Mr. Chairman, right at the outset I should like briefly to put a few standpoints as to how I see the present economic and financial state of affairs. Sir, I must tell you that I am somewhat concerned about certain of the reports and opinions appearing these days, which seem unduly and unnecessarily pessimistic to me, and I think it is important that we should try to put this matter into perspective.

†Mr. Chairman, If you were to ask me, in a word, to say how I see the economy, I would say that the South African economy at this moment is one of the very best in the world. It therefore must follow that I do not share the sort of pessimism that we are finding in certain quarters at the moment. Of course, there are problem areas. We know that there are problem areas and we do not dispute that. We know that the deficit in the balance of payments is high. That deficit is high particularly because the gold price has fallen, and because the economies in many parts of the world, and particularly, as far as we are concerned, in the countries of our main trading partners, are in a very poor state. This affects our exports, apart from anything else. And, of course, we know that the inflation rate is certainly too high. As far as the gold price and the state of the so called world economy are concerned, we have no control over those matters. We simply have to take them into account and adjust our policies accordingly.

As far as inflation is concerned, it is also true to say that this is a world-wide phenomenon. It varies from country to country. In some countries it is absolutely out of hand; in some countries it is higher and in some it is lower. Even in a country like Germany, which has a very good record over the last several years in the field of inflation, there is considerable worry in this regard, as I discovered only a few days ago again at first hand. I think I can say that my Department and I are doing everything possible to keep a firm hold on Government spending and, in difficult circumstances, to finance Government services and Government requirements in as non-inflationary a manner as we can.

As to monetary policy, I think one can say too that the Reserve Bank is acutely aware of the need to control the money supply, and is doing everything it can in that direction. But, once again, I would merely like to point out that the sort of world in which we are living is a world in which there are great problems affecting the money supply in a very large number of countries. In our case in particular I should like to repeat what I have said on other occasions: We have had the circumstance that, with the very big increase in the price of gold in 1980, we actually had an inflow of cash from abroad, from the sale of gold alone, of R10 billion, as against R6 billion in the previous year. If anybody wants to know what the implications of that are for monetary policy, I think one only has to be in the Reserve Bank or, indeed, the Treasury for a short time. An enormous problem is created in that way. The economy is flooded with liquidity, and it is not easy to handle such a matter in a matter of months. And, of course, on top of that we had last year a record maize crop, and that has caused further very substantial problems, because the cost of holding very large quantities of maize, with interest rates as they are, is very high, and the financing involved has been something on a much bigger scale than we have ever encountered in this country. Those two things have come together. But, Sir, I would like to repeat that in 1980, when conditions were very buoyant, we did in fact put aside a very big amount of some R1 240 million in the Stabilization Account, in reserve, and we also paid off a very substantial amount in foreign debts. A great deal of money was therefore in fact sent abroad in that form.

Mr. Chairman, I think it is true to say that we have a great deal going for us in this economy which is positive and beneficial. Our economy is without a doubt one of the most versatile in the world. We are not dependent on one or two commodities or one or two sectors of actively, as so many countries are, for our wellbeing. We are in fact able to obtain the benefits of production and wealth from a whole list of major sectors and commodities. There is agriculture, which is our biggest employer to this day. We are without a doubt in South Africa the biggest and most reliable exporter of foodstuffs on the whole African continent. At times, in fact, we are virtually the only exporter of foodstuffs—which is a frightening thought to me. There is mining, which is running extremely strongly. There is manufacturing and construction, which is our biggest single sector and which is developing apace. There is trade, wholesaling and retailing; there is transport; there is the financial sector, which is, I think as sophisticated as one can probably find anywhere at the present time.

It is true that our growth rate has eased off somewhat since the extremely high rates of last year and the year before. During 1980 and 1981 we had an average growth rate, over that period, of something like 6 to 7%, which is exceptionally high in these days. But even now our growth rate compares favourably with that of nearly all countries in the world. Investment, after a boom period of at least two years, is still buoyant. Employment is running strongly. One only has to look to see how tight conditions still are in the labour market. This is in contrast with the massive unemployment that prevails in so many countries, amongst them some of the most mature countries in the world. One only has to look at the position in Germany. I raised the point with some of my banking friends in Germany the other day. I said: “I understand your unemployment is reaching 1½ million.” They said: “No, it is not; it is fast approaching 2 million.” For Germany to have an unemployment figure of 2 million, Mr. Chairman, is something absolutely out of this world. In the United States the figure is something like 8½ million and in Britain it has now topped 3 million. These figures are in fact bigger, I am told, than at the time of the great depression of the early 1930’s, and they are worrying these countries very much indeed. It is not surprising, therefore, when one looks at our position and one looks at the positive factors I have been mentioning, that despite inflation, real incomes per capita—that is adjusted for inflation have risen substantially in the last few years or so for all population groups, which means that there has been a general and a significant improvement in living standards in this country in the last few years.

It is of course true that financial conditions are tight, and this brings me to an interesting contrast in the economy, which is perhaps not always sufficiently stressed, and that is that, on the one hand, we have an economy which, by and large, is still running very well. We have only just seen again the figures in respect of the sales of motor vehicles, which are always regarded as a very important indicator of economic activity in a big field. These figures are still virtually at record levels. On the other hand, financially, we only have to look at the interest rates to see how tight the position has become. I do not want to go into an analysis of all the reasons for that, but of course it is again directly attributable to the fall in the gold price and to the adverse effect on exports as a result of conditions abroad. That is why I have been stressing, Mr. Chairman, that we must take these things into account, and that we must consolidate. Our policies must be policies of consolidation of the basic strengths of the economy, of which there are many. We must also have a policy of adjustment, particularly in respect of the balance of payments. As regards the balance of payments, the deficit is large, but by no stretch of the imagination is this a source of concern, because I believe our policies are already beginning to have a considerable effect.

Then, Mr. Chairman, one has to refer again to our credit rating, our creditworthiness, both at home and abroad, which is something I think we can be very grateful for in a world which we all know is not an easy world, also financially. Therefore I believe there is absolutely no reason whatever why we should not have great confidence in the future of our economy. With prudence, confidence and, obviously, hard work—that is always basic—I have no doubt that South Africa will weather whatever economic storms may in the shorter run assail the world economy which, to some extent, must spin off onto us, and that when conditions in the world economy improve, as they must— after all, the business cycle is a fact of life; economic tendencies go down and turn and come up over periods—we shall be in a condition to reap the maximum advantages from that happy circumstance.

I have mentioned, Mr. Chairman, how we are trying to hold down Government spending under inflationary conditions. I was interested to read an article in the Business Times section of the Sunday Times of 28 February this year, where they say the following—

Here they mention particularly the United States. Then they go on to say—

They do not have the very latest figures. Mr. Chairman, this is something which we have deliberately tried very hard to do, and which we can take some satisfaction from.

I would like, in a minute or two, to mention that I had occasion to go to Europe last week. It was a very full itinerary, mostly in Western Germany. I went in the first instance to sign, as a guarantor on behalf of the Goverment and co-principal debtor, a very interesting loan transaction, where the three chairmen of the Community Councils of Greater Soweto—that is to say Soweto, Diepkloof-Meadowlands and Dobsonville— signed as borrowers for the very first time. They signed for the obtaining of a loan, from a very important syndicate of European banks, of $160 million. I thought it was an extremely dignified and an excellent ceremony. The participating banks were very well represented. There was a very large number at the luncheon given by Deutsche Bank, who took the main lead, and we had some very excellent and constructive publicity there. I would like to say that these three chairmen of the Community Councils—or mayors, as they are sometimes called—acquitted themselves, I thought, with great dignity and indeed, with great success. I went to the International Trade Fair at Hannover. I was invited to go there, and we were very well received. The chairman of the fair committee was good enough to give us a luncheon on the opening day, and I met a large number of friends and made many others, I think. It is, I think, the biggest industrial trade fair of its kind in the world. It was an exceptionally interesting experience. In Hannover I addressed the annual meeting of the German-South African Chamber of Industry and Commerce, where there was an excellent turnout, and a really most constructive spirit. The next day I was asked to address the Executive of the Federated Chamber of Industries of the Federal Republic of Germany in Cologne. Again we had a first-class occasion. Through all these things, what comes through is the friendly and constructive interest in this country. That applies not only to Germany, because at the fair we met senior people from a number of countries, and they displayed the same great interest in this country. The Europeans are very worried indeed about the international situation. One is almost surprised at the extent of their concern about Russia and Russia’s intentions in Poland, Afghanistan and Iran. They talk about the dangers because there is a war with Iraq. They are also extremely perturbed about the Middle East. They think that is an extremely explosive situation. Then, too, there are Central America and South America. All these things are topics of conversation all the time.

What it means, as far as we are concerned more immediately in the economic sense, is that many of the big potential investors and actual investors in Europe are more and more casting their eyes our way. This is an exciting prospect for us. I was extremely encouraged to see not only how well informed these people were, but how well disposed they all were. They constantly wanted to have more facts. Mr. Chairman, I came back once again feeling that, provided that we can keep our heads in difficult inflationary conditions, provided we can keep a proper perspective, provided we can continue with a certain measure of discipline in our financial affairs, and continue at all costs to push the private sector of the economy as much as we can, which we are trying to do, and, of course, at the same time, realize that we have a tremendous responsibility in developing and helping to develop the self-governing and the independent Black states around us as well and, as we are doing, the Black towns, we have a great future ahead of us. I wanted just to mention those few things at the start of the debate.

Could I just, while I am on my feet, mention two matters very briefly? Last year we amended the Income Tax Act to broaden the scope of the benefits that could accrue to people who donate money to educational institutions. I have had further representations, as I think some of my hon. friends opposite know, particularly from representatives of certain private schools, which are doing an excellent job, but are of course finding it very difficult to make ends meet, particularly when it comes to the recruiting of the type of teachers they want, and the paying of the salaries that have to be paid. So, after careful consideration of the matter again, I have come to the conclusion—also in consultation with the Department, of course—that we should try to broaden the scope of the applications of these funds that are thus donated, through the means of the Income Tax Act. You will perhaps remember, Mr. Chairman, that what we were doing as far as schools were concerned, was to say that the basis would be broadened in connection with donations for capital expenditure. What we now want to do is to extend that to current expenditure as well. In terms of the existing provisions of the Act, as amended, the donations have had to be utilized for the financing of capital expenditure. In some institutions, especially those where the State bears all the running expenses, or the major part of them, the full amount of the donations can readily be applied for capital expenditure, but in other educational institutions the need for capital expenditure and the defraying of increasing current costs are equally important. Some schools, in fact, may even have to close if we do not do something about it. Some of them are old established schools which I think are doing a wonderful job. They have perhaps a somewhat lesser need, really, for capital expenditure. As I have said, their difficulties are with their current budget. Because the underlying purpose of the tax concession is to encourage donations to educational institutions—after all to advance the training of skilled manpower generally, which in turn can contribute, as far as we, more particularly, are concerned, to the economic welfare of the country, and, I would say, for general sound educational purposes too—I am of the opinion that the conditions in regard to the use of those funds donated should be less restrictive, and should rather be seen as the more general application of them for educational purposes as a whole. The only restriction should be that the donation should not be a disguised payment of school fees or bursaries for the donor’s child or related persons. So I propose, Mr. Chairman, in the amending Bill, which will come before us a little later in the session, to make that necessary amendment.

*Finally, Sir, I wish to refer to a matter which, in fact, comes to my attention quite often, as a result of representations made to me. It is in connection with the transferability of agricultural distillers’ licences. Let me say immediately, Sir, that it concerns “mampoer” and “witblits” and a couple of other things. As a result of representations and requests which have been received over a number of years, and which have been raised in the House of Assembly as well, for the retention of the distilling of “mampoer” and “witblits”, as a “cultural heritage”, the matter has been carefully investigated. In order to give effect to the recommendations made by the departmental committee that investigated the matter, it is the intention to propose certain amendments in this regard in the Customs and Excise Amendment Bill this year. The effect of the amendments will be to make provision for the transfer of an agricultural distiller’s licence from one person or farm to another on the death of the licensee or the expropriation of a farm, subject to certain requirements that will probably be set by the Department. I think that this will provide some relief. It is an art to make these products—I grew up on a wine farm myself, and it is not everyone who can make “mampoer” and “witblits”—and it will be a pity if this art should die out. It should be mentioned that, since approval was granted in December 1980 for the licensing of agricultural museums and colleges as special manufacturing warehouses for the distilling of spirits for grapes or other prescribed fresh fruit subject to certain requirements, three cultural history museums in the vicinity of Customs and Excise offices have already made use of this concession. We want to continue with this.

Sir, I think I should now give other hon. members an opportunity to make their contributions as well.

Mr. Chairman, may I ask for the privilege of the half-hour? May I say immediately that even though I ask for that privilege, I in fact only have twenty minutes to cover the whole wide field of this debate, which makes it a somewhat difficult task.

May I begin by again recording my thanks to the officials of the various Departments who are concerned with this Vote, particularly for what I believe is the co-operation which they have shown, not only to me as a member of Parliament, but also to everybody who seeks to get information from them and who bothers them. I must say that there is not one of the Departments concerned with this Vote where this co-operation and helpfulness is not displayed, and I would like to record our appreciation for this.

The second point that I should like to make is that I think it should not go without comment that the hon. the Prime Minister is today meeting the President of Zambia in order to discuss, no doubt, affairs which relate to all of us in Southern Africa. I am sure that I speak not only for my colleagues who sit on this side of the House, but for every person in this Committee and, I think, in Parliament, when I express the hope that this meeting will contribute towards peace in Southern Africa, and that it will enable us to spend our resources in the most productive manner in the whole of Southern Africa, because one of the matters which I think concerns all of us is that Southern Africa at the present moment is becoming the scene of something of an arms race. I do not believe that Southern Africa can afford this. There are people in Southern Africa who I believe need uplifting and if we could bring about a concept in terms of which people were committed to peace, people would reject violence, and people would reject terrorism, I think all the people of Southern Africa would prosper. Therefore I should like to express my wishes for this conference to be a success, in the interests of all of us.

The hon. the Minister referred at the beginning to a degree of pessimism which had arisen, and spoke about South Africa. I think that it is not inappropriate that when this conference takes place, as it does today, we should remember that South Africa only represents I think just about 3% of the total surface area of the African continent, that our population is only about 6% of the total population of Africa, but that we in fact are responsible for 40% of the industrial production of Africa, for 45% of the mining production of Africa and for more than 25% of the gross national product of this whole continent. I think that shows the role and the strength that this country plays in Africa as a whole.

Thirdly, I should like to talk about the hon. Minister’s visit to Europe and the signing of the loan agreement. We obviously welcome the provisions of the funds for the purpose of which this R160 million is to be applied. I think there are a few comments that need to be made on it. Firstly, I think that the question of raising money for specific purposes, particularly for the upliftment of the Black population of South Africa, should be encouraged to a greater extent, because that is a test of the bona fides of those abroad who want to see the Black population of South Africa uplifted. The only thing that disturbs me about this, if I may say so, is that despite the fact that the purpose is clearly stated and despite the fact that the Government itself guarantees the loan, we still have to pay just a little over the odds as a result of the alleged political risk which is attached to investment in South Africa. I think that is a test of their bona fides rather than of ours, because if they really wanted to make the money available it should be easier to make the money available to us at lower rates. The hon. Minister spoke about the credit rating and I think he probably referred to the publication in the so-called Institutional Investors Magazine, which publishes these credit ratings. I had a look at it and I have it with me. We appear as Nr. 31 on the list with a credit rating of 60,5 as opposed to the top one, i.e. the United States with a credit rating of 97,5. However, if one looks at some of the other countries, and I do not want to run down any other country’s credit rating, I think our credit rating is certainly much better than many of those who appear above us in this list. One thing is very clear. Some of the loans granted over the last 10 or more years to countries at rates which have been more advantageous to those countries than to the Republic, are loans to countries which today are busy with the rescheduling of loans, countries where they have asked for rescheduling because of their problems. Irrespective of the Government that is in power and the political aspect of it, the record of the country is that there has never been a request for an extension of a loan or a rescheduling of a loan or a deferment of interest since the establishment of the Union of South Africa. I am not aware that any of the countries before that time asked for it either, even though there are very difficult times for some of the Republic’s friends in regard to their particular problems. Therefore our credit history I think goes beyond question. I must say that seeking money for specific purposes is something, particularly in relation to Black upliftment, that we should like to see take place a little more often.

Then the hon. the Minister referred to the question of the transferability of permits in respect of the distilling of certain liquor, such as “mampoer” and “witblits”. I respect everybody’s culture, including those whose culture involves the drinking of witblits, even though it is now only twenty past eleven in the morning. I respect them completely. I am a little worried that next year the hon. Minister will come with the legalization of skokiaan and a few other such products because they are also part of the culture of people. Therefore, whereas I am quite happy with what he is doing, I just hope that the provision of liquid refreshment in this House will not extend to the cultural requirements of all the hon. members, but that we will keep to water.

If you were drinking “witblits” now, you would make a hell-fire speech. [Interjections.]

Maybe it is lucky for the hon. the Minister that there is no “witblits” for me this morning.

You would not be able to talk at all.

The other point of which I want to express my appreciation, and the hon. the Minister knows of my concern about it, is the proposed change in the Income Tax Act relating to donations in respect of schools. I want to record our appreciation for that. He knows of the interest I have taken in this particular matter. While I am on the subject I should just like to mention the one thing that disturbs me dreadfully. I should like to hear some of the Transvaal MP’s who represent the governing party on this issue. Why is it that in the Cape, the Orange Free State and Natal these schools receive a per capita contribution in respect of each child who attends those schools—I agree that they should receive it—whereas in the Transvaal the Administration steadfastly refuses to do this, even though it saves them the money to educate those children? They steadfastly refuse it. I am a Transvaal MP myself, but I must tell you that I have to say to my voters that in the Orange Free State, in Natal and in the Cape they certainly know how to treat school children better than they do in my own province. I should like to bear some of these Transvaal MP’s on that side of the House explaining that during the course of this debate. I think they are aware of it and the hon. Minister is aware of it. I do not know whether he can explain it, but he comes from another province. Therefore, he has a different problem. I cannot understand why this is happening. I ask my colleagues in the Transvaal, irrespective of which party they are in, to support us in this effort to see that the children are treated in the same way.

The hon. the Minister dealt with the question of the pessimism in the economy and the pessimism which is prevailing. He has seen the publications of the various financial institutions which are making forecasts. He has seen the comments of people from the various research institutions connected with universities. It is not just the ordinary man in the street who is feeling pessimistic. The pessimism is coming through from those organizations as well. The question which the hon. the Minister really has to answer are: Firstly, it is no use saying that there is an inflation problem, that it is serious and that other people also have it. The concrete question that has to be answered in this debate is what is actually being done by the Government to deal with inflation. We can look at the figures of last month. Although they were inflated by the general sales tax increase and by the levy in respect of import duties, the reality is that despite what is being done with regard to the money supply, inflation is not under control. That is something which needs action in a real fashion. One of the things which worries me is that we are still in a state in South Africa where exploitation is playing a role and the inflationary expectations are playing a role. When there are inflationary expectations people increase prices in anticipation of every greater inflation. When it comes to the exploitation aspect, one can give many examples. Let us take a classic example which I believe needs the attention of the Registrar of Financial Institutions at the earliest moment. I refer to the type of activity which is taking place with regard to money lending and the forcing of people to take out insurance. The insurance companies are not to blame. I am satisfied that they are in the clear. However, people are being forced to take out policies where there are tremendous commissions payable immediately and where there is no intention really to insure somebody’s life. Obviously payment of front-end loading of the commissions is what enables this to take place. Here people who need money desperately are being forced to pay rates of interest which are utterly outrageous. It is just one example of the kind of exploitation syndrome which appears to exist in parts of the country, where people want to grab as much as they can as quickly as possible and do not appreciate that by doing that they are in fact harming the economy as a whole, or they do not care a darn whether they harm the economy as a whole or not. I ask the hon. Minister together with the hon. Minister of Industry, Commerce and Tourism to take action to deal with the exploitation in the community which is taking place. I do not have time to deal with all the other examples.

The other matter which worries me is that there is no doubt that the weakening rand is of concern to us. I do not want to quote the statistics as to how far we have gone down against the dollar, the Deutsche Mark, the Swiss Franc and other currencies. However, that has had its inflationary effect and will continue to do so. Whereas some people benefit from it—those in certain activities benefit from it—others suffer. Somewhere along the line, even though it may be good for the goldmining industry and exporters, there has to be a balance. Somewhere along the line we have to look at this to a far greater extent.

Then I want to deal with the interest rate patterns. The hon. Minister, during the course of his budget speech, spoke about the need to show real returns. However, the difficulty that we have at the moment is what the Government’s policy actually is with regard to interest rates. On the one hand high rates are developing and on the other the Reserve Bank is stepping in in order to enable the rates to come down again. I took the trouble, both this morning and yesterday, to check the rates which are being paid by commercial banks in South Africa. From yesterday until today they have varied from bank to bank not by a marginal ¼%, but by 1% to 1½% in respect of 31 day money and other money. The reality is that nobody knows what interest rate pattern is actually developing. What is the Government’s policy in this regard?

Let me deal with the question of political action and interest rates. Does the Government have an attitude with respect to the interest on borrowing for home-building or to the question of the Land Bank situation which has developed? Will there on the one hand be talk about free markets operating and on the other political action with respect to particular interest groups? If there is, then the market mechanism is being distorted when the reality is that one should do this by means of a form of subsidization. One cannot on the one hand say that one wants a free market to operate with regard to money and on the other have political action which distorts it. I believe that one has to have a situation where one does assist particular interest groups, but that the answer there is subsidization so that the market mechanism can operate.

The hon. the Minister talks about the market mechanism and yet in the same breath he continues with a compulsory investment pattern which takes place. What does he do? He to some extent manipulates the market because he forces people to invest. Then he decides on the quanity of stock that becomes available and in that way he actually starts to play with the interest rate pattern without allowing market forces to operate. I should like to hear from the hon. Minister during this debate what his policy actually is in this regard. That is part of a problem with regard to his whole economic philosophy. I keep trying to draw him out on it. However, the tragedy that I see at the moment is that he sometimes speaks as a capitalist but that he acts as a socialist, both in respect of controls and with regard to the ownership and the means of production. The hon. Minister speaks as a capitalist in one of the biggest socialist states that exist. [Interjections.] He sometimes talks as a Keynesian and he sometimes talks as a monetarist. One does not know what he is. I have no problem with somebody taking the best from Keynes and the best from Milton Friedman, but it alternates. It is like a Jekyll and Hyde situation. One day he is Milton Friedman and the next day he is Keynes. We really do not know what his actual philosophies are in this regard. I think he has to tell us. In exactly the same way we do not know what his attitude is with regard to how much tax should be direct tax and how much tax should be indirect tax. How much should be obtained by means of loan capital and how much should be obtained by means of direct taxation? In none of these things is there a philosophy. The problem is that it is an ad hoc situation which develops from time to time.

Let me deal with a couple of other things. I have to just throw them at the hon. Minister to get answers from him. I must ask him to tell us a little more about the public debt commission and what happened last year. Other hon. members will deal with it, but I must tell him that I cannot see a situation being allowed to stand where on the one hand the hon. Minister says something about the Department of Transport and what they have done, and the Department of Transport disputes it and we now have the situation that we do not know what the reality is.

That is according to a very doubtful press report. I shall deal with it.

He must deal with it. I am not making the allegation. I am merely saying to him that we cannot allow that situation to stand. Secondly, I should like to ask the hon. Minister to deal with the allocation of the Secret Services Fund and his satisfaction with regard to the application of that Fund. Thirdly, I want him to deal with the question of the staff of the Auditor General and the serious situation that exists there and which is displayed in the report with regard to their ability to actually do their job, and what is being done to put it right. Fourthly, I should like him to deal with the question of the financial rand and I should like him to deal with exchange control because I think we are getting close to a stage where the future of the financial rand now has to be carefully decided. The distortions that are being created with regard to the existence of the exchange control and our complete reliance with regard to the current account in order to deal with our reserves is something that I believe needs attention. Then I want to touch briefly on the question of private companies. Private companies have been painted throughout as the villains of the piece with regard to the taxation position in South Africa. Whether they are or not is another matter, but what has happened in South Africa is that as a result of legislation there are a tremendous number of people who regret that they have private companies at all. It could save a tremendous amount of trouble in respect of the Commissioner for Inland Revenue and the application and administrative aspects of the legislation if we could do away with those companies. I want to ask the hon. Minister, in consultation with his Commissioner, to consider whether we should not have a particular moratorium period during which people could do away with their private companies and pay a fixed amount of tax, which can be equivalent to a shareholder’s tax on dividends, in order to wipe out the companies so that they can then again become private taxpayers. That will make life much easier for everybody concerned.

I want to raise one last point to the hon. the Minister. We have debated the question of sales tax at great length, but I have one pet subject which deals with coin collectors. If one imports a coin which is legal tender into South Africa and one brings it in one’s pocket as part of the change with which one comes back from overseas, one does not pay sales tax on it. However, if one puts it in a parcel and it is legitimately and properly sent to one from the Mint, then one pays sales tax on it. Then it is no longer regarded as legal tender. On behalf of the coin collectors of South Africa, may I appeal to the hon. Minister to abolish that, because there is no difference between bringing a coin back legitimately in one’s pocket and importing it in a parcel if it is legal tender. I want to ask him please to give that his attention.

Mr. Chairman, the hon. member for Yeoville made a very interesting speech. That I want to concede. I shall come back to it shortly. Before doing so, I should like to say a few things arising out of the hon. the Minister’s speech. Firstly, I want to congratulate him on the very successful tour he had during the past two or three weeks. I think that, apart from the funds he obtained there, the relations he established and the conversations he had and the image of South Africa he presented are of very great importance to us and especially to the economy and the commercial world. We know that this hon. Minister of ours is held in very high esteem. This is not to flatter him. We know that it is so. He is in very high esteem abroad. I think that if he shows his face abroad and makes the necessary contacts, it is to our benefit.

A further word of appreciation to the hon. the Minister is in relation to a matter which I also raised in the Second Reading debate on the Budget, viz. the large measure of pessimism one finds in the economy. It is true that we can talk ourselves into a recession or a depression if we want to. Particularly if responsible economists and academics adopt a very pessimistic attitude, it naturally has a cumulative effect and later on the whole country talks itself into such a condition. Therefore it is of particular value to me that our hon. Minister presents an optimistic picture, not without justification. He has good reason to present that optimistic picture and I want to ask him to continue doing so. The hon. the Minister mentioned that our economy is at present one of the best in the world in spite of the problems we have. Unfortunately I do not have the time to go into that, but it is a very interesting discussion. We are grateful for his concessions in regard to the donations to schools. I shall come back to that in a moment. As far as the matter of “witblits” is concerned, I want to say that in my constituency it will be great news, because it is part of the cultural heritage of that region. And where we wish to promote tourism, it will be something special, apart from being very nice of course when one goes hunting on a wet winter’s day. [Interjections.]

The hon. member for Yeoville really spoke in a very responsible way in regard to the co-operation that we are getting from the department, and I want to associate myself with that. He pointed out the importance of the South African economy, especially in the Africa context, like a good Nationalist. We are grateful to him for that. Coming from the Opposition side it means a great deal.

As regards our credit status in South Africa, we are—and on this I agree with him— not badly off. Then he spoke about inflation and referred, inter alia, to a certain report on the insurance industry of which I have a copy with me. It struck me as well. It is a big report that appeared in Sunday’s Business Times. The insurance industry has responded to this and I think has done so very responsibly. I have a Press release with me that was issued by the Chairman of the Life Offices Association. In this he says, and I quote—

He goes on to say that unfortunately it is very difficult for them to determine when they have to deal with such an irregularity or a “racket” and when not. However, it is also good news to me that the Department is already making a thorough investigation of the whole matter.

But the commission system should be changed. That is the problem. Then it could not be exploited.

The matter is receiving the attention of the Department and I am quite confident that we shall soon get a decision on it.

As far as the bank rates are concerned, it is of course disconcerting for all of us to pay such high bank rates, but we know what the reason is. The variation in the bank rates of course arises from the fact that the Reserve Bank recently decided to free its prime rate so that there will be competition among the banks as regards their interest rate patterns. The hon. member for Yeoville raised this and many other matters for the attention of the hon. the Minister, and I believe that he will get replies to them. It is a formidable task to reply to all those questions in the time we have at our disposal.

I have more questions, but I do not have the time.

If there is one person who knows how many questions the hon. member for Yeoville can ask, it should be I. [Interjection.] The time is passing very quickly and I have a few matters which I should like to bring to the attention of the hon. the Minister. It is true that in the present situation we have a State expenditure where we, and I think it is right that we have done this, over a period of years have decreased the percentage representing the Government’s contribution to the total expenditure pattern. I believe this is the correct policy to follow in the short term, but I am a little worried that we might not be able to continue doing so indefinitely. This country requires certain expenditure by the State. I want to make the statement today that the country progresses when the State spends. This has always been the case in the past. We have to be very careful.

You are all right.

The South African circumstances—we are a developing country—are simply such that the State imparts momentum to the economy when it undertakes certain spending projects and I do not think anybody can differ with me on this. What is happening now, is that as a result of a certain financial situation in which we find ourselves, we are holding back expenditure by the State. However, the country’s economy does not stand still and it may be that we shall build up a certain backlog. I am somewhat concerned about that. I believe that expenditure by the State should show growth in real terms. The best way of having real growth in State spending is to have the economy grow. However, if the economy does not grow now, the State will of course have a certain problem, because if one then pumped money into the economy, one would be faced by this problem of inflation.

I think our domestic potential is being utilized very well at the moment. Whether we utilize it by means of direct taxation, indirect taxation or loans, it remains a fact that we draw a lot of money to the State, which then reduces the investment potential of the private sector.

Order! The hon. member’s time has expired.

Mr. Chairman, I rise to give the hon. member the opportunity to complete his speech.

I thank the hon. member. Sir, I want to make a plea today that the State should acquire funds in a noninflationary way and will in particular pay attention to donations made to the State. There are persons and bodies in this country that are prepared to donate capital for the exclusive use of the State, capital that can, for example, be used for education. However, there are also those bodies and persons that are prepared to make certain donations to the State for the acquisition of land for the development of national parks, which in turn have a tremendous effect on our tourist industry. I briefly want, to ask that the hon. the Minister and his Department should perhaps take another look at this. I think it is unfair that when a resident is prepared to make a donation to the State, for the exclusive use of the State, without any conditions attached to it, we should not exempt him from taxation on that specific donation.

My time has unfortunately expired and I do not want to take up the time of other hon. members.

Mr. Chairman, to begin with I want to associate myself with the hon. member for Yeoville in that he expressed thanks to our Government and the hon. the Prime Minister and also conveyed good wishes to him. I am sorry about the remark and he will just have to wait now until he hears the truth. I am sincere in saying that I want to associate myself with those sentiments. I hope the talks will be successful. On behalf of the CP I just want to say: “Every success and good luck”.

I want to express the same sentiments as the hon. member for Yeoville also as far as the officials are concerned. I think I also want to mention here that the Auditor-General, Mr. Schickerling, is retiring on pension. Having served on the Select Committee on Public Accounts for years, I also want to thank him very much on behalf of this side for that good service. It has already been done, but I should like to repeat it today.

Then I want to come to the hon. the Minister. Firstly, I also want to thank him very much for the success he achieved with the loan of R160 million. Unfortunately I must say that I am going to cross swords with the hon. the Minister this morning. During the Second Reading debate on the Appropriation Bill, I supported the hon. the Minister of Finance on behalf of the CP. I did so in all sincerity and I am sincere when I say this. I put several questions to the hon. the Minister and expected to receive replies to them, but what happened? The hon. the Minister simply ignored us. In Hansard there is only one remark and that is what the hon. the Minister said in col. 4287—

I want to say to the hon. the Minister that he knows that I have been a good friend of his all through the years and have great regard and respect for him, but I am sorry that he has in fact offended not only my 16 500 constituents, but all the constituents of the CP. The hon. the Minister is in a position of trust; he is handling not his own money, but the State’s money. When we of the CP ask certain questions and make certain recommendations, then we expect him to reply to us, in the interests of our constituents. It is not for us personally that he would do so, but for the electorate of South Africa. We are speaking on their behalf; we are their representatives. He is very lucky, because he only has one constituent, and we congratulate him on that.

There is no ulterior motive.

I am very grateful for what the hon. the Minister is telling us. I put a couple of questions on the Order Paper for reply by his Department. Our officials have a great deal of work and I do not want to give them any extra work, but if I do not get replies, we will have to follow that pattern. I want to come back to my questions and I want to tell the hon. the Minister that the CP will support him in all respects, because it is not for the NP that we are doing so, but for South Africa, and I think that we on this side of the House are as concerned about the interests of South Africa. The Official Opposition and the other parties should be as concerned about those interests. We cannot make politics out of the prosperity and welfare of the people and population groups in this country. We accept it if the hon. the Minister does not give us replies to political questions. That is not his field.

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

No, I am sorry, but my time is too limited. I shall reply to your question privately later.

I want to come back to pensions. Military and civil pensions were increased with effect from 1 April, but social pensions with effect from 1 October. I want to ask the hon. the Minister please to go into this matter again. An hon. member opposite replied to this the other day, but this reply is not enough. I want to tell you that we in this country are deeply indebted to our old people. The question of housing in particular was discussed in detail by me the other day. My seat is in Pretoria, and in the Pretoria Central constituency and in my constituency the names of more than 1 000 old people who cannot afford the terribly high rentals of flats are on a waiting list. To supplement what the hon. member for Yeoville said, namely that not one of the hon. members on that side of the House would approve of it, I want to say that we would approve of it even less. As far as house and flat rentals are concerned, it is simply shocking to see how high they are in Pretoria today. The rentals have soared and I think we should look at this situation. That is why I asked what the hon. Minister was going to do. I expressed my thanks for the allowance he is going to provide in order to encourage more housing. However, that is not enough; houses are simply not increasing in number. I want to ask the hon. the Minister, his Department and the Government as such, to pay more attention to this matter, because we cannot allow things to continue in this way.

Another matter which is very near to my heart is our education. I spoke about the fact that the project at the Teachers’ College in Pretoria, which was to have extended over a period of 20 years, was summarily cancelled. I do not want to go into it in detail, but I should like to know why it has been cancelled and what the cost, which in fact represents fruitless expenditure, is that the State has to pay. We shall come to these things later on. I made the request that those moneys should be voted.

I want to associate myself with what the hon. member for Malmesbury said, namely that there are certain things on which money is spent by the State and which simply cannot be curtailed, because the infrastructure has to be there. As far as I am concerned, education is one of these important things. If we are going to cut down on education, this country is going to suffer a lot of damage. As regards that Teachers’ College, I think it was a very unfortunate state of affairs, and I want to ask the hon. the Minister again today that we should look into it. I promised the people and I undertook to bring it to the attention of the hon. the Minister again that we should take another look at it. It is true that large amounts of money are being spent on education in other respects, but we also have to train the teacher as such. The Teachers’ College in Pretoria is the largest in the country and unfortunately something has happened there which in my opinion is not fair.

As regards inflation, I asked you to go into this problem. It is a nightmare for all of us. I suggested that a special commission of inquiry be established to study the problem of inflation in all its aspects. We know the Government is doing its best, but we have to study and examine this problem in its entirety. We have the experts in both the public and the private sector. We should examine this problem in depth and the hon. the Minister should get this committee off the ground. I know the Handelsinstituut and other bodies have asked for it and if the hon. the Minister can attend to it and establish such a committee as soon as possible, it will redound to his credit later on. It is not a committee that will determine policy or do useless work; it will be very useful work, it is going to be positive for South Africa, it is going to be positive for all people, and in the light of this I think he should not leave it in abeyance any longer. I think we can discuss it. If the hon. the Minister cannot reply to these points, the problem of inflation and this one, immediately, today, I should like to have a discussion with him so that we can look into this case, because we cannot wipe it off the table.

I have said that I regard this budget as a very conservative one. I fear that our revenue from exports is going to decrease in future, especially in view of the fact that our farmers in South Africa have to be granted assistance as a result of the drought and the depression overseas. The Government cannot do anything about that, nobody can do anything about it, but I still think this budget does not make sufficient provision for granting assistance to the farmers in their distress. I know the South African Agricultural Union is having talks with the hon. the Minister of Finance, the Government and the hon. the Prime Minister. Be that as it may, the farmers are a section of the population that is suffering, and when they suffer, we in the cities also suffer as a result. The consumer is hit directly when hardships are experienced by the farming community. [Time expired.]

Mr. Chairman, in actual fact this is mainly a personal matter between the hon. member for Sunnyside and the hon. the Minister, but he will remember that, after his speech in the House, I put it to him that in my opinion it was a Committee Stage speech he had made. Therefore I think he has now raised this aspect of the Teachers’ College in the right place and I think the hon. the Minister will reply to it.

†Mr. Chairman, on 8 October 1979 the hon. Leader of the PFP appointed a commission of inquiry with the following terms of reference—

On 3 October 1981, two years later, the commission presented the so-called Charter for Social and Economic Progress.

It is very good.

I am coming to that. After scrutinizing this Charter, one comes to the conclusion that what the hon. member for Yeoville had already clearly and fully spelled out on 6 June 1978 during the Third Reading debate on the Appropriation Bill, is now incorporated in this Charter. Nothing more and nothing less. The only real difference is that the hon. member for Yeoville described it as “social democracy”, whereas the commission refers to it as “economic democracy”.

To prove my statement, I wish to quote certain extracts from the hon. member’s speech and corresponding extracts from the Charter, respectively. Firstly, the hon. member said, and I quote—

The commission states, and I quote—

Do you disagree with that?

No. Just keep quiet, my friend, I will come to that. Secondly, the hon. member said, and I quote—

The commission states, and I quote—

Thirdly, the hon. member said, and I quote—

The commission states, and I quote—

Mr. Chairman, I can go on drawing comparisons in this way.

Do not stop. Go on.

This is only the beginning. What is stated in this Charter, is exactly what the hon. member for Yeoville advocated in his speech. Nothing more and nothing less. However, the fact of the matter is that it is clear to me that it took the hon. member for Yeoville two years to persuade the hon. member for Pinelands and Dr. De Beer and other members of his commission, who represented other interests, to endorse this Charter.

On page 2 of the introduction the following is stated—

It sounds as if they would have liked to have done it, but were not allowed to. The dilemma of the commission was that it had to work within the policy of the PFP. Both the left and the right wing of the PFP had to be satisfied. With this policy the PFP is trying to be all things to all people. That is why they shy away from fitting their policy into the “existing political economic doctrines”. Why don’t they just say that they do not see their way open to explain to the financial powers behind them that they are now advocating social democracy?

Who are the financial powers you are talking about?

It is the mealie farmers.

It is the wine farmers.

The hon. member referred here to the free market system. He described the hon. the Minister as a capitalist and a socialist. It is interesting to note what is played in their policy by the market mechanism. On page 4 of the Charter it is stated, and I quote—

What is this “social conscience” that is referred to here and by whom is this “social conscience” going to be determined?

Do you not have a social conscience? We have one.

The market mechanism is dragged in by the commission to satisfy the financial powers of the party and the “social conscience” is used to woo the radicals, even those outside the party.

That is not what a social conscience is.

Mr. Chairman, with this economic policy, by pleading for full employment, provision in basic needs, unemployment benefits, etc., the PFP is obviously trying to get away from its image as a rich man’s party. Then the commission suddenly remembers that it should not move away too far from the goose that lays the golden eggs. Then they have the following to say, and I quote from page 6—

Why? Without this creation of wealth or prosperity by the individual the coffers of the PFP would not be filled.

The poor and the underprivileged should, however, take care not to be misled by this sanctimoniousness of the PFP. On page 5 the commission pleads for the narrowing of the income and wealth gaps in South Africa by “uplifting the underprivileged, rather than by impairing the standards enjoyed by the more fortunate”.

The policy is also available in Afrikaans.

Whom is the PFP trying to bluff now? In the economy, metaphorically speaking, one cake is baked and how are you going to give one group more without the other group making sacrifices? I find it strange that the reply “enlarge the cake” has not yet been given.

You do not understand.

Even if the RSA maintains a relatively high growth rate, the challenges are so enormous that just providing for the basic needs of people is virtually an impossible task. That is why Prof. Louw van Wyk, head of the Department of Economics at the University of Potchefstroom, said in a recent article in the periodical Ontwikkelingstudie in Suider-Afrika that priorities should be established in satisfying basic needs. He emphasized education, employment, regional development and water supply.

This is not the only utopian thinking displayed by the commission. On page I they claim that their policy is aimed at full employment. But what do they say? I quote—

How are they going to achieve that? It is generally known—it seems to me those hon. members do not know it—that full employment is accompanied by a certain percentage of frictional unemployment. In the USA it is estimated at as high as 4%. In a country like South Africa, with a large percentage of unskilled labour, it may be even higher. Why do the PFP then try to pretend that they can create an economic situation in which they can provide employment to all people?

They are dreaming.

Surely that is not honourable and credible, or do they perhaps not know any better?

Now we understand your policy for unemployment.

Mr. Chairman, it will be interesting to see how the PFP is going to sell the combating of market concentration, according to page 4, in the economy to Anglo American. May I suggest that the profit-sharing scheme for workers, which is one of the pet schemes of the hon. member for Yeoville, be initiated by Anglo American. [Time expired.]

Mr. Chairman, I do not intend to carry on the argument between the NP and the PFP, because I do have a number of items that I would like to raise with the hon. the Minister. My time is very limited.

It was interesting to hear the hon. the Minister say that, in comparison with many other nations of the world, South Africa’s economy is in good shape. When one considers the state of the economies of some other countries, I am inclined to agree with him. However, I would like to raise a matter which I think was first raised by the hon. member for Yeoville and then referred to by the hon. member for Sunnyside, and that is that there is a tremendous degree of pessimism in certain quarters in South Africa today. I am particularly referring to the question of housing. I am quite sure that the hon. the Minister is aware of the conditions that some people are finding themselves in. For instance, in a place like Empangeni a person who was recently renting a house for R350 per month, was suddenly told that, at the end of next month, the rental on this house would be up to R850 per month. This person had to give notice and he had to try and find other accommodation, because he just could not afford to stay on. This was a white person, but I believe that this problem goes right through the various groups in South Africa.

Yesterday I was in Atlantis for the opening of the Atlantis diesel plant. I believe that, in a new development area such as Atlantis, many of the employees, who are Coloureds, are having great difficulty in being able to afford some of the houses which are provided by the Department of Community Development. In fact, I was told that the Atlantis Diesel Engine Company is spending R1 000 per day to transport employees to and from Cape Town, because many of them just cannot afford to live in Atlantis. There is therefore a problem area here which I want to draw to the hon. the Minister’s attention. I agree with the hon. member for Berea that there is a degree of exploitation by certain profiteers in the property market and in the house rental market. I was wondering whether the hon. the Minister might consider trying to do something about this. I realize that a lot of this would concern his colleague the hon. Minister of Community Development, but I do believe that the State owns a tremendous amount of land throughout the country. I was wondering whether it would not be possible for the State to put this land back on the market. A lot of it is undeveloped land close to urban areas and in various group areas, which means that it would be available to Coloureds, Indians and Whites. I was wondering whether it would not be possible for the State to have this land developed as townships and put back on the market at reasonable costs in order to create a greater supply of building lots in certain areas for home construction.

One of the reasons given for the high cost of building land is the tremendous tax developers have to pay. A lot of developers expect to make tremendous after-tax profits and so they naturally have to charge high prices for their lots. I would like to ask the hon. Minister whether it would not be possible in certain areas, especially with Coloured, Indian and Black housing, to put sites which the State itself could develop, on the market for freehold title ownership. I know there will be an argument that the State is now competing with the private sector, but I believe we have an urgent problem here and something should be done about it.

Another way, of course, is to increase the public’s desire to save. A figure was given to me the other day that the average savings on an average income in Japan is about 20% per annum. I was told that this figure is down to 6% in the United States. This high degree of savings was given as one of the reasons why Japan is expanding economically and industrially the way it has in recent years. I know the hon. Minister had a lot to say about this in his speech during the Second Reading debate of this Appropriation Bill. He said that there is a need today for people to save. I was wondering whether a greater incentive could be given to the public to save, especially as far as investing in building society shares is concerned, by making this, possibly, a greater tax incentive. I know there has been a great debate on this in the past. What concerns me, is that there has been talk that the interest payments of home-owners could possibly be deductible against income as a tax incentive. I believe that such a move would actually encourage people to spend, rather than to save. I would like the hon. Minister’s views on that.

Having said that, we realize there is a great shortage of money. Something has been brought to my attention and I want to put it to the hon. the Minister: From recent annual reports of some building societies, it appears that some building societies are selling their investments subject to an obligation to repurchase such investments at a later date. I am sure that the hon. the Minister will appreciate that the result of such a transaction has been to create liquid assets for window-dressing purposes.

I believe that this matter has been brought to the attention of the Deputy Governor of the Reserve Bank, who, of course, is concerned with the controlling of money. The Deputy Governor was asked whether the commitment had been shown in the monthly returns of the building societies and in particular he was asked whether it maintained the statutory liquid asset cover in respect of this arrangement. In reply the Deputy Governor said that he was aware of what was going on and he said that this was not an isolated case. I quote—

referring to the building societies—

Moreover, there was no obligation on them to hold liquid assets—

I, too, was rather surprised to hear that these buy-back arrangements are regarded as contingent liabilities. I would therefore like to ask the hon. Minister whether this practice is regarded as desirable by the Registrar of Financial Institutions and whether societies are obliged to maintain liquid assets in respect of their liabilities under such arrangements and if not, why not? If the answer is that the liabilities mentioned are regards as contingent liabilities, upon what event are they contingent? I wonder whether the hon. the Minister would like to comment on that.

Mr. Chairman, in the last two minutes that I have at my disposal, I want to bring to the attention of the hon. the Minister the fact that, despite the legislation we have, the Companies Act and the Stock Exchange Control Act, there are some unscrupulous operators who, from time to time, go to great lengths to skate just within the law in order to defraud investors on the Stock Exchange of their assets. I have raised this matter, in respect of a particular group, in the House before, but I have had other cases brought to my attention where people, investing in the share market, suddenly found that their assets were milked away from under them. I could bring some of the details of this under the hon. Minister’s attention at a later stage. I was wondering whether we should not create a watch-dog group that will look after the affairs of the investing public who purchase shares on the Stock Exchange. I am sure that the Stock Exchange itself must be concerned about these happenings and I would imagine that they would in fact support such a suggestion. I know that the Shareholders’ Association in the United Kingdom does have certain statutory powers and certain teeth which are used to protect the interests of the investing public. I do know that we have the Shareholders’ Association of South Africa which is recognized by the Stock Exchange Act, but I do not believe that the Shareholders’ Association of South Africa has enough power at the present time to investigate such matters. I have a letter from a gentleman who said that he brought certain matters to the attention of the Minister of Industries, Commerce and Tourism some years ago. I quote from his letter—

[Time expired.]

Mr. Chairman, members on that side of the House are continually making attacks because the State and the hon. the Minister of Finance cannot get inflation under control. The hon. member for Yeoville and the hon. member for Sunnyside stress the increase in the money supply, the increase in bank credit, currency control and financing of State expenditure by creating money, and by these means they want to prove that these things are the reason why it is not possible to control inflation. However, there is now a new economic star on the side of the CP, namely Prof. Nick Stapelberg. He says this Government is quite incapable of solving the problem, or does not want to try to solve it. This Prof. Stapelberg goes on and do you know what he says about our real growth rate of 8% in 1980 and 4,6% in 1981? He says: “This appearance, and artificial wave, of prosperity, seen in retrospect, was indeed artificial and not based on pure economic principles.” [Interjections.] This friend goes on to say that the large profits made by the private sector are shoplifting. This morning we saw the same tendency on the part of the hon. member for Yeoville— this continual attack on profits. Do they not realize that some of our most important methods of financing in this country are by means of domestic financing? The hon. the Minister of Finance has already pointed out to us that the increase in the money supply between 1976 and 1981 was less than the growth of the gross domestic product. It seems to me these gentlemen really believe that the Reserve Bank can control the money supply effectively. The Reserve Bank is unable to control the money supply effectively because there are too many factors involved. The creation of money is equally dependent on price changes as the other way around.

I should like to quote here what a well-known person, Prof. Robert Solow of the Massachusetts Institute of Technology said about the question of the creation of money by the Reserve Bank—

He went on to say—

We know that the supply of money has an effect on the demand side in the economy, but there is a supply side as well, and if the supply side can adapt to the demand side, you need not have inflation. However, on the supply side, the production side, there are certain underlying factors that have to be taken into account, namely the structure of the market for goods and services and the labour market. These underlying factors always create a certain measure of inflation, which is called core inflation. The South African economy cannot escape it. We have to admit that we do not have a particularly competitive economic structure, but that is because we have a small market. We do not have a population of 200 million where there is a large demand for goods. Therefore we have monopolies in both the private sector and the public sector, such as agricultural control boards, for example. 2,7% of all undertakings control 50% of all turn-over and this is the type of structure we are faced with. Unfortunately we are now also faced with an increasing tendency to have amalgamations and take-overs. Unfortunately in the case of these monopolies, when the demand decreases the price is increased. This is not only the position in the case of butter, for example, but in the private sector as well.

We also have an unbalanced labour market because we have too much unskilled labour and too little skilled labour. Wages often increase more rapidly than productivity does. This is not the Government’s fault and it is a long-term structural problem for which a solution is being sought. Too many wages, prices of goods and fees of professional associations are unfortunately too much linked to price indices. We have these underlying factors and in addition we have initiating factors such as the oil price, which increased from $1 per barrel to nearly $40 per barrel in a very short time. There is also the gold price, which increased from $144 in 1976 to $612 in 1980. We have a Black trade union movement which is becoming more and more active as well as a fluctuating flow of capital from overseas and import prices which are increasing. These factors have an effect on the underlying inflation.

In addition there are transmitted effects. These initiating factors aggravate the inflation and are transmitted by administered prices in the case of the Railways, the Post Office and Escom. Rising prices and larger profits generate increased optimism. There is a more rapid turnover of money and prosperity creates its own credit. It does not always need the Reserve Bank to be able to do it.

We have now reached the stage where the gold price is decreasing and we have to begin sweating out the high oil price. Together with the decreasing price of gold we have the recession overseas and consequently a very serious balance of payments problem. I want to say, however, that a strict fiscal monetary policy has much greater negative effects on growth and employment than it has on prices. If it is too strict, I can tell you, it will not always succeed in bringing prices down.

What do we learn from the above? This Government’s policy is to try to make the cost factor, which intractable, more flexible and therefore the Government is endeavouring to make the economy more competitive. I should like to refer here to the Competition Board and the exceptional part which has been played there by Dr. Mouton, who, I believe, is retiring shortly. I also want to refer to the reduction in State intervention, to Sasol, where the State has sold certain shares, and the particularly open monetary system which has been created by Dr. De Kock. I also want to ask the hon. the Minister of Finance whether he will not pay attention to the ceiling on instalment financing between R10 000 and R100 000 for the borrower who can deduct it or bring it into account for his income tax. It will then not be detrimental to the ordinary consumer.

I want to conclude by quoting from Business Week—

Mr. Chairman, the hon. member Dr. Marais must excuse me if I do not follow too much on what he has said, as my time is limited. I simply want to say to him that the hon. member for Yeoville has never made an attack on profits, as suggested by him. He has, however, spoken considerably in connection with exploitation and he has attacked exploitation, but he has never spoken against profits. In fact, he has said that the taking of profits is a normal part of the free enterprise system. Secondly, the hon. member for Smith field has made a couple of rather extraordinary statements. He apparently attacked the policy document of the PFP because it has an objective of full employment. I would like to ask the hon. the Minister of Finance if he agrees that full employment is a good objective.

You do not understand Afrikaans.

Secondly, he also equated a social conscience with radicalism and I also found that an extraordinary thing to say.

The subject that I want to deal with in this debate concerns Rondalia Bank. For two main reasons I do not believe that we have heard the end of the story in connection with Rondalia Bank. Firstly, there were tremendous amounts of public moneys involved in terms of the State corporations or State bodies, public institutions and municipalities. Secondly, to a lesser degree, because a lot of small shareholders were hurt by the collapse of this bank. These are people who are scattered throughout the country districts of South Africa and who had invested money in what they actually thought was a travel organization and who ultimately lost the shareholding they had invested because of the banking arm of this organization. I should like to refer to a bit of history of this bank. The bank was placed under curatorship by the hon. the Minister of Finance in 1976. Subsequently, it emerged in the 1980 Select Committees that a number of Administration Boards had deposited funds in this bank and that there were certain politicians who had been involved in obtaining these deposits and who had been paid commission thereon.

On 21 June 1981 a long article appeared in the Sunday Times and this began to reveal the depth, which I do not think the public realized at that stage, of how much public money was involved. The article stated that at least R39 million from 42 public institutions was deposited with this bank, most of which was deposited in the last few months before the bank was placed under curatorship. Most of these funds were deposited in the second half of 1976 or thereabouts. Apart from Administration Boards, which I have mentioned, many other public institutions were involved, for instance the MVA Fund, which deposited R750 000. Much of this money has not been recovered, and I believe it is becoming increasingly obvious that substantial losses of what are public funds have occurred. As far as I can understand at this stage, approximately 60% of these deposits have actually been returned, but if one takes 40% of approximately R40 million, one is still left with some R16 million of public money, and I therefore suggest that it is a matter of public importance and a matter which should be followed up and which the public should be informed about.

It would appear that there was a deliberate campaign embarked upon to solicit public money. I would like to mention some of the people involved and I get their names directly from the report which appeared in the Sunday Times on 21 June 1981. There was the general manager and member of the board, a certain Mr. B. D. T. Boshoff, who is the MPC for Sunnyside and also Chairman of the Transvaal Provincial Council. Secondly, there was his son. Thirdly, as has been mentioned in this House before, the hon. member for Innesdal. Then there was a Mr. P. J. Potgieter, who is a NP city councillor and a former mayor of Randburg. Mr. Boshoff appears to have been the king-pin in soliciting, and I want to quote from this article—

This concerted campaign was obviously highly successful and I would like to mention some of the organizations involved. The Public Resorts Board deposited R3 million, the Transvaal Peri-Urban Areas Board R50 000, the Rand Water Board R4 million, the SABC R2,5 million, Armscor Group Pension Fund R1 million, Iscor Pension Fund R2 million, Economic Development Corporation R1 million, 11 Administration Boards in total something of the order of R8,75 million, Randburg Municipality R2,5 million, Sandton Municipality R1 million, Benoni Municipality R2 million, Kempton Park Municipality R5 million, Krugersdorp Municipality R2 million and Brits Municipality R3,75 million. That is the sort of order of public funds that have been invested, but in the article there are more serious allegations and one of these concerns a certain Mr. A. J. Marais, who was a director of Rondalia until 1972. He also became a director of a Rondaba subsidiary, Ferco Investments (Pty.) Ltd. I would again like to quote from the article—

Taken from the report of the directors—

This means that money was lent from Rondalia to Ferco and then lent by Ferco to one of its own directors, a Mr. A. J. Marais, through the medium of his own company Sebkor, and the whole amount was written off.

What is the date of that report?

It was published on 21 June 1981 on the front page of the Sunday Times and I will let the hon. the Minister have this report if he wants it.

Since the date of this article—and I think the hon. the Minister will realize that these are fairly serious allegations that have been made in this article—there has been a deafening silence by the hon. the Minister and by any authorities. I believe that these are very serious statements and they have not been refuted. Therefore, I call on the hon. the Minister to firstly table the reports made by the curator to the Director of Financial Institutions—I do not believe these have become public knowledge at any stage and I believe it is in the public interest that they should be made public knowledge—and secondly I believe an investigation should be requested from the Advocate-General. Thirdly I believe that an investigation by the Commercial Branch of the S.A. Police, in view of the seriousness of allegations in this article, should be requested. I think some of the questions that need to be investigated are: Firstly, the position of people in positions of trust that solicit investments from organizations in which they held those positions. Secondly, the position of directors and former directors of the bank—and, of course, the case of Mr. Marais is what I principally have in mind here—and its subsidiary companies in terms of declaring interest and various transactions that I have mentioned—such as the loan to Sebkor. Thirdly, the correctness of the practice of lending money mainly within the group; and let me quote the curator himself, Dr. Charles Ferreira—

I am sure the hon. the Minister agrees with that. Fourthly, there have been a couple of additional matters of which I have been informed, such as the sale of the Rondalia executive jet to Rentmeester Beleggings at what, I am told was a very low price. [Time expired.]

Mr. Chairman, the hon. member for Port Elizabeth Central referred to Rondalia and certain aspects that he raised are within the ambit of the hon. the Minister’s reply, but there are certain aspects to which I would like to reply.

He started by saying that it was a travel organization and that people did not quite realize that it had a banking arm. I want to tell him that that statement is absolute nonsense, because the Registrar of Financial Institutions approves banking institutions and everybody that invested there would know that it was an institution approved by the Registrar of Financial Institutions. In that respect the hon. member is reflecting directly on the Registrar of Financial Institutions, because every single one of those banks—this is not the only bank in South Africa that had problems at that point in time—were approved by the Registrar of Financial Institutions and therefore he is reflecting directly on the Registrar of Financial Institutions; and he must tell me if I am wrong.

I am not reflecting on the Registrar of Financial Institutions.

If the hon. member says he is not reflecting on the Registrar of Financial Institutions, I vant to ask him what his argument is, because Rondalia was approved by the Registrar of Financial Institutions. All these investment concerns such as the Administration Boards and local authorities are advised who the approved banking institutions are, in other words, if they invest with a bank that is approved by the Registrar, they cannot be doing anything wrong. If the hon. member is therefore not reflecting on the Registrar of Financial Institutions, who is he reflecting on, because that is the man who is in charge and decides which of the banking institutions get placed on the approved list? That approved list is distributed throughout the country. For the hon. member now to say that he is not reflecting on the Registrar of Financial Institutions is absolute nonsense, because that is precisely whom he is reflecting on because that is the man who must accept responsibility in the end.

The hon. member then further reflected on hon. members of this House, and I want to say to him that he should be absolutely ashamed of himself because in June 1980 the hon. member reflected on members of this side of the House and on the last night, the night of 13 June, just before the adjournment, he made a personal apology with his tail between his legs. The hon. member was ashamed of himself and he apologized as shown in col. 9543 of Hansard on 13 June 1980. This happened right at the end of the session because he knew he was in the wrong in attacking hon. members of this House because they had done nothing wrong. As far as I understand, nobody has yet lost a farthing in the Rondalia affair because there has been a pay-out of approximately 60% and I understand that there is a very good chance that there will be full repayment in that particular case. I understand that the institution now has a strong board of directors. During that period there were many other banking institutions that read the economy wrong and that got into trouble. I want to ask the hon. member if he has any objections to hon. members of this House dealing with institutions that have money or funds available for investment. I am sure that he himself, at the garage that he owns, acts for one of the third party insurance companies. The third party insurance companies belong to the consortium that is approved by the Government. What would happen if he took insurance premiums and one of those companies went under? Would we say that he is acting in bad faith? Would we say that he is not entitled to commission because it is a Government approved insurance company? The hon. member has a habit of casting personal aspersions against hon. members of this House and is thereby lowering the dignity of this House. I think the hon. member must deal with facts and not with personalities in the manner that he has done.

I further want to point out to the hon. member that every professional man, whether he be an attorney, an accountant or an insurance broker, has certain agencies, whether it is for insurance agencies, building societies or financial institutions, and they are entitled to approach anybody to invest money, whether they approach a local authority, a Government institution, Iscor or anybody else. What happens then is that an approach is made and the money gets invested with an institution which offers the most favourable rates for that investment money. Why does the hon. member want to pin-point, and deal in the way that he has done with, hon. members of this House? I think the hon. member should reconsider and do what he had the guts to do on 13 June 1980, when he issued an apology at the end of the session to hon. members of this House. Perhaps he has forgotten about that apology in the meantime, or perhaps his standards have changed since the time he offered that apology. I can understand that his standards have changed because we now have two factions in the PFP—the Hulley faction and the Harry faction. I think the Hulley faction has the influence over the hon. member for Port Elizabeth Central.

*The day after the budget we were invited to a discussion on the budget by one of the largest institutions in the country. There were an estimated 400 people present, and they represented various professions and private and public institutions. I saw people from various political parties there whom I know and the hon. member for Yeoville was also there. There were introductory speeches, questions, discussions and constructive proposals for the future, and the point was made that we should learn from the facts of the past. There was unanimity on the fact that it was an excellent budget and that the right options had been exercised.

†The hon. member for Yeoville is looking at me—I am mentioning that he was at a function the day after the budget where we were informed what took place in the budget. I merely noted that he was there. One person of exceptional standing who serves on many companies, both public and private, and who is not a supporter of the NP, paid tribute to the hon. the Minister and the budget and he felt in the first instance that the man in the street and the companies expected a far tougher budget and that it helped the average South African and he enumerated in which way it helped the average South African. He underlined the fact that the increase in company tax was reasonable if the circumstances in South Africa were taken into account. Bearing in mind that the man is involved in numerous companies that will be paying this additional tax, he adopted a fair and reasonable attitude. He was strongly supported by the chairman of one of the biggest financial institutions in the country. As we know, the hon. member for Yeoville attacked the increase in company tax during the budget. If the hon. member had stayed on after the discussions had ended and had spoken to influential supporters of his party, he would have found, as I did, that although there was an increase in company tax affecting them adversely, they believed that it was fair that they should be called upon, at this point in time, to make a bigger contribution towards the well-being of South Africa. I was impressed by the dignified manner in which they expressed appreciation to the hon. the Minister for what he was trying to achieve for the less fortunate people in South Africa.

I am sorry the hon. member for Yeoville is now sitting in the Chair.

A gentleman who represents a massive overseas financial institution said he felt that it was a privilege to have listened to the budget in Parliament. He thought it was an excellent budget and he commented on the dignity with which the presentation took place. He then told me that he had known the hon. member for Yeoville for 25 years and that he thought very highly of him, but he was absolutely stunned at the manner in which the hon. member for Yeoville projected himself in his brief reply on that Wednesday. He thought some of the hon. member’s remarks were in poor taste, and he in fact asked me to obtain a copy of the Hansard …

Is the hon. member reflecting on the Chair? [Laughter.]

I sent a copy of the hon. member’s Hansard to this person of this financial institution, and I found out afterwards that he represents a massive foreign financial institution which does a lot of good for South Africa and I would like the hon. member to reflect on that.

Four days before the budget there was an article in the Evening Post dated 20 March 1982, written by none other than the hon. member for Yeoville. There is much in that article which supports the hon. the Minister’s case for an increase in taxation. In fact, the hon. member for Yeoville was preparing the public for an even tougher budget. He referred to the gold price drop, the economies of major trading partners, increase in defence expenditure and he said that someone had to pay. [Time expired.]

Mr. Chairman, I think the hon. the Minister touched on a very sensitive point this morning when he said that there was concern in South Africa about the prospects for our economic life and about what was happening in South Africa at the moment. There is a sort of lack of confidence, not in the economic viability of the country and the economy itself, but in our method of financing, where there are today great problems, especially amongst smaller businesses. We have reached a position where the small business cannot survive. The contracts he has to enter into and the guarantees he has to give make it impossible today for the man in a small business who has to pay interest of 18% to 20%, when he is a manufacturer of articles, to make the grade.

For instance, we have to look at the major problems of the world, especially those of Europe.

†If one looks at the system of rescheduling in a country like Poland, we see that if one takes all the dollars lent to Poland end to end, one can cover the world 57 times. One then finds that the whole world has gone cock-eyed in respect of the lending of money and the ability of people to pay, especially these two countries which have shown that they are unable to pay. We have the problem that on a loan of R160 million over a period of 20 years we are paying an excessive rate, as the hon. member for Yeoville said, for the world penalizes us every year, although it is for the uplifting of the Blacks.

Mr. Chairman, has my time expired?

No, the hon. member may continue with his speech.

I think it is unfair of the world to expect from us to pay the highest rates when it comes to the uplifting of people whom they blame us every day for, according to them, not giving that which they should have. This is especially the case where we have productive money which we are putting into the Soweto system. I am worried as to who will spend this money and how it will be spent. This is one of the important factors of this loan.

Business suspended at 12h45 and resumed at 14h15.

Mr. Chairman, just before the adjournment of the Committee for lunch I was in the process of expressing my concern regarding the whole situation which has arisen in the world as a result of loans, often politically orientated loans, which are granted to countries. When one thinks of the loans granted to countries like Brazil, the blue-eyed boy of the world, as well as to Turkey, Zaire and others, one feels concerned, but then one is immediately hopeful too that gold will enter a new era. It is so that when one covers the world to this extent with paper money, gold will have to play an ever greater role in the future.

In the time of Bretton Woods, America showed that its aim was to dominate the world politically as well as economically. America is the greatest political factor and the country which exercises the greatest measure of control in the Western World, but South Africa is the country which maintains the largest production of gold. In my opinion we shall have to reach an agreement with each other at some or other time. The negotiations will be difficult, but I believe that we can today jointly attain a firm basis in terms of which we can say that gold is essential for the world. Today it costs approximately $350 to mine one fine ounce of gold. I do not think it is unreasonable to ask that we will have to try to enter into an agreement with America in terms of which we expect a gold price of $500 per fine ounce and that, with every increase of $100, a levy of $20 per fine ounce be paid into some or other reserve fund which can be made available by the IMF or some other organization for the world’s energy problems. Even Russia, which is at the moment a so-called “bogey man” as regards the amount of gold which it can possibly dump on the market, can be drawn into such a possible combination.

The fact remains, however, that we are today to a large extent helpless as a result of the political handling of the monetary system. It is politically manipulated. There are so many people who tell you today that it is not good for the monetary system if too much gold comes onto the market, but let us then use 50% of our gold for the manufacture of commodities—then we will quickly see how many backs in the world are stiffened. I think that is the answer. We continually hear the story that the manufacture of jewellery takes up only 20% or 30% of our gold, but commodities will be able to take up more than 50%. There are many rich people in the world who would so dearly love to have a tea-set made of gold. The prices which would be paid for that would be three, four or five times higher than the price paid for gold in its natural state by the world banks which buy it.

The world’s paper currency, the fluid money system, is a failure. The system of special drawing rights constitutes a grave danger to the present world money system. It can only fail and it will fail in the future. The world will have to come back to some sort of hard currency, even if it is only backed to the extent of 19% or 20%. Eventually this should be an official backing. These undercover backings and agreements are not to the benefit of the world.

*When one looks today at all the problems experienced by the IMF and the banks in the world, you ask yourself to which control body a bank can turn, for instance to ascertain whether a loan is risky or not.

In this regard I may just refer to Poland’s case. Poland was not a member of the IMF. Who, apart from the politicians who had to take political decision, had to monitor this country? This is the main cause of all our problems.

I believe that this country is truly blessed with people like the hon. the Minister of Finance and his officials. There can be no argument about the fact that we today have one of the best Ministers of Finance that we have ever had in the history of South Africa and that his application of what we have is exceptionally good. I do, however, want to issue just one warning. There are too many people in this country who make announcements with regard to the finances of the country. People holding certain posts simply announce out of the blue that, for example, R700 million is going to be spent on this project and R150 million on that project. [Time expired.]

Mr. Chairman, it is with pleasure that I associate myself with the congratulations which the hon. member for Langlaagte expressed to the hon. the Minister. I agree with him 100% that the present hon. Minister of Finance is regarded as a success even by his enemies.

The hon. member for Langlaagte spoke about the question of gold. This is probably one of the most involved areas one can enter upon today. The latest idea for fixing the gold price has recently been calculated by the Andes Sisters of South America. Just as in the old days they said ex African semper aliquid novi, one can now almost say that the prediction of the new gold price now comes from South America.

One is now faced with the unshakeable belief that gold has already been remonetized. In spite of the present bear market in gold trading, the concept is slowly coming to the fore that the end of this bear market is almost in view and that the prospects for gold in the next few years are exceedingly rosy. Conservative estimates are that the gold price will be plus minus $600 or more by 1984. Anglo-American itself undertook a study which indicated that the chances are good that it will be $1 000 in 1984. In this morning’s newspaper there was even a prediction that it could be $2 500. There is naturally also the wonderful thought that by the year 1986 it could be $5 000 or more. If that is so, I hope the hon. member for Langlaagte and I will still be here so that we can speak about gold once again.

There are three matters I should like to raise with the hon. the Minister and one matter I should like to discuss with the hon. member for Yeoville. In the first place I should like to refer to a report which appeared in the Sunday Times of 23 August 1981 under the heading: “Benefits of South Africa as a tax haven”. This deals with a study which was undertaken by the University of the Witwatersrand. The statement is made that South Africa should be regarded as a “tax haven” in the sense that it offers tax benefits to foreign investors, and that the reason why South Africa cannot be regarded as an absolute “tax haven”, is merely of a political nature. This matter has already been dealt with by the hon. member for Yeoville this morning, when, in explaining the situation very well, he said that in fact we had no control over that factor. Speaking purely economically and financially, however, South Africa is known as one of the countries with the best tax structure for companies existing in the world. For that reason and also because of the increase which recently came into effect, the hon. the Minister and his department must be sincerely congratulated.

The second point I want to discuss with the hon. the Minister is the question of the present shortage of personnel in the Public Service. The Receiver of Revenue, for example, is experiencing a shortage of personnel. One asks oneself what the possibilities are of simplifying and making easier the system of the collection of tax so that, at departmental level, there can be a saving of staff.

I now want to come to statements made by the tax expert Michael Menof, who asked for a “turn-over tax which would simplify revenue procedure”. He referred to more or less eight benefits which this would bring. He is of the opinion that a tax levy of 5% on the turn-over of a company instead of company tax of 42%—it is now 45% plus— will simplify the system a great deal. He also asks why the State must always stand at the back of the queue and wait until a company makes a profit. The danger exists that that company, because of poor management and poor organization, will not be able to make the profit it should make or will even make no profit at all. Let us be realistic and acknowledge the fact that a company, just like any person, does not like paying Caesar more than is due to Caesar. I agree with that, because it is a natural tendency, but for that very reason net profits are scaled down as far as possible. A system of turn-over tax would, however, simplify everything, because then that would not matter. As I have said, he referred to eight benefits.

A fact I should like to emphasize is that if we were able to accept this simplified system—and I do not mean that we should accept it totally—if we could adapt it and make it applicable to certain companies or cases, we would be able to effect a tremendous personnel saving and, in addition, the present personnel could perhaps be utilized on a more productive basis. The stigma which could possibly cling to the State that it should be regarded as an enemy of the company or the individual, could be eradicated by working together on a friendly basis, to try to help the company and to simplify things.

One could assist a company by allowing it, for example, to pay its tax on a monthly basis so that it could have a greater measure of security and control over its planning, because it would then know exactly where it stood. If one can bring in such a system in an amended form, you will to a certain extent eliminate taxation of fringe benefits, because it will not matter what expenses a company incurs if the Receiver of Revenue collects tax on the basis of a percentage of the turnover, but it will nevertheless have to monitor its expenses much more carefully than is the case at present. In support of my argument I now want to refer to a practical example. Under the present system companies are inclined to advertise without taking costs into account and to incur expenses on travelling costs and fringe benefits which are not productive, but if their tax is calculated on turnover, they will not have to regard these things as deductions, but as a cutting down of costs in favour of themselves.

This better and more convenient system can bring with it savings for the company. I leave the matter there, but I should very much like the hon. the Minister to react to this briefly.

Thirdly, I wish to refer to page 17 of the hon. the Minister’s budget speech. I quote—

The hon. the Minister further referred to the initial allowance of 10%. I think this may possibly cause a problem in the sense that it has not been laid down that these rented units have to be rented as permanent accommodation. There is simply a reference to housing units. The matter I want to raise is the question of the so-called “holiday flats”, which are causing a problem especially in the coastal cities such as Cape Town, East London, Port Elizabeth and Durban. Many of the old blocks of flats—granted, they are old—in Cape Town which can be acquired cheaply are converted into “holiday flats” these days. In my opinion there is a possibility that the owners of these flat units can derive benefits from them to which they are not entitled. I just want to draw the hon. the Minister’s attention to this.

I now want to come to the question of savings, about which I think the hon. member for Amanzimtoti delivered a very strong plea earlier in the debate. I wish to refer to an article by Martin Feldstein, a professor of economics at Harvard University. As the hon. member for Yeoville said, there are people who shout about Milton Friedman one moment, about Keynes the next moment and then later in such a confused fashion that one does not know where they stand. I think that this new school of economists which is coming to the fore in America, a school which wants to promote the element of savings, is one of the most important which has come to the fore in the field of the financial economy of the world. [Time expired.]

Mr. Chairman, the hon. member for Vasco has addressed certain questions to the hon. the Minister, who no doubt will reply to them. If I may, I want to raise two aspects today.

The first aspect concerns the question of building societies. I want to focus the attention on the fact that these societies are today facing the worst cash crisis in memory, because cash has dried up. In fact, the chairman of the Association of Building Societies has described their position as catastrophic. It has been shown that something like 12 000 people, mostly Whites, are applying for bonds every month, involving something like R300 million, but that only R117 million is being granted. This means that applications of something like 8 000 people are being turned down every month. In other words, there are a lot of people who cannot obtain loans. It also means that many flat dwellers who have been forced to purchase their flats under sectional title cannot find the funds to do so and are therefore in a desperate position. Obviously the building societies are not taking in enough money to lend out, because there has been a massive withdrawal of funds. Something like R55 million is being withdrawn every month. One reason for this is of course the high interest that is being paid by banks and other financial institutions. Another reason, however, is that the hon. the Minister has seen fit to phase out the revolving scheme he initiated some years ago in terms of which a person was allowed a tax-free investment of R150 000. He has now closed that door and has forced them to withdraw their money by the beginning of 1982. Having withdrawn their money, they are not putting it back into building societies, because they can obtain more lucrative interest elsewhere.

It has not been closed down. It has been reduced.

Most people who have been involved in this, have withdrawn their money. Whose fault is this? I say it is the hon. the Minister’s fault for having done so. We appeal to him to leave the existing participants in revolving schemes alone. If he wants to phase it out, he must let it apply only to new participants.

In addition to this the hon. the Minister has seen fit to place a current limit of R20 000 on tax-free subscription shares per year. I do not think that that is sufficient. This should be considered and be made much higher.

Tax-free building society subscription shares are currently paying 8,75% interest, which is equivalent to around 12% if the tax is added back. This must be compared with something like 16% on fixed deposits and even up to 20% on large amounts of R100 000 and more invested with banks. The interest earned by societies, however, average about 15%. Normally the average is 12,75%. This shows a clear loss on the part of the building societies when one compares that which they are paying out as against that which they receive. The interest rate on tax-free subscription shares with building societies has been increased from 8,75% to 9,5% as from 1 May. It only brings them into line with rates available from the Post Office and Treasury Bonds. One can look at what they are paying out.

Mr. Sloet, chairman of the Association of Building Societies, has said very curtly—

All they can hope for is to stem the tide of money flowing out. I raised this question in this very Committee on 26 May 1980. If the hon. the Minister looks at column 370 he will find that I said—

This is the hon. the Minister—

In the same debate I raised the following argument—and I quote (col. 370)—

I then warned the hon. the Minister as follows—

I begged the hon. the Minister to allow existing subscription shares to remain in force. The hon. the Minister then replied to me on that same day—and I quote (col. 383)—

The hon. the Minister therefore expected them to realize this and to withdraw their money. The hon. the Minister then referred to something like R800 million that was involved. I want to ask the hon. the Minister to admit that this was a mistake and that if he had listened to our appeals, the building societies might not have been in the terrible position in which they find themselves today.

An entirely different item that I now want to raise with the hon. the Minister is the question of monopolies. I want to refer to the Maintenance and Promotion of Competition Act, No. 96 of 1979, and in particular to section 10, which states that the Board may on its own initiative and shall on the directions of the Minister make such investigations as it may consider necessary. It is dealt with in paragraphs (a), (b) and (c). Paragraph (b) reads as follows—

1. (i) whether any acquisition has been, is being or is proposed to be made;
2. (ii) the nature and extent of the controlling interest held and acquired, being acquired or proposed to be acquired;

Paragraph (c) stipulates that such investigations can be made into any particular type of business agreement, etc.

I want to draw the hon. the Minister’s attention, if it is necessary for me to do so, to the tremendous changes that are taking place in the business world, particularly in so far as take-overs by huge concerns are concerned. It would appear that if this carries on, then very shortly all trade and business will be in the hands of two or three conglomerates. I want to ask the hon. the Minister whether he regards this as healthy for the economy and whether this is not in conflict with the spirit and intention of the Act and the protection of the consumer himself.

It has been suggested in an article in The Argus of 10 April 1982 that—and I quote—

Reference has been made here to the Old Mutual, C. J. Smith and Barlow Rand eventually combining in the formation of the country’s biggest food group. As a result the Old Mutual will hold about 25% of Barlows shares and Barlow Rand will control C. J. Smith, which in turn will control Tiger Sugar and its subsidiaries, Tiger Oats and C. J. Smith Sugar. Barlow will also enlarge its stake in Nampak, Romatex and ICS.

The Business Times of the Sunday Times of 4 April states—

This article refers to the take-over I have just mentioned and to the fact that this would create the largest food group with assets approaching R550 million and tax profits of more than R70 million a year. It could also hold a major stake in the R760 million strong Imperial Cold Storage.

Reference has also been made to South African Breweries, with total assets of R917 million and a turn-over of R1 428 million, followed by AECI with assets of R750,2 million and a turn-over of R590 million. I should like to direct the hon. the Minister’s attention to the Competition Board’s Report No. 9, which deals with the agreements that have been made with the Chamber of Mines and Fedmis with regard to explosives and nitrogenous products in respect of which there was competition.

After a most successful year the S.A. Breweries achieved a turn-over of R2 400 million in the year to December 1981. Recently the Breweries took over the R255 million strong Edcon, Africa’s largest chain of retail stores with a turn-over of R3 400 million under the nose of the director who was very ill and spent 50 years building up his business. I also refer to a subsidiary of OK Bazaars which has sales of more than R1 million, if this figure has been correctly quoted in the newspaper. Its total assets are worth R4 775 million and it has a turn-over of R5 920 million.

Kirsch Industries have annual sales of R2 300 million. It controls 25% of the country’s distribution of food.

With profits and turn-over down due to the state of the economy at the moment, I want to ask the hon. the Minister whether he is prepared to allow these take-overs to continue. Whereas the Maintenance and Promotion of Competition Act resorts under the hon. the Minister of Industries, Commerce and Tourism, the hon. the Minister of Finance is responsible for the monetary and fiscal policy. I ask the hon. the Minister to direct his attention to the fiscal policy involved here. He must address his mind to it.

We have a marginal rate as far as personal tax is concerned. There is a fixed percentage as far as company tax is concerned. I want to appeal to the hon. the Minister to consider discouraging the large corporations from continual take-overs and from monopolizing the control of wholesale and retail outlets in South Africa by placing an additional rate of taxation on companies whose profits exceed a certain sum and by taxing that excess with a higher rate of taxation. I shall not venture to suggest what the amount should be. I leave that to the hon. the Minister, but I think he should consider this in principle as a form of discouragement to the large concerns who involve themselves in these takeovers. [Time expired.]

Mr. Chairman, please allow me first to express a heart-felt desire. As Deputy Minister I should like to associate myself with what the hon. member for Yeoville said earlier on. I think the hon. the Minister will agree with what I am going to say now.

I should like to express my personal thanks to the Director-General: Finance and his staff, persons such as Messrs. Koert Pretorius, Mickey van der Walt, Dirk Odendal and Gerhard Croeser, Mr. Pienaar of the Land Bank, Drs. Gerhard de Kock and Stals of the Reserve Bank and Messrs. Groenewald and Van Staden of the Office of the Registrar of Financial Institutions, for the really sincere co-operation one receives from them. When I as Deputy Minister think of the co-operation I receive from them, I cannot but put on record my deep appreciation.

This co-operation, however, they do not only extend to me. In my other capacity as Deputy Minister of Industries, Commerce and Tourism I often associate with industrialists. What I have said here today, also reflects the virtually unanimous sentiments of the industrial sector. I think it is important that we say to these people, who work under great pressure and who also have a shortage of staff, that the co-operation received from them is very highly appreciated.

†The hon. member for Yeoville made quite an amazing speech today. He did a very amazing thing, because he tried to find—to use the Afrikaans expression— a “stalmaat” for the hon. the Minister. He did this because he is not sure where he stands in the economic world and whether he is a social democrat or an economic democrat or any one of those things. He tries to find a “stalmaat” for the hon. the Minister by giving the impression that he is not sure whether the hon. the Minister is a socialist or a capitalist. [Interjections.] If one accuses the Minister of being a socialist it will be one of the most far-fetched statements ever made.

He has the voice of a capitalist, but he is a socialist.

Whether it is the voice or not, that is the accusation he has made and I think the hon. member is fishing on dry land now. However, what are the realities? This hon. Minister is accused by the leaders of the large financial institutions of the world of being one of the greatest capitalists in the Western World. That hon. member, however, is himself not sure where he stands in the economy. He would like to present the image of a socialist, but behind him there are capitalists looking over his shoulder and now he is trying to find a partner to pull with him in harness. It is so outrageous. However, one should look what is happening now. We have discussions with the leaders of the largest banks in the world from day to day and they are constantly seeing the hon. the Minister in his office. That hon. member says something else, however, that is equally amazing. He says the Minister is not sure what his interest rate policy is nor what his taxation policy is. In addition, he is not sure what his monetary and fiscal policy should be. Because he is not sure, he now says that the hon. the Minister is not sure either. However, I think that hon. member is nothing but an economic stranger in Jerusalem. We often have discussions with the leaders of the largest banks in the world, people who not only have insight into the financial and fiscal policies of their own countries, but, because they represent international banks, also have insight into the fiscal and monetary budget policies of other countries and, in fact, into South Africa’s policy as well. More often than not the hon. the hon. the Minister is so kind as to invite me to be present when he has discussions with these gentlemen. They then speak quite unequivocally and with the greatest appreciation of the attitude adopted by the hon. the Minister in respect of his economic or financial policy—call it what you like—here in South Africa and in respect of his budget. These people have absolute clarity because they know which way the hon. the Minister, the Reserve Bank and the Department are heading. That hon. member, however, says that he is not sure and therefore he levels accusations at the hon. the Minister.

Tell us.

It will not be of any use to tell those hon. members because if they do not know yet, they really will not understand in the next 15 minutes what it is all about.

Let us take this point further. We recently had a mission from the International Monetary Fund here. These people brought out a very short report, which I have here, but these people support us and understand exactly what the hon. the Minister’s problems are in connection with the budget, with fiscal policy and monetary policy and the application thereof in South Africa, seen in the broad context of the world economy. These people understand these things, but the hon. the member says that he does not understand them. Can you believe it, Mr. Chairman? He, who is in South Africa, says that he does not understand it. Yesterday evening some industrialists again appeared in a television programme. They were industrialists who had come to South Africa and they said that the only reason why they would like to invest money in South Africa was that they were looking for security and security meant political stability and economic stability as well. This Government provides the political stability and the hon. the Minister, with his purposeful approach in respect of monetary and fiscal policy, creates the climate for South Africa to have economic stability as well. That is why we have industrialists from all over the world in South Africa virtually every week to invest money here. These people know where the hon. the Minister is heading. These people know what the economic stance of the hon. the Minister is, but the hon. member now comes and says that he is not sure whether the hon. the Minister is a socialist or a capitalist. Have you ever heard greater nonsense in your life? Mr. Chairman, do you know what impression one gets? One gets the impression that the hon. member has nothing to say and now talks such nonsense by saying to the hon. the Minister that he has no policy, but has an ad hoc budgeting policy. These are the words that he used, an ad hoc budgeting policy. There are numerous examples of this kind, but I want to leave the hon. member there, because I think the hon. the Minister himself will sort him out later on.

†The hon. member for Amanzimtoti raised a few points. The first matter concerned the availability of housing at Atlantis. In our Additional Appropriation Bill last year we provided an amount of R5 million for the Atlantis housing project. This problem is accordingly very much appreciated and accepted by us. I think that the hon. the Minister does everything within his power within the financial means of the country to provide funds for building houses at Atlantis. I have just been told that, in addition to the R5 million, an additional R10 million— thus a total of R15 million—was provided for housing at Atlantis. Mr. Chairman, I think the hon. member will agree with me that this is quite a big sum.

*The hon. member asked that the State should sell the land at its disposal in the vicinity of large urban areas to township developers at a low price. I think the State has already decided in principle that it will in fact sell properties in respect of which it has no obligation or which it does not need to the private sector. To sell these properties at a low price is, however, not acceptable. If these properties are to be sold they can only be sold at the market price, because is is not only the private developer who is going to buy that land to lay out townships, but also developers who are going to buy properties at market-related prices who will have to lay out townships. If the Government can decide to do it according to some or other formula, I think it will be competing directly with the private sector, and I do not think that is acceptable. The hon. member also referred to the saving trend in South Africa and I think we acknowledge that he is right in that.

The hon. member for Hillbrow referred to the shortage of funds experienced by the building societies. However, we must keep in mind that the Government is already making a big contribution by means of two schemes which encourage people to save. In the first place large concessions have already been given to building societies in respect of tax-free investments. The interest rate on that type of investment was just recently increased to 9,5%, and if one calculates an effective rate in respect of earnings in the 50% marginal investment field, it amounts to an effective earning rate of 18%. I believe this is a considerable contribution towards encouraging people to save. This is therefore part of my reply to the hon. member for Hillbrow. I also want to refer to the House-ownership saving scheme of the building societies, in terms of which young people or married people can invest money for the purpose of obtaining a bond for a house. In terms of that scheme the Government is already subsidizing the interest rate to a very large extent. The latest figures I have seen show that there is already R40 million available in terms of this scheme for the building of houses. We can therefore say that on the part of the Government particular attention is being given to incentive measures. However, I also want to reply to what was said by the hon. member for Hillbrow regarding the scarcity of funds. I think we are very much aware of this. We are constantly having discussions with Mr. Sloet and the building societies and we are intensely aware of the scarcity of capital for housing purposes in the building societies. The hon. the Minister will again have discussions with them in the next few days. I want to give the hon. member the assurance that this matter is receiving special attention and that we regard it as a matter of very high priority to see what relief we can provide in this respect.

Mr. Chairman, there are two matters I quickly want to touch upon, because my time is running out. The one concerns the Browne Report. In talking about the Browne Report, I should like to deal with the salient points, because they also touch upon the point made by the hon. member for Amanzimtoti that land should be made available for the development of urban areas at economic rates. As far as I am concerned, the work of the Croeser work group with regard to the Browne Report has now reached the stage at which we can submit a report to Parliament. What I mean by that, is that the inquiry has progressed as far as we want to take it under the present system at this stage. In this regard I want to say thank you very much to Mr. Croeser and his team—in which representatives of the provincial councils and the UME also served—for the great task they have performed. Our recommendation is—and I trust that we shall announce it shortly—that the Croeser work group’s task has now been completed and that the outstanding matters still to be investigated be referred to special committees—of which there are six. I do not have the time this afternoon to deal with the terms of reference of these six committees in greater detail, but when the report is tabled it will become clear that except for the additional sources of income, a matter at present being investigated by a subcommittee under the leadership of Mr. Croeser himself, this matter is more of a financial, administrative, statistical and arithmetical nature. We want to recommend— and the Cabinet has already approved this— that a local liaison committee—I want to refer to it as a local liaison office—be established under the hon. the Minister in the Department of Finance and that this office will deal with the outstanding terms of reference of the six committees and that they will be held responsible for the implementation of the 122 recommendations which have already been approved. The report has therefore now reached the stage at which it must be implemented, but we must now put into operation the mechanism for the implementation thereof. As regards the outstanding aspects for which committees have already been appointed—most of which have already completed their assignments—the position is that as soon as these assignments have been completed and the reports have been presented, the local regional office will be able to begin implementing the recommendations immediately.

Mr. Chairman, will the hon. the Deputy Minister react to the suggestion made by the chairman of the Croeser study group to the effect that a metropolitan board should take over services provided by local authorities?

Mr. Chairman, I shall gladly react to that. I think Mr. Croeser made this suggestion in a speech he delivered before the Treasury Institute. In his speech he explained a certain model in terms of which the financial aspects of the joint rendering of services are to be dealt with by Coloured and White local authorities. At the moment we do not have a constitutional model and therefore we are looking at a financial model to determine from exactly what sources the finances are to be obtained. Hon. members who have read the report of Mr. Croeser’s speech will have noticed that he identified certain sources and that he said that the funds obtained from those sources would be managed on a joint basis for joint services. I think this is the concept which Mr. Croeser tried to put forward, but unfortunately the Press in a sense did his speech an injustice by not reflecting exactly what he had said. I think, however, that this is the most important point he made. Various models were put forward. We have suggested a joint services committee, but such a committee has not yet been put into operation. There are various models in terms of which this joint services committee can deal with the financial aspects of the rendering of joint services. I hope I have answered the hon. member’s question fully.

There is a last point I wish to discuss, and if I have any more time left I shall come to the question put by the hon. member for Amanzimtoti concerning the “buying back of liquid assets”. It concerns the committee on the financing of Black housing. We have already worked out all the formulas for the sale of houses built in the Black areas before 1975. As soon as we have cleared these formulas with the bodies concerned, they will be made public. I think it is important that I mention that we have made provision, inter alia, for the price of the houses that will be sold to be determined in a particular way, and that provision will be made for a discount on the price for the number of years the intending seller has lived as a tenant in the house concerned. We have decided that this is one of the principles we are going to accept. However, we have also decided that active endeavours must be made to sell the houses. With this in view we have accepted the principle that a commission will be granted to the administration boards or the community councils in respect of the houses they sell. We have also accepted the principle that we will immediately have to establish a Black estate agency industry in South Africa. We are already discussing this with the Estate Agents Board. There are two other important factors as well. The first is the question of surveying. There are already 450 000 plots available, but a large number of these plots have not yet been surveyed and there are no surveyor’s diagrams for them. We have decided to recommend—and this has been accepted—that these surveys will be made on a bulk basis, either by means of aerial photographs or by means of surveys on the ground. The surveyors have explained to us that if plots have to be surveyed individually it will cost R500 to R800 per plot. However, if it is done on a bulk basis, it will cost from R50 to R100 per plot. This recommendation has therefore been approved and it has also been recommended that it be done as soon as possible.

The next point I just want to touch upon briefly, concerns the question of means limits. We have said that the means limit will remain at R0 to R650 per month, but in cases where houses are sold to persons earning more than R650 per month those persons will have to pay the economic replacement value of the houses. I can elaborate on this further, but my time has nearly expired and I still want to furnish the hon. member for Amanzimtoti with a few replies.

†I want to react to his comments in regard to the buy-back practice and I want to assure him that it is common practice for banking and other financial institutions to enter into any buy-back arrangement. Normally securities which qualify as liquid assets are sold by the financial institutions on this basis. The practice enables the institutions to regulate the flow of their funds in this way. There need not be obligations on the buyer of the securities in terms of such an arrangement to resell the securities to the institution concerned. Therefore only a contingent liability is created by a buy-back transaction. In practice, however, buy-back transactions constitute a switch of one liquid asset for another. The practice is being watched carefully by the Registrar of Financial Institutions. When I say this, I do not say that it is a malpractice. It is a standard practice which has been applied by all financial institutions for a considerable time already.

Mr. Chairman, I will not react much to the speech made by the hon. the Deputy Minister, except that I shall come back to the address delivered by Mr. Croeser on the 22nd. I hope the hon. the Deputy Minister will forgive me, because I should very much like to raise another important matter here.

Over the years it has been my personal view that one should protect the hon. the Minister of Finance and that nothing should attach to him that is not good. Unfortunately I now have a document in my hand about which I want to question the hon. the Minister and against which I want to protect him, if necessary. Just before the commencement of the proceedings of this Committee I handed a photostat of these two documents to the hon. the Minister. My leader, the hon. member for Waterberg, held a meeting in Kathu on 22 April at which the hon. member for Kuruman was also present. At this meeting Mr. A. J. Van Wyk, the MPC and a regional secretary of the NP, distributed a document. This document is actually a photostat of Skietgoed of 8 March 1980. The numbers of the relevant pages are 3390 and 3391. A photostat has been made of these pages. At the bottom of page 3391 there appears a three-inch paragraph under the heading “Buiteland”, but that paragraph has been omitted. However, a photostat was made of the signatures of the hon. the Prime Minister, Mr. A. L. Schlebusch, the hon. the Minister of Finance and Dr. A. P. Treurnicht and it was photostated on that space on the document to create the impression that those pages of Skietgoed were signed by those persons. The words “Uitgegee deur die Inligtingsdiens van die Nasionale Party” appear below. This document also contains a statement that it is an extract from an information document issued by the Federal Council of the National Party on which Dr. A. P. Treurnicht served in his capacity as Transvaal leader. It is a pity that we are sinking to this level in South Africa. However, I want to make it very clear that the hon. members present here probably do not know about this and I do not want to charge them with it. The signature of the hon. the Minister of Finance appears on this document, however, and I think it is a crime and a fraudulent act if such a document is distributed in the name of the National Party. I want to tell the hon. the Minister today that I reject this document with all the power at my command. However, it was distributed at that meeting. A person’s signature was even photostated and transferred to another document which that person had not signed, and that is fraud.

But read what he said. We do not know what you are talking about now.

It does not matter what was said. The top part of the information document is correct and was not tampered with. The impression is created, however, that that document was signed by these persons, because their signatures were photostated.

That has many implications.

I should very much like to know in terms of what legislation one can do this.

But go and charge them.

Throughout the years it has been the NP’s policy to act honourably and fairly and I therefore hope that the hon. the Minister will reject this document and that the necessary steps will be taken. I do not want us to conduct politics or fight elections in this fashion. I hope hon. members on the other side will support my standpoint. We cannot allow this, and if this should continue in South Africa, I ask myself where we will eventually land.

I should like to come back to the report of the Croeser work group to which the hon. the Deputy Minister referred.

Mr. Chairman, may I ask the hon. member what he has to say about the statement made by the hon. member for Waterkloof at Marble Hall, a statement which is also on record?

I was not present at Marble Hall and I do not know what was said there.

I ask that a commission be appointed about that.

Order!

I disapprove of anything immoral. I think we should maintain a higher standard, it does not matter who or what says it.

I want to come back to the Croeser Report. I have a very high regard for Mr. Croeser, whom I know personally. He is one of our excellent and brilliant officials. Incidentally, this address was also delivered on 22 April, and it seems to me that funny things happened on that date. In this report Mr. Croeser states the following very clearly—and I quote from page 6 of the address he delivered—

I therefore accept that this is solely his own standpoint. I have a problem, however, because he is a senior official and a respected one too.

This address, however, does not deal with the question of where or how we must find our money. It is totally politically inspired and it represents a completely new approach. I ask myself why such a political document had to be published and I am very sorry that Mr. Croeser has had to do it. I cannot agree with it because, as he says, he does not want to anticipate the President’s Council’s proposals. If all the speculations one hears all day are true this is in fact the precursor of the President’s Council’s proposals. I do not know whether the hon. the Minister has read this document …

Yes, I have read it.

I shall be glad to hear to what extent the hon. the Minister can comment on the political tenor of this document, because I do not think it is a healthy state of affairs that such a document should be mixed with politics.

I am very grateful for the Browne Report and I am also grateful for the Croeser Report and what has been done for our local authorities by these reports. The hon. the Deputy Minister will know, because we have had many discussions about this. On behalf of the CP I also want to express my thanks for this.

There is also another matter to which I want to refer—although my time is very limited—and this concerns loans. The interest on loans plus the cost involved amount to R2 293,6 million, i.e. nearly 13% of our total budget. It is an amount which is just smaller than our Defence budget. This item therefore takes an enormous slice out of the Central Government’s budget. The 13% to which I am referring, I take as a percentage of part 1 of the budget. I know that money is difficult to obtain, but I nevertheless want to ask the hon. the Minister to give us an indication—although I know he will not be able to do it today—how many of those debts are productive and how many are unproductive. If possible, we should like to know this. One can defend this heavy interest burden if one can say that it is interest which is paid on something productive. However, if not all this money is used productively, we must take another look at the matter. We are always in a difficult situation when we want to borrow money, but if it is possible I should like to get this information from the hon. the Minister or from the Department. However, I do not want this to cause them an unnecessary amount of work, because in that case we must rather forget about it. I do not want to cause our officials a lot of work when they are already up to their ears in work.

Then there is one other little matter I want to raise, namely the R46 million being voted for “Secret Services”. In this regard I just want to say that we are very glad to have the explanatory memorandum that we received from the Department on this Vote. According to the memorandum there are a few services for which this provision is utilized, for example the Special Account for Foreign Affairs, the Special Account for Security Services, the Special Defence Account, etc. I do not want to learn any secrets, Sir, but can the hon. the Minister perhaps in his reply tell us how this provision is divided among the various services? In the memorandum it is stated very clearly that details of the provision naturally cannot be made public. If any sensitive information would be revealed thereby, the hon. the Minister should rather not furnish it, but I should nevertheless like the hon. the Minister to tell us how the provision is divided among the various services. When one has to help to defend the Government in future, such information may be valuable. It will also strengthen the hon. the Minister’s hand.

My time has virtually expired, but I just want to say that as far as the CP is concerned, in the political field we shall fight if fight we must, and that we shall differ on a high level on matters of principle. However, as far as finance and economic matters are concerned, I want to keep politics out of it. As I have said, we must strengthen the hon. the Minister’s hand. It is good that not only we, but everyone in South Africa, should contribute his share to overcome our problems as far as this is concerned. [Time expired.]

Mr. Chairman, in his speech at the beginning of the debate the hon. the Minister has referred to his visit to West Germany. I want to tell him that I too was in Bonn recently as a member of a parliamentary team. I must tell hon. members that during our discussions with the Deutsche Industrie und Handelstag we were particularly impressed with quite a few things about German business people. In the first place they have an absolutely thorough knowledge of the South African situation in general and of our economy in particular. In the second place they are extremely keen to trade with South Africa and to expand the trade. In the third place the Germans and other European countries place South Africa eleventh as an investment country out of the 45 most important trading countries in the world. I regard this as a splendid, compliment to the South African economy. In the fourth place their exports to South Africa have increased by 34% to a total of more than R2 500 million over the past year. South Africa is their most important trading partner on the African continent. Nigeria is but a poor second. A fifth point that impressed me is that although their imports from South Africa amount to only slightly more than half of their exports, i.e. approximately R1 300 million, these imports are of extreme importance to them because they are raw materials and other goods which are absolutely essential for their economy and particularly for the defence of their country. The sixth point is that one out of every four Germans involved in manufacturing is involved in the manufacturing of export products. They admit this openly. And it is not only their business people who say this, but also their senior officials in the Department of Economic Affairs. It is of such great importance to them that they will have to consider the matter very carefully if ever they wanted to apply a trade boycott or something similar against South Africa, because it could so easily be counter-productive and harm the German manufacturing industry very seriously. I should therefore like to tell the hon. the Minister that I agree with him 200% that our trade relations with West Germany and with many other European countries are excellent and that the prospects for the expansion thereof are very good.

I should very much like to deal with a very practical matter with regard to the Department of Finance. One of the Department’s functions is control and the application of control in respect of financial institutions such as banks, building societies, etc. Now it is so that these institutions compete with one another very strongly. Especially in the present economic climate circumstances are often very difficult for banks and building societies. Moreover, they are constantly under pressure to render more, faster and better services to their clients. A great deal has been said about gold and paper money today, but I should like to say something about plastic money.

One of the modern developments in the financial world is increasing mechanization and especially the use of plastic money, by means of which people can withdraw and deposit money easily. I have no doubt in my mind that the time will soon come when facilities will have to be created at supermarkets, large hotels, airports, etc. where the public will be able to conclude cash transactions, be it at the post office, the banks or any building society. It therefore stands to reason that these organizations such as the airports or supermarkets will have to provide space for quite a few automatic teller machines which are coupled to each of these various banks or financial institutions. It is therefore logical that we will have to do what is being done in Europe and especially in the USA, namely that these facilities are shared by the various financial institutions and the Post Office. Fortunately we have now progressed so far that the various financial institutions in South Africa together with the Post Office are investigating the feasibility of a shared network. The shared network of automatic teller machines serves as a basis for the discussion. I am referring here to the terminals one sees here and there and which will be coupled with all the financial institutions so as to form a shared network.

If this proposed co-operation can be implemented in its simplest form, it can in future lead to the further expansion of a fully-fledged electronic money transfer network between the banks and the wholesale and retail trades. This will mean that a man can go to a shop and make his purchases and that the amount of his purchases can then immediately be debited to his bank account. It will be possible to determine whether immediately that man has the necessary credit in his account. There is no doubt that it will definitely be in the interests of the country as well as the financial institutions in the country.

The point is that in order to make any of these terminals, these automatic teller machines, economically viable, such a terminal must be able to cope with approximately 6 000 transactions per month. Unless it is shared it simply cannot reach the break-even point. What are the advantages of such a shared network for the country and for the financial institutions as such?

The advantages are that a national standard will be established in respect of transfers of funds, in respect of credit and debit cards, etc. A steering committee has therefore been constituted under the chairmanship of the Bureau of Standards on which the building societies, banks, clearing-banks as well as the Department of Finance, the Department of Post and Telecommunications and the Reserve Bank are represented. In the interests of the whole of the economy my request today is that the Department of Finance should use its influence to make this shared network a reality because it will contribute to enormous savings being made in the whole of our economy. It will affect not only the business people, but the whole of our national economy. The point is that if these organizations do not act in concert, it will mean that each of these financial institutions will develop its own system, that the Post Office will have to develop its own system for each of them and that it will have to back each of these systems. This will lead to a decrease in efficiency. However, if there can be concerted action and the Government through the Department of Finance and the Post Office and the financial institutions can all work together, a very splendid example of co-operation and rationalization can be set.

What will happen if we do not do this? If we do not do this, the smaller financial institution will not be able to afford it. It will be squeezed out and will then not be able to render the same service. It will then not be possible to establish a central transfer system between the trade and the financial institutions. What is also important, is that the retail trade or public institutions such as airports and railway stations will naturally not allow 12 or 20 different terminals to be erected at each of them so that everyone can go to his own terminal with his own particular bank card. The idea is a system of rationalization. I want to make an earnest appeal that the Department of Finance use its influence to put this system into effect.

Mr. Chairman, the hon. member for Paarl has made some very interesting comments today about some of the implications of the use of plastic money. I do not intend to follow him on that subject, but it is certainly something to look to in the future.

I raised the matter last year of the 1980 launch of mini Krugerrands, but in my view it was never satisfactorily dealt with. Briefly, as everybody knows, a set of mini Krugerrands was sold to 60 people for R437,83, which are now worth something in excess of R10 000 per set. The key aspect as far as I am concerned is that of withholding information, and of what the public is entitled to know. I believe that the public is entitled to know how the Government is managing its affairs. In particular, taxpayers have the right to demand that the Government accounts for every cent it spends. I believe this is fundamental.

There are a number of unanswered questions, but I want to ask six questions today, to which I hope I will receive replies from the hon. the Minister.

The first question is this: Who decided that only 60 sets of coins would be minted? Section 11 of the South African Mint and Coinage Act of 1964 provides that the Minister may cause gold coins to be made and issued. Section 13 provides that coins other than official coins are prohibited. The chief executive of Intergold has said that—

The second question is the following: Who decided on the 60 guests to be invited to buy the coins? On 9 October 1981 in the House the hon. the Minister said—

The chief executive of Intergold has explained that the function had been arranged by the Government. There was no Chamber of Mines “inteference” in what was arranged as a private party at the Mint. The Director of the Mint has said: “The Minister was the host and issued the invitations.”

But this is an old story. You are specializing in raking up old stories today.

The third question is: Who decided on the price at which the coins would be sold? According to Mr. Len Gullan of the Gold and Hard Asset Exchange, the sale was like giving the people a gift of about R7 000, because rarity value created a fictitious profit.

Why do you not go to the Advocate-General?

First of all, because it was said in Parliament, and secondly, because I have never suggested that the hon. Minister has stolen anything.

Is that so?

Yes, I have never suggested that.

That is interesting.

Now you know.

You had better read your speech then.

It has been argued that the public has lost nothing. I do not believe that that is so. The South African Mint is a public institution and its assets are public property. To the extent that those sets of mini Krugerrands were sold at less than the true market value, the taxpayers have suffered financial loss. All the indications are that their loss amounts to the best part of R500 000 if one compares the actual amount at which they were sold to their market value.

The fourth question is the following: Who wants the names of the guests kept secret? The hon. the Minister gave this undertaking to the House on 9 October 1981. He said—

I would like to ask the hon. the Minister whether in fact he has done so and what their replies were.

What are you quoting from now?

Hansard, column 6280, of 9 October 1981. The chief executive of Intergold’s comment was—

However, the Director of the Mint refused to release a guest list on the grounds that “that is exactly what the Minister doesn’t want revealed”. Is that true or not? The Financial Mail has commented—

The fifth question: Who would be embarrassed if the names were made known? The hon. the Minister has said that he does not want to embarrass his guests. But why should anyone be embarrassed? I have not suggested that, as a group, the recipients knew that they were going to be offered the coins or that only 60 sets were going to be minted. Those guests, who had every right to be there, have no reason to be embarrassed or feel that their bona fides are being questioned. But the public is entitled to know what is going on.

The sixth and final question is: Were sets made available to the Minister of Finance, any other Cabinet Minister or members of Parliament? I ask this question again, because when I asked the hon. the Minister last October, he interjected (Hansard, column 6256): “I’ll answer that very easily”. But when he spoke, the hon. the Minister did not do so, and subsequently explicitly refused to say whether, for example, he was one of the recipients or not. Is he prepared to tell us now what the position is in this regard?

What do you mean to say by that now?

Mr. Chairman, it is up to the hon. the Minister to answer these six questions. At best, the decision to sell 60 sets of 1980 mini Krugerrands for R473,83 per set at the launch was a bad one, an act of mismanagement that has cost the taxpayers of this country some R500 000. The refusal of the hon. the Minister of Finance to supply timeously the information to which the public is entitled, is symptomatic of the disregard that this Government has for democratic processes. Most of the damage has been done and the losses are irretrievable.

You caused the damage.

I call on the hon. the Minister to request any Cabinet Minister, members of Parliament or civil servants, who may have received sets from the Mint to sell them back at the price they paid for them. Those sets can then be sold by public tender or auction and the proceeds credited to the Consolidated Revenue Fund. Such a step, together with clear answers to the questions I have asked, would contribute considerably to regaining the confidence of the public in this matter.

Mr. Chairman, I think it is one of the more undesirable things in Parliament to have to get up to reply to a scandalous, smearing speech as the one just delivered by the hon. member who has just resumed his seat. The hon. member displayed a total lack of understanding of the dignity of Parliament. He displayed a total lack of understanding of simple facts which had been given to him adequately on previous occasions. He talks about damage, but I want to state that if any damage had been caused—I am sure there has been, because newspaper articles are distributed throughout the world—it is based purely on the scandalous insinuations of that hon. member. It is a strange thing we are experiencing in this House today. Two hon. members of the PFP go back into the past to dig amongst the refuse heaps, the garbage heaps to try to get material for their speeches.

The hon. member raised six questions, which will be replied to in the course of my speech. First of all, I want to say that this particular vendetta has a very important history. Firstly, that hon. member had timed the scandalous accusations very well to coincide with the last day of the Parliamentary session last year. But immediately after the hon. the Minister replied by requesting the appointment of a Select Committee, the hon. member suffered a reprimand from his own Chief Whip. In this regard I want to quote from Hansard of Friday, 9 October 1981, column 6402, where the Chief Whip of his party said—

That is, the hon. the Minister’s—

So absolutely poor are they in terms of arguments, that the hon. member has to raise this matter again.

I want to make haste, because many facts have to be given.

Then the hon. the Minister proceeded and challenged the hon. member to go to the Advocate-General. When he did not do that, the hon. the Minister himself went to the Advocate-General. The Advocate-General replied by means of a public statement, declaring that the newspaper reports, did not contain sufficient facts to warrant an investigation by him. We challenge that hon. member again today to go to the Advocate-General and to have this matter investigated.

He will never do that.

But in the process, based on his skew and distorted perception of simple facts, he is now casting aspersions on the integrity of the hon. the Minister and on the integrity of all the officials involved, as well as on the integrity of the Chamber of Mines and the people involved whom he quoted so extensively. The hon. member will one day be faced with the results of the scandalous inferences he makes while enjoying the privilege of Parliament. He does not seem to be able to learn. I want to ask the hon. member whether he has the support of his Chief Whip in raising this matter again today. Does he have the support of all the members of his party in repeating this scandalous behaviour?

There is a fundamental fact in the light of which this whole matter must be evaluated. This basic fact is that gold coins will not be sold in the world unless there is an extensive marketing effort.

I said that last time.

Gold coins have to be marketed, and if you market something world-wide as the case is with gold coins, this goes hand in hand with promotion. This particular instance was nothing but a promotion. It was conducted along ordinary business lines. The people invited were people who were involved in the whole process of decision-making, the manufacturing and the marketing of gold coins. Those were the people who were present.

Who are they?

That does not concern the hon. member at all. The fact remains that this was a promotional effort. Obviously the hon. member does not even understand basic business principles, because if he had, he would have realized that if a supermarket were involved, the stuff would have been distributed free of charge. But what happened here? The promotion material was sold. A series of questions now arises which have to be answered against the background of the fact that this was a basic promotion.

The first question is the following: Was it necessary to have this promotion? Of course it was necessary. It was the launching of a new type of coin and it was an entirely new dimension in the marketing of gold coins. It was therefore necessary, and there is a precedent for this. Dr. Dönges distributed 120 sets in 1964 during the launching of the current series.

The second question is whether this promotion was conducted in a fair manner. Again the reply is “yes”. Those who were intimately involved in the entire process and who had an interest and who could further the cause, were the people who were invited.

The next question is whether the sets were negotiated at a fair price. Of course this was the case. This is the basic fact which this hon. member does not seem to appreciate. Proof coins are sold at a specific price. The hon. member keeps on quoting the market price and tries to scare the daylights out of the public by telling them that hundreds of thousands of rand have been wasted. The allegation that all this money has been wasted, is totally untrue, it is a lie and he will have to withdraw that. [Interjections.] I maintain it is a lie to say that there is price difference between the collectors’ price and the price at which those people were able to buy these sets.

Order! No, the hon. member must withdraw that.

I withdraw it, Mr. Chairman, but I will now give you the facts. [Interjections.] In 1980, when this issue was made … [Interjections.] Mr. Chairman, can I please have some order? I cannot even hear myself talking.

Order!

Thank you, Mr. Chairman. When the price was determined, it was based on the cost of material, plus a premium of 10%. The following year, when the same sets of coin were distributed as proof coins, the sets were distributed at a price of only R127 more per set.

Why don’t you tell the public that?

Of course I told them that.

Covering up, that is what you are doing. You have no place in this House.

I want to say that anybody who in future distorts the facts and insinuates that a set such as this could have been sold on that particular occasion at a higher price tells a lie. I want to state that categorically, because it is a fact that the price was determined at cost of material plus a premium.

May I ask the hon. member a question?

No, I do not have the time to reply to a question.

Who had the opportunity to buy on that particular occasion?

Mr. Chairman, on a point of order: The hon. the Minister has said by way of interjection that the hon. member for Cape Town Gardens distorts the facts. Is he allowed to say that?

That is putting it mildly.

will the hon. the Minister please explain that?

I said that to say that the facts were distorted was to put it mildly.

The hon. the Minister must please withdraw that. It is against the practice of the House.

Very well, Sir, I withdraw it.

The hon. member for Florida may proceed.

Mr. Chairman, the fact remains that at that point in time, when the decision was taken in August 1980 to mint these coins and to distribute them in the following year, the circumstances were as follows: In the first place, 13 000 collectors get their sets annually. Those orders have to be in by 30 June and by then the Mint would have ordered electrolytic gold material for the purposes of minting these particular coins. These deliveries have to be honoured by the 5th December. In August the State President approved the various designs for the new sets and it was absolutely impossible at that particular point in time to distribute order documents. Secondly, it was absolutely impossible to get those orders back and then to honour those orders before the Mint closed in that particular year.

Another fact that has to be borne in mind, is that in order to mint 13 000 sets, to which all the collectors would have been entitled, an enormous amount of work would have had to be done in terms of dies and by that time, in accordance with the normal minting programme, all the staff were fully engaged and all the equipment was fully booked until the end of that particular year. [Interjections.] It was a matter of impossibility. Therefore, the equipment was not available, the staff was not available and the material was not available. By 30 June the Rand Refinery had already delivered electrolytic material, sufficient only for orders received by 30 June. In other words, the whole basis of the case the hon. member tried to make out, is founded on incorrect information and a distorted interpretation. [Time expired.]

Sir, I merely rise to give the hon. member for Florida the opportunity to finish his speech.

I thank the hon. member for the opportunity. In other words, I can draw no other conclusion than to say that if one evaluates the fundamental facts and the fact that his own party last year sabotaged and blocked the appointment of a select committee because they knew …

Mr. Chairman, on a point of order, I object to the remark that our party sabotaged the appointment of a select committee.

I withdraw the word “sabotage”.

If the hon. member wants to move for the appointment of a select committee, please let him do so.

Order! The hon. member may proceed with his speech.

I say again, I withdraw the word “sabotage”. However, if my Hansard of what I said earlier is read, it is absolutely clear that the PFP by means of their Chief Whip blocked the appointment of a select committee to investigate this issue. In other words, the entire case which is again drawn across the floor of the House by that hon. member, rests on incorrect information. I want to appeal to the hon. member to avail himself of all the relevant facts and then to reconsider. I do not think it behoves an hon. member of this dignified institution to entertain facts and to use them in such a way that South Africa and the hon. the Minister, as well as various other people, are drawn into a debate which to my mind seeks to achieve no other purpose than to try to make a little bit of political capital. My suggestion to the hon. member is this: If he is not prepared to take this particular issue to the Advocate-General—I challenge him to take it—he owes the House an apology for abusing the privileges of the House, and he also owes the hon. the Minister and all the other people he has so scandalously involved in the whole issue, a very sincere apology. I want to suggest to the hon. member that he goes back and read in Hansard the speech of his party’s Chief Whip in which his Chief Whip tried to protect him against the fallacy which he again committed today. It is my sincere conviction that he is serving no purpose at all continuing this vendetta and that he is really abusing a particular privilege. I urge the hon. member to withdraw his remarks and to apologize accordingly.

Mr. Chairman, I do not want to spend too much time on this issue, but I do think there are one or two fundamental points which should be made to the hon. member for Florida. The first point is that one of the functions of the Opposition is to raise matters where it feels that there might have been an injustice done. At times it will not know whether those injustices have in fact been done, but it is essential that the Opposition—whether it be the CP, the NRP or the PFP—should have the right to raise issues where it feels that injustices which are not in the public interest have taken place. The hon. member for Florida actually pointed out the best way to solve a problem is to evaluate the facts and to make the information available.

I want to raise a second point. It is well known that proof Kruger Rands have considerable scarcity value. It is advertised virtually every day in various publications. Obviously an issue of 60 coins will have considerable scarcity value. This is just a fact of life. Consequently there will be considerable interest on the part of the public and hon. members of Parliament as to who actually got those coins. This is really the point which the hon. member was trying to make.

I want to refer to the First Report of the Inter-Departmental Committee of Inquiry into Certain Specific Pension Matters which was issued by the Department of Finance and by the Department of Social Welfare and Pensions. The terms of reference of this committee were to investigate three things: Firstly, the compulsory preservation of pension rights, secondly, the question of the commutation of lump sum benefits into annuities and, thirdly, the provision of satisfactory benefits for that section of the community who does not enjoy cover in this respect at present. I should like to ask the hon. the Minister three questions. Firstly, is it the intention of the Government to go on to item C in the terms of reference of the committee? In other words, the provision of satisfactory pension benefits for that section of the community which does not enjoy cover in this respect at present. If it is the Government’s intention to investigate, I should like the hon. the Minister to tell us when the Government anticipates the committee will start looking into that matter.

The second question which I want to raise with the hon. the Minister is on the question of the transferability and preservation of pension money in the light of the fact that these provisions have now been withdrawn. Is it the Government’s intention not to do anything in this regard? I think this is an important point. If one has a look at the 21st annual report of the Registrar of Pension Funds, one finds that R217 million was withdrawn on account of resignations. This is basically money which should have gone towards providing for one’s retirement, and which is now basically wasted. I appreciate the problems which arose in respect of the transferability and preservation of pensions, but is it not possible to start implementing this piecemeal? Most of the problems arose in regard to industrial pension funds, and not with the others. Why do we then not make the preservation and transferability of pensions applicable in the case of non-industrial funds? I believe that once one has moved along this path, other people will eventually see the benefits.

I want to raise a third point with the hon. the Minister or the hon. the Deputy Minister: Are the other points which have been raised by this Committee going to be implemented? I want to refer to two points specifically, firstly, the concept of a statutory minimum accrued interest, and secondly, the question of commutations. All of us have probably experienced situations where one contributes to a pension fund and then when you withdraw from that pension fund, you receive your own contribution into the fund together with a minimum amount of interest. I want to quote what the committee says in this regard—

I believe we are here dealing with one of the fundamental problems. We have had instances in South Africa where companies have taken others over and closed pension funds in order for them not to meet the obligations of that particular pension fund. They did nothing illegally, but it can be done.

This raises one of the fundamental points, namely one’s attitude towards a pension fund. Some employers believe it is a privilege and that an employee is lucky if he is allowed to join their pension fund. There is also an argument that a pension is really deferred compensation. I am inclined to agree with the view of the committee that this is in fact deferred compensation, whereby payment of compensation is postponed to be paid out in 25 or 30 years’ time. I believe that is a very important concept. If this is so, obviously to return to an employee his contributions together with interest at a rate of 3% or 5% at a time when the interest rate pattern is way above that, is wrong. What is happening is that withdrawals are being used to fund pensions for people who are going to come later to the detriment of the person who has contributed to the pension fund. If one has a look at the recommendations of the committee, one finds that they came up with the concept of a statutory minimum accrued interest. This can be worked out in various ways and I believe this is an important concept which could be implemented now. I do not see why we have to wait for legislation to be introduced whereby pension funds will have to pay a more reasonable return of contributions together with interest when an employee leaves the pension fund.

I now want to refer to the question of the commutation of pension benefits. In terms of our law a person who retires can take up to one-third of his pension money and invest it, and the other two-thirds is used to purchase an annuity. The reason I raise this point is that I have shopped around to find out what interest rates can be earned on annuities. It seems to me that at the present moment the rate is roundabout 16%. The point I want to make is that an individual can actually take his money and invest it in, say, participation mortgage bonds, in a building society, or in Government stock, and earn roughly the same amount of income which an annuity would give him. There is, however, a fundamental difference, because if he invests it himself the capital remains intact, whereas if he gets his income through an annuity eventually that capital is evaporated. In this regard the committee introduces something which I would support, namely that in the case of a single person he should be compelled to purchase an annuity equal to twice the current social old-age pension, and in the case of married couples four times the current social old-age pension. I think this is a logical thing, because we are trying to prevent people from becoming a burden on the taxpayers of the future. That is the whole idea. The reason I believe we should implement this is that so long as they have provided for their retirement by the means suggested here, then let them invest the balance of their money if they can get a better investment. I think we have to look at this question of the problem regarding annuities, because what normally happens under a pension fund is that two-thirds of an employee’s money is used to purchase an annuity with that company. [Time expired.]

Mr. Chairman, I will not follow the hon. member for Edenvale, who obviously knows his subject very well. He prepared himself very well, and if I may say so, he behaved at a different level from what his hon. colleague of Cape Town Gardens behaved. The hon. member for Cape Town Gardens is a bit of a hit and run political merchant. We learnt in the House recently that there are people whose behaviour is becoming rather questionable.

I want to say something about the balance of payments problem which we are facing now, and which we will have to face in future, with particular regard to the gold price and the way it has fallen away over the past few years. It is a fact that the recession in the economies of our main trading partners, plus the high interest rates, particularly in the United States, but also elsewhere, have forced the price of gold down. This has in turn resulted in a relatively weak balance of payments position and it has also resulted in the fact that State revenue is considerably down. I think the figure is R1,2 billion for every 100 dollar drop in the price of gold. I think, in a sense, this is a blessing in disguise if one takes the long view. I say this because we know how dominant gold remains in our economy in spite of the versatility which the hon. the Minister mentioned in his opening address. We know that the steep rise in the selling price, almost a windfall rise, and the spin-off effect this has had on the mines and the manufacturing sector, have led to the danger of structural changes in the entire cost, wage and salary pattern in South Africa. This threatens to make our non-gold exports even wildly uncompetitive, if continued with. The increased price of gold led to wage demands, it unleashed general demands and encouraged cost increases, necessarily always the commensurate increases in productivity. This situation does not augur very well for the future of our non-gold exports, on which our long-term future strategy must be based. I say this because not only do the non-gold exports become more vulnerable, but the gold mines themselves become more vulnerable if they base their cost structures upon windfall, perhaps temporary, price formations.

As a result of the steep rise in the price of gold the foreign earnings which came into the banking sector resulted in more credit creation and increased demand, and it also encouraged the expansion of the economy without the necessary industrial capacity to meet the demand. This is a classical inflationary position, demand inflation.

We know that Soviet gold sales and US interest rates may be the main reasons for the lower gold price, but there is also another reason. In the Middle East, where one had massive oil-price hikes over the past ten years, there was also another reason. In the Middle East, where one had massive oil-price hikes over the past ten years, there was also a large investment—we do not know the percentage—by Arabs in gold and as the price of oil fell away very rapidly, we experienced fairly large-scale gold sales from that quarter. I think the cold shower which our economy has had has been a good thing in the sense that it would be unwise to build wage patterns and structures into future costs on windfall profits or uncertain earnings. The Arab world showed us that they were wildly affluent yesterday, while many of them are wildly bankrupt today. I do not think we would like to go in that direction.

The fall in the oil price has also been a blessing. We know the spot price of oil has dropped from over $40 a barrel to something like $32 a barrel, and many people say it is heading for $25 a barrel. We know the massive increase in the oil price hammered the economies of our major trading partners and industrial nations. The resultant lower energy price, plus the energy substitution which industrial economies have undertaken, plus their massive energy conservation programmes, may in turn benefit our exports in the long term. Many people will say that the economic recovery in the industrial world may be hastened by the fact that oil prices have dropped substantially as they have done.

The international research department of the UK Brokers Phillips and Drew recently stated, according to an article which appeared in the Sunday Times commenting on the report, the following—

They go on to say—

One sees therefore that it is not all bad news. I think in a sense the adjustment in the gold price in the long term might be a blessing. Hopefully we will be more disciplined. In that regard I should like to congratulate the hon. the Minister for the courageous way in which he has curtailed Government expenditure. The hon. member for Yeoville said that one moment he thought the hon. the Minister was a socialist or Keynesian, and the next moment he thought he was a disciple of Milton Friedman. I think that is absolutely untrue. One thing which is absolutely true, the golden thread that we have seen running through the budgets over past years, is discipline, growth from strength and a conservative approach to budgeting. We can be grateful for that because it has softened the blows which we have had to take over the past 12 to 18 months.

The hon. the Prime Minister and the Cabinet have set an example by waiving their salary increases. Hon. members on this side of the House have also wanted a percentage of their increments, which is a further example of the discipline with which the Government approaches the finances of the country.

The hon. the Minister is also to be congratulated because not only did he over the past year or two save for a rainy day, but he has responded well to the economic challenges, in our economy. We know the moderate decline we experienced during the first three quarters of 1981 was based largely upon physical constraints such as the shortage of skilled and semi-skilled labour. The manpower budget was 22,8% higher and came to R63 million, the education budget was 150% higher and came to R3,16 billion, and these indicate that in the long term this investment will assist us in achieving greater productivity and competitiveness, which ultimately will result from the increased investment in education and training. This will also help our non-mining exports and will help to lengthen the lifespan of our mines. [Time expired.]

Mr. Chairman, the hon. member for Maitland must forgive me if I do not discuss the question of the balance of payments, because I believe the hon. the Minister will reply to him fully.

I should like to deal with the 1981 report of the Land and Agricultural Bank and make certain comments on it. During the debate on the Co-operatives Bill in 1981 the financing of co-operatives at market-related interest rates in respect of short and long-term financing was stressed. Co-operatives today are no longer small, ill-managed businesses. I have with me information regarding one of these co-operatives and it is stated that they are involved in tobacco farming, general trading, trucks, dairy equipment, mechanization, research and also manufacturing. They are large organizations which consist of many branches and cover a wide range of business activities. They are managed by a new generation of highly competent university-trained business graduates. All co-operatives utilize the Land Bank facilities to the full and borrow from the commercial banks, which are financial institutions, for additional financing. During the debate on the Co-operatives Bill it was stated that private enterprise was correct, according to the Steenkamp Commission, in their assertion that the co-operatives should also operate at market-related interest rates and it was categorically stated that this was now happening. However, the problem is that market-related interest rates, when money is obtained directly or indirectly by the farmers from the Land Bank, and market-related interest rates when money is obtained directly by borrowing from financial institutions such as commercial banks, do not mean the same thing. What is happening? Originally, under the Land Bank Act, the Land Bank obtained overdrafts from financial institutions, mostly the commercial banks, and discounted Land Bank bills, and these counted as liquid assets, which was at the lowest possible rate for the Government. In addition money was appropriated in Parliament for fairly long-term financing and lent at exceptionally low rates to encourage food and product production in the public interest. Therefore the money borrowed was at the lowest possible rate and the total amount was comparatively small. Furthermore, the Land Bank need not overcharge on interest rates in order to produce a small annual surplus. However, during the 1950’s the co-operatives and the marketing boards expanded at such a rate that the Land Bank was empowered by legislation in 1959 to raise additional funds in the open money and capital market through the issue of Land Bank debentures. In 20 years over 2,5 billion have been issued, yet, as they were liquid assets, the rate of interest remained low. The insatiable appetite for funds for the considerable expansion of the activities of the agricultural co-operatives during the last decade brought about such a large increase in their capital requirements that the Land Bank Act had to be amended in 1980 to allow for the issue of Land Bank stock at competitive rates for an initial period of three years. Although this stock does not qualify as a liquid asset, it is a prescribed asset for financial institutions with major interest rate benefits.

The report for 1981 shows that the intermediate and long-term loans in total rose from R704 million to R1,1 billion in the five year period from 1976 to 1981, of which 75% was utilized by the farmers themselves. The short-term loans to the co-operatives for the same period increased from R1,3 billion in 1976 to R2,8 billion in 1981. During the same period Land Bank interest rates rose from 9,5% to 13,5% in 1981, by which time the rate from financial institutions, particularly commercial banks, stood at over 20% at the end of 1981.

However, one thing is obvious. As the Land Bank will be called upon by the voracious appetite for financial assistance on the part of the ever-growing co-operatives and the increasing price of land, and as agricultural prices keep on increasing with inflation, the agricultural industry is going to be faced with increasingly higher interest rates, as the Land Bank is compelled to seek more money in the open capital market. A very significant quote, on page 22, of the report reads as follows—

There can be no quibble about the Land Bank financing the farmer directly or indirectly. Why should it only be co-operatives who can use the Land Bank for the purpose of financing the farmer? Why cannot private enterprise, which carries out exactly the same functions as the co-operatives, have the use of the facilities of the Land Bank? The hon. the Minister said today that the Government was pushing private enterprise as much as possible. The hon. the Minister made that statement this morning.

In terms of the hon. the Prime Minister’s remarks to private enterprise at both the Carlton and Good Hope conferences, I believe that those private enterprise organizations such as Massey Ferguson should be equally entitled to the wonderful facilities offered by the Land Bank. There is a simple answer to this question; Allow free and equal competition for the co-operatives and private enterprise by the hon. the Minister amending the Land Bank Act to allow by law such private enterprises as deal in agricultural supplies and products and their manufactured derivatives to the farmers, to avail themselves of the facilities of the Land Bank on equal terms with the co-operatives at Land Bank market-related interest rates.

The Land Bank Act allows the Bank to deal both with co-operatives and co-operative companies. All that need be done is that sections 21 and 35 of the Act be amended to allow private enterprise to use the facilities of the Bank. There must, however, be safeguards. The Land Bank in conjunction with the hon. the Minister of Agriculture will have to register such private companies which deal in a similar manner with the farmers as the co-operatives, and only such registerd companies should be able to utilize the facilities of the bank.

Because the co-operatives borrow public money from the Land Bank, the old Act gave the co-operatives full security by having a lien over the whole of the farmer’s crop. The new legislation on co-operatives has, however, changed this in part. The co-operative has the first lien on the crop, and the farmer can apply to be released from such part of the lien which is not required to guarantee repayment of the loan of the co-operative and disposal of the farmer’s crop. The unused portion of the lien can be given as a guarantee to private enterprise, which would be bound to provide security to the bank, as do the co-operatives. This ensures repayment to the Land Bank.

Private enterprise would also have to deposit funds via the agricultural sector in the same way as agricultural co-operatives do. This is another important source of funds for the Land Bank.

The hon. the Minister of Finance cannot have one law for the Medes and another law for the Persians. That is the principle that is at stake. The business of the Land Bank will consequently be expanded with the healthy maintenance and promotion of competition between private enterprise and the co-operatives for the custom of the farmers, indirectly financed through both sources by the Land Bank, to the ultimate benefit of the farmer, who constitutes the backbone of our country.

For lack of time I shall not respond to what the hon. member for Bezuidenhout has said. I am sure the hon. the Minister will furnish him with a reply.

I should like to associate myself with other members who wished the hon. the Prime Minister success with the talks with Dr. Kaunda of Zambia. This meeting is proof that greater realism is breaking through afresh in Southern Africa. This is mainly due to South Africa’s strong economy. The countries of Southern Africa will find out more and more that South Africa holds the key to their development and prosperity. It will be worth their while to talk to South Africa and to make friends with it. It is in this light that we have to see these important talks.

I should now like to deal with a subject which is discussed a great deal. I am referring to rising prices and inflation. None of us will deny that rising costs and inflation are a big headache for many people in our country. I think they are a headache for the hon. the Minister as well. It is true that inflation is causing red warning lights to flash in our economy, but what is not true, is that the blame for inflation must be laid at the door of the Government and that the Government is indifferent towards people who are having a difficult time in this country. This hon. Minister has taken one step after another to apply monetary and financial discipline. In budget after budget he has built in the strictest discipline. He has issued warning after warning. He has repeatedly pleaded for economic and financial self-control. He continues to set an example to the country. State expenditure has been curtailed so drastically that there has been grumbling throughout the country. We must not blame the Government for everything.

No, not everything. [Interjections.]

We must rather seek the fault in the extravagant lifestyle of many South Africans. Our people live too well. They are too extravagant. They are saving too little. They are not working productively enough. They are not displaying enough selfdiscipline and they are setting their demands too high, and one example of this is wage demands. It is very easy to say to the Government that it should intervene, keep profits in check and peg prices, but we all know that State control of wages and prices does not work, because it disrupts the free-market system. State control has not worked anywhere in the world, because there is always a way of circumventing it and because the cost of providing the necessary machinery to enforce it is disproportionately high when compared with the advantages that can be gained thereby. There is, however, a further disadvantage. When one puts a damper on prices it does provide short-term stability, but in the longer term one’s problems just build up further. It does not help to put a stone on the lid of the pot for a while, because the pressure will simply build up and blast the lid off. It is therefore simply not practical to apply price fixing. It simply cannot be a solution.

Price increases can, however, be checked to a certain extent if the public limits its demand curbs its wild urge to buy. Too many people are chasing too few goods, and if the demand exceeds the supply, prices are pushed up. If the demand is smaller than the supply, prices must come down. Buyers should only buy what they need. Our buying public is not selective enough. Many of them are credit addicts. In this way our people are feeding the monster of inflation. I want to emphasize that the remedy to a large extent lies in the hands of the public. Instead of being like ants that work and save for the future, we have become locusts that simply devour everything before us.

Our inflation rate is much too high. It hurts and must be reduced. The most important step to be taken now is the development of a joint strategy against inflation, a strategy in which both the private sector and the general public must be fully involved. I want to ask the hon. the Minister to take the lead with such a strategy once again. We have to keep on trying to see whether we cannot force inflation down step by step and point by point. If we do not succeed in doing that, it means a further decline in the value of the rand, an ever-increasing inflation rate, still higher consumer prices, still higher interest rates and an even more painful situation than the one in which we find ourselves now.

In other words, you are saying that the Minister has failed.

Mr. Chairman, I would like to address a few comments to the hon. member for Bloemfontein North. Obviously we in these benches like everyone else in the House, share his concern about inflation, but I think that the initiative for curbing inflation should firstly come from the Government. It is not really the responsibility of the consumer, nor can it be attributed solely to consumer demand and spending.

Are you saying it is not the responsibility of the consumer?

Perhaps the hon. the Minister would just let me carry on and then comment when I have finished. Every year the Government seems to find different reasons for inflation. At one time the Government says inflation is imported, then it attributes inflation to the price of oil, and so it finds any number of reasons for the phenomenon. I would like to suggest that the causes of inflation, or some of the causes involved in inflation, lie in Government action in the past. One of the problems is obviously poor productivity growth, and this is directly related to the lack of skills in our economy. That again relates back to the lack of opportunities in the educational field, and this is attributable to Government action in the past.

There is also the question of the lack of labour mobility. This also militates against the principle of a free enterprise economy. [Interjections.] We also know—it is obvious— that our economy is a cartel-ridden economy. Every day we see people acting in unison when it comes to setting prices, and I believe that it is areas such as these that should be attacked. The initiative must come from the hon. the Minister. If areas such as those could be attacked, we would start getting somewhere with the problem of inflation.

I should now like to turn to a subject that has already been discussed this afternoon by the hon. member for Hillbrow and also replied to by the hon. the Deputy Minister. I am referring to the question of building societies. It was obvious from his reply that the hon. the Deputy Minister showed the same concern as we do for the problems that the building societies are experiencing at the moment. I would, however, like to take a slightly different tack and make a few suggestions. I would indeed be interested to hear how the hon. the Minister responds to these suggestions.

Just to set the background, however, let me say that I think it is a fundamental desire in every society for people to own a home. In South Africa I think this is becoming impossible for young people. Just by way of example, let me point out that a R43 000 home with an 80% bond and a repayment period of twenty years requires a minimum monthly payment of R455. To be able to meet this repayment one would require a minimum salary of R1 825 per month. Let us, however, move up to a R62 000 house—because I am sure hon. members will realize that there are not many R43 000 houses available, especially-in Cape Town at the moment—we find that under similar conditions the repayment is R668, requiring a minimum salary of R2 672 per month. This high figure is, obviously, due to the high prevailing interest rates. Hon. members will appreciate the fact that this is not, by any means, a luxury home, and I am sure that it will not have gone unnoticed that the salary I mentioned is the sort of salary earned by members of Parliament. It is certainly not the type of salary that is earned by some young fellow who is starting up in life. In addition, building societies are experiencing a critical cash shortage. I think this has been dealt with quite adequately by the hon. member for Hillbrow.

Home-owners therefore have three problems. The first is a shortage of cash, the second is the high interest rates and the third is the high prices. I should like to make one or two comments on each of these aspects.

First of all, as I have said, the cash shortage has already been dealt with by the hon. member for Hillbrow. I would, however, like to add one idea as far as the shortage of cash is concerned. I think the hon. the Minister should look into the possibility of building societies being able to tap other sources of finance. Here one thinks immediately of pension funds and insurance companies. It could, for example, be done on a similar basis to that applied in the United States. There funds are generated by bundling mortgages into packages. These packages are then sold to the pension funds and other investors in the form of securities that can be marketed in the same way as any other bonds. As I have said, this is a common practice in the United States of America, and one we could perhaps look into in South Africa.

This brings me to the second problem, that of high prices. We are all concerned about house prices and would like to prevent houses from being priced right out of the market. In this connection I should like to raise one or two points. First of all I think that interest subsidies on bonds have had an adverse effect on prices. What a person pays off on a bond is obviously determined by his monthly income and not all that much by the interest rate he has to pay. With a shortage of housing a bond subsidy enables one to pay more and I believe as a consequence house prices are pushed up. I am not suggesting for one moment that we should phase out housing subsidies, with no form of compensation, but I do believe that they could be phased out, with compensation being paid in the form of tax concessions on bond repayments—as is done in other countries—or by way of the payment of higher salaries.

Another aspect of subsidies that I think should be mentioned, is the fact that there are thousands upon thousands of employees, in State or semi-State bodies, banks or building societies, who do not own homes and therefore do not get the benefit of a subsidy on their bond. This seems to me to be unfair discrimination against those persons who choose, for some reason or other, not to buy their own homes.

There is another point that I think bears looking into. I am referring to the question of extending the repayment periods on bonds. I cannot see why bonds of more than a certain amount have a maximum repayment period of only twenty years. If this repayment period could be extended, it would reduce the size of the monthly repayments and therefore make it easier for people to afford homes.

Another point that I think could be considered is the question of repayment patterns. I do not see any reason at all why a bond should be amortised in equal monthly payments over a given time span. Why cannot monthly payments be geared, for example, to take cognizance of increases in a person’s monthly salary? For example, smaller payments could be made during the first few years, with payments gradually increasing over the years, with even balloon-type repayments at the end of the bond periods.

There is another point that I think is very important. I do not see why, in deciding upon the amount of a bond, only the husband’s salary should be taken into consideration. I think that circumstances in the world today are changing. More and more married women are working, and I think that a married woman’s salary should also be taken into consideration in deciding the amount of a bond.

This brings me to a point I mentioned earlier on when I was talking about inflation. I believe that costs in the building industry have gone up faster than the inflation rate. I really believe that the building industry as such should be closely monitored so as to eliminate monopolies in the building industry. We have seen what happened recently in the case of bricks and cement. I am not saying that what happened was not justified, but costs have, gone up faster than the inflation rate. [Interjections.]

In conclusion let me just re-emphasize that there is a desperate shortage of housing. Housing activity can generate employment, because it has a high employment multiplier effect. I therefore think that the Government should give its utmost consideration to the question of housing. I do not think we can rely, any longer, on the small investor putting money into housing. Building societies must be able to tap other sources of finance, particularly if we look at the fact that we also expect building societies, one of these days, to make a considerable contribution towards the provision of Black housing in this country. We all know the massive funds that this is going to require in the future.

Mr. Chairman, seeing that I only have a few minutes at my disposal—the hon. the Minister still has to reply—I shall not take the housing question, which the hon. member for Pietermaritzburg South has dealt with, any further.

I want to confine myself to making a request to the hon. the Minister. However, before I do that, there is something else that I should like to say. I was glad to hear from the hon. the Deputy Minister this afternoon that the affairs of the Browne Committee have now been disposed of. The task of that committee was a comprehensive one, with benefits of great importance to the local levels of government. This applies to the Croeser Committee as well. I trust that a permanent institution—a committee or whatever—will be brought into being to see to it that there will be proper liaison among the various levels of government. I think that is very important. Whether it be the central authorities, the second level of government or the local level of government, it remains an integral part of the administration of the whole country and I think that proper liaison in that regard will greatly benefit sound administration in this country.

I quickly want to make certain representations to the hon. the Minister in connection with funds for a road system for the Free State gold-field. In doing this, I realize that the hon. the Minister does not have unlimited funds at his disposal, and also that the Provincial Administration of the Free State can undoubtedly state their own case. However, as this is indeed a matter of great importance, I should like to emphasize it on this occasion. This project is awaiting implementation. The Provincial Administration has already had a transport study made and the plans are ready for implementation. The Provincial Administration of the Orange Free State has no funds available at the moment to tackle any new road project whatsoever. The formula according to which funds are allocated to the provinces by way of subsidy, is calculated on the basis of standard expenditure, so much so that the Free State, with its small revenue from its own sources, is not in a position to provide important infrastructure which becomes necessary. They have virtually no room to move in their budget.

But there is something else that I want to put to the hon. the Minister. The central area of the country, of which the Orange Free State forms a part, did not experience the industrial growth in the post-war period that the other industrial areas experienced. However, Welkom and other gold-field towns are situated in an area where regional growth began as a result of the economic stimulus of the gold-mining industry. There are 11 gold-mines at present, and there is also an exceptional potential for further development, but if the infrastructure there does not keep pace with the development, it has a retardatory or restraining effect. The poor road connection also lead to loss of life as a result of road accidents. I therefore trust that the hon. the Minister will enable the province to carry out this project. The hon. the Minister will come to the back payment later in this financial year, and I trust that it will be possible to make those funds available.

I know—it has also been said here this afternoon—that the officials of this department are rendering excellent service. Our officials can in fact be described as co-rulers. Although the hon. the Minister and the elected members have the public responsibility, it is nevertheless true that the senior officials are actually in the position of co-rulers. I therefore want to ask them to give sympathetic consideration to this matter. In the past, the hon. the Minister was not unsympathetic when special circumstances arose and when a case having special merits had to be considered. I am therefore quite confident that he will meet the needs of that area in this case too.

In conclusion I should just like to point out that that area, because of the mining industry there, provides large amounts of money for the State. If the hon. the Minister could therefore set aside a small portion of the money that he receives from that area, it would in fact be possible to carry out this project.

Mr. Chairman, right at the outset I should like to reply to the request made by the hon. member for Yeoville this morning. I am referring to the question of a subsidy for private schools by the Transvaal Provincial Administration. I would be glad if the hon. member for Hillbrow would please just write down the figures.

In the Transvaal there are 212 pre-primary and primary schools that are subsidized by the Provincial Administration, to the amount of R993 800. Furthermore there are 11 secondary private schools, which are subsidized to the amount of R52 500. The full salaries of the staff of another 11 secondary schools are paid by the Administration, and the amount involved here is R490 000. This gives us a total subsidy for private education in the Transvaal, by the Provincial Council of the Province, of R1 536 300.

Yes, but there are certain conditions. [Interjections.]

The remark was made today that the Government is not doing its duty as far as combating inflation is concerned. The hon. member Dr. Marais made an excellent contribution in this regard. In addition, one may perhaps just recall the budgets of 1975, 1976 and 1977. Those budgets were characterized by restrictive fiscal and monetary measures to reduce inflation. Growth was encouraged in 1978 and 1979, but with the warning that it had to be coupled with financial discipline. The feature of the budget of 1979-’80 was growth from strength. The features of the budgets of October last year and this year were consolidation and adjustment.

I think the State is doing an excellent job—to the best of its ability—to keep inflation in check. However, there are several fields to which further attention might possibly be given. [Interjections.] I have prepared a whole, long speech which I do not have the time to deliver.

However, I want to exchange a few thoughts about controlled or administered prices and the part they play in inflation. If one compares controlled and uncontrolled prices over the past 10 years, you see that the rise in controlled prices was more than 30% more than that in uncontrolled prices. It cannot be otherwise, however, because as a result of the fact that the prices are controlled, it happens that marginal land is used for production, that marginal enterprises are kept alive artificially and that production costs are not kept as low as they should be kept by a proper undertaking, because the higher price must provide the profit. As a result, efficiency suffers. Competition is eliminated by price control, because other enterprises are simply taken over. New entrepreneurs are deprived of their initiative. A very important aspect, of course, is that the productivity of the labour suffers in the process. Especially in the type of situation that we have experienced because of our tremendous growth in the last year or two, there is not enough trained manpower. The trained manpower moves in a vicious circle in search of higher salaries. Higher salaries are negotiated, while there is lower productivity.

I want to suggest that if we abolished price control as far as possible, we could succeed in curbing the inflation spiral somewhat.

Mr. Chairman, I think we have had a particularly interesting and important debate today. I want to thank hon. members very sincerely for their contributions. I think excellent arguments have been put forward here today. I myself feel that I have learnt a great deal. If I do not succeed in dealing with all the important points or arguments—I only have limited time for my speech—I trust that the hon. members concerned will understand my position. I shall, however, do my best to respond to as many of the contributions as possible.

There is of course one exception—a very reprehensible exception—in today’s debate, and that is the contribution made by the hon. member for Cape Town Gardens, if one can call it a contribution. I want to say very little about it. I think it is a very great pity that the hon. member made use of this opportunity to make a speech of this. I sat in this former Senate Chamber for many years and some of my former colleagues are sitting here today. I think all of them will feel, as I feel, that it is a very great pity that we should have had such an experience in this stately and dignified Chamber.

†This matter was raised last year and immediately a select committee was called for by me because very serious reflections were cast on me, the Director of the Mint and certain of the senior gentlemen attached to the Chamber of Mines. Let me say that some of them, those involved, agree with me completely on that. This motion was absolutely stymied by the Opposition. I have the Hansard here to prove that. I then raised the matter with the Advocate-General, but unfortunately, as the Act reads, I myself having been attacked could not call for an investigation. However, I think there is an obligation on this hon. member to do it. I think he should go straight to the Advocate-General. He cannot go on like this. He cannot go on with this campaign of calumny. It is nothing less than that. I myself think that many hon. members if not all hon. members of his own party are feeling extremely embarrassed and uncomfortable, because not one of them took part in that aspect of the debate, not one. I think it is all the more regrettable that it should have been raised. I think the hon. member did enough damage last year. After all, what is he trying to do? He is trying to prejudice as much as he can from the start the sale of the so-called mini Kruger rand. As the hon. member for Florida absolutely correctly said, there was a little promotion campaign done in the best way that could be thought up particularly by the Mint. It is based on previous experience, it is a repetition of what has happened before, but on a smaller scale. It was a little launching ceremony to give some publicity to this very valuable attempt to improve our gold sales, but now we have to hear this sort of suspicion-mongering and this sort of reflection being hurled across the floor of the House.

Mr. Chairman, it might interest you to know that last year there was sold in round figures 160 000 half ounce Kruger rands, 722 000 quarter ounce Kruger rands and 1 313 000 one-tenth ounce Kruger rands. These are the figures of last year alone, the first year that these coins were on sale to the public. In the almost four months of this year there have so far been sold, apart from the 1 426 000 one ounce Kruger rands, 153 700 half ounce coins, 622 000 quarter ounce coins and 332 500 one-tenth ounce coins. I think this is an absolutely fantastic success story and I hope we have heard the last of this sort of calumny. I can add nothing to what the hon. member for Florida has said. As far as I am concerned I must say to the hon. member for Cape Town Gardens that unless he withdraws this sustained reflection he has cast on me and which he has cast on the Government, on the Director of the Mint and on certain of the most senior members of the Chamber of Mines, I wish to have nothing more to do with him. I am not going to put up with this, not from any quarter whatsoever.

He must go to the Advocate-General and let us see what happens to him there.

What reflections?

I say there is not a single irregularity, not one iota of any kind of irregularity, involved here whatsoever. Just read your speech of last year.

I said mismanagement.

It is not mismanagement. That is a grave reflection on the Director of the Mint, a scandalous one.

Don’t hide behind your Department.

I am hiding behind nobody. I did not arrange this.

You are an arrogant little twerp (twak).

You are a most offensive young man.

Mr. Chairman, on a point of order, is the hon. member to be referred to as an offensive young man?

Of course I am entitled to say that.

The hon. the Minister may proceed.

Mr. Chairman, I want to say to this hon. member that there is an old saying which comes from the Greeks that those whom the gods destroy they first make mad, and this hon. member is destroying himself. He is destroying himself in this House of Parliament. I am saying to him once again that he must listen or otherwise let him learn the hard way.

Mr. Chairman, on a point of order, is the hon. the Minister inferring that the hon. member for Gardens is mad?

Mr. Chairman, I quoted an old saying going back to the time …

Mr. Chairman, the hon. the Minister is casting a reflection on the hon. member and I ask that he withdraw it.

I am quoting a statement which is an old saying of the Greeks.

You referred …

Order! The hon. the Minister may proceed.

Thank you, Mr. Chairman. The hon. member for Hillbrow must just come to terms with himself. He must not make an absolute fool of himself in this House. This is a dignified House.

Well, you keep it that way.

And you mind your own business.

It is in your hands.

Order!

Just one very last point, imagine that a man buys a gold coin from the Mint at the normal sort of price covering all costs plus a premium and then he sells it because it is a scarce coin—as everybody knows it happens to all gold coins—and makes a profit and then this hon. member says that is irregular! Now, Mr. Chairman, I am leaving that matter and I wish to have nothing more to do with him anyhow. [Interjections.] And as for the young member for Constantia I would suggest he should go back to the other House and see if he can talk better on defence than he did the other day.

There is another matter to which I should like to refer. This morning the hon. member for Yeoville just in passing referred to the Public Debt Commissioners. I have nothing to add to the statement I made in reply to the hon. member for Berea in the House of Assembly, nothing at all. What I said is absolutely correct. There was a report in the early edition of The Argus the other day which I did not find in any later editions. It is strange that it was pulled back straight away. The heading of this report reads as follows: “Don’t blame us, Railways tell Horwood”.

That is right.

It is either mischievous or completely irresponsible or plain silly, because what I said is absolutely correct. After this heading the report, which is a report by Mr. Bruce Cameron, goes on to say—

I am not aware that they ever denied it, so why must they concede it? That is what I stated. I stated there were net withdrawals of funds and that is exactly correct. Therefore, the first half of this report and the heading are completely misleading and I leave that matter there.

I now come to matters raised by other hon. members. I take these matters in no particular order. The hon. member for Bezuidenhout raised the question of market related rates of interest, more specifically in regard to the Land Bank. I am glad he raised the matter of the Land Bank, because it is an extremely important institution serving an absolutely fundamentally important industry, the agricultural industry. I would just like to draw this attention to the fact that the Jacobs Committee recommended and, in fact, the Cabinet at the time approved that market related rates were to be phased in over a period of three years and that the final or third phasing in would in fact take place in the middle of this year. I should like to add that the increase in short term financing which the hon. member referred to is of course very much related to the size of the crops. We had this huge maize crop of 14,2 million tons, which is unheard of in this country. However, I think there is another reason when you look at the size of the Land Bank’s financing, namely the increased mechanization that is taking place in the agricultural industry. As we know, this is taking place at higher and higher costs. I think that is a factor that one must bear in mind, especially if one looks at the co-operatives as well.

The hon. member for Port Elizabeth Central talked about the Rondalia Bank. He was good enough to give me a copy of the Sunday Times report that referred to. I will ask my senior officials concerned to look very closely at this. If in fact there are any irregularities they will be dealt with in the proper way. I can give the hon. member that assurance.

I think my colleague the hon. the Deputy Minister dealt with a number of the points raised by the hon. member for Amanzimtoti. I would just like to refer to one. The hon. member mentioned the possibility of a sort of watchdog-committee over the Stock Exchange. There was a report on this in the Press not long ago—I think it was in The Argus—that the Shareholders Association suggested something of this kind. I would like to say that the Stock Exchange is a very important financial institution. Its history goes back a long way and it does set itself very high standards. Of course, there is a committee of the Exchange that controls the Exchange. In fact, as hon. members know, the Exchange and its members must scrupulously comply with the stringent provisions of the Stock Exchange Control Act. Those provisions are indeed stringent. The Act empowers the Registrar of Financial Institutions to attend and take part in all the proceedings of the committee which controls the Stock Exchange. A member of the staff of the office of the Registrar in fact attends every meeting.

Mr. Chairman, I should like to ask the hon. the Minister whether it is not possible to have a member of the Shareholders Association on that committee so that at least the shareholders are represented?

Well, the Act prescribes the composition of this committee, but one can go into these matters. However, I must say that I am personally very satisfied with the way this is being conducted. There is always likely to be criticism, particularly on the part of people who lose money in dealings on the Exchange! However, I think the committee sets itself high standards. Of course, if it can be shown that it is not complying in any way whatsoever with any aspect of the Act, there could be trouble. I can personally at the moment not see the need for another body over and above the committee established in terms of the Stock Exchange Control Act, but perhaps it is a good thing that these things are raised so that we can at least look at them from time to time. I therefore, thank the hon. member for his interest.

The hon. member for Hillbrow raised among others the question of subscription shares. He says it was a mistake to have made the exemption complete. These subscription shares were of course primarily introduced to encourage savings by, particularly, the smaller man, but there is no doubt that several examples were brought to our attention over the years of exploitation by those, you might say, with money to spare.

It was R150 000.

Yes, R150 000.

So, how big could it be?

I want to say that even on the revised basis we believe and I believe it will still be more than sufficient for the average citizen. I must say I do not receive any representations on this whatsoever. I mention that just as a matter of interest. I think there is a limit as to how far the Government can encourage savings by means of tax concessions.

If you get representations, will you re-instate it?

I would not like to say that I would re-instate it, because we think we had very good reason for changing it. However, I am always prepared to look at representations.

Then the hon. member for Hillbrow, in another attack, if I understood him correctly, pleaded for an excess profits tax in the case of certain big amalgamations. That is interesting because this morning there was some talk about profits. I think the Opposition was very anxious to say that they had a great regard for profits, and here in peace time they came along and want to have an excess profits tax. I think the hon. member for Hillbrow must be very careful. He must look at the implications of this suggestion. This was a war-time emergency measure.

He was thinking of the total onslaught, I think.

I think if one is going to do this in peace time one must be very very careful of what one is talking about.

The hon. member for Edenvale I find puts up in our debates thoughtful and careful arguments. However, I think this afternoon he was in a little difficulty. He followed the hon. member for Cape Town Gardens and probably felt that in some way he had to just say something about that unfortunate contribution, but I think we will not hold him to that, because what followed was a much better example of his attitude. [Interjections.] Yes, he is decent, and also makes responsible speeches in the House.

The hon. member referred to the preservation of pension rights and, I think, particularly to the second leg, you might call it, of the terms of reference of the Committee of Inquiry into the Preservation of Pensions, related particularly to the introduction of a pension dispensation which would enable those persons who are not members of a pension fund to provide for their old age. I would merely like to say that this leg of the inquiry is indeed receiving attention. We also hope to come back to the other very important aspect which we have had to slow down on because there was undoubtedly quite a campaign against it—perhaps the hon. member knows something about it— which I thought was very regrettable. I spoke again to the Registrar today and he assured me that his office was certainly having a good look at this aspect. I hope we will be able to discuss this further in a reasonable time.

*The hon. member for Vasco said, “South Africa is a tax haven”. I think that is so. I think if one compares it with the rest of the world, one finds that, in comparison with many parts of the world, it is indeed the case.

He does not know what tax haven means.

I want to thank him very sincerely for the kind words he addressed to me. At the same time I want to take this opportunity to thank all those hon. members—there were several of them—who addressed such kind word to me, which I think I do not deserve, but which I nevertheless appreciate greatly, very sincerely for that friendly gesture.

The hon. member also asked what could be done to simplify the work of the Receiver of Revenue. As the hon. member rightly said, it is of course a question of staff. In this regard there is a great deal of pressure at the moment. In other words, the question is how we can economize on staff. I can only say to him that this is an aspect which has been given priority over the past months. The Department and the Ministry have held talks, among others with Defence. A very fine agreement has been reached in terms of which the Department of Inland Revenue in particular is now making use of the services of a number of servicemen who are qualified to do this type of work. I hope this will help. We are constantly looking to see whether the whole system cannot be simplified. I think the new system in terms of which we say that deductions are final for all taxpayers who earn less than R7 000, is a very good example of the simplification that is taking place in the whole system.

The hon. member also said that turnover tax definitely has its merits. That is so, but I think the Commissioner is not yet satisfied that, on the whole, it will be an improvement on the present system. I think it will be a very good thing if the hon. member would discuss this with us, because these are very important matters and we do not know everything. Turnover tax can lead to a company’s tax burden being shifted onto the buyers of its products or the users of its services. This is but one of the implications one has to be careful about. I am glad the hon. member spoke about tax, because it is such an important subject. I want to give him the assurance that the Department, the Commissioner, Mr. Van der Walt, and the Standing Commission on Taxation Policy are doing excellent work. In the past two or three days I again had the opportunity of studying their latest report. I can assure the Committee that they are doing excellent work. I think the hon. member for Vasco will be interested in this. I want to thank him once again for his contribution.

The hon. member for Sunnyside, who, in the old days, if I may put it like that, often took part in these debates in the Other Place as a member of this side, took me to task a little today and asked why I had not replied to the points which he had raised during the Second Reading debate on the Appropriation Bill. It is true that I did not reply specifically to the points he had raised, but I said by way of interjection this morning that I had not had any ulterior motive, but that it was actually due to a lack of time. There were a few dozen speeches from this side of the House in that debate and I think I could only deal with four or five of them quickly, because I only had an hour at my disposal and I had to talk about other policy matters too. I hope the hon. member accepts it like that.

I accept it like that.

The hon. member then raised the question of inflation and asked whether there should not be a proper inquiry into inflation. I have to agree with the hon. member and also with the hon. member for Bloemfontein North and the other hon. members on both sides who spoke about this, that this is a serious problem. I am particularly concerned about it. But you know, Sir, it is not a Government’s responsibility alone. I think hon. members on the other side will agree with me if they think about it carefully. Everyone must do his share to eliminate, if possible, this very severe cancer in our system. I said earlier on that we do not know everything and that is true, but I think that, as far as the causes of this inflation problem are concerned, we can say that we feel we know a good deal about them. Not long ago we held a conference at a very high level at the Carlton Hotel, just about inflation. It lasted one whole day. It was a very representative conference that was attended by approximately 200 people from all sectors. What became very clear there, was, firstly, the complexity of the problem and, secondly, the exceptional consensus of these people with the policy which this Government is trying to implement. I am referring to our fiscal policy where we are trying to combat inflation by means of taxation policy and the combating, where possible, of expenditure. Although the circumstances have been very difficult, we have tried to do everything to prevent the money supply from increasing excessively. Of course it comprises much more than just this. So the private sector, for example, has a very large and important part to play in this regard. One is not always sure whether everyone realizes this fully, but it is true. When the hon. member therefore emphasizes this major problem, I agree with him, but, to be very honest, I am not quite convinced that we should institute another inquiry. We are constantly studying this matter at all levels. I can give the hon. member this assurance.

Then I also just want to refer to my friend the hon. member for Malmesbury, who also referred to State expenditure. I think his plea was that we should not act too strictly in combating expenditure. I think this is actually our view as well, but to stimulate the economy now will to my mind have a tremendous inflationary effect. I am sure the hon. member agrees with me. What we are trying to do, is to combat expenditure to a reasonable extent, but without preventing the provision of important and essential services in any way. That is how we approach the matter. We are therefore constantly looking at this matter.

The hon. member for Sunnyside also asked how much of our State debt was actually productive. That question is rather a bit of a “humdinger”. It is not the easiest of questions, but if I may reply very briefly, I would say that all loans are against capital assets and that we borrow considerably less than the total expenditure on those assets. I may perhaps just say specifically that virtually the largest portion of the Defence Vote is financed from current funds. I think we may therefore say that all expenditure as a result of which public debt has been built up can in that sense be regarded as productive. That is, however, not the only criteria. I am just mentioning. It is something that one will have to look at much more thoroughly.

Earlier the hon. member also gave me a copy of this information document about which he was very unhappy. As I said to him immediately, this is the first that I hear of this. I know absolutely nothing about it, but I will have the matter investigated and then we shall be able to know for certain precisely what happened here. I am not in a position to express an opinion on this, as I really do not know what happened here, but we shall take the matter further. I must, however, say to my hon. friend that I have recently also seen a couple of strange publications for which I think hon. members of his new party are responsible. So perhaps this type of thing is going on on both sides. But let us take a look at the matter.

In my opinion the hon. member for Langlaagte made a very interesting reference to the international monetary system. I think he was concerned about the fact that, under certain circumstances, it is possible that we might be politically manipulated from time to time by the very large “international financial power”. I do not want to say that this does not happen. Perhaps it is so. It is not always possible to know precisely. However, as far as we are concerned, we are carrying on. We have many positive views on this matter, which, from time to time, we also state in speeches and so forth at meetings of the International Monetary Fund and the World Bank and on other occasions, also in the House of Assembly. As far as the role of gold is concerned, I also want to say to the hon. member that he touched on a very important point. In this regard the hon. member for Maitland also made a very interesting speech which I was very glad to hear. Both the hon. members touched on a very important point, viz. that since South Africa is now by far the largest producer of gold, the role of gold is of cardinal importance to us. I can only say that this is something that we are always looking at. I feel that in the past nine or ten years in particular we have really put our views across, in the outside world as well, not only at the IMF, but also at big international conferences and so forth. Although the official Gold Commission of the American Government recently reported that it did not feel the time was ripe to reintroduce the gold standard, I must say that this is something that we have never expected and that we have never asked for it.

†What we have asked for some time and have argued closely for is what we call a gold-based system. Let at least the main currency or main currencies of the world be based on gold. It can be defined. These are various ways in which it can be done. That will bring more stability into the system, which is what both hon. members asked for. Although it might mean at times a lower gold price than might otherwise have been the case—we do not know—we think a more stable gold price has great advantages for us, especially as regards the exports of South Africa as a whole.

*This is therefore a very important matter to us and we are making use of every opportunity we get to take this matter further abroad. If one looks at this thing in the long run, I am not pessimistic. I think we are going to reach this position one day, because we cannot go on like this. The inflation problem, which is causing chaos throughout the world, cannot continue in this way.

†This inflation actually became such a serious problem in August 1971 when the Americans closed the gold window, as they said, when in Nixon’s administration they made the dollar inconvertible into gold.

*We are pleading for this to be changed again and for the original position to be restored. When that happens, I think we shall be making a start on the road ahead. I again thank the hon. members for their interest. I think that in the months and years ahead this will still be discussed a great deal and a lot will still be heard about this.

†The hon. member for Yeoville raised some interesting points. He was very much generalizing at one point and was hurling questions and points at me to such an extent that I was finding it difficult to field them. However, I think I caught most of them. I am not suggesting that I caught him out, but I think I caught most of them. For instance, as regards the Soweto loan, I appreciate his very positive remarks. I appreciate his positive remarks too, about the hon. the Prime Minister’s meeting with President Kaunda. I think all these contacts are very important.

*Here I may perhaps just refer to the hon. member for Langlaagte as well. I do not think the conditions in this regard were unfavourable, not at all. As hon. members know, interest rates in general are still very high.

†We have to deal with the capital market as it is. I think on the whole this was a very satisfactory transaction. However, I cannot agree more that it is a great pity that we have to suffer for this so-called political premium when it comes to assessing the rate of interest on a loan, for instance. It is a pity. I can tell hon. members in this Committee that more than one leading international banker has said to me—this happened again recently—that if it were not for this aspect we would really get our big loans at virtually the London inter-bank rate, in other words, the normal rate that applies as a basis. So we have to put up with that, but we are in a very much better position than some other countries which recently were paying half a per cent above the London inter-bank rate. I can tell hon. members that some of them are now paying 1½% above that rate. Depending upon the transactions, the borrower, and so on, we are somewhere between a half, three-quarters and seven-eighths of a per cent. At the very highest it is seven-eighths of a per cent above Libor. One hopes that even that will ease off.

Then, Mr. Chairman, the hon. member spoke about the Reserve Bank’s role in the money market. He mentioned the intervention of the Reserve Bank. I would merely like to say that, if one looks at the last few weeks, it is true that the Reserve Bank did intervene at the end of March to relieve temporary shortages in the market. That is quite correct. It did so deliberately, in order to prevent interest rates rising to what were then felt would be unduly high levels, but for a relatively short period of time. We know that early in April the liquidity situation would ease again. That was the clear feeling. That is what has in fact happened, and the bank’s intervention was therefore only intended to avoid unnecessary short-term fluctuations in interest rates. There are times when the central bank simply must, in its judgement, intervene.

Mr. Chairman, may I ask the hon. the Minister a question? What does he regard as being a fair deal return in respect of money in the ordinary short term market? In other words, taking the inflation rate as it is at the present moment, what is he actually trying to achieve? What does he think should be the real return? Is it 1%, 2% or 3%? What does he have in mind?

Mr. Chairman, I would like to give the hon. member an absolutely explicit answer, but it is extremely difficult, because as he knows, the whole market consists of a number of subsections, and it is very difficult to give one figure for all of them. There is a pattern, and they are all interdependent. Let us, however, look at the prime rate today, which is 20%. Let us then take the inflation rate in round terms at about 15%. We therefore have a real rate there of 5%. I am not saying that that is the ideal.

That is the bank rate on overdrafts, and not the rate of the investor.

Yes, but one would, I think, lead off from there. As I have said, it is extremely difficult, at any moment of time, to lay down a figure. If I do so, that is immediately latched on to, and people say: “This is what the Government says the figure has to be.”

But you accept that there should be a real return?

Yes, and that is what I was at some pains to say in my reply to the Budget debate, namely that I thought it was high time we had a real rate of interest. I think it is a very good thing that we should have it.

Then, Mr. Chairman, the hon. member spoke about the compulsory investment of funds. I think he had in mind the insurers and some of the other big institutions, in respect of which we have certain rates laid down. He asked what the policy was. We think that we should not disturb that at the moment. We think that the present requirements which are laid down there are about right, because a number of these big institutions are in fact, and have been, investing a good deal more than the minimum required under the Act. Again, I have not had any representations on this. For instance, pension funds and insurance companies seem to be quite happy to invest more than the minimum in Government securities. I think it is due to the rates that are offered; the rates have improved quite a lot. If there are problems, I am quite sure that they will come to us.

Then, Sir, the hon. member asked for a moratorium for private companies by exacting nominal tax in order to clear shell companies—is that right?— …

Yes, all people who want to get rid of them to trade on their own.

… from the register of companies and from the income tax register. Now, these companies fall into two categories, namely, in the first place, those which were used as a vehicle to purchase fixed property free of transfer duty and now cannot transfer the property out of the company without having to pay the duty at five per cent and, secondly, those companies where profits were not distributed but accumulated in undistributed reserves while the shareholders obtained economic use of such funds by means of loans. In both cases the purpose was the minimizing of tax liability for the shareholders of such companies. The question that arises is: Would it be reasonable now to grant a full or partial moratorium in such circumstances, bearing in mind that many, or shall I say most citizens did not resort to these means to minimize their tax liability? Persons who now find themselves sitting with shell companies, I think probably have themselves to blame. In tax administration a moratorium is anathema as it will be giving a blessing to tax avoidance. I am, however, prepared to ask the Standing Commission on Tax Policy to have another good look at the matter.

There was one more point the hon. member raised, and I am afraid I have to be rather selective now. The hon. member for Yeoville raised the question of GST on coins imported for numismatic purposes in contrast to coins brought into the country on the person of the taxpayer as legal tender or for numismatic purposes. The principle of the GST is of course to tax consumer spending and, in our case, on a broad basis. The obtaining of coins for legal tender is specifically exempt because they are not bought or obtained for their use as a corporeal asset, but for their role as a means of exchange. Coins which are purchased or imported for numismatic purposes are, however, not so exempt and fall in the same category as works of art, stamps, etc., which are purchased for their value as such. There does appear to be a hiatus in the GST law in regard to coins imported and those brought in on the person of somebody coming to South Africa, and attention is at the moment being given to set this matter right and to make the acquisition, by whatever means, of coins for numismatic purposes subject to GST, whilst specifically exempting those used for exchange purposes.

In other words, you are going to make it worse than it is now?

No, I do not think so.

Yes, of course you are.

This is a matter on which no final decision has been taken. The matter is being carefully investigated. Perhaps the hon. member would like to have a chat with us about it. He would be very welcome, but it is not the easiest matter to handle—I can tell him that.

Are you going to put GST on the Kruger rand?

The Kruger rand is a very special item, I can tell you that. I do not want to bind myself, because this matter is still under very careful consideration.

In other words, you are thinking about it?

The hon. member raised it, and therefore we are thinking about it, Sir.

Well, that is going to worry a lot of people. Unless you now deal with it, a lot of people in South Africa are going to be worried.

Mr. Chairman, the hon. member raises so many matters in one debate, and if I try to reply to them on the same day, he tries to corner me. He should give us a chance now. We shall investigate it very carefully. I can give him that assurance.

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

I really have very little time. I have been asked to finish by twenty-five past, and we have two minutes left.

If you leave the Kruger rand question in the air, it is going to create a lot of problems, and I would ask you to clear this up.

No, we shall not leave it in the air. I did not say we would leave it in the air at all. The whole matter is being very carefully looked at.

*The hon. member for Welkom made a plea that we should take a careful look at the roads in the Free State, especially at the road system in the Free State gold-fields. We shall discuss that matter very thoroughly with the province. I can given him that assurance.

The hon. member for Paarl, my old town, made a very interesting speech about plastic money. This matter has been investigated by a commission and we have a report on it, and I should like us to allow the hon. member to look at some of those aspects. I think he will be interested. It is a very technical matter and I think he put it very well, if I may say so. I should like to discuss it further with him.

I have already referred to the hon. members for Bloemfontein North and Maitland.

†The hon. member for Pietermaritzburg South talked about building societies. I thought he made a very thoughtful contribution; I made several notes of what he said. It is true that home ownership, as it is often called, has become a real problem. For what it is worth, in the United States it is absolutely at crisis point. It is a difficult question. Property is really costly. Building costs are in fact still rising. Interest rates are well up. All these things catch one at one and the same time, so it is a real problem also for the building societies. As I think the hon. the Deputy Minister has said, we talk regularly with the building societies. I shall be meeting them soon again, and we shall thrash out all these things again. I would like to say that we have a report which has just reached me from the so-called Du Plessis Commission. There was a commission on building societies under the chairmanship of Dr. J. C. du Plessis, who retired recently as Deputy Governor of the Reserve Bank, and Mr. Bertie Kemp, who retired recently as number two in the Treasury. They have put in their report, on which they have worked very hard. I have also just received, at my request, a draft preliminary section from the De Kock Commission, which also deals with building societies in looking at the whole question of monetary policy and the monetary system. They have been good enough to give me an insight into what one may call a preliminary chapter or section in which they deal with building societies. We want now, as fast as we can, to bring these two together to see what we can make of the issue, because there is no doubt about the fact that this is an extremely important movement, and we have to make some rather important decisions, in conjunction with the building societies. They are an important part of the whole monetary system, and we have got to regard them as such. I cannot say more at the moment, but as soon as I am in a position to do so, I should like to inform hon. members further on that point.

I have just been given a note which reads as follows: Coins of legal tender purchased through a bank in South Africa or otherwise are in fact specifically exempt.

And will continue to be? That is the question.

Well, we do not change things in a hurry. We are conservative people.

That is the question, and if you are thinking about it …

Mr. Chairman, the hon. member must not jump to any conclusions. We are not going to change things in a hurry, but we are re-examining this issue very carefully, just to see that we are on the right lines, and also in the light of the fact that the hon. member raised and put forward certain views this morning.

*Mr. Chairman, thank you very much for this opportunity. If I did not get round to certain hon. members, I beg their pardon, but I say once again that I think we have had a reasonably long discussion. One should also bear in mind that we have had a Little Budget, a Main Budget, an Additional Budget and I do not know how many other discussions in the field of finance. In addition, we have had this full day on this Vote. I think we can say that our financial policy is reviewed thoroughly. I thank hon. members for their kind contributions and interest.

I just want to end on this note, Sir: I have the greatest confidence in the future of our economy. Of course there will be problems, as I said this morning, but our economy is basically so strong, and there are so many favourable aspects this moment, that we can only be grateful, especially when we have to bear in mind the kind of world in which we are living and with which we have to trade.

Vote agreed to.

The Committee rose at 17h28.