House of Assembly: Vol107 - MONDAY 17 APRIL 1961

MONDAY, 17 APRIL 1961 Mr. SPEAKER took the Chair at 2.20 p.m. COMMITTEE OF SUPPLY

First Order read: House to resume in Committee of Supply.

House in Committee:

[Progress reported on 14 April when Vote No. 4 had been agreed to and precedence had been given to Votes Nos. 2, 3 and 12 to 20.]

Vote No. 2.—“Senate”, R163,000, put and agreed to.

On Vote No. 3.—“ House of Assembly ”, R515,000.


For many years past it has been the unfortunate position in Parliament that there have been complaints about the general facilities available to members. I think at this stage we are all happily agreed that with the building of the two new wings that day is past. I think it is only right and proper on this Vote to record our appreciation of the services of those who have made this possible. I refer in particular to the Clerk of the House and his staff, because as one who has been intimately connected with the arrangements I know what an arduous time he has had in looking after the various matters which cropped up from day to day in connection with the building programme, as well as taking over his new post as Clerk of the House. It is only right that we should pay our tribute particularly to the Clerk of the House as such and to the staff under him. We must not forget those members of the P.W.D. who have made their contribution. I would even say on this occasion that I believe that when you have a building contractor, by the time the building is finished you have usually fallen out with him, but on this occasion we can all say that a good job was done and I would like our appreciation to be recorded.

Mr. GAY:

There are two matters I want to raise which I think fall appropriately under this Vote. One is a matter which has caused considerable comment outside the House itself, and that is the non-observance by Parliament of statutory holidays proclaimed by Parliament in celebration or in recognition or in honour of certain national events which Parliament should be honoured throughout the country. It is a fact that Parliament itself in many cases fails to observe as holidays those days which it itself has made a compulsory holiday for everybody else. I wonder whether this is not a matter which should be considered by the committee concerned, because it does seem to detract both from the honour that we wish to pay to the memory of a particular national event or the tribute which is paid to a particular person by declaring a public holiday, when Parliament itself does not observe that holiday. I think that Parliament should set the nation an example by honouring such public holidays itself, and I commend this to the attention of those who are responsible for dealing with this matter.

Then I want to refer to a matter which was publicized on Saturday in the Cape Times and which will have a material bearing on the wellbeing of members of both Houses and on the staff who compulsorily attend Parliament. I refer to the scheme which was published in the Cape Times on Saturday dealing with the proposed redesigning of Stal Plein at the top of Parliament Street. According to the paper this is to be a matter for joint consideration between the City Council and Parliament through its Internal Arrangements Committee. I think this falls into line with the sentiments expressed by the Chief Whip on behalf of all of us, namely our satisfaction with the improvements which have been made and with which sentiment I wish to associate myself. This proposed further scheme will undoubtedly be another wonderful improvement. The scheme, according to the article in the paper, is to be considered by the Select Committee on Internal Arrangements some time after Easter, and it envisages the establishment of a very large underground parking area in Stal Plein capable of parking 100 to 150 cars, a proposal which I think every member will heartily support, but in addition to that, according to the article this scheme will provide a fitting forecourt, not only for Parliament itself, but for Government House.

It goes on to say that in that scheme, which would have to be a joint scheme between the Government and the local authorities, it is proposed in the general layout that the statue of General Louis Botha, which now adorns a portion of that area, will be transferred to a raised pedestrian way, specially designed to set off, not only Government House, but also the historically valuable Thibault gate. It is in that particular aspect. Mr. Chairman, that I want to ask that when the matter may be considered by the Internal Arrangements Committee, that in the design of a fitting forecourt for Parliament, the possibility of siting of the statue of the late General Smuts somewhere also in that area could also be considered. These are two figures who undoubtedly, whatever our political views are, have played a tremendous part in the work of this Parliament and in the build-up of this Parliament. If the Government and the City Council are to endeavour to design a fitting forecourt to Parliament, I can think of no better project than to have those two great national figures associated in that area. It is a scheme, I believe, which could be accented by all of us, irrespective of whatever political views we may hold, and I believe it would be a scheme which would give general satisfaction. I know it would to the people of this area and to the people of the country in general, to know that associated with the Parliament in which they have both served with distinction for so many years on behalf of the country. The memorials of those two great figures could also be associated in some form in any fitting forecourt to Parliament which is to be brought into being, and in respect of which in the one case up to now there have been difficulties in finding a site which is acceptable to all concerned. That matter in itself I think should also be referred to the appropriate committee for consideration as a matter of parliamentary interest when the joint scheme is being planned.

If I may come back to a more mundane matter, following on the Chief Whip’s suggestion, and seeing that we have had such magnificent service from the staff itself, I am going to ask them during the months which lie ahead in the next recess also to give some attention, seeing that they have been so successful in the other sphere, to the seating accommodation in this Chamber itself. Not particularly with regard to the siting of the seating, but with regard to some of the sharp corners and the knobs and bumps which adorn these seats, a design which belongs to a long-forgotten age, and when we sit here for five months on an average of anything up to seven to eight hours a day, I believe hon. members will agree with me, these knobs are far from ornamental in so far as their effect on the anatomy of members is concerned. We have had an Anatomy Bill before the House, but I think myself that this is a matter which, if the officials, who have been so successful in the other direction, would turn their mind to, they might be able to evolve some satisfactory solution of this problem also.


I rise to say a few words about Hansard. I want to congratulate those responsible for the compilation of Hansard, and to state that hon. members appreciate the work of Hansard very much, not only because they do the work, but because they do it so thoroughly. It is worth While, because it is the only reliable source from which the country can really deduct what is actually being said from time to time by hon. members on both sides of the House. It is the only reliable source. Some efforts are, of course, made by different newspapers to try to tell the public what happens in Parliament, and there are some hon. members of the House, not all of them, who, from time to time for many years, have been the victims of inaccurate reports by many newspapers in the country. It is bad enough when an inaccurate report is broadcast or a distorted report is published by a newspaper, whose representatives have the privilege of sitting in the Press gallery here, but when something which he has never said is attributed to an hon. member, and when things which never happened are reported in Parliament by certain newspapers, then it is very serious, and there are many hon. members of this House who have then got only one means of justifying themselves in public and to their voters in connection with what their actions were and what they actually said in connection with a matter, and that is by referring to Hansard. As the hon. member for Lichtenburg (Mr. M. C. van Niekerk) said recently: When one talks nonsense and insults an hon. member, then there is plenty of space to publish it to the world, but when one makes out a good case, there is just not space in the newspapers to publish what the hon. member said. That goes for both sides.

Therefore, I ask that the small number of Hansards available to hon. members should be increased if possible. This work of high quality should be made more readily accessible to the public. I think I am correct in saying that in Australia Hansard is published and is supplied to the public at about 2d. per weekly issue.


That was the position earlier, but it is no longer so.


I do not know what the exact price is at the moment, but I think hon. members on both sides will agree with me. We do not want to argue about this, but it just does not help to argue about it and to refer to distorted reports and the wrong way in which hon. members of the House are treated. It just does not help. The newspapers’ greatest fun to-day is to make a fool of a Member of Parliament. It is their greatest fun while the House is in session. Therefore, I ask whether it is not possible to have twice as many copies of Hansard printed so that each member will have more copies at his disposal, and make the price of £1 10s. per session, as it is at present, 1s. 6d. per copy. I am convinced that thousands and thousands of copies will then be purchased throughout the country. Then the country will be better informed about what happens in this House. If we take into consideration the number of voters in South Africa to-day and the number of copies of Hansard available to each hon. member, then the number is so small that it has absolutely no value. Let it be made more readily available to the public at a reduced price. Then we can use this efficient service supplied by Hansard for the benefit of the public. The public does not get the benefit of it to-day. It is only the party organizers, party officials all over the country, who perhaps have the privilege of obtaining these copies, but the broad public is deprived of the privilege of knowing what actually happens in the House.


I would like to support the plea of the hon. member for Krugersdorp (Mr. M. J. van den Berg) that Hansard should be made more freely available, and perhaps the hon. Minister of Transport might be able to help us. But I would like to say that in my experience, while admittedly in brief reports of speeches mistakes are made, I do believe that the Press of this country does attempt to give a fair reflection to the public of what happens in this House.

Vote put and agreed to.

On Vote No. 12.—“ Treasury ”, R6,867,000,


This is a Vote which it always is rather difficult to deal with because there are so many things one would like to take up with the hon. the Minister, but on the other hand you, Mr. Chairman, quite rightly, would not allow us to indulge in a second Budget debate on the hon. the Minister’s Vote. Therefore, one is limited in what one can say.

Sir, the hon. the Minister, in the course of various speeches, inside and outside the House, has recently talked about the storms that loom ahead, storms worse than ever that lie ahead of us, and he has said very little about them and he has not enlightened the country as to what he is doing to meet those storms. We tried most of last week to elicit from the hon. the Prime Minister how he was mobilizing his Government to deal with the cold war upon which we are entering at the present time. We obtained no satisfaction from the hon. the Prime Minister, and therefore we are compelled in the course of these Votes to tackle each Minister individually on the subject and to ask each one of this band of bewildered, frightened men just exactly how they visualize the position and what they propose in their particular sphere to do to help the country to face the storms which we are told we are about to face. We asked the hon. the Minister of Finance a number of pertinent questions in the course of the Budget debate, none of which did he answer. Let me cite just one. The hon. the Minister told us that the outflow of capital constitutes the most important economic symptom requiring attention. He made that statement before the ignominious failure of the hon. Prime Minister’s mission to London, and nobody, not even the hon. the Minister, will suggest that the Prime Minister’s visit to London did anything to encourage the flow of capital to this country or to discourage the outflow to which the hon. the Minister referred. That outflow is continuing. I don’t know whether the hon. the Minister has got the figures for the first quarter of this year. We know what the figures were to the end of 1960, and I have no doubt that the hon. the Minister and his Department are keeping the closest watch on the position, since this is the most important economic symptoms requiring attention, and I hope the hon. the Minister may be able to give the House the nearest estimate of what the net outflow of capital has been during the first quarter of 1961. Because as far as we know that outflow is continuing. The momentum has been a little bit stayed, simply because of the weakness of the market—stockbrokers are piled up with selling orders which they cannot execute because there are no buyers, and that in spite of the fact that South African stocks, many of them, at their present prices, offer a very much better yield than similar stocks overseas to which the money would be repatriated if the stocks here are sold. The hon. the Minister has done nothing whatever to enlighten the House and the country as to what steps he is taking to deal with this important economic symptom, nor has he indicated as to what steps he has taken not only to stem the outflow, but to promote a return flow of capital. The hon. the Minister has told us that he has in this country to redeem something like R127,000,000 of capital this year—that is all locally held stock. And, Sir, that again brings us to the point to which we have referred in recent years, of the undesirable practice which has been growing during the time of this Government to depend more and more on short-term borrowing. If you look at our loan position to-day, you will find that the overwhelming proportion of the loans are short-term loans which have to be repaid in a very short time, although they have been used very often for long-term investment projects.


Is that not the world tendency?


I am not concerned with the world tendency at the moment, but I do know that at the present time there is no difficulty in the London market to get long-term loans for approved clients, nor in the United States, and what we want to know is: With this outflow of capital, what is the Minister doing to check that flow, how is he going to stop it? Because, if it goes on, it is only a matter of time before some kind of exchange control will have to be imposed, and that is what is worrying financial people in the country at the present time as to whether the position may be rectified without the imposition of exchange control because of that outflow and all that goes with it, because from that outflow of course flows import control, and if you are thinking of severe import control, price control is almost inevitable. That is the path on which, if we are not very careful, this country is going to find itself. That is why it is most important for the hon. the Minister to take the country in his confidence and tell the country how he views the position, what are the storms that he is worrying about, what are the storms, how he is preparing for them, what steps he is taking and what he expects the country to do about it. In other words, in view of what lies ahead, according to the hon. the Minister, we want to know where is the money coming from to maintain development in this country without which disaster lies ahead of us, and what he has been doing to take steps to strengthen our financial position so that he can counter the hostile measures which are envisaged in what is going on overseas at the present time.


The hon. member is still pessimistic. We have already got to know him as the most pessimistic member in this House. The first matter he raised was the outflow of capital which is still continuing. Nobody will deny that our foreign currency has at times been in a stronger position than it is now, but I also remember that the late Mr. Havenga once asked in this House what we wanted to do with all our foreign reserves and that one should not have more than one needs. I do not want to say that we have a superabundance of foreign reserves, but one thing is very clear, and that is that throughout the years we have always had, in the first half of the year, from January to June, a decrease in our foreign currency, and in the second half of the year it again increased, and if we look at the decrease we had just recently it is not abnormal at all. The hon. member in this connection also referred to the stock exchange and various other things. In recent months, and even after the Prime Ministers’ Conference in London, the decrease was not abnormal. It was a few hundred thousand rand per week. Therefore we should not be alarmed by that. We also know that in regard to this matter the Government will not allow itself to be caught napping. If necessary, it will try to control the matter properly by means of stricter import control. The hon. the Minister will perhaps say that I am going too far, but I want to say that I think that a matter of R109,000,000 in foreign currency is a reasonably safe position in view of South Africa’s external trade at the moment, and that is equivalent to our gold production for approximately two or three months. We have such a tremendous gold production that foreign reserves do not constitute such a problem in our case as it does in the case of other countries. Our powers of recuperation as the result of our gold production cannot be equalled by any other country in the world and therefore I believe that we need not be so concerned about the matter as other countries are.

The hon. member said something which I rather deplore. He said: “ Stockbrokers are piled up with selling orders which they cannot carry out because there are no buyers.” Surely that is not true. On Monday last week there was a rush on the Stock Exchange to sell shares and there was an appreciable fall in the price of shares, a big fall. What was the cause of that? There was an article in the Sunday Times to the effect that a certain stockbroker in England had sent a circular to his clients advising them to sell all their South African shares. As hon. members know, about 80 per cent of all people in South Africa who operate on the Stock Exchange read the Sunday Times. These people were greatly alarmed when they read that report, and on Monday they were in a panic and threw their shares on the market, with the result that prices dropped. But it was an old circular; it was already two weeks old but the public did not know that, and in addition it then appeared that the broker concerned was not even known to the stockbrokers and that he was just a little insignificant man in London who had tried to make a name for himself. The other day the hon. member for Kensington blamed the Prime Minister for having quoted a broker’s letter. Nobody ought to know better what the rules of the Stock Exchange are in regard to the circulars issued by brokers than the financial editor of the Sunday Times. I want to ask why the hon. member for Kensington did not take him to task for the report he published, because did he not break all the rules by doing so? But fortunately the public soon realized that this was a weak circular which caused them to lose millions of pounds and the market recovered as from Tuesday, and to-day it is just as firm as at any time before that. Even the sellers overseas are now buying back the shares.

Just a final point. The hon. member for Constantia again raised the matter of short-term loans. He is very concerned because the Government takes up short-term loans and uses the money for long-term expenditure. The hon. member has been a member of the Select Committee on Public Accounts for many years. He ought to remember that when the hon. member for Johannesburg (North) (Mr. Plewman) was Auditor-General this matter was raised pertinently in the Select Committee on two occasions. At that time the percentage of short-term loans was 16 per cent to 17 per cent of our total debt, and then the Treasury advanced the argument that we had an expanding money market in the Union and that as the money market expanded we should make provision for the State to accommodate short-term capital, and the Treasury further stated that, in view of the position our money market had already reached, 16 per cent was not a dangerous percentage. Notwithstanding that, our short-term debt is to-day a much lower percentage than it was at that time. Out of a total debt of R2,530,500,000, the total short-term debt amounts to only R240,000,000, i.e. less than 10 per cent. But that by itself does not tell the whole story. One must analyse these figures. Then one finds that of the R240,000,000—I refer the hon. member to page 60 of the Estimates—R170,000,000 is really short-term debt, i.e. only 6½ per cent of the total national debt. That is a very low percentage, even lower than it was during the war when nobody apart from the State could borrow money in South Africa. Then it was 7 per cent. We find, further, that the loan levies are regarded as short-term debt, but that is a levy which was borrowed for five years. Long before this money has to be repaid the State knows when to make provision for it. The loan levies alone amount to approximately R60,000,000 of this R240,000,000. Then there are tax redemption certificates amounting to R8,500,000. Surely the hon. member does not want us to abolish these certificates. It is a concession to the taxpayers, and one knows more or less when people will come and pay their tax, and one can make provision timeously. In practice it of course amounts to this, that one does not repay these people. They pay in the deficit on the tax redemption certificates, and then it is of course transferred from the one account to the other but it stays in the Treasury. The rest consists of personal tax and savings levies. All these three are amounts which are not connected with Treasury bills which have a short term. But I want to say here that unless the Government makes a larger proportion of our national short-term debt, then our short-term investors will have trouble one of these days. We know that the position ten to 12 years ago was already that people who wanted to invest money on short term in South Africa could not do so because there was no investment market here, and therefore they had to invest it overseas. [Time limit.]


The hon. member for Pretoria (Central) (Mr. van den Heever) has quoted Mr. Havenga as saying at a certain period of our history that he did not know what we were doing with all our reserves. Well, the hon. the Minister of Finance knows what he would like to do with the reserves. He would like the reserves to be a bit more healthy than what they are at present. Then the hon. member said that the market to-day is not abnormal. I should like to know what he regards as an abnormal market if this is not an abnormal market. The selling is coming from all over the world, and any support for the market is coming internally in South Africa from good South Africans who believe in this country, who are bullish, as I am, because they look forward to the day when the country will get rid of this Government. For that reason they are bullish. They believe that South Africa will not for ever tolerate a Government of this kind, and because of that there are buyers in the market. The hon. member said that it was a Sunday Times market because of a report in the Sunday Times. We have these reports every week in our newspapers. People are accustomed to them. I think hon. members on the other side pay too much attention to what is reported in the Press. The Press in South Africa, where it is a free Press, is regarded by the ordinary reader as a Press which expresses an opinion. I don’t think the English-speaking reader of the English Press feels that here is the truth in everything that is said. He feels that here is an opinion. And now I should like to go a little further. My time is very limited and I will reply to all these questions if I get in again, but at the moment my time is too limited. I should like to say to the hon. the Minister of Finance that the relations between his Department and the Stock Exchange for many, many years, to my knowledge, have been excellent. And I think the reason for that is the very fine example that was set by a former Secretary for Finance, Dr. Steyn. He took the Stock Exchange Committee into his confidence, and there was a spirit of co-operation which I can recommend to the hon. the Minister to-day. I am sure that by appealing to the Stock Exchange Committee he would receive cordial co-operation. And because I believe that and because I know that is true from my experience, I regret very much indeed that the hon. the Prime Minister saw fit to read in this House from a private and confidential weekly market report by a stockbroking firm to their clients. I reget that, and I should like the hon. the Minister of Finance to discuss that with the hon. the Prime Minister and to explain to him that it makes his position as Minister of Finance embarrassing. I think there is a great deal he can do in that direction. The hon. the Minister of Finance will find co-operation from the Stock Exchange. The relations to-day, I understand, are very healthy indeed, and I am sure that they will be maintained.

Now, Mr. Chairman, I find myself in the embarrassing position of having to pay a compliment to the hon. the Minister of Finance.


Shall I go out?


No, no. We must have a little light and shade in the picture. When I look at his estimates I realize that in his own Department he has been pruning the estimates. When we look at the figures we find that there are no great increases. In spite of the fact that he is carrying out additional work every year, there is not a large increase in the estimates. What I would like to suggest to the hon. the Minister of Finance is that he should prune the estimates of his colleagues in the Cabinet. I think the hon. the Minister of Finance has that duty to the country. When I look at the estimates of the Department of Education, for example, then I feel that the hon. the Minister of Finance should exercise very strict control on the estimates of other Departments. It is quite Hear to me from his estimates that he is exercising that control in his own Department.

The next point I shall come to is this: I should like to make an appeal to the hon. the Minister of Finance in regard to a subject that I raised in the Budget debate. He will have observed that since we had the Budget debate no less a person than the President of the Chamber of Mines has also appealed to the Minister for reconsideration of his Budget proposals in regard to the taxation of gold mining profits. The hon. the Minister has provided in his Budget for a reduction of 3 per cent on company taxation, and I appeal to him now to reconsider applying that reduction to the taxation of gold mining companies. We have spoken about capital leaving South Africa. How does capital come to South Africa; how does it leave South Africa? We all know the manner. The South African companies that are popular throughout the world are generally gold mining companies. Our industrial companies are not in the same category. How many blue chips, as we call them, are there among our great industrials? Very few indeed. But there are some very fine companies in our gold mining section. I feel that if the hon. the Minister wishes to have confidence restored—and I think it is necessary to restore confidence—he would do well to reconsider the taxation of gold mining companies, because that is the avenue by which capital comes to South Africa. Gold mining shares are quoted on the New York Stock Exchange, they are quoted on the London Stock Exchange, in Amsterdam and in Pans. Any gesture in the manner I have suggested would, I am sure, help to restore confidence. I think it is necessary to restore confidence to-day. There is a loss of confidence in South Africa. I feel that if the hon. the Minister could say “ We intend to treat our gold mining companies in the same way as we treat our industrial companies and our commercial companies; there is a field for investment; we have confidence in the future ”, I am sure he would do much to reverse this flow of capital to which the hon. member for Constantia (Mr. Waterson) has referred. That suggestion I leave to the hon. the Minister for his consideration.

*Mr. HAAK:

The hon. member for Constantia (Mr. Waterson) said a moment ago that overseas investors had lost confidence in South Africa, and one of the reasons he mentioned for it was the fact that we had left the Commonwealth. The hon. member for Constantia is one of those who for several years now has been trying to destroy confidence in South Africa. I am afraid that since I first heard him speaking in this House he has said very little that was constructive, and the same applies to hon. members opposite. When I say that the hon. member is trying to create distrust and to make statements which harm the economic position of South Africa, then I want to refer to one such statement here. In the Cape Argus last year, a month or so before the referendum, the hon. member said—

No preferences out of the Commonwealth, Mr. Waterson says.

Then we read the following—

If the South African republic had to leave the Commonwealth, international trade agreements would operate to prevent Britain and other Commonwealth countries from continuing to give trade preferences to South Africa.

The hon. member therefore said that if we become a republic outside the Commonwealth “ international trade agreements ” would operate to prevent Britain and other Commonwealth countries from continuing to give trade preferences to South Africa. Now I want to ask the hon. member what these international agreements are to which he referred which would prevent these preferences from continuing. The hon. member can have the opportunity to tell us if he wishes. But now he sits quiet. I take it he referred to G.A.T.T. Those are the only international agreements which can affect these preferences. But he gave this reply after the Minister of Economic Affairs had said that G.A.T.T. does not affect it, and this statement made by the hon. member for Constantia was really in reply to the Minister who said that these agreements should continue to exist and that they were not prohibited by G.A.T.T. But then he tried to show what harm South Africa would suffer if we no longer enjoyed these preferences. He tried to cast suspicion on their continued existence. But now we see, after the announcement was made that South Africa would no longer be in the Commonwealth after 31 May, that the British Prime Minister made a statement in the House of Commons, and inter alia, we read the following. Referring to these international agreements—I take it they are the same as those referred to by the hon. member for Constantia—the British Prime Minister said this—

Then there is the question of preferential arrangements which affect trade both ways. These are governed by a bilateral agreement concluded after the Ottawa Conference in 1932, and will be unaffected by South Africa’s changed status. I am informed that the maintenance of these original arrangements is not affected by our obligations under G.A.T.T.

We therefore have that statement, and the same was said by Mr. Sandys, the Minister for Commonwealth Relations, in the House of Commons. I need not even quote it. Here we therefore have an example of the type of thing being said to shock confidence in investment and trade in South Africa in future. But fortunately we know that there were also other reactions which followed immediately. So, for example, we see that the Economic X-Ray on 20 March—therefore after the announcement— wrote the following in connection with South Africa—

South Africa’s tragic withdrawal from the Commonwealth makes no difference to economic arrangements. Seriously, they might have been affected more if the Union had copied Canada, in being inside the Commonwealth but outside the sterling area. There was never any question of her leaving the sterling area. Her financing and trade and gold selling arrangements with Britain rest on mutual advantage, not on Commonwealth sentiment. Dr. Verwoerd clearly wishes to strengthen them to the mutual advantage.

There we have a proper summing up of the financial position between South Africa and Britain. It is the declared desire of our Prime Minister that this should remain in existence. There are also the statements of the British Prime Minister that it should remain in existence, and we see no reason why the position should deteriorate. In conclusion, the Stock Exchange Gazette thereafter summed up the position very correctly when it said—

The hard fact, of course, is that membership of the Commonwealth does not necessarily make the country an attractive investment proposition, and non-membership equally does not wipe a country off the list of desirable places to invest.

That is the position. It depends on the investment possibilities in South Africa and it is time for the Government, through the Ministers who handle these matters, to do everything in their power, in spite of the position in which South Africa finds itself, to make the best of it and to make us economically as strong as possible and to preserve and to expand those financial and economic bonds with other countries which are mutually advantageous.


It is quite apparent from the remarks of the hon. member who has just spoken that he does recognize that South Africa has become a bad financial risk for external investments. But what he fails to do, of course, is to see the beam in the eye of his own side as the reason for that, and he is trying to concentrate on the mote which he sees in the eye of this side of the House. He would do far better to concentrate on the beam in the eye of his own side of the House.

So far as the hon. member for Pretoria (Central) (Mr. van den Heever) is concerned, he seems to think that short term borrowing is a matter which you can adjust on a percentage basis. Short term borrowing is on the increase, as the hon. member for Constantia (Mr. Waterson) has pointed out. And much of our short term borrowing is tantamount to overdraft financing. Now there is nothing wrong with overdraft financing provided the capital is used for working capital and not for fixed capital outlay. But that is what is happening here, it is fixed capital outlay that is taking place here.


That theory of yours was repudiated in 1954 by the Treasury.


I am dealing with the current position which has become more aggravated since 1954. There is nothing fundamentally wrong with short term borrowing, with two reservations. Firstly, it must be kept within the bounds of safety and, secondly, the means for repayment must be readily available. The hon. member would have been much more helpful if he had tried to ascertain what are the bounds of safety; what are the limits of safety. I personally have tried to get this information from the hon. the Minister of Finance, and from his predecessor, without any success.

As regards the ready means available for repayment, may I point out to the hon. member that for the current year, repayments on external loans amount to something just under R50,000,000. And all of those loans are, in effect, short term borrowings which now have to be repaid. The fact, therefore, is that we are now committed to frequent refinancing operations in which, of course, the Reserve Bank and the International Monetary Fund are playing a certain part. But there are certain aspects of the matter that I would like to raise with the hon. the Minister himself.

The first point is this: Provision is being made under Vote 12, for R6,000,000 as a contribution towards the Decimalization Fund. That is the second contribution of R6,000,000, and I hope the hon. the Minister will tell us what is contemplated as to the amount that will have to be contributed to this Fund. The country is, of course, entitled to this information and so is this hon. House, and I hope the hon. the Minister will indicate to us precisely what amount is involved and for how long these contributions are going to take place.

The second matter I want to raise with the hon. the Minister is what our relationship is, firstly, with the International Monetary Fund. A substantial contribution had to be made last year. It was something like £4,500,000. I think the hon. the Minister should inform this Committee what the position is. Is there going to be any further contribution towards the International Monetary Fund in the near future or not? And secondly the same applies with regard to the International Bank for Reconstruction and Development. No amount has appeared on the estimate as such. The hon. the Minister did indicate during his Budget speech, that an amount of R1.6 million was going to be paid to the International Bank during the current year. Here, again, I hope the hon. the Minister will inform the House precisely what the relationship is between the Union and this World Bank; what our commitments are for the future in regard to it, and whether this is a final instalment payable, and the circumstances under which it has become payable.

I support the hon. member for Constantia who has indicated that we have not had an adequate reply in regard to what the Government proposes to do in connection with this outflow of capital funds that is taking place. The position as it stands at present is something of this order, that the gold and foreign reserves stand at something round about R180,000,000 at the present moment. But that figure takes into account, of course, some R28,000,000 which has been contributed from two sources; firstly there has been a contribution or a drawing on the International Monetary Fund of some R13,500,000. The hon. the Minister told us that the Reserve Bank itself had entered into a short-term loan from a private source, of R14,000,000. Those two items do not go into the Loan Account, as he told us, they go direct to the Bank. But they do affect the balance of reserves. And taking off those amounts brings us perilously near where we were in May 1958, because, disregarding those two items, the reserves stand at something like R150,000,000. I hope the hon. the Minister will therefore deal with the position as raised by the hon. member for Constantia and make quite clear what the position is. I think he should tell this Committee whether more than the R13,000,000 has or has not been drawn from the International Monetary Fund.

I think the hon. the Minister should also take this country and the House into his confidence in regard to this loan which was raised by the Reserve Bank itself. I think we are entitled to know when the loan was raised, when it is repayable and what the rate of interest is, and the cost of that loan to the Reserve Bank. The Government is, of course, practically the whole shareholder in the Reserve Bank, and for that reason should keep the country informed in regard to the matter. I raised this matter previously with the hon. the Minister but I have not had a reply, and I therefore hope that he will now clarify the position in regard to that loan by giving the information for which I have now asked him.


I am surprised at the remarks made by both the hon. member for Constantia (Mr. Waterson) and the hon. member for Johannesburg (North) (Mr. Plewman), particularly those of the hon. member for Johannesburg (North) in regard to the short-term loans which, according to them, are so easily available and too big in the Union. They made that statement without producing any evidence in proof of it. They must forgive us, therefore, if we do not pay much attention to it.

However, I think it may interest the Committee to know that the hon. member for Johannesburg (North) is really, what shall I say, the villain or the hero in this story. This has been his pet subject for years. The development of a short-term money market in the Union is really his brain child. When he was Auditor-General he repeatedly urged upon the Government to establish a short-term money market. I want to quote from the report of the Select Committee on Public Accounts of 1951. Mr. Loveday, who was the right hand of the Auditor-General Mr. Plewman, the present member for Johannesburg (North), gave evidence before that Committee. The Chairman asked Mr. Loveday the following question—

Have you any further comments in regard to this paragraph?

This was with reference to the Auditor-General’s report that there were insufficient facilities for short-term investments in the Union and that as a result of that people were investing their money overseas to the detriment of the Union. I congratulate him on the fact that he was a good citizen in those days. The reply was—

I mentioned in evidence at the last meeting that the Treasury had informed me that it was a matter of policy to encourage the development of a local short-term money market in the Union. As a result of that policy you will remember, we found that there had recently been large accumulation of cash balances in the Exchequer which had not been invested.

The Auditor-General then complained that that money was lying idle. A question was then put to Dr. Steyn who was Secretary of Finance and he said that if we had such a market that money would be utilized in this country. It was as a result of that that the Government tried to utilize those short-term investments in this way. The Government has saved millions of cents because the rate of interest on these short-term investments is only 4 per cent. I have with me the latest report of the quarterly statistical journal of the Reserve Bank for December—I think it is the latest, but I am not sure. There is a list of the rates which were paid and you will find. Sir, that it never exceeded 31 per cent during any month. It therefore pays the Government. The only complaint one may perhaps raise is that the ratio between short-term and long-term debt has become too great. When we compare the position in this country with that of other countries, we find that our ratio is still very favourable. As a matter of fact, it is a fraction of what it is in other countries. In England the ratio between short-term and long-term debt is 20 per cent. In South Africa it is 9 per cent. It is ridiculous to say that our short-term debt is at a dangerously high level. Financiers of repute say that it can reach 16 per cent. The hon. member said so when he was Auditor-General.


No, he disagreed with that.


Treasury said so. That is a point of difference which has not yet been decided. But it does not have to be decided because we are at 9 per cent. When we look at the position of those countries outside the Commonwealth, we find that in America the period for long-term credit is seven years. It is absolutely ridiculous, therefore, to say that we will obtain long-term credit in America. The American Government never lends money for longer than seven years. We regard any period shorter than six years—five years—as short term. If we deduct all the levies which the hon. member for Pretoria (Central) (Mr. van den Heever) has mentioned, and the further advances which are for periods of over a year, this figure of 9 per cent becomes as small as 6 per cent. To attack us on this point, therefore, merely shows that Opposition members do not really know what they are talking about. They do not know what to talk about so they again raise this matter.

I can quite understand that the whole of South Africa is concerned that confidence should be restored. But let me say this: The main reason why confidence has been shocked is the fact that many people overseas and in our own country are afraid—as the hon. the Prime Minister said the other day—that we will not be able to see things through in this country. The easiest way to restore that confidence is not only for the Government to say that it will do everything in its power to see things through, but also for the Opposition to say that the White section, who in any case organizes everything in this country, will see things through and remain here. If they were to go further and tell the world outside to cease interfering in our affairs because by doing so they are merely aggravating our position, and that they do not achieve anything by doing so, confidence in this country will be restored much easier and much sooner, because the stock exchange about which they are so concerned is very sensitive to any political and economic disruptions. However, if we counter those influences with counter-influences confidence will be restored just as easily. We expect every White man in. South Africa to say to those people who try to influence the position here and who try to create unrest and to undermine confidence in this country, those people who try to disrupt the peace and to undermine the confidence, that they will not succeed in their attempt. By doing so they consolidate us all the more. If we tell them that, confidence will immediately be restored.


I think we can quite safely leave the hon. member for Standerton (Dr. Coertze) to be dealt with by the hon. member for Johannesburg (North) (Mr. Plewman). But I am sure he will wish to do, what I think I would do in his place, namely leave him severely alone, ignore him. Let me say this in passing: If the hon. member for Standerton could lay claim to a long record of disinterested service to the State such as that rendered by the hon. member for Johannesburg (North); if he could more often approach our parliamentary debates with the same degree of high-minded objectivity as my colleague, one could forgive him a little for his brash vulgarity. Mr. Chairman, I wish to make an appeal this afternoon for the total abolition of death duties. Taxes on capital are always more offensive to us than any other form of taxation. We all know that we must be taxed in order to get the money to pay for the security and the defence of the realm; to provide those services which we expect a Government to supply to sustain the aged, educate the indigent and administer the State. In that context we accept the justice, for example, of an income tax, although we may, and indeed do, complain with a great degree of volubility about the inequalities of its incidence. But a tax, which is not a tax on revenue, not a tax that we can “ pay as we go ” from what we earn; a tax that seeks to remove the capital reserves we have built up; capital on which taxes have, iii most cases, already been paid; such a tax is, to my mind, one that is unsound in many respects. All of us, I presume, are prudent heads of families who have aimed to build up an estate for our dependants. That is why we feel that when you tax capital in this way, you strike at the very roots of domestic stability and destroy the incentive to build up an estate, which is one of the finest incentives for production. Mr. Chairman, I maintain that death duty is a tax which might well be abolished. I have looked at the statistics available to me. I find that in 1958-9, which is the last year for which I have the figures, death duties produced some R7,400,000 out of a total Government revenue collected of some R664,000,000. As a percentage of the total Government revenue, death duties represented 1.12 per cent. And this at a time when that revenue per head of European population was just over R216. Never before has the percentage of estate and succession duty, in relation to total Government revenue, been so low. Way back in 1921-2, in the days when a mere R550,000 was collected out of a total Government revenue of some R50,000,000, death duties as a percentage of Government revenue was again 1.12 per cent. At that time revenue per head of the White population was R32.25. Since then it has waxed and waned. It has gone as high as 4 per cent in 1950, and as low as our present 1.12 per cent. The argument used by the Minister of Finance does not hold water when one reckons that never have we had a stage in our fiscal history when it would be easier to do away with estate duties without sacrificing any great percentage of revenue, especially for a Government which has been producing the most staggering surpluses for a number of years. I think we can make out a convincing case for the total abolition of death duties. It could be abolished without undue hardship to the Treasury. The Minister could well afford to do so. I would remind him that one of his predecessors, Mr. Havenga, suggested, when he began to lessen the incidence of death duties, that those who followed him should continue this wise course. He regretted having to introduce estate duties in the first place and he hoped, with the wisdom of a second thought, that finance Ministers, who followed in his footsteps, might see their way clear to easing it still further. I am sure he envisaged its eventual total abolition.

I make the point, which I think is most important, that we do not wish to follow the course followed in England and intensify taxation of this sort which destroys the incentive to produce. Production incentive is needed much more in a young and developing country like ours than in an older and more settled country like England. Even there they found, in the case of small family businesses particularly, that heavy death duties destroyed not only the incentive to build up those businesses, but when several fortuitous deaths took place in succession they often handicapped very severely, if they did not destroy, the capacity of such firms to survive. Our farmers in this country may well be placed in the very same position. Having built up something flourishing and stable for their family, all may be jeopardised should the father and the eldest son die soon after each other. I would suggest that in a country like ours (I speak now as a man recently engaged in commerce when I say that farming and industry must always be the backbone of the country) we should give every possible incentive to industrial and agricultural development. We should not handicap production by death duties, especially as the percentage of tax it produces is infinitesimal compared with our total revenue collected. To me it is quite clear that the abolition of death duties should logically lead to the abolition of the gifts tax. This tax was only introduced as a deterrent against an avoidance of death duties. Its abolition should be concurrent. Never before in our financial history have we so urgently needed an inflow of capital into our country. Nothing would be more calculated to bring capital to the country than the course I suggest. If we abolish death duties it will be a great attraction for capital from overseas, capital that we so sadly need to replenish our impoverished coffers and keep the wheels of progress turning.


I want to touch on a few points of principle and ask whether the hon. the Minister can give us any information. I saw in the Press that it was the intention to draft legislation to provide for the transfer of pension benefits from one pension fund to another and to prohibit persons from drawing benefits from the funds before reaching a certain age, say 60 years. That is a matter for which we have pleaded on various occasions in the House and I would very much like to hear from the hon. the Minister whether such legislation is being contemplated and when it can be expected.

Last year concessions were made to self-employed persons to provide for their old age and to deduct amounts of up to £300 per annum from their income when making their returns for income tax purposes. This year that amount is being increased to £400. I am quite convinced that the hon. the Minister has laid down this policy for the future but there are still people who are doubtful. They say that it is something new and they ask whether the hon. the Minister will continue with it or whether he will say in a year or two that he is no longer going to continue with that policy. I would like the hon. the Minister to clarify his policy for the benefit of those people who make provision or who want to make provision for their old age, and that he should state it as being his policy for the future from which he will not deviate.

My final point concerns the question of taxation on benefits derived from pension funds. We would like to encourage the people to make provision for their old age. The contributions of ordinary people are free of tax up to £200 and that of self-employed persons up to £300 per annum. They can deduct it from their taxable income, but when a person receives his pension the State comes along and demands a share of the income derived from the pension fund. People who have reached the age of 60 years or more consider it to be very unfair that the State should come along when they draw their pensions at the end of their working life and demand a share of the cash amount or of the annual income if it is high enough. The hon. member for Wynberg (Mr. Russell) has just pleaded for the abolition of estate duties. I want to point out that at the end of a man’s life he is finished, but here the State is demanding certain taxes while the person still has a few years to live but no longer earns any money. I want to plead that where they are now allowed to deduct the contributions from their income during their lifetime the income which they will ultimately receive in their old age from the pension funds should also be exempt from taxation. It cannot cost the State much and it will be an inducement to those whom we want to encourage to provide for their old age to do so.


There is nothing in the previous speaker’s remarks to which I cannot lend support and therefore I can proceed with my own case. In his Budget speech the Minister said that our customs tariffs were low and that there were various items able to bear a moderate increase in import duties without having any noticeable effect on the cost of living, and he tabled a schedule of such items in which the increases range from 5 per cent to 40 per cent. The Minister also assured the House that mainly non-essential items were affected and that goods produced by local manufacturers had as far as possible been excluded from the schedule. The main point at issue is whether the new duties will affect the cost of living or not. The Minister assured us that they would not, but I must say that it looks as if he has not been entirely thorough. I would like to point out that certain of these: increases will have a very material effect indeed on the cost of living and that this is so obvious that I wonder why the Minister did not spot it. I think it is wrong for him to speak about the cost of living not being affected materially, because surely if the cost of houses goes up that has a material effect on the cost of living and it is equally sure that if the essential goods used by housewives in the house are taxed that will lead to a substantial increase in the cost of living. These items are important and I take it they come into the schedule although the demand cannot be satisfied by local manufacturers. In this connection I can do no better than to quote from notes prepared by the Associated Chambers of Commerce of South Africa, in which they say this—

In that connection attention is drawn to the Minister’s reported statement that the proposed new duties would not exercise any noticeable effect on the cost of living. In the Association’s view, this statement does not apply to at least some of the proposals. contained in the motion. Some specific examples will be quoted below to substantiate the aforegoing …
73 (1) (b): Millinery, drapery, haberdashery and textile articles of furnishing and napery. This item includes a wide range of essential goods used by the housewife.
113 (1): Hardware: This item includes practically every item of builders’ hardware and ordinary household fittings. It would seem that apart from paints and tools, this item covers a large proportion of the articles stocked by the average hardware retailer. Whilst the tariff does make specific provision for some hardware items, it is true to say that the bulk of hardware as interpreted in the way of common usage falls under Item 113 (1). Certain lines are manufactured locally, but imports remain a most important factor in meeting the requirements of the householder and of the building industry. The item covers fittings for doors, windows and furniture; angles and brackets; padlocks and ordinary locks; curtain fittings, etc.

If you go into the details of the cost of a house, you will find that that is quite a substantial proportion of the cost. The notes then go on to say—

355: All goods, wares and merchandise not included under any other heading in the tariff … new products which are constantly coming forward as the result of scientific developments are frequently classified initially under Item 335 before a specific classification under the tariff is framed to cover them. They may be new products which by their nature should be admitted free of duty and yet they will now carry the substantial duty of 20 per cent.

I will not go into these notes further. I think they say enough to prove that there are some things that the Minister should go into in more detail. I must say that this is just another case, in my opinion, of the Minister passing money-raising legislation without sufficient investigation. This year he is amending his legislation in at least two instances where last year we pointed out to him that it was ill-considered and not thoroughly investigated. I refer to the allowances now made in respect of industrial and hotel premises and to donations to universities. In each case he has now seen the light and has accepted the suggestions we made last year. But I hope that this time, because this matter will have a direct effect on the ordinary person, he will investigate the matter I have put forward, and if he finds that I am right that he will do something about it before next year.

I cannot resist suggesting to the Minister that in future he calls upon our finance group, under the usual arrangements for secrecy, of course, to help him in the preparation of his financial measures, in order to keep him out of these little difficulties which seem to arise.

I want to refer to one other matter, and that is the special tax-free bonds that the Minister seems to re-introduce. He said in his Budget speech that he introduced these to attract capital from the private investor and expects R14,000,000 from it. Personally I shall be very surprised if he does not get it, as the rate of interest he is giving to the man in the high income group is nearly 14 per cent per annum. If a man’s income is at the stage where he pays 12s. 6d. in the £—and there are many such—he is left with 7s. 6d. If he pays 12s. 6d. in the £, and if he invests £10,000; in this manner he pays no tax on the last lot, which gives him 14 per cent. If that is not buying money I do not know what it is. I do not know whether it is tied up with this long discussion about short-term and long-term loans and whether we are in such a parlous financial position that we have to get money quickly in order to meet the demands shortly to be made on us, but surely this is buying money. It is not new. We pointed it out to the Minister’s predecessor but nothing was done, and now it is being reintroduced. It looks to me as if it is going to go on being reintroduced. It is very attractive, but look what it will cost us. As the money markets overseas become more difficult for us, and we get shorter and shorter of money, we will end up by paying 14 per cent on many millions.

Finally, I hope that the Minister has listened closely to the speech of my colleague in regard to death duties, because as he pointed out, the abolition of death duties, which do not bring in a substantial amount, will be a very important factor in encouraging people to come and live in our country and to bring their money with them.


I cannot allow the speeches of the hon. member for Wynberg (Mr. Russell) and the hon. member for Benoni (Mr. Ross) to go unanswered. The hon. member for Benoni’s complaint is that the import duty which is levied to-day will raise the cost of living and by way of an example he mentioned three items which appear on the list of goods that are affected by the import duty. Let me ask him another question; He asks the Minister to investigate the position but he himself has made an inquiry to ascertain how many of those items are manufactured locally, and does he not think it is more South African and more patriotic to buy a locally manufactured article in preference to the imported item? The reason why the import duty has been levied is partly to stimulate the love for their fatherland of those who are not as patriotic as they should be and partly to protect our foreign currency. One has to start at the bottom to reach the top, Sir. There is a saying; “Take care of the cents and the rands will take care of themselves ”, in recognition of the hon. member for Kensington. If he studies that list properly and looks at our producers, he will realize that no difficulty can be expected in respect of any article or that there is anything that will aggravate the position of the consumer.

He also raised the question of the person who is in the highest income-tax bracket. I think the least we say on this subject the better because if we told Treasury what people who fall in the highest bracket pay in other countries, he would be surprised to find how fortunate he is in only paying 12s. 6d. in the £. The highest bracket in South Africa, according to the table compiled from the most recent data, is 47.5 per cent of the taxable income. It is 91 per cent in America. It is 88.75 per cent in England. How would the hon. member like to pay 47 per cent right from the start? Those people pay that much sooner than we do because their scale is much shorter than ours. In Canada it is 80 per cent and in Ireland 77.5 per cent. In no country in the world do the people pay as little as we do in South Africa, except in Switzerland, and if the hon. member thinks it so wonderful that they pay 8 per cent in Switzerland why does he not rather go and live there? Perhaps he will reveal a greater love for his fatherland in Switzerland than here.

There is another point to which I must reply and that is in respect of the abolition of estate duty. You know, Mr. Speaker, when the Greeks bring presents you must watch out, and when the Opposition pleads the cause of the farmer you must know something is brewing. They say the farmer should have an opportunity to build up an estate but they forget that he enjoys various privileges in respect of capital expenditure. A farmer has a greater opportunity to build up an estate by way of capital investment than the person engaged in many other concerns in the country. It is completely erroneous to think that in abolishing estate duty a person will be able to build up an estate. There are other measures that can be resorted to. As far as estate duty is concerned we will be making the biggest mistake that we can make in our economic life if we abolished it, because the object with estate duty is not to derive income; that is why the argument that so little is derived from estate duty that it should be abolished is not a good argument. Estate duty is imposed for socio-economic reasons. There is a tendency for big estates to become concentrated in one hand; a tendency to become concentrated in a dead hand. The object of estate duty is to whip it up in that hand so that it will fall into more hands. We have a very good example of that in our country where one of our prominent citizens died recently. During his lifetime he had acquired more than 100,000 morgen of land and when he died the estate duty was so heavy that 100,000 morgen of land had to be divided between approximately ten members of the family because the heirs could not pay that duty. That was quite right. Whereas previously only one man and his family had lived on that land, it now carries ten families. The object is not to derive income, but the object is more to return to the economy which has been drawn from it. That is the wholesome effect of estate duty. I agree that with over-taxation we may stiflle initiative; you have to consider the amount of the tax. When taxation is so high that the individual is no longer interested in making every extra threepence that he can, you are endangering your whole monetary system and your economy. The hon. member for Constantia (Mr. Water-son) and the hon. member for Johannesburg (North) (Mr. Plewman) and I have argued on that point ad nauseam. We pointed out that that stage was only reached when taxation reached the figure of 25 per cent in relation to State expenditure, but when it is 14 per cent, as in our case, or less, there is no danger at all. That is why I say, Sir, that when the Greeks bring presents you should be careful.


I would like the Minister to give us some indication as to what he thinks the future pattern of interest rates will be, particularly having regard to the present pattern. The Minister knows that overseas today South African stocks are paying nearly 9 per cent on short term, and if the Minister proposes to float a long-term loan on an overseas market, in view of the present interest rate, it will be interesting to hear what he expects the future picture to be. As the Minister knows, the interest rate on long-term loans sets the interest rate for the whole of the country. I will leave that now because other members have raised the question of interest rates and possibly when the Minister replies we can go into further detail.

I come now to the next matter, the report on the provincial finances. Some three years ago the Minister’s predecessor advised this House that he proposed to set up a commission of inquiry to go into the provincial finances. So far this report has not been received. The commission took evidence in one or two provinces and it looks as if it will be at least another 18 months before the report is available. In the meantime the various provinces have to carry on as usual with increased demands for hospitalization and more children going to school, and consequently an increased financial burden, and the sources of revenue are limited. The other day I put a question to the Minister of Finance in regard to the taxation that was accruing and which showed for 1956-7 and 1957-8 and 1959-60 that the taxation from individuals showed a generally even trend. Although the Minister in his Budget report said that the income tax was increasing, when we examine the figures and break them down we find that while over-all the taxes are increasing, that impression is given because there has been a considerable increase in the amount of taxation accruing to the Treasury from the gold mines. But if we break it down into the various sections, viz. the income tax from individuals, from companies other than gold-mining companies, from gold and diamond mines and other mines, the figures show that in 1956-7 the income tax from individuals was R106,000,000 and in 1959-60 it was still R106,000,000. The income tax from companies other than mining companies in 1956-7 was R124,000,000 and in 1959-60 it was R118,000,000, so there was a downward tendency in the income from companies. To give the intervening years, in 1957-8 it was R116,500,000, and in 1958-9 it was R119,500,000, and for 1959-60 it was R118,000,000. So one sees from the analysis of those figures that the tendency of income from individuals and from companies other than mining companies has either been to remain static or to go down. And the provinces are taxing the taxpayer a percentage of Union income tax, so the tendency is that although the provinces are having increased demands for services, they will be forced, in spite of the Minister’s assurance that there will be a deduction in taxation, to ask for additional taxation unless there can be some alteration to the formula. I would like to know from the Minister when we can expect that report, whether he has had an interim report and when the provinces can expect some relief, because it is particularly the smaller provinces, the Orange Free State and Natal, which are hit hardest as a result of this formula. I am sorry to say, but I am afraid the Minister has a reputation for procrastination. It is either that or it is overwork.

We would like to know when the Minister is going to give us a consolidated Income Tax Bill. It is just on 20 years since the first Income Tax Act was introduced. It has been amended from year to year. Last year the Minister said that it was a very difficult matter, but that he would go into the question of a consolidated Bill. His predecessor also said that he would consider the matter. Practically every financial periodical refers to this matter. A recent edition of the Taxpayer also recommended that this matter should be considered, and we would like to ask the Minister if he can give us some indication as to when we can expect this Bill. We would also like to know when we can expect the Bill for the present Session incorporating the Minister’s tax proposals. Last year there was a complaint that the Bill was tabled at the last minute and that very little time was given for consideration. I hope we will not have to make a similar complaint this year. I hope the Minister will make up his mind as to what he wants with regard to the final clauses of the Bill and will ensure that the Bill is put before us at the earliest possible moment. The Minister’s Department, as far as I am aware, should have completed this Bill by now. We have had the tax proposals and one is entitled to assume that when the tax proposals are put before the Minister, the Department has a fairly good idea of as to what the tax proposals are and what legislation is needed in order to give effect to those tax proposals. I hope that the Minister in the course of his reply will give us some indication as to when we can expect that tax Bill. At a later stage, under the income tax Vote, we propose to go into greater detail in regard to the recent report by the Select Committee of Public Accounts on the Department of the Commissioner for Inland Revenue, but at the moment we are dealing with general matters. I hope the Minister will be able to give us a reply on these general matters so that we can get them out of the way before we go into the detailed items falling under the Minister’s various Votes.


The hon. member for Kensington (Mr. Moore) blamed the Prime Minister the other day for having quoted from a circular sent to their clients by stockbrokers. He then said that those circulars were very confidential, and unless I am wrong—he can correct me if I am—the position is that in terms of the rules of the Stock Exchange they must be treated as confidential and clients cannot use them for any other purpose than for their own personal information. The hon. member blamed the Prime Minister, but did he blame the Sunday Times for publishing such a confidential document, a confidential document which cost the investors and the Johannesburg stockbrokers millions of pounds in one day on the Stock Exchange? I am referring to the circular in regard to which the Sunday Times of 9 April wrote as follows—

A leading firm of London stockbroker! which claims that its views are widely held on the London market has advised its client! to dispose of their South African shares virtually at any price.

Was that not regarded as confidential? Was that not advice given to his clients by a stockbroker?


I do not know; it emanated from London.


It must have been clear to the Sunday Times that the information contained in that circular was completely untrue, because all they needed to do was to phone the Treasury to hear whether the information was correct. Because why does this so-called stockbroker recommend that his clients should sell their shares. Not because he has no confidence in South Africa’s position; not because he thinks it is not a good investment, but because he says that one of these days the Government will prevent capital from leaving the country. Then he gives the following reason—

Fear that the Union Government will be obliged to restrict the outflow of remittance money in the form of dividends to overseas investors to help to pay for capital development programmes like Bantustans, according to the spokesman of the firm …

And the most scandalous part of it is that this is not a circular which arrived in Johannesburg towards the end of that week. People in Johannesburg had known about this circular for a fortnight already, and the stockbrokers in Johannesburg, as well as the investors who study the market knew that it was nonsense, and that is why it caused no reaction on the market, but then the Sunday Times came along with this sensational report which they could have controlled either by telephoning the Minister or the Treasury to ascertain whether that was so or not. But they told the public that the Johannesburg stockbrokers had announced that they would advise their clients to sell because the Government would restrict the outflow of dividends, and the hon. member for Kensington knows what the result was. He says that the stock market did not drop as the result of this report in the Sunday Times, but surely he knows that it did fall as the result of that report because on that Monday shares fell by 5s., 6s., 7s to 8s. each, and there was panic on the Johannesburg Stock Exchange such as there has not been since Black Friday. All the small investors who could least afford it lost millions and millions of pounds, and the fact that this took place as the result of this report is proved by the fact that late that afternoon the stock market had recovered, and before 3 p.m. on Tuesday every penny which had been lost that Monday had been regained on the Exchange. But the small shareholder lost 4s. or 5s. per share since 10 o’clock on Monday morning as the result of this report because then they panicked. They rushed to the brokers and handed in as much scrip as they could with instructions to sell at any price, and by 2 p.m. or 3.30 p.m. that afternoon the market had dropped lower than it had done for years before, and by 3 p.m. the next day all the losses had been wiped out, and I am sure that those who instigated it bought as many shares as they could. The hon. member who was an important member of the Stock Exchange in Johannesburg, does he have no word of condemnation for this scandalous and shocking manipulation on the Stock Exchange? Because he knows it is not the big investor who suffers, because the big investor holds the shares; he does not sell in a panic. It is the small investor, the man who has only £100 or £200 or £500 to invest who suffers; it is those people who have been robbed of their money in this way, and then the hon. member still comes along as a responsible person and as one of whom the Johannesburg Stock Exchange and the investors of South Africa take notice, and says that the fall in prices was not due to this report which appeared in the Sunday Times. I then asked him: If it is not due to this, why did the stock market recover on Tuesday? Will he get up and tell me why it recovered on Tuesday? It is clear that it dropped as the result of this false report. The financial editor of the Sunday Times ought to know what the rules of the Stock Exchange are. In the first place he contravened those rules and in the second place he published the report which was clearly false and the correctness or otherwise of which he could have controlled simply by phoning the Treasury, but as the result of this scandalous thing the small investors in South Africa lost millions of pounds on that Monday. It is the panic caused by this type of report, and that caused by the hon. member for Constantia (Mr. Waterson) saying that there are no buyers on the Stock Exchange, which result in the small investor losing millions of pounds. The hon. member surely knows that he is talking nonsense. If there were no buyers, how could the market recover again the same day? There were many buyers when the market reached a certain point. No, one expects a greater sense of responsibility from the hon. member for Kensington, and if I could give him advice I would advise him to invest every penny he has in shares. If he does not want to do so he can lend me the money—I will give him good security—and then I will buy shares, as the market is now, because there is not the slightest doubt that as the market is now there are many buyers but those buyers are just waiting for the next Sunday on which the Sunday Times again tells a lie or until the hon. member for Constantia again causes panic and then they buy De Beers (Preferred) not for 135s. but for 130s. The position therefore is not that there is any fear. Everybody knows that these shares pay a good dividend. Take a share like De Beers (Preferred), which is a gilt-edged security. It is as good as the Bank of England and at to-day’s prices it gives you 10 per cent on your investment, of 9.8 per cent at Friday’s price. Does the hon. member for Constantia want to tell me that there are no buyers for that type of share? Of course there are buyers and they will come forward one of these days, just as soon as the public becomes accustomed to these shock tactics we have had since we left the Commonwealth. There is simply a state of panic, encouraged by the English Press and by sensational and false reports like this one, encouraged by a Jeremiah like the hon. member for Constantia, although I think that the public has now become so accustomed to him that they no longer take much notice of him, but also encouraged by irresponsibility on the part of a man like the hon. member for Kensington whose word still counts in financial circles and with the investors. I think that when he discusses these matters he should forget his politics for a moment and show a greater sense of responsibility.


The hon. member seems to be confusing many things in his speech. The point I made was this (perhaps the hon. member for Vereeniging (Mr. B. Coetzee) was not in the House): The Prime Minister read extracts to the House from a private and confidential weekly letter sent by a Johannesburg stockbroking firm to its clients, and not only did he quote from it but he quoted the name of the firm. What the hon. member for Vereeniging is quoting is something altogether different. His complaint is of a different nature. His complaint is a complaint against newspaper reports having an effect on the market.


On a stockbroker’s note.


He is quoting what a London stockbroker said. It may be a London stockbroker or a New York or a Paris stockbroker, but that is something quite different from the case I raised in the House. The hon. member for Vereeniging is naturally disappointed that the Press should have behaved as it did. I do not know what the effect of a Press report is on the market; we get many Press reports, but my experience is that the public generally do not pay such a great deal of attention to Press reports as the hon. member thinks. I do not think for a moment that they are stampeded by news. They are stampeded by Sharpeville and I think with good reason, but the selling after Sharpeville came from overseas, and selling is still coming from overseas. South Africans have from time to time shown confidence in the market, but there is a limit to their resources. I should like the hon. member not to confuse what happened here in the Prime Minister’s debate and the complaint he has against the Sunday Times.


What was your objection to the Prime Minister quoting from that note?


Perhaps the hon. member will first tell me whether he was in the House last Friday?


No, I was not.


Sir, the hon. member is not familiar with the facts. I will tell him privately afterwards what the facts are; I do not wish to take up the time of the House. We discussed that matter under the Prime Minister’s Vote. I think the hon. member for Vereeniging is not in possession of all the facts. I have now obtained copies of the reports to which the Prime Minister objects, and the hon. member will see printed on the report very clearly “ Private and Confidential ”. My chief complaint was that the hon. the Prime Minister was indiscreet in reading those reports to the House. I do not think any person should read a report by a financial adviser to his clients in public. I would not mention the name of that firm; I have never done so.


It is quoted in the newspaper.


But there is another aspect to it, and perhaps the Minister of Finance will consider this as well, that when the hon. the Prime Minister mentioned the name of the firm—he was giving the firm a free advertisement. If a firm has been pessimistic and bearish for the last 12 months, the firm has been right because the market has been bad during the last 13 months. Confidence overseas has decreased. Any firm that said 12 months ago that Sharpeville would have a bad affect on the market, whether the Sunday Times said so or not, was right. It would have advised its clients as it should have advised them, to the best of its ability. If after the referendum campaign and the result of the referendum the firm had said that “ this is another bear point for the market ”, they would have been right again, because it was a bear point for the market; and when the announcement was made of a republic outside the Commonwealth that was another bear point for the market. A broker who says that in London is obviously right, and if a newspaper repeats it the newspaper is right as well. Sir, that is the unfortunate part and there is nothing we can do about it.


The hon. member for Kensington (Mr. Moore) cannot get away with it so easily. What has he really blamed the Prime Minister for? For quoting from a circular sent to his client by a stockbroker and marked “ Confidential ”. But surely he knows that all circulars from stockbrokers to their clients are marked “ Confidential ”.


Do you expect them not to advise their clients?


Of course they must advise their clients, but that is not my objection; it is the hon. member for Kensington’s objection. His objection is that when the hon. member for Wynberg’s stockbroker gives him certain advice, that advice should be treated as confidential. That is the objection of the hon. member for Kensington, and not that he advised his clients. The hon. member for Kensington’s objection is that the Prime Minister made use of a confidential document of that nature, but he has no objection when the Sunday Times makes use of an equally confidential document which, as they say, “ a leading firm of London stockbrokers ” sent to its clients confidentially.


That is not a South African stockbroker.


What difference does that make? What makes this matter worse is that the information given by the London stockbroker to his clients, although confidential, was clearly false, and any financial man who poses as a financial expert, anyone who dares to write about the Stock Exchange must have known it was false. I ask the hon. member for Wynberg whether he knew that it was false.


I didn’t see it.


Then I will read it to him. They do not recommend that their clients should sell shares because they have no confidence in South Africa, but they recommend it for this reason—

Fear that the Union Government will be obliged to restrict the outflow of remittance money in the form of dividends to overseas investors.

Was there ever such a danger? Did the hon. member for Wynberg and the hon. member for Kensington know of such a danger? The Sunday Times did not know such a danger, but they published it on Sunday, and the Rand Daily Mail said on Monday morning that every broker in Johannesburg had been rung up by his clients on Sunday to ask whether they could not sell their shares on Sunday. That was said by the Rand Daily Mail, and on the Monday morning when the Exchange opened prices fell before High Change by 7s. and 8s. and up to 20 per cent. I know of a number of shares I kept which fell from 20s. to 16s., but that same afternoon when it became clear that it was not a new circular— they had had that letter for the past fortnight already—the market started rising and before 3 p.m. the next day it had completely recovered. Now the hon. member for Kensington wants to intimate that this fall in prices was not caused by newspaper reports. Does he want to deny that the financial editor of the Rand Daily Mail said on that Tuesday morning that the whole collapse of the market that Monday morning was due to nothing else but the report in the Sunday Times?


Now they say it is good.


They say that incidents like Sharpeville cause the market to collapse, but on that Sunday there was no Sharpeville and the Minister of Finance did not decide on Sunday to place an embargo on dividends leaving the country. Nothing happened that Sunday, except that it rained very nicely in Johannesburg. There was no Sharpeville, there was no Langa, the hon. member for Constantia did not make a pessimistic speech, we did not leave the Commonwealth, UN did not chop off our heads, nothing happened, but on Monday the Stock Exchange fell by 20 per cent and on Tuesday it rose by 22 per cent. And then the hon. member for Kensington still says that newspaper reports had nothing to do with it. He says there are so many newspaper reports. He does not have the courage to condemn this scandalous thing which caused people to lose millions of pounds. Of course he will never condemn the Sunday Times. He will condemn Sharpevilles, but not this sort of thing which causes people to lose millions of pounds. On Tuesday morning the financial editor of the Rand Daily Mail said that the total collapse that black Monday was due to one thing only, viz. the report which had appeared in the Sunday Times. Sir, I think it is one of the most shocking things to have happened in the history of the Stock Exchange of Johannesburg, and I wonder whether the Minister of Finance cannot do something to make this sort of thing punishable.




I want to ask the hon. member for Pinetown (Mr. Hopewell) whether he thinks this type of lie should remain unpunished, a report in which they say that the Government should restrict the transfer overseas of dividends? Is that the truth, or is it a lie? It is an infamous lie which cost people millions of pounds that Monday. Why should they be allowed to get away with that? Simply to sell their ridiculous little newspaper, and as the result people are robbed in this scandalous manner. Must we allow such reprehensible action towards our country and its investors? There is not a word of disapproval from that side, but when one says that this type of villainy should be restricted, hon. members opposite say “Oh!”, and then it is suddenly an attack on the freedom of the Press. This bunch of scoundrels can rob people of millions of pounds …


Order! The hon. member must moderate his language.


Sir, I say that the man who wrote this article committed a knavish deed, and that he is a scoundrel, and I do not see what claim he can have on your protection or that of any other person. It was a dastardly thing to do, and what I blame hon. members opposite for is that they do not condemn it. Sir, you know how many millions of pounds were lost in Johannesburg as the result of this false report? Millions of pounds, and it was lost by people who were advised to invest in the country, people who have confidence in South Africa, people who follow our advice and invest their money in industrial shares and in sound gold mining shares. The banks and the insurance companies advise them to do so and they do it, and then this mean type of thing happens and they lose 20 per cent to 25 per cent of their investment as they did that Monday, but those hon. members opposite do not express a word of disapproval. They defend this type of thing. I say it is one of the most shocking incidents in our financial history.


I just want to say that I have now allowed two members on that side of the House and two on this side to talk about the Stock Exchange, but they must now come back to the vote.

*Mr. E. G. MALAN:

In compliance with what you have just said, I do not want to follow the hon. member for Vereeniging (Mr. B. Coetzee) to any great extent. I only want to say that it is a pity that he so often spoils his case by the unrestrained nature of the language he so often uses in this House.


You are the last person to talk about unrestrained language.

*Mr. E. G. MALAN:

We know that brokers are often obliged to make forecasts on behalf of their clients, and it often happens that those forecasts are wrong, but this does not justify one in attacking them in the way in which they have been attacked here.


Order! The hon. member must come back to the Vote.

*Mr. E. G. MALAN:

I now want to discuss a different matter, a matter which will certainly calm the emotions and which will enjoy the sympathetic consideration of all sides of the House as well as that of the officials of the hard-working and efficient Department which falls under the Minister. I am referring to the great and critical staff shortages which exist in the Departments which fall under the hon. the Minister. Extremely severe staff difficulties are being experienced, particularly by two of these Departments, that is to say the Department of Inland Revenue and the Department of Audit. We appreciate—I think the hon. the Minister will do so as well—how important it is that there should be adequate staff in these two Departments particularly because this is a matter which could cost the country not thousands or tens of thousands, but in fact millions of pounds annually. We must remember that under Act No. 58 of 1960, the Department of Inland Revenue, for example, is prohibited from correcting errors once three years have elapsed. In other words, if the Department of Inland Revenue cannot correct such errors within three years, that money and that revenue is in effect lost for ever. May I quote from what the Commissioner for Inland Revenue himself has said in evidence before the Select Committee on Public Accounts. He said—

The fact remains that the quantity and quality of staff available to do the work of the Department are hopelessly inadequate. It does not help to create posts if those posts cannot be filled or are filled by persons who are employed on a temporary basis.

The work of the Department of Inland Revenue has increased. In the first place there are more income taxpayers and in addition the loan levies which have caused a tremendous amount of additional work have been introduced. We find, for example, that there is a great staff shortage in the offices of the Receivers of Revenue. There are 803 authorized posts; of those only 698 are filled; in other words, there is a shortage of 105. When we see under what difficult conditions the Department of Inland Revenue is working, then I say that it is in the utmost national interest that urgent steps should be taken to correct the position. During the four years from 1956 to 1960 no less than 4,350,000 tax assessments had to be checked, but by August 1960 only 1.6 million of those assessments had been checked, that is to say, only 37 per cent during those four years.

When we examine the evidence which has been given, we can see what could actually have been saved and what additional revenue could have been collected for the State. It would certainly also have eased the task of the hon. the Minister of Finance if the inspectorate of the Department of Inland Revenue had had sufficient staff. The inspectorate has done excellent work. For the year ending on 30 June 1960, for example, the inspectors carried out 64 income tax investigations, and those 64 investigations resulted in the collection of no less than R1,100,000 in additional taxes. I can also mention in passing that the Department of Audit has also undertaken 18,000 investigations which yielded no less than R600,000 in additional taxes. This shows that vast amounts—ten, 20 or 30 times the present rate—could be saved or collected on behalf of the State if this problem could be tackled and solved. I appreciate the Minister’s difficulties in finding staff and I also appreciate the difficulties facing the Public Service Commission, but I feel that something should be done. The Department has done a great deal in respect of mechanization and reorganization, but as the Commissioner for Inland Revenue has said—

No improvement in either knowledge or accuracy can be hoped for until the Department is allotted sufficient posts to cope not only with the work which is being done but also with the work which is not being done.

We also find a very similar position in the Audit Department. This Department is also doing excellent work, but once again we find that there are posts on the establishment which cannot be filled. We find, for example, that there are 479 posts on the establishment of which 289 are filled by permanent units, 130 by temporary units and 60 are vacant. There are problems created by the resignation of staff. Of 58 appointments which were made in one section in the course of one year, no less than 38 resigned. There is a shortage of clerical assistants, Grade I. Of 95 posts only 20 are filled by permanent units. The outside audit is suffering as a result. Outside audits should take place regularly, particularly in the platteland areas, that is to say at least once every 18 months. At present these audits are only being undertaken every three or four years and once again the State is losing hundreds of thousands of pounds as a result.

There are other problems. The Department of Audit and the Department of Inland Revenue are for good reasons which were given in the evidence perhaps not as popular as careers as other Departments among the ordinary public servants and many of them are being attracted to a Department such as the Department of Commerce and Industries where there are far more senior and important posts, such as that of Trade Commissioner. I think that we should guard against the Public Service Commission promoting officials from these Departments to other Departments. Perhaps the solution is to create additional senior posts in these two Departments. I do not know. The Minister is in the best position to know what the answer is.

The question can even be asked whether the best solution as far as the Department of Audit is concerned, may not be to place it under the control of Parliament itself instead of under the Public Service Commission. This is the position in Canada. Then different salaries can be laid down for this Department which will not be subject to the ordinary Public Service regulations. I do not say that that will be the solution, but this is a matter which could be investigated. These are matters of the utmost importance because millions of pounds could be collected in additional revenue at a cost which would probably not equal even one-tenth of that amount. I am convinced that the Minister and his capable Departments will give attention to this matter and will perhaps be able to find a good solution.


In reply to the previous speaker I just want to say that the Department is of course fully aware of what has taken place on the Select Committee on Public Accounts and the evidence given there relating to the under-assessment of persons who should pay tax. This of course gives us cause for concern because it is always the position that if some people pay too little tax it means that others must pay more because we must find the total amount. This is therefore a matter in respect of which the report of the Select Committee on Public Accounts will be examined by the Department and the necessary replies will be given at the appropriate time. But I understand that it is already accepted that the Auditor-General on the one hand and the Commissioner on the other hand have reached an agreement in this regard and that this agreement is now being confirmed by the Select Committee on Public Accounts.

The hon. member for Constantia (Mr. Waterson) has raised a number of general questions. He has asked me what is the figure of the capital outflow for the first quarter of this year. The figures are not yet available. The nearest I can give him are the figures in respect of the reserves. On 31 December, last year, our reserves stood at R171.1 million, on 14 April (the latest figures available) they stood at R177.1 million; in other words, R6,000,000 more than at the end of December. But in the meantime account must be taken of the fact that R18,000,000 has been drawn from the International Monetary Fund. Therefore there would not have been an increase of R6,000,000, but a decrease in the neighbourhood of R13,000,000, if the amount of the I.M.F. is taken away. It is interesting to compare that with the corresponding figure for the first quarter of last year. In the first quarter of last year the position could not have been very much affected by the Sharpeville incident, which only took place towards the end of March, but, if my memory tells me correctly, the drop in the reserves for the first quarter of last year amounted to R16,000,000. This is, of course, the season when one expects the reserves to drop. Apart from any other considerations, that is quite normal, and that is not confined to South Africa. Other countries are also faced with this problem. I read what quite recently happened in Australia in the Statist from 11 February this year—

Figures issued by the Australian authorities last week show that taking official gold and currency holdings and the external balances of the commercial banks together, the country’s reserves dropped by no less than £A136,000,000 in the second half of last year. That brought them down to £A376,000,000, which is only about £A6,000,000 beyond the low point for the 1955 Australian external payments crisis. There can be little doubt that they have broken through this level since then. For the weekly returns of the Reserve Bank, which normally holds all but about a fifth of the total stock, have revealed a number of sizeable downward movements since the opening of the present year.

So, it is not a situation that is confined to South Africa alone. It is no use blinking the fact that there have been factors, and particularly the factor of “ Africa ”, which have caused a loss of confidence in everything that pertains to Africa. That is one of the main reasons for the outflow of capital in the last couple of months. As I say, this time of the year one does expect it. I think the amount of the outflow has been increased by this factor, which, I think, is the result of a loss of confidence in any investments in the Continent of Africa as a whole. The remedy, by the same token, would be an attempt to restore that confidence, and I think it is very important and a matter in which I can call for the co-operation of all sides of this House in an attempt to restore confidence. I think I cannot only call on members on both sides of this House, but I think I can fairly appeal to all South Africans, also outside the House, particularly those who are in the position to influence opinion that they should at this time be very careful in the remarks that they make, in the advice that they give. If there is any publicity to that advice, it can have important results. Therefore, I think I can make use of this opportunity to say that in the last couple of weeks my attention has been drawn to what I can merely say is a spate of rumours at present in circulation to the effect that the Government is considering all sorts of drastic measures, such as, for example, restrictions on the repatriation of capital invested in South Africa from abroad, or the dividends, interests or profits on such investments.

This is a time of rumours, some of them deliberately spread for ulterior motives. The bearish element is always there. Most of these rumours are so foolish that it is hard to understand that anyone can seriously give them any attention at all. To deny each one of these rumours individually would place an impossible task on my shoulders, and would also give these rumours an importance which they do not deserve Therefore, I hope hon. members will accept my statement that it is impossible for me to deny all those rumours individually as they crop up. But I take this opportunity to say that the rumours of restrictions on the repatriation of overseas capital or of the income earned thereon are completely false. Even in the most difficult times when our balance of payments position was in a far more parlous state than to-day, we never imposed any such restrictions, and we are certainly not considering the imposition of any such restrictions at this time.

It is, indeed, regrettable that these rumours should have been given currency and publicity at a time when we want to build up confidence. We all know how sensitive the Stock Exchange is to rumours of this kind. We know, and I want to say that I agree with the hon. member for Kensington (Mr. Moore) that our relations with the Stock Exchange are very healthy. But I think I can also say that the one thing that is troubling me, and I think it is troubling the responsible members of the Stock Exchange too, is that in their attempt to encourage people to invest in the share market, every time a thing like what happened last Monday comes along, they are pushed back further than they were. Not only the money was lost, but it is confidence that is lost in the Stock Exchange. That is their problem, and that is my problem with them to see that this sensitive machinery, this sensitive mechanism of the Stock Exchange is not used in a manner which sometimes makes one think and feel that there is something deliberate and sinister behind it. I know it is a difficult problem, and I am not here to solve it, but I have spoken to the leaders of the Stock Exchange, and I think they know, as I know, that they share these views and that they are also hard put to find a solution for this trouble.

As far as the question of confidence and the effect it has on our balance of payments is concerned, I would say that the general antidote would be to restore confidence. But there are other measures which one can also take to protect your reserves in the meantime, and that is that, although there may be an outflow on the Capital Account, our balance of payments, if there is a sufficient balance favourable on the current account of balance of payments, that can reduce to a large extent the drop in reserves. Therefore, naturally, one feels that on the one hand everything should be done to encourage export and by the same token, as far as possible, steps should be taken to discourage the import of unessential goods. If that is. done, the favourable balance on the current account, which we have at present, can be increased, and that, to a certain extent, can counteract the outflow of capital.

As I have said, those are two ways which do not deal with the matter itself—the real question of confidence—but they do help us to bridge a difficult time. I am not saying that there must be any limitation on imports as far as essential goods, capital goods are concerned, goods required for the development and expansion of the country. I think, however, there are many things which are unnecessary luxuries which are imported.


Such as?


I think many things are imported which are manufactured in South Africa, and if there is a curb upon these imports, it need not mean any deprivation on people who used to enjoy those articles, because they can then switch over to obtain the same goods made in South Africa and save our foreign currency in the process.


May I ask the hon. the Minister a question? Do you suggest by that the further tightening up of import control? Are you going to take further steps?


No, I said that that is one way of doing it, to discourage the import of such goods and we have taken that step already. But apart from what my colleague, the Minister of Economic Affairs has done, in the introduction of tariff increases on certain articles, I have gone in the same direction. That is the one way. My colleague has adopted the other way. But I do not believe that that is a permanent answer. At this stage, however, the steps taken are very necessary and I think they will bear fruit. As far as my humble contribution is concerned, I have to a very small extent raised the tariffs on certain non-essential articles. The hon. member for Benoni (Mr. Ross) has suggested that that has a greater effect than I think. Well, I will deal with that when I come to reply to him. The hon. member for Constantia has also again raised the question of short-term borrowing. I gave a very full reply in the course of my reply to the Budget debate, and I do not propose to cover that field again, except just to say that it is the general experience in all comparable countries that the proportion of short-term loans has increased and is increasing. It serves a very useful purpose as far as the maintenance and growth and expansion of the money market is concerned. Actually as far as South Africa is concerned, I do not think the position in respect of our short-term loans is one which in any way should cause uneasiness or fear. Our short-term borrowing in actual fact has decreased by R64,000,000 over the year 1960-1. So I do not think we need be so very much concerned on that account. I have given a full reply to this point in the course of my reply to the Budget debate, and I think I can leave it there now.

The hon. member for Kensington (Mr. Moore) has said that we should preserve the good relations with the Stock Exchange. I have already referred to that. The relations are good, certainly from my side, and I hope they will remain good. As far as I am concerned, they will. I think they realize and I realize that both of us have a function to fulfil in the economic future of South Africa, and as long as every one does his duty in that regard, I do not think they will find me quarrelling with them.

The hon. member for Kensington has also said that while I have pruned the expenditure of my Department, what about my colleagues? In reply to the Budget debate, I said that our position is extraordinary healthy as far as expenditure is concerned. If the hon. member compares the Estimates of Expenditure for this year with the original Estimates of Expenditure of last year the increase is in the neighbourhood of 5 per cent, which I think is a very reasonable increase; and even after I had to make provision for extra items, for my colleague, the Minister of Defence, and for the development of the Bantu areas, it was only a little over 6 per cent, which I think is a very conservative rise in the Estimates of Expenditure, I must say that my colleagues have assisted, they and their departments, have assisted the Treasury very much indeed in regard to this curtailment of expenditure. I hope hon. members on both sides of the House will also assist me in one respect in this matter and that is that they will try and curb the demand for new services, for additional services which bring about additional expenditure. If they put the same curb on their expenditure ideas as my colleagues have done, we will be able to maintain a very sound position in that regard.

The hon. member for Kensington has also come back to the question of gold-mining taxation. I have also dealt with that and I do not want to deal with it again, except to repeat that the goldmining industry has received more concessions in recent years than many other branches of the economy, and they are going to benefit further by this stretch-out programme in respect of uranium which is going to put a very severe strain on our balance of payments for the next four years. We have done that with our eyes open because it was manifestly in the interests of the goldmining industry, and through them in the interest of South Africa.

The hon. member for Johannesburg (North) (Mr. Plewman) has asked questions in regard to the contributions to the International Monetary Fund. No further increase in our quota is envisaged. We were given the opportunity last year, in company with all the other member states, of increasing our quota by 50 per cent, and we did so. Now it remains there. In terms of a fixed statutory appropriation, annual amounts of R1.6 million are subscribed to the International Bank up to a total of plus/minus R13,000,000. The amounts that we have to pay to the International Bank are twofold. The first is a 2 per cent gold cover and 18 per cent cover in ordinary currency. And that we are allowed to do in instalments, until we have paid off the whole amount, i.e. 18 per cent of R100,000,000 or R18,000,000. That would be the amount that we have to pay. That is paid annually in instalments until it is paid off, that is to say, until our full contribution has been paid. It is not a repayment of loans. Loans are repaid in instalments, but they are not necessarily short-term loans. They are term loans on which we have to pay an amount every year. There are public issues that we have, three years, four years, five years issues—I think that was a private placing that we have. All these have to be repaid back.

The hon. member has raised another point, and I am very sorry that he has raised that point again. He said that the Government is after all the chief shareholder in the Reserve Bank. That of course is not so. The Government has no shares in the Reserve Bank. The loans between the Reserve Bank and other financial institutions, either in the country or outside, is a matter for that statutory body. Any ordinary bank may have to make financial arrangements with financial institutions overseas. There is nothing which they publish. There are many financial arrangements which the Reserve Bank has to make to carry out its function as the Central Bank of South Africa, and amongst them was the one item that I mentioned in my Budget speech. That was as far as I could go to say that that amount had been received by the Reserve Bank, because it affected our balance of payments, our reserves. But I can’t give further information where it comes from, but I understand my Department was prepared to give the hon. member further information …


I did not ask where it came from.


I do not know whether the information was given, but the fact is that this is no precedent. It is a normal function of the Reserve Bank that they have been carrying out in this case with that particular institution. A transaction to the mutual interest of the other overseas financial institution and the Reserve Bank. Therefore I find it very regrettable that the hon. member should without proper inquiry have come even to suggest that this may be a “ panicky ” measure on the part of the Reserve Bank. It is nothing of the kind. But, as I say, they are private transactions of a financial institution of which I cannot give details. I hope the hon. member will leave it there. I give him the assurance in any case that this is nothing abnormal, that it is one of those transactions which are normal and which are entered into for the mutual benefit of both sides.

The hon. member for Wynberg (Mr. Russell) has suggested that we should do away with death duties altogether. I have learned to regard any member of the public who makes a suggestion like that to me as an indication more or less of the strength of his own estate, or expected estate! I have never been able to be too worried about it. Actually our death duties in South Africa are very, very mild indeed, and if one compares them with other countries, then we have very little reason for being aggrieved. For instance, capital gains are not subject to income tax in South Africa, as they are in some other countries, and it is not unfair to my mind that some contribution should be made by the estates of rich men, and when I say rich men, I mean rich men, because only the richer estates are taxed.


You are not suggesting that one raises a question like this in one’s own interest?


No, the hon. member must try and retain his sense of humour! I can only say that I have never been so interested as even to suggest that there should be a doing away with a tax of this nature altogether, and when a rich gentleman from overseas asked me the other day “ What is the ceiling?”, I said: “Well, really I could not tell you, I have not been sufficiently interested to find out.” I asked him to ask his neighbour, and even he did not know. The other point that one has to remember is that income derived from this tax is in the neighbourhood of R8,000,000 per annum, and it would certainly put a tax, even on the hon. member for Wynberg’s ingenuity to suggest where I should find that R8,000,000 were 1 to accede to his suggestion. I would lose that money, and that money has to be found.


But your total revenue is about R660,000,000.


It does not matter what the revenue is. I would have to find R8,000,000 of that total revenue, and the hon. member has not suggested where I can find it. He has airily suggested that we have a lot of surpluses, but if there are surpluses available for tax remissions then one has to investigate where they can be granted with the greatest equity to all. It seems to me that where you have a tax in lieu of the capital tax obtaining in many countries, a tax on estates which falls only on rich estates, it is not unfair to suggest that if I have the money available I should rather employ it in other ways and bring greater relief and greater happiness to a greater number of people than by exempting the few rich estates from this taxation.


You must tell that to your farming groups.


May I ask the hon. the Minister a question relative to the reply he has just given? Is he satisfied with the situation where you get variations in the valuation of the same farm between R10,000 and R20,000 for the same property, and the taxation is imposed on the higher value?


That relates to the method used not the principle. Hon. members have raised this matter before. They asked that we should have Land Bank valuations as the basis of estate duty, and we agreed to that because it was the lowest basis. We agreed to adopt the basis of the Land Bank valuations. I do not think you can find any four people coming together and agreeing on a valuation of any property to-day. Even if the Angel Gabriel were to come down from Heaven he would not be able to get unanimity as far as the valuation of any particular farm is concerned. But we do know that the basis of valuation for the Land Bank is altogether different from the market values which may be inflated at any particular time. This is a matter which does not affect the principle. I do not want to be drawn into the question of valuations now. I am considering the question of the principle and, as I say, it seems to me that if I have to find some means of making it up I simply have to say that I cannot do it. We have to leave the position as it is.

*The hon. member for Pretoria (West) (Mr. van der Walt) has put one or two questions. The first relates to the transferability of pension benefits from one fund to another fund if the contributor goes from one employer to another employer. The House discussed this matter last year. I think it was felt, and I said that I thought, it would be a sensible step to provide that any person, on reaching the age when he could no longer work, would receive a pension. If whenever a person changes his employment, we allow him to draw his pension benefits in cash, we shall have the position that when he can eventually no longer work, he will not have a pension either. It is this difficulty which was emphasized in last year’s motion. I said that this was something that we would tackle. The Registrar of Financial Institutions has also stated in his annual report that it will be done. But the legislation in this regard will not be introduced during this Session. It is a matter which we must still investigate. Certain representations have been made in this regard—I think representations from persons who do not quite appreciate what the real value of this step will be as far as protecting their own interests is concerned. In any case the legislation will not be introduced during this Session.

Then the hon. member has asked what the position is as regard the rebate which persons who are self-employed are allowed in respect of their contributions to a recognized pension fund. Last year the figure was set at R600, and this year it has been increased to R800. The principle is that when a person is employed, then he as an employee can deduct up to R400 from his taxable income as representing contributions to a pension fund; and his employer is entitled to contribute £ for £ up to an amount of R400, so that the total is R800. I have laid down that basis this year. The hon. hon. member now asks whether this position will remain unchanged. I cannot bind any future Cabinet or Parliament. I can only say that this is the law of the land at the moment. Just as the figure is R400 in the case of the employee and R400 in the case of the employer, so it is R800 in the case of the self-employed person. It is on the same basis. That is our policy, and I do not have any reason to believe that any change will be affected.

Then the hon. member has also asked in connection with pension payments whether pensions drawn by pensioners can be exempted from taxation. This would of course involve a vast loss of revenue. I do not think it is as little as the hon. member thinks. But it would represent a departure from the basic principles of income tax, because a person who receives his income by way of a pension or by way of a salary for which he works, is in both instances in receipt of income. Whether he worked for that income in the past or over the past 12 months, it still remains income, and all income is subject to income tax. It would, therefore, be quite contrary to the basic principles of the Income Tax Act if we should exempt one type of income. This would also immediately expose us to applications and to requests for the exemption of other types of income as well. I do not think we can do anything in that regard. This is income, and we are trying in other ways to help these people who will enjoy this income in the future, to be able to do so. We grant them this rebate on their taxable income every year. This is the encouragement we are giving, so that they can build up that income. But now they must not want to have their cake and eat it. They must not ask us to surrender State revenue in order to help them build up a pension and then later say that the pension itself should also be exempted from income tax.

The hon. member for Benoni (Mr. Ross) has raised the question of the increases in Customs Duties. That is matter which will come before the House when we go into Committee of Ways and Means, and I think that is the proper time to discuss this matter. It is one of the proposals of the Budget which will have to be discussed when we go into Committee of Ways and Means. Generally, however, I can say this, that when protective duties are increased they are done so as the result of the investigation by the Board of Trade and Industries. In the course of their investigations they apply certain criteria, and perhaps I should recount to the hon. member what those criteria are. Firstly, employment value of the industry and the use made of local materials. Secondly, extent and stability of the local market. Thirdly, liability of the industry and capacity to supply the quality required. Fourthly, extended overseas competition, particularly from the East. Fifthly, the possibility of building up a sound export industry. Sixthly, the possibility of the industry attracting other related industries. Seventhly, possibility of the industry forming an inter-related unit in an industrial complex; and, finally, the possibility of the industry taking the place of gold in the earning of foreign currency. Those are the general principles which they take into account before they recommend that there should be an increase in the protective duties. The commodities recommended for increase in the last Budget were selected with a view to both the raising or revenue and the slowing down of the outflow of currency and, of course, to the protection of our local industries. Those were the purposes for the introduction of increases, and on that basis the selection was made.

With regard to the question of raising revenue, an attempt was, in the first place, made to select articles which are not strictly necessary or which are obtainable from local sources. These are the types of things: caviare; fish; pickles; juke-boxes. Secondly, an effort was made to spread the duty as much as possible. It is for this reason that the duty in respect of goods classified under the general “catch-all” items 73 (1) (b); 113 (1) and 335 were increased. But on the whole the increase was so minimal that there have actually been complaints. The overall increase is 10 per cent in the duty. In other words, if it was 10 per cent it is now raised to 11 per cent. The hon. member had read what the Chamber of Commerce has said, but I have also had representations from certain branches of industry which have complained that the increase is so small that it is really of no assistance at all. I think by and large what I said in the Budget debate represents the correct position.

There are one or two other small points with which I want to deal. The hon. member for Pinetown (Mr. Hopewell) asked what we contemplated in regard to the overseas long-term loans. I want to assure him, as I said in my Budget speech, that we are not contemplating any long term overseas public loans, because the rate of interests which we have to pay would be too high. As regards local loans, the present pattern of rates is, I think, realistic, and with the co-operation of the financial institutions we hope to be able to maintain it.

The hon. member for Constantia said on another occasion that an increase in interest rates would have a depressing effect on the expansion of our economy. For that reason I hope that we will have the assistance of all the people with any influence in this matter in maintaining the line that we have taken. That pattern, I think, is a realistic pattern. There may be certain sections of the economy which may benefit by a rise in the interest rates, but I think the economy of the country as a whole would suffer. Where we now want to give every incentive to increased production and expansion, I think it would be very regrettable if the pattern of rates could not be maintained.

The hon. member also asked me about the Schumann Commission on the financial relations between the Provinces and the Central Government. That Commission is busy, but they have a tremendous task. Hon. members will realize that has one of the most difficult assignments that you can give to any commission, but I think they are setting about it in the right way, in a thorough way. However I do not think their report will be available until, probably, the end of next year. In the meantime we have to assist the Provinces. In the Budget I indicated that whereas the formula was 6 per cent on the previous year’s subsidy—it was 6 per cent every year —we raised it to 7½ per cent last year and we are raising it to 7½ per cent this year again. The subsidies which the Provinces get are about 50 per cent of their total expenditure. In other words, if they can keep their expenditure within the 5 per cent limit as we are doing in the Central Government, then on 50 per cent they will have an increase of 7½ per cent. And on their own 50 per cent they would only increase their income by 2½ per cent and they would then be able to finance a 5 per cent increase in their total expenditure. Of course, the difficulty with the Provinces is that they follow different ways. We cannot attain the necessary uniformity. However, at a meeting with the Administrators this week I impressed upon them the importance of cutting their coats according to their cloth and not so easily raising taxation. I said that they should rather stretch out their programmes of road building, hospitalization and so forth. Where they have a scheme for three years they should make it five years and they will then find they will be able to save quite a lot. So we have given them this assistance this year again, and in the supplementary estimates there will probably be provision—as there was last year—for a special subsidy for those Provinces with special problems.

The hon. member also asked me about the introduction of the Income Tax Bill. Last year I tried to accommodate hon. members on the other side by putting it in their hands as soon as I had it myself. But the hon. member will realize that Tax Bills can only be introduced after the Committee of Ways and Means. However, I am again prepared as far as possible, with due respect to my trust in their reliability not to make it a public secret— because at that stage it will not even be a final draft of my Department—I am prepared to give them the Bill at an early stage on the understanding that they treat the information as confidential. That means they can consult with experts on it but it is not for publication, just as was the case last year.

The hon. member also asked me about the possibility of introducing a Consolidated Income Tax Bill. This is one of the things we have in mind, but it is very difficult for the very reason I have just given; because of the amendments which always flow from the Budget statement there is seldom sufficient time for a Consolidated Measure which would probably run into at least a hundred clauses. The difficulty is that there is such a short time available that we can barely get the ordinary measure through in time. The other alternative to which we may be forced to have regard is the possibility of consolidating the existing Act early in the session on the Select Committee certificate, and to amend that Consolidation Act later on in the Session, in June. That seems to me to be the only way of meeting the requirement of having a Consolidating Income Tax Act within the short time at our disposal.

Mr. Chairman, I think that that disposes of the points that have been raised.


The hon. the Minister in replying to the hon. member for Pretoria (West) (Mr. van der Walt) on the question of the first report of the Registrar of Pension Funds, indicated that there was no intention to introduce legislation this Session in connection with the recommendations included in the report under Item 127. I think we ought to have some more information about this position because I think many hon. members have received telegrams and letters from all parts of the country in this connection. There is considerable concern over this report. I think that that is possibly as a result of misunderstanding, and I hope that the hon. the Minister will clarify the position so that the final portion of the Registrar’s recommendation can be given effect to by those who are interested in the various funds. This is a very important issue indeed. There are over 3,000 funds with members totalling some 803,000 odd. It therefore affects a considerable number of people throughout the Union. This is what I feel the hon. the Minister should clarify: Clause 127 says—

In view of the large amounts repaid on resignations the Minister has agreed that the Pension Funds Act be amended in due course to incorporate the foregoing principle.

It is in establishing what the “ foregoing principle ” is that we have this confusion. Let me remind the hon. the Minister that the principle laid down here and referred to as the foregoing principle is—

The principle was laid down in the Parliamentary Service Pensions Act, 1951, that except where the amount involved is very small, no repayment may be made upon a member’s leaving the fund but that the benefit must be paid only as from the date the person concerned would have reached the normal retiring date had he remained a member of the fund.

In terms of the Parliamentary Service Pensions Act there are three principles: The first is that if a member ceases to be a contributor to a fund up to a period of nine and a half years he gets all of his contributions back without interest. The second principle is that no pension can be paid out unless the contributor has reached the age limit of 50 years or more. And the third principle is that the contributor must have more than nine and a half years as a contributor to the fund. So the question arises as to which of these three principles does the Registrar refer when he says that the Minister has agreed to the Pension Fund Act being amended in due course to incorporate the foregoing principle?

The hon. the Minister can quite see how those who are interested, when they have gone to the Parliamentary Service Pensions Act to discover what this principle is, have come up against this problem I have just mentioned. I therefore ask the hon. the Minister, in view of the last paragraph, No. 127, which says this—

In the meantime it may be advisable for funds to consider the incorporation in their rules of some restrictive provisions to retard this undesirable practise….

whether he will clarify the position. I know what the Registrar has in mind. But if the Minister is not going to introduce legislation during this Session and the funds are to give effect to this latter paragraph I think it is advisable that the Minister should indicate quite clearly what he has in mind so that they can give effect to this latter paragraph. I think that the funds would like to do something of their own accord rather than have some legislative provision enacted which may not suit their particular fund. I therefore ask the hon. the Minister whether he will give a little more information about this matter, clarifying the principle that is involved, so that the funds themselves can go into this question and they in turn, will be able to advise their members of what should be done. The other point I want to make is this: The State funds—and I am thinking particularly of the Railway Pension Fund—would not fall under this proviso, I feel, although the same malpractices take place there. But I understand from what the hon. the Minister of Transport has had to say, that he has no intention of amending the Superannuation Fund in this respect. I therefore think that if the hon. the Minister will clarify this position it will help everybody to overcome what appears to be quite an undesirable practice that has crept into the pension principles in operation in our country to-day.


The hon. the Minister, when speaking a few minutes ago said that in times of surpluses he adopts a policy of applying tax remissions to deserving cases and to the greatest number of people. I hope he will retain that sense of generosity because I want to make a suggestion to him which will amount to a concession to taxpayers. This is a matter which affects a good number of taxpayers, and I refer to the question of encouraging parents to allow their children to continue at universities and technical colleges.

The policy of every Minister of Finance has quite rightly been one to discriminate in certain respects and to try and encourage certain trends. For instance, there is the position of the married taxpayer and the unmarried taxpayer. The unmarried taxpayer is quite rightly discriminated against in the application of taxation. I believe the hon. the Minister can assist a great deal in the problem of young persons furthering their education. I believe that all hon. members of this Committee will agree that nobody should be denied the opportunity to further their education to the fullest degree without being subjected to financial stringency. This suggestion is one which has also been put forward by various Juvenile Affairs Boards, and was also discussed at their Congress last year. The suggestion is that the Minister of Finance could assist in this problem by making a concession to taxpayers in respect of children who are attending universities or technical colleges. There are two means whereby these concessions can be made. The one is in regard to the question of child rebates. The position to-day is that a rebate for the first two children is allowed in the amounts of £17 per child and £19 10s. Od. for the third and subsequent children. That rebate makes no differentiation in regard to the age of small children who are not costing the parents the same amount as the older child who is attending a university or a technical college. So that there is no differentiation between those rebates. I therefore ask the hon. the Minister to give his consideration to increasing that rebate where these children are attending universities or technical colleges and thereby, in some measure, relieving the financial burden that is placed upon the parents in these cases. The other manner in which he can approach the problem is one whereby the amounts paid and the expenses incurred for those children attending universities or any higher educational institutions would be a remission on the total taxable income. So in taking into account the assessment of the tax paid by these persons, the man should be allowed an amount off his gross income to be applied towards the expenses incurred for the higher education of his dependent children. The matter is one which I believe would give considerable relief to these parents, because it seems most unfair that talented young persons are prevented from getting higher education due to the financial difficulties experienced by their parents. I think the Minister would be doing a great service to these future citizens by doing something which could be of great benefit, not only to the persons concerned, because we all know that educational qualifications are often a deterrent to a successful career for many people. The interest of the young people and of the country require a further expansion of knowledge in regard to techniques.


Order! I do not think this is appropriate under this Vote. It should be discussed in Committee of Ways and Means.


I am putting this forward as a matter of policy under the Minister’s salary.


On a point of order, when we deal with Ways and Means, we are presented with a fixed proposition by the Minister. I do not know whether that is the right occasion to ask for taxation relief. I understand the hon. member for Umbilo (Mr. Oldfield) is dealing with the matter of policy now.


The matter should have been raised during the Budget debate.


If you do not wish me to do so, Sir, I will not pursue the matter. But there is another matter of policy I would like to raise with the Minister, the collection of taxes, the P.A.Y.E. system, which I raised last year, and on which I have also put questions to the Minister in two previous years. In his Budget speech the Minister said that the matter was receiving the consideration on his Department and that there were certain difficulties involved before the system could be successfully implemented. Therefore I ask the Minister whether he is able at this stage to give us some information as to what his difficulties are, and when he is likely to institute this system of P.A.Y.E.


I would have liked to say something in respect of the first matter dealt with by the hon. member for Umbilo. May I point out with respect that if we are permitted to talk about the introduction of P.A.Y.E., surely we can discuss rebates on income tax. Surely the two matters are related and therefore it is competent for the Committee to discuss it. As I understand it, we are discussing the salary of the Minister, and therefore his policy in respect of taxation or any other matter.


The hon. member may proceed.


I would like to say a word or two in support of the suggestion of the hon. member for Umbilo. He suggested two ways and he has argued that on the present basis we are discriminating in taxation between a married and an unmarried person, in regard to the tax they pay, and surely the same discrimination exists in respect of taxpayers who have children attending a place of higher education and those who have young children. There is no reduction in the rebate whether the child is 19 or 20 years old, or six or seven months old. The same rebate is allowed, but obviously the expenses of the parent are much greater than when the child is very young.

But I would like to draw the Minister’s attention to the other aspect. The Government has already accepted the policy of drawing more of our younger people to institutions of higher learning and the Minister stated certain propositions in regard to tax rebates to people who are prepared to donate money to such institutions. But surely there is a need amongst the White population of our country, particularly amongst talented children in the lower income groups, who have the ability to attend a university but are debarred from doing so on the ground of financial stringency. You find in many of the lower income groups that many children are prevented from getting this education to the benefit of the State as a whole, purely on economic grounds. With a few exceptions where bursaries are obtained, the privilege of going to a place of higher education belongs only to those people in the higher income brackets who can afford to send their children to such institutions. It is surely necessary if the White man is to maintain his position that we should have a far greater number of talented young South Africans attending places of higher education.

There is another aspect of the matter. In support of my contention that the privileged few in the higher income brackets attend the universities, that is evidenced in recent reports that students attend the university who have no ability. I think we are all aware of the Press reports in recent months of the high percentage of failures at the universities by first-year students. I know of many cases of talented students, people in my own constituency, who are prevented through lack of money from attending universities. I think the Minister will agree with me that that need exists, and if it can be achieved to create an inducement on the part of the White population to send their children to a university by way of tax remission, either by the taxpayer being permitted to deduct from his taxable income the amount of the university fees he pays or a percentage thereof, or the alternative suggested by my hon. friend, giving an increased rebate to those parents, it would be a good thing. I join the hon. member in pleading with the Minister to give this matter favourable consideration.


If the hon. member for Umbilo (Mr. Oldfield) wishes to add anything, he may do so now.


Thank you. Sir. The points raised by the hon. member for Turffontein (Mr. Durrant) illustrate that this is a matter which deserves consideration. I do not wish to be irresponsible and say that such a system should be implemented without a thorough investigation such as the Minister will no doubt have. We are not actuaries but laymen and therefore the loss of income to the State is something which will require careful consideration. However, as we see the position, we believe that this gesture from the Minister of Finance will also be appreciated by the Ministers of Education and Labour, because interwoven with this suggestion are the difficulties facing those Departments in regard to the future employment of young persons and the equipping of these people for citizenship.


In regard to the points raised by the hon. members for Umbilo (Mr. Oldfield) and Turffontein (Mr. Durrant), it seems to me, as far as I can understand it, that what they are pleading for is a graduated scale of rebates or of abatements; in other words, where our present system is that the rebate given for any child, provided the child is not older than 24 years and is a full-time student at the university, is R17 now, and instead of that they would rather have it graduated and make it less for younger children, gradually going up for the older children at the university.


To retain the present standard of rebate and have increased rebates for children attending university.


The old law until quite recently was that after 18 years no rebates were allowed. We have already gone very far in the direction in granting rebates in respect of children who are at the university. I thought the hon. member meant that it had to be graduated. That I could consider, having a lower rebate for the younger children and gradually increasing it for older children, without exceeding the present mean. That could be investigated, although I do not know what it would lead to, and possibly I could consider it. It would require some consideration, but it seems to me that that might have the germ of something practical.

The other point is that the rebate we give now on the actual tax to be paid instead of an abatement on the taxable income, is in the interest of the lower income group. If it was to be an abatement it would be much more to the advantage of the people in the higher income brackets, but this R17 actually is the equivalent of the tax on an income of about R400 to R500 for the lower income groups. It would not mean that at all to the higher income brackets. So actually the point the hon. member takes, that we ought to make it possible for the poorer people to send their children to university, is met by the fact that we make it a rebate and not an abatement. If it is an abatement it would be of more interest to the other people. But I can consider what it would mean if we could get some scheme in which the mean would be the same as we have at present, but younger children would be below the scale and children at university above the scale. Of course one must remember that there are not many children attending university and it may possibly be that the other children would have to suffer for the sake of the few who are able to go to university. I cannot say anything more about it at the moment.

The hon. member for Umhlatuzana (Mr. Eaton) asked me what the proposal is which is envisaged in the report of the Director of Financial Institutions. Well, the whole matter is so fluid at the moment that I cannot tell him definitely this is what will be in the Bill next year. I do not know myself. I would say that, as far as I know, what I have in mind is some kind of proposal to provide for an exemption from income tax on the lump sum payable to any person resigning from any fund, provided that that lump sum is paid into another fund to safeguard the ultimate pension of that person. Whether we can go further than that I cannot say. That is the prime idea of the motion we had last year, to try to find ways and means of preserving the pension by giving some inducement of this kind. You take your cash lump sum payment and you have to pay tax on it, but we will exempt you from it provided it is put into another fund and is preserved for you until you reach the age of retirement. The whole thing is very fluid at the moment. Hon. members say they have received various requests in regard to the matter, but we will have to go into the matter fully. I can only say that this is what I had in mind, but whether that is all which will be contained in the Bill next year I do not know, but I don’t think the director knows either.


The director said that the Minister would introduce legislation to give effect to the principle.


That is the broad principle, but whether it is the only principle I cannot say. The principle is to give expression to what I took last year to be the view of both sides of the House, to preserve as far as possible the pension for any person when he can no longer work. That is what I want to achieve, but I cannot give the hon. member any information now as to how it will be achieved.


Has the Minister given consideration to the P.A.Y.E. system of collection?


I really have nothing to add to what I said last year. Any collector of revenue is aware of the many advantages of such a system from the point of view of the fiscus and we are only too willing to apply it, but there are certain practical difficulties which we are still tackling. I had hoped to be able to go a step further this year, but at the moment I cannot go further than my statement last year.

Mr. RAW:

May I ask the hon. Minister whether he has gone into the question which he promised to investigate last year of the discrepancy between a widow and a divorced who has to maintain children in regard to the payment of income tax? I raised the question that a widow continues to receive her marriage rebate, whereas a divorced, who may be the innocent party and is left with young children to educate, is regarded as a single person for the purposes of income tax, and does not enjoy the marriage rebate. The Minister promised to go into the matter and to see whether any relief could be granted to such a person. They get dependants’ allowances, but they do not get the marriage rebate to which the widow is entitled. I would be grateful for any information.


It is not proposed to make any change in the existing law.

Mr. RAW:

The point is whether the Minister went into the matter, and whether he does not consider it is deserving of attention.


I do not know whether I went into it as a result of what the hon. member asked last year, but a case has arisen in which my attention was drawn to it, of a person who was a divorcee and who asked for this concession, but it was decided not to go beyond what the law is at present.

Vote put and agreed to.

On Vote No. 13—“Public Debt”, R41,125,000,

Mr. E. G. MALAN:

There is one matter I should like to raise from the point of view of obtaining some information. In his Budget speech last year the Minister dealt, under the heading of Civil Pensions, with the investment of moneys of the Central and Provincial Pension Funds in Government stock. As the Minister said, these funds have been earning 4 per cent interest since 1936. But now the Minister has decided first of all to convert the existing 4 per cent stock into local registered stock at current rates of interest, at the rate of R20,000,000 per year as from I April; and he has secondly decided, in connection with those pension funds, as from I April to invest all new funds also in local registered stock. The Minister then added this, and I am quoting from his Budget speech—

These two measures will yield additional revenue of approximately R65,000 to the several funds during the financial year 1961-2, and this amount has already been included under the Public Debt Vote.

I wonder whether the Minister could inform me whether this amount is included under this Vote. I could not find it. On page 60 there is mention of R360,000,000 invested at 4 per cent, and that the interest payable on it—as I worked it out—will be about 3.77 per cent for the ensuing year, while it was about 3.98 per cent, very close to 4 per cent, during the previous year. So it cannot be under this particular amount that the R625,000 is included, unless these funds are going to be invested at a lower rate of interest, which I can hardly imagine to be the case. It might also be that the Minister intends including the amount in the Supplementary Estimates, in which case I do not think it is quite what he meant when he said that the R625,000 has already been included in the Public Debt Vote. That was on page 18 of the Budget speech. Since this new procedure has been in force since I April this year, I should like to know at what rate of interest these funds, the R20,000,000 a year, which is now being converted into local registered stock, has been invested. I assume that a million or two must already have been invested at this new rate.


I want to bring up a matter which the Minister may consider very trifling, but which, to the persons concerned, is a matter of considerable importance, and which constitutes a very justifiable grievance. It relates to the conditions of issue of Union Loan Certificates. The certificates, although handled administratively by the Post Office, are the financial responsibility of the Treasury, and it is the Treasury which lays down not only the rates of interest of the various series but also the conditions of issue. I wish to raise a point arising from the position that, after the date of maturity, no interest is payable on these certificates. The Government has embarked upon this campaign to foster thrift, and it has met with a tremendous response to this campaign for the issue of Union Loan Certificates. I see from the Auditor-General’s Report for the year 1959-60 that during that year certificates were purchased to the value of £9,500,000, representing some 19,000,000 units of 10s. each, and that the fund stands at present with a balance of about £29,000,000 as at the end of March 1960. It is true that recently the Treasury has offered inducements to people of comparative means with fairly large investment portfolios to invest in these Union Loan Certificates, but the majority of the people who buy these certificates are people of comparatively modest means, mainly in the lower-income groups. These certificates are designed to encourage thrift—not on a short-term basis of one or two years, but rather on a long-term basis of not less than five years. Studying the schedule which shows the rate at which interest accrues, it is disclosed that the rate of interest at the end of the first year rises from .83 per cent cumulative to 5.52 per cent at the end of five years, or calculated on an annual interest basis from .83 per cent in the first year to 10.56 per cent at the end of the fifth year. The Government was quite right in issuing a pamphlet pointing out that these certificates offer the highest rate of interest in the world for investments of this kind, in that the capital investment of any given amount up to the limit increases to the extent of 31 per cent by the time the five-year period has expired. But there is a provision that if the holder of these certificates holds more than one certificate, then on expiry of the first purchase certificate, on the maturity date, interest continues to accumulate at the rate of ½d. per unit per month until the maturity date of the last purchased certificate in that series when interest ceases. On the other hand, if the holder has only one certificate in a series, once it reaches maturity no further interest is payable. I feel that this gives rise to a justifiable grievance, particularly on the part of the small investor, for two reasons. In the first place, on maturity date the Post Office sends out no notice to the holder of the certificates advising him that the certificate has matured, and that the accumulation of interest ceases as from that date. In the second place, I think it is well recognized that the people who purchase these certificates, being mainly in the lower-income groups, buy them from time to time, and not only do they usually not even look at the conditions under which they are purchased, but they put them away and forget them. Therefore, whenever it happens that these certificates mature and are not cashed upon due date, the holders very often suffer severe financial loss by ceasing to earn interest. As far as the Treasury is concerned, it must be a trifling amount. I have no statistics of the number of people affected in the course of a year and the amount of interest involved, but, to those people, that trivial amount of interest is very important, particularly if it often represents the life savings of such a person, designed to keep him from poverty in his old age. From that point of view it seems to me that this provision operates unduly harshly on the people who are least capable of bearing a loss of income, and I would suggest that the Treasury should consider a revision of the terms of interest on the certificates. There are two ways, of course, of rectifying the matter. In the first place the Treasury could alter the terms to ensure that notice will be given to the holders immediately any certificate matures. That, of course, might involve the Treasury or the Post Office in a very considerable amount of work and the cost may be excessive. Alternatively they could consider amending the terms under which, once a certificate is mature, it would continue to earn interest at a given rate of, say, 3 per cent, or even at the rate of £d. per month per unit. I believe that this concession would be very greatly appreciated by the general public. There are many deserving cases, and it is quite obvious that in cases of particular hardship the Minister can only exercise his discretion and make any adjustment by creating a precedent. I believe that, by making these concessions, it would give a great deal of satisfaction to the minds of those very many thousands of investors who put their small weekly or monthly savings into these certificates as insurance for their old age.


The hon. member for Orange Grove (Mr. E. G. Malan) has asked me where the additional provision is made in the Estimates for higher interest. I am instructed that it is to be found on page 60 just before the total, under “ anticipated further borrowings where provision is made for R6,025,000 as compared with R4,132,000. Apparently it is included there.

Then as far as the hon. member for Durban (Berea) (Mr. Butcher) is concerned, it is right that interest is only paid up to the date of expiry of the last certificate, but this is really a matter which has to be dealt with by the Department of Posts and Telegraphs—they do the administration. The onus is at present on the holder of a certificate to cash in on time. I think there is a lot to be said for this concession that, when the last certificate expires and interest would ordinarily cease, notice of that should be given to the holder of the certificate. I am prepared to convey that to the Minister of Posts and Telegraphs. I do not know whether it will be practicable at all, but on the case which the hon. member has made I feel that some concession of that kind should be made. One must realize that the rate of interest paid on the Union Loan Certificate is far above the current pattern of interest for five-year loans. I think it is actually 5½ per cent compounded annually, whereas for five years the current pattern of interest is only 5 per cent, so there is this very great advantage which the holder of Union Loan Certificates has, that he is actually getting a rate of interest —tax free, which is much above the ordinary rate. If they have to lose something through their own lack of vigilance, it must be remembered that they have gained quite a lot in the meantime. However, the suggestion that notice should be given to them when the last certificate has expired so that they can know that unless they draw now they are going to lose further interest, is one that I will put to the Minister of Posts and Telegraphs.

Vote put and agreed to.

Vote No. 14.—“Provincial Administrations”, R132,283,000, put and agreed to.

On Vote No. 15.—“South Africa House, London (Administrative Services)”, R651,000,


I would like to know from the hon. the Minister what the position of South Africa House will be in the future. We had a Bill before us, which has not yet been passed in regard to the status of South Africa House. Whilst we were a member of the Commonwealth there was some justification for South Africa House being administered under a separate Act of Parliament and for the Treasury as well as External Affairs to have a say in its administration but obviously the status of South Africa House will no longer be that of a High Commission; it will have to be that of an embassy. We will now have to have an ambassador in London and on the surface it would appear ridiculous that in one particular country we have to establish an embassy by a special Act of Parliament, but in every other country where we have an ambassador enjoying the same status as the one situated in London, we have to maintain it by separate legislation.


Are you referring to the legislation on the Order Paper?


Yes, I am talking about South Africa House and its future under a republic outside the Commonwealth.


What would be the position in Australia and Canada?


Sir, when we vote moneys for Australia and Canada we do that under the External Affairs Vote; we do not do it under the Treasury Vote, and we have not got special legislation for that.


There is special legislation at the moment.


I am aware of that, but we are dealing here with a Vote for South Africa House. We are called upon to vote so much money for the administration of South Africa House, together with all these other subsidiary estimates which will come later covering different personnel, but South Africa House was a responsibility of the Minister whilst it was a High Commission and whilst we were members of the Commonwealth. After 31 May we will be a republic and out of the Commonwealth, so I am asking the Minister what he envisages as the future of South Africa House. Is it still going to exist under separate legislation such as we have on the Statute Book at the moment? Is it always now going to be a separate Vote? Because the position would appear to be anomalous and would appear to be ridiculous on the surface, because if this principle is to be adhered to, then by a special vote in this House, we are going to vote separate sums of money for an embassy in one country while we will deal with our embassies in other countries under the External Affairs Vote. What I want from the hon. the Minister is an explanation as to the future of South Africa House under the republic of South Africa as far as these estimates are concerned. We have had some legislation before us which has not yet been passed, and I assume that the Minister will now withdraw that Bill, if he envisages a different future for South Africa House. There is still a breathing space of one year while the standstill agreement with the United Kingdom Government continues to exist, but under what Minister will this Vote fall in future? Will it revert to the Minister of External Affairs, like all the other embassies or what does the Minister visualize as the future of South Africa House.


In the past there was a difference between the High Commission offices. The one in London was dealt with in a particular manner. It was not dealt with in the same way as the one in Ottawa or the one in Canberra. It was treated differently because historically there were reasons for it —particularly the large staff of locally recruited officials at South Africa House. In the past it was an anomaly. Here was one High Commission which was taken out of the ordinary rut and treated differently and in 1911 it was the only one, historically, but afterwards when the others came into being no special legislation was passed as far as they were concerned. If the hon. member looks at the Bill which is on the Order Paper, he will see that it is envisaged that in the future too there will be a distinction between this one particular embassy, as it will now be—it is a diplomatic mission to Great Britain—and the other embassies. It will be treated in a different way, in certain respects, from the other diplomatic missions. In other words, the anomaly that existed in the past between one High Commission and other High Commissions and embassies will be retained if this legislation is passed—as between one embassy and all other embassies. That is the only change. It may be that other changes are envisaged for the future but those are the provisions of the Bill. In other words, the Department of Finance will still have certain responsibilities which are circumscribed in this Bill in respect of South Africa House (the embassy in London) which they do not haze in respect of other embassies. The position continues, as far as I can see, with the simple change in name.

Vote put and agreed to.

On Vote No. 16.—“South African Mint”, R1,421,000,


I would like to raise with the hon. the Minister the question of decimal coinage. My attention has been drawn to a statement in to-night’s paper where Dr. Arndt, Chairman of the Decimalization Board is alleged to have stated over the week-end that all decimalization problems are things of the past. We do not know whether the Minister has seen the statement as yet, but it is alleged here that “ the smoothness of the currency change-over within a period of two months amazed not only South Africans but many interested people abroad He says that within a period of two months we had affected a complete change from £ s. d. to decimal coinage. Sir, it is quite clear that when decimalization was introduced there was a great deal of cooperation in centres like Johannesburg and in the country generally shopkeepers put up their price tags in decimal coinage with the prices marked in £ s.d. in small letters underneath. But if the Minister goes through the streets of Johannesburg to-day or to any shopping centre on the Reef he will find that that is no longer the position. He will find that shopkeepers have reverted to £ s. d. and that they are putting the price in decimal coinage at the bottom of the price tag. It is alleged that there is such a shortage of decimal coins and that such confusion has arisen because of that shortage that shopkeepers and traders have found it more advantageous to revert to £ s. d. instead of using decimal coinage in daily transactions of a small nature. I would therefore like to ask the Minister when it is envisaged that there will be a complete change-over in coinage when there will be a withdrawal of pennies and when decimal coins will be the normal tender in the country, because it is my view that as long as you are dealing in a double coinage, so long will people continue to use the £ s. d. currency to which they are more accustomed than decimal coinage, which is now the legal tender, and this applies in particular to the non-White and the Native populations. If the Minister goes to any trading store in Johannesburg he will find that no business is being done with Natives at all in decimal coinage; the normal transaction is in £ s. d. and storekeepers attribute this to the fact that there is such a shortage of decimal coins that it is quite useless trying to deal with the non-White customer in decimal coinage. I would like to know therefore when it is envisaged by the Mint that the change-over will be complete. When is it considered that pennies will be withdrawn and that the normal tender will be cents and half cents?


I do not know when the Mint anticipates that there will be a complete change-over. They are doing their best to provide what the Decimalization Board considers should be the amount of coinage in circulation. We are now minting about 2,500,000 to 3,000,000 of these coins per week. In the new year we anticipate minting altogether 30,000,000 coins; that is for the year beginning on I April. The original number of bronze coins available was about 30,000,000 to 35,000,000, which was hopelessly insufficient and we have been trying to make up the leeway in the meantime. But the Decimalization Board as well as the Decimalization Commission envisaged that for a certain period of lime the two systems would operate alongside each other. To start off, many of the machines have not yet been altered. Some of them are still on the £ s. d. basis. It was anticipated that 20 months would be needed for the changeover. As more decimal coins become available there will be a gradual withdrawal of the other coins, particularly as far as bronze coins are concerned. The others do not make such a big difference because they are of similar value. The main difference will be in regard to pennies and cents. While there are not sufficient coins to go round, while there are still pennis in circulation the present position will continue, but I think it was envisaged that a certain period would have to elapse before the one system could be discarded altogether and before we could switch over to the other. A sudden switch is altogether out of the question. We are trying to arrange things in such a way that the change-over causes the least friction and annoyance.

Vote put and agreed to.

Vote No. 17.—“Inland Revenue”, R3,986,000 put and agreed to.

On Vote No. 18.—“ Customs and Excise ”, R6,681,000,


I think that the matter which I am now going to raise will probably fall under the new Immigration Vote, but because it relates to Customs and Excise, I also want to put it to the Minister on this Vote. I do not know whether I should raise it on this Vote or the other Vote. We are all concerned about the flow of White immigrants particularly from Africa to our country. The White man is leaving Africa and we as South Africans feel that we should like to have those people here. The point I want to make relates to the question of the customs duties which these immigrants have to pay on arriving in South Africa, whether they are entering our country from Rhodesia or anywhere else. These duties fall under the Department of Customs and Excise, and the rebates which are allowed also fall under that Department. For that reason I am not certain whether I should raise this matter on this Vote or on the Immigration Vote.


This is a matter for negotiation between the Department of Immigration and the Department of Customs and Excise. That Department will probably make representations, if they feel they are necessary, but it is that Department which must make the representations. It is not for us to say that we are going to make this or that concession because we are a collecting organization and we are not generous.


In the light of the facts, I then want to say that I shall raise the matter on the Immigration Vote, but I just want to ask the hon. the Minister in advance to put himself in a completely favourable frame of mind when the approach is made.

Vote put and agreed to.

Vote No. 19/—“Audit”, R836,000, put and agreed to.

On Vote No. 20,—“ State Advances Recoveries Office”, R343,000,


I am rising on this Vote to thank the hon. the Minister on behalf of the farmers in my constituency for the great assistance which they have been given. But when we take into account that approximately R21,000,000 has been advanced in the form of State advances under the farmers’ assistance scheme, and when I tell the House that in my constituency alone R1,586,000 has been made available to the farmers, this of course represents immediate proof of how greatly the farmers have suffered as a result of four successive bad years. What worries me is this: The farmers have been helped, but I can give the House several instances where State advances totalling R200,000 have been advanced to farmers and they are then given 12 years in which to repay those advances. There are cases where farmers have been given R16,000 and were then given 10 years in which to repay the advance. I can assure the hon. the Minister that it is simply not possible. The farmers cannot repay these loans within that period with the result that many of them have to obtain an extension. The officials who are charged with collecting this money are not always very sympathetically inclined and the result is that these people have to approach their M.P.s. I would like to make an appeal to the hon. the Minister to-day to help these people. I know that a deputation from the South African Agricultural Union has already met the Minister and that he then agreed that in such cases where a farmer can prove that as result of factors beyond his control he cannot repay the money, he will be given an extension. But I do want to ask whether it is not possible to review these cases and to grant a longer extension, because these people simply cannot repay this money within 10 or 12 years. If they must do so, then it is pointless; then this assistance merely postpones their ruination as farmers which must eventually come.


I also want to join in the plea made by the hon. member who has just sat down and ask that consideration should be given to the case of the small farmer. We have an enormous number of small farmers in the country. Their incomes are small and it is quite impossible for them to pay back assistance loans over a short period. I feel that the Minister should consider introducing some scheme, as under Section 10, where people have perhaps 50 years to pay back a debt at a very low rate of interest. We have to face up to this question in this country whether we are going to support the small producer. Large farmers are quite differently situated. We have enormous numbers of small farmers in this country and their production is of material value to us. They contribute a great deal to the production of this country and to our rural life, and we find that there is a general drift from the country to the towns, a drift which has been accentuated during depressions in particular parts of the country. I appeal to the Minister to give this matter serious consideration.


I just want to say that the Farmers Assistance Board lays down its loan periods on the basis of the income potential of the particular farmer, but where a case can be made out for the extension of the loan period, the Department will always act sympathetically, as it has done in the past. But the period is laid down in the first instance on the basis of the income potential of the farmer concerned. If there are any other cases, then we can consider them on their merits.

*Mr. RALL:

As regards these loans which the State Advances Recoveries Office has made to the farmers, we are of course grateful that the Government has made this assistance available, but we do feel that one of the main reasons for this position is the fact that the farming industry involves great risks. It has already been found throughout our country that there are times when the farmers, not as a result of the price structure but as a result of factors such as periodic droughts, cannot meet their annual payments. As a result the arrear payments are then carried over, and interest is collected on the arrear amount. I should like to suggest to the Minister that he should consider whether a plan cannot be devised whereby the payments can be so arranged that the debtor will at least not be obliged to make his payments every third year—I can describe it as a respite year—because we know that there will be times when the farmer as a result of circumstances beyond his control will not be able to meet those payments. If the repayment period is extended, subject to the condition that during that period there will be years when he will not be obliged to pay but that he should try to make up those arrear payments when he can, as a result of good years, that will be an acceptable scheme. Mr. Chairman, we are still receiving letters in respect of this matter, and it remains a fact that many farmers cannot meet their payments at regular intervals and then the interest on the loan accumulates which makes the loan still more expensive.

Vote put and agreed to.

Precedence given to Votes Nos. 10 and 11 (External Affairs).

Business suspended at 6.30 p.m. and resumed at 8.5 p.m.

On Vote No. 10.—“ External Affairs ”, R2,906,000.


During the course of the discussion on the Prime Minister’s Vote, several matters which were raised by the Opposition, were more particularly related to the Department of External Affairs. The hon. the Prime Minister replied in general terms to those points. But there are some which need further clarification, and it might be useful if I made a preliminary statement dealing with the points which were raised on the Prime Minister’s Vote, That might save time and also repetition.

Mr. Chairman, the Opposition, as could be expected, has concentrated on recent events at the United Nations, and also at the Prime Ministers’ Conference. I could not help feeling, Sir, that it was with a certain amount of relish that members of the Opposition and some of their newspapers referred to the increased adverse vote which South Africa sustained at the United Nations last week. As in the case of the Commonwealth Conference, there is no doubt, judging particularly by the speech of the hon. the Leader of the Opposition, that they are determined to seize upon the Commonwealth Conference and also on recent events at the United Nations, for the purpose of making political capital, and for staging an attack on the Government. This applies also to the Prime Ministers’ Conference, even in a greater degree. They ascribed the adverse vote at the United Nations entirely to the Government’s colour policy and to racial discrimination. Apparently the Opposition has forgotten that when General Smuts went to the United Nations in 1946 he was up against exactly the same position. Then the attack was only in connection with the Indian question, but then also the attack was entirely on the colour discrimination against the Indians. The hon. member for Salt River (Mr. Lawrence) in 1947 found himself in the same position. I have already in the past directed the attention of the House to the fact that when General Smuts returned in 1946, he said that he had been up against a stone wail of prejudice. Mr. Chairman, that attack which was made in 1946, and repeated in 1947, when the hon. member for Salt River represented South Africa—he put up a very good fight, as did General Smuts, against these attacks—have been repeated annually for the past 14 years. Also on the Indian issue it was based entirely on the previous Government’s policy of racial discrimination. If the United Party were in power to-day, they would be subjected to exactly the same attacks, because admittedly, particularly after the statement made by the hon. member for Yeoville (Mr. S. J. M. Steyn) on Friday, even their new policy of race federation is based on colour discrimination, a policy which I notice in this evening’s Argus was aptly described by the Leader of the Progressive Party “as an attempt to make United Party policy look respectable by world standards ”. I could not agree more! That is exactly what it is! If they were in power and were to go to the United Nations with that policy, they would be subjected to exactly the same attacks. In fact, Sir, the attacks at the United Nations, first on the Indian issue and, since 1950, on the Government’s racial policy, generally known as apartheid, are in fact, against White South Africans. Again and again, in those attacks those words recur. The attacks are against the policies adopted by White South Africans in respect of the non-White population of our country. What is, in effect, being attacked is the policy which was also enunciated by General Smuts in London in 1929. We are told, “Oh, yes, but General Smuts changed his policy since then ”, but. Sir, let me remind hon. members of what General Smuts then said, way back in 1929—

There is now shaping in South Africa a policy which is being expressed in our institutions and which may have far-reaching effects in the future civilization of the African Continent. We have realized that political ideas which apply to our White civilization generally, do not apply to the administration of Native Affairs. A practice has grown up in South Africa of giving to the Natives their own separate institutions on parallel lines with the institutions for the Whites.

Apartheid! Separate institutions on parallel lines. He continued—

It may be on these parallel lines that we may yet solve a problem which may otherwise be insoluble.

It is against that policy, enunciated as far back as 1929 by General Smuts, continued by subsequent governments in various forms that the attacks are made at the United Nations. Therefore I say that it is manifestly unfair of the United Party and of their Press to tell the people that the attacks at the United Nations are purely attacks against the present Government’s policy.

Mr. Chairman, the policy of this Government, and also the policy of the previous Government, as put up by General Smuts in 1946, as put up by Mr. Lawrence in 1947, is to stand by Article 2 (7) of the Charter. That paragraph was described by General Smuts at San Francisco and also in this House when he was sitting on this side, as the cornerstone upon which UNO rests. He said at that time that had it not been for Article 2 (7), it was extremely doubtful whether South Africa would have consented to have become a member of the United Nations. Article 2 (7) was intended more particularly as a protection for the smaller and the weaker nations. Unfortunately, during recent years. Article 2 (7) has come to be regarded as the United Nations, by our enemies more particularly, as practically a dead letter, except when they themselves have recourse to Article 2 (7) for their own protection. It is particularly India that has on several occasions resorted to Article 2 (7).

During recent years our enemies have resorted to another tactic, viz. the argument that Article 2 (7) does not operate in cases where international peace and security are in danger, and by some sort of reasoning it is sought to argue that international peace and security are being endangered because of South Africa’s policy of separate development. Which of course is nonsense! Chapter VII dealing with those matters relates only to disputes or differences arising between countries, between nations. There is no indication whatsoever that it was intended to apply to local conditions.

These annual attacks on South Africa have always struck me as a manifestation of international hypocrisy in its worst form. Many of those who are attacking South Africa are themselves practising racial discrimination. Take a country like India. At the United Nations last year, I drew attention to the extent to which racial discrimination is being practised in India. I drew attention to the fact that it is being practised in Norway and in Sweden against the Laps. I dealt with a number of other countries.


They laughed at you.


Take another country which has been in the forefront at the Commonwealth Conference, practically leading the attack on South Africa. I have evidence, received some of it only last week, to show to what extent racial discrimination is being practised in Canada. A book was recently published by a man who lived amongst the Eskimoes for some years, a very knowledgeable book. It is written with authority and knowledge, and is an indictment of the neglect of the Eskimos by the Canadian authorities. Take the case of Malaya. Their constitution enshrines the principle of clear discrimination against the permanent Chinese population of Malaya. Take the case of Ceylon. It was only yesterday that the radio carried the news that the Prime Minister of Ceylon, Mrs. Bandaranaika, had hastily returned to the capital because trouble had arisen with the Tamils. There is serious trouble in Ceylon because of discrimination against the Tamil section of the population. And what about the United States? I was there for several years, and have been there on many occasions since for the sessions of the United Nations. I venture to suggest that in certain respects, there is more discrimination against the Negroes in the United States, and not only in the deep South, but also in the Northern States, than there is in South Africa.


But it is not embodied in laws.


We are told by the representatives of those countries that they are trying to put a stop to discrimination. Mr. Krisma Menon, the representative of India, tells us that they are putting a stop to the vicious and cruel caste system, but it goes on just the same. When one hears that they are putting a stop to it, it reminds one of the old saying about “ the reformed rake ”. We are also told that in America it is not official. But, Mr. Chairman, we know that in the United States of America there are States that have state rights, of which they are very jealous. Each State has its Governor, and also a Senate and House of Representatives. In certain of the southern States discrimination against Negroes is permitted by the laws of that State. There is discrimination in some of the countries that are taking the lead in attacking South Africa, perhaps even in a more severe form. Here are just a few headlines of recent Press dispatches: “ Race clashes in India ”. “ Hindu-Moslem clashes ”. Here is another one; I need only read the headlines …


What are you trying to prove?


The Opposition has been very free with extracts from the Nationalist papers. They quote from those papers to serve their own purposes, I am doing the same. The headlines of a dispatch which appeared in the Star: “ Uncanny subtlety of colour bar in Britain.” There follows a description of what is happening there. I have here a statement by a previous Governor-General of Australia, who says that the only possible policy in Australia is to discriminate against Asiatic immigration. Mr. Menzies admits it. He told me that himself recently. Only two days ago there was an article in the Cape Times. One of their columnists wrote: “ Unhappy Africans in India.” And he gives a description of discrimination against African students in India. These things are happening in other countries, but of course when they happen in South Africa there is a great song and dance about it. As regards India, we know what is happening with the Naga there. We know what has happened in the past with the people in Kashmir. The caste system is still being maintained. According to United Nations reports, there is a certain type of slavery in India, the debt bondage system. The United Commission on Slavery says—

Debt Bondage is still the lot of millions in India.

It is a form of slavery, but we are being attacked by these same people! Here I have another statement about the treatment of Black students in India, how they are being discriminated against. Two years ago complaints were made by these students from Africa about the way in which they are shunned, looked down upon by most of their Indian fellow-students. That was denied by an official Indian paper. Thereupon the High Commissioner of one of the dominions who had been stationed in India wrote a letter to the London Times, in the course of which he said—

The average Indian beguiled by the diatribes of his delegates at the United Nations and sharing the human frailty of seeing the mote in his neighbour’s eye, whilst missing the beam in his own, would be astonished to learn what the thousand or so African students in India think about the race prejudice because of their Black colour.

I mention these cases to show up the hypocrisy that is so prevalent at the United Nations, particularly when South Africa’s problems are being discussed. Those of us who have participated in sessions of the United Nations can testify as to what is going on there.

Mr. Chairman, another attempt to circumvent Article 2 (7) is based on the argument that they are entitled to disregard that article because of the provisions of another article, viz. Article 55 and also 56 relating to Fundamental Human Rights and Freedoms. That matter was discussed at the San Francisco Conference. At a plenary session a unanimous resolution was adopted that Art. 2 (7) could not be circumvented by relying on Articles 55 and 56. It was agreed to include in the records of the Conference a statement that “ nothing contained in Chapter IX of the Charter (relating to fundamental human rights) could be construed as giving authority to the organization to intervene in the domestic affairs of member nations Articles 55 and 56 of the Charter enjoin members of the member states to see that in their countries higher standards of living are being maintained, that there will be full employment, and they will give attention to social and health problems. I could keep the House busy for a long time showing what the actual position is.


Yes, We know.


I know this is unpleasant for hon. members on the other side who are always on the side of our enemies. They hate to hear anything against our enemies. Mr. Chairman, a SAPA-Reuter report from London this year stated—

A dockyard vicar, the Rev. J. Williams of St. Paul’s Church, has described slum conditions in Stepney as worse than African locations in South Africa.

If I mistake not, Archbishop de Blank was the Bishop for that particular part of London. In the latest edition of that very authoritative journal the U.S. News and World Report there is a good description of conditions in some of the West African states, which are taking the lead in attacking South Africa. According to this report a person who specially investigated conditions in Senegal, Guinea, Liberia, the Ivory Coast, Ghana, Nigeria and the Camaroons, he asks—

What will it take to lift the new nations of Africa into something resembling a modern civilization?

The dispatch refers to the tribal rights, superstition and abject poverty. It is a damning indictment of the conditions under which people are living in those countries, some of the same countries that accuse us at the United Nations for not looking after the welfare of our Native population. Last week the hon. the Prime Minister quoted a statement which had appeared in the Cape Argus, under the headlines—

Hundreds have died of hunger in Basutoland.

This is what is happening on our borders. But in Britain we are being accused. The dispatch states that “ Mr. Katlele, Deputy Leader of the Basutoland Congress, has told the Basutoland Legislative Council that 90 patients died of malnutrition in the hospitals last year and that hundreds more have died in their homes. Quoting a world health organization expert who recently conducted a nutrition survey, Mr. Katlele said that 85 per cent of Basutoland’s population are under-nourished.” Then the dispatch goes on to describe the conditions under which the people are living in Basutoland.

According to official figures South Africa spends four to five times as much per capita of the Bantu population on housing, on social services, on medical services, on education than any other State or other territory on the whole of the Continent of Africa. Yet, we are being subjected to attacks.

Mr. Chairman, we will continue to stand by Article 2 (7) of the Charter which provides that the United Nations shall not interfere in the domestic affairs of any member-country.

I add that South African delegations have consistently stood by that article. We have also stood by other nations where attempts have been made to interfere in their domestic affairs. These include nations by whom we have stood in the past, and that are now either voting against South Africa or recording an abstention vote. I want to say here to-day that where we in the past have always stood by certain countries where attempts have been made to interfere in their domestic affairs, where we stood by them, they can no longer expect active support from South Africa.


But South Africa is all alone.


Hon. members need not laugh. The margin between the Western nations and the Afro-Asian and Eastern nations is so small today that South Africa’s vote has acquired a very considerable value.

The Opposition has made great play of the increased majorities against South Africa at the United Nations. They have also made great play of the fact that there has been a so-called switch in the votes of the British, French and Australian delegations. Again the Opposition is not honest. They fail to mention the increase in the number of Afro-Asian members of the United Nations, which necessarily must have a very material effect on the margin of votes. In 1948 there were 16 Afro-Asian states and six states from Eastern Europe (countries behind the Iron Curtain), 22 in all. As against 16 Afro-Asian states in 1948, there are to-day 45 Afro-Asian states, and as against six Eastern European states in 1948, there are to-day ten. When it comes to South Africa’s colour issue, those states always vote together. In other words, the position is that in 1948 there were 22 Afro-Asian plus communist states as against 55 to-day. So obviously there must be a greater increased majority against South Africa at UNO.

Mr. Chairman, there is also another factor. Apart from the increase in the number of Afro-Asian states, there is the important factor that during the past four or five years, there has been a tremendous upsurge in African nationalism on the Continent of Africa. It has become the custom to attack colonialism, and generally South Africa is included amongst the colonial powers. And then, there is the anti-White campaign. In this connection one has only to think back to the proceedings at the Bandung Conference some years ago; the subsequent Cairo Conference a year or two later; the discussions that took place at Cairo and also in Addis Ababa where the African front was formed. Under these circumstances it is obvious that an entirely new spirit prevails at the United Nations compared with what it was six or seven years ago. Naturally that has had its effect also on the vote against South Africa. We have seen the effects of this new spirit not only in respect of South Africa but also in the Congo, in Northern Rhodesia and in Kenya. We are seeing it right now in Angola. All this is being interpreted by the Opposition as signifying the unpopularity of South Africa as a result of our Native policy. I say that to suggest that the intensified attacks on the Union are entirely due to Government policy, is not only untrue. I also say that it is unjust.

Mr. Chairman, the hon. the Leader of the Opposition has now come with his race federation policy which, as explained by the hon. member for Yeoville the other day, also discriminates against the non-Whites. That policy would be just as strongly attacked if the United Party formed the Government.

Mr. Chairman, much political capital is being made out of the switch, as it is being called, in the votes of the United Kingdom, France, Italy, Belgium and the Netherlands. As far as the Netherlands are concerned there has not been much of a switch there, because the Netherlands have never supported South Africa at the United Nations.

Exception was taken to a statement by the hon. the Prime Minister when his Vote was being discussed, that to a large extent the switch in votes was motivated by political considerations and by self-interest of the nations concerned. Mr. Chairman, I want to say that I fully subscribe to the statements made by the hon. the Prime Minister. After all, I have attended six of the United Nations’ sessions and I was at two sessions of the old League of Nations, and I can thus speak with a certain amount of experience and knowledge of what has been happening there. I can testify to the fact that self-interest, i.e. national interest, and political considerations, local as well as international, very often play an important role in determining the votes of delegations. I can also testify to another factor which influences the votes, viz. the practice of what is generally known in United Nations circles as “ horse-trading ”.

Hon. members on the other side need have no illusions about the voting. Let us take the case of the United Kingdom. Hon. members opposite have fastened on the fact that the United Kingdom on this occasion voted against South Africa as an illustration of the bad odour in which South Africa now finds itself. Mr. Chairman, what are motivating reasons in the case of the United Kingdom? In the first place the present Government is under very severe pressure in Parliament and outside Parliament from the Socialist Party. It is known that the hon. the Prime Minister of Great Britain and other Ministers are nervous about the Socialist Opposition. [Laughter.] It is no good laughing, I know that it is so. As hon. members know, the political pendulum swings very easily in Britain. There is also the pressure of the United Kingdom Press. There is the pressure exercised by religious bodies, and particularly by the Anglican Church. Another motivating factor is the international political situation, and the influence of the United States Government. We know what the position is in the United States. Only last year evidence was given before the Foreign Affairs Committee of the United States Senate by the official then in charge of African affairs. He said in his evidence—

The State Department agrees in general with the recommendation in the report before the committee that United States policy should be guided by the expectation of the privacy of Africans in all sub-Saharan Africa.
The special programme can have an important role in demonstrating that the United States in word and in deed wishes to identify itself with the aspirations of the African people.

Especially under present world conditions, it can be understood that the Prime Minister of Great Britain is anxious to be in accord with the New President of the United States of America.

There is also the reluctance—another motivating factor—of the British Government to antagonize the new Black states of Africa. That was clear from what happened at the Commonwealth Conference, particularly in the cases of those Black states that are members of the Commonwealth. There is that very important factor, that motivates United Kingdom policy by the export markets of the African Continent. There is great competition amongst the exporting nations of Europe and also of Japan, to secure a bigger share of those markets. Mr. Chairman, these are all factors which, I am convinced in my own mind, were taken into consideration by the British Government when deciding to vote as they did at the United Nations.

The same applies in the Netherlands. When I had a discussion with Mr. Luns, the Minister of Foreign Affairs two years ago and suggested that in view of our cultural and other ties they should support South Africa at the United Nations, he said, quite frankly, that the Netherlands Government had to take account of the fact that part of the Netherlands Empire consisted of two Black states, Surinam and Antilles. He said they could not identify themselves with South Africa in view of their obligations to those two Black states. There is the fact that there is a Coalition Government in which the socialists play an important part.

France, I admit, was a disappointment. But then it has to be borne in mind that although France has divorced herself from her former African colonies she still maintains strong ties with them. And so from the point of view of their own interests France is going to consider their own interests in Africa, rather than to support South Africa.

In Italy there is a strong communist party and a strong socialist party. The Italian Government there is under heavy pressure, not only from these parties in their own country, but also from outside of Italy. To that I can testify because of reports which we have received.

Mr. Chairman, then there is the case of Australia: I have no doubt whatsoever in my own mind regarding Mr. Menzies’ sympathy for South Africa, not the least, although he quite frankly says he does not approve of our policies. But Mr. Menzies is, in the fullest sense of the word, a very good friend of South Africa. We saw that at the Commonwealth Conference. But he, too, is under very heavy pressure from a socialist and labour opposition in his own country. He is under heavy pressure from the Australian Press. And in those circumstances, because he has had to look to the interests of his government, his delegation adopted the course that they did at the United Nations. I have no doubt whatsoever that it was not because the Australian Government was trying to make things difficult for South Africa.

Mr. Chairman, I repeat that we have at the United Nations consistently stood by countries that have claimed the protection of Article 2 paragraph 7. Through the years, ever since I went to the United Nations, we have stood by the United Kingdom in connection with the Cyprus question—so much so, that we lost the support of Greece which, in the past, had always supported South Africa. Through the years we have stood by France in connection with the Algerian question. France also relied on Article 2 paragraph 7. As a matter of fact on one occasion, when they were a bit nervous about protesting against United Nation’s action, I was the only delegate that did so. [Laughter.]


What a man!


Do not be funny! In 1949 when the Netherlands were attacked for the first time in the United Nations in connection with the Indonesian question—say “ What a man ” if you like—there again I was … [Laughter.]


Order, order!


You see, Mr. Chairman, that is the lighthearted attitude we get from the Opposition when we are dealing with these very serious matters.

South Africa was the only country that stood by the Netherlands. And throughout the succeeding years every year we have positively and actively supported the Netherlands in connection with the New Guinea question. But we have not been able to rely on their support.

During the past two years Italy has been having trouble with Austria over the Tyrol-lean question. There again we stood by Italy. We did not ask why, or why not. Italy was a friend, and we stood by her. And now we find Italy no longer supporting us.

It all comes down to what I have just said that every country looks after its own interests. If they can get your support, good and well, but when their own interests dictate otherwise you are left in the lurch.

Mr. Chairman, I have given this brief review in order that it may stimulate further discussion, and partly to deal with some of the points raised by the Opposition during the Prime Minister’s Vote. I want to say in conclusion that the obvious tactics of the official Opposition, their attitude to the question of the Commonwealth and South Africa’s decision to withdraw its request to remain in the Commonwealth, and in connection with the vote at the United Nations, is to scare the public. These are scare tactics. They wish to create an atmosphere of fear and despondency, and to frighten investors. It is a repetition of the tactics that we had in 1948 after the election. When the Nationalist Party came into power for the first time, we had exactly similar speeches being made by General Smuts, who told the public that the banks would close; that unemployed would walk the streets of our cities and so forth. But after we had cleaned up the mess which we inherited by imposing import control and carrying it out strictly, we had the greatest period of prosperity that South Africa had known for many years.

As regards our withdrawal from the Commonwealth, let me say at once that I am not worried about the effects of that. I do not think many people are worried about it, except the Opposition who are trying to make political capital out of the withdrawal. In spite of warnings that Mr. Tom Mboya and others have been giving to Britain and to Canada and to others, I am not worried. The White countries of the Commonwealth are not going to break the ties of friendship and trade which have existed for all these years in order to please Mr. Tom Mboya, Nkrumah or anybody else. And as regards the isolation at United Nations, I suggest that that has been grossly exaggerated. There has been a threat of sanctions. We saw what happened to that at the League of Nations. The hon. member over there probably does not know. He was a young boy when an attempt was made to apply sanctions against Italy in connection with Ethiopia. It failed. There was the time when the United Nations applied sanctions against Spain by requesting member states to withdraw their diplomatic representatives from Spain. That also failed, and they later re-appointed their representatives. Sanctions may have a certain effect, but countries that wish to trade with South Africa, particularly Great Britain and countries that have a favourable trade balance with South Africa like Britain and Canada are not going to take the risk of losing their markets in South Africa by engaging in sanctions.

I repeat, as far as the United Nations are concerned, with the very narrow margin between the Western powers and the combined Afro-Asian and communistic blocs that exists to-day, South Africa’s vote has acquired a considerable value. In spite of the attempts of the Opposition, there is no need for despondency. I wish to deprecate, very strongly, the creation of a fear complex, from what ever source it comes. Whether it comes from the United Party, and is politically motivated, or whether it comes from, perhaps, our own side I would say to Nationalists that they should be very careful not to be caught in the United Party trap. This is a trap which has been set for the Government and for the Nationalist Party.

Undoubtedly the position at the United Nations is difficult, but it is not so difficult that there are any reasons for panic. The tactics of the Opposition, both on the Prime Minister’s Vote is with the intention of creating a feeling of despondency and an atmosphere of panic. It must also be borne in mind, as far as the United Nations are concerned, that that Organization is itself in difficulties—very serious difficulties. There is this attack that is being made on Mr. Dag Hammerskjoeld, which is not unlikely to lead to his resignation as Secretary-General of United Nations. And if that should happen it is going to precipitate a very serious situation in the United Nations.

I want to say this about the United Nations. As far back as 1957 M. Paul Henri Spaak, a previous Prime Minister of Belgium; one of the founders of the United Nations and a previous President of the United Nations, writing in a very authoritative journal Foreign Affairs in 1957 expressed himself as follows—

From the start I had excessively great hopes for this Organization. Only too often they have been dashed. Those who do not know the inner workings of the United Nations, its oft demonstrated inefficiency and hypocrisy; in short, those who are acquainted with it from the outside hark back to its generous principles and noble ideals, and they have held fast to their original confidence and faith. I only wish I could still number myself among the faithful, yet I honestly cannot. On the contrary, it seems to me that never before has the insufficiency of the United Nations as at present constituted stood out so clearly. In spite of its apparent success, I believe it has come near to the brink of failure.

That same year Mr. Robert Menzies, the Prime Minister of Australia, addressing a meeting in London said this—

Great changes will have to be made in the procedures and attitudes of the United Nations if the Charter is to be effective. The procedures of the Assembly are unsound and must be remodelled upon a basis of justice for all.

At the Commonwealth Conference of 1958, in the communiqué issued by that conference there appeared the following—

The United Nations was designed to provide one of the main opportunities for the practical exercise of the principle of cooperation between nations. Experience, however, has revealed deficiencies and weaknesses in the functioning of the Organization. The Commonwealth Prime Ministers have agreed that constructive action is needed to strengthen and improve the United Nations as an instrument for preserving peace and justice and co-operation throughout the world in accordance with the principles of the Charter.

Mr. Chairman, on that note I shall close, by quoting the opinions of two outstanding statesmen, M. Paul Henri Spaak and Mr. Robert Menzies. And I can only say that my own experience after attending six United Nations’ sessions confirm their opinions. Therefore I say that where attempts are being made to make us despondent, and to create a feeling of panic, we must bear in mind that the position of the United Nations itself is not as sound and is not as strong as it should be. And I can only deprecate the attempts on the part of the Opposition to create this feeling of panic, particularly as it is clear that they are doing so purely for the purposes of political gain.


I should like to avail myself of the privilege of the half hour.

The hon. the Minister of External Affairs rose to his feet and said that he thought he might save time by saying a few words before this Vote started. I should have thought he knew from his own experience that if there is one way of lengthening the debate on his Vote it is for him to get up and speak first. The hon. the Minister has told us that he has attended UNO meetings six times. One cannot help wondering whether that is not one of the reasons why we have so very few friends left in the world. Because this speech of his this evening which, I imagine, was intending to be a fighting speech to whip up the flagging spirits of the people behind him, has really been a flaying attack on everybody else in the world except ourselves. He has attacked Sweden, Canada, the United States, Malaya, Great Britain, France, Italy—the whole lot of them. If we had any friends before he got up to speak I think it is very doubtful whether we have any friends left now. The hon. the Minister has made such foolish statements. Amongst other things, he compares this threat of sanctions with what happened in regard to Italy and Ethiopia and what happened in Spain. He knows as well as I do that those cases were entirely different. In the case of Italy and Ethiopia the League of Nations was divided on the matter. In the case of Spain, Russia was on one side and Germany was on the other. In neither of those cases was there a unanimous vote of the League of Nations of those days against one side or the other. The difference now is that we are faced with this position, that the whole of the United Nations is against us.

The hon. the Minister has quoted what the late General Smuts said in 1929. He has done that before. And he has consistently refused to repeat what General Smuts said in 1942, 14 years later, when he said segregation had failed.


What did he say in 1947?


And the hon. the Minister has made that misleading statement time and time again. He knows very well that if General Smuts had lived during the past 13 years South Africa would not have found itself in the position in which it is to-day.

We started this debate with the Prime Minister’s Vote, to which the hon. the Minister of External Affairs has referred, by pointing out that we are now landed in a cold war. And the contribution of the hon. the Minister of External Affairs as to what we are going to do in the difficulties in which we find ourselves, is to say that South Africa still has one vote at United Nations and he proposes to horse trade it at critical moments in the hope of getting people to support him. It is so childish it makes one feel appalled at the thought that the hon. Minister for External Affairs still represents us in our overseas interests. [Interjections.]


Order, order!


I then come back to the cold war. During the debate last week we had statements from the other side of the House talking about deep waters, dark hours, a crisis period. The hon. the Prime Minister told us that the present position was very serious and that we must prepare ourselves to deal with it. How on earth he or any member of the Government thinks that the people can prepare themselves to deal with a very serious position without being told what that position is, I just do not understand. The hon. the Minister will agree with me that the ignorance of the people of South Africa at the present moment as to the true state of affairs is quite appalling.




The only people who can enlighten them are in the Government itself, and speeches like that of the hon. the Minister of External Affairs this evening does nothing whatever to help them appreciate exactly where this country stands.


What is wrong with it?


We tried all last week to get the Government, through the Prime Minister, to enlighten the people … [Interjections.]


Order, order!


The hon. the Prime Minister by-passed or evaded almost every question. He has enshrined himself in a sort of ivory tower—a white ivory tower of course —and anything that he does not like he simply ignores. And when he ignores it it automatically ceases to exist for him. Our only alternative, therefore, in the course of these votes, is to tackle each Minister and see whether he can contribute anything to enlighten the people of this country as to the position in which they find themselves.

There are three or four fronts on which this cold war is fought. One of them is the diplomatic front …


None so blind as those who will not see.


How right you are.


Order, order!


Mr. Chairman, I would not say that of the hon. the Minister of External Affairs at all. I would say that as far as the diplomatic front is concerned, which is one of the fronts that has to be defended, he is the Veg-generaal of the country, dealing with the diplomatic front of this cold war. The first thing of course, as the hon. the Minister has said—in fact it is all he has talked about—is this question of our position at United Nations. The hon. the Minister has referred to the various votes at UNO. He has said that of course we must expect the majority against us to increase because of the increasing number of non-European members of UNO. But, Mr. Chairman, that does not explain why all the White members of UNO have also turned against us as well. And all the hon. the Prime Minister could tell us was that we were still a member of UNO. He took comfort in the fact that the British Government had refused to support the more extreme resolution of the 24 members. He thought that that was a good sign because Great Britain had refused to vote for a resolution calling for collective sanctions. Of course the resolution that has been passed now does call for individual or collective sanctions, and Great Britain voted for it. So that that grain of comfort has been taken away from the Minister of External Affairs.

We tried to find out what the most immediate threat to our interest is in the form of South West Africa. The hon. the Prime Minister refused to discuss it on the ground that it was sub judice. The hon. the Minister of External Affairs treated it as if it did not exist; he did not refer to it in any way at all.


Is it sub judice or is it not?


It is perfectly clear. We say it is sub judice, but it is clear that the United Nations are not waiting on the grounds that it is sub judice …


Do you agree with that?


It is not a question of what I agree with, it is a question of what this Government is going to do in the face of facts, not legal arguments. [Interjections.]


Order, order! Hon. members must give the hon. member for Constantia (Mr. Waterson) an opportunity to make his speech.


The facts are that United Nations is taking action and is not waiting. But our Government says the matter is sub judice. They will say nothing about it; they will do nothing; they will not admit it is going on until 18 months’ time when we shall get a judgment from the Hague Court.


What is your suggestion?


The United Nations has again appointed a Good Offices Commission to report to them on the position in South West Africa. What is the Government going to do? Are they going to agree to the admission of that commission into South West Africa in order to put in a report? The commission has said that if they cannot go to South West Africa they will put in a report without going there. In other words, Mr. Chairman, if they do not see things for themselves in South West Africa they are going to put in a report to UNO based on the kind of evidence they have been getting for years from New York. The report will be totally and entirely adverse. I want to know what the Government is going to do in regard to this commission. Are they going to refuse permission to that commission to go into South West Africa or not? [Interjections.]


Order, order! If hon. members wish to put questions to the hon. member they must do it in the proper way. The hon. member may continue.


As far as the other votes are concerned—not the South West Africa vote—the hon. the Minister says we need not worry about it. He says we can expect it now, that nobody likes South Africa and we can expect that sort of treatment in the future at UNO.


May I ask the hon. member a question?


I do not think so, no. My experience of the hon. member is that his questions are very seldom worth answering.

We want to know, what is the Government’s policy in regard to UNO? Are we just going to carry on like this? For 13 years we have been sulking in our tents at UNO and we have been letting our case go by default. The hon. the Minister told us earlier this Session, and he has confirmed it again to-night, that in practice, whatever the principle may be, Article 2 (7) is a dead letter and affords us no protection at all. The question is, are we going to continue to protect ourselves behind an Article which is no longer of any practical value in the United Nations, or not?

This Government complains about the increasing number of non-White States at UNO. But what did they expect? Thirty or 40 years ago one could say that in effect the greater part of the world was controlled by White people. That is not the position to-day. This is no longer a White world where the White man is boss. And unless this Government realizes that and realizes that the United Nations is a fair reflection of what is going on in the world, then the prospect of their being able to restore South Africa’s prestige in the world is very small indeed.


Smuts told you that in 1947.


You keep quiet and listen now. You are talking all the time.


Why should I? Why don’t you keep quiet? [Interjections.]


Mr. Chairman, may I appeal to you to ask that hon. member to keep quiet? It is very difficult to hear what is being said because of the continuous row from that side?


Oh, sit down. [Interjections.]


Order, order! Did the hon. member notice whether the Opposition kept quiet while the hon. the Minister was speaking?


We certainly did.


Does that mean that you are going to allow them to interfere, Mr. Chairman?


Mr. Chairman, on a point of order, when the hon. member for Transkeian Territories (Mr. Hughes) was addressing you, is the hon. member for Vereeniging (Mr. B. Coetzee) entitled to say “ Sit down ”?


I did not say that.


Yes, you certainly did.


Order, order! That is not a point of order. The hon. member may continue.

Mr. GAY:

On a point of order Mr. Chairman, when the hon. member for Transkeian Territories was addressing you the hon. member for Vereeniging told him “ Sit down you dirty squealer ”. Is that parliamentary? [Interjections.]


I did not say that.

Mr. GAY:

I distinctly heard you.


Order, order! Did the hon. member for Vereeniging say that?


Mr. Chairman, he is being ridiculous, he must have a dirty mind. [Interjections.]


Order, order! Will the hon. member continue.

Mr. GAY:

He is just afraid to face up to it.


Mr. Chairman, I find it very difficult to continue while the hon. member for Vereeniging is carrying on a running conversation. I do not mind occasional interruptions but this is really beyond the limit.




There he goes …


Order, order! If hon. members are not going to be quiet I shall have to take serious steps against them. They must give the hon. member an opportunity to make his speech. The hon. member may continue.


Mr. Chairman, I can think back to 1939 when South Africa was a member of the Council of the League of Nations and I had to represent South Africa on that Council. I can remember one day, the 21st birthday of the League of Nations, and the meeting of the Council was adjourned in order that the Council could send a telegram of greetings to General Smuts as one of the founders of the League, congratulating him on its success and thanking him for his services to the world. In those days it was something to be a South African representing your country abroad. What is it to-day?


It is a greater honour today.


Order, order! Did the hon. member for Marico (Mr. Grobler) not hear me ask hon. members to be silent?


I apologize, Mr. Chairman.


To-day we are running away with our tails between our legs, outlawed by the world. That is what this resolution of last week means. It means that we are outlawed by the world, that the world unanimously, with one exception, has voted to take individual and collective action against South Africa. What are we to expect from all this? What does the hon. the Minister expect? Does he think that the United Nations, having passed that resolution, is going to forget all about us? What is he going to do about it?

If the hon. the Minister asks me what I would do, I am bound to say that if I was sitting in his place as a member of that Government I could do absolutely nothing. The hon. the Minister is like a commercial traveller trying to sell something that nobody wants. If I were sitting in his place I would feel bound to resign, and advise my Prime Minister to do the same thing in the interests of South Africa. Otherwise, if we go on along the present lines of the hon. the Minister of External Affairs, representing this country with something which nobody in the world will accept, we are faced with further humiliation and degradation: the dragging of South Africa’s name through the mud as it is being dragged to-day. And we are faced with the ultimate interference from outside about which some sections of the Nationalist Press have already warned this country.

The hon. the Minister knows all this. He knows it better than anybody else in this House. What can he do about it? And the next question is, what is our new position outside the Commonwealth going to be? We are now going to be a foreign country in terms of the Commonwealth. Our whole diplomatic system, so far, has been based on membership of the Commonwealth. There has been the closest possible co-operation. There has been a continual exchange of information. Our principal source of information of world affairs has been London, assisted by our own diplomatic representatives. I can remember when I was High Commissioner in London every day boxes of telegrams were delivered to me from British sources from all over the world, which I passed on to my Government. The hon. the Minister and I probably know that better than anyone else in this House. The Commonwealth Relations Office is a most valuable channel of information to enable our Government to form a sound opinion of what is going on in the world. All that will now cease. We will now be a foreign country, under the Foreign Office. I want to ask the Minister what will take its place. Moreover, we have interests throughout the world. We aim to be a world trading nation. We are always being told that by the Government. They have three missions touring the world now, ostensibly trade missions, but quite clearly with a political flavour to them, because you cannot build up world-wide trade without having political contacts with the countries you are trading with.


What nonsense!


I do not know whether the hon. member for Vereeniging (Mr. B. Coetzee) has ever been abroad in his life, or knows anything about overseas trade, but the Minister will tell him that if he does not believe me. What is more, we have some 22 missions abroad, most of them very small ones. We have six consular offices, two of them in the Congo, one in Angola and one in Lourenço Marques, and two others, and we have six honorary consuls mostly in the Baltic ports who receive the princely sum of £5 a year for the right to print on their visiting cards that they are the honorary consuls for South Africa. Everywhere else in the world the British officials looked after our interests. Just imagine what that means. Whether it is trade, or consular work, or diplomatic work, the British network throughout the world represented us. What is going to take their place? Are we going to retire into a vacuum in South Africa and have no contacts? What plans has the Minister for re-establishing something to take the place of these services we enjoyed? I would like to ask the Minister whether he has in mind any kind of standstill legislation to freeze the position in the same way as Britain is passing an act to hold the position for 12 months while everything is being sorted out? Or are we not going to do anything about it at all, and just learn by bitter experience what difficulties we will get into?


We are busy with that right now. We are contemplating similar legislation.


Our whole foreign policy has been based on Commonwealth membership ever since Union, and that now goes by the board, and what we now have to have is a new foreign policy. I think the least this Government can do is to tell the country how they are facing up to the new position and what line they propose to take, and how they propose to establish the necessary machinery for our representation, and what kind of foreign policy they envisage. The only one we have heard mentioned so far from the colleagues of the hon. the Minister is that in lieu of membership of the Commonwealth South Africa should now have close treaties with Portugal and the Federation, with the idea of fighting the Black peril. Well, I think that is a very poor substitute as a foreign policy compared with our membership of the Commonwealth. The Minister of Justice made a speech about that a few days ago. I think the Minister of External Affairs had better tell the country whether the Minister of Justice spoke with Cabinet authority, or whether he was just making one of his party political speeches. [Time limit.]


It is necessary that one point should be dealt with before the debate goes any further. The hon. member has raised the question which was also raised by his leader, as to what we are going to do about the case now pending before the International Court. The hon. the Leader of the Opposition, as also the hon. member for Constantia (Mr. Water-son) insists that we should now inform the House as to our intentions.

The Prime Minister stated the position clearly when he explained that there is at present a case pending before the International Court. South Africa is one of the parties to that case. As in the ordinary Courts of the land, when a case is pending, any discussion of the matter before the Court is regarded as sub judice. I took up that attitude last year in the Fourth Committee of the United Nations. It is the attitude of the Government, that while this case is pending in the International Court we are not prepared, by participating in discussions, to prejudice our case in any way. It is necessary, in a purely factual manner, to inform the House as to our attitude at the United Nations.

When the Fourth Committee met shortly after Ethiopia and Liberia had brought action, I raised a point of order, namely that the subject was now the subject of contentious proceedings in the International Court and that in those circumstances the Fourth Committee should not discuss it. After having explained what the sub judice rule is, because there are a number of nations there who may not observe it themselves, and do not know what it is, I then quoted certain authorities. I quoted a very well-known international lawyer, the late Judge Lauterpacht in his work, “ The development of International Law by the International Court ”. He mentioned the case of the Electricity Company of Sophia and Bulgaria, where the International Court, invoked “ the principle universally accepted by international tribunals to the effect that the parties to a case must abstain from any measure capable of exercising a prejudicial effect in regard to the execution of the decision to be given and, in general, not allow any step to be taken which might aggravate or extend the dispute”.

Mr. Chairman, the sending of a commission to South West Africa would in our opinion be such a step.


The Fourth Committee is not a party to this dispute. Liberia and Ethiopia are on one side, and we on the other side.


Yes. The parties that have brought action against the Union are two of the original members of the old League of Nations. They are the only countries which could bring action, viz. Ethiopia and Liberia. South Africa is the other party to this case; it is one of the litigants. The United Nations as such is not a litigant. In the same way that someone not concerned with a Court action in South Africa would be judged guilty of contempt of Court if he expressed his views about a pending case, so the United Nations, would, in our view, be guilty of what might be called contempt of court if it now intervened in a case that was pending in the International Court.

The position of the United Nations is interesting by reason of what happened two years ago when the Anglo-Iranian dispute was discussed by the Security Council, at the time when Iraq nationalized the Abadan oilfields. The matter was discussed by the Security Council, which is one of the organs of the United Nations. In the course of this discussion in the Security Council, Sir Benegal Rau, later a judge of the International Court of Justice, said—

It may not therefore be wise or proper for us to pronounce on this question, while substantially the same question is sub judice before the International Court of Justice.

At the 565th session of the Security Council on 19 October 1951 the adjournment of the debate was proposed until such time as the International Court of Justice had ruled on competence. Sir Benegal Rau pointed out that the basic question was whether the matter was sub judice. The proposal that the debate be adjourned was carried by eight votes to one, the Soviet Union alone voting against the proposal.

I also quoted other authorities which I will not deal with now, to support my contention that the case could not be discussed by the Fourth Committee. The British delegate participated in the discussion and read to the Committee a very carefully drawn up statement, which obviously had come from the law advisers in Britain. In the course of that statement the representative of the United Kingdom said—

Last week the Liberian and Ethiopian Governments filed with the International Court of Justice an application requesting an interpretation and ruling upon numerous matters connected with the mandate for South West Africa. This is a contentious proceeding to which the Union of South Africa is a party. The decision of the Court will be of the utmost importance, not only for the inhabitants of South West Africa but also for men and women throughout the continent and for the United Nations itself. I feel that my colleagues in this Committee will agree that in these circumstances it is important that a decision of the Court should carry the greatest possible weight, and therefore that we in this Committee should do nothing which might in any way impair the standing of the Court, or enable it to be said that its decisions have been the subject of improper influences or of pressure based upon political consideration. It is apparent from the case which the Court will be entertaining that the subject matter upon which the Court will be asked to decide, and which is alleged under numerous headings, includes a whole range of matters which are dealt with in the report of the Committee on South West Africa …

That is so. The report of this Committee and the complaint of the two complainant countries, contain a number of the matters that are identical. The United Kingdom delegate continued—

No doubt it is to such matters that witnesses will wish to testify here. We are therefore in danger of finding that two separate organs of the United Nations, the Assembly and this Committee on the one hand, and the International Court of Justice on the other, are pronouncing upon the same subject matter at the same time. I cannot think that any member of this Committee would feel happy at such a prospect…. Clearly, therefore, in its own interests, in those of the litigants, and in the interests of member states generally, the Committee ought not to proceed without careful consideration of the implications which flow from this particular case and which extend far beyond it.

Then I come to an important aspect of the matter which I suggest also affects our discussions in this House. The British delegate referred to the application of the sub judice rule in Britain, and said—

The sub judice rule as it is applied in England and also, I believe, in many countries… is designed to protect the interests of parties before the Court and to maintain the reputation of the courts for rendering impartial justice.

He pointed out just before that that there was a difference between local courts and the International Court, and then asked what the position would be in the House of Commons. He said—

Under this rule the Court may, for example, punish or restrain individuals or organizations who publish material likely to prejudice a fair trial or, and I think this is important, even to appear to do so. As, however, the proceedings of the House of Commons are privileged, the Court has no power to restrain members from such prejudicial comment spoken in the Chamber. But the House of Commons is jealous to defend the good reputation of the courts and for the right of litigants to a fair hearing. It therefore imposes upon itself by its own voluntary act a discipline in this matter. Repeated rulings from the Chair have made it clear that a matter before the courts cannot be the subject of a debate or even of a parliamentary question. Erskine May puts it in the broadest terms: “A matter, whilst under jurisdiction by a court of law, should not be brought before the House by motion or otherwise.”

I will not read the rest of his very clear statement, but it clearly indicated that also in the opinion of the British Government any discussion by the United Nations or by the Fourth Committee would be in contravention of the well-recognized sub judice rule, which is also observed in the House of Commons. Mr. Chairman, I fully agree with the attitude taken up by the Prime Minister, viz. that it would be a contravention of the generally accepted sub judice rule if there should be a discussion of this matter. There is the danger that it might affect the Union’s position. Our legal team is working hard at present preparing South Africa’s case and it is obvious that if discussions were to take place in Parliament on the very matters which are now before the Court and which are included in the report of the Committee on South West, it is likely to prejudice or influence the Court. Therefore it is my intention to discuss this matter. I am not prepared to answer questions as to whether or not we will accept the finding of the Court. When the Leader of the Opposition was practising at the Bar and there was an appeal pending before the Appeal Court, he would not have advised his client to say beforehand what he should do if the Appeal Court were to hold against him.

Mr. Chairman, I wish to suggest to you as Chairman—-I do not think you can give a ruling on the matter—that in the interests of South Africa and of this case which we are not letting go by default it would be most unfortunate if, e.g., statements were made, say by the Leader of the Opposition, criticizing South Africa’s administration of South West Africa or agreeing with something which was said in the Fourth Committee, it might influence the International Court. Therefore, if I may take the liberty, Sir, of asking you to do what the British delegate said regarding procedure in the House of Commons, viz. to ask the Committee to exercise a certain amount of restraint in discussing this matter I shall be glad if you give such a ruling. The matter is sub judice and I sincerely hope that hon. members will realize the importance of this matter to South Africa. May I add that there is the question of the dignity of the Court itself. Any Court of Justice is jealous of its position and it would be a great pity if the members of the International Court were to be unfavourably impressed by the fact that members of this House, the Parliament of one of the litigants, were to express views which might be regarded as interfering with the functions of that Court.


In view of the fact that the whole question of the administration of South West Africa by the Government of the Union of South Africa has been referred to the International Court of Justice for decision, my opinion has been sought as to whether matters relating to South West Africa should not be regarded as being sub judice.

Standing Order No. 72 provides inter alia that no member shall refer to any matter on which a judicial decision is pending. Obviously this is intended to be a reference to decisions in our own courts of law and not to courts of law outside South Africa. Strictly speaking therefore a decision which is pending in the International Court of Justice does not fall under the provisions of Standing Order No. 72 and cannot be regarded as being sub judice in so far as discussions in this House are concerned.

South Africa is, however, a member of the United Nations Organizations and, according to paragraph 2 of Article 36 of the Statute of the International Court, the Union Government has recognized the jurisdiction of that Court in regard to certain matters but not disputes affecting matters which are essentially within the jurisdiction of the Government of the Union of South Africa as determined by the Government of the Union of South Africa (see Year Book of the International Court of Justice, 1959-60, pages 253-4).

In terms of Section 22 of Act 23 of 1949 the Union has full powers of administration and legislation over the Territory of South West Africa as an integral portion of the Union and it may be contended that domestic matters affecting South West Africa are matters which fall essentially within the jurisdiction of the Union Government. If such matters were raised in the International Court or any Court other than a South African Court, discussion thereof in the Union Parliament in my view would not and could not be disallowed under the sub judice rule. However, in view of the fact that the Union Government has appointed agents and briefed counsel to appear on its behalf in the matter of the application by Ethiopia and Liberia to the International Court concerning South West Africa, any discussion in this Committee of such matters may conceivably prejudice the conduct of the case before that Court and embarrass counsel briefed by the Union Government. It may furthermore have the effect of aggravating or extending the matters in dispute and may even influence, impede, embarrass or obstruct the Court itself in arriving at its decision.

In these circumstances I appeal to the good sense and discretion of hon. members to refrain from referring to any matters concerning South West Africa in a way which may be regarded as being insulting or embarrassing or derogatory to the dignity of the International Court or which may in any way influence that Court in arriving at its decision.


I do not wish to discuss the implications or the merits of the case in regard to South West Africa and our opposition to the indictment delivered by Ethiopia and Liberia, but I think the public of South Africa should realize the seriousness of the consequences to our country and to our vital interests if that judgment goes against us, because the matter will obviously be referred to the Security Council of United Nations, with possible far-reaching consequences, and we will be called upon, as a member of United Nations, to uphold any resolution given by the Security Council based on the judgment of the International Court of justice.

I have really risen to say that rarely have I felt as incensed in this House as I do tonight. I feel incensed because to me it is tragic to consider that here we have a Minister of External Affairs, with our country in the international sphere facing probably one of the greatest crises it will ever face, with a world ranged against us, with our own previous friends in the Commonwealth having severed relations with us, with a practically unanimous damnation of the vote before the World Council. At this time we have to, enjoy the spectacle of our Minister of External Affairs rising in this House and on the basis of his own racial prejudice attempting to criticize the actions of the rest of the world and making the accusation that the world is hypocritical in its approach to South Africa; that the Government is the only one which is right and that the Minister is the only one who can have any views based on right and justice. Here we have had this damnation by the Minister not only of the rest of the world but also of our own friends, countries which loyally stood by us in the past and have given us support either at United Nations or in the Commonwealth. [Interjections.] It may be monotonous to say so but it is tragic to consider that the whole future of the country is based on our relations with other countries of the world and that we should have the Minister arraigning himself against the world purely because of his own racial prejudices, and based entirely on one accusation, that the rest of the world is hypocritical when it deals with us. Look at the contrasts. We have had the hon. the Minister damning the United Kingdom for the attitude they adopted at the Prime Ministers’ Conference. Compare it with the attitude adopted by the Prime Minister. The Prime Minister was at pains to show our continued desire to be cooperative with Britain, but the Minister of External Affairs did not have a single word to say in regard to that future close relationship with Britain. All we have had was a churlish argument about the political difficulties Mr. Macmillan may find himself in if he openly supported our Government in its present racial policy. [Interjections.] I am dealing with the approach of this Minister to the other countries of the world. Let us take a few examples.

The Minister tried to say that the position at United Nations had deteriorated for one reason only, that there are now some 55 Afro-Asian states and he couples them automatically with the communist countries. Yet the whole tactics of the Western world is to draw the Afro-Asian states away from the domination and the influence of communist countries. But the Minister says no, we are damned at United Nations because the rest of the White nations are looking for the support of these 55 Afro-Asian states and therefore they voted against us. He says that the position has continually deteriorated since 1950.


Why did they vote against us?


The Minister misleads the House and the country. He knows as well as I do that before any motion can be of force and effect in United Nations it must receive at least a two-thirds vote, and if the other White nations supported South Africa the Afro-Asian bloc would be unable to get a motion passed.


Why did they vote against us in 1947?


Let me tell the hon. member the true facts about 1947, and not the picture presented by the Minister. In 1947 and 1948 there was no vote against South Africa at United Nations. The only movement towards a condemnatory motion came from the communist bloc and from India. There was never a condemnatory resolution. It never passed the General Assembly, because I sat there myself.


So you prevented it when Smuts could not?


From when did the position deteriorate? Let us face the facts. The position only deteriorated because the Minister did not talk about the statement of policy of General Smuts on the basis of parallel development and free opportunity, and the crux of our argument in those days at United Nations which was that we were not oppressing the non-Whites. As for example in this House the Coloured man sat on the Common Roll with the White man and there was equality of political opportunity. There was no resolution in those days condemning our race policies. It was only in 1950 that the first resolution condemning our race policy was introduced, and how did it come to be introduced? It was because this Minister, when he led the first delegation to United Nations after the Minister of Finance had done so, announced at United Nations that the previous arguments in regard to the policy of South Africa would not be presented because there was a new Government in power which was based on the policy of apartheid. That was the first time the word “ apartheid ” was used at United Nations, and if hon. members doubt my word, they can look at the speeches in the Library of Parliament, and the speech made by this Minister when he advocated the new race policy of apartheid at the United Nations. Even in 1947 United Nations did not use the word “ apartheid ” in their resolutions. It was only in 1950, through the persistence of the Minister to get acceptance for the policy of apartheid, which was viewed as a policy of domination and suppression, that the word “ apartheid ” became well known in the civilized world, so that every little man in the back streets of Warsaw or London or Prague, or of Brussels or of New York, came to know that word as the epitome of what is worst in racial domination and suppression. That is what it means to the world outside, and it was introduced by this Minister, but now he rises to-night to defend South Africa’s race policy and our future relationship to the world. We hoped that we would hear to-night at least about the application of some policy which would mean that we could walk a new road in the world and that we could talk as White Africans standing together and stating a fair and honest position, but there was not a word of encouragement from the Minister.

Let me take a few of his other arguments. The Minister talks about horse-trading. He says the voting at United Nations is based on the principle of “You scratch my back and I scratch yours ”, and he says why take notice of that voting? He tells the public not to take notice of United Nations, because the voting there means nothing. And then in the same breath, Sir, he says: I issue a warning: I issue a warning to these people who have voted against us. He tells them: Do not come and horse-trade with me in the future—you voted against me recently; do not ask me for my vote at all. [Time limit.]

*Mr. J. H. STEYN:

The hon. member for Turffontein (Mr. Durrant) who has just sat down based his whole argument on what he has described as “ race prejudice ”. I want to ask him: Is this prejudice (vooroordeel) or is this an opinion (oordeel)? Can he tell me that throughout South Africa’s history, the history of each province, there was not a large majority in each of those provinces, the parts of the Union which later formed the Union of South Africa, who held this opinion? What right does he have to condemn this as prejudice? I want to put this pertinent question to him: Does he not share this opinion? Does he stand for absolute equality or does he stand for differentiation? What policy does the party of which he is a member advocate? He must now reply. Do he and his party regard this as “ racial prejudice ”? Is the non-White policy of his party not based on “ prejudice”? And what is more, on “racial prejudice”? He owes us an answer.

I should like to come back to the hon. member for Constantia (Mr. Waterson). We have known him for a long time in this House. He is a member who has represented us abroad, and not without distinction. He is the same person who has come back and who now condemns the policy which at that time he, to a certain extent, furthered. What has caused this change in him? What has happened in South Africa that he has changed his opinion in this way? Has he changed his opinion because of changes here in South Africa or because of changes abroad? That is the question I should like to put to him. He has loudly proclaimed that the entire UNO is against us. His facts are correct, but I should like to ask him this question: Why are they opposed to us? We know what we must do to satisfy UNO. We need only jettison our whole traditional South African policy and say that we shall follow the world’s policy of no discrimination whatsoever, of all races forming one entity, and we shall then enjoy support at UNO again. I should now like to ask the hon. member for Constantia whether that is his opinion? Is he prepared to make that sacrifice in order to gain UNO’s support? This is a question which he must answer, and not only he but his whole party must answer it. He has relied on General Smuts. There are many people who rely on persons who can no longer answer for themselves. Why does he not rely on his own present leader? Will his leader give us a reply? Perhaps it will be yet another reply to add to the many replies which we have already been given over ¿he past year or two. We do not want to know what the opinion of past leaders was. We know these from studying history; they can no longer be changed; they are on record, but we should like to know the opinion of the present leader and we should like to know what it is before he changes it again. They must answer this question. The hon. member for Constantia has referred so insistently to the attacks being made on us at UNO, that we eventually formed the impression that he possibly, as a result of his own political standpoint, approves of those attacks. I do not want to do him an injustice. I do not think that is his attitude, but then he must be more careful when he speaks. He must not create the impression outside that the United Party is prepared to accept those criticisms merely for the sake of the party political capital which they can derive in South Africa from those attacks. He has said that the statements being made at UNO are “ a fair reflection ” of the position in South Africa. Do those hon. members who sit behind him agree with that opinion? Does the hon. member for Florida (Mr. H. G. Swart) agree with him? Is this a “ fair reflection ”? Do we not have the right to demand of the Opposition that in all their criticism of us they should at least put the standpoint of South Africa uppermost? We have the right to demand that of them. He has gone still further. He has accused the Minister and said that the Minister is dragging our name in the mud. You see, Mr. Chairman, throughout his speech this hon. member has made use of very strong language. Let him tell us what the hon. the Minister of External Affairs has done that he, if he had had to represent South Africa abroad, would not have done. He must give us a clear reply in that respect. I am not referring to the statements which have been made across the floor of this House, but I am asking him what other standpoint he would have adopted if he had had to represent South Africa abroad. When he has the opportunity, he must answer this question. His next question was what our position was going to be outside the Commonwealth; With whom were we going to trade; where would we find friends? But let me once again put a counter question to him: Where do those countries who are not members of the Commonwealth find their friends? Take a country like Switzerland—-I do not want to take any particular country—or Ireland, as examples. They are small countries which are in more or less the same position as South Africa. Where do they find their friends? What argument is it to say that we who for a long time have belonged to one group, call it a family group if you wish, who have belonged to one international group for a long time, will now be faced with closed doors and that we will not be able to join any other group if—please note—the members of this group to which we have belonged no longer want us. We do not want to break off our friendships, just as little as we want to break off our general ties, but let the hon. members of the Opposition rise and tell us whether they would have remained in the Commonwealth if they had been faced with this position, or would they have been obliged to follow the same course as we have? If the answer is “ yes ”, then they must immediately add the following: Why should we not seek to co-operate with those countries who are well disposed to us and who are prepared to establish friendly relations with us?

Another question he has raised has been that of trade in general. Will we still have a general circle within which we can trade? Will we be able to trade and with whom? Once again I have to put a similar question to him: With whom do all the other countries of the world trade? Do they also only trade within their own circle, whatever that circle may be? Do Commonwealth countries only trade within the Commonwealth? Or do they seek to trade with any country which will give them favourable conditions? [Time limit.]

Mr. E. G. MALAN:

I do not think that I would be exaggerating if I called the speech of the hon. the Minister of External Affairs a tragic and an unhappy one which does our country no good whatsoever. I listened to the speech of the hon. the Minister and I made notes of the different countries of which he disapproved. Looking at this list it seems that there are very few countries of which the hon. Minister does approve. During his speech to-night he disapproved of Malay, Ceylon and Canada with her Eskimos; of the United States with her Negroes, of India with her caste system. He even referred to India, in what I suppose is diplomatic language, as a “ reformed rake ”. He attacked Ceylon, he attacked Britain, he had reservations about Australia’s discriminatory policy; he attacked the African states; he was against Nigeria; he disapproved of the Cameroons, of Ghana and even criticized the lack of support given to South Africa at the United Nations by the Netherlands; he disapproved of France and of Italy, and for good measure he even attacked the Anglican Church—and on top of that he disapproved of a large section of his own party which apparently has the temerity to criticize his policy. I presume he was referring to the Burger and some other newspapers which have been criticizing him in the past.

I think there should be serious heart-searching in regard to the conduct of our country’s diplomacy abroad, not only in theory but also in practice. At times this diplomacy has been so inept, so shocking as almost to be spine-chilling. Diplomacy, Sir, is a science as well as an art and when we see some of the things which are being done by the hon. the Minister of External Affairs, then I almost feel that whatever his undoubted talents are in other directions, he is psychologically not suited to this task of being the country’s Minister of External Affairs. Had he spoken at the United Nations and had he spoken at the London Conference in the way he spoke to-night, it would be no wonder that the debacle arose at those two places; no wonder that during the past two months we have suffered the two greatest diplomatic defeats in South Africa’s history, namely the defeat at the United Nations and the defeat at the Prime Ministers’ Conference where we had to withdraw from the Commonwealth.

May I mention one instance of blatant disregard of all diplomatic practice which is surely without parallel. I refer to a statement made by the hon. the Minister in which he indicated that possibly consistency and honesty may no longer be the guide to our foreign policy in future. It sounds an unbelievable statement. But I have his words here taken from the Digest of South African Affairs. The hon. the Minister said this—

Whether South Africa’s policy of consistency and honesty has paid dividends is open to serious doubt.

He added this—

Since returning to South Africa I have given this matter considerable thought and have come to the conclusion that at the United Nations a policy of consistency simply does not pay and that we would be well advised to adhere to the old established diplomatic practice of reciprocity when approached for support by other delegations.

He went on—

In future the delegation of the Union will be guided only by consideration of South Africa’s own interests with due observance also of the quid pro quo principle.

The hon. the Minister was more specific tonight when he referred to a policy of that nature as “ horse trading ”. Now, Sir, coming from the hon. the Minister of External Affairs surely this is an amazing statement. Firstly on account of its contents and secondly on account of the fact that if the hon. the Minister has the idea of indulging in a quid pro quo policy of horse trading, then surely he should at least maintain a decent silence about his plans. We are adult people, Sir, we know what can happen in diplomatic circles but surely this statement of the hon. the Minister’s is without parallel. One has to go back to the days of Michiavelli, to the 15th century, the Italian diplomat, to find an equally blatant admission of motives. I looked up Michiavelli’s “ Prince ” to find some of the things that that political writer had said in the 15th century. He said this—

A ruler therefore who is wise and prudent cannot afford to keep his word when the keeping of it is to his prejudice.

He went on to say this—

Nevertheless experience has shown that those rulers who had not pinned themselves to punctiliousness and preciseness have done great things and by their cunning and subtlety have circumvented those with whom they have had to deal.

If we are to introduce Michiavellism into our foreign policy then I believe we have indeed reached the very lowest possible depths that we can attain.

Now, Mr. Chairman, this new policy of quid pro quo, this new policy of horse trading has apparently been in existence since the Minister made this statement in February of this year. What have the results been? Has there been a sudden change in favour of South Africa on the part of the other countries of the world? What are the dividends that we have been paid? The dividends are those two greatest defeats in our country’s diplomatic history. Before we indulged in horse trading we were defeated 78 to nil; after we started with this quid pro quo policy we were defeated 95 to 1. Imagine the shocked effect a statement such as that must have throughout the world. A statement such as this must have its effect on embassies of other nations. One can well imagine one shocked diplomat saying to the other: “Look old chap, we must be very careful of that man Eric Louw. After all he stated publicly that he is dealing on a quid pro quo basis with us, and it might be a bit of horse trading. Just remember what our parliaments would say if they were to hear that we have been making a deal at the United Nations or the London Conference with South Africa.” The hon. the Minister mentioned quid pro quo, Sir; what quid for what quo? I should not like to go so far as to suspect the Government of adopting the policy of the hon. member for Randfontein (Dr. Mulder) who suggested the other day that the Union of South Africa should on occasions pay R1,000 to have a favourable article about us placed in the London Times. I do not want to go as far as all that, but I would like to know what this quid actually means in our horse trading. The Burger nowadays speaks of “ aanpassing ”. Surely diplomatic relations with some other African states would have been an excellent quid, an excellent gesture on our part. After all the Minister was the person who welcomed Nigeria to the Commonwealth a few years ago, but one thing that is not a quid in this case is the way in which those countries were attacked to-night.

The attack on Canada because of her treatment of the Eskimos was a most amazing piece of work, Mr. Chairman. I hold no brief for Mr. Diefenbaker, but I do not think there is such a thing as a Separate Representation of Eskimos Act in Canada, or an Eskimo Resettlement Act or that there is separate reservation of kayaks, or that there is a Group Igloos Act in Canada. What is the quo in this quid pro quo policy? We can only assume, Sir, that, if the hon. the Minister has been indulging in this quid pro quo policy, he is indeed by no means a good horse trader. Let us be frank, Sir. The Minister has a tragic record of diplomatic failure and these failures are not in every case attributable only to Government policy. [Time limit.]

*Dr. DE WET:

I do not think I am going too far in saying that in a debate on external affairs one ought not to have to listen to a speech such as we have just been listening to. The hon. member for Orange Grove (Mr. E. G. Malan) made me think of bad business— of bad donkey business, of bad business as Orange Grove did when they exchanged this hon. member for Frankie Waring.

I want to come back to the debate and ask hon. members: On whose side are they now that South Africa is experiencing difficult times in the international sphere, not dark times, not times which frighten us, but difficult times. There are, among others, people from overseas in the gallery and if they listened to the debate this evening on whose side would they think hon. members of the Opposition are? On South Africa’s side or on whose side? [Interjections.] I will tell you what kind of assistance we have given, Sir. At the moment there are three trade missions overseas to try to seek what is best for South Africa, for that side and for this side, for the whole of South Africa. There are three such missions but what does the hon. member for Constantia (Mr. Waterson) do? He says those trade missions have a political tint. He says: “ These trade missions are missions with a political flavour.” Why does he say it? To create one impression, to place those trade missions in an awkward position, to cast suspicion on them while they are trying to do good work for South Africa, trade missions which do not consist of political men but of the most highly placed men in the field of commerce. That is the kind of assistance we get here this evening. I ask again: On whose side are hon. members opposite? There is the hon. member for Constantia, and I hope that the hon. member sitting next to him, who does not know much about these matters, will give him a chance to listen to me. I ask the hon. member for Constantia what he meant when he said “ the trade missions are missions with a political flavour?” What did he have in mind? What did he try and convey to South Africa and to the world? No, Mr. Chairman, he thought well; he had some plan. Permit me to say this: Hon. members opposite will condemn anything in South Africa and will accept any assistance from outside South Africa if only they can come back into power. That is the position we have in South Africa and which no other part of the world has to contend with. Allow me to say that the future of any other country in the world must be dark if it has an Opposition such as ours. As I said before, Mr. Chairman, in the gallery we have people from abroad. On whose side must they think the hon. members opposite are? I say that we have difficult international situations and the hon. the Minister quite rightly did not make attacks on other countries but merely pointed out that while South Africa was standing in the dock in regard to her colour policy those very countries were practising discrimination. I do not expect very much from hon. members opposite but I do expect them at least to be prepared to give to South Africa what the Daily Express of London was prepared to give to South Africa. If we can only get that from the Opposition in South Africa then we have at least got an Opposition on which we can depend. Let us be honest. All the trouble in the world concerns one issue only, and that is colour. We do not want to deny that. In 1946 and in 1947 it also concerned colour. It still concerns colour; we have no argument; why should we argue about it? But let us at least show the world a united front. In 1946 the Sunday Times wrote the following, and this is precisely what the hon. the Minister referred to—

South Africa has grave racial and political problems which only she can solve. But her efforts to do so are being gravely embarrassed by a formidable and increasing mass of ill-informed adverse opinion overseas.

I underline “ increasing mass of ill-informed adverse opinion ”. That was how the Sunday Times saw the position. Then already the Sunday Times saw that this attitude towards South Africa in regard to her colour policy was increasing. The hon. the Minister quite rightly this evening pointed out that this situation in the world was bound up with the change which came about at UN and throughout the entire world in regard to colour. All I expect of hon. members opposite is that they should not stand on the side of Mr. Alan Patan and not stand on the side of the hon. member for Namib (Mr. J. D. du P. Basson), because what does he say? It could just as well have been Alan Patan. He says “ just like Nazi Germany ” and then he gives ten reasons on the front page of the Sunday Express why South Africa is like Nazi Germany. While I am mentioning his name—and I mention it in the same breath as I mention Alan Paton’s name— I think this House and the country are justified in asking the hon. the Minister to tell us what all Mr. Alan Patan had to say to the world, since he dealt with these matters personally. Not only do we have to face colour prejudice in the world, but we also have an Opposition such as this, and we also have Alan Patons as well as lapie Bassons. I would like to ask the hon. the Minister what Alan Patan had to say. He said certain things, and who were his defenders? The hon. members opposite, while he was busy humiliating South Africa down to the ground. While we are busy discussing this matter this evening and while the hon. the Minister mentioned certain examples, I would like to mention one thing before I quote what one at least expects from an Opposition. South Africa feels happy and would like to say that she regards Portugal as a very good friend. We do not interfere in her policy in Angola and in Moçambique but what we do know is that Portugal is one of the good friends of South Africa and we would like to tell her so. All sorts of allegations have been made against the hon. the Minister here this evening. I think that if ever there was a courageous and outstanding attempt to keep South Africa within the Commonwealth then it was that of the hon. the Prime Minister at the Conference. But one should not forget that much of the preparatory work, the good work, was done by the hon. the Minister of External Affairs, between here and New York and England in order to discuss the matter for the sake of South Africa, and then one gets speeches of the type we heard here to-night. What one expects from the Opposition, Mr. Chairman, is that they should at least give South Africa what a British newspaper was prepared to give South Africa. I want to read from the leading article of the Daily Express of London of 7 March—

Britain finds herself in strange company in the monstrous attack on South Africa at UNO.

I did not hear a single hon. member condemning it. Has any member opposite condemned it? But the Daily Express was prepared to do it—

There is Nkrumah of Ghana. He has most of his political opponents locked up in jail. It is just as reprehensible to put Opposition members of Parliament in Prison as it is to put Black men in Purdah. Then there is the Congo. The Congolese cannot govern themselves yet they think they are fit to say how South Africa should be governed.

Let us also hear this from an hon. member of the Opposition for a change. Let them at least say that there is one country which cannot say anything against South Africa namely the Congo because they cannot even govern themselves. This leading article continues—

There is Ceylon, which practises its own kind of apartheid by tyrannizing the Tamils-peaking minority. Britain smiles on these nations. She extends the hand of friendship to them—and to Franco’s Spain as well! Lord Home, the Foreign Secretary, is going to Madrid to give Franco our best wishes. Although the people who live under Franco have far more to fear than those who live under Dr. Verwoerd.

Mr. Chairman, I do not agree with all these assertions. I was in Spain and I never saw these things. But although the Daily Express was prepared to go so far in order to help South Africa, we do not get that from the Opposition. [Time limit.]


Mr. Chairman, the hon. member for Vanderbijlpark (Dr. de Wet) who has just sat down, posed the question initially on whose side the Opposition was. I would like to tell him immediately that the Opposition is certainly not on the side of the Nationalist Party, it is on the side of the people of South Africa. And for that reason it has a duty to perform this evening and that duty is to be critical, as an official Opposition, of the policy of the Minister so that the country may know what the policy is of the Government and what course it intends to pursue. It is in that respect that I should like to criticize the speech of the hon. the Minister. His whole attitude was on the defence; there was nothing positive about it and he made no attempt to explain his policy to this House. He admits —the Prime Minister has admitted—that South Africa is in a very serious position and that we can expect difficult and stormy days ahead. The House is looking forward to an exposition of policy particularly on the part of the hon. the Minister and we want to know why this Minister is not prepared to give some information as to what the Government’s intentions are to meet the problems of the day. The hon. the Prime Minister went out of his way in answering certain criticism both overseas and in this country, to talk of South Africa’s good neighbourly policy in its attitude towards other countries of the Commonwealth. What we would like to know from the hon. the Minister is what his policy is in order to promote this principle of good neighbourliness, not only in respect of countries abroad, whom he condemns on account of their attitude towards South Africa, but in respect of other countries with whom we are in close contact mainly on the Continent of Africa.

The other side of the House has often said that it was important to expand our trade. It is not only important to expand it in the older countries of the world where the competition we are facing is severe but it is important that we expand it in the emerging states of Africa. Everyone is agreed that South Africa’s export trade must increase; everyone is agreed that South Africa must make more friends; everyone is agreed that it is not only a policy which South Africa should follow, but that it is a policy which all nations wish to adopt in order to promote a better understanding between themselves and other nations and in order to promote the economic relationship between themselves and other nations.

Whilst we are sending missions overseas to some of the older countries what are we doing in so far as the countries on the Continent of Africa are concerned. It is well known that in the case of certain of our exports particularly machinery, we have a very good market on the Continent of Africa. It is also well known that of our total export trade of approximately 18.4 per cent to Africa, 12 per cent goes to the Federation of Rhodesia and Nyasaland and only 6 per cent to the rest of the Continent of Africa.

At 10.25 p.m. the Chairman stated that, in accordance with Standing Order No. 26 (1), he would report progress and ask leave to sit again.

House Resumed:

Progress reported and leave asked to sit again.

House to resume in Committee on 18 April.

The House adjourned at 10.27 p.m.