House of Assembly: Vol106 - WEDNESDAY 30 MARCH 1983
Mr. Speaker, I move—
During the past year the economic situation in South Africa has improved in certain fundamental respects. Assisted by a moderate recovery in the gold price since the third quarter of 1982, our fiscal and monetary policies of “consolidation and adjustment” have succeeded in transforming a large balance of payments deficit into a substantial surplus. Since the middle of 1982, our net gold and other foreign reserves have increased sharply and the rand has appreciated in terms of most other currencies. On the other hand, in a world buffeted by the worst economic depression since the Great Depression of the early thirties, our own rate of economic growth has declined significantly, while our rate of inflation has remained unacceptably high. We are therefore still confronted by economic challenges which simply have to be met. It is against this background that today’s Budget is being presented.
The South African economy is at present still in the downward phase of the business cycle which has been in progress since the third quarter of 1981. Although this cooling-off process has been relatively mild by comparison with the severe recession in most other countries, it has nevertheless been reflected in a decline in real gross domestic product during 1982 of about 1%, following increases of about 8% in 1980 and 5% in 1981. One of the principal reasons for this negative rate of real growth has been the recent drought in many parts of the country, which was largely responsible for a decline of 71% in the contribution of agriculture to real gross domestic product.
In real terms, that is, after correcting for price increases, gross domestic expenditure declined by about 3½% in 1982, following the high rates of increase of 13% in 1980 and 10% in 1981. Of its main components, all taken in real terms, private consumption increased by only 2% in 1982 and government consumption expenditure by about 31%, while domestic fixed investment declined by 21%. The level of real inventories started to decline in the second quarter of 1982 and, compared with an accumulation of R2 billion in 1981, showed a modest decline in 1982 as a whole.
The present downward phase will probably continue for some months ahead. For the year as a whole, gross domestic product in real terms may decline somewhat, particularly since the contribution of agriculture is again expected to be adversely affected by the prevailing drought conditions. However, present indications are that the next upswing will commence towards the end of this year and that the real growth rate will show a noticeable acceleration in 1984.
If Sidney Webb is right, I must sound a note of caution here. He said that “Economists are generally right in their predictions, but a good deal out in their dates”. There have at any rate recently been signs that the expected economic recovery in the United States may already have begun. If this is indeed the case, our own next export-led recovery should not be long delayed.
Inflation still remains a serious problem, as indicated by the increase of 14,9% in the consumer price index between February 1982 and February 1983. This is a matter which clearly requires further attention and I shall deal with it more fully presently. It is important to note, however, that despite the inflation, real wages and salaries per worker—agriculture excepted—still increased by 3,6% in the first three quarters of 1982 by comparison with the corresponding period of 1981. In other words, living standards continued to rise throughout most sectors of the economy.
The improvement in South Africa’s balance of payments since the middle of 1982 has been quite dramatic. Taken at a seasonally adjusted annual rate, the balance on the current account swung around from a deficit of R6,6 billion during the first quarter of 1982 to a surplus of R1,1 billion in the fourth quarter. For the year 1982 as a whole the deficit therefore amounted to only R3 billion or 3,8% of gross domestic product, which was considerably smaller than had generally been predicted. Present indications are that, if the gold price continues to fluctuate between $400 and $450 per ounce, the current account will show a surplus of between R1 billion and R2 billion in 1983. Naturally, if the gold price rises to a higher level or if our other exports benefit from an economic upswing in the major industrial countries later this year, this surplus could be substantially higher.
I remain convinced that, despite day-to-day fluctuations, the price of gold over the longer term will continue to rise, which will benefit not only South Africa, but the world as a whole As long ago as the first century B.C., Publius Syrus wrote that “When gold argues the cause, eloquence is impotent”!
The improvement in the current account during the course of 1982 was largely due to a decline of over 18% in the seasonally adjusted value of imports from the first to the fourth quarter—a decline induced by our restrictive monetary and fiscal policies and the accompanying cooling down of domestic economic activity. A further contributory factor was the increase in the price of gold from an average of $348 per fine ounce in the first half of 1982 to $380 in the third quarter and $427 in the fourth quarter. For 1982 as a whole, the average price of gold amounted to $376 per ounce, compared with $613 in 1980 and $460 in 1981. However, as a result of the further depreciation of the rand against the U.S. dollar in 1982, the rand price of gold increased from R400 per ounce in 1981 to R409 per ounce in 1982.
The capital account of the balance of payments also strengthened considerably during the course of 1982. In the first quarter there was still a net outflow of capital “not related to reserves” of R12 million, but this was subsequently transformed into a substantial inward movement, resulting in a net capital inflow of R2,6 billion during 1982 as a whole. This transformation was largely the result of improved control over the money supply and the accompanying rise in domestic interest rates to levels higher than those in the United States and the Euro-dollar market. As the realisation grew that the balance of payments was improving rapidly and that the rand would accordingly tend to appreciate in terms of other currencies, this interest rate differential induced many enterprises in South Africa to make increased use of foreign credits and loans without incurring the costs of forward exchange cover—costs which would have neutralised the interest rate advantage.
The result of all these favourable developments was a combination of an appreciation of the rand and an increase in the net foreign reserves, largely reflecting substantial repayments of foreign credits by the Reserve Bank and the other banks. Between the middle of 1982 and 25 March 1983, the rand appreciated by nearly 10% in terms of a weighted “basket” of currencies, after having depreciated by 22% during the preceding 18 months. And the net foreign reserves, which had declined by R5½ billion between September 1980 and June 1982, increased by about R2½ billion in the eight months to the end of February 1983.
An event of considerable importance to the management of our foreign reserves was the loan agreement reached in November 1982 between South Africa and the International Monetary Fund, in terms of which South Africa has already drawn an amount of about R938 million and could draw a further R242 million in 1983 if necessary. The conditions attached to this agreement, although strict, gave us no difficulties whatsoever, as the broad policies the Fund desired us to follow to ensure effective balance of payments adjustment were, in essence, the very policies of financial discipline we had ourselves adopted earlier. The latest statistics confirm that we have, in fact, comfortably met all the monetary targets for the end of December 1982 as agreed with the Fund. In February this year an IMF Mission visited South Africa for further consultations, following which we have once again been given a very encouraging report on our financial policies and practices. I wish to express once again my sincere appreciation to the Management, Executive Board and Staff of the Fund for the highly professional and efficient manner in which they negotiated the loan agreement, and are carrying it out.
It is common cause today that monetary conditions and policy in South Africa were more accommodative during the years 1979 to 1981 than the authorities would ideally have desired them to be. Under the impact of the rising gold price and the balance of payments surpluses of 1979 and 1980, and the increased scope for bank credit expansion which this created, the rate of increase of the broad money supply (M2) accelerated from 13% in 1978 to 27% in 1980 and declined only marginally to 25% in 1981. These high rates of money supply growth and the abnormally low rates of interest which initially accompanied them, naturally contributed to the demand inflation of that period and the subsequent deterioration in the balance of payments.
During the past year, however, monetary policy has proved increasingly effective and succeeded in reducing the rate of increase of the broad money supply to 17% during 1982 as a whole, and to a seasonally adjusted annual rate of 14% during the second half of the year. This was clearly one of the main reasons for the improvement in the balance of payments, the increase in the net foreign reserves and the appreciation of the rand since the middle of 1982.
The key to the success of monetary policy during the past year has been the acceptance by the Treasury and the Reserve Bank of flexible, realistic and market-related interest and exchange rates. Initially, as the Reserve Bank’s conscious policy of permitting financial markets to tighten took effect, interest rates naturally increased substantially from the abnormally low levels which had prevailed in 1979 and 1980. This had the desired effect of curbing the demand for bank credit and other loanable funds, and also of transforming a net outflow of short-term capital into a substantial inflow. The Treasury’s willingness to accept market-related rates of interest on new issues of government stock also ensured the success of its loan financing programme.
Subsequently, as monetary policy increasingly achieved its objectives, financial conditions eased again and from October 1982 interest rates began to decline sharply. The prime overdraft rate of the commercial banks, for example, which had risen from 9i% at the beginning of 1981 to 20% by March 1982, declined in stages to its present level of 14%. Similar downward movements were shown by most other short-term rates. Since these declines occurred for the “right reasons” and not because of excessive central bank credit creation, they were welcomed by the monetary authorities.
In analysing monetary developments during the second half of 1982, two figures stand out. The first is the increase in the net gold and other foreign reserves of nearly R1,4 billion during this period, which naturally exerted a strong expansionary effect on the money supply. And the second is the decline of nearly R1,5 billion in the net claims of the banking sector on the government sector during the same period, which more than offset the expansionary effect of the augmented foreign reserves and therefore helped to keep the money supply under adequate control.
This decline in net bank credit to the government sector can be directly attributed to the success of the Treasury’s efforts during this period to contain the “deficit before borrowing” in its accounts and to finance the deficit in the most appropriate manner. Indeed, the Treasury not only avoided any net recourse to bank credit but also issued large amounts of additional government stock to the non-bank private sector in order to build up its Stabilization Account, partly with a view to financing the stockpiling of strategic commodities in a non-inflationary manner. Net new government stock issues—excluding issues to the Public Debt Commissioners—during the first nine months of the 1982-’83 fiscal year amounted to nearly R2,2 billion, of which R1,8 billion was issued on tap to the Reserve Bank and sold by the Bank in the market. These operations constituted the most comprehensive and successful loan financing programme ever undertaken in South Africa, and formed an essential part of the offficial strategy of controlling the money supply, curbing inflation and improving the balance of payments.
Bank credit to the private sector, which had increased by 35% in 1981, showed a rise of 20% for 1982 as a whole, but slowed down considerably after the middle of the year as the demand for funds weakened and some substitution of foreign for domestic credit occurred.
Against the background of these developments, the Government took the major step in February 1983 of abolishing exchange control over non-residents—a step which a leading British financial paper hailed as one of “remarkable audacity”. This implied the disappearance of the “financial rand” and of the dual exchange rate system which had existed in one form or another since exchange control over non-residents was first introduced in South Africa in 1961. The basic purpose of this step was to demonstrate the inherent soundness of the South African economy and of our financial policy, and to provide proof not only of our favourable disposition to foreign capital but also of our ability to provide an equitable and profitable environment for its investment.
It was assumed at the time that this step would result temporarily in a decline in Johannesburg share prices, a reversal of the upward tendency of our net foreign reserves, a depreciation of the commercial rand, and a reversal of the sharp decline in interest rates—effects which would not have been unwelcome in the short term from the point of view of controlling the money supply and curbing inflation. In actual fact, however, the step was so favourably received both here and abroad that these developments failed to materialize. Share prices held up well, the net reserves increased, the unitary rand initially depreciated to 88 U.S. cents but then almost immediately rebounded to about 92 cents, and interest rates declined even further.
Indeed, by the middle of February it became clear that the net reserves had increased so considerably that the money supply was once again showing signs of rising too rapidly. Interest rates on money market paper also declined somewhat precipitously, resulting to some extent in a distortion of the structure of relative short-term interest rates. More recently, however, the decline in world fuel prices and the accompanying fall in the gold price from more than $500 per ounce to between $400 and $430 have, at least temporarily, reversed both the rise in net reserves and the sharp fall in money market interest rates, thereby reducing the danger of excessive monetary expansion.
Last year’s Budget was designed to promote “consolidation and adjustment” in three main ways: Firstly, it provided for an increase in total expenditure of only 11,5% above the revised estimate for the previous year. Secondly, the “deficit before borrowing” for 1982-’83 was estimated at only R2 380 million, or 2,8% of gross domestic product. And thirdly, provision was made to finance this expected deficit in such a way that not only the Exchequer, but also the government sector as a whole, including the extra-budgetary funds, would be able to avoid any net recourse to bank credit.
To design such a Budget in the prevailing circumstances implied increases in tax rates. In anticipation of this need, I had therefore already increased the general sales tax from 4% to 5% and imposed a 10% surchage on imports in the Part Appropriation Bill in February 1982. These steps were supplemented in the main Budget by increases in certain ad valorem excise duties and by a moderate increase in company tax. In addition, I imposed a loan levy of 5% on individual taxpayers. Later in the year it also became necessary to raise the general sales tax from 5% to 6%.
In actual fact, as I shall indicate in more detail later, both expenditure and revenue turned out to be larger than expected. The actual “deficit before borrowing”, however, amounted to only R1 785 million, which is smaller than the Budget estimate. Moreover, as I have already indicated, the Treasury’s loan financing was conducted in a manner which not only avoided the use of bank credit but also helped to control the growth of the money supply.
The conclusion must be drawn, therefore, that fiscal policy fully achieved its objectives during the past year and, in close co-ordination with monetary policy, made a vital contribution to the success of the overall economic strategy of consolidation and adjustment.
I now turn to the implications of the present economic situation for fiscal and monetary policy in the year ahead.
Since the real growth rate is now negative and the balance of payments in surplus, the question arises whether the time has not arrived for a policy of deliberate “reflation” or “stimulation” of the economy as a whole. In the field of fiscal policy such an approach would imply some combination of materially higher government spending and tax reductions, resulting in a substantially larger budgetary deficit before borrowing than that of the past year. And in the field of monetary policy it would imply a higher rate of increase of the money supply, lower interest rates and presumably some depreciation of the rand.
I have no hesitation in rejecting any such policy, which would amount to attempting to spend ourselves out of the recession. It would increase the rate of inflation, harm the balance of payments, weaken the currency, reduce the net foreign reserves and damage our overseas credit rating. For these reasons it would in the longer term undermine and not promote real economic growth. Abraham Lincoln went so far as to warn that “You cannot keep out of trouble by spending more than you earn”. In the long run he was absolutely right.
Indeed, in South Africa today, as in most reasonably developed countries, the whole notion of showing either a green light or a red light to the economy is too over-simplified to be useful and has, in fact, gone out of fashion. We live in a world in which the gold price, exchange rates and interest rates all fluctuate considerably, and in a country with developed financial markets in which our financial policies have to be market-orientated to be effective. In such circumstances, our policies cannot remain static for any length of time but have to be adjusted almost continuously to changing circumstances.
From my earlier analysis it is clear that we have, in fact, made such adjustments throughout the past two years. Thus, when it became clear towards the end of 1981 that our policies tended, on balance, to be too accommodative, we took the necessary steps to tighten them and accepted the need for higher taxes and interest rates. Then, in the latter part of 1982, as our conservative measures increasingly took effect and the balance of payments improved, while the recessionary tendency in the economy continued, we consciously eased our monetary policy by permitting a certain increase of liquidity and a substantial decline in interest rates.
In the year ahead we shall continue to adjust our policies to changing circumstances. For the time being, however, I believe that we have gone as far as we should in this direction. It is certainly true that our strategy of “consolidation and adjustment” has largely achieved its objectives. But there still exists an urgent need to curb inflation and to continue repaying short-term foreign debt with a view to rebuilding the net foreign reserves. I deem this an essential part of our preparation for the next cyclical upswing in the economy.
The need to curb inflation must receive particular emphasis in the months ahead. In the latter half of 1981 and the first half of 1982, in order to deal with the balance of payments problem in a manner which did not unduly aggravate the domestic recession, it was necessary to allow the rand to depreciate in response to market forces. However, now that this strategy has achieved its immediate objectives and the depreciation of the rand been reversed, the highest priority must be given to reducing the rate of inflation.
Salary and wage adjustments throughout the economy have been exceptionally high for three years in succession, having far outrun productivity, and have had a major part in the general upward thrust of costs and prices—especially when such pay increases have been accompanied by a low propensity to save.
There has been much discussion recently of the contribution made to inflation in South Africa by structural factors such as low productivity, inadequate competition, tariff protection and increases in administered prices. Quite clearly all these matters are relevant and important and are enjoying the close study and attention of the authorities in their own right.
The pricing of public utility goods and services, which is what is involved when talking of “administered prices”, is an extremely complex subject, particularly as the undertakings concerned are more often than not monopolies. In South Africa, Escom and Iscor and Foskor and, indeed, although they function as departments of state, the South African Transport Services and Posts and Telecommunications, among others, all fall into this category. It is required of all these public utility type undertakings that they must produce sufficient goods and services to satisfy demand. In a developing economy that means they must expand. To expand they must have capital—usually in substantial amounts, because they are often capital-intensive—and, with exceptions, and apart from the amounts which some of them can from time to time contrive to plough back from profits, most of them have only one source of capital, and that is borrowed capital. For those not having equity capital, it means that the more they expand to satisfy rising demand, the bigger their interest burden—that is, their cost of production—becomes. That means higher tariffs for goods and services which are widely used throughout the economy and that, in turn, can mean but one thing, the adding of further fuel to the fires of inflation.
I believe the time is ripe, in the interests of the country as a whole, for the public sector and the private sector to come together and examine the capital structure of undertakings which, after all, are an indispensable and integral part of the South African economy.
In general, two alternatives appear to present themselves: Either the status quo is maintained as to the financing of the capital budget, with the expectation of comparatively higher and escalating tariffs being charged; or private enterprise participates by contributing equity capital, on an agreed basis, with some expectation of a generally lower than the going rate of return on the investment and an anticipated lower order of tariffs charged. Which is the superior overall approach today? Only a thorough, joint study can throw light on an issue of first-rate national importance. I realize, of course, that in some cases the nature of the business may preclude private participation.
Finally, when all is said and done, I remain convinced that the major prerequisite for success in the battle against inflation is a sound and well-coordinated fiscal and monetary policy of demand management. Without that, the effectiveness of all other counter-inflationary strategies is likely to be seriously prejudiced.
To my mind, the present situation therefore calls for a fiscal-monetary policy “mix” which provides for continued restraint on government spending, a relatively small budget deficit before borrowing, and effective control over the money supply. A major part of this package will be presented in today’s Budget. But the use to be made in the coming months of such techniques as government loan financing management and openmarket operations will, of course, be greatly influenced by the behaviour of the gold price, the timing and extent of the expected upswing in the industrial countries, and domestic economic tendencies. And as far as interest and exchange rates are concerned, we shall as far as possible adhere to our policy of relying on market forces to determine realistic rates within the framework of our overall financial strategy.
Our broad policy for the year ahead will accordingly be one of continued market-orientated financial discipline, designed to lay the foundation for higher growth with less inflation and increased balance of payments stability.
Before turning to the Government Accounts and tax proposals I wish to deal briefly with a number of policy matters of a more structural nature.
Marginal Gold Mines
A little over a year ago I appointed a representative Committee under the chairmanship of Prof. D. G. Franzsen to investigate the practicability and the effectiveness of the present scheme for the subsidization of marginal gold mines. The Committee has made a thorough study of this complex matter and the majority report has come to the conclusion that the existing scheme should be terminated in its present form and a different approach be taken to the problem. The scheme at present in force was initiated as a purely temporary assistance measure as long ago as 1968, when the gold price was still fixed at $35 an ounce and, as the Committee points out, is badly out of date.
Final decisions on certain aspects of the recommendations still have to be taken by Government in close consultation with interested parties, but at this point it has been decided to amend the relevant Acts in respect of assisted gold mines with effect from the tax years commencing on or after 1 April 1983, as follows—
- (a) Only mines which incur mining losses will qualify for assistance and such assistance will henceforth be limited to the losses flowing from mining activities;
- (b) the assistance a mine receives will be reduced by any net after-tax revenue derived from any other source, but will exclude capital profits from sources outside its scope of mining activities, while possible losses from such outside sources will not qualify for assistance; and
- (c) the amount of capital expenditure qualifying for assistance in any one year will be limited to a maximum of 10% of the mine’s gross mining revenue.
Depending on the outcome of the consultations with the parties concerned, it is the intention to give mines which participate in the present scheme the necessary six months’ notice from 1 January 1984 of the termination of the benefits as presently determined, and their replacement by whatever further arrangements that may be decided upon. In the meantime no further mines will be admitted to the existing scheme.
Local Authorities
The Report of the Croeser Working Group, which was appointed in 1981 to evaluate the recommendations of the Browne Committee of Inquiry into the Finances of Local Authorities, was completed last year, and has been evaluated against the background of the recommendations of the President’s Council as well as the guidelines laid down for the new constitutional dispensation. The time is now propitious to table the Report.
Matters which have financial implications will be dealt with by the Croeser Working Group, which in future will be known as the Permanent Finance Liaison Committee. Recommendations bearing specifically on matters affecting the proposed constitutional dispensation will be handled by the Department of Constitutional Development and Planning.
It clearly will be advisable for the Permanent Finance Liaison Committee and the National Interim Liaison Committee, under the jurisdiction of the Department of Constitutional Development and Planning, to liaise closely with each other.
In my Budget Speech last year I announced that, in accordance with the recommendations of the Croeser Working Group, an amount of R43,6 million would be set aside to provide for the payment of assessment rates to local authorities in respect of Government property. For the 1983-’84 financial year I propose that this amount be increased to R60 million. This will be the third instalment in the phasing-in process, which I expect will be completed in 1984-’85. Thereafter the full agreed amount of assessment rates will be payable to local authorities on all Government-owned property as well as the property of Government business enterprises.
Public Debt Commission
Judged by the funds it administers it is clear that the Public Debt Commission, under the chairmanship of the Minister of Finance, has become a vast banking organization, so much so that last year I deemed it wise to appoint a Committee of Inquiry, under the chairmanship of Prof. D. G. Franzsen, to investigate the functions of the Commission under constantly changing conditions in the capital and money markets.
In my Budget Speech last year I specifically referred to the complications arising from—
- — fluctuations in the PDC’s contribution to the financing of the Exchequer and the disparity between the budgetary estimates of its contribution and the actual amount invested annually; and
- — liquidity problems experienced by the PDC in 1982 due to rapid interest rate fluctuations.
The Committee has, after a thorough investigation, come up with recommendations that will have important implications not only for the PDC itself, but also for the Government’s financial structure as such. Due to the very technical nature of the Report, I intend to highlight only the most important findings and recommendations. These have been accepted by Government.
The Committee is of the opinion that the problems of the PDC can be ascribed mainly to the dichotomy in its activities, viz. that it has to accept long-term deposits—so-called earmarked funds—as well as short-term monies—so-called pooled funds. In the market these short-term activities in actual fact correspond to the activities of commercial banking institutions operating in the money market. They are at variance with the original purpose for which the PDC was established, namely to invest in long-dated stock.
The Committee has recommended that the money market activities of the PDC be transferred to the National Finance Corporation, which has the necessary financial infrastructure and expertise in this field. This will also bring these activities well within the ambit of monetary policy measures and will facilitate control of the monetary aggregates. I support this recommendation.
The PDC will thus henceforth concentrate exclusively on its more traditional function as investment trustee of the very large pension, provident and other similar funds in the public sector. To underline this function, the Committee also recommended that the name of the PDC be changed to that of Public Investment Trustees. I am open to any contrary views on this latter point, preferring myself that the word “Commissioners” should at least be retained.
This recommendation naturally involves administrative and organizational changes as well as certain interim arrangements to prevent disruption of the financial markets during the change-over period. An announcement in this regard will be made soon.
A second recommendation is that the General Sinking Fund, a statutory fund administered by the PDC, be dissolved. This Fund was established in 1927 as an instrument to limit the increase of the public debt. Our financial infrastructure has developed since those days to such an extent, and the current financial requirements of the Exchequer are of such a nature, that this Fund today has become virtually irrelevant and obsolete and should be dissolved. I accept this recommendation too.
Finally, I would like to draw the attention of the House to the Local Loans Fund, a statutory fund administered by the PDC. The Croeser Working Group recommended that this Fund be turned into a development fund with borrowing powers of its own to assist all types of smaller local authorities to finance their capital expenditures at more reasonable rates. This recommendation has also been accepted and implies that the Local Loans Fund will no longer be administered by the PDC as such but by the Department of Finance. Steps will now be taken to implement these recommendations which, I am sure, have great merit.
Long-term Insurance
When the basis for the determination of taxable income from long-term insurance business was amended last year, I undertook to have a Committee appointed to investigate the matter further and report to me on the adequacy or otherwise of the new basis.
The Committee has not yet been able to complete its deliberations and I have accordingly decided that the tax basis as announced last year will continue to apply in the meantime.
Fringe Benefits
In my Budget Speech last year I confirmed that the taxation of fringe benefits arising from employment or from the holding of an office, which has been part of our income tax law ever since its inception, had been reaffirmed by the Government. And I pointed out that the real problem lay in the formulation of a uniform valuation of such benefits, a matter, I said, requiring to be approached “very circumspectly”.
Certain proposals were first put forward by the Franzsen Commission in November 1970. The issue was subsequently investigated in depth by the Department of Inland Revenue and by the Standing Commission on Taxation Policy. As I informed the House a year ago, it was decided, because of the complexity of the problem, that the Standing Commission’s valuation proposals should form the basis of a thorough inquiry by a Commission of Parliamentarians.
I am informed that the Parliamentary Commission plans to complete its report very shortly. Upon its receipt, an opportunity will be given to interested parties to comment upon its recommendations before the Report is submitted to Cabinet for final decision. Because of the time element necessarily involved in this process, it is not envisaged that any decisions that may be made can be implemented before 1 March 1984.
Taxation of Blacks
In terms of the National States Constitution Act of 1971, the various self-governing national States have the right to tax the income of their citizens regardless of where such citizens are resident in South Africa.
Hon. members will recall that in 1979 it was decided, in consultation with the governments of the national States, to seek parity of taxes relating to the incomes of all persons in the Republic of South Africa.
To achieve this, it was proposed that the separate taxation of Black people under the Black Taxation Act phased out over a period of three years and a single tax system applied to all individuals on the lines of the Income Tax Act of the Republic. It was never the intention to abrogate the right of the national States to tax their citizens and it was therefore necessary to consult with them and to obtain their approval for the final stage of the phasing-out process.
I am pleased to be able to announce that agreement has now been reached with all the national States and that as from the tax year commencing on 1 March 1984, all taxpayers in South Africa will be taxed on the basis of the Income Tax Act (Act No. 58 of 1962), as amended.
The national States will retain their right to tax their citizens and, while Inland Revenue will collect the tax in areas outside the boundaries of the national States, each State will collect the tax from its citizens within its boundaries. Arrangements will also be made for the training by Inland Revenue of tax officials of the national States and for the rendering of assistance in the administration of taxes in these States if required.
As payments of taxes cannot be identified on ethnic lines, especially PAYE deductions, and, since the yield to the national States of taxes collected under the Income Tax Act will be less than under the Black Taxation Act, a basis of payment to the national States will be proposed to ensure that they are not worse off from 1 March 1984 than under the existing dispensation and that payments to them are increased annually at a rate equal to the increase in the total income tax collected from individuals in the Republic of South Africa outside the national States.
It is also the intention, before the new arrangements are finally implemented, to meet with employer and employee bodies so as to consult with them about, and fully inform them of—and through them also their employees or members—the effects of the change-over from a uniform tax to one in which the ability-to-pay principle is applied and tax liability varied according to marital status and the number of children or dependants.
With few exceptions Black taxpayers will find that after 1 March 1984 they will be paying less tax than before in terms of the Income Tax Act, 1962, as amended. It is eminently fair, I feel, that all South Africans, irrespective of race or colour, be taxed in terms of the same income tax act and at the same time enjoy the same concessions, deductions and rebates.
The new procedure represents a significant step forward in our fiscal laws and administration.
†Initial and Investment Allowances
I indicated in my Budget Speech last year that the Standing Commission on Taxation Policy was instructed to investigate and report on the system of initial and investment allowances in the industrial sector. The Commission has recently submitted its Report to me and recommended that the investment allowance, because of its high cost to the Exchequer, its very limited role as an anti-cyclical instrument, its doubtful efficacy—save in marginal cases—as an incentive to investment, and its exposure to abuse, should be discontinued. The Commission proposed, however, that an extension of accelerated depreciation through initial allowances be considered in its stead.
This recommendation I and the Cabinet accept and I propose that—
- (a) the 30% investment allowance in respect of machinery and plant which expires on 30 June 1985 and the 20% investment allowance in respect of buildings which expires on 30 June 1986, be not renewed;
- (b) in the case of machinery and plant used in a process of manufacture and brought into use on or after 1 July 1985, the 20% initial allowance be increased to 55%; and
- (c) in the case of a building in which a process of manufacture is carried on and which is brought into use on or after 1 July 1986, an initial allowance of 20% of the cost be granted.
The effect of these proposals is that the total of the various allowances under the Income Tax Act in respect of machinery, plant or buildings will not exceed 100% of their cost.
The proposals do not apply to processes regarded as “similar” to manufacture. The Commission will report later on the desirability or otherwise of extending the increased or new initial allowances to machinery or plant used in such processes or to a building in which such processes are carried on.
I intend tabling the Commission’s Report as soon as possible.
Building Societies
I should like to announce the Government’s reaction to the recently published reports of the Du Plessis and De Kock Commissions on building society matters. The combined findings of these two commissions have proved extremely useful to the authorities. The Du Plessis Report has, among other things, provided us with the most comprehensive and incisive statistical analysis of building society operations yet produced in South Africa. I wish to express the Government’s appreciation to both commissions for the tasks they have performed in relation to a most important sector of the economy.
After studying these reports, as well as the detailed comments on them submitted by the building societies and other interested parties, the Government has adopted three broad guidelines in its approach to building societies.
Firstly, it accepts that building societies have undergone an evolutionary change away from the traditional concept of mutual thrift institutions, and are today increasingly operating in the field of modern deposit banking. In order to attain a more effective monetary policy and a more efficient allocation of financial resources, it is therefore desirable that they should increasingly be subjected to the same sort of disciplines as banking institutions including, after a transitional period, the same cash reserve and liquid asset requirements. At the present stage of their evolutionary development, building societies should still be accorded special treatment under their own Building Societies Act, but the Act should be redrafted and brought more into line with the format of the Banks Act. This task has been entrusted to the Standing Technical Committee on Banking and Building Society Legislation and its recommendations will, of course, be discussed with the building society movement and any other interested parties before being submitted to Cabinet for approval.
Secondly, in order to enhance the effectiveness of monetary stabilization policy, building societies should be permitted and encouraged to quote realistic and market-determined borrowing and lending rates in competition with banks and other financial institutions.
Thirdly, in the realization that such a more market-oriented approach might, in the interests of economic stabilization, entail relatively high mortgage rates at certain times, the State is prepared to provide additional assistance to moderate the cost of financing home ownership for certain categories in the lower and middle income groups, such as first-time borrowers, young married couples and other special categories of potential home-owners. To this end, new and improved methods of providing such assistance will be introduced.
The present system of allowing building societies to offer investors tax-free indefinite period and subscription “shares”, together with the favourable treatment of “dividends” on their ordinary “shares”—concessions which already entail a loss of revenue to the State approaching perhaps R100 million per year—will gradually be phased out. Instead, the State intends to pay a direct interest rate subsidy to mortgagors who have bonds with building societies and other approved financial institutions below specified amounts, but subject to certain restrictions on, for example, the income of the homeowner and property values.
The system of tax concessions does serve to reduce the cost of funds to the building societies, but the investors who benefit most from it are by definition taxpayers in the upper tax brackets, while the benefits of lower mortgage interest rates accrue to all borrowers from building societies and not only to those for whom assistance is normally considered desirable. The main advantages of a direct interest subsidy approach are that its benefits will accrue only to those borrowers for whom they are intended and that its costs can be accurately measured and provided for annually.
The phasing-out of the tax concessions in respect of building society shares will be a gradual process and the details can only be announced at a later stage. The same applies to the phasing-in of the more generalized direct interest rate subsidies for certain categories of borrowers.
Consistent with the new approach, however, I propose to make provision, as it were ahead of time, in this Budget for certain forms of assistance in respect of housing. The details will be dealt with presently.
There are, of course, a number of more detailed recommendations of the commissions of inquiry which continue to have our close attention and are in the process of being decided upon.
I now wish to review briefly the accounts for the financial year 1982-’83, ending tomorrow. Leroy Paige counselled: “Never look back. Something may be gaining on you.” But as the year ends with a surplus, I thought I might be entitled to do just that.
The current revised estimate of government revenue amounts to R17 420 million, an increase of 9,8% on the original budget total of R15 858 million. This higher than anticipated revenue can be attributed almost entirely to increased receipts from Inland Revenue, which exceeded the budgetary estimate by some R1 447 million. Higher collections from gold mining taxation, gold mining leases, personal income tax and general sales tax all made their contribution.
For Customs and Excise a revised total of R2 346 million or R115 million more than the amount budgeted for, will be collected. Compared with the 1981-’82 financial year, the revised aggregate revenue of R17 420 million represents an increase of 20,8%.
In somewhat more detail, the increase in the gold price from a low of around $300 per fine ounce during June 1982 to a high of more than $500 during February 1983, coupled, as it was, with a lower exchange rate of the rand, resulted in higher than expected rand earnings for the gold mines. This gave rise to increases in tax payments of R535 million, and in lease payments of R160 million. However, one should point out that the total revenue expected from gold mines this year, at some R1 700 million, is still R431 million or 20,2% below last year’s figure. The volatility of this source of revenue makes any accurate budgetary forecast almost impossible. In these circumstances it is clearly prudent to err on the conservative side.
The revised general sales tax estimate of R3 290 million is 3,8% higher than the original budget total of R3 170 million. Compared with last year, this means a rise of R1 174 million, but this was of course due to two adjustments in the rate during last year.
These increased tax collections serve to underline the inherent resilience of the South African economy even in a recessionary phase.
The revised estimate of aggregate expenditure for 1982-’83 amounts to R19 205 million, comprising an amount of R18 238 million provided for in the original Budget—of which R15 618 million was voted by Parliament and R2 620 million represented statutory amounts; R797 million, voted in the Additional Budget; a further R245 million in the form of statutory expenditure—mainly interest payments on public borrowings made for monetary stabilization purposes; less anticipated savings by various government departments amounting to some R75 million. This revised estimate exceeds total expenditure for 1981-’82 by some R2 774 million, or 16,9%.
In addition to the fact that the real increase in government expenditure amounted to a mere 2% when measured against the consumer price index, the 1982-’83 deficit before borrowing of R1 785 million is not only substantially lower than the R2 380 million budgeted for, but amounts to less than 2,2% of the gross domestic product, compared with 2,8% estimated a year ago. This is, I think, a considerable achievement.
Loan redemptions for 1982-’83 amount to R1 908 million, substantially more than the original estimate of R1 246 million, mainly due to an increase of R497 million in the redemption of foreign loans. This accelerated tempo in the reduction of foreign indebtedness is in stark contrast to the position prevailing in the world generally, where defaulting on foreign commitments is widespread, and is another reason for South Africa’s high credit rating abroad.
A gross amount of R5 264 million has been borrrowed from various sources mainly for financing the deficit, but it included also some R1 060 million borrowed specifically for monetary stabilization purposes and transferred to the Stabilization Account. This transfer is, firstly, required to meet a part of the Government’s commitment to the Reserve Bank in respect of losses sustained on forward exchange contracts; secondly, an amount of R262 million is required as bridging loans to finance part of the cost involved in the recent reduction in the price of petroleum products; and, thirdly, the Account will be used, as in the past, to finance the procurement of stocks of “strategic” imports.
The amount transferred to the Stabilization Account will therefore not be used to finance current expenditure. This strategy has already made a major contribution to the decline in the growth of the money supply and has been instrumental in containing what might otherwise have been an excessively rapid decline in interest rate patterns.
The net amount available to meet the borrowing requirement amounts to R4 204 million.
Foreign sources of finance contributed R526 million to loan receipts compared with an estimated R250 million, serving to underline the confidence that foreign investors have in the Republic’s economic future.
To sum up, aggregate revenue and aggregate expenditure for 1982-’83 amount to R17 420 million and R19 205 million respectively, leaving a deficit before borrowing of R1 785 million. If we add loan redemptions of R1 908 million, it leaves us with a financing requirement of R3 693 million. Net financing available is R4 204 million, thus exceeding the amount required by R511 million.
Of this surplus an amount of R140,2 million will be required, by way of the 1983 Finance Act, to defray excess expenditure on the Defence Special Account for 1981-’82. Hon. members may recall that during the last session of Parliament the Defence Special Account Act, 1974, was amended by the insertion of section 1A to provide for the authorization by me, in anticipation of subsequent Parliamentary appropriation, of commitments not exceeding the amount allowed for overspending and published in the printed Estimates for that year. The amendment came into force on 1 April 1982—just a day too late to cover the amount overspent in 1981-’82, hence the entry in this year’s accounts.
Having made this provision, I deem it prudent to use the balance remaining to meet increases in expenditure which cannot reasonably be foreseen at this point, such as extraordinary defence expenditures, assistance to the drought-stricken areas and like contingencies, particularly the extreme fluctuations in the gold price and the great uncertainty as to what the average price would be in the coming year. It is as impossible to quantify, in advance, with any particular accuracy, defence and drought relief commitments as it is accurately to estimate the gold price a year ahead of time. For this purpose I propose transferring R371 million to the Tax Reserve Account. Withdrawals from this Account are, of course, subject to Parliamentary scrutiny and approval.
I wish now to deal with next year’s accounts.
The printed Estimate of Expenditure tabled today provides for expenditure of R21 061 million in the year ahead. I will subsequently propose supplementary expenditures totalling R115 million for that year. The main Estimate of Expenditure will thus amount to R21 176 million, which is no more than 10,3% higher than total expenditure for 1982-’83, albeit 16,1% higher than the original Estimate for that year.
I wish to direct the attention of the House to certain votes which merit special mention, dealing first with votes which require supplementary allocations.
Social, Military and Civil Pensions
I am thankful to be able to announce that in spite of the difficult economic conditions, it has nevertheless been found possible once again to grant improvements to social pensioners and other social beneficiaries, as well as to military and civil pensioners.
Particulars of these concessions are set out in a document I shall table this afternoon.
- (a) Social Pensions and Allowances
The concessions, in brief, amount to the increase of social pensions by R14 to R152 per month in the case of Whites, by R10 to R93 per month in the case of Coloureds and Asians and by R8 to R57 per month in the case of Blacks.
After only three years the means test in respect of Whites will be adjusted again by increasing the maximum assets limit from R34 800 to R42 000 and the maximum limit for income from R1 392 to R1 920 per annum. The present ratios in respect of Coloureds, Asians and Blacks will continue to apply.
The total cost of these concessions, which take effect from 1 October 1983, will amount to R66 million in 1983-’84 and R132 million in a full year.
I am also pleased to be able to announce that a bonus will once again be paid to social pensioners and other social beneficiaries. A one-off payment of R36 for Whites, R29 for Coloureds and Asians and R22 for Blacks will be made to all social pensioners and other social beneficiaries during May 1983. The cost of this bonus will amount to R29 million in 1983-’84.
It is interesting to note that the provision for social pensions to all groups during the past eight years in South Africa will have increased more than three times by next year, that is from R332 million to R1 123 million, an increase which by far outstrips the rate of inflation during that period.
- (b) Military Pensions
All military pensions will be increased by 10% with effect from 1 April 1983. The cost of this concession is R2,5 million.
- (c) Civil Pensions
The Government is fully aware of the problems encountered by former employees of the State and their families, and the House will recall that last year very substantial improvements were made to civil pensions.
In the tight financial circumstances prevailing this year, it has been decided that civil pensions be increased by 5% with effect from 1 April 1983 in respect of persons who become entitled to a pension prior to 1 April 1983, or whose last working day is 31 March 1983.
The cost of this increase to the Exchequer is estimated at R2,5 million in 1983-’84. The balance will come from the Civil Pensions Stabilization Account.
In total, R100 million will be required to finance all these pension concessions next year.
There is another matter affecting the aged which I will deal with later.
Small Business Development Corporation
Small business enterprises play a vital role in any country’s economy. They are major employers of labour and they promote the use of equity or risk capital. And nowhere are they more important than in a developing economy, where entrepreneurship is invariably at a premium. The Government is fully aware of this and took the initiative, some two years ago, in close collaboration with the private sector, in establishing the Small Business Development Corporation.
The Corporation is an incorporated company, with half its capital contributed by the private sector and the other half by the State. It was established specifically to cater for the financing needs of the small businessman, and thus enable him to own and operate his own business, whether alone or in partnership with others. Its functions also embrace matters such as the provision of business infrastructure, management training and after-care services.
Although the Corporation has been in existence for only two years it has made great strides and needs all the encouragement it can get. A very big demand for its services is already being experienced, and in order to assist it in fulfilling its vital task, I feel justified in proposing a further contribution of R5 million to be spent at the discretion of the Corporation. I am sure that this will prove to be a productive investment. Small businesses are the cornerstone of any truly private enterprise economy.
Another avenue of assistance which merits and will receive immediate attention is the extent to which the public sector might channel more funds in procurement contracts to the small business sector.
Housing
In the printed Estimates the amount included as a direct contribution from the Exchequer for the provision of housing by the National Housing Fund amounts to only R6 million due to a structural change in the provision. However, the Housing Fund will be approaching the capital market for substantial amounts of loan funds which will enable it to spend no less than R363 million in total on housing in the forthcoming year. In fact the provision of housing has been accorded such high priority in recent years that the gross amount made available to the National Housing Fund for the construction of new dwellings has more than doubled during the past six years.
That the provision of adequate housing of realistic standards is accorded high priority by Government is further evidenced by the recent announcement that hundreds of thousands of individual houses initially provided by the National Housing Fund, will now become available for sale to occupants at extremely reasonable prices. This decision is the direct result of one of the large number of very positive recommendations of the Steyn Committee of investigation into the financing of housing matters, benefiting, as it does, mostly the Black community.
In other respects, too, the quality of life is being constantly improved. In Soweto alone a substantial foreign loan from a consortium of overseas banks is financing the upgrading of infrastructure, including water supply, sewerage effluent and roads, while another substantial amount is being spent on the electrification of the area, all of which is being subsidized and guaranteed by Government. Soon, too, a report is expected from Mr. Louis Rive who has been given the task of devising an upgrading of accommodation and other developments in the Eastern Cape. If accepted, this comprehensive programme will also involve expenditures running eventually into hundreds of millions of rand.
While on the subject of housing, I am pleased to be able to announce that Cabinet has approved the following new and improved concessions mainly to assist young people in acquiring a first home of their own—
- (a) Home ownership savings scheme
The savings limit of RIO 000 which qualifies for the present 2% subsidy will be doubled to R20 000 with effect from 1st April 1983, and the subsidy payable on the amount saved increased to 3%. Certain administrative changes will also be effected to the scheme to make it more attractive, such as the utilization of a portion of the savings for the purchase of a stand.
- (b) Interest rate subsidy
In order to assist young people and those in the lower to middle income groups with mortgage commitments in these difficult times of escalating building costs and comparatively high interest rates, the Government has decided to offer individuals who have not previously owned a home or flat and who wish to purchase for the first time, for their own occupation, a new dwelling or a dwelling that has not previously been occupied or wish to have a new dwelling erected, a subsidy of 20% of the monthly interest rate payment calculated on the minimum building society mortgage rate applicable.
This subsidy will, furthermore, only be paid in respect of mortgages of not more than R40 000 on a property of which the full purchase price does not exceed R50 000. These concessions will not be available to persons who receive housing assistance from other sources.
The cost of these two concessions is estimated to amount to R5 million each in the 1983-’84 financial year, and to some R30 million altogether in a full year. Full details of the schemes will be announced by my colleague the hon. the Minister of Community Development in the near future.
This completes my supplementary expenditure proposals which amount to R115 million.
Manpower
The amount included on the Manpower vote increases from R63,2 million in 1982-’83 to R71 million for the coming year. Manpower development will also be financed from the Manpower Development Fund, which is expected to show a credit balance of about R10 million at the end of the 1982-’83 financial year. A high priority is, therefore, once again being accorded to improving the manpower situation in order to ensure that a sufficiently trained pool of labour will be available to meet the demands of a steadily growing economy.
Education
The total provision for education for all population groups, including the education component of provincial subsidies and fiscal transfers to the national States, amounted to no less than R3 016 million in 1982-’83. The corresponding figure for 1983-’84 will be R3 410 million—an increase of more than 13%—and, with Defence, the biggest item in the Budget. The systematic elimination of the backlog in education facilities for all South Africans and the narrowing of the gap between the standards of White and non-White education is, once again, receiving high priority. Taking a medium term view, education expenditure rose from R890 million in 1975-’76 to the aforementioned R3 410 million provided for next year, an unparalleled 283% increase over the past eight years.
Government is well aware that much remains to be done in this sphere and that investments in education must be matched by investments in job creation to achieve really satisfactory and balanced results.
Defence
The amount to be voted for Defence increases by 15,9% to R3 093 million in the coming financial year. As prosperity is based on external no less than internal security and the maintenance of law and order, Government has always accorded a top priority to a well-trained, adequately equipped and effective Defence Force and will continue to do so for as long as is necessary. Equally important, in the face of an international arms boycott, is the systematic development of a modern armaments industry.
If one adds to the provision made for Defence the amounts provided for other protection services, it is evident that the total amount spent between 1975-76 and next year will have increased appreciably more than threefold.
Against the background of the protracted debate currently taking place as to the position of those who claim objections of conscience to military service, I thought Langenhoven’s view of a few years back might be of interest. Comparing the position in more recent times with the past, he said: “Die wapens het verander, die stryddoel is dieselfde. En die reg van beroep wat Suid-Afrika op sy kinders het om hom te verdedig, is ook dieselfde.”
Public Debt
The cost of servicing the public debt was originally estimated at R2 294 million in 1982-’83 but escalated to R2 494 million mostly because of substantial borrowings for demand management and monetary stabilization purposes generally.
This revised figure may increase by another 14,2% to R2 850 million in 1983-’84 due, once again, not only to the normal borrowing programme but also to the estimated cost effect of borrowing for monetary policy purposes for the full year. I remain determined to keep a proper control of the monetary aggregates in order to combat inflation and with this objective in mind will, if necessary, endeavour to borrow in excess of the Exchequer’s immediate requirements in times of surplus liquidity and transfer these proceeds to the Stabilization Account.
Agriculture
Agriculture is not only of decisive importance to the farmer and to the consumer but also to the country as a whole. Napoleon, whose greatest success as an outstanding administrator was in finance, said 170 years ago: “State finances founded upon a good system of agriculture never fail.” South Africa and her neighbouring developing States would all do well to bear those words of wisdom constantly in mind.
The past three to four years have been characterized by persistent drought conditions, mainly in the North Western Cape, and which more recently have increased in intensity and area. High interest rates and escalating production costs further contributed to the problems of agriculture and the Land Bank was called upon to assist farmers and their organizations as much as possible.
This it has done, inter alia, by suspending the redemption of instalments, the extension of the period of redemption of medium term loans, consolidation of arrear interest payments and the deferment of capital amortization, which in the past was applicable only in respect of bonds. In 1980 a Special Drought Relief Scheme comprising a Government guarantee and interest subsidies was launched in Natal to assist sugar cane farmers, while the Bank decided to assist farmers in the fruit and wine producing areas of the Western Cape through the granting of production loans for a further period up to 1985.
Several emergency relief schemes already are operating in the grain producing areas in terms of which farmers’ outstanding debts to their co-operatives are financed by the Land Bank under Government guarantees. The debt under these schemes which originated through the granting of production credit to farmer members of the co-operatives, amounts to some R530 million at present. The interest payable on this debt is also subsidized by the State.
The extent to which the Land Bank is involved in the financing of agriculture is reflected in the cash disbursements in excess of R6 681 million made by the Bank in 1982 to farmers and their co-operatives. Apart from these measures and in response to an urgent Report submitted by the Jacobs Committee, the hon. the Prime Minister recently announced that further extensive assistance will be granted to the agricultural sector.
I now have pleasure in announcing that the Land Bank Board has decided to reduce its short-term cash credit advance rates to co-operatives by 2% to 12,75% in respect of production credit and to 13,75% for all other short-term credit. The Board has further decided to reduce the market-related long-term lending rate on instalment loans to co-operatives by 1,5% to 14%.
This reduction in the Bank’s lending rates will already be operative as from this Friday and, where applicable, the co-operatives will pass on the advantage to their members immediately.
As I mentioned earlier, drought relief is one of the imponderables which could result in additional burdens to be financed by way of the Additional Estimates for 1983-’84. We shall, however, simply have to meet the emergency and rise to the challenge. Meanwhile, hon. members will observe, an amount of R71,2 million has been included in the printed Estimates for agricultural financial assistance next year—nearly double the R34 million voted in 1982-’83.
Conditions of Service
As has already been announced, because of the prevailing financial stringency, the Government has not been in a position to grant a general salary adjustment to the Public Service and related institutions on 1 April 1983. This guideline has also been followed by the South African Transport Services, the Department of Post and Telecommunications, and, wherever possible, the statutory corporations. Should the position of the Exchequer improve significantly later in the year, the granting of a modest general salary increase will be one of our first priorities.
The provision of R250 million on the Vote “Improvement of Conditions of Service” will effectively be augmented by channelling anticipated savings of some R45 million on other votes to this one. The Commission for Administration will therefore be able to effect improvements totalling R295 million in 1983-’84. The lion’s share of this provision will be used for the virtual completion of the programme of occupational pay differentiation.
Employers’ contributions to the Public Service Medical Aid Scheme are to be increased from R1,75 to R2 for every R1 contributed by members. This provision should stave off any increase of members’ contributions for at least another year.
Looked at as a whole, and including all subsidies, allowances, bonuses and Exchequer contributions to the various pension funds, there is no denying that the gross remuneration of public service employees increased noticeably in real terms during the past two years. However, these improvements should be seen in perspective against slower increases in previous periods. Public servants may rest assured that the Government is determined to look after their best interests at all times.
Export Promotion
Exports are of vital importance to the economy of any country, especially a developing country like South Africa. An increase in exports is the best and soundest way to finance the country’s necessary imports. Besides this, rising exports enable a country to exploit its domestic resources more effectively for increased domestic prosperity. In short, exports are of vital concern to South Africa, not only for balance of payments purposes, but also for domestic economic development and the raising of standards of living for all population groups.
For these reasons the authorities offer a range of special facilities aimed at assisting exporters to compete in foreign markets. We have been doing our utmost within the limited financial means at our disposal to encourage more effective and purposeful export strategies, and the amount provided directly for this purpose in 1983-’84 totals R106 million. To this amount should be added the hundreds of millions of rand funded by the Exchequer, due to losses on forward exchange contracts entered into by importers and exporters at nominal premiums, thus relieving them of foreign exchange risks. Furthermore, substantive tax concessions are available to exporters, a “hidden” subsidy which is not reflected in the estimates of expenditure.
I say this in order to emphasize the Government’s earnest about the promotion of the export trade. But anything the authorities can do in this direction must come a poor second compared with the efforts of enterprising exporters themselves.
Let me now turn to the revenue position next year.
The estimated revenue on the current basis of taxation amounts to R19 083 million in 1983-’84, or 9,5% higher than the revised estimate of R17 420 million for 1982-’83. This increase is entirely due to Inland Revenue sources, which will contribute R17 023 million or 12,9% more than last year.
Receipts from Customs and Excise are expected to fall by 12,1% to R2 060 million. This decline can be ascribed to an expected decrease of R255 million in revenue from the reduced import surcharge. Another contributing factor involves increased payments to member countries in terms of the Southern African Customs Union Agreement. These payments, which are deducted from gross customs and excise proceeds, will amount to some R750 million next year and represent an increase of 14,3% over the 1982-’83 total.
The increase in Inland Revenue will be mainly accounted for by higher estimated proceeds from personal income tax, general sales tax and, to a lesser extent, company tax. Although across-the-board average wage and salary adjustments are likely to be effectively lower than last year, normal salary scale increments and the continued implementation of the policy of occupational pay differentiation in the public sector are expected to result in higher than proportional personal income tax receipts. This source of revenue is estimated to yield some R5 300 million next year, an increase of more than 20%. General sales tax receipts are expected to increase by some 20% to R3 950 million, and company tax receipts to about R4 100 million, which is not quite 9% more than this year’s figure.
The volatility of the gold price makes it extremely difficult to estimate gold mining revenues. Income tax on gold mines is estimated to yield R1 430 million in 1983-’84, or 8,3% more than the previous year, while revenue from gold mining leases is taken to remain constant at R380 million. This means that Exchequer receipts from gold mining are estimated at R1 810 million in the new year, an increase of R110 million, or 6,5% on the previous year.
To summarize, aggregate revenue on the existing basis of taxation is thus estimated at R19 083 million.
I now wish to turn to various proposals in respect of taxation, beginning with tax concessions—even if President Theodore Roosevelt said “Pray not for a light burden but for a strong back”.
Customs and Excise
Having already reduced the surcharge on imports by two successive amounts of 2,5% since December last year, I do not propose to make any further adjustments at this stage. However, in terms of the agreement with the International Monetary Fund, I am expected to phase out the balance of this surcharge (5%) by the end of this year.
The Tobacco Board has submitted well-founded arguments for the maintenance of the status quo so far as duties on tobacco are concerned, and I propose to “let sleeping dogs lie”!
Sections of the liquor industry in the Western Cape have been experiencing financial problems for some time and that is one of the reasons why I do not propose to raise excise duties on wine and spirits. So as not to disrupt the relative competitive position of the beer industry, I also do not propose to raise the duty on beer.
The Board of Trade and Industries has, however, received representations for an increase of the rebate on wine spirits entered for use in the manufacture of brandy and has already informally recommended that the extent of the rebate be increased from 7 123c per 100 litres absolute alcohol to 8 844c per 100 litres absolute alcohol.
I am in favour of the recommendation and as soon as the formal proposal is received from the Board, a Government Notice to give effect to it will be promulgated in the Government Gazette.
The loss in revenue is estimated at R3 million.
Farming
The drought conditions and the various relief measures instituted by Government have been dealt with in detail in the document which I shall table today, but there is an income tax concession which I should like to announce in respect of those farmers who are being forced to liquidate part of their livestock and who would be taxable on the proceeds but who would need to re-acquire stock as soon as grazing conditions improved.
In order to accommodate such farmers I wish to propose an amendment to the Income Tax Act, effective retrospectively to the years of assessment commencing on or after 1 March 1982, to allow the proceeds of such forced liquidation of livestock to remain untaxed while deposited with the Land and Agricultural Bank, but on condition that these proceeds be reinvested in new livestock within four years After the year of forced sale.
This concession can only be applied when the income tax returns of such farmers are submitted at the end of a tax year and will therefore result in minimal loss of revenue in the coming financial year.
Retirement Benefits
The various provisions of the Income Tax Act which encourage people to make adequate provision for retirement need to be regularly reviewed. I therefore propose that the following concessions be granted with effect from the tax year which commences on 1 March 1983:
- (a) Contributions to retirement annuity funds
These contributions currently do not qualify for deduction from a person’s income unless he carries on a trade, and where he does, the contributions cannot be deducted from investment income (such as dividends or interest) or income in the form of annuities or pensions. Retirement annuity funds originally came into being as a form of pension fund for the self-employed. They are also used by salary earners to augment their pensions from pension funds. I feel that everyone, including pensioners, should be encouraged to make further provision to supplement their income, and hence I wish to propose that such contributions now be allowed as deductions against investment income, annuities or pension receipts.
- (b) Lump sum benefits on retirement
In calculating the exempt portion of lump sum benefits from pension and provident funds in accordance with the formula prescribed in the Act, so much of the member’s average annual salary during a particular period as does not exceed R30 000 is taken into account. The maximum exemption in respect of such benefits and lump sum benefits from retirement annuity funds amounts to R60 000. Having regard to the substantial remuneration adjustments in the past few years, I propose that the amount of R30 000 be increased to R40 000 and that the amount of R60 000 be increased to the greater of R80 000 or an amount calculated by multiplying the amount of R3 000 by the number of years in the member’s period of service (where he is a member of a pension or provident fund) or the number of years in the period during which he was a member of a retirement annuity fund. What that precisely means I would not know, but I am told that it is quite a substantial improvement.
- (c) Service bonuses on retirement
In terms of the current provisions of the Income Tax Act, so much of a bonus given by an employer to his employee on the termination (or, in certain circumstances, impending termination) of his services as does not exceed R20 000 is exempt from tax. I propose that this amount be increased to R30 000.
The loss of revenue as a result of these concessions is estimated at R7 million in the 1983-’84 financial year and R15 million for a full year.
The Aged
The persons who will benefit most from the concessions in respect of retirement benefits are those who have not yet retired. The position of persons who retired some time ago and whose ability to augment their income is thus reduced, has also received attention. They are often in a weaker position than others as a result of the gradual decline in the value of their fixed incomes, and I therefore propose that the additional tax rebate for all persons over the age of 70 be increased from R80 to R180. In practical terms, the effect of this rebate, together with the R120 rebate for persons over 60 (which persons over 70 also enjoy) will be that the total rebate increases from R200 to R300.
The loss of revenue is estimated at R3 million for the 1983-’84 financial year and R4,5 million for a full year.
Donations Tax
Donations tax was originally introduced to counter the avoidance of income tax as well as estate duty by means of donations. Casual donations of a “small value” cannot be labelled as tax avoidance and an exemption has thus been provided in respect of such donations which do not exceed R2 000. The concept of “small value” is relative in the times we live in and I propose that the amount of R2 000 be increased to R5 000.
By reason of increased values, I wish to propose that for donations tax purposes the exemption in respect of donations in favour of the donor’s children, on donations effected after 31 March 1983, be raised from R15 000 to R20 000 per child.
The loss of revenue as a result of these concessions in the current year is estimated at R100 000.
Post Office Savings Bank Certificates
Up to and including the 1982 year of assessment an exemption from income tax was allowed in respect of the interest received by each person from an investment in Post Office Savings Bank Certificates not exceeding R10 000. Last year the Income Tax Act was amended to the effect that, as from the 1983 year of assessment, the exemption will be applicable to the interest derived by a taxpayer on an investment not exceeding R20 000.
This change still leaves the Post Office in a less favourable position in regard to the amounts which can be invested with it free of tax.
Although the exemption, as updated last year, was sufficient where a man and his wife both had investments in Post Office Savings Bank Certificates, a number of persons had made investments on behalf of their minor children which, at the time when the investments were made, would have been totally exempt from tax to a maximum amount of R10 000 per child. I feel that in these cases the exemption should be phased out over a period of two years to afford the persons concerned the opportunity to make other arrangements.
I propose therefore that—
- (a) the general exemption limit per taxpayer be increased to R40 000 with effect from the 1983 year of assessment; and
- (b) in the case of investments not exceeding R60 000 which were made by a taxpayer prior to 1 March 1982, the amount of interest which will be exempted in the 1983 or 1984 tax year, be increased to the amount of interest which would have been exempt in terms of the exemption provisions as they were in force in the 1982 tax year.
The loss of revenue is estimated at R900 000 for 1983-’84 and R3 million for a full year.
The aggregate of the concessions thus far proposed will amount to R14 million in 1983-’84.
I should like next to deal with two tax measures involving higher imposts.
Advertising and Publicity Services
The general sales tax on advertising and publicity services which I proposed last year was to have come into operation on a date to be determined by me to allow adequate consultation between the Commissioner and interested parties.
From the discussions it emerged, however, that the greatest single stumbling block was the adaptation, at short notice, of existing advertising and promotion budgets to allow for general sales tax payments by those concerned.
I have therefore decided that the date for coming into operation be determined as 1 January 1984. This will afford advertisers adequate opportunity to adapt their budgets and absorb such expenditures.
Expected proceeds in the 1983-’84 year will be R5 million, while in a full year this total could reach R30 million.
Stamp Duties
It will be seen from the estimates of revenue collections that stamp duties form an important part of indirect taxation. Viewed individually, the various stamp duty items may seem unimportant. In fact, from time to time suggestions are made for the abolition of stamp duty on particular items which in the course of time have lost their significance. Such duties have in fact mostly been deleted already.
On the other hand, with the passage of time some items which used to yield appreciable amounts of revenue have, because of inflationary and other factors, lost some of their vitality as revenue earners. This is particularly true in those cases where fixed amounts of duty are payable.
The various dutiable documents have been examined and in most cases it has been found that stamp duties have remained unchanged for some considerable time—some for as long as 15 years and in one case for as long as 72 years!—and that their yield can be increased without causing the rates to become unduly burdensome.
My proposals in this regard cover increased duties on agreements, antenuptial and postnuptial contracts, bills of exchange, customs and excise documents, duplicate originals, fixed deposit receipts, credit agreements, partnership agreements, insurance policies, powers of attorney and security or suretyship. Full details appear in the taxation proposals I shall table today.
The yield is estimated to amount to R20 million for 1983-’84.
After allowing for supplementary expenditure proposals of R115 million, total expenditure for 1983-’84 amounts to R21 176 million. The total of these additional taxes is estimated to amount to R25 million which, less the R14 million proposed in the form of concessions, brings the total amount of revenue for 1983-’84 to R19 094 million. This means that the deficit before borrowing will now be R2 082 million.
To this must be added an amount of R1 941 million in respect of loan redemptions and other loan expenditures, including repayments of loan levies to individual taxpayers removed from the income tax register as a result of the final deduction system, a matter which I will deal with shortly. This raises the total amount to be financed to R4 023 million.
As to the financing of this amount, the Public Debt Commissioners will be providing some 15% more than this year, that is, some R1 500 million. In addition, because Treasury has for some time been offering market-related rates of interest on its stock investments, I do not foresee any problem in budgeting for full conversion of maturing stock. Similarly, the R930 million required from the issue of new stock should also be comfortably placeable in the market without causing any undue upward pressure on interest rates.
The general decline in interest rates will enhance the competitiveness of the Treasury’s non-marketable debt instruments, that is, tax-free Treasury Bonds, Defence Bonus Bonds and taxable National Defence Bonds. In fact, the interest rate currently being paid on National Defence Bonds is now out of line with the market, and I have already decided to reduce the rate offered from the present 14% to 11% with effect from 15 May 1983.
In foreign markets I plan to raise a modest R250 million which, with our good credit standing, should pose no problem. Including an amount of R10 million in respect of arrear payments for loan levies by individuals, the financing proposals for the deficit add up to:
R |
|
million |
|
Public Debt Commissioners |
1 500 |
Reinvestment of maturing stock |
933 |
New stock issues |
930 |
Non-marketable securities (Treasury Bonds, Bonus Bonds, National Defence Bonds) |
400 |
Foreign loans |
250 |
Loan Levy (arrear payments) |
10 |
R4 023 |
It is with the loan levy on individuals that I feel some meaningful relief can most appropriately be offered to taxpayers. Here I wish to announce two concessions:
(a) Final Deduction System
As a result of the introduction of the new “final deduction system” in terms of which income tax returns are no longer required from salary earners in the lower income groups—those below R7 000—the names of more than 340 000 persons are in the process of being removed from the income tax register. This means that with the passage of time the addresses of many taxpayers will no longer be known to Inland Revenue. Many of them paid loan levies in earlier years (1978, 1979 and 1980) and will have to receive refunds in due course. In most cases the amounts are not large, and to obviate unnecessary administrative problems I propose that the Commissioner be authorized to refund such loan levies to these persons as soon as is practicable.
The estimated amount involved, already allowed for in loan redemptions, is R15 million, while interest payments amounting to approximately R3,8 million have already been allowed for in the statutory provision for public debt interest.
(b) 5% loan levy
Where the economy is in recession I feel it desirable to inject a modest morale booster by way of financial relief, and the best measure to achieve this is in my view to abolish the loan levy on personal income taxpayers which I had reimposed just a year ago. This leaves the maximum marginal rate of tax at 50% without any loan levy encumbrance.
I propose therefore to abolish the loan levy on individuals with effect from the tax years commencing after 1 March 1983.
The amount foregone to the Exchequer in loan receipts is estimated at R230 million.
On this basis, the 1983-’84 Budget is exactly balanced.
SUMMARY
As is customary, a summary of the Government’s accounts is subjoined in the printed version of the Budget Speech.
COMPARATIVE STATEMENT OF THE STATE REVENUE ACCOUNT
Revised figure 1982-’83 |
Budget figure 1983-’84 |
Percentage change |
||
Rm |
Rm |
Rm |
% |
|
Expenditure: |
||||
Printed Estimate (R.P. 2—’83: First Print): |
21 061 |
|||
Plus: Supplementary appropriations in respect of: |
||||
Social pensions |
95,0 |
|||
Military pensions |
2,5 |
|||
Civil pensions |
2,5 |
|||
Small Business Development Corporation |
5,0 |
|||
Home ownership saving scheme |
5,0 |
|||
Housing assistance |
5,0 |
|||
115 |
||||
Total Expenditure |
19 205 |
21 176 |
10,3 |
|
Revenue: |
||||
Printed Estimate (R.P. 3—’83: First Print): Customs and Excise at existing rates: |
2 060 |
|||
Less: Taxation proposals in respect of: Excise duty on brandy |
3,0 |
3 |
||
Total for Customs and Excise |
2 346 |
2 057 |
-12,3 |
|
Inland Revenue at existing rates (excluding loan levies): |
17 023 |
|||
Less: Retirement benefits |
7,0 |
|||
Income tax rebates for over 70’s |
3,0 |
|||
Donations tax |
0,1 |
|||
Post Office Savings Bank |
0,9 |
11 |
||
17 012 |
||||
Plus: Taxation proposals in respect of: Stamp duties |
20,0 |
|||
General sales tax on advertisements |
5,0 |
25 |
||
Total for Inland Revenue |
15 074 |
17 037 |
13,0 |
|
Total Revenue |
17 420 |
19 094 |
9,6 |
|
Deficit: (before borrowing) |
1 785 |
2 082 |
16,6 |
|
Loan Redemptions: |
||||
Domestic loans: |
||||
Stock |
614 |
933 |
||
Bonds |
510 |
386 |
||
Foreign loans |
529 |
302 |
||
Loan levy |
239 |
300 |
||
Other loan expenditures |
16 |
20 |
||
1 908 |
1 941 |
1,7 |
||
Financing Requirement: |
3 693 |
4 023 |
8,9 |
|
Financing: |
||||
Domestic loans: |
||||
Public Debt Commissioners |
1 300 |
1 500 |
||
Re-investment of maturing Stock |
2 823 |
933 |
||
New Government Stock issues |
930 |
|||
Non-marketable Securities: |
||||
Treasury Bonds |
200 |
|||
Bonus Bonds |
150 |
|||
National Defence Bonds |
50 |
366 |
400 |
|
Foreign loans |
526 |
250 |
||
Loan levy |
170 |
10 |
||
Treasury Bills |
-34 |
— |
||
Transfer to Stabilization Account |
-1 060 |
|||
Surplus carried forward from previous year … |
113 |
— |
||
Total Financing |
4 204 |
4 023 |
||
Balance: |
511 |
Nil |
||
Appropriation of Balance: |
||||
Transfer to Defence Special Account |
140 |
— |
||
Transfer to Tax Reserve Account |
371 |
|||
Surplus: |
— |
— |
CONCLUSION
The Budget I have presented today is neither “reflationary” nor “neutral”. To describe it as a “holding operation” would also be incorrect. It forms part of a co-ordinated fiscal and monetary strategy to curb inflation and to strengthen both the balance of payments and the net foreign reserves, with the specific objective of laying a sound foundation for the upward phase of the business cycle expected to commence within the next fiscal year.
The economic effects of a Budget cannot be judged merely by the extent to which tax rates are changed. The mere fact that I have not deemed it desirable on this occasion to make any major adjustments in either direct or indirect tax rates, does not make the Budget “neutral” or lessen its economic importance. Other criteria have to be used to assess the likely impact of the Budget on the domestic economy and the balance of payments.
Among these criteria are the following—
Secondly, the deficit before borrowing is estimated to rise only moderately from R1 785 million in 1982-’83 to R2 082 million in 1983-’84. As a percentage of the expected gross domestic product, the latter figure amounts to just less than 2,4%, compared with the average of 3,3% since 1960.
Thirdly, provision is made to finance the expected deficit in a manner which will ensure that no net use of bank credit is made by the government sector as a whole, including all the extra-budgetary funds. Moreover, as during the past year, the Treasury and the Reserve Bank will keep monetary and financial developments under close surveillance and will adapt their loan financing policy and open-market operations to the extent needed to maintain adequate control over the money supply.
Judged by these criteria, the Budget is clearly conservative in character and its central theme remains that of reasonable financial discipline—not as an end in itself but as a means to the achievement in the medium and long term of sound and rapid growth on the basis of stability.
In different circumstances, the presentation of such a conservative counter-inflationary Budget might well have entailed significant increases in either direct or indirect taxes or both. I am naturally gratified that no such increases were necessary on this occasion—indeed, I am able to return R15 million to, and to leave a further R230 million in the hands of personal income taxpayers who would otherwise have had to pay this amount in levy.
This satisfactory state of affairs is to some extent attributable to the moderate recovery in the gold price since the second quarter of last year. But it is in large measure also the direct consequence of the results achieved by the fiscal and monetary policies applied in South Africa during the past year. In particular, we are now reaping the benefits of the restraints on government spending and the willingness to accept realistic interest and exchange rates.
As I said at the beginning of this address, the financial situation in South Africa has improved in certain fundamental respects during the past year. I am convinced that by rejecting a policy of trying to force the pace of economic recovery through artificially increased money creation and spending, and by giving priority instead to the achievement of greater internal and external economic stability, this Budget will contribute to a further improvement in the state of the economy during the year ahead.
In the Budget I also dealt with a number of important policy matters of a more structural nature. These included amendments to the scheme for the subsidization of marginal gold mines, local authority finances, the future role of the Public Debt Commissioners, the phasing out of separate taxation of Black people, amendments to the investment and initial allowances in the industrial sector, and changes in the official approach to building societies. Some of these proposed changes can be brought about quickly, others will take a little time to be effective. After all, as Mark Twain said, “A round body cannot be expected to fit into a square hole right away. It needs time to modify its shape”.
Once again, I take pleasure in thanking the hon. the Prime Minister for his constant support and encouragement—not that he can be held responsible for any errors of commission or omission on my part! The longer I have had the honour to work with him, the more impressed I have been by the Prime Minister’s grasp of even the most intricate financial issues.
It gives me pleasure, too, to thank my colleagues in the Cabinet for their forbearance in invariably having to put up with less money than they and their departments would dearly like to have. I also wish to pay tribute to my staff, to the Treasury as a whole under the leadership of Dr. De Loor as Director-General, to the Reserve Bank under Dr. De Kock as Governor, and to the Land Bank under its Managing Director, Mr. Pienaar, for the able and dedicated way in which they carry out all their numerous tasks.
The Registrar of Financial Institutions, Mr. E. W. (Naas) van Staden, retires on 30 June 1983 after a long and distinguished career in the public service and carries with him my best wishes for a blessed retirement, both for him and for Mrs. Van Staden.
Finally, I wish to pay a special tribute to the late Mr. Koert Pretorius, immediate past Secretary to the Treasury, and the late Mr. Nico Botma, immediate past Accountant-General, who died so tragically in an air disaster last July. Not only were they two of the ablest and most devoted, but they were also two of the pleasantest officials I have had the privilege to be associated with. In the words of the Scriptures: “They were lovely and pleasant in their lives and in their death they were not divided”.
We are fortunate to have men of the calibre of Mr. Peter Wronsley and Mr. Piet Kriel to take their places.
TABLING
Mr. Speaker, I now lay upon the Table—
- (1) Estimate of Expenditure to be defrayed from State Revenue Account during the financial year ending 31 March 1984 [R.P. 2—’83];
- (2) Estimate of Revenue for the financial year ending 31 March 1984 [R.P. 3—’83];
- (3) Statistical/Economic Review [W.P.B—’83];
- (4) Comparative figures of Revenue for 1982-’83 and 1983-84;
- (5) Taxation proposals [A. 1—’83];
- (6) Proposals for improved social pensions and grants, military pensions and civil pensions;
- (7) Report of the Croeser Working Group on the Report of the Committee of Enquiry into the Finances of Local Authorities in South Africa;
- (8) Statement on Government assistance to farmers in the drought stricken areas.
REVENUE 1982-’83
(R1 000)
Head of Revenue |
Printed Estimate 1982-83 |
Revised Estimate 1982-’83 |
Increase |
Decrease |
|---|---|---|---|---|
Inland Revenue: |
||||
Tax on income: |
||||
Normal tax: |
||||
Gold mines |
785 000 |
1 320 000 |
535 000 |
|
Diamond mines |
2 000 |
3 000 |
1 000 |
|
Other mines |
153 000 |
160 000 |
7 000 |
|
Persons/Individuals |
3 908 000 |
4 350 000 |
442 000 |
|
Companies (other than tax on mining) |
3 774 000 |
3 770 000 |
4 000 |
|
Interest on overdue tax |
8 000 |
11 000 |
3 000 |
|
8 630 000 |
9 614 000 |
988 000 |
4 000 |
|
Loan Levy |
115 000 |
170 000 |
55 000 |
|
General sales tax |
3 170 000 |
3 290 000 |
120 000 |
|
Other taxes: |
||||
Non-resident shareholders’ tax |
300 000 |
240 000 |
60 000 |
|
Non-residents’ tax on interest |
13 000 |
17 000 |
4 000 |
|
Undistributed profits |
2 500 |
2 500 |
||
Donations tax |
2 000 |
2 000 |
||
Estate duty |
60 000 |
78 000 |
18 000 |
|
Trade securities |
20 000 |
35 000 |
15 000 |
|
Stamp duties and fees |
120 000 |
150 000 |
30 000 |
|
Transfer duties |
120 000 |
180 000 |
60 000 |
|
Miscellaneous |
4 |
4 |
||
637 504 |
704 504 |
127 000 |
60 000 |
|
Mining leases and ownership: Gold mines |
220 000 |
380 000 |
160 000 |
|
Diamond mines |
5 000 |
1 000 |
4 000 |
|
Other mines |
8 000 |
7 000 |
1 000 |
|
233 000 |
388 000 |
160 000 |
5 000 |
|
Interest and dividends: |
||||
Interest: |
||||
Border area development |
2 699 |
3 300 |
601 |
|
Import and export promotion |
4 000 |
4 450 |
450 |
|
Housing |
200 |
200 |
||
Pedagogy |
8 500 |
8 000 |
500 |
|
Broadcasting |
910 |
900 |
10 |
|
Petrochemical industry |
1 710 |
1 500 |
210 |
|
Shipbuilding industry |
1 294 |
2 500 |
1 206 |
|
Farming industry |
6 268 |
6 200 |
68 |
|
State land |
1 000 |
1 000 |
||
Transportation |
425 000 |
474 800 |
49 800 |
|
Communications |
26 180 |
22 650 |
3 530 |
|
Farm land purchases |
13 860 |
13 860 |
||
Local loans |
9 000 |
9 000 |
||
Cash balances |
2 500 |
230 |
2 270 |
|
Other |
6 086 |
9 330 |
3 244 |
|
Dividends: |
||||
Broadcasting |
2 280 |
2 280 |
||
511 487 |
560 000 |
55 301 |
6 788 |
|
Levies: |
||||
Diamonds export duty |
22 000 |
27 000 |
5 000 |
|
Mining lease rights and licences |
2 506 |
3 000 |
494 |
|
Licences |
3 000 |
3 000 |
||
27 506 |
33 000 |
5 494 |
||
Recovery of loans and advances: |
||||
Loans: |
||||
Farming industry |
2 732 |
2 550 |
182 |
|
Shipbuilding industry |
3 396 |
3 735 |
339 |
|
Communications |
11 179 |
7 421 |
3 758 |
|
Redemption funds |
18 000 |
14 000 |
4 000 |
|
Other |
5 582 |
12 722 |
7 140 |
|
Advances |
9 233 |
6 623 |
2 610 |
|
50 122 |
47 051 |
7 479 |
10 550 |
|
Departmental activities: |
||||
Wood and wood products |
40 000 |
41 000 |
1 000 |
|
Water (including tax and rights) |
62 000 |
65 000 |
3 000 |
|
Coin sales |
28 000 |
28 500 |
500 |
|
Leasing of state property |
18 063 |
23 500 |
5 437 |
|
Fines and confiscations |
15 000 |
19 000 |
4 000 |
|
State diamond diggings |
3 374 |
1 300 |
2 074 |
|
Reserve Bank profits |
19 922 |
21 000 |
1 078 |
|
State Trust Board |
300 |
5 220 |
4 920 |
|
Sale of state land |
1 000 |
1 000 |
||
Other |
180 000 |
231 925 |
51 925 |
|
367 659 |
437 445 |
71 860 |
2 074 |
|
Total for Inland Revenue |
13 742 278 |
15 244 000 |
1 590 134 |
88 412 |
Customs and Excise: |
||||
Customs duty |
865 000 |
935 000 |
70 000 |
|
Surcharge |
605 000 |
620 000 |
15 000 |
|
Excise duty |
1 634 001 |
1 636 000 |
1 999 |
|
Miscellaneous |
41 050 |
61 050 |
20 000 |
|
Gross total for Customs and Excise |
3 145 051 |
3 252 050 |
106 999 |
|
Less: |
||||
Amount to the credit of |
||||
Central Revenue Fund (sec. 22(l)(d) of Act 25 of 1969) |
250 000 |
250 000 |
||
Payments in terms of Customs Union Agreements (sec. 51(2) of Act 91 of 1964) |
664 000 |
656 000 |
8 000“ |
|
Total for Customs and Excise |
2 231 051 |
2 346 050 |
114 999 |
|
Grand Total |
15 973 329 |
17 590 050 |
1 705 133 |
88 412 |
Net increase: |
R1 616 721 |
*A decrease in these directly diverted taxes causes an increase of Exchequer Revenue.
REVENUE 1983-’84
(On existing basis of taxation)
R1 000
Head of Revenue |
Printed Estimate 1983-’84 |
Revised Estimate 1982-’83 |
Increase |
Decrease |
|---|---|---|---|---|
Inland Revenue: |
||||
Tax on income: |
||||
Normal tax: |
||||
Gold mines |
1 430 000 |
1 320 000 |
110 000 |
|
Diamond mines |
3 000 |
3 000 |
||
Other mines |
210 000 |
160 000 |
50 000 |
|
Persons/Individuals |
5 300 000 |
4 350 000 |
950 000 |
|
Companies (other than tax on mining) |
4 100 000 |
3 770 000 |
330 000 |
|
Interest on overdue tax |
12 000 |
11 000 |
1 000 |
|
11 055 000 |
9 614 000 |
1 441 000 |
||
Loan levy |
240 000 |
170 000 |
70 000 |
|
General sales tax |
3 950 000 |
3 290 000 |
660 000 |
|
Other taxes: |
||||
Non-residents shareholders’ tax |
200 000 |
240 000 |
40 000 |
|
Non-residents’ tax on interest |
15 000 |
17 000 |
2 000 |
|
Undistributed profits |
2 000 |
2 500 |
500 |
|
Donations tax |
2 000 |
2 000 |
||
Estate duty |
75 000 |
78 000 |
3 000 |
|
Trade securities |
40 000 |
35 000 |
5 000 |
|
Stamp duties and fees |
150 000 |
150 000 |
||
Transfer duties |
180 000 |
180 000 |
||
Miscellaneous |
5 |
4 |
1 |
|
664 005 |
704 504 |
5 001 |
45 500 |
|
Mining leases and ownership: |
||||
Goldmines |
380 000 |
380 000 |
||
Diamond mines |
1 000 |
1 000 |
||
Other mines |
9 000 |
7 000 |
2 000 |
|
390 000 |
388 000 |
2 000 |
||
Interest and dividends: |
||||
Interest: |
||||
Border area development |
4 000 |
3 300 |
700 |
|
Import and export promotion |
4 400 |
4 450 |
50 |
|
Pedagogy |
9 000 |
8 000 |
1 000 |
|
Broadcasting |
1 100 |
900 |
200 |
|
Petrochemical industry |
2 000 |
1 500 |
500 |
|
Shipbuilding industry |
2 500 |
2 500 |
||
Farming industry |
7000 |
6 200 |
800 |
|
State land |
1 000 |
1 000 |
||
Transportation |
487 000 |
474 800 |
12 200 |
|
Communications |
23 000 |
22 650 |
350 |
|
Farm land purchases |
13 860 |
13 860 |
||
Local loans |
9 000 |
9 000 |
||
Cash balances |
230 |
230 |
||
Other |
7 000 |
9 330 |
2 330 |
|
Dividends: |
||||
Broadcasting |
3 000 |
2 280 |
720 |
|
560 000 |
560 000 |
16 470 |
16 470 |
|
Levies: |
||||
Diamonds export duty |
27 000 |
27 000 |
||
Mining lease rights and licences |
3 000 |
3 000 |
||
Licences |
3 000 |
3 000 |
||
33 000 |
33 000 |
|||
Recovery of loans and advances: |
||||
Loans: |
||||
Farming industry |
3 000 |
2 550 |
450 |
|
Shipbuilding industry |
3 750 |
3 735 |
15 |
|
Communications |
8 000 |
7 421 |
579 |
|
Redemption funds |
14 000 |
14 000 |
||
Other |
5 750 |
12 722 |
6 972 |
|
Advances |
5 500 |
6 623 |
1 123 |
|
40 000 |
47 051 |
1 044 |
8 095 |
|
Departmental activities: |
||||
Wood and wood products |
40 000 |
41 000 |
1 000 |
|
Water (including tax and rights) |
65 000 |
65 000 |
||
Coin sales |
25 000 |
28 500 |
3 500 |
|
Leasing of state property |
26 000 |
23 500 |
2 500 |
|
Fines and confiscations |
18 000 |
19 000 |
1 000 |
|
State diamond diggings |
500 |
1 300 |
800 |
|
Reserve Bank profits |
20 500 |
21 000 |
500 |
|
State Trust Board |
5 220 |
5 220 |
||
Sale of state land |
1 000 |
1 000 |
||
Other |
200 000 |
231 925 |
31 925 |
|
331 000 |
437 445 |
2 500 |
108 945 |
|
Total for Inland Revenue |
17 263 005 |
15 244 000 |
2 198 015 |
179 010 |
Customs and Excise: |
||||
Customs duty |
955 000 |
935 000 |
20 000 |
|
Surcharge |
365 000 |
620 000 |
255 000 |
|
Excise duty |
1 675 000 |
1 636 000 |
39 000 |
|
Miscellaneous |
65 050 |
61 050 |
4 000 |
|
Gross total for Customs and Excise |
3 060 050 |
3 252 050 |
63 000 |
255 000 |
Less: |
||||
Amount to the credit of Central Revenue Fund (sec. 22(l)(d) of Act 25 of 1969) |
250 000 |
250 000 |
||
Payments in terms of Customs Union Agreements (sec. 51(2) of Act 91 of 1964) |
750 000 |
656 000 |
94 000 |
|
Total for Customs and Excise |
2 060 050 |
2 346 050 |
63 000 |
349 000 |
Grand Total |
19 323 055 |
17 590 050 |
2 261 015 |
528 010 |
Net increase: |
R1 733 005 |
*An increase in these directly diverted taxes causes a decrease of Exchequer Revenue.
Unbelievable, my first 105 minutes in this House without calling any hon. member to order! [Interjections.]
Mr. Speaker, we shall see what we can do during the 106th minute!
I firstly want to join in the tribute which the hon. the Minister paid to Mr. Botma and Mr. Pretorius. I think we should like to extend formally to their families our sympathy. I should like to express personally my thinks for the co-operation which I always received from them, particularly in the Select Committee on Public Accounts where their services and their great intellectual ability were of considerable value to us. If I think for example of Mr. Pretorius, I as a person regard his passing away as a personal loss. That goes for both these two gentlemen. I also join in the welcome of their successors. Both of them have already appeared in the Select Committee on Public Accounts and we have already experienced their value. We welcome them at the same time as we regret the passing away of the others.
Obviously one congratulates the hon. the Minister of Finance on the manner of presentation of his budget, but he seemed to have a feeling of insecurity about this budget himself, because right at the end he said that this was not really to be called a reflationary or a neutral budget or a holding operation. He seemed to feel that he had to apologize. Well, I think he was right because if I were to try to explain what this budget is, I would have thought to myself, if I were kind to the hon. the Minister—I am inclined to be kind to him today—I would say that it is not an exciting budget. If I were to say what really is the substance of this budget, I would say it is a non-event budget. If I were to point out what it really is, I would say maybe it is a bit of a damp squib because the hon. the Minister has a few by-elections hanging over his head. [Interjections.] Well, Mr. Speaker, the first interjection in the 107th minute! If I were to describe this budget as it really is, I would say it is a piece of patchwork.
That is the tragedy of this particular budget because some of us sat here waiting to hear what the hon. the Minister and the Government are going to do about inflation. Well, what is the hon the Minister going to do about it? I defy anybody to say that there is anybody who is going to be happier about the fight against inflation after this budget than he was before. Let me give a simple example. Some of us had hopes that the import levy would be removed because that would help in the fight against inflation. Some of us had hopes that one might find that even GST might find itself remarkably reduced or reduced in regard to some aspects.
I do not want to compete with the hon. the Minister when it comes to quotations, but I brought with me a little book called The control of the purse which I recommend the hon. the Minister should read. When he spoke about making the price of getting married more expensive, because now the stamp duties on antenuptial contracts are going up, I thought perhaps I should remind him of what Edward I tried to do because he was taxing people on the essentials of life. It was for Parliament to petition to say—
Not two beds, only one bed for both—
Edward I was prepared to exempt one bed from sales tax, but the hon. the Minister wants to put up the tax on antenuptial contracts when one gets married. That is really quite remarkable!
When we come to write the epitaph of the hon. the Minister, perhaps we should echo what the Anglo-Saxon Chronicle said at the time of the death of William the Conqueror, viz—
I wonder what we are going to say about this hon. Minister when the time comes.
When it comes to the question of relief for the pensioners, let me say that one is grateful for the relief that is being given. One is, however, a little unhappy and one would like some explanation about why, when the means-test levels go up for Whites, they do not go up for the other groups. I think that that needs a little explanation, to put it mildly. The ratio of increases also does not meet with our approval, because the gap does not appear to be closing in the manner in which we should like to see that happen.
When it comes to the question of Black taxation and the question of bringing them under one Act, I can say that we are pleased to see that something we have asked for years and years is now likely to come about. However, I want to appeal to the hon. the Minister to see that there will be relief given to those who will suffer some hardship as a result of this when the statute is introduced. Then there is another matter I find disappointing, and I am sure that the women of South Africa will also find it disappointing. Whereas under the Black taxation measures there can be separate taxation for man and wife, now everyone will be faced with the situation that there will be no difference in regard to that. That is an opportunity lost to the hon. the Minister, and one regrets that it is lost.
I have asked what there is in this for inflation, which is the real issue. I find myself no more optimistic about the ability of this Government to deal with inflation than I was before the budget. There are, however, even more important things, for example the question of unemployment in South Africa. Where in this budget can one point to something really being done to combat unemployment in South Africa? That is the real crunch of it. There are problems in South Africa in regard to the lack of growth in our economy, there are problems in regard to people not having jobs, there are problems in regard to inflation and, fundamentally, there is the problem whether this Government actually is capable of planning for the things that will face us in the future, for the real South Africa of tomorrow. Is there a plan here to deal with the short term? What is more serious is that there is no plan to deal with the long term. That is what concerns us.
This brings me to a point where I will perhaps be breaking with tradition because normally one deals only with financial matters in the few minutes before the adjournment of this debate is moved. There is however one fundamental thing that worries us politcally. We are told that we are on the brink of major constitutional developments, and we have important by-elections pending. We are told people are being shown the draft Bill in respect of the constitution. This Parliament is about to adjourn and go into recess, but we who sit in this Parliament have no knowledge of the Bill that is going to be presented in respect of a new constitution for South Africa. Where is that Bill? When are we going to be shown it? When is the public of South Africa really going to be shown what is contained in that Bill? Or are we going to enter by-elections in Soutpansberg with the hon. the Minister of Manpower, in Waterberg with the former hon. member for Waterberg and, far more important, in Waterkloof without knowledge of that Bill on the constitution? Surely South Africa is entitled to know that. I want to say to the hon. the Minister of Constitutional Development and Planning that we demand that before Parliament goes into recess … [Interjections.] we will be told of the Bill and will know what in fact is happening in South Africa constitutionally.
What are you scared of?
We are not afraid to go to the country to debate that, but let the Government make that public and let Parliament not go into recess without knowing what is going to be in that Bill on the constitution.
There are lots of other matters in the budget requiring consideration and therefore I move—
Agreed to.
The following Bills were read a First Time—
Clause 1 (contd.):
Mr. Chairman, when the Committee adjourned last night, I expressed the concern of the CP at the hon. the Deputy Minister’s arbitrary decision to enlarge the membership of the council from 20 to 25 members. The council has hardly convened. There is no ratio for the decision. The hon. the Deputy Minister concedes that it is an arbitrary decision, not supported by the benefit of any experience whatsoever or substantiated by reasonable and acceptable arguments calculated to convince this Committee. How can reasonable men legislate in this fashion? It is a hit-and-miss exercise. The judgment of the CP on this issue is one of absolution from the instance, with costs unfortunately against the taxpayer. I further reiterate the approach of the CP that the modern tendency is for boards and councils to be made smaller and thus more efficient. The spadework has to be done by technical and knowledgeable committees.
Hon. members who were not even members of the commission, now endeavour to argue that the hon. member for Kuruman insisted on the appointment of people of colour on the council. This is simply not true. [Interjections.] Listen to that. Sir. The hon. member Dr. Odendaal was not even a member of the committee. [Interjections.] The position is this. The hon. member for Bryanston suggested that provision be made that a Coloured person be appointed to the council.
Order! I am sorry to have to interrupt the hon. member but he must come back to the provisions of the clause.
Mr. Chairman, you will recall that during the Second Reading debate mention was made of the fact that the increase was calculated to make provision for the appointment of additional members to the council, and then there was a debate on the intention to increase this number by appointing people of colour. I request your indulgence to allow me to proceed.
The hon. member may proceed.
I say that it is not true that my friend, the hon. member for Kuruman, insisted that a person of colour be appointed to the council. That suggestion was made by the hon. member for Bryanston. We then said that we left this in the discretion of the hon. the Minister.
Mr. Chairman, on a point of order: The hon. member for Brakpan is making a false allegation, therefore.
That is not a point of order. The hon. member for Brakpan may proceed.
The position is simply that the members of the NP on the Commission felt that this was not necessary and that the matter be left to the discretion of the hon. the Minister. In order to reach unanimity it was decided to recommend to the Minister that he consider appointing a person of colour to the council. The hon. the Minister has apparently not accepted this recommendation. Those are the facts, Sir, and I challenge all the other members of that Commission to deny it. These are the facts. The hon. member for Bryanston insisted on the appointment of a person of colour. Let there however be no misunderstanding. This body was supposed to be an advisory body responsible to a Minister who in turn was responsible to this sovereign Parliament. This will now no longer be the case unconditionally. We are now entering a new mixed and mixed up dispensation which the CP rejects. The CP has firmly set its foot on the unequivocal basis of the division of power in all facets of government. Therefore the CP rejects this clause.
May I ask the hon. member a question?
I shall answer a question.
Will the hon. member for Brakpan tell me whether I am correct in saying that I proposed in the committee that people of colour serve on this council, and that I did so on the recommendation of the chairman, the hon. member for Kuruman?
I want to reply to that categorically. The hon. member who asked that a recommendation be made with regard to the appointment to this council of a person of colour was the hon. member for Bryanston. There were other hon. members who also felt that way. [Interjections.] It may be so that the hon. member for Ladybrand also discussed the matter, but the person who advocated this was, in the first instance, the hon. member for Bryanston. [Interjections.] The circumstances were simply that the matter had to be left to the hon. the Minister. To satisfy the hon. members of the PFP, we then said that the hon. the Minister could consider appointing a person of colour to the board as well. Those are the facts.
Mr. Chairman, it strikes me as being an exercise in futility for hon. members to bring us news here in Committee about what happened on the commission. If the rules allow this, we could discuss it, but it would actually be a shame if the rules allowed such a thing. What is the position? What does a report mean? A report means that the hon. members who signed the report reached consensus on the recommendation made in the report.
Yes, 20 members.
It would be an absolute farce if hon. members could then come here and dissociate themselves from what appears in the report.
What did the hon. member for Fauresmith do?
We have a clear example of what ought to happen. One member of the commission who did not agree with a certain aspect of the report or with the report as such, gave a good account of himself; he submitted a minority report. If it is not clear from the report itself that someone was of a different opinion on any specific aspect of the report, then I do not think it befits any hon. member to give evidence here of what his standpoint was. [Interjections.] I think it would be absolutely futile and unworthy of any hon. member to try to dissociate himself here, after the event, from a report to which he had appended his signature. The signature of the hon. member for Kuruman appears at the bottom of the report… [Interjections.]
Order!
It does not befit any hon. member to testify here against his own signature. However, that is in effect what the hon. members for Kuruman and Brakpan want to do. They could have dissociated themselves from the report by, for example, having it recorded in the report that they did not support the specific recommendation. It would not even have been necessary to submit a minority report. If they had had such a note made, it would have been in order, but I really think it is unworthy and inconsistent for any hon. member to dissociate himself from something in this way. The recommendation is clear; it states—
If hon. members have in the meantime adopted another standpoint…
You have adopted another standpoint.
… that is in order, because any person is entitled to change his standpoint. It is, however unacceptable to say at this stage, as the hon. member for Kuruman in fact stated during the Second Reading debate, that circumstances are not the same now …
Surely that is precisely what I did; so what are you talking about?
The reasoning used by the hon. member for Kuruman to try to justify his failure to continue to support the recommendation is fairly transparent, but he at least has adopted the correct course. He should however not dissociate himself from what he has signed; he should rather tell us why he has changed his standpoint in the meanwhile.
Mr. Chairman, I find it a great pity that someone like the hon. member for Sundays River should have wrested a matter so completely out of context as he has just done.
That is what you people did.
The hon. member for Standerton does not know what is going on in this legislation either.
Order! I want to point out to the hon. member for Kuruman that I shall under no circumstances allow a further discussion of the principle of the Bill. The hon. member for Brakpan, as the first speaker of the CP, broached the matter. The hon. member for Sundays River, as the first speaker on the Government side, took the matter further. The rules applying to Committee Stages stipulate that the principle of the Bill may not be discussed in Committee, but only the details. My ruling is that no further speakers from these two parties may discuss the principle.
Mr. Chairman, with all due respect to you, how can you tell me that I may not discuss the principle when I have not yet begun my speech? Thus far I have only reacted by saying that the hon. member for Sundays River wrested my standpoint on the Bill out of context, as did the hon. member for Standerton, who does not know what he is talking about.
Order! The hon. member may not address me on this matter now. He may address me on what is stated in clause 1. If he wants to take the other aspect further, he may do so during the course of the Third Reading debate.
Mr. Chairman, I shall reply to that matter during the Third Reading stage, but I should now like to address you on clause 1. In clause 1 no reference is made to colour. Not a word was said about colour, either in the Bill or in the principle Act. When this Bill was originally drafted, we decided that colour should not be mentioned in it. The matter of colour therefore has nothing to do with this Bill. However, in his Second Reading speech the hon. the Minister said that he wanted to make provision for the appointment of people of colour to the council. The hon. member for Sundays River and the hon. member for Standerton, by way of interjection, tried to imply that we were deviating from this. I want to say that I accept the responsibility for our making a recommendation that people of colour could be considered. However, there is not a word about colour in the legislation. The Act provided that 20 members could be appointed by the Minister, and when he appointed them he appointed 20 Whites.
And if he had appointed a Coloured person?
Then he appointed him.
Would you have been satisfied then?
Sir, you will not allow me to reply to that now, but I shall reply to it during the Third Reading. The hon. the Deputy Minister could therefore have appointed 20 people that included people of colour. However, he only appointed 20 Whites. It seems to me that someone has brought pressure to bear on him—I do not know whether it was the hon. the Minister of Environment Affairs and Fisheries, or whether it was the hon. the Minister of Constitutional Development and Planning—to increase the number to 25 so that people of colour could be included.
It was the chairman of the commission who … [Interjections.]
We on this side of the House say—and thus far no argument has been raised against this—that a council with 20 members is large enough to deal with the interests of the environment. The commission was unanimous on this point. A previous commission on littering of which I was also chairman and of which the hon. the Deputy Minister was a member, also discussed the matter of membership in depth and unanimously decided that the relevant body should have 20 members. I also mentioned the example of the Forestry Council which has been functioning for ten years and deals with very important matters. The membership of that council has not been enlarged.
We said the council should be small so that it could be flexible. We said the cost involved in a larger council could be saved in the present difficult economic condition. We did not refer to administrative costs. The hon. member for Fauresmith referred to that the other day. He referred to an office or a meeting place and that there would only be one secretary. Mr. Chairman, the travelling expenses of five extra members would be considerable. The subsistence expenses of five extra members would also be considerable. The daily remuneration of those members should also be taken into account.
Should we then make it 15 members?
If the hon. the Minister had suggested fifteen, we would have supported it with pleasure. Before the Council for the Environment met, before they claimed that the council was not large enough, before any representations were made for that council to be enlarged from 20 to 25 members, this legislation was introduced to enlarge the council. As the hon. member for Brakpan said, this matter was discussed very thoroughly and it is not possible to include all the experts on environmental conservation and its various aspects here, but those experts could be used on committees and that council may appoint as many committees as it deems necessary to do the work.
What about the costs involved?
If there is no work for a committee it need not be appointed. They are in any case not standing committees. The commission discussed this matter in depth and those hon. members, of whom the hon. member for Standerton was one, as well as the hon. member for Sundays River and the hon. member for Ladybrand, were unanimously of the opinion that the council should consist of a maximum of 20 members, and we in the CP would like to adhere to that decision.
Mr. Chairman, the hon. member for Brakpan tried to help the hon. member for Kuruman out of the predicament he found himself in as a result of his decision as chairman of the commission. What is at issue here is the enlargement of the council from 20 members to 25 members. The argument the hon. member for Brakpan put forward was that with 20 members the council was already too large. Why do we wish to enlarge the council even further to 25 members? He alleged that this number was picked at random.
Your own Minister said so.
The hon. member for Kuruman was correct in saying that the smaller the committee is, the more effective it is. This is the case in communication. In my Second Reading speech I already mentioned that the ideal number of members for any committee or group is five because it has logical benefits and ensures the greatest possible participation of all members of that group. However, that does not mean to say that because the ideal number is five we must reduce the number of members of Parliament in this House to five. Why is it important to have the number of members there are here today? It is to represent all interest groups in the country, in our case constituencies.
Who do you represent?
I represent the Free State. [Interjections.] The important point that must be made here—we made this throughout the Second Reading and it is extremely important in the consideration of this clause—is that it has been proved in practice—please note that it was not done in a random way. The chairman of the commission knows that there were differences of opinion among the members of the commission on whether provision should be made for 25 or for 20 members. What is at issue is the necessity to represent all interest groups. Hon. members must remember that the provinces each appointed a representative from their Departments of Nature Conservation to serve as the provincial representative. Consequently there are already four members representing nature conservation, and we do not feel that this is over-representation, but we do feel that this resulted in all interest groups that should have served on that council, not serving on it. This is therefore no longer a random provision. Hon. members of the CP do not like practical matters. They like to go about with their heads in the clouds, to float on air and never let their feet touch the ground. However, this legislation concerns practical matters and that is why membership has to be increased from 20 to 25 members.
Mr. Chairman, the CP clearly finds itself in a totally ridiculous position. The arguments that they have advanced for keeping the number of members at 20 are, except for the substantive reason of race, entirely unsatisfactory.
That is not the reason.
The hon. members who have spoken have advanced the costs of transport as being a factor.
You did not understand the argument.
The hon. member for Brakpan made it quite clear that race was at the heart of everything and the hon. member for Kuruman has indicated …
Were you here yesterday?
I have followed every word of this debate.
Yesterday too?
Yes. Members of the CP have not been able to persuade any member of this House outside their own party that there is any good reason to keep the number at 20 on the grounds of their real objection, which is irrelevant. It shines out of their attitude that they want to block the Government increasing the Council’s number in order to forestall the appointment of members of other race groups. They supported the adoption of the principal Act last year after their breakaway from the NP and the coming into being of the CP. In the principal Act there is absolutely no obstruction to the appointment of people who are not White. There is nothing new in this clause which now provides for the appointment of people who are not White, nothing that is not already there and for which the original commission made provision.
I can understand hon. members of the CP having second thoughts about the implications of this measure. However, their whole attitude is illogical if one considers the attitude which they adopted last year.
You are a real new Nat.
As far as the numbers are concerned, this clause increases the number of members of the council which will have to advise the Minister on environmental matters. When it comes to that question, which is the real question, any number one might care to mention is an arbitrary number. Twenty is an arbitrary number just as much as 25, and the test of what is appropriate is the test of how wide the field is that has to be covered at the time. It is a question of what is appropriate for the task at hand now. It seems to me that given the fact that 20 members are presently appointed, and also looking at the present composition of that council, that a case can be made out for increasing that number. There is also a case to be made out for increasing the balance of disciplines represented on the council, something which we discussed during Second Reading. A case can also be made out for widening the scope of the council. The environmental field is an enormous field, and for 20 people to cover it adequately is, I submit, a sheer impossibility. It is also extremely difficult for 25 people adequately to cover the field. However, at least it takes us further and gives the council a wider scope.
The final reason, which is a very good reason, a reason in respect of which we will particularly encourage the hon. the Minister, is the question of the racial balance. The fact that there are only 20 members on the council, all of whom belong to the White race group, is, I believe, a disadvantage to the operation and the credibility of the council at the present time, and to the extent to which the hon. the Deputy Minister says he wants to use these extra five members to appoint knowledgeable people and experts from other race groups, to that extent do we support him. For that we say bravo. That is the real issue, I believe, which troubles hon. members of the CP. They are apparently troubled by the fact that this council may well become a multiracial body. As far as we are concerned it will strengthen the council if it becomes a multiracial body. We totally reject the concept which hon. members of the CP are implying, namely that we must in the end run the conservation and environmental programmes in South Africa and in Southern Africa with Ministers of different colours. That is the logical consequence of the argument put forward by hon. members of the CP. We will then also have environmental advisory councils of different colours.
Mr. Chairman, I submit that that would be an absolutely ridiculous position. In terms of the 1977 proposals—which the CP supports—we would end up with multiracial advisory bodies anyway. Therefore, Mr. Chairman, we will support the clause.
Mr. Chairman, I want to refer immediately to the argument raised initially by the hon. member for Brakpan. The fact is that that hon. member is contradictory in what he says. First of all he says—and so does the hon. member for Ku-human—that by increasing the number of members of the council we are going to increase the cost involved. I believe that what is important is that we go back to the original mandate. The original mandate was derived from a national policy in respect of nature conservation. In this respect I refer to the White Paper which was printed in 1980. I want to quote now a paragraph from that White Paper in order to prove that the scene was then really set for what was to follow. I quote from page 5, par. 2.4, of that White Paper, as follows—
So one could go on. In other words, it was an economy measure on the one hand, because activities falling under a multitude of departments were now being concentrated in this one council. There was consequently a cost-saving, an elimination of double jurisdiction. It was meant to be—and practice will show it to have been—a more rational approach to the environmental concerns of our country. [Interjections.] The White Paper, however, went further, and what I am now going to say relates to the hon. member’s statement that the hon. the Deputy Minister said that what we were doing was arbitrary. I do not think one must take literally what the hon. the Deputy Minister said. Of course there is always an element of arbitrariness in it, but the fact of the matter is that the White Paper, endorsed later by the commission’s findings, very carefully delineated what it felt to be the major areas of concern. Those were air pollution, cultural and historic aspects, marine pollution, nature conservation, noise pollution, radiation pollution, soil conservation, solid-waste littering, water pollution and any other environmental aspects. We, in fact, added two. We on the commission added the question of impact statements and the whole question of the importance of education in changing the behavioural patterns of people so that they can create and sustain a higher quality of life in our country. So we added to what the White Paper had laid down.
The Bill, which was referred to our commission and which formed the basis of our work on the commission, recommended that there should be 30 people on the council, and that was after a serious, long-term study involving a policy document for a national policy on the environment. As a result of that, the Bill advocated 30 people. So this matter appeared before us on the commission. It is a matter of history that I argued strongly for our retaining the figure of 30 members. Let me give the reason why I argued for that. Hon. members raised the issue, so I shall respond. One aspect was our giving effect to the recommendations of the White Paper and the commission’s report and adequately covering all the disciplines. The other factor related to co-ordinating, not only activities within the Government departments, but also effecting a marriage of environmental concerns within the Government departments and environmental concerns within the private sector. Right the way through it was said that the private sector must be heavily represented, because in the former dispensation the council was, in actual fact, only made up of Government-sector people. Hon. members must remember that on the commission I argued the point very strongly. Hon. members will recall that I argued the matter twice. I even said that if this were to be elevated to a principle, I would put in a minority report. I was then told that this was not a principle. They said they thought it would work better if it were smaller, but if in practice this were not shown to be the case, the government could always introduce an amendment in Parliament and increase the number. That, it was said, was a simple thing to do. So I thought: Well, if that is the case, fine! What, however, happened in practice? When the gentlemen of the department sat down with the hon. the Minister, in order to select a variety of people who could, in fact, give effect to the spirit of the White Paper and the commission’s report and meet the conservation needs of our country and the challenges to come, they found that having put together a team of people whom they regarded as essential—I should like anybody to tell me who, if any, should be taken off this list of eminent South Africans in their fields—even within the relatively narrow limit, environmentally speaking, that both the White Paper and the commission’s report laid down, radiation pollution, which we all agreed was an area of concern that should be represented, was not represented. We found that air pollution was not represented; that marine conservation was not represented and that the biggest developer in the country, the Department of Community Development, was not represented. After all, environmental conflicts occur at the points of development.
Would you not prefer to increase the membership of the council to 100?
No, I do not want to increase the membership of the council to 100. Apparently the hon. member does not understand how the council is going to function. He keeps talking about the council as if the council are going to have executive powers. However, it is a co-ordinating council. People who serve on the council, for example Prof. Fuggle, Mr. Gawie Fagan and others, are busy people.
†These are people who are already fully extended. To get them together four times a year will, in my view, be the best one can do. The actual executive work will be done by the technical subcommittees. All we are doing by co-ordinating these disciplines in the council is to provide a body of people that can have a multi-disciplinary look at what is going on as far as the environment is concerned in South Africa. They can then exercise their judgment within that milieu and, because of their understanding and experience, they can initiate work to be done by the technical subcommittees, on an ad hoc basis or on a standing basis depending on the nature of the particular matter. For the hon. member to argue that if we want more technical expertise, we can have it on the technical subcommittee and then to argue that we must have savings, is a ridiculous argument. The whole thing is just silly.
The original recommendation was for the council to consist of 30 members, but the commission came with a recommendation of 20 members. We have now split it down the middle and have found 25 to be a more satisfactory number. I think to elevate the whole matter to a principle is silly. I think the arguments on efficiency are silly.
The hon. member for Brakpan made the remark that this was a “hit-and-miss exercise”. I do not think it is worthy of that hon. member to say that kind of thing on a measure like this, which, after all, should be an agreed measure. We all want to improve the environment in our country. We know its impact upon us all, whether we are Coloured or Asian, or wherever we live in the country. If somebody drops a piece of paper in Adderley Street, it is a matter which concerns us all. We must change the behaviourism, we must try to change people’s attitudes. We must create a new conservation ethic in our country. However, to do that we must involve all the people of our country. If we can find people of colour with the necessary expertise to serve so as to demonstrate the contribution those people make and can make, and they can give us inputs which we might not necessarily have as to how we can best go about improving their attitudes towards environmental conservation in those communities, then it is a good thing.
We have so many political conflicts in our country. We must really not seek to politicize everything in our society. We have so many problems already. Let us therefore not make of conservation a matter of political conflict, at least not over an issue like this where only numbers are involved. [Time expired.]
Mr. Chairman, on this occasion I want to distance myself—metaphorically of course—from the hon. members of the CP.
Where is the rest of your party?
They are coming. [Interjections.]
Sir, it is regrettable indeed that the bona fides of this Bill are being questioned. It is equally regrettable that a seed of suspicion is being sown in regard to such an important aspect as conservation. The environment is something that should be kept above the political scene. It is something to which everybody in this country has a responsibility. If the hon. Minister is of the opinion that by expanding the advisory council it will be found that the provisions of the Environment Conservation Act can work better in practice, then it must be supported to the full. What we must remember—and this is a point that has been mentioned by the hon. member for Maitland—is that, in endeavouring to meet the problems relating to the control measures applicable to environment conservation, one requires the assistance and the co-operation of all sectors of the-community. If the inclusion of people of other race groups on the advisory council is going to mean that one is going to get a far more effective application of the Act itself, then I can only say that it is a very welcome measure. This is the basis on which we support the Bill.
Mr. Chairman, I do not want to belabour the point too much at this stage, but I just want to say that the hon. members for Cape Town Gardens, Maitland and Mooi River are all missing the point. I just want to quote from the hon. the Deputy Minister’s reply to the Second Reading debate (Hansard, 24 March 1983, col. 3867)—
*A little further on he continues—
What is so incomprehensible to me …
[Inaudible.]
That hon. member who is making so many interjections, agreed that it had to be 20. And this was after an in-depth investigation, after evidence had been heard and memoranda studied and after the matter had been debated.
†I should like to tell the hon. member for Mooi River that he must make no mistake about it that as far as we are concerned we agree that it is the responsibility of all. However, this is a co-ordinating body which initiates something or hears views of people who come forward and therefore it is not necessary to have a big, lop-sided body. The body has to co-ordinate. If one has to make provision for every facet of the environment, one has to have 50 or 100 people on that body and therefore one has to make some provision in this respect. After long discussions in Pretoria and Cape Town we agreed that it should be reduced to 20, but now the hon. the Deputy Minister says that he wants to make it 25 before the council has convened, before we know what they want and before we know what the extent and nature of their business are going to be. If he had come after a year or two years or after a certain time in which experience had been gained one could have agreed to it, but now, before they have started their work, the hon. the Deputy Minister tells us that it should be 25. We cannot accept that.
Mr. Chairman, the hon. member for Brakpan again raises this argument of an arbitrary number, but to my view he is misrepresenting what the hon. the Deputy Minister meant. I shall tell hon. members why I say this. It is so that at the time that the hon. the Deputy Minister made the appointment he did not envisage filling all the extra five posts which have been proposed. There were two or three involved. There could be a couple of positions he had not as yet considered filling. He arbitrarily created the potential for more members on the council than he necessarily wanted to appoint in the knowledge that this council is in its formative years and that we have not yet fully co-ordinated all those disciplines which have been set out in the commission’s report or in the White Paper. He therefore allowed a little leeway in the form of a few vacancies. If to that extent it is arbitrary, then it is arbitrary. Then again, however, for that hon. member to argue that the position can be taken to absurd proportions by appointing hundreds of people who are involved in environmental concerns, is still nonsense because the White Paper and the report of the committee made it quite clear which areas of concern were the prime areas of concern. It is only to cover those prime areas of concern that this council has been increased in size. It is in order to accommodate radiation pollution, air pollution and matters which we have a mandate to cover but which have not as yet been covered by the council as it is currently constituted. The reason for this is something which the hon. the Minister could not anticipate. Nobody could anticipate the fact that when the four Administrators of the provinces appointed one person from each of their provinces, they would all appoint nature conservationists. Nobody could anticipate that. Nobody could anticipate either that of the other members of the council who have been appointed at least three can be regarded as being nature conservationists, people like Douglas Hey, for example. Therefore, the council is lopsided only to the extent that nature conservation is well represented and, by comparison with the other disciplines, over-represented. This increase in the number of members will allow us to find a greater balance as far as all of the facets of the environmental concerns with which we are dealing are concerned.
Mr. Chairman, hon. members on this side of the House who participated in the debate were for the most part members of the commission. I want to thank them for their contribution as well as for the background to this Bill which they sketched for us. I was not a member of the commission, so those hon. members have the background which I do not have. However, I am now going to reply to the various points which hon. members of the CP in particular raised here.
The first point that I want to discuss is the question of other race groups. Nowhere in my Second Reading speech did I say that I was going to appoint people of other race groups. My words were—
This is subject, of course, to the condition that they are knowledgeable people.
†The main issue that allegedly worries the hon. members of the CP is the question of the arbitrary number. I want to submit that the number advocated by the commission and included in the legislation is in itself an arbitrary number. When appointing the Council for the Environment, as we did at the end of last year—I think we announced its appointment at the beginning of this year—we received a large number of representations which were made to us by all sorts of bodies and all sorts of people. In the light of that experience we found that we required to increase the number of the members of the Council for the Environment. The hon. member for Maitland and other hon. members on this side of the House who have participated in the Committee Stage debate have said that the Administrators have in fact appointed the four Directors of Nature Conservation of the four provinces. This in effect reduced the number of, let us say, people from the private sector and from the public sector whom we have nominated, to 16. In effect, therefore, the council consists of 16 members appointed by us and four people appointed by the provinces as a result of the office they hold which gives us the figure of 20. From our experience so far, we are of the opinion that it is necessary to make provision for a possible increase in the number of council members. There is no certainty whatsoever that we are going to avail ourselves, if this measure is passed, of the right we are giving ourselves to appoint five extra people. At this stage we are making provision for the possibility of the appointment of five additional people, some of whom may or may not, as the case may be, be people of colour.
There are many disciplines in the environment which are in fact not represented on the present Council for the Environment. We think that by taking this power, we enable ourselves, as the need arises and when necessary, to appoint people from other disciplines who are not represented on the council.
I come now to the question of cost. The hon. members opposite also feel that by increasing the number, we are increasing costs. I would suggest that we rather not sacrifice effectiveness for a relatively small increase in costs that is envisaged. In our wisdom we see that it is necessary to increase the number of members of the council for the reasons I have given. If that involves an increase in cost, then we believe it is a relatively small increase in relation to the objective that we think this provision is going to attain.
Clause agreed to (Conservative Party dissenting).
House Resumed:
Bill reported.
Mr. Speaker, when this debate was adjourned last Thursday, I was in the process of dealing with aspects of the Bill before us. If I may resume where I ended off, I would just like to draw the attention of the hon. the Minister to clause 3(4) in regard to goods imported without a permit. I would like to appeal again to the hon. the Minister to exercise extreme discretion in regard to allowing such goods, if I may term them as such, to be brought into this country without a permit.
What is of concern to the agricultural sector particularly is the fact that over recent years there have been numerous animals introduced into the country which could have undesirable effects in the long term. One is forever receiving reports of pet shops offering for sale animals which have been imported into this country illegally. One is also receiving reports of the importation of certain fish species which have also been brought into the country illegally. It is because of these factors that I hope that the provisions of the Bill will assist the department to now control effectively all relevant importations.
Clause 3(5) fits in with my previous observations regarding the need to import exotic parasites and predators to control indigenous pests and for this reason we see it as a positive measure.
Clause 4 deals with the powers of the executive officer. We accept that these are substantial, but they are necessary to carry out effective control. The fact that, if a person should feel aggrieved by certain regulations which the executive officer is called upon to carry out, he has the right of appeal to the Minister. This is welcomed.
Clause 5, which deals with the compulsory notification of the presence of locusts, is obviously a very important clause. We are well aware of the fact that control in countries to the north of us and in Central Africa has virtually broken down. Therefore the threat to us in this country is very much greater.
The control measures the Minister may prescribe are indeed stringent, but we see them as absolutely necessary if they are to be effective. The Republic cannot be seen out of context with the whole of the Southern African region as far as pest control is concerned, and for control measures to be effective these must be extended to apply to neighbouring independent, sovereign and self-governing States which must at all times be encouraged to co-operate.
I wish to refer to one aspect which illustrates how necessary this is. I refer to the threat of scab in the sheep industry. Scab is being controlled to a great degree within the Republic itself, but I must point out that the regulations appertaining to scab control, and dipping regulations in neighbouring countries are not being applied effectively, with the result that there is always a threat of scab being brought into the Republic from those neighbouring countries.
In conclusion I would like to point out that modern agricultural trends demand intensive selection for high performance and uniformity. We are aware of the great emphasis being placed on performance testing. The result of this, however, is that the genetic base is being narrowed in many aspects of production. Consequently agriculture is becoming more and more vulnerable to attacks by diseases and pests and it is for this reason that it is so necessary that the stringent controls appertaining to this particular aspect be encouraged. We have much pleasure in giving this Bill our full support.
Mr. Speaker, before replying to remarks and comments on this Bill by hon. members, it is my pleasure and privilege to thank hon. members of all parties in this House for their cordial congratulations. Many of them also referred to the relatively difficult task I have at the moment. I am pleased that they realise this and I take it that they will also be reasonable in their criticism in this regard. I can also say to hon. members that together with the hon. the Deputy Minister who gives me his very strong support in this difficult time, I shall try to deal with agriculture and legislation in this regard with the utmost responsibility. I am sure, too, that I can rely on the support of the hon. members of this House.
†The hon. member for Pietermaritzburg South made some very interesting remarks about certain pests and diseases. He said that most of our problems in South Africa have been brought about by the importation of different diseases in plants. I agree with him. The hon. member made the very important point that it is not always so easy to control these pests. I am sure however that the provisions of clause 3 will enable us to deal adequately with the importation of these controlled goods. In clause 4 the executive officer is empowered to handle these goods in a way which we hope will stop the importation of new diseases. We also hope that clauses 3 and 4 are an improvement on the existing provisions. In fact the Bill represents a rearrangement of principles regarding stricter sanitary control as contained in the Act of 1973.
*I thank the hon. member for Middelburg for his contribution. He is an authority in this sphere. He has a very good knowledge of nurseries and in the nature of the matter he is fully aware of the problems of plant pest control. Among other things, he made the remark that our country was internationally known for our distribution of virus-free plant material. That, too, is why we are a very respected and well-known member for the International Plant Protection Convention. Indeed, it is via this Plant Protection Convention that we are in a position to make possible a reciprocal exchange of knowledge about potential distribution of various pests in the plant industry. It is also due to our membership that it is possible to streamline this legislation further.
The hon. member for Meyerton, who apologized for not being able to be present, made certain interesting remarks about the white moths that precede commando worms. The hon. member said that the moths were the harbingers of a commando worm infestation. According to the information I have been given by the technical people in my department, it is not a moth but a butterfly. Moreover, it is said that their appearance has nothing to do with the commando worm and that one should not confuse the two. I am not aware of any agricultural crop that is a host plant to them.
The hon. member also made reference here to a recent example of the importation of certain rats, we became aware of this on the basis of a report on 18 March. The Plant and Seed Control Division immediately contacted the Cape Department of Nature Conservation and immediately began visiting the pet shops one encounters everywhere in the cities. The rat was also found in Durban and East London. It was reported to the Natal Parks Board and they helped us to identify the rat further. It is important to identify the rat for purposes of tracing it, etc. It is said that there are two species of this particular rat in the world, viz. in North Africa and in Central Asia. As yet we have not been able to determine how the rat entered the country, but we suspect that it has been smuggled into South Africa unlawfully by sailors and passengers. However, I can assure the hon. member in his absence that we are taking very seriously the matter of hunting down this new kind of rat in South Africa.
The hon. member for Fauresmith put several questions to me. Among other things, he asked that in view of the extensive powers vested in him, this executive officer would be a senior man and that he should possess not only theoretical knowledge but also practical knowledge with regard to the combating of agricultural pests. What we envisage doing, of course, is to delegate all the functions relating to agricultural pests in terms of the envisaged legislation to the Director of the department’s Division of Plant and Seed Control. The present Director is Mr. J. F. van Wyk, a man with many years of experience of pest control. Accordingly the intention is to appoint him as the executive officer and entrust this work to him.
The hon. member also put a question to me about the person who is not an official; viz. a person who is not employed by the department. Provision is made for this in the legislation with the specific aim of calling in the assistance of farmers as soon as there is, say, a locust plague. It has occurred in the past that such a person has been declared an authorized official and granted the power to carry out certain acts and act on behalf of the department, particularly when rapid action is required, for example with the view to the combating of a locust plague. The hon. member also expressed his concern with regard to the exemption of certain imported goods. He is concerned about the fact that in future, certain controlled goods may be imported without approval. The hon. member for Mooi River also referred to this. The present requirement that permits should be issued for all imports means that we have to issue more than 7 000 permits annually. In fact, such a permit consists of nothing more than setting out the conditions in terms of which controlled goods may be brought into the country. However, we can substantially reduce the issuance of these permits in order to eliminate a lot of administrative work. For example, when we publish the conditions in the Gazette, and duly set them out there, then we shall be serving this very purpose. However, this involves two requirements. In the first place, a phytosanitary certificate must be issued in the country of origin of the goods concerned. In the second place, it is a requirement that the consignment in question be declared and notified so that the necessary inspection may be carried out there. I therefore put it to the hon. member for Fauresmith and the hon. member for Mooi River that there can be no question of us relaxing the existing control in this way. The whole aim is merely to eliminate a lot of unnecessary red tape and, in the nature of the matter, to be able to take more prompt action when certain goods are brought into the country.
The hon. member for Fauresmith also put a question to me with reference to the possibility of confusion among quarantine areas. The word “quarantine area” is not employed at present in the Animal Diseases and Parasites Act, but it is in common usage with regard to the Act. Moreover, there is such a major difference between the implementation of that Act and the present legislation that we really do not believe that any confusion could occur in this regard. I therefore do not believe that an adjustment of the definition of “insect” is necessary to resolve this problem.
†I come now to the hon. member for Mooi River who asked a number of questions.
He is the farmer’s friend.
I know that. The hon. member need not tell me. He asked a number of questions, some of which were quite technical in nature. I shall attempt, to the best of my ability, to answer those question.
First of all the hon. member said that the long-term solution must be sought in biological control. I agree with the hon. member about that. The hon. member is no doubt aware of the fact that the department is actively engaged in research on the biological control of various pests in South Africa. The hon. member will also know that some spectacular results have been obtained in recent years, and I am going to mention a few examples. In the case of hakea, various insects, which were introduced from Australia, were released at selected sites in the Republic, after it had been proved beyond any doubt that they would not be harmful to the indigenous flora or cultivated crops. The department also actively advocates the judicious use of pesticides in order to minimize the detrimental effect of such pesticides. The citrus farmers have reaped the benefit of this. During the past few years—as far as I know—they have reaped the benefit of this by way of much lower pesticide bills.
The hon. member also referred to the Karoo caterpillar. He said that it was regrettable to note that Grootfontein had discontinued research on their control. That is indeed true. The Karoo caterpillar is one of a number of insects that feed on the Karoo bush. Its increasing importance as a pasture pest is a direct result of the fact that sweetgrass veld has, over large areas, given way to bushy intrusions. The results of a long-term research project to investigate the biological control of the Karoo caterpillar appeared in 1982 in the form of a doctoral thesis at Rhodes University. This project proved without doubt that any further entomological research input would be wasted, since there is virtually no hope of alleviating the problem using biological control methods.
I have always thought that caterpillars were not very considerate.
Yes. A solution may be found, I believe, by way of farm management, and here I am thinking of the reduction of the population of the host-plants of the Karoo caterpillar. It has been shown in practice that if a farmer is prepared to allow his veld to recover from the damage done to plants by sheep and goats, the damage done by the Karoo caterpillar is of minimal importance. When a farmer does not, however, withdraw a camp from normal farming activities, the incidence of pentzia bushes is high. In that case damage owing to the caterpillars would be very serious indeed. It must therefore be realized that the introduction of proper pasture management is the key to the control of the Karoo caterpillar. I know the hon. member is a good farmer and will realize that what I have said is true and accepted.
*I think I have already replied to the hon. member’s question about exemptions with regard to the importation of certain goods. I just want to add that we shall impose very stringent measures in this regard.
However, the hon. member raised another very important point. He expressed his concern about the question of pest and plant control with regard to our national and independent states.
†I want to tell the hon. member that at the time Transkei, Bophuthatswana, Venda and the Ciskei became independent, the RSA entered into agreements with them. We are co-operating with these States and we are also assisting them with the training of officers in order to help them.
*Towards the end of his speech the hon. member also mentioned scab. We in the Republic of South Africa can say with certainty that due to compulsory dipping, scab is under control in South Africa. I shall not say that we have eradicated it, but it is certainly under control. However, we do have problems with certain national states. I am, however, negotiating with these people to see whether we cannot develop a dipping programme for them which could link up with the South African dipping programme.
I thank hon. members for their support.
Question agreed to.
Bill read a Second Time.
Bill not committed.
Bill read a Third Time.
Mr. Speaker, I move—
Since the marketing of yellow margarine was legalized in 1971, the annual sale of butter has decreased from almost 54 000 tons to less than 18 000 tons. One of the contributing factors to this decrease was the fact that butter was not as easy to spread as its competitors on the market.
Similar decreases in butter sales have also taken place in various other dairy countries when the marketing of yellow margarine was permitted there. However, they have largely succeeded in overcoming this problem by marketing a blend of butter and vegetable oils.
The local dairy industry has developed a similar product in which a small percentage of vegetable oil is blended with butterfat. The spreadability of this product is far better than that of pure butter and should be acceptable to the consumers.
†The Act at present contains a definition of margarine but no definition of butter. In terms of the definition margarine is a product which is manufactured mainly from one or more vegetable or animal fats or oils, and which in substance is an imitation of butter.
An interpretation problem has now arisen on the question whether or not a product consisting of butterfat blended with vegetable fats or oils and which is in the form of butter, can be regarded as butter in terms of the Act.
In order to remove any doubt which may exist, the Bill provides for a definition of butter. In terms thereof a blended product in the form of and with a consistency similar to that of butter and which has been manufactured mainly from butterfat will be regarded as butter. Conversely a product in the form of butter but consisting mainly of vegetable or animal fats or oils, excluding butterfat, will be regarded as margarine. The Bill further provides that certain obsolete designations and references be deleted or substituted. The maximum penalties have remained unaltered since 1961 while the jurisdiction of our magistrates’ courts has been increased considerably. These maximum penalties are therefore increased to meet the needs at the present time.
Mr. Speaker, I think that perhaps the first sentence of the hon. the Minister’s introductory speech is very illuminating where he tells us that the yearly consumption of butter, which before the introduction of yellow margarine was 54 000 tons, has today reduced to only 18 000 tons. This is, I think, a sign of the fact that the dairy industry as such is a very beleaguered section of a most beleaguered industry. It is affected by all the evils caused by the Government’s preoccupation with protection for strategic regions. It is also affected by the high cost of Atlantis Diesel Engines, high fertilizer prices, high diesel prices, high electricity prices and high transport prices. Yet, it is perhaps the most difficult form of all farming. Dairy farming is one of the hardest lines of any type of farming. That milk has to go out seven days a week and the milk farmer has to be up at about 5 o’clock, whether it is winter or summer. He needs to be in his dairy and he needs to ensure that his factory, which is a milk factory, is producing at that hour of the morning. If this particular industry had to have industrial protection as certain, blue collar workers have industrial protection, I think one would have great difficulty in trying to decide what sort of protection the dairy farmer had. His hours are long and his work is very hard. Particularly—and I want to spell out a word of warning here to the hon. the Minister—the dairy farmer today is affected by high maize prices. I was shocked to read in the newspaper the other day that the maize farmers are looking for an increase of no less than 25%. I want to ask the hon. the Minister please to be aware of the fact that with any increase he gives to maize farmers—I am not saying he should not give them an increase—he certainly has to consider very carefully the situation of the dairy farmer because that increase to the dairy farmer will need to be at least an equivalent percentage. I can produce a couple of cuttings that spell out the seriousness of the situation in some areas of the country. I have a cutting here from the Daily Dispatch of March of last year in which a certain Mr. Lloyd, who is the chairman of Model Dairy, disclosed that the number of farmers supplying the dairy in East London had dropped from 100 to 60 in the last 18 months because dairy farmers were leaving the land and the dairy was having to pay more and more to ensure that other suppliers stayed in the business. He said further—
Then, to bring the situation perhaps a little bit more up to date, only this week, on Tuesday 29 March, there was a long article in the Eastern Province Herald under the heading “Plight of the dairy farmers desperate”. The name that comes up in this article, I promise you, is entirely unintended from my part, but it happens to be in the article. It says—
This is perhaps the next item that I should raise with the hon. the Minister. I want to say that the drought relief situation in respect of dairy farmers is in my opinion inadequate. For instance, if they are in phase 1 of the drought relief programme, they are given no relief in respect of the railage they have to pay on transporting dairy meal that they have to import to keep their dairy cattle going and producing. It is not enough simply to give a dairy cow fodder. One has also to feed the animal with dairy meal in order to achieve maximum production. I am aware, of course, that we are producing a large quantity of milk at present but we must remember that a very short period of time ago we were importing large quantities of milk powder, butter and cheese.
I want to point out that from 1965-’66 to 1979-’8O butter consumption per capita dropped by 75%. I am pleased to note that provision is being made for a blended butter/ margarine mixture in this particular legislation, although I feel that the wording used in the Bill is perhaps a trifle inexact. As the clause is worded, it refers to a blend “mainly” consisting of butterfat or vegetable oil. “Mainly” is a very inexact concept. Does the hon. the Minister or his department mean by this that if 51% of the blend is from butterfat, the product will then be called butter? Perhaps one should give a little more consideration to this because the margin that one may have to deal with can be very fine. If the blend is going to be 75% /25% from butterfat, then by all means call it butter. However, I for one would feel rather unhappy to see a product marketed as butter which in fact contained only 51% of butterfat and the balance from vegetable oil.
If it is 51% it is no longer butter.
Thank you, Sir. I am happy to have that answer from the hon. the Minister.
When one looks at the matter further, one sees that milk production in this country fell from 70 kg per capita in 1960-’61 to 31 kg per capita in 1979-’80. This is a tremendous drop. Our consumption of cheese is also very low by world standards. These are all controlled products and I want to make this point very clear. The three products that I have mentioned in regard to which the per capita consumption has dropped considerably are all products that are controlled by boards. However, as far as the uncontrolled dairy products are concerned such as yoghurt, exotic cheese and ice cream, they have all expanded their production and consumption considerably within the South African market. I believe that there is a moral in there somewhere.
We in these benches do believe that the legislation before us is an improvement and we shall support it. There is only one aspect of it to which we object and this relates to penalties. We are quite happy to go along with a situation in which fines are increased. We live in an inflationary age and obviously, with the value of money decreasing, the amount of the fine should be increased. We have no qualms about this at all. However, we do not approve of inflationary prison sentences. A year or a month or a week in prison in 1983 is exactly the same penalty it was in 1903. Imprisonment deprives a person of his liberty for a fixed period of time, and whether this happened 80 years ago or whether it happens today, we do not believe that there has been sufficient justification advanced by the hon. the Minister in his speech or sufficient explanation given in this Bill for prison sentences that are being increased in terms of this Bill by as much as sixfold. We believe this is onerous, and in the Committee Stage I shall move amendments to reduce these prison sentences back to the sentences in the present Act. My amendments are on page 80 of the Order Paper, and no doubt the hon. the Minister has seen them.
Clause 1 contains the definitions of “butter”, “animal fat”, etc. and I think this clause does make for greater clarity subject to the question which I have asked the hon. the Minister.
I have already commented on the penalties, but I must point out that there are penalties which relate to the manufacture of margarine except under the authority of a permit. I should like to ask the hon. the Minister whether he would not spell out a little bit further precisely what is envisaged in this type of section because it is possible that the prison sentences that are in the Bill might be too low if in fact one remembers the situation in Spain about two years ago when a certain brand of vegetable oil was marketed throughout Spain and it had a very toxic effect. I think several hundred people died as a result of their consumption of the oil. Is it intended to control that type of situation by means of this legislation? I would have thought that should rather be controlled by health provisions and not by provisions relating to the dairy industry. I feel, however, that that particular point should be made and we want clarification from the hon. the Minister on that.
For the rest the Bill deals predominantly with definitions with which we have no problem at all. Therefore we shall support the Second Reading of the Bill.
Mr. Speaker, I want to express our thanks to the hon. member for Port Elizabeth Central for supporting the Bill on behalf of his party. The hon. member had a great deal of fault to find with the way in which dairy farmers are treated and he put quite a number of questions to the hon. the Minister. However, I want to point out to the hon. member that although I do not deny that the dairy farmer has his problems, I do think that if there is one group of farmers that can still keep their heads above water at this stage it is the dairy farmers.
The dairy farmer has a cash income every month. If he takes care of his herd, as he ought to, he will have a fairly good income every month. I do not deny what the hon. member had to say about how expensive fodder is, etc. I nevertheless believe that when we consider the other problems in agriculture, we still have a great deal to be grateful for as far as the dairy farmers are concerned.
The Bill only deals with butter. I want to express my sincere thanks to the hon. the Minister and his department for the introduction of the Bill which in my opinion is a very important piece of legislation because in the first place it deals with a very important product, namely butter, which we want to turn into an even more important product. I believe I am right in saying that a milestone has been reached and a tremendous breakthrough made in the history of the dairy industry with the Bill now before this House.
The main object of the Bill is, in terms of clause 1(a) to allow a small percentage of vegetable oil to be mixed with butter in order to improve or enhance the spreadability of butter—this has been a major problem or shortcoming over the years—while still allowing the new product to be called butter. I want to express my sincere thanks on behalf of the dairy farmers for this important step that has been taken. I am only sorry that research in connection with the mixing of vegetable oil with butter did not become a reality in 1971 because in that year the House gave its consent for margarine to be coloured yellow. The consumption of butter has dropped tremendously since margarine was coloured yellow. The hon. the Minister also referred to this during his Second Reading speech. During 1970-’71 the consumption of butter was 55 000 tons per annum compared with the consumption during 1982 of only 20 000 tons per annum, and this in spite of a tremendous increase in the population. In contrast the consumption of margarine during the same period rose tremendously from 19 000 tons in 1970-’71 to 91 000 tons in 1982.
I did a little research into the manufacture of margarine and arrived at certain conclusions. I think it is necessary for us to consider the manufacture of margarine because it may seem as if in mixing a small percentage of vegetable oil with butter we are doing margarine a disservice in order to benefit butter. This is not the case. I came across a book containing three papers. These were papers by experts in connection with the manufacture of margarine. These papers contain very interesting information. The first interesting fact is that margarine was manufactured for the first time in South Africa in 1947. What does that tell us? It tells us that up to 1947 there was only one important breadspread in South Africa that had to feed the entire nation, namely butter. This butter met all the requirements of the population of South Africa. I want to go so far as to say that up to 1971 butter was the most important spread because the sales of margarine as spread did not actually get off the ground until it was coloured yellow in 1971.
Let us first consider the manufacture of margarine. I am quoting from a paper read by Mr. Theuns Botha, B.Sc., who read his paper when he was the general works manager at Lever Bros, in Boksburg. He said—
I am still quoting—
It is therefore quite clear that milk is an important ingredient in the manufacture of margarine. For that reason I cannot find any fault with a small percentage of vegetable oil being used to make butter a better product by increasing its spreadability. This ought also to put an end to the unfair way in which butter and margarine have been played off against each other during the past few years. These two agricultural products are supposed to supplement each other and not to compete against each other.
I think the other amendments moved in this Bill are of an administrative nature and are logical rectifications which are being made. I do not think it is therefore necessary to elaborate on them. I support this Bill wholeheartedly.
Mr. Speaker, we are all acquainted with this wonderful product which is legally known as butterfat, or pure fat from milk. It is a product of the dairy farmer. I want to agree with the hon. member for Port Elizabeth Central that the dairy farmer is the category of farmer who has to work very hard to be able to make a profit. The dairy farmer is a person who must literally earn his bread by the sweat of his brow.
Do the Coloureds also eat margarine?
I could probably have said that that hon. member is a “bitterbek”, but I prefer to say that he is a “botterbek”. The dairy farmers are among those who are having a hard time at the moment owing to the drought and the prevailing economic conditions. As a result of the present economic conditions consumers are unable to afford the dairy farmers’ produce. They are farmers who are having a hard time as a result of production costs. I want to call on the hon. the Minister and the Government to take a very sympathetic look at the dairy farmer and producer, not only the producer of butter, but also the producer of factory milk, cheese and powdered milk products. Butter is one of the dairy products that has gone through a very lean time in recent years. In recent years this delicious dairy product has encountered a formidable competitor, namely margarine. Margarine does not taste as good as butter, but because margarine is far easier to spread than butter—we all know what it is like to try to spread rock-hard butter onto one’s bread on a cold winter’s morning—butter has lost ground in favour of margarine. For this reason the dairy industry has to do something to make the spreadability of butter competitive with that of margarine.
Pure margarine gives one cholesterol.
That hon. Minister should rather keep his mouth shut now because every time he opens it he gets deeper into trouble. We shall deal with him tomorrow on another subject. Sir, the CP is fairly allergic to change, particularly when change means integration. Normally this party would strenuously oppose any change which would lead to integration. However, here we have a change which we support. Here we have a form of integration we approve of.
The spreadability of butter is being increased by blending a small percentage of vegetable oil into the butterfat. The definition of “butter is making provision for this mixture to continue to be regarded as butter. This is important for the producer who wants to sell his product. That is why I believe that the dairy farmers are being very sensible when they ensure that the spreadability of their product—in this case, butter—is being improved. I am convinced that butter, with all its other wonderful characteristics, as well as its greater spreadability, will be placed on the road to victory with this step. In the first place, it is on the road to victory as far as its presence on the dining-table of every family in South Africa is concerned. In the second place, it is on the road to victory as far as its saleability is concerned, as well as its ability to compete with other spreads.
This legislation is in the interests of the dairy industry and also in the interests of the dairy producer. The CP is therefore pleased to support it.
Mr. Speaker, although the hon. member for Kuruman spoke a whole lot of rubbish, I still want to thank him for his support for this legislation. [Interjections.] In addition, I want to associate myself with the thanks expresssed by the hon. member for Ladybrand to the hon. the Minister of Agriculture for his submitting this amending Bill, which is of the utmost importance to the dairy industry. It is in actual fact a rectification as far as the dairy industry is concerned, one which became essential as a result of a situation which arose … [Interjections.]
Mr. Speaker, if hon. members of the House would only give their attention to this discussion, they could in the process learn what butter really is. It is quite clear to me that they have not known for some time what butter really is. [Interjections.] As I said, this is a situation which arose in the spread industry, after this House passed legislation in 1971 …
Order! I regret having to interrupt the hon. member for Humansdorp. The hon. the Prime Minister has requested me to afford him an opportunity to make a statement. The hon. the Prime Minister has the floor.
Mr. Speaker, I thank you and this House for the opportunity of making the following statement:
The Government intends to give notice, as soon as possible after the resumption of the business of Parliament after the Easter recess, of legislation to amend the Constitution of the Republic of South Africa. The Government wishes to obtain the greatest possible co-operation, within the provisions of the principles on which it has been elected, in order to give statutory effect to its constitutional proposals in the interests of stability and meaningful relations between the various population groups. The electorate is entitled to be fully informed with regard to this matter. After a proper discussion of all the stages of the legislation, and before it comes into operation, therefore, it will be submitted to the voters who elected this Parliament, by way of a referendum at a suitable date.
Hear, hear!
The referendum will be held on the principles contained in the Bill. The Government has the fullest confidence in its well-intentioned proposals and in the desire of all reasonable voters to bring about a dispensation which will make satisfactory provision for the security and the political rights of Whites, Coloured people and Asians.
Mr. Speaker, it is an important announcement which the hon. the Prime Minister has made. I agree with the hon. the Prime Minister that changing the constitution of a country is a fundamental and important step, and that for this reason, one should find the best possible way of gauging the support for such a step. I believe that a referendum is a suitable way of doing this.
I urge that the referendum should present the electorate with a very simple choice so that there cannot be any confusion about the way in which they should cast their votes.
In the second place, I find it regrettable that this referendum should be limited to the Whites, since, as I understand it, the Whites are not the only ones who are going to be affected by this new constitutional dispensation. I should like to see a referendum which would involve all South Africans—Whites, Coloureds, Indians and Blacks—so that we could gauge … [Interjections.] … their true feelings. [Interjections.]
Finally, I should like to appeal to the Government—especially to the information services and the SABC—to ensure that all parties have free access to the media, on a proportional basis, so that they, too, may explain their standpoints to the voters clearly and unequivocally.
Mr. Speaker, I should like to welcome, on behalf of the CP, the announcement made by the hon. the Prime Minister, i.e. that the White voters are going to be enabled to say what they think of the proposed constitutional change. I believe that this is the greatest constitutional change this century, because it means that the Whites are to surrender their sovereignty. [Interjections.] That is why I believe that the Government owes it to the voters to give them an opportunity to express their opinion on the matter. I should like to associate myself with the hon. the Leader of the Opposition in saying that all parties should be given a fair and reasonable opportunity during the campaign to make use of the State media—the radio and televion service—to put the case of the Opposition parties as well. [Interjections.]
Mr. Speaker, on behalf of the NRP I should like to welcome the fact that the widest possible test of opinion amongst voters will be made. I am not quite clear about whether the hon. the Prime Minister has provided an alternative for the others concerned, the Coloured and Indian people, whose views I believe are as important as those of the White electorate and whom I believe should also be able to express a clear opinion. We nevertheless welcome the announcement of a referendum. We believe that it is the correct way to approach any fundamental change which will affect the entire future of the country and all its people. We therefore look forward to seeing the legislation and being able to examine it in depth.
Business suspended at 18h30 and resumed at 20h00.
Evening Sitting
Mr. Speaker, when you interrupted my speech so suddenly before dinner, my last thought was that the hon. the Prime Minister was going to cut through my butter with his political knife, but in the same way that we are going to modify butter to meet current requirements, we are going to modify our constitution to meet the requirements of South Africa. For most hon. members in this House, as well as for most voters, butter will be sufficient to get them going, but I am afraid there are some people on whom we shall have to use turpentine! [Interjections.] I should like to know from hon. members of the CP how they are going to vote. Are they going to vote with the PFP? If not, then with whom? [Interjections.]
We vote for our people. [Interjections.]
Order! Hon. members will have sufficient opportunity to fight the referendum outside. Let us now confine ourselves to butter.
I just want to say that I have great respect for my hon. leader because he has the courage of his convictions to take this matter to the people. [Interjections.]
The hon. member must now come back to the Bill.
I gladly comply with your request, Sir.
In order to understand the situation with regard to the spread industry, we must delve back into the past a little. That is why I referred to the Hansard of 1971 and looked up the Second Reading debate on this matter. In his Second Reading speech on the dairy legislation the then Deputy Minister of Agriculture, Minister Schoeman—at present the hon. the Minister of Transport Affairs—pointed out that the consumption of margarine had in creased by 46% between 1965 and 1970, whereas the consumption of butter had dropped by 11%. [Interjections.] If hon. members would allow me to make my point, they would also find out what butter is. However, butter production was not sufficient to meet the demand. That is why these hon. members do not know what butter is. That is why they are constantly interrupting me. That is why in 1971 butter prices were adjusted sharply upwards by the then hon. Deputy Minister. The argument was then advanced that it had become essential to make a cheaper spread available to the lower income groups, a spread which would be acceptable to the general public. Minister Schoeman said at that stage (Hansard, 16 June 1971, col. 9359)—
In other words, the entire exercize was aimed at presenting margarine in such a form that it would be accepted by the consumer who was used to butter. At that stage the hon. the Minister gave the assurance on behalf of the Government—I must say this to his credit—that the interests of the dairy farmer would be protected throughout. And I want to tell the hon. member for Kuruman and the hon. member for Port Elizabeth Central that the Government has kept its word. Over the years it has looked after the dairy farmer.
Are you satisfied with everything?
Give me a chance to finish my argument; then you will see what I mean. [Interjections.]
Order!
Mr. Speaker, I should like to express my thanks to the hon. the Minister, because he is a man who understands the farmer’s interests and knows how to deal with farmers. Later on in my speech I shall indicate how this step, the introduction of yellow margarine, influenced the situation in the years that followed. Not even the hon. the Minister could have foreseen that.
To the credit of the hon. member for De Kuilen—unfortunately he is not, present at the moment—I want to say that at that stage he took up the cudgels for the dairy farmer and for the housewife. Although I do not share the political philosophies he supported then, I do have great appreciation for the agricultural vision he displayed at the time, because he predicted accurately what would happen, namely the unfair and unjust propaganda in favour of margarine and at the expense of butter. It is alleged that margarine is supposedly better for general health than butter. This propaganda has had various effects in various parts of the world. To this day there is no irrefutable evidence of this.
†Mr. Speaker, to qualify my statement, I would like to quote from a British journal on consumer studies, dated June 1981. In comparing different types of spreads, they say—
*Mr. Speaker, that is surely correct. I really do not believe there is such a thing as a bad food or a bad drink. It surely depends on how one uses it. After all, anything one eats or drinks or does in excess is bad for the system. [Interjections.]
†Mr. Speaker, take for instance the hon. member for Bezuidenhout, if he will allow me to. That hon. member does not only manufacture dairy products, but he is also a regular user of that product. And you will agree with me, Sir, that he is a real picture of health, despite his age.
*If I compare him with the hon. the Minister of Transport Affairs, who only drinks black coffee, then hon. members will understand what I mean! [Interjections.]
Mr. Speaker, on a point of order: May I point out that I am fond of milk, but Parliament only has Jersey milk and I do not drink Jersey milk. [Interjections.]
Mr. Speaker, we shall get to Jersey milk. The hon. the Minister must just listen patiently. It is a fact that the advent of yellow margarine coincided with this world-wide campaign against cholesterol. Apparently the average housewife of South Africa believed that she could safeguard her husband against possible heart problems by eliminating butter from his diet entirely, because we found that immediately after the introduction of yellow margarine in 1971, the per capita intake of butter dropped tremendously, while that of margarine rose tremendously. It was therefore mainly as a result of the cholesterol spectre and the difference in price. Between 1955 and 1971 the per capita consumption of butter remained more or less constant at between 2,4 and 2,7 kilograms per person. The total sales of butter increased from 41 000 tons to 55 000 tons, however, and that was the highest production or consumption of butter of all time. That was until 1971. If we were really to undertake an in-depth study of the true situation that developed in the butter industry after 1971, we would find that what was virtually a catastrophic change took place in this connection. In 1971 there were 46 600 producers producing cream and sending it to the factories. Within the short period of 10 to 12 years this number dropped to a meagre 6 499. Then we should also take into consideration that this number of 46 600 represented half the farming population of South Africa, and this, as I have mentioned, has now dropped to a mere 6 500. What does this mean? What do these facts tell us? In the first place, it means that the traditional cream can at every station or siding, has disappeared. Today they are chrome or copper ornaments in our sitting-rooms to remind us of the days when that cream can ensured a handy extra income every month, an income which paid for the children’s education or for the monthly provisions of the master and the servant or even for his wife’s clothes—indeed, a handy extra income which in many cases kept the wolf from the door. We find that between 1971 and 1981 the per capita consumption of butter dropped from 2,5 kilograms to a meagre 0,5 kilograms per person. If we compare these figures with those of overseas countries, we find that the consumption there is 6 to 7 kilograms per person. Sales have dropped to a mere 20 000 tons from, as I said, 55 000 tons. The consumption of yellow margarine, on the other hand, rose from 19 000 tons in 1972, a year after it had been introduced, to 91 000 tons in 1981. The competition between the two products therefore became completely distorted. The position is that today we no longer have people who have to get used to margarine, as was the case in the days of the hon. the Deputy Minister of Agriculture in 1971; we are now dealing with a generation of people who do not even know what butter looks like.
Or tastes like.
Or tastes like. The hon. member is quite right. In spite of this, butterfat will always remain an integral part of the dairy industry. I just want to tell the hon. the Minister of Transport Affairs that even if he slaughters all the Jersey bullocks, he will still not solve the problem. [Interjections.] I also want to ask the hon. the Minister whether he remembers selling his Frisian cows a few years ago because they did not pay. [Interjections.] I just want to tell the hon. the Minister that I still have my Jersey cows. [Interjections.] I also want to tell the hon. the Minister, in lighter vein, that the Jersey farmers seem to be doing better than the Department of Transport Affairs. [Interjections.]
It is also a fact that from time to time the dairy industry is saddled with surpluses which arise as a result of various circumstances, whether it be as a result of drought conditions or whether it be as a result of economic problems being experienced in other branches of farming. Dairy farming has always been a handy standby, still used by many a farmer to stabilize another branch of farming. The fact of the matter is that the dairy industry may not refuse to deal with the occasional dairy farmer, but has to sell those farmers’ products as well. For that reason it is important for us to retain the market we have, and even to extend it and re-establish the balance.
Again we are faced by the situation that we have to adjust to the needs of the times and have to give the housewife the product she wants. This can be done by improving the spreadability of refrigerated butter, because this is the major disadvantage of butter. This can be done by adding a little vegetable oil to the butter, as the hon. member for Ladybrand has already pointed out.
Technology has already progressed to this point. In many overseas countries this mixing has been applied to very good effect, I could mention that as long ago as 1979 the Swedes were already marketing a mixture named “Bregot”. It consists of a mixture of 80% butter and 20% vegetable oil. This dairy spread has also been marketed in Finland with great success—in other words, regulations which stand in the way of the development of new products must be eliminated.
It is interesting to look at the German pattern. In Germany not only the consumption of butter, but the per capita consumption of butter is increasing, whereas the per capita consumption of margarine is slowly decreasing. It is also interesting that the mixing of butter and vegetable oils is not allowed in Germany. The increase in butter consumption in Germany is ascribed to consumer preference as regards taste and also that the fear of cholesterol no longer exists.
It is quite clear that with the interests of the dairy industry in view, the time is more than ripe for this amending Bill and for that reason we on this side of the House wholeheartedly support the Bill.
Mr. Speaker, I suppose with the impending Currie Cup final during the weekend we must be aware of the fact that dairy products do play quite an important part. I refer in this connection to the butterfingers which may be evident in the slips.
Not in Natal.
Do cricket players eat butter?
They would be far better disposed if they did.
The hon. member for Humansdorp has covered a very wide range in regard to the dairy industry, but there are one or two points which I should like to make. I am also particularly pleased to see the hon. the Minister of Transport Affairs here on this occasion, because after all it was he who actually threw me, as it were, into the melting pot by appointing me to the Dairy Board when he was Minister of Agriculture.
And it improved immediately.
He was a good member.
I thank the hon. the Minister for that remark.
What we must bear in mind when we look at the dairy industry and at the Bill before us that there is no other agricultural enterprise as widely represented throughout the overall spectrum of agriculture than the dairy industry. If we look at a breakdown of the present dairy supply position as in February 1983, we come to the rather revealing figures, as the hon. member for Humansdorp has stated, that almost half the farmers of South Africa have a finger in the pie of the dairy industry. We see that the fresh milk suppliers in the controlled areas number 1 800 and the fresh milk suppliers in the uncontrolled areas some 2 000. There are a total of 23 000 industrial milk suppliers whereas the cream suppliers number 6 000. This is in round figures, and it gives one a total figure of approximately 32 000 to 33 000 suppliers. In other words, half the South African farmers are in one way or another connected with the dairy industry.
If one looks at the dairy industry, I think it is safe to state that this industry is really the economic sponge of agriculture. During hard times brought on for example by drought conditions when crop yields are low producers expand or retract their production according to the economy. In other words, the dairy industry is looked upon as a means of meeting cash-flow problems under a variety of conditions. This, incidentally, has had an unfavourable effect on the industry. It is here that surpluses are created. Frequently surpluses are created by part-time dairy farmers coming into the market to solve a temporary cash-flow problem. When conditions improve, they leave the dairy industry and leave behind the problems of the surplus they have created and which have to be borne by the dairy farmer who is permanently in production, i.e. the genuine dairy farmer.
For the part it plays, the dairy industry is not accorded the recognition to which it is entitled by the Government, because in times of surplus and in times of difficulties the industry itself experiences, Government assistance has not always been available. We must remember that butter itself is the balancing factor in the dairy industry. It is indeed alarming, as the hon. member for Humansdorp stated, that butter consumption has dropped from some 50 000 metric tons to 15 000 metric tons since 1971. This can of course be attributed to margarine. When the colouring of margarine was approved in 1971, the then Minister of Agriculture gave the assurance that the dairy industry would be protected. I am sorry to say that this has not been generally adhered to because margarine quotas were not enforced and the consumer subsidy on butter has been reduced each year.
The decline in the consumption of butter led the board to investigate a greater diversification within the industry and the production figure in February relating to butter is now a mere 18 500 tons as compared with a production figure of 50 000 tons in 1971. This has led to a greater utilization of milk products in the manufacturing process. It has led to butter factories closing down and giving way to centralized powdered milk factories. The result has been a growth in the production of powdered milk. The consumption of powdered milk products has increased and the normal consumption now is in the vicinity of 20 000 metric tons per annum. A highly undesirable practice has now reared its head and I wish to bring this strongly to the attention of the hon. the Minister because the indiscriminate and illegal importation of milk solids is now taking place from countries of the heavily subsidized EEC. This has been done in two specific ways. Firstly, by plain illegal importation and, secondly, by the importation of milk solids under the guise of another product as a result of a minute quantity of additives. This has affected the local consumption of milk powder products to the tune of some 7 000 metric tons per annum. In other words, if one takes into consideration the normal consumption which is estimated at 20 000 metric tons a year, which is easily provided by local manufacture, it is estimated that the consumption of locally manufactured powdered milk has been robbed, and I repeat robbed, by some 7 000 metric tons per year as a result of these illegal importations. I do appeal to the hon. the Minister to take steps to ensure that this malpractice is brought to an end. We therefore welcome the increase in the penalties that are contained in this Bill because we in these benches see the justification for it that the punishment must fit the crime.
I now wish to turn to other aspects of the Bill. We fully support the Bill in that we see that it is desirable that in the interests of market penetration and product diversification the blending of butter and vegetable oils must be accommodated. However, I should just like to put a question to the hon. the Minister with regard to the percentage of margarine and vegetable oils that may be added. Perhaps it might be an idea if some indication were to be provided on the wrapper to indicate exactly what percentage of butter and vegetable oil is included. Possibly it would be logical if these prescribed categories—and I regard them as prescribed categories because there may be some blends that contain 25% vegetable oil and 75% butter, and vice versa, or 49% vegetable oil and 51% butter—and percentage allowances should be prescribed by the Dairy Board.
Finally, I should just like to bring to the attention of the House the present trend in the dairy industry. We are sitting at the present time with a considerable surplus of powdered milk. The reasons for this I have already explained. It is quite clear that there has been a downward turn in production within the dairy industry since December and as a result of the drought conditions and the severe heat that has been experienced in the Highveld areas that this downward trend is likely to continue. It would appear that there is likely to be a shortage within the not too distant future of fresh milk and of certain other dairy products before the end of this year. The dairy industry is known as a very fickle industry because from a surplus the one moment one can find oneself confronted with a shortage within a relatively short period.
I must make it clear, Mr. Speaker, that I believe that the dairy industry is the Cinderella of South African agriculture and that a greater measure of confidence must be instilled into the genuine dairy farmer if he is to continue with the onerous task that he has accepted.
Finally, Mr. Speaker, I should just like to draw to the attention of hon. members that the genuine dairy farmer carries the baby for the whole industry, and that he feeds it on the milk of human kindness.
Mr. Speaker, I thank hon. members for their support of this legislation. Hon. members have covered a fairly wide field in discussing this Bill and have said a good deal about the dairy industry in general. I want to say at once that many of the aspects that have been raised here by hon. members could perhaps be more fruitfully debated when the Agriculture Vote comes up for discussion. In any event, I shall try to reply now to some of the matters raised by hon. members in this debate.
The hon. member for Port Elizabeth Central—he was the first speaker—mentioned the present aid schemes and said that they were not sufficient to help the dairy farmers in South Africa. I do not know about that. These schemes are very comprehensive. It is very difficult to give a proper reply to this because the hon. member did not specify to what particular aspect he was referring. I want to point out to the hon. member, however, that the circumstances in the dairy industry are quite different from those in other industries. Consequently it cannot be done in terms of an existing scheme. I am thinking specifically of the scheme with regard to the emergency grazing areas. That is a specific aid scheme which has been introduced in those particular areas. When this scheme was devised—I am referring to the old scheme, which has been in operation for the last four or five years—the position of the dairy farmers was not affected and they were not taken into consideration. That was because they were not experiencing any problems at that stage. Now that the drought is assuming such enormous proportions, it has probably become necessary to adapt some of these schemes in order to devise a much more comprehensive strategy in which the various industries can be accommodated. Possibilities do exist within the total package of this scheme, though, for assistance to be rendered to the dairy farmer as well. However, this is an aspect which could perhaps be discussed in greater detail in the debate on the Agriculture Vote.
Furthermore, the hon. member mentioned the price of maize and suggested that we should not only raise the maize price, but the price of the milk producer as well. I want to point out to the hon. member that when it comes to the producer prices of dairy products, all cost factors are normally taken into consideration, including, therefore, the rise in the maize price. It is taken into consideration, therefore, but it cannot be done purely on a basis of cost plus. One must also have regard to what the trade itself can accommodate. So the situation with regard to supply and demand also plays a major role in this connection.
Another hon. member made a very important statement in this debate and asked a very important question. It concerns the percentage of vegetable oils to be mixed with butter. I told the hon. member by way of interjection that if it was more than 51%, the mixture could no longer be regarded as butter. I agree with the hon. member when he points out that in terms of the legislation, there has to be a substantial similarity. Substantial similarity is a relative concept, of course. Therefore it is difficult to lay down a percentage. To some extent this also answers the question of the hon. member for Mooi River. Therefore the hon. member for Mooi River should also pay attention to what I am saying now. I am replying to the question put to me by the hon. member for Port Elizabeth Central in connection with the proportion of vegetable oils to butterfat in the blend.
I should say that the first requirement should be that of taste. Similarity in appearance goes without saying. It is obvious, therefore, that there should be a similarity in colour, but I think taste is extremely important, and this is up to the people who do the research. They will decide what the absolute minimum vegetable oil content should be to make it easier to spread the butter. In other words, they will lay down the minimum vegetable oil content. I want to add, though, that there are other chemical facets as well that have to be taken into consideration. It has taken years to carry out the research on this particular product. If this product had been available to us in 1971, we would not have had the problems in connection with butter today which the hon. member for Humansdorp referred to. In order to lay down what the composition of the product should be, one publishes certain requirements in the regulations. On the basis of discussions I have had with the people involved, I do not believe that the figure will exceed 20%. It seems to me that it will be around 20%. [Interjections.] However, this will be determined by the regulations contained in the Dairy Board scheme.
Mr. Speaker, I would like to ask the hon. the Minister: Having arrived at this blend of butter and vegetable oils, will it be stated on the wrapper that it consists of say 80% butter and 20% vegetable oil, or will it simply be sold as “Butter” with no mention on the packaging that it is a blend?
I regret that I cannot give the hon. member a specific reply to that question. In any event, the new product will have to appear under a particular brand name. The product will carry its own brand name. In other words, the general public will recognize it as a product containing vegetable oils. It is likely that attention will be drawn to the addition of vegetable oils, but it will be published in the regulations in any case. Therefore it will be known to the public. [Interjections.]
The hon. member objected to the penalties, but I think we can argue about that when we come to the Committee Stage.
The hon. member for Ladybrand also made a very positive speech about the position of the dairy farmer. The hon. member is very positive and he believes that the dairy farmer will be able to keep his head above water again with this new product we are now going to market. [Interjections.]
The hon. member for Kuruman spoke about the difficulties which the dairy farmer was experiencing during the drought. We are all going through difficult times, not only the dairy farmer. Maize farmers, meat farmers, in fact, all farmers, are having a hard time. I agree with him that we shall certainly have to consider the position of the dairy farmer as well.
The hon. member for Humansdorp made a very interesting speech about all the possible uses of butter. He also mentioned the fact that certain Ministers not only had problems with butter, but political problems as well. The hon. member referred to the 1971 Act and its effect on the consumption of butter. He referred to the fact that it had declined sharply. The position in 1971 was that because of the fluctuation, one had a surplus one moment and a shortage the next. The reason was most probably that butter was being produced under more extensive conditions at that time than butterfat is being produced today. The hon. member for Mooi River made the statement that butter was a stabilizing agent, just like milk powder. With the new product we are going to market, therefore, we may perhaps be able to make a more stable butter supply available to the public, for in actual fact, our only stabilizing agent in the dairy industry today is milk power, of which we have an enormous surplus. When we market this new butter, therefore, we may find it a great help to have an additional stabilizing agent for dairy products. The hon. member for Humansdorp also expressed the hope that with this product, we might be creating new possibilities for the dairy industry in South Africa. I thank him for his contribution. I think he has a thorough knowledge of the industry.
The hon. member for Mooi River made a very important statement when he alleged that the dairy farmer was the Cinderella of the agricultural industry in South Africa. That may be so, but one of the problems we are experiencing in the dairy industry at the moment, especially with regard to the supply aspect, is the fact that an abnormally high number of farmers have entered the industry. As the hon. member said, the South African farmer improves his cash flow position by entering the dairy industry. It is true that many farmers do not give attention to their dairy animals under normal conditions, but the moment drought conditions arise and the farmers’ income from their crops is reduced, they start feeding their cows again so that they may produce milk which can be sold in order to improve their cash flow position. This is one of the problems that are being experienced in the dairy industry at the moment. Consequently we have great surpluses which we shall have is to dispose of sooner or later, probably at a high cost and with State assistance.
We can discuss many of the aspects surrounding the dairy industry in greater detail when my Vote comes up for discussion.
Question agreed to.
Bill read a Second Time.
Committee Stage
Clause 2:
Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—
The effect of this amendment is that the term of imprisonment, which this amending Bill seeks to increase to 12 months, should remain at the original six months. I cannot see what has altered between 1961 and today in terms of an offence against section 14(1) of the Dairy Industry Act of 1961 to have caused the hon. the Minister to double the term of imprisonment. As I have said in the Second Reading, we do not object to the fine being increased, because the value of money obviously has decreased considerably since 1961. We have no problem with that. However, to increase the prison sentence, to double the length of time that a person might spend in gaol, is something we do not agree with. That sentence may be in relation to a fairly technical offence. This particular clause prohibits the manufacture of margarine, except under the authority of a permit and subject to conditions, if any, which might be imposed and specified. It is possible that inadvertently a condition that has been imposed might be contravened. A person might be imprisoned for 12 months. I am sure the hon. the Minister in charge of prisons will agree that he does not have too much room in his gaols anyway. Therefore I would suggest the hon. the Minister should seriously consider leaving the period of imprisonment at six months.
Mr. Chairman, these penalties are already very old and it goes without saying that they should be made more stringent to keep pace with the times. The hon. member was quite right when he said that the penalties should be adjusted; the only trouble is that he does not want the penalties to be adjusted sufficiently. The monetary penalties have been increased by 500%. The penalties for which this specific section make provision apply to manufacturers of margarine who do not comply with the conditions of the permit issued to them. Whom are we referring to? We are referring to large industrialists. We are not referring to small entrepreneurs or farmers, but people with investments totalling hundreds and even millions of rands in a specific industry. The kind of penalty one inflicts on these people must therefore very definitely be altered to keep pace with the times.
It is the policy of my department to check the penal provisions in the various Acts with the Department of Justice and the legal draftsmen from time to time. We cleared this matter with them. I really have problems and I therefore do not see my way clear to accepting the hon. member’s amendment.
Mr. Chairman, we shall not be able to support this amendment. I think I made it quite clear that we are faced with a situation in which illegal transactions in respect of milk powder are taking place and it is taking place on a large scale. Penalties must be seen to act as a deterrent.
But milk powder is not affected by this clause.
We are talking about offences.
Only in relation to margarine.
No. I would like to stress that there are many malpractices going on and that it is time that penalties were increased substantially.
Hang them from the yard-arm.
To merely impose a fine of R100, is not in any way making the punishment commensurate with the crime.
Mr. Chairman, has the Minister any information as to how many people were gaoled in terms of this section in the 22 years of its existence?
Mr. Chairman, I am sorry, but I cannot reply to that question of the hon. member. I am only able to tell the hon. member that the penalties that may be imposed in terms of this provision are maximum penalties. The magistrate may use his discretion depending on the nature of the offence.
Amendment negatived (Official Opposition dissenting).
Clause agreed to.
Clause 5:
Mr. Chairman, I wish to move the following amendment to this clause, viz—
Here we have the same story in relation to prison sentences. However, in this particular case we are increasing the prison sentence from two months to 12 months. This penalty is now being increased sixfold and, in terms of the clause, this imprisonment can be imposed in respect of a variety of offences in respect of which the hon the Minister may make regulations. Therefore, it can affect the individual dairy farmer and it can affect the big factory as well. It runs the whole gamut of the dairy industry in respect of which the hon. the Minister can make regulations. I think that rather than escalating these prison sentences so dramatically in terms of this Bill it would be better to use the provisions of the legislation that are currently of force and effect. I should again like to ask the hon. the Minister whether anybody has in fact been gaoled for contravening any of the regulations issued in terms of this dairy industry legislation. I do not think the hon. the Minister will be able to answer me, and I cannot blame him for it. However, I do think that we have sufficient punitive measures in the Bill. What we need to do if we want to stamp out abuse—and the hon. member for Mooi River has related to us an example of the abuse of milk powder—is to charge the people responsible and bring them to court time and time again if necessary. I am certain that the magistrate will then see to it that imprisonment is meted out and that it is an apt punitive measure. However, to increase the prison sentence to a maximum of 12 months for contravening any of a variety of regulations that the hon. the Minister may make, is, we believe, too much.
Mr. Chairman, I have two problems I want to put to the hon. member. The first is the most important and it is in connection with the penalties provided by section 29 of the Act. If the hon. member were to read section 29 of the Act he would notice that in the main it concerns hygienic conditions. It therefore concerns the general health of the public. I think that we must really act very carefully with regard to making penalties lighter. If we made these penalties lighter, in accordance with the hon. member’s plea—and I have considered these provisions very carefully—people may feel that we want to sacrifice a very important principle of the dairy industry as far as the health position and hygiene are concerned and may also get the impression that the Government or the authorities are unwisely making this penal measure lighter.
My second problem is that the hon. member is quite satisfied for us to increase the fine by 500% while only increasing the imprisonment by 20%. I consider that a bit of an anomaly. [Interjections.] I realize that imprisonment might not be as susceptible to inflation as money is. [Interjections.] This is really old legislation and for the sake of section 29 which deals with the health regulations I am afraid that I unfortunately cannot accept the amendment of the hon. member.
Amendment negatived (Official Opposition dissenting).
Clause agreed to.
House Resumed:
Bill reported.
Bill read a Third Time.
(Second Reading)
Mr. Speaker, I move—
The International Union for the Protection of New Plant Varieties, called Upov, serves as co-ordinating body with regard to matters concerning the granting of plant breeders’ rights in its member States. In an effort to eliminate the duplication of the expensive and time-consuming tests to evaluate new varieties, Upov recently provided its member States with a guideline agreement to regulate the exchange of results of tests. The primary object of this agreement is to facilitate the granting of plant breeders’ rights in different countries through the mutual use of the same results. It also serves as an instrument to promote the more efficient utilization of highly skilled manpower.
The Republic could for obvious reasons gain considerably if results obtained abroad could be used when considering the granting of plant breeders’ rights locally. The sale of results of local tests, especially with indigenous varieties, could furthermore enable our local breeders to obtain plant breeders’ rights more readily in other countries.
*The principle of such agreements has already been provided for in the Act, but the reciprocity required by the Upov guideline agreement has unfortunately not been authorized. The Bill contains the necessary provision in this connection. In terms of this, the Registrar of Plant Breeders’ Rights is authorized to enter into an agreement with his counterpart in another country, with ministerial approval, to regulate mutual testing and provision of test results.
The Act requires an applicant to reimburse the Registrar for expenses incurred in buying results of tests abroad. Because it is not possible to determine in advance the amount that will have to be paid, it is necessary to protect the State against possible default. Therefore provision is being made for the Registrar to require an applicant to provide a suitable guarantee of payment. Furthermore, it is provided that a plant breeder’s right will not be granted until an applicant has paid his debt.
The Bill also provides for the restriction on the disclosure of information to be extended to include particulars of varieties in respect of which plant breeders’ rights have already been granted.
The Bill is another attempt to regulate the status of the Republic as one of the leading countries with regard to the granting of plant breeders’ rights. It has the support of the S.A. Agricultural Union, the S.A. Plant Breeders’ Association and the other interested parties in the seed and plant industry.
Mr. Speaker, in starting off I want to tell the hon. the Minister that we in the official Opposition shall support the Bill. The Bill seeks to amend the Plant Breeders’ Rights Act, 1976, which provides for the registration of rights relating to new varieties of plants, for the protection of such rights and for the granting of licences to people who have been granted such rights. The Bill before us provides for the Registrar of Plant Breeders’ Rights, as the hon. the Minister has said, to enter into reciprocal agreements with authorities in other countries in terms whereof the exchange of results can be facilitated. We believe this is an eminently sensible and necessary arrangement.
In my previous career I knew a number of plant breeders, some of the foremost plant breeders in this country, and I know very well the time involved in trials and tests in developing new plant varieties. So every way in which this could be short-circuited is obviously going to save a lot of very valuable man hours and a lot of time in developing new plant varieties. The registrar is also enabled to require of the applicant for new plant breeders’ rights to furnish him with guarantees that he will pay the Registrar the expenses the Registrar incurs in getting these results. It is difficult for the Registrar to know in advance what it is going to cost to get the results. This, again, is an eminently sensible arrangement.
The Bill also introduces amendments to section 40 of the Act, which is that section of the Act which provides for secrecy. Officials, in carrying out their duties in enforcing this particular Act, obviously often come into possession of information which in the world of industrial espionage could be valuable to competitors. It is then obviously necessary that secrecy should be enforced. The amending clause provides for secrecy in respect of plant breeders’ rights which have in fact already been registered.
There is one aspect of this Bill which the hon. the Minister could perhaps clear up for us in his reply, namely whether this Bill will enable plant breeders in this country to get and use results from trials and tests which have in fact been conducted in other countries. Why I ask this—and this is something we will again bring up in the hon. the Minister’s Vote—is that research in certain areas in this country, for example on oil-seeds, has been neglected in the past. If we could therefore get the results from tests and research done overseas, this would enable our breeders here in fact to get a head start in breeding varieties better adapted for our local conditions. We believe that more money should be channelled into developing better adapted oil-seed varieties because this is a field which has largely been neglected in this country with all the emphasis being placed on maize breeding. I think that as far as maize breeding is concerned we have a proud record here. We have amongst the foremost maize breeders in the world in this country. However, it seems as though there are a lot of maize farmers right now who are going to be taking maize out of production and retiring maize lands. The problem right now is that there is not a suitable alternative crop which they can in fact use on a lot of this land. What we really need is better adapted oil-seed varieties. If this Bill could enable that research to get a head start, that would be a most welcome development.
Another point we can raise in connection with this is that in South Africa we are of course very short of protein. This is obvious from the amount of fishmeal we are importing at the moment. The expansion of oilseed production would in fact also assist us in solving the protein shortage we have. In addition, it would provide farmers with a suitable alternative crop. Sir, with those few words I want to say that it gives us pleasure to support this Bill.
Mr. Speaker, the Plant Breeders’ Rights Act is actually an exceptionally valuable Act for the plant breeder. Prior to 1976 the plant breeder had to rely on the Patents Act under which the rights of the plant breeders could not be accommodated adequately. With the commencement of the Plant Breeders’ Rights Act in 1976 a new era dawned for plant breeders in which they could enjoy proper protection. The fruit industry as a valuable earner of foreign exchange and a supplier of fruit to the local market, is an industry which is constantly engaged in breeding and research. Through breeding there is a constant search for cultivars with better characteristics to meet the demand for better results in the various branches of the industry, for example vines for table grapes and wine and tree-fruits for fresh fruit for export and for local consumption, for canning and for drying. I can still remember the time when we had to rely solely on imported cultivars which were to a large extent unsuitable for South African conditions. Because there was little protection prior to 1976, there was little encouragement for the plant breeder to spend large sums of money in breeding. The breeding of new cultivars is mainly undertaken by the State at the various research institutes where a great deal of progress has been made and good results have been achieved. However, quite a bit of use is also made of promising cultivars from other countries, and it is important for our fruit industry to obtain such cultivars and for tests and trials to be undertaken in the industry as soon as possible. Testing of and research on such material is time-consuming but is nevertheless important because major expenses are incurred with regard to planting and establishing. As a result there must be absolute certainty on the viability of specific cultivars. However, this also refers in particular to the value of a cultivar before plant breeders’ rights have been granted. That is why this amendment Bill makes provision for the exchange of test results and the undertaking of tests with new cultivars in agreements with overseas undertakings with whom we have agreements. This means that use may be made of new imported cultivars, without tests having to be repeated. This brings such cultivars into the industry more quickly after the further tests have been undertaken by our own institutions and research institutes and on the basis of such joint results, plant breeders’ rights can be allocated more quickly. This therefore gives the registrar the authority to use such test results obtained from abroad when he considers an application for plant breeders’ rights. A further advantage is that the costs of evaluating a new cultivar can be reduced tremendously which in itself will mean a valuable monetary saving. This is of particular value to the private breeder. This should of necessity be encouraging and I am convinced that this amendment will be welcomed by breeders. I am also aware that the Nurserymen’s Association of South Africa supports this amendment. For that reason I also take pleasure in supporting the Second Reading.
Mr. Speaker, the hon. member for Middelburg, who has just resumed his seat, is an expert in this field, so I do not wish to criticize anything he said. This Bill enables breeders to receive a proper reward for their work. In terms of the rights conferred under this legislation, the plant breeder will have the sole right to receive loyalties, etc. It is a good thing, too, that our South African breeders will more easily be able to obtain plant breeders’ rights abroad my means of these agreements. The proposed agreement eliminates the duplication of research and will enable plant breeders to protect rights in a large number of countries at a low cost. It enables member countries, including those that could otherwise not justify the cost of research facilities, to accept the new varieties in terms of their laws. For South Africa it has the advantage that plant varieties which have been developed by experts abroad can be used in our local production processes as well. The people who conduct these tests in plant genetics are scarce and well trained. The question arises whether we have enough of these people in our country. Fortunately, we have experts who work almost day and night, people with a special dedication to this task. The hon. the Minister will have to see to it that the ranks of these experts are augmented and that they receive the assistance they deserve.
We in the CP take pleasure in supporting this legislation.
Mr. Speaker, we are glad to learn that the other parties in this House agree that this is good legislation. It is a fact that the farmers are always demanding new plant material, especially imported material. This is a justified demand, for in my own constituency, which is known to be one of the best regions for vine material, it is true that one gets impatient at the apparently slow progress if these plants were to be bred in South Africa only.
Unfortunately, it is also true that people have been smuggling this plant material into this country for many years, a practice which has not always been to our benefit. Talking about smuggling, one hears many stories. One of those apocryphal stories which I should like to quote in passing is one which is often heard in connection with Dr. Charlie Niehaus of the KWV. It is said that he smuggled the Spanish yeast cells used for making sherry into this country under his finger nails. However, I am simply selling this story for what it is worth. It is also a fact that the breeder who has chosen the long and expensive course of breeding the material often loses out precisely because of this. After all, it is so much easier for some people to smuggle this material into the country. On the other hand, one also has to admit that much of this material, and even of the material which has entered our country legally, has not always been in the best interests of our country. Apart from the fact that diseases may be introduced into the country in this way, this material has not always been the most suitable for our climatic soil conditions.
As against that, we have to admit that it was a good starting-point. The basic requirement is to obtain good tested material; to obtain it abroad in the correct manner and to develop it here in South Africa. Therefore we believe that this legislation will bring about an orderly situation and that at the same time, it will give new impetus to our own local plant breeders in particular.
We have a shortage of irrigation water in the Republic of South Africa. Furthermore, approximately 4% of our land can be regarded as high potential land. This means that in future, we shall increasingly have to rely on vertical rather than horizontal growth. However, this long and expensive process of plant breeding requires years of intensive research. It even requires lifetimes of dedicated research. The hon. member for De Aar referred to this, and I should like to support him in his plea that specific provision should be made for these people.
One thinks, for example, of a person such as Mr. P. A. L. Steyn, who devoted a lifetime to plum cultivars in particular and who produced splendid cultivars. You may also find it interesting to know that a man such as Mr. Wynand Malan, the former hon. member for Paarl, gave the industry a beautiful Barlinka cultivar, for which he did not charge anything. However, when we think of what has been accomplished and of what is being done by people, it is obvious that these people have to be protected, and that the rights of such people have to be protected. In doing so, after all, we are encouraging initiative among these people. In this way, we are enabling them to earn something when they do manage to achieve something.
All this can eventually be of benefit, not only to that particular breeder, but to South African agriculture in general. Finally, I just want to add that it could also be of benefit to all consumers in South Africa.
Mr. Speaker, the NRP will be supporting this legislation. We see this Bill as a means of streamlining procedures involving the testing or trial of new varieties under the Upov reciprocal agreement. This legislation is obviously an attempt to expedite the registration of new varieties of seeds and plants, which is indeed necessary. The Bill empowers the Minister to grant permission to the Registrar to enter into agreements with authorities in convention countries. This is significant in the sense that the trials of the convention countries may be accepted by the Registrar, and similarly the results pertaining to new varieties that are propagated in this country can be made available to other convention countries. This will obviously avoid delays in regard to the registration of new varieties.
Provisions relating to guarantees prescribed for testing vary from one country to another, and one appreciates the significance of a guarantee being required. The conditions required for registration of new varieties, and the secrecy in that connection, are logical. Every encouragement must be given to the propagation and development of new varieties, because the full production potential in agriculture can only be achieved if the ingredients are applied in such a manner that this can be brought about. Here seed in itself is a very important cog in the wheel of crop establishment. One has only to look at the role that hybrid seed has played in this country. It is important that the plant breeders in this country keep abreast of developments overseas and are encouraged at every opportunity to bring in and develop strains of seed which will result in greater crop yields. South African plant breeders have developed strains and varieties that have been tested locally. This means that these strains can now be made available, on a commercial basis, to other countries.
We have much pleasure in supporting this legislation.
Mr. Speaker, most hon. members have supported this legislation. There are just a few remarks I wish to make. The hon. member for Pietermaritzburg South asked me a direct question, or rather two questions. He asked whether we could use the test results obtained in overseas countries. I assume that the hon. member is referring to highly developed overseas countries which are able to compete with us with regard to research for the development of new cultivars. In many of these overseas countries where these various cultivars are available, the plant breeders’ industry is extremely commercialized. This legislation does provide for some of the results to be exchanged, but at the same time, the legislation also provides for the fact that this is all intellectual property, if I may call it that. It is internationally recognized that a plant breeder may retain his right to a cultivar, or even to the breeding material which was used in developing a particular cultivar. There are several agreements with private companies in South Africa as well as with overseas companies. As a result of the fact that our legislation has not been streamlined, however, the existing contracts were only between various companies. The plant breeders’ rights are not necessarily protected in those contracts, however. All that is happening now is that because we are now a member of Upov, and this has been embodied in legislation, Government control may be exercised over such a contract. So it is possible that we may use some of the cultivars. As far as vines are concerned—the hon. member for Wellington is an authority on this subject—approximately 120 grape cultivars have been imported from overseas and tested in South Africa. When one imports a new cultivar, however, it does not necessarily mean that it will adapt to South African circumstances. It first has to be tested in this country. Therefore it would be better to use the breeding material which is protected by the plant breeders’ rights. Crosses can be made with various South African breeding lines in an attempt to ascertain whether a greater adaptability can be brought about in the breeding programme. This legislation provides for this in a very orderly way.
Hon. members also said that there were certain industries, such as the oil seed industry, which lacked good cultivars. I do not quite agree with that. The big summer grain centre at Potchefstroom is basically geared to produce new maize cultivars. We have now developed a new cultivar, the high lysine maize, which produces an exceptionally high yield. This should mean a tremendous breakthrough for us as far as the nutritional value of maize in South Africa is concerned. We have made an additional contribution to the summer grain centre to enable research to be done in connection with oil seed. Oil seed is an extremely sensitive product. The cultivar which is able to adapt the conditions in the Western Transvaal is not necessarily suitable for the eastern Highveld. When one emphasizes high yields, the development of cultivars in South Africa becomes absolutely essential, because cultivars have to adapt to the various climatic conditions in South Africa. That is why the development of cultivars and plant breeding in South Africa are particularly important. The legislation provides for us to exchange more breeding material and breeding information with overseas countries which have also reached a high level of development in this sphere.
I thank hon. members for their support.
Question agreed to.
Bill read a Second Time.
Bill not committed.
Bill read a Third Time.
Mr. Speaker, I move—
At present the Bill provides that a register of registered undertakings be kept and that it should be available for examination by the public. However, the public makes use of this register so seldom that there is barely any justification for its continued existence. With a view to the more effective utilization of manpower, the present obligation to keep such a register is being repealed.
At present the Act requires that the registration of undertakings such as nurseries and seed dealers must be renewed annually. In the nature of the matter, a great deal of time is spent on renewals. Accordingly the question has been raised whether such frequent renewals are necessary. Accordingly, on the basis of practice in certain other countries, it is being provided that in future, registrations have to be renewed for periods of two years.
†The seed testing station of the Department has primarily been established with a view to analysing samples for official purposes. It has nevertheless for many years also been able to satisfy the seed testing requirements of the industry. The steady increase in the number of samples from the industry during recent years has, however, placed a severe burden on available staff and facilities. This has caused unfortunate but unavoidable delays and has forced the seed industry to investigate other possibilities. The seed industry has now decided to establish its own seed testing facilities, but requires official supervision over the work being done there. This could be achieved by the registration of such facilities in terms of the Act, and provision to this extent is therefore proposed.
The Act requires the publication of secondary legislation for comments before the promulgation thereof. During recent years it has however become practice to draft such legislation in close consultation with representatives of interested bodies. As a result of the proven success of this arrangement, the obligation in the Act no longer serves any real purpose. For this reason, and also in view of the high costs of publication, it is proposed that this requirement be repealed.
*The methods of determining how new a new cultivar is, are internationally standardized. Accordingly it is increasingly becoming the practice that countries enter into agreements to regulate the exchange of test results. In this way duplication of the expensive and time-consuming tests is eliminated and varieties may be recognized with less delay.
The existing authorization contained in the Act to enter into such agreements does not comply with the requirement of reciprocality that is set, and accordingly it is being proposed that the necessary supplementary provision in this regard be inserted.
Mr. Speaker, apart from the above, the Bill also contains a number of minor technical and administrative rectifications. These are aimed at simplifying the implementation of the Act. The Bill enjoys the support of the S.A. Agricultural Union and all the representative bodies in the seed and plant industry.
Mr. Speaker, I am sure that this legislation, the Bill before us and the previous one, must be the most quickly passed legislation that we have seen in the House this session. If we can carry on at this rate, we can get through the Order Paper rather quickly. Perhaps this is to set aside a bit more time for a few more controversial things which are going to be debated in a few weeks’ time.
We on this side of the House will be supporting this bit of legislation as well. It makes good sense to us. We have been through the provisions in some detail. A few of the questions which I did have and wanted to ask the hon. the Minister, he has in fact already answered in his introductory speech. The Bill essentially amends the Plant Improvement Act of 1976 and it is this Act that provides for the registration of establishments from which the sale, cleansing and packing of certain plants and seeds and the sale of propagating material are undertaken. The Act also provides for the packaging and the conditions under which it is sold. It also provides for the certification of plants and propagating material with the object of maintaining the quality, which is also very necessary in agriculture, so that when farmers buy something, they know exactly what they are getting.
As explained by the hon. the Minister, the Bill which we have before us repeals provisions relating to the keeping of a register of establishments and it is very clearly explained why it is desirable that this register be done away with. It also provides that the registration of establishments will in future be valid for a period of two years and we fully concur with the hon. the Minister’s reasons for that.
Mr. Speaker, finally, the Bill contains a provision that will authorize the Registrar of Plant Improvement to enter into reciprocal agreements with authorities of other countries and provide for the exchange and use of results of tests that have been performed on new varieties in other countries, where certification is necessary.
Mr. Speaker, with those few words the official Opposition has pleasure in supporting this legislation.
Mr. Speaker, this legislation confirms the view that when an industry has to expand it must not only expand horizontally: one also has to accommodate and facilitate the vertical expansion of such an industry. That is precisely what this legislation does.
As the hon. member for Pietermaritzburg South has just confirmed—the hon. the Minister also said this—the two most important aspects of this legislation are the aspect of recipriocity and, secondly, that the Registrar is now being empowered to make use of the test results of foreign researchers when considering the recognition of a new variety.
The deciduous fruit industry is an important industry for the Western Cape. There are approximately 80 000 workers in the employ of the industry and this industry earns approximately R360 million annually in foreign exchange. That was the figure in 1982. Therefore it is an important industry. It is estimated that approximately R500 million has been invested in the establishment of fruit orchards and capital facilities for production, packaging and refrigeration facilities. Therefore it is a formidable industry. It also seems as though within the next decade the apple industry will not be able to produce enough to supply the market. South Africa supplies 41% of the total European imports of apples from the southern hemisphere. At the present rate of development of the apple industry the industry predicts that there will be a shortage of 3,6 million cartons of apples on the European market in 1988. With the limited possibility of horizontal expansion, this industry will have to help itself in the direction of vertical expansion, and it is in this respect that this legislation is so important.
The apple industry has always regarded itself as being a self-sufficient industry, as well as a sophisticated and well-organized industry. It regards it as its responsibility to look after its own economic viability. In order to meet the challenges of the future the apple industry has recently initiated a strategic and very extensive programme of development.
I wish to conclude by saying that this legislation will be of great assistance to the apple industry in fulfilling this responsibility of self-sufficiency. In the present circumstances of agriculture in South Africa, this industry is an encouragement and a source of inspiration, since to a large extent it has managed to support itself without relying on government aid. By means of this legislation the Government is contributing towards further enabling this industry to help itself. We take pleasure in supporting this legislation.
Mr. Speaker, as far as the recognition of new varieties is concerned, this Bill has the same objectives as the previous legislation, viz. the Plant Breeders’ Rights Amendment Bill. It also makes provision for the extension of test results. I believe that the standardization of this legislation will make a tremendous contribution to a more effective administration.
The provision that test laboratories for seed may be registered as seed establishments is an extremely interesting development. I think it is high time that the private seed industry should see to its own interests when it comes to the analysis of seed and that the industry should not always depend on the department to render this service for them. I hope that the seed industry will not lure away the trained staff of the department in the process.
According to Landbounuus of 11 March 1983 the department has already begun to train analysts in the seed industry. I wish to express the hope that this will be the procedure which will be followed, instead of the department having its staff lured away by private enterprise.
An extremely interesting aspect of the Bill is to be found in clause 18, in which provision is made for the Act to apply to the State as well. This will also have the effect that State and provincial nurseries will also have to be registered in future. They will also have to comply with the provisions of the Act as far as the quality of the material they sell is concerned.
We in the CP take pleasure in supporting the Bill.
Mr. Speaker, I should like to thank the hon. member for De Aar most sincerely for his party’s support of the Bill. After all, it is clearly not a contentious Bill and therefore one can well understand that there would be support for it.
The fruit industry is one of the most important sectors in agriculture, and apart from being the provider of food in the Republic, it is also a valuable earner of foreign exchange. Therefore it is necessary to take good care of this industry. In the Plant Improvement Amendment Bill we have an extremely fine instrument with which to regulate the industry and place it on a very sound footing. It assists in obtaining, placing in the industry and protecting the best propagating material.
The fruit industry is really one of the oldest in South Africa. It dates back to the time when on 24 August, 1652, Jan van Riebeeck planted the first seeds of fruit-bearing species in the Cape. In reality this date could be regarded as the date when the fruit industry was born.
Over the years South Africa has done very little to obtain better cultivars, but as a result of the increasing importance of this industry, growing interest has been aroused in obtaining better plant material. It is true that up to the time of the forties the tree fruit industry in particular depended mainly on imported cultivars from abroad which in most instances did not, however, meet the demands of climate and marketing methods in South Africa. Pioneers such as the late Prof. A. F. de Wet and Prof. Dr. S. J. du Plessis, in their time, emphasized the need for cultivars which complied with South African requirements and the importance of healthy, virus-free material capable of maintaining high production.
In those years the departmental research institutes made a start with the cultivation and selection of new cultivars in earnest, with the result that soon various new cultivars were obtained which complied with the desired requirements. However, it was not left at that. The breeding programmes are still being pursued in earnest. Consequently, besides very sound material which is already in use, there is still a great deal of promising material which is in the process of evaluation.
The production and marketing of propagating material is a highly specialized industry, and breeding and research is tremendously expensive. Unfortunately I do not have the latest figure, but it costs in the region of R40 000 to put one new cultivar on the market. That is why it is important for us to have a sound law to control the allocation and use of material.
The Plant Improvement Act came into operation in 1976 and all that is being done now is to effect a few amendments with a view to making it more effective. Clause 2 places it beyond doubt that the Registrar may also be appointed as the authority to administer a certification scheme and that he may also assign certain duties to non-officials. This applies to the certification schemes concerning which it is difficult for the limited number of officials of the department to keep up with the certification of seed. Clause 3 repeals the provision that a register has to be kept. It has been proved in practice that there is no demand for this, and since keeping a register entails a considerable amount of unnecessary administrative work this provision is hereby being repealed. Clause 6 contains an amendment which makes provision for the registration of establishments for two years. This will also alleviate the administrative work considerably and is a measure which will be welcomed by the people who are affected by this Act. Clause 10 contains the provision which will empower the Registrar, with the necessary ministerial approval, to enter into agreements abroad with regard to the reciprocal notification of test results and the undertaking of tests with a view to the recognition of new varieties. This replaces a similar, but incomplete, provision in section 18 of the Act. Clause 14 amends section 23 of the Act by deleting the requirement that a certification scheme be published. Usually, certification schemes are discussed in depth with the interested parties, which makes their publication unnecessary. Like clause 14, clause 21 provides that regulations do not have to be published for comment in advance, since it is standard practice of the department to discuss regulations in advance with all the representative organizations of the industry.
Sir, I take pleasure in supporting the Second Reading.
Mr. Speaker, we in these benches will be supporting the Bill. We see it as an attempt to simplify the application of the Plant Improvement Act to introduce more practical measures to meet the needs of the day. The department is obviously experiencing difficulties in rendering test services to the trade. They are unable to cope with all the requirements that this involves. Provision is now being made for the seed trade to make its own arrangements with regard to seed testing in the form of registered laboratories which will be registered by the department and will be under its supervision. Such laboratories will indeed render seed-testing services to the seed trade which will be most beneficial. I must just warn that we in these benches do not feel that it is advisable that certification schemes for Government-certified seed should be carried out by outside bodies. I would like to bring to the attention of the hon. the Minister that results of performance tests should be made available with as little delay as possible. There have been hold-ups and we trust that greater attention can be given to expediting the release of the results of these performance tests. It is also essential that the delays in the inclusion of names on the varietal list should be reduced as far as possible because the release of new varieties for sale must be expedited.
With regard to the legislation itself we note that the Registrar is authorized to enter into agreements with appropriate authorities of other countries for the carrying out of tests and trials in order to ensure that these tests can be accepted. This again we see as a means of avoiding delay. The Registrar being empowered to delegate certain powers applicable to some certification schemes, to another person, is also regarded as a positive measure, but again I would like to draw the attention of the hon. the Minister to the fact that this should be only done and permitted with discretion. Provision to repeal the obligation and to publish certification schemes and amendments thereto in the Government Gazette for comment is regarded as practicable and is acceptable. We in these benches also consider that the powers that are being given to the Registrar to prescribe conditions relating to the importation of plants and propagating material are highly desirable.
In conclusion I would like to emphasize that every effort must be made to encourage and protect the rights of plant breeders. They must be encouraged to develop strains of plants which will have the effect of enhancing production potential. We support the Bill.
Mr. Speaker, it is abundantly clear that hon. members have studied this Bill very carefully, since they have made exceptionally good contributions. As a matter of fact this amending Bill complements the previous amending Bill, viz. the Plant Breeders’ Rights Amendment Bill. A very important provision—and some hon. members pointed this out—is that the private sector is now being accorded recognition in the seed industry in terms of which they may be registered and indeed, some of their laboratories may even be used to carry out certain tests. In South Africa we have reached the stage where all the breeding material simply cannot be dealt with by the department any longer. It is simply no longer physically possible.
Secondly, I wish to point out that the competition in South Africa with regard to the seed industry, and particularly the industries which are connected with the cultivation of seed, is relatively strong. In certain respects a situation is developing in which the people of the various companies travel around to sell and to propagate certain cultivars directly to the farmers as well, which, of course, increases the cost of the marketing of that cultivar. This is simply an indication that there is healthy competition. This amending Bill is now simply providing for proper control to be exercised, since we are making use of the private sector to test seed as well, to carry out certain tests and to assist in certification.
The hon. member for De Aar expressed his concern that some of these technical people should not be lured away from the department, since now the private sector, too, is being afforded a great deal of recognition in the seed industry. This is not a problem in this industry alone. It is a problem in every sector of agriculture. Every day the department is losing people, and this is affecting the seed industry in particular.
The problem of the hon. member for Mooi River was that there should not be a delay in respect of the certification of seed. We need hundreds of these people to carry out inspections continually in order to assist in the certification of seed. I do not wish to create panic, but the situation has developed to the point at which we shall probably have to consider withdrawing certification in respect of specific commercial seed species—I prefer not to mention what seed species—because we do not have inspectors, and we shall simply have to confine ourselves to basic seed.
However, my department is in the process of training people ab initio, since as quickly as we train people, they are lured away by the private sector. I envisage having talks with these people in the near future, since I am of the opinion that we cannot carry on like this. After all, the certification of seed is a guarantee of quality and of sound production in the various industries. Therefore we shall definitely have to give our attention to this problem.
I thank hon. members for their contributions to this debate. I am aware that it does not always go so well; that I shall not always obtain their approval for all measures so rapidly. Therefore I convey my gratitude to all hon. members of this House for their support of this Bill.
Question agreed to.
Bill read a Second Time.
Bill not committed.
Bill read a Third Time.
Mr. Speaker, I move—
In the first instance this Bill provides for the amendment of certain definitions. These amendments were necessitated by the continuation of the rationalization process in the Public Service, and all are self-explanatory. The Agricultural Credit Act requires at present that the Minister must grant authorization before a second mortgage can be registered on land if it has already been encumbered with a mortgage in favour of the State. In cases where the registration of a second mortgage, also in favour of the State, is envisaged, this requirement is of little value. In fact, in the normal course it only causes delays. Therefore, it is being provided that the registration of second mortgages in favour of the State no longer be subject to this requirement.
When a unit in regard to which assistance is being granted in terms of the Act consists of non-contiguous pieces of land, the registration of a restriction on the alienation of any of the different pieces of land is usually required. Except in the case of consolidations, such a provision is usually only withdrawn if alternative land is offered for linking purposes. Thus far, further linking had to be effected by way of the registration of a notarial deed to link the properties, but that is an expensive and time-consuming process. Investigation has brough to light the fact that further linking may also be effected by way of the endorsement of title deeds, and the necessary authorization in this regard is therefore being provided.
†The authority in the Act to restrict the subdivision of land by means of an endorsement on the title deed of such land has been obsolete since the inception of the Subdivision of Agricultural Land Act, 1970. This authority was therefore repealed by the Agricultural Credit Amendment Act, 1979. The latter Act also authorizes the cancellation of all existing endorsements restricting the subdivision of agricultural land. This authority was intended only to apply to endorsements made in terms of the Agricultural Credit Amendment Act, and its predecessors. It now appears that endorsements which were made by direction of the National Transport Commission with a view to restricting the subdivision of land adjoining national roads are also affected thereby. As it has never been the intention to revoke such endorsements or to curtail the powers of the National Transport Commission, the Bill contains the necessary provision for the continuation of the validity of such endorsements.
Mr. Speaker, the Bill enjoys the support of the S.A. Agricultural Union and of all the other interested bodies to which it has been submitted.
Mr. Speaker, we on this side of the House would like to congratulate the new hon. Deputy Minister on the presentation of his first Bill. We wish him luck in this position. As he has been a man who has been particularly interested in finance in the past, I intend to deal with agricultural finance, as this is really very seriously affected by this particular Bill as a whole. The object of this Bill which is before us tonight is naturally to allow the department to substitute endorsements for notarial deeds where ties between various portions of land are required to maintain the economic status of the farmer. If a farmer therefore has three portions of land in various parts of the district which together form an economic unit to ensure his economic survival, it is advisable that the ties should be by endorsement rather then by notarial deed which, as the hon. the Minister knows, involves a very costly process.
If the hon. the Minister furthermore consents to the sale of one of the portions, the purcharser is subject to the same restrictions, for economic reasons, unless the hon. the Minister agrees to lift such restrictions.
The last clause deals with the Transport (Co-ordination) Act which is affected by this. This Bill merely reinstates the relevant provision. I think that at this stage the situation is a much more serious one as far as the Agricultural Credit Act is concerned. When one reads the long title of the Act, one sees the necessity for discussing, at this stage, further details affecting the agricultural industry and, in particular, agricultural credit. The long title of the Agricultural Credit Act, No. 28 of 1966, reads as follows—
South Africa, at this instant in time, is faced with the worst drought of the century. Let me quote from Die Boer of February 1983—
It goes on to say—
In addition to that there is also the following—
I think that whilst we have the opportunity, we should really discuss what is going to happen to South Africa in the long term and not only in the short term, because I think it is absolutely essential for us to understand, in terms of the principle that the agricultural experts discussed tonight, that of plant breeding, that despite the fact that one can try to make two blades of grass grow where only one grew before, unless one can make it an economic possibility, in the end one would be forced to recognize the fact that it is the money that is the measure of the success of a farming operation, and the provision of credit is a very, very important factor that has to be taken into consideration.
That is why I should like to deal with the drought and the assistance that is going to be rendered by the Government, because I do not think that the Government has provided the farmers with sufficient help at this particular stage. The situation is very serious indeed. I have with me a book containing cuttings dealing with the drought in South Africa. These cuttings carry headlines such as “Bankruptcy threatens hundreds of farmers”; “Drought devastation”; “Drought could cost South Africa R800 million”; “Drought is going to affect export of maize seriously”; “Drought: PFP calls for snap debate”; etc. I do not have to deal with the devastation which the drought has caused in South Africa because all of us know exactly what has happened.
I quote further—
Another important point is—
I think we are all aware of how seriously the drought is affecting the country. I recently read an article by Dr. Cloete, the Chief Economist of Barclays Bank in which he stated that the effects of this drought are going to reduce the growth of our economy during the forthcoming year from a figure of 1% last year to a figure of minus 3% this year. This is very serious indeed.
On the other hand we have had the good news given by the hon. the Prime Minister at the show in Bloemfontein on 19 March. I want to quote from a report in Rapport under the heading “Boere juig”. I quote—
It was also stated—
That will be in terms of a Bill to be introduced tomorrow. [Interjections.] I am not discussing that at all now.
Order! The hon. member is not speaking to the Bill now.
Mr. Speaker, I am speaking on the question of assistance to farmers and I am pointing out that the drought has so seriously affected the situation that special assistance has to be given to farmers. Hence this Bill. It is covered under this Bill.
The type of assistance which is going to be given to farmers has been set out in a speech made by the hon. the Prime Minister. I quote from Rapport—
It has nothing to do with the Bill.
It has to do with the Bill and I am going to make some suggestions.
A large number of suggestions have been made by the hon. the Prime Minister which every one of us in this House here support. However, I think what is wrong …
Are you talking about the referendum?
No, I am not talking about the referendum. The hon. member will not put me off with that. If there were to be a referendum as to whether help should be given to the farmers I should support it and the hon. member would support it. It would probably be the only referendum that both of us would support. [Interjections.] There might be other referenda, but I am talking about past ones.
I wish to recommend that agricultural credit should be taken out of its present context where the Agricultural Credit Board is separate and that everything should be consolidated under the Land Bank. I do not think that there is a necessity to have a Land Bank Act and an Agricultural Credit Act. I believe the time has come for there to be one organization which has been rasionalized to do one job.
What is our situation in South Africa at the moment? Our situation is that we are only going to produce 4,7 million tons of maize whereas we need some 7 million tons just to feed our population. Unless one provides the necessary credit and one provides the means in the future one is not going to have the wherewithal to supply South Africa with the rapid urbanization that is going to take place in the future. When I spoke just now about the question of how one is going to provide for the future, I said that we would not only have to provide for the short term but also for the long term. I would suggest that in order to meet this problem, the Land Bank and the Agricultural Credit Board should be merged into one so that we would have one organization to deal with all of this. I would suggest that the organization assisting farmers should be a portion of the Land Bank, which would be subsidized by the State. The Land Bank should have an investigation into the whole matter to determine whether an ordinary person can be assisted when it comes to obtaining a loan under normal conditions. If such a farmer cannot be helped by the Land Bank as such, a department under the Land Bank such as the farmers’ assistance organization could then be brought in to help him. This rationalization will bring about tremendous financial saving, less paper work and simplification of the registration of title deeds.
This is where I come back to the Bill. The amount of registration and paper work that has to be done by the Land Bank is exactly the same as the amount of paper work that has to be done under the Agricultural Credit Act. A tremendous amount of administration is duplicated by having two organizations.
Finally I should like to suggest that something should be done in this respect in order to remove any stigma that is attached to an unfortunate farmer who is hit by bad times and then has to go to the farmers’ assistance organization. It would be better if he would only have to deal with one organization. We shall support this Bill.
Mr. Speaker, kindly grant me the opportunity of congratulating the hon. the Deputy Minister of Agriculture on this fine piece of legislation, which is a vast improvement on existing legislation dealing with agriculture credit. I am sure that if the hon. the Deputy Minister continues to make such meaningful changes, he will reach great heights. I am sure that he succeeds because he has the right background. He has experience of the finances of agriculture because of his experience in the co-operative movement. As hon. members are aware, he was also chief spokesman on finance on this side of the House for a long time.
I should like to come back to the hon. member for Bezuidenhout and I wish to tell him that I agree whole-heartedly with his view as far as the severity and the ravages of the drought are concerned. I do not know whether the hon. member is aware of this, but the inflow in the Vaal Dam Basin this year has only been about 180 000 million cubic metres, in comparison with the previous lowest of 450 000 million cubic metres. However, in contrast with the hon. member for Bezuidenhout I do not need a cuttings service to tell me how serious the drought is. I am familiar with it, I feel it in my bones and I see it in my community. The hon. member for Bezuidenhout would therefore possibly concede that I know more about the drought, and in addition; concede at the outset that perhaps we know more about how our farmers should be assisted.
To come back to this legislation, I should like to give a short summary of the legislation on agricultural credit. It is my contention that in this country it is probably the cornerstone which is the foremost bulwark and stronghold in preventing our rural areas from becoming completely depopulated. That is why, to us farmers, it is a particularly important piece of legislation. When discussing agricultural credit and Land Bank legislation, I am of the opinion that as a Free Stater, I am probably one of the people with the most right to speak about that, since for all practical purposes, we in the Free State are employees of these two organizations. [Interjections.] No, the hon. the Minister will have to reply on my superior knowledge of the Land Bank. [Interjections.]
When we review the history of this legislation, one would find that it is, in fact, Free State legislation. Moreover, it is an NP Act. In 1907, when the Representative Councils were established in the then four colonies, it was true that almost all the debates which were held in the Free State Representative Council at that time—by the way, it was also the year the “Het Oranje Party” of General Hertzog from which the NP evolved at a later stage, was founded—were dominated by the establishment of a Land Bank, as well as the establishment of the settlement at Koppies in order to uplift the people who had been completely ruined. That was the first step which was taken. Then in 1966, when there was once again a tremendous drought, this legislation made its appearance as part of the evolutionary process. This is what surprises me about the hon. member for Bezuidenhout. He remarked that this legislation was drawn up in 1966, but he did not ask why. In 1966 the Government had to deal with a situation that there were farmers who wanted to expand and who therefore needed special assistance, whereas on the other hand, there were also farmers who had to be kept on the farms. Then they decided that it was necessary to draw up the Agricultural Credit Act of 1966 to assist these people who were, in fact, in such difficulties, that they were in fact insolvent. If these people could not be assisted by Agricultural Credit, no one else would be able to assist them. Therefore it will be noted that this Act does not make provision for someone else to be able to take a mortgage after Agricultural Credit has taken one because no one else wanted to, or wants to. Therefore we had the development here that they only specialized in aid to people who could not help themselves. The next step in this evolutionary process with regard to the principal Act followed in 1980. In that year, under the leadership of the then Deputy Minister, at present the hon. the Minister of Environment Affairs and Fisheries, who was involved in the matter, a revolving fund was established so that farmers could be assisted from the revolving fund. The intention was that the revolving fund should grow to the extent that in time, farmers would be increasingly assisted by it, and not so much by money appropriated by Parliament. Therefore we had a basic change in the funding of agricultural assistance.
You may as well repeat what you said about me.
Sir, I shall do so with pleasure. The then hon. Deputy Minister did a fine piece of work. [Interjections.]
Now we come to the present. Today we have reached another new milestone as far as this legislation is concerned. We have reached a new milestone, for what is changing now? The hon. the Deputy Minister spelt out clearly that it is now becoming easier and more streamlined for the Government to have a new mortgage registered on a farm on which there is already a registered mortgage. Why is this being done? Basically, there are two reasons for this. Circumstances have changed. Mortgages which were taken on land ten, twenty or even five years ago, no longer have any connection with the present market value of the land. In order to accommodate these altered circumstances, the thrust of the legislation was changed, and this was correct, otherwise it would have been meaningless in that it would not have been possible to assist anyone.
The Government was aware of the drought. In fact, since last year, the Government has been observing it and then began to plan timeously to assist people in the drought. In clause 2 as well—this is the only one I wish to speak about—we find that there is streamlining as far as the linking and delinking of land is concerned, since in future a deed of registration for the linking and delinking of land will no longer be necessary. I can give the assurance that if one has never experienced trouble, one should deal with linking and delinking in the present dispensation. One is extremely lucky if it takes one six months to have this done in respect of one piece of land. Therefore the Government has seen an error in the existing legislation and that is why it is now being altered.
What is the general meaning of this legislation? The legislation as a whole is a comprehensive evolutionary process, to adapt to altered circumstances, but we have not sacrificed any principle in this process of evolution through which we are adapting to new circumstances. Nowhere have we sacrificed the principle that the interests of the State should be protected and that the State’s money should not be lost when it comes to agricultural credit, when farmers have to be assisted with the taxpayer’s money. Furthermore, we have not sacrificed the principle that agricultural land in this country should not simply be fragmented. We are making it easier and cheaper to keep abreast of any change, but we are not sacrificing the principle that there should be no fragmentation.
Furthermore, it will be noted that as far as this legislation is concerned, the Government has gone along with the Jacobs Committee throughout. This committee is an authoritative committee in the agricultural sphere. Therefore the Government has had expert advice throughout.
This is the style of the party on whose behalf I am speaking tonight. We could say that we are changing to adapt, or, to put it another way, we are adapting to support change. Therefore I assume that the CP, who said through the hon. member for human that they did not support change, will not support the change which is now being made to this legislation. After all, they said that they were opposed to change. I wish to conclude …
Hear, hear!
If I had been told off as thoroughly as I have just done to that hon. member, I would also say “hear, hear” if the person who had done that to me said that he wanted to resume his seat.
I wish to conclude. The hon. member who is being so rowdy without looking round, said in Soutpansberg on the occasion of the by-elections in the “Bergs” that the Government was coming forward with this fine assistance for the farmers simply because the NP had to fight a number of by-elections. This is what is being said. I shall prove that that is an untruth. When did this Bill appear on the Order Paper? This Bill, which makes provision for farmers to be assisted in a crisis, appeared on the Order Paper on 31 January, long before those challenges were issued and accepted in this House.
Mr. Speaker, I shall do my best to confine myself to the contents of the Bill. [Interjections.] I have inferred that certain hon. members have a remarkable incapacity to ascertain exactly what this Bill is about. Permit me, Sir, to begin by congratulating my good friend the hon. the Deputy Minister of Agriculture on his promotion and his handling of his first Bill in this House. For our part—and we mean it sincerely—we shall give him all the co-operation that we ought to give him in the interests of agriculture. We wish him every success. It was an exceptional privilege to listen to the new farmer from Bezuidenhout this evening and to the drought-stricken farmer of Heilbron who has just resumed his seat. Now, the hon. member for Heilbron made a sidelong reference to the CP and made a fairly meaningless remark and/or inference in this regard, and I really believe that it is not worth my even referring to that meaningless remark.
This is a simple technical measure. Whereas in the past it was required—one does not know why this oversight has existed for so long—that if the State, on the Agricultural Credit Board, already had a first mortgage on a farmer’s property, the Minister had to grant permission for a second mortgage to be granted in favour of the State. In fact this was a meaningless requirement and it is now being done away with.
In the second instance, the requirement of notarial execution of certain deeds is being done away with, and this will be a cost-saving measure for farmers in particular. We therefore welcome this measure.
The other hon. members who have participated in the discussion of this Bill thus far have, in very roundabout fashion, tried to make reference to the proposed referendum. How they read that into this Bill is beyond me. We take pleasure in supporting the Bill.
Mr. Speaker, I am of the older guard who believe that it is now bedtime. [Interjections.] I am not talking politics now. I should very much like to associate myself with the other hon. members who have congratulated the hon. the Deputy Minister of Agriculture and wished him all of the best as regards the tremendous task that has now been entrusted to him. I want to say to him that if he has perhaps dreamt that he will be able to satisfy all the farmers in South Africa then there is nothing wrong with that. It is always a very good thing to strive for the impossible, because then at least one achieves a greater percentage of the impossible than one had imagined one could. There is a saying: “If you can imagine it, you can achieve it.” I hope that the hon. the Deputy Minister will manage to satisfy all the farmers in South Africa. He has a tremendously wide-ranging task, and certainly not the least of it is the important division of Agricultural Credit and Land Tenure. Fortunately, as we know, he is assisted in this part of his task by the able team of members of the Agricultural Credit Board, and the outstanding corps of officials who have many years of experience in this field and who can assist him with the tremendous task that rests on his shoulders. The amendments in this Bill are of a more technical nature and they have already been dealt with by all the hon. members who have spoken. They concern rationalization and a few definitions that have had to be changed because Sea Fisheries is being detached from agriculture and linked up with another department. They concern the division of agricultural land and the delinking of certain pieces of land. Something which has perhaps not yet been mentioned is that when a farm is divided in two by the building of a national road, we are obliged to involve the National Transport Commission as well, so that land is not divided in such a way as to create a problem for the National Transport Commission in that it has to build new access roads to the new owners.
That is all that the Bill entails. We are very grateful to the hon. the Deputy Minister for the changes that are being effected, because they help us as farmers to streamline matters and to eliminate red tape, in that in future we shall no longer need notarial bonds for so petty a matter. I take pleasure in supporting the Bill.
Mr. Speaker, on behalf of the members in these benches I would like to express our congratulations and best wishes to the hon. the Deputy Minister in welcoming him to his new position. I can assure him that we look forward to working with him and we wish to congratulate him on this the first occasion of guiding a Bill through this House.
We in these benches see this Bill as a means of simplifying and ironing out existing functional problems, of minimizing possible delays in the registration of bonds and of simplifying procedures relating to the alienation of land committed to the State as a result of the requirements of the Agricultural Credit Board. However, in supporting this Bill I wish to raise several points.
First of all I would like to commend the Agricultural Credit Board for the services it has rendered in terms of the Agricultural Credit Act. It is safe to say that the financial assistance that has been provided to the agricultural sector, in the form of production loans and in the form of consolidation of debts has assisted many farmers to remain on the land, farmers who otherwise would have found it impossible to do so.
I would just like to appeal to the hon. the Deputy Minister in regard to two aspects. One is that one receives complaints regularly with regard to delays in the processing of applications for assistance. It would be appreciated if attention could be given to this particular factor because so often it plays a role in the final analysis, of whether the application is successful or not.
I have no intention of going into any detail except that I would like to bring to the attention of the hon. the Deputy Minister the fact that the agricultural sector is facing an orchestrated attack from many quarters in regard to improving the conditions of its farm labourers. It is here that the assistance afforded for the construction of housing on farms is completely inadequate, especially when one relates it to the fact that for a four-roomed house assistance is only rendered to the extent of some R3 800. During these times of high building costs this is inadequate. The allowances for electrification and for providing water services for these employees are equally inadequate.
Having said that, I should just like to deal briefly with a few other aspects of the Bill.
In accordance with Standing Order No. 22, the House adjourned at