest to the hon. the Minister that we then need not do anything further except to accept the amendment of the hon. member. The corporation will only have to look at its employment contract with both local and overseas scientists.

Mr. Chairman, the hon. member for Durban North is now introducing something new into the argument, viz. the foreigner who gains certain experience here. If such a person works in South Africa, there will certainly be a contractual arrangement to regulate matters of this kind.

Furthermore, I should like to refer to the hon. member for Port Elizabeth Central who is trying to create the impression that the provisions of this clause will not be effective in respect of South African citizens who live abroad. This is not the case. First of all, it is a fact that if he commits an offence there which is an offence in this country, an extradition order could be called for. Moreover, an interdict could even be obtained against him, in the same way as foreign companies obtain interdicts here. This is not, therefore, an ineffective clause. Consequently I cannot agree with him.

Mr. Chairman, hon. members should realize that what we are protecting here is not merely a new egg-beater. We are engaged in discussing something about which hon. members are concerned, viz. whether the millions and millions of rands that we are investing to establish this development, will be economically viable. One cannot, on the one hand, be concerned about this enormous investment of ours, and on the other, want to protect it with feeble measures. It is an enormous investment, and it is important that it be protected.

Section 29 of the Atomic Energy Act contains the same provisions, and they work well in practice. We do not merely want to pay lip service in this regard; we also wish to assume powers to protect our rights.

Furthermore, I want to point out to hon. members that not only employees of Ucor, or the Atomic Energy Board as it is called at the moment, have access to this information. Non-employers in this family of scientists also have access to certain information. There are people working for contractors who, from the nature of their activities, acquire certain information. There are people at universities and other institutions who have access to this information. That is why we are assuming these powers—we consider it essential in the interest of South Africa.

Amendment negatived (Official Opposition and New Republic Party dissenting).

Clause agreed to.

Clause 68:

Mr. Chairman, hon. members will be aware of the fact that clause 68 deals with secrecy and the protection of information. It also creates offences with very severe penalties if these provisions are not adhered to. As I said in the Second Reading debate, we believe that this clause goes too far. I have motivated that view in the Second Reading, and will therefore not spell it out any further. We object to this clause in its present form, and in an effort to improve it, I move the amendment printed in my name on the Order Paper, as follows—

1. (6) No person shall be convicted of an offence under this section unless it be proved that such offence jeopardized or was likely to jeopardize the security of the State.

In other words, the State would have to prove in a case—and this could be done in camera—that there was indeed an element of harm to the State by the disclosure of the information. If they cannot prove that element of harm, then there should be no case, because I have absolutely no doubt that there would be many, many publications, conversations and libraries that would conflict with the provisions of this particular clause. We believe, therefore, that it should be ameliorated in some way.

Mr. Chairman, I want to thank the hon. member for the constructive element contained in his amendment, i.e. the fact that he recognized the need for secrecy. His problem is really how we should limit that need. I want to assure the hon. member that there is nothing sinister in the wide net that is being cast. The fact is that it is not only the security of the State that is involved in the necessity for secrecy.

*Several other aspects and interests which have to be protected, are involved here. The disclosure of uranium prices and the disclosure of the names of the people to whom we sell uranium could, for example, severely prejudice our uranium trade in the present international political climate. It cannot be publicized, however, that this endangers the security of the State. Therefore, if we were to accept the hon. member’s amendment we should have an endless argument as to what the security of the State involves. The same applies to our trading partners when it comes to nuclear matters. For example, if it were to become known—for this is an historical situation—where Escom obtained the enriched uranium for Koeberg fuel, South Africa’s enemies at the UN could have exerted pressure on those suppliers not to supply it and then it would not have been possible to commission Koeberg in time, which would have meant a major financial loss to Escom. Once again one would have an argument as to whether the security of the State would have been involved here or not. Rather than having to argue about it, we wish to retain the clause as it stands; that is, after all, why it is worded in its present form.

Clauses similar to those included in this Bill have existed since the first Atomic Energy Act was promulgated in 1948. The present clauses, too, were taken word for word from existing legislation, and since 1948 many a debate has been conducted on this matter in this House of Assembly.

Finally, I want to add a few other considerations for the edification of that hon. member. In the first place, nuclear research, nuclear technology and nuclear energy can not only be utilized to the detriment of the Republic if information about it were to find its way into the wrong hands, but it could also be utilized to the detriment of the international community as a whole. For that very reason there is legislation similar to our own in all countries which have their own nuclear energy programme. We are therefore in step with this practice. Indeed, South Africa would be irresponsible if we did not also prohibit the unchecked distribution of such sensitive information.

Consequently the issue here is not merely that of the safety of the Republic, but also the safety of the international community as a whole, as well as the protection of our uranium industry and our nuclear industry in general. Section 69, for example, was placed on the Statute Book in 1978 in accordance with legislation in other major uranium producing and consuming countries, for example, Great Britain, Canada and Australia. Why did we do that? We did this when court proceedings were instituted against certain uranium producers in the USA. This legislation was aimed at the protection of the uranium industry, and not at the security of the State as such. As a result this amendment was passed at the time with the approval of both sides of the House.

I want to assure the hon. member for Port Elizabeth Central that there are no sinister ulterior motives involved here. However, there are wider interests than merely the security of the State, and in this field we owe this to our trading partners as well.

Mr. Chairman, I simply want to state that while I fully understand the problem that the hon. the Minister and the officials have, I nevertheless believe he should also understand our problems with this clause. We feel very strongly about it and I am indeed very sad that the hon. the Minister cannot accept it.

Amendment put and the Committee divided:

Mr. Chairman, this clause is the one clause that does ameriorate the conditions of clause 68 to a certain extent. It is not clear that an institute could be exempted by the Minister in this clause. I therefore move the amendment printed in my name on the Order Paper, as follows—

Mr. Chairman, I rise merely to indicate that I accept the amendment.

Amendment agreed to.

Clause, as amended, agreed to.

House Resumed:

Bill, as amended, reported.

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

Mr. Speaker, I should like to thank the hon. the Minister for his acceptance of the amendments he did accept. Obviously, I am sad that he did not accept the ones he did not accept. At this stage I should like to add my thanks to those of the hon. the Minister to Dr. Wynand de Villiers for explaining the Bill to us so carefully and for spending so much time with us on this. I am quite certain that he added immeasurably to our knowledge of the Bill and we thank him for that.

The Third Reading stage has to do with the effect the Bill is going to have and I believe it should be spelt out that we believe that the provisions of this Bill will be advantageous to the public of South Africa in that, by means of these provisions, we believe the safety factors are going to be looked at more carefully, particularly of course by the Council for Nuclear Safety. This, as we said in the Second Reading debate, is a tremendous improvement and I believe it should go a long way towards putting the public’s mind at rest that we are very carefully inspecting everything that has to do with nuclear safety in South Africa. I also hope, as I have said earlier, that the hon. the Minister will use the greatest possible discretion in terms of the safety provisions and secrecy provisions and that he will consider establishing a board for declassification. I do not think that he replied to that during the Second Reading debate. I think that a board for declassification of secrets is an extremely good idea.

During the Second Reading debate the hon. the Minister mentioned that we could have some 16 000 megawatts of electrical energy supplied by nuclear stations by the turn of the century. I want to say to the hon. the Minister that they are going to have to move if they want to get another 14 000 megawatts in the next 18 years. It is going to be a very, very difficult task. I believe that the hon. the Minister and his department will have to make up their minds fairly soon on the expansion of our nuclear energy programme if they want to get this programme going now so that by the turn of the century we could have 16 000 megawatts. I do not think that there should be too much dillydallying over this matter. I believe that a decision from the hon. the Minister is called for in the very near future.

I want to end by quoting again from the speech of the hon. the Prime Minister on 20 July 1970 (Hansard, col. 58) where he stated—

These are very important words and I believe that we should hear them again at the close of this debate, i.e. that our intention in terms of nuclear energy is that we want to use the benefits of nuclear fusion for the benefit of mankind and not for any other purpose. I believe that this is our intention and I believe that it is just as well to put it on record once again, i.e. that our South African nuclear programme is aimed at the beneficial and peaceful uses of nuclear energy.

Mr. Speaker, I should like to discuss the application of this legislation and the future of nuclear energy in South Africa. However, I should first like to broach three other matters.

Firstly, I should like to associate myself with other speakers who paid tribute during the Second Reading debate to Dr. A. J. A. Roux or “Ampie” Roux, as he is called. He is the retiring leader of the South African Nuclear Energy Programme. Dr. Roux is being succeeded as president of the Atomic Energy Board by Dr. Wynand de Villiers, who is also the chairman designate of the Atomic Energy Corporation which is going to be established in terms of this Bill. I should like to thank Dr. De Villiers for the work he has done up to now and also wish him everything of the best with the new assignment he has received. He also serves on the board of directors of Kentron, is a member of the CSIR and chairman of the Scientific Advisory Council of the Prime Minister, etc.

The third person whose name I should like to mention is Dr. W. L. Grant, Wally Grant, as he is called, the present managing director of Ucor. He is the person to whom, in my opinion, all the credit should be given for the development of the South African uranium enrichment process. Justifiably, the South African process is referred to in Ucor publications as the “Grant process”.

The second matter I want to touch upon is the question of secrecy which is covered by clauses 68 to 71 of the Bill. I should like to make an appeal to the hon. the Minister and his officials, and ask the scientists of the Atomic Energy Corporation should in future be allowed to publish particulars of their scientific work in so far as this is not at variance with the aims and objects of the Bill. The recognition which a scientist enjoys in the world of science depends very largely on the material which he publishes. I believe that the objects of the corporation will in the long run be furthered in this way.

In his Second Reading speech the hon. member for Port Elizabeth Central referred to the economy of the uranium enrichment process and this afternoon the hon. the Minister also expressed certain ideas in this regard, with which I should like to associate myself. If one leaves the development of the American permanent fusion process for uranium enrichment out of the reckoning, a study of the development of the uranium enrichment processes indicates that it takes approximately 20 years from the time one makes a start with the development of such a process on a serious scale in a laboratory until one has progressed through the phase of a pilot plant to the successful putting into operation of a production plant. If one bears in mind that Ucor only came into existence in terms of an Act of Parliament in 1970 and that it was only decided in 1978 to expand the pilot plant, it seems to me that the development of the South African uranium enrichment process is still progressing pretty much according to schedule. One can, of course, expect that other strong industrial countries will also be successful in this sphere, given sufficient time. In this connection I should like to refer to the German process developed at Karlsruhe by Prof. Becker. This is also an aerodynamic process and also makes use of hydrogen as a carrier gas. For a very long time after 1970, when the former premier, Mr. Vorster, announced the development of the South African process in this House, Prof. Becker accused us on all international platforms of having taken over his process. After Ucor had made more information on its own process available, Prof. Becker dropped this accusation. Yet it is interesting to note that quite a number of problems are being experienced with the application of this only other aerodynamic process in Brazil.

An aspect of uranium enrichment which the hon. the Minister broached was that enrichment costs comprise only approximately 8% of the cost of the nuclear energy electricity produced. By itself, therefore, the ability to enrich uranium at a certain more or less economic price is of tremendous importance as far as independence in the sphere of nuclear energy is concerned. If one is therefore able to enrich uranium at, say, approximately 25% more or less than the cheapest cost at which another country is able to do so, it simply means that one’s nuclear electricity will only be 2% more expensive or cheaper as a result. The ability to enrich uranium at a competitive price is also of major international importance because the international nuclear industry is heavily dependent upon a diversity of enriched uranium suppliers in the international market for the sake of the stability of that market. I also wish to point out that the concept of “economic process” requires definition. In this connection I want to refer to the American permanent fusion process. This has the advantage that the capital expenditure can to a large extent be written off against depreciation. Another advantage is that the American energy department pays no tax, carries no insurance, receives no profits and also enjoys the benefits of very low State interest rates. According to published data on the South African enrichment process, it appears that our process has a high specific energy consumption and a relatively low specific capital expenditure.

I want to discuss the application of nuclear energy in South Africa in future, with reference to Chapter II of the Bill. Clause 19 of the Bill provides that the sole right to produce nuclear or atomic energy is vested in the corporation. I could mention in passing for those hon. members who are interested that constant reference is made in the Bill to “nuclear or atomic energy” and that these are equivalent concepts. The scientific and more acceptable term is nuclear energy, but in certain combinations the word “nuclear” just does not sound satisfactory. For example, the Afrikaans acronym for “kemenergiekorporasie” would have been KEK, and that would have looked strange. Consequently it was decided to use the name “Atoomenergiekorporasie”, with its acronym AEK.

Clause 20 of the Bill provides that no person shall produce nuclear energy except under a nuclear licence. Clause 21 provides that Escom receives preferential treatment, while clause 23 provides that the distribution of electricity generates by means of nuclear energy is subject to the provisions of the Electricity Act. We all know that South Africa is a net exporter of energy. If one takes into consideration the value of uranium energy and the energy value of the coal which we export, one realizes that we export far more energy than we import in the form of liquid fuel.

Nuclear energy is definitely the only known long-term source of electrical energy and it goes without saying that a great deal of attention will be given to its possible utilization in our country. At present approximately 98% of our electricity is being generated by means of coal energy. There is a twofold increase in our total energy consumption approximately every 14 years, but there is a twofold increase in the electricity component approximately every 7 to 8 years.

The hon. the Minister referred earlier this afternoon to the studies carried out in 1974 by the Atomic Energy Board before the decision was taken to make a start with the Koeberg power station. The major consideration in this connection is that long transmission lines in due course make nuclear energy far from our coalfields cheaper than coal energy. It was found at the time that by the early ‘eighties, nuclear energy in the Western Cape would be cheaper than coal energy, and that is why a start was made with Koeberg. When Koeberg comes into operation, it will represent approximately 10% of the national generating capacity.

It is also interesting that 1974 happened to be a watershed year in the sphere of nuclear energy in the world. Up to 1974 there was enormous optimism on the future of nuclear energy and massive international construction projects were envisaged. After 1974, however, we experienced an irrational tide of resistance to nuclear energy in the West, while the communist countries continued unabated with their nuclear energy programmes.

The hon. the Minister did point to the example of France which is taking the lead very strongly as far as the application of nuclear energy is concerned, but one must admit that the nuclear energy programmes which were forecast in 1974 have not been realized at all, and that the rate of the application of nuclear power worldwide is far slower than was envisaged 10 years ago.

A primary inhibitory factor which came into the picture was the Nonproliferation Treaty, in terms of which the signatory countries undertook to manufacture no nuclear weapons. In addition, they have to throw open their facilities to inspection by the International Atomic Agency. Provision is made for a penalty, viz. that if a country refuses to sign the treaty, it is subjected to an embargo in terms of which no components which may possibly be used in a nuclear energy programme will be supplied to that country. On the other hand, however, there are no guarantees. I am quoting from page 11 of the latest annual report of the Atomic Energy Board—

This is the International Atomic Energy Agency—

I just want to point out a few factors which will have to be borne in mind when decisions are made on the application of nuclear energy in future.

In the first place I think—this is probably a factor of moderate importance—that operational experience will first have to be acquired with our first nuclear energy installation, viz. Koeberg, which will probably be realized within the next year or two. Secondly, I think one must reach the point where the guaranteed supply of South African nuclear fuel elements is ensured. In addition, however, it is necessary in the first place that we make sufficient progress with our own uranium enrichment project, and, secondly, that we develop the ability to manufacture our own fuel elements which have been tested in a civil reactor, because Escom is required to supply the cheapest possible electricity. If it is delayed in any way in its programme, as a result of the fact that we do not have fuel elements, this will have an inhibitory effect on such development.

Furthermore, as far as the provisions of the Nonproliferation Treaty are concerned, our motto should continue to be “South Africa first”, but we must nevertheless take international political pressure thoroughly into consideration. There is also the question of economic studies. Escom and the Atomic Energy Board will once again have to make studies, taking into consideration the prevailing economic circumstances, the high initial capital cost of a nuclear installation, the effect of the increase in fuel prices, coal price increases, which the hon. the Minister mentioned, and increases, in the price of uranium. It must also be borne in mind that nuclear energy can only be economic if the total nuclear energy programme in a country is of sufficient magnitude. Finally, there is the long-term need for nuclear energy in the world.

Mr. Speaker, I want to begin by saying that I hope that the spirit of co-operation which prevailed generally today will continue in the future. As far as I am concerned, I shall do my utmost to promote that spirit of co-operation in this sensitive field.

The hon. member for Port Elizabeth Central referred once again to the possibility of 16 000 Mw by the year 2000. I wish to reemphasize the fact that I used the word “could” and that any decision in this regard will depend upon the results of further investigations. However, I agree with him that time is becoming more and more important from year to year and that it will be necessary to arrive at certain basic decisions fairly soon. At the same time, however, I want to say that I feel that this process should be evolutionary and that we should not move too fast.

The hon. member also referred to the use of nuclear energy. He emphasized that it must be used for the benefit of mankind. The attitude of the Government in this regard has been stated categorically from time to time, and this has not changed.

The hon. member appealed once again—he made a similar appeal during the Second Reading debate—for a declassification board. I think that this is a worthwhile suggestion, and I shall definitely investigate such a possibility and its practicalities.

*I should also like to thank the hon. member for Pretoria East for his contribution. We all know that he is an expert in this field, and it is always a pleasure to listen to an expert. On the one hand he advocated that scientists should be allowed to publish as widely as possible within the guidelines laid down in the legislation. I have a great deal of sympathy for this request, and I am pleased that he emphasized this matter. Scientists at research and development organizations are frequently at a disadvantage compared with their colleagues in the private sector. Their work often involves sacrifices because they are dedicated to their task. Part of the job satisfaction they experience lies in their ability to make a scientific contribution, and in this connection publication plays an important role. I want to assure the hon. member that this matter will most certainly be looked into very sympathetically.

I should also like to say, with regard to the factors which he mentioned in connection with decisions affecting the future, that I listened to him with very great attention, that there is most certainly a very great deal of merit in the points which he brought to our attention and that they will be looked into very thoroughly.

That brings us to the end of this debate, except that I had an obiter contribution from the hon. member for Johannesburg North. He did not rise to speak himself, but it nevertheless came to my attention that he was concerned about the use of language in the legislation. Not that he levelled any negative criticsim, but he spotted the fact that in a sense we were engaged in developing the Afrikaans terminology here. He was concerned about the terms “kernklo-wing” and “kernversmelting”, and the translation of “versmelting”, and asked whether we should not rather consider the use of “fusie” in this connection. We shall certainly give attention to this matter. The hon. member need not be afraid, though, that we are in this way necessarily finalizing the terminology, and any constructive contribution aimed at parity of language and creative thoughts in connection with the Afrikaans terminology in this field will certainly be welcomed and carefully scrutinized. Just as long as we do not wish to apply these interesting terms, which he wrote about, in politics, because it would seem to me that the political situation is rather complicated at the moment, particularly if I have to apply it to the question of fission. There is no risk of fusion, because the differences are profound. Fortunately, however, fission is not as serious as nuclear fusion, and consequently the hon. member need not be concerned about it. When he has retired from politics and is living a more peaceful life, as he intends doing, we should like to receive a contribution from him on the terminology in connection with nuclear energy.

Once again I convey my sincere thanks to hon. members for their contributions. It was an interesting debate, and I thank them for their constructive approach.

Question agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

Before I deal with the relevant amendment, I believe that this House will allow me to make a few observations on the university as such. It is not every day that a university is granted the opportunity of being mentioned in this House, and since such an opportunity has presented itself today, I should like to make a few observations on the Rand Afrikaans University.

This university today, in spite of having only been in existence for a short while, and despite its short history and tradition, has every right to assume its place in the array of South African universities. Those of us who live in Johannesburg are justifiably proud of the development that has occurred within the short while it has been in existence, a period of 14 years, and also of the fact that it has occupied an independent and worthy place among South African universities. In a lighter vein I wish to say that it so happens that there are two Bills dealing with universities before this House today, and the fact that the Rand Afrikaans University Bill has come up for discussion before the Stellenbosch University Bill is an example of the worthy, independent way in which this university is occupying its position in South Africa. [Interjections.]

Furthermore, I want to point out the role which the RAU plays as a centre for the community of Johannesburg, and, in general, of the Witwatersrand. During the past few years, and particularly in recent times, there has been a development at the university which was characterized by an outward movement to the community in Johannesburg. I believe this is something which the general community—and here I am speaking on behalf of the Johannesburg community—can welcome. Referring in particular to the fact that the university is, as it were, opening its doors as a cultural centre to the people of Johannesburg. We welcome this because it is necessary for any university to play that role. However, it is also the case that any university in its course of development from its inception, cannot immediately occupy that position. However, we welcome the fact that the university is, on its part, throwing open its doors, and I think that the community of Johannesburg should utilize it to the full.

Two years ago we also dealt, in a private member’s Bill, with an amendment to the Rand Afrikaans University Act in this House, and on that occasion I made a plea for an engineering faculty to be established at the university. Such a faculty was subsequently announced last year, and came into existence this year. I should like to thank the Government very sincerely for the decision which was taken, on the basis of advice from the Universities Advisory Council, to establish an engineering faculty at RAU. We are very grateful that the faculty has come into existence in the meantime.

As far as the proposed amendment to the Rand Afrikaans University Act is concerned, I wish to point out that the present section 9(9) does not empower the council of the university to delegate its powers in full to its management committee. Every legal act performed by the management committee, in the exercise of its present powers, is consequently subject to ratification by the University Council. As in any modern undertaking, a daily power of final decision is, however, essential. Problems may crop up if the appointment of staff and the finalizing of urgent contracts have to be held in abeyance if the university or the other party should insist that the decision of the management committee or of another committee of the council must first be ratified by the council. Such ratification may lead to delays, since the university council only meets four times a year. In accordance with sections in the legislation pertaining to other South African universities, we find that with the exceptions of the State universities and Medunsa, as well as UPE, the council of every university is in principle able to delegate its power in full. In most cases the delegatory power is qualified by requiring that the committee to whom such power is being delegated shall consist either exclusively of council members, or of a majority of council members. The requirement that the committee shall consist exclusively of council members will continue to apply in the case of RAU. This ensures that the delegated power remains effectively in the hands of the council.

If the proviso is deleted it will still be possible to report to the council in connection with the resolutions which are adopted in terms of the delegation.

Mr. Speaker, it is a great privilege for me to thank the hon. member for Johannesburg West for his short, but thorough motivation of this amending legislation. I think it was a fine example of the way in which energy ought to be expended. Moreover, I believe it was a lesson to many people.

†Although RAU is not situated in the Parktown constituency the hon. member for Johannesburg West can be described as my geographic political neighbour. Many of the staff and students of RAU, however, live in the Parktown constituency, and, of course, the majority of them not only supports the PFP but are also hard workers for the PFP. [Interjections.] I have already visited that magnificent university to attend various functions there, and I can give hon. members the assurance that although I am an old Ikey and originally came from Cape Town, and therefore a newcomer to Johannesburg, I am convinced that Johannesburg, the Transvaal, and in fact the whole of South Africa, can rightly be proud of this young university, of its standards and achievements. The academic and sport achievements of RAU are known and appreciated by all South Africans. I should like to add though that if the Transvaal rugby selectors would only give more recognition to RAU’s rugby talent better rugby could perhaps be played by that union, especially if they chose the flyhalf who plays for RAU at the moment. [Interjections.] His surname signifies that he is an excellent rugby player. [Interjections.]

Also of course in the political field the PFP recently made RAU very famous when a very attractive old student of that university was elected mayor of Randburg. This beautiful woman has been gracing the Randburg city council for quite some time already.

This Bill is introduced for the sake of expediency and to ensure the better administration and conduct of the affairs of RAU. We on this side of the House are therefore delighted to support this measure.

Mr. Speaker, the CP, too, supports this amendment of section 9(9) of the Rand Afrikaans University Act relating to the delegation of powers of the council.

I also wish to add that the CP has very strong and firm convictions as to the nature, character, purpose and place of a university within a specific community. The history of the events leading up to the founding of this university is also known to us, that period which gave rise to the founding of the Rand Afrikaans University. We are well acquainted with the period when the university was established, as also the place of the Rand Afrikaans University in our country. We are also fully acquainted with the progress already made in academic and other spheres. I think that the Rand Afrikaans University has established itself very firmly in this southern land of ours.

In the light of what I have just said I wish to repeat that we support this Bill. We wish the Rand Afrikaans University everything of the best for the years that lie ahead.

Mr. Speaker, on behalf of the NRP I should just like to congratulate the hon. member for Johannesburg West on the introduction of this amending Bill. We have no difficulty with it. We shall support it in all its stages. The motivation provided by the hon. member during his Second Reading speech spelt out very clearly to us the problems being experienced by the university. We understand them, and accordingly we shall take pleasure in supporting this amending Bill.

Mr. Speaker, I wish to make this speech on behalf of myself and the president of the convocation, the hon. the Minister of Industries, Commerce and Tourism. [Interjections.] To begin with, I wish to say that it is a great pleasure to speak when we are all so much at one in this House. I think we shall now be able to gain time. I must say, I should still have liked to have one last fight this session with the hon. member for Parktown. He comes from Ikeys, but he makes out that he knows something about Johannesburg. [Interjections.]

I support this amendment which relates to my old alma mater and my employer for a period of 12 years. I should also like to point out—reference has already been made to this—that RAU plays a very important role, and I just wish to quote a few figures to support this contention. On the first Tuesday of June every year it is determined, for the purposes of the subsidy formula, how many students attend the university. At this stage RAU has 5 427 students, which represents a growth of 5%. Last year the growth was 7,5%, which is exceptional if one takes into account the fact that at the vast majority of White universities, there is no growth, or even a drop in the number of students. Of course, the part-time students make up a very large component. They represent more than a quarter—in fact, 26%—of the total number of students, and the post—graduate component, representing one quarter of the students, is probably among the highest to be found. This is an exceptional achievement, and indicated even then that RAU concentrates in particular on post-graduate training, because so many students from other universities come to study there, people who have found a living and job opportunities in Johannesburg and the surrounding regions and wish to study further. The advent of RAU has made this possible, and an indication of this is the fact that after 14 years of the university’s existence, more than a quarter of the students are post-graduate students.

The advent of the new engineering faculty has drawn quite a lot of criticism from various other universities. On the first Tuesday of June this year, however, there were 274 students studying in this faculty. That is not bad for a faculty which has only existed for one year.

I support this amendment because it will facilitate the activities of this rapidly growing university.

Mr. Speaker, I rise merely to thank the hon. members for Parktown, Rissik and Durban North and the hon. member Dr. Welgemoed for their friendly support of the Bill, and also for the friendly words they expressed vis-à-vis the Rand Afrikaanse University. What is interesting about RAU is that it was established with a group of people from other universities. For example, the hon. the Minister of Industries, Commerce and Tourism was eventually a sound export product of RAU. The hon. member Dr. Welgemoed, too, was an export product of that university. RAU will also continue to play its role in South Africa.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I move—

The amendments being proposed to the University of Stellenbosch Act are chiefly aimed at extending the seat of the university to the municipal area of Cape Town. They relate to the training of students in co-operation with the Cape Technikon, and provide that the university may enter into agreements with other teaching institutions, such as the Cape Technikon, in terms of which study at those institutions may be recognized for degree or diploma purposes at the University of Stellenbosch. The Department of National Education has already let it be known that the Minister of National Education has no objection to be proposed statutory amendments. However, the university gives the assurance that the proposed measures will in no way be to anyone’s detriment.

The amendment of section 1 of the principal Act seeks merely to replace the title of the Minister by his present title.

The university is already training students for the higher education diploma (commerce) in co-operation with the Cape Technikon. Moreover, negotiations are at present in progress concerning the possibility that the university could offer training in pharmacy in co-operation with the Cape Technikon. The amendment of section 3 to extend the seat of the university to the municipal area of Cape Town is being requested solely in order to make provision for this co-operation with the Cape Technikon, in the event of the agreement in question materializing.

The insertion of section 19A provides that such an agreement may be entered into with the consent of the Minister.

The amendment of sections 8 and 9 merely seeks to regulate the specific administrative affairs in connection with resolutions of the university council, particularly in view of the introduction of the post of vice-rector.

The statutes of the university, as just amended, provide that the university council may designate a chairman from its own ranks if the rector also occupies the post of vice-chancellor. The amendment of section 8(5) regulates the appointment of a chairman for the council if the appropriate chairman is absent. Section 8(8) is being amended to provide that the executive committee of the university council shall be appointed biennially instead of annually to change the composition of the executive council.

Section 9 is being amended to regulate the appointment of an acting chairman of the university senate and the composition of the senate. The aim in this regard is to prevent the senate from being dominated by a few faculties.

The amendment of section 11 was proposed by the Department of National Education and provides that the amendment of the statutes of the university may in future be consented to by the Minister. This is aimed at expediting the publication in the Gazette of such amendments, which can usually be effected annually.

Mr. Speaker, it is a privilege to support the Bill on behalf of the PFP. We are grateful for the opportunity to effect these amendments. There are two aspects of the Bill in particular that are of importance, as the hon. member for Vasco indicated. They are embodied in clauses 2 and 6, on the one hand, and in clause 4—the most important—on the other. Clauses 2 and 6 provide for closer co-operation between the University of Stellenbosch and the Cape Technikon. I particularly welcome this, because it is very clear that the broad gap which existed in the past between technikons and universities has to be narrowed to an increasing extent. Since this is, in fact, the first step to bring about closer liaison between technikons and universities, it is therefore to be wholeheartedly welcomed. Primarily, of course, as the hon. member for Vasco is aware, these provisions are in fact necessary to legalize a practice that already exists, viz. the degree to which co-operation with the Cape Technikon has taken place. It appears as if actions in this regard have not had the necessary statutory authorization in the past. Accordingly we are gratified that the necessary adjustments are now being made.

I also took note of the assurance given by the hon. member for Vasco, viz. that the university gives the assurance that the proposed measure will in no way be to anyone’s detriment. I am fully aware that the University of Cape Town and the University of Stellenbosch have enjoyed very good co-operation in the past in all spheres. I therefore wish to express the confidence that also as regards the co-operation in respect of the Cape Technikon, that good understanding between the University of Stellenbosch and the University of Cape Town will be preserved in all respects. I have no reason to think that this will not be the case. I also wish to express the hope that in the event of the Peninsula Technikon appealing to either the University of Stellenbosch or the University of Cape Town to be of assistance, they will give favourable consideration to such an appeal.

The second important amendment is in fact the one embodied in clause 4, which provides for something approaching a drastic change in the composition of the senate. At most universities, and traditionally at Stellenbosch, the position has always been that all professors in the various faculties serve on the senate. In this regard a drastic departure is being proposed, viz. that the senate itself may decide what professors from what faculties may serve on the senate. This is a development which has in fact become essential, due in particular to the existence of the medical faculty of the University of Stellenbosch. In view of this, provision has necessarily to be made in that medical faculty for a very large number of professors. Accordingly I welcome this provision of the Bill as well.

In conclusion, I wish to say that the Bill is a step in the right direction, and accordingly I regard it as a privilege to support it.

Mr. Speaker, on the face of it this is a minor and very brief Bill, but as such it deals with the birthplace of many things in our country, South Africa. Accordingly our party regards it as a privilege to support the Bill wholeheartedly.

The two previous speakers have already dealt with the amendments in this Bill, and accordingly I shall not dwell on them. I merely wish to express a few ideas concerning the University of Stellenbosch as such. As I have already said, it is the birthplace, the giant of many things in the national life of South Africa. Looking at a few spheres in which this university has shone, we see that in the field of language the university has given us an N. P. van Wyk Louw, D. J. Opperman and others, and in the field of music, an Arnold van Wyk, a Hubert du Plessis, a Prof. McLachlan and the inimitable oom Pietie le Roux with his “boereorkes”. In the field of law and science the university has produced giants. In the field of sport the university has produced people like Danie Craven, Dawie de Villiers, Morné du Plessis, Danie Malan, De Villiers Lambrechts and others. These are some of what this university has given us. In the field of religion as well, the university has produced giants.

In the political sphere, the university has produced six good Prime Ministers out of eight. We think of General Smuts. Politically I differed from him, but he was a giant, and is internationally recognized as a world statesman. He was a former Matie. I also think of General Hertzog, and Dr. Malan, men who made South Africa strong. I call to mind Mr. Strydom, the man who caused the struggle to continue. I call to mind Dr. Verwoerd, the man who in fact established the Republic. I call to mind Mr. Vorster who, in the early ‘sixties, fought communism tooth and nail in South Africa. In addition, I am convinced that our next Prime Minister will also be a former Matie. [Interjections.] All that will have to be decided is whether it is going to be the present hon. Minister of Internal Affairs or the hon. the leader of the CP. [Interjections.] The chances of the hon. the Minister of Internal Affairs are 1% and those of the hon. the leader of the CP 99%. In addition, I wish to say that the University of Stellenbosch is also being enriched by the “Transvaalness” of two of my own sons.

In conclusion: As the many hundreds of oak trees spread their tap-roots, their lateral roots and capillary roots deep into the fruitful earth of Stellenbosch, and above the surfaces offer their pleasant shade to Stellenbosch, in the same way the giant, the University of Stellenbosch, has its roots deep in the soil of the nation of South Africa, and the branches of the university have offered and still offer refreshing shade across many spheres of the national life of the Republic of South Africa. Accordingly it is indeed a privilege for us to support this Bill.

Mr. Speaker, on behalf of the NRP I should like to convey our felicitations to the hon. member for Vasco on the introduction of this Bill and congratulate him on the outstanding way in which he elucidated the amending Bill in this House. We realize the need for the involvement of the University of Stellenbosch in the various spheres as mentioned in the hon. member’s Second Reading speech. We realize that there is an acute shortage of pharmacists, commercial teachers and medical staff. In particular we welcome the fact that the University of Stellenbosch is going to undertake this expansion with the consent and co-operation of other bodies such as the University of Cape Town. Since no objections have been raised by anybody or person, including the University of Cape Town, it is a privilege for us, too, to support this legislation.

Mr. Speaker, I want to thank the other hon. member wholeheartedly for their support of the Bill. The timing of the introduction of this Bill was absolutely fantastic. Paragraph (g) of the preamble to the Bill reads as follows—

Thus, an agreement has been entered into with a university in the north that a very important rugby match is to be played tomorrow. At this early stage I can say on very good authority that I am able to announce the score.

It will be 30-0.

I had thought that the score was going to be 30-0, but I think it is going to be 26-6. [Interjections.]

In whose favour?

The score is going to be 26-6 in favour of the university that this Bill is about. I say this without the slightest doubt.

Otherwise you will resign? [Interjections.]

The hon. member for Meyerton referred very effectively to the very important contribution made by the University of Stellenbosch in the course of many years. I find it very interesting that this Bill and the legislation on the Rand Afrikaans University should follow one another, the one being the youngest university and the other the oldest university, after the University of Cape Town. The one university is approximately 10 years old and the other, 100 years old, and its seat is a town which was established 300 years ago. The hon. member for Meyerton referred to the six Prime Ministers which the University of Stellenbosch had produced, and I was surprised that he did not refer to the fact that that university had also produced a few leaders of the Opposition. In the Cabinet today there are seven former Maties, and according to a survey I carried out, virtually one-third of all the hon. members in this House are former members of the University of Stellenbosch. [Interjections.]

In the field of the economy of our country, the University of Stellenbosch has made a tremendous contribution through the people it has put in the field. And then there is the sphere to which I referred at the outset, viz. sport. The University of Stellenbosch has already produced more than 100 Springboks.

The aspect to which the hon. member for Vasco referred, viz. that the University of Stellenbosch is also spreading its wings, is not, in fact, a new principle either. The faculty of commerce at Stellenbosch has for a long time been established at Bellville, the military academy has been at Saldanha, and the atomic reactor, which is operated in conjuction with the University of Cape Town, is at Faure. There are agreements with the teachers’ colleges throughout the Cape and now there is also the agreement in regard to the Cape Technikon. I should very much like to agree with the hon. member Prof. Olivier that it is of the utmost importance that our universities should concentrate increasingly on practical aspects as well in the future. We do need more academics, but we also need academics who are at the same time practical technological people. I believe that this new agreement will contribute a great deal in this regard.

Mr. Speaker, while the hon. the Minister of Finance is here there is one final aspect I should like to raise. It is a matter which I should very much have liked to raise during the discussion of a previous Bill, but I think it is relevant here too. It concerns the issue of donations to educational institutions. Last year this was extended to schools, and it has been further extended this year. However, there is one aspect which I should very much like the hon. the Minister of Finance to give his very earnest consideration. Companies can deduct 5% of their taxable income tax-free for donations to universities. In the case of individuals, the amount is 2% or R500, whichever is the greater. However, the figure of R500 originates from the time of Dr. Dönges. Therefore it is a very old figure. The percentage does, of course, take into account the increases in taxable income, but the problem is—and now I link this specifically to the University of Stellenbosch—that there are many retired people with an income of, say, R30 000, who would like to give, say, R1 000 to their old alma mater. Unfortunately, 2% of R30 000, for argument’s sake, is a mere R600, and this means that the balance is not deductible for tax purposes. I should very much like to ask the hon. the Minister of Finance to give serious consideration to that aspect of the matter in the interests of the University of Stellenbosch and other institutions for higher education.

Mr. Speaker, I should like to convey my sincere thanks to the hon. member Prof. Olivier and the hon. members for Durban North, Rissik and Paarl, as well as the other hon. members who, through their “Hear, hears” gave their support so enthusiastically. I wish to say to the hon. member for Paarl that whereas I am unable to commit the hon. the Minister of Finance, I undertake to support strong representations on the hon. member’s behalf. I hereby thank him, too, for his contribution.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I believe you will agree that this is an appropriate time to move—

Agreed to.