as Chairman, presented the First Report of the Select Committee on Irrigation Matters.

Report and proceedings to be printed and considered in Committee of the Whole House.

as Chairman, presented the Second Report of the Select Committee on Irrigation Matters.

Report and proceedings to be printed and considered.

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

Report and proceedings to be printed and considered.

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

Report and proceedings to be printed and considered.

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

As hon. members will note, an additional clause was inserted in the Bill on 24 June—a new clause 11. This clause merely serves to repeal the existing section 1(1)(b) of the Payment of Members of Parliament Act, 1974, and in this way dissolves the link that existed between the increase in the salaries of Public Servants and those of members of Parliament. Therefore, in future the one group will no longer necessarily be dependent on an increase or amendment in the remuneration of the other group. Hon. members must please also renumber the numbers of the clauses in the explanatory memorandum, W.P.8-’83, from clause 11 onwards to read 12, 13, etc.

As is customary, this Bill deals with various matters affecting the State Revenue Fund and the finance and accounts of the S.A. Transport Services.

Since the various clauses are elucidated in the explanatory memorandum, I do not think it is necessary to explain all the clauses in detail. If hon. members require more information about any clause, I or the hon. the Minister concerned will gladly furnish further details in the Committee Stage.

Mr. Speaker, right at the very beginning I should like to express my pleasure at the fact that the hon. the Minister of Finance is back in the House and able to resume his duties. We hope he has fully recovered, and if he has not, that he will indeed be in perfect health shortly.

Hear, hear!

Mr. Speaker, in respect of this Bill we will try to give the hon. the Minister an easy time as it were, and treat him a little gently today. That will of course prepare him for tomorrow when the political debate on the Third Reading of the Appropriation Bill begins. Therefore we will be somewhat gentle with the hon. the Minister today. [Interjections.]

There are, however, a number of matters which I should like to deal with. Firstly, I want to point out that the clause to which the hon. the Minister referred, which deals with the change in the method of payment of hon. members of Parliament, is a clause which does not give us any problems. That matter has already been discussed and that particular provision does not cause us any concern. There are, however, other matters contained in this Bill with which we will have to deal here today.

One of those matters relates to the whole question of the raising of revenue and to the question of whether there should be action to jeopardize the raising of revenue, whether by way of taxation or by way of loan capital. The matter to which I specifically want to refer, and which is relevant in this instance, is the question of the amount which is being provided for, an amount of some R150 million to be raised as finance by way of bonus bonds.

In order to deal with that matter specifically, I now move as an amendment—

I should like to put it to the hon. the Minister that one of the things which, he will agree, is absolutely fundamental is that if one is going to ask people to invest money then they must be given certainty. When there is uncertainty people do not invest. As far as we are concerned, we are very worried today about the fact that the uncertainty which surrounds the bonus bond scheme is going to affect the ability of the hon. the Minister to raise the amount of R150 million, which he has provided for in his budget. The simple situation is that when there is uncertainty there may also be fewer people who will invest in this medium of the investment, and furthermore, there will be more people who will cash in their investments in bonus bonds. As far as we are concerned, we do not want to see that happen. We want to see the bonus bond scheme continue. We want to see people continue to invest in it, and we want people to be encouraged to do so. That is why we should like the hon. the Minister of Finance to give us the two undertakings today to which we refer in our amendment.

The question which, I believe, needs to be answered is the following. At the time when this scheme was introduced that scheme was acceptable to the Government; it was certainly acceptable to a vast number of people in South Africa because they invested money in it, and the controversy in respect of that scheme disappeared. What I should like the hon. the Minister to tell us is the following. What has happened in respect of the bonus bond scheme since it was introduced, which should make him change his mind about whether that scheme should be continued or not? We believe that nothing has actually happened in this regard. What is indeed an important feature is that when people are asked to invest in a scheme, when a scheme is marketed, when that scheme is advertised, it means that the advertising must be clear, it must be understood and there must be no confusion caused by it. People should know that when they invest in a particular medium—whether it be the bonus bond scheme or any other medium—that they are investing in something which they understand, and that the medium must indeed be the one in which they are told they invest.

One of the criticisms which we have is that the impression was being created that the money invested in bonus bonds was going towards defence. The average person in the street believed the money was going towards defence. The hon. the Minister of Transport Affairs is looking at me. I am sure he also believed it. [Interjections.] Yes, he really believed it. He still believes it today. [Interjections.] The problem is, however, that one has to create the position where, when the public believe something is happening, either one corrects that belief if it is wrong or one actually makes sure that that which they believe is happening is carried out. Here the issue is very clear. I do not want to quote things people have said and have it argued whether my quotation is in context or not. The reality is that if one were to ask the man in the street what he thought it was for he would tell one it was for defence. I want to ask a very simple question: Is there any reason why this money should not be for defence? If there is a technical problem why this money cannot be used for defence, the ingenuity of the Government in regard to the preparation of legislation should certainly extend far enough for it to amend the law to make sure the money goes to defence. Let me take a simple example. There is a Special Defence Fund, which I am going to talk about in a moment. There is no reason why the money from Defence Bonus Bonds should not go to the Special Defence Fund. If it cannot go to that fund under existing law, the law can be changed. I want to ask the hon. the Minister to tell us whether he will consider ensuring that this money goes to defence and whether he will consider amending the law. Alternatively, does he think it should be used for some other specific purpose? We accept there may be other purposes for which specific funds must be raised. In that case the necessary legislation can be introduced to give effect to that. My appeal today is that we must get certainty in regard to Bonus Bonds. We must know where we stand and people should continue to be encouraged to invest in this medium because it is necessary for us to have that source of investment.

I want to deal with some other matters and specifically with clause 1 and the question of the Special Defence Fund and the budget appropriation in that regard. When the Special Defence Fund was introduced, it was introduced with a particular purpose in mind. That was not to finance current defence expenditure as it is required year by year, but specifically that this fund would be available in order to re-equip the Defence Force when it was needed and to deal with expenditure which was not of an annual nature but which of necessity had to be over a period of time. What has happened over the years is that the functions of the appropriation and the functions of the Special Defence Fund have virtually merged. The result is that today the state of the Special Defence Fund is such that it cannot fulfil the purpose for which it was originally intended. I want to ask the hon. the Minister whether we should not reassess that situation and re-establish the Special Defence Fund as a fund which will be available to deal with the long-term re-equipment of the Defence Force and to deal with contingencies which cannot be dealt with on an annual basis so that we will have clarity on that.

In exactly the same way, if the Special Defence Fund is going to be used for current expenditure, we will have lost control of that current expenditure because in this particular legislation the example exists that the Special Defence Fund can be used in order to get overdraft facilities and to raise additional money in which circumstances it is not authorized expenditure as the law stands today. I think that that was the position. It is referred to in this clause. One can actually virtually circumvent the budget in this particular manner. All one has to do is to take the overdraft in the name of the fund in which case that will no longer be subject to the ordinary budgetary control. This is one of the problems that exist not only in respect of the Special Defence Fund, but also in regard to so many para-statal institutions. When we talk, for instance, of keeping our borrowing within a certain percentage of the gross domestic product, we do not include in that the borrowings of the para-statal organizations. If we were to include those in the relevant figure, we might get a completely different picture of the borrowings that take place. Therefore, firstly there is this lack of control in regard to borrowing and, secondly, there is the continuing situation in South Africa that Parliament has no real control over the funds in these para-statal organizations and there is no real accountability to Parliament for that. We do not regard that as being a satisfactory state of affairs. There are also other matters in terms of which budget finance is being frustrated, and which are being demonstrated by this Bill. The question of suspense accounts is an example. We are now going to have a position in terms of which one has to report on suspense accounts. However, one can add items to the suspense account and hide them away. It does not matter whether one has exceeded the expenditure for the year. One can bring it back the next year, take it out of the suspense account and then provide for it out of the next year’s appropriation. In that way one is in fact circumventing the whole concept of parliamentary control over the budget.

In the same way we have had the examples that when it gets near the end of the financial year and no more money is available, or the so-called policy of financial discipline has to be applied, all one does is not to pay people, to hold one’s accounts over for a while and to wait for the next financial year and to pay them then. These matters which frustrate the policy of financial discipline that the hon. the Minister talks about, need urgent attention.

I want to refer to a last matter, which is also used in order to deal with this matter, namely the manner in which Vote 25, the salary supplement vote, is used to balance Votes. By using that Vote one in fact ends up virtually balancing the individual Votes at the end of the financial year without one really knowing whether the right degree of financial discipline is being applied by that department or not. All one is doing is to top up. Whatever the shortfall is, it is transferred from Vote 25. If it is a department that has applied financial discipline it will get very little and if it is a department that has been lax it will get a lot more. In those circumstances we ask the hon. the Minister whether his policy of financial discipline is not being frustrated by these matters, and whether it does not require more action on his part in order to deal with these particular problems which exist at the present moment?

We also have in this Bill the question of unauthorized expenditure concerning the Department of Defence, where there is a dispute as to whether it is unauthorized or authorized. If it was not unauthorized it would not need legislation to put it right. It must therefore be unauthorized. There really is no answer to that argument. The technical argument as to whether it is unauthorized or not, is really academic because we are going to pass the legislation anyway.

However, if we look at the Department of Agriculture we have a far more important issue. The thing that worries me about this unauthorized expenditure—one of my colleagues is going to deal with this in some detail—is that there was an error, not an error of R13 million as is referred to here, but an error of double that amount, of R26 million. In this regard I want to quote from the evidence given to the Select Committee. I quote from page 27—

In other words, there are suspicions, beliefs, but nobody can actually tell us what the mistake is. I quote further—

Again, a little further in the evidence, on page 31, it is stated—

What is really happening, is that we have a mistake which cannot be explained as to how it arose. There is only a belief or suspicion as to how it arose. In fact, it is now argued that in those circumstances we must ratify the unauthorized expenditure. I would have imagined that when one comes to Parliament, when one has a situation where apparently somebody has made a mistake in respect of R26 million in regard to the bread subsidy—R26 million in bread subsidy must mean an awful number of loaves of bread—the very least that one would expect is that we can be told what has really happened, what the real reasons are and why we are being asked to ratify expenditure where there has been a mistake, if they cannot tell us what the mistake is and how it arose at his stage. The whole system which relates to the question of the bread subsidy—and my hon. colleague will deal with this in detail—is one which we feel needs to be revised because we feel that some degree of discipline has to be brought into this situation. One cannot allow this sort of error to arise under these circumstances.

I should like now to deal with some of the other matters contained in this Bill. In terms of clause 3 there is to be a transfer of a very substantial amount of money. I want to quote in this regard from the explanatory memorandum. It reads as follows—

In other words, it was transferred first of all from the Stabilization Account to the Exchequer Account, and from the Exchequer Account it is now to be paid into the Gold and Foreign Exchange Contingency Reserve Account—

As anyone can see from this clause, the amount involved is a very substantial one, namely in excess of R890 million. We should like to know what the actual losses are that have been sustained because this is simply an amount that is being transferred to that fund. We want to know what the actual losses are that have been sustained in respect of forward exchange contracts that have been concluded. We should also like to know what the basis is of all of these forward exchange contracts. Are they all simply in relation to trade or are there other contracts in respect of forward exchange cover? What is the exact situation? Here again we have a very substantial sum of money that has been transferred from Stabilization through the Exchequer to this fund. When we consider the budget as a whole, this figure should have been taken into account as part of the budget picture as a globular one rather than dealt with in this fashion. This is a very large amount of money and, at the very least, we should like to have an explanation in this regard from the hon. the Minister. I think it is essential that we know what the position is.

There are other matters in regard to this Bill which my hon. colleagues will deal with in detail. There are only one or two to which I wish to refer in passing. The first of these is the provision in regard to the extension of time for the State Trust Board to sue individuals. This obviously has our support. However, I do feel that this matter must be finalized sooner or later. I hope therefore that this will be the last extension and that the State Trust Board will be able to finish its work soon.

I have already referred to the question of the Suspense Account and the railway situation will be dealt with by one of my hon. colleagues as will also be certain matters relating to the Mint. We do not want to oppose this Bill but we do want to give the hon. the Minister the opportunity to give us the necessary undertakings in regard to the bonus bond scheme which we believe to be necessary in the national interest and in the interests of the finances of the country.

Order! Will the hon. member for Yeoville indicate to me which clause in this Bill deals with bonus bonds?

Mr. Speaker, this Bill deals with money that requires to be raised for the State Exchequer. In terms of the budget that was presented, an amount of R150 million is intended to be raised from bonus bonds for the use of the fund. If, for example, that amount of R150 million is not raised, there may be difficulty in meeting certain of the other financial commitments contained in this legislation. Going through the Bill we have, firstly, the position in regard to a transfer from the State Revenue Account as at 31 March 1983. If that amount of R150 million is not available, then one will not be in a position to transfer that amount …

Now you are taking a chance.

… and therefore that amount is going to have to be reduced. [Interjections.] Mr. Speaker, is the hon. the Minister of Law and Order as efficient in regard to financial matters as he is in regard to matters of law and order? [Interjections.] I am dealing with clause 1 on that basis. I am also dealing with the provision that deals with the further transfer of moneys, namely clause 3. I am dealing also with the ability to transfer funds in terms of the latter clauses which relate to the S.A. Transport Services because if we do not get this R150 million, then we may have to reconsider that situation. That is why we regard this as being relevant to a financial aspect of the Bill.

But the hon. member cannot point out any provision which refers to bonus bonds?

That is absolutely correct, Sir.

Does the hon. member not think that this can be more appropriately dealt with during the Third Reading of the Appropriation Bill, the debate on which is due to start tomorrow?

No, Sir, and I shall tell you why. Traditionally one does not oppose the Third Reading of the Appropriation Bill because then the finance of the State may come to an end. One is entitled, as I understand it, and this is my submission to you, before one passes a Bill, to ask for undertakings from the hon. the Minister concerned. The hon. the Minister of Finance is in charge of the Bill, in charge of this matter and in charge of the State’s finances. This is a financial matter and it relates to appropriations of the State. We therefore ask him for an undertaking. That is why we use this mechanism as opposed to the Third Reading because should the Third Reading be turned down, the country would come to a stop. One therefore never votes against the Third Reading of the Appropriation Bill.

My trouble is undoubtedly that there is nothing in the Bill dealing with bonus bonds. I think the hon. member can ask for this undertaking during the course of the Third Reading debate on the Appropriation Bill which will commence tomorrow.

Sir, it is true that technically one can ask for the undertaking during the Third Reading debate, but one does not do it because there is a tradition that one does not do it. It is a convention of Parliament that one does not vote against the Third Reading. That has been the tradition in Parliament for much longer than I have been here and, with respect, than you have been here. It is never done. It is true that the words “Bonus Bonds” are not used in the Bill, but Bonus Bonds are only relative to a method of raising finance and in the budget one sees …

[Inaudible.]

I think that the Minister of Finance actually does a better job than the hon. the Minister of Law and Order and therefore the hon. the Minister of Law and Order should keep out of this.

Order! The hon. member for Yeoville should not be put off so easily.

No, Sir, I am not put off; I actually love his interjections because they are so easy to handle. [Interjections.]

All I am saying is that Bonus Bonds are to raise R150 million this year. R800 million was originally raised and I think there is close on R600 million still owing on them. If that were to be repaid, we could not pass any of this.

I have listened carefully to what the hon. member for Yeoville has said. If we have to deviate from ordinary procedure, then we must do so, but I cannot allow his amendment as it is not relevant to the subject matter of this Bill.

Mr. Speaker, I should like to join the hon. member for Yeoville in welcoming back the hon. the Minister of Finance upon his return to this House after his recent illness.

In these financial debates in particular are the PFP and its spokesmen always trying to toss in a few “hardy annuals”. There is, for example, the matter of inflation, appeals for a lowering of the GST, the exclusion of food from the GST and joint taxation for married couples. There are the representations in regard to “Suspense Accounts” to which we have to listen, and now there is also the matter of bonus bonds. However, I shall abide by your ruling, Mr. Speaker, and refrain from discussing bonus bonds. All I want to say is that we have had full-scale debates on all these matters in the past and every time one analyses these debates one comes to the conclusion that the hon. members have only one thing in mind, namely to try to make political capital out of them. If one analyses these matters carefully, one finds that they do not make sense. These are merely political ploys they are resorting to. The hon. member for Yeoville referred to clause 1(1)(a) of the Bill, whereas I want to refer to the concluding sentence of the Second Report of the Select Committee on Public Accounts. It reads as follows—

This legislation is contained in clause 1(1)(a). Whereas the average monthly expenditure on the Special Defence Account was R110 million during the few months preceding March 1982, in March 1982 the expenditure suddenly rose to R390 million. There were two reasons for this abnormal expenditure. In the first place, the economic recession in the RSA and in the rest of the world led to there being reserve capacity in factories. This, coupled to the high interest rates on stock on hand, resulted in a tremendously high rate of delivery of back orders. For this reason there was a stream of invoices for payment, on which special rebates had been offered. Although Armscor had the right to allow these accounts to stand over for a month and only effect payment in April and, as the hon. member for Yeoville alleged, this would have resulted in a sort of suspense account and they need only have been paid during the new financial year, this would have led to Armscor not being able to benefit from rebates. As a matter of fact, the Auditor-General indicated that if Armscor could get the rebates, the accounts had to be paid, otherwise they would have to be reported as a loss to the State.

In the second place, the weakening position of the rand during this period was also an important factor. The rate of exchange of the dollar as against the rand dropped from 1, 25 on 1 April 1981 to 0, 95 on 31 March 1982. It is therefore clear that the overdraft on the Special Defence Account resulted from an unexpected increase in the cash flow in March 1982, that it was a shortage of cash and not that the budget was exceeded in any way. On page 55 of the evidence on this matter placed before the Select Committee one finds that the hon. member for Yeoville elucidated this clearly.

Unfortunately the amendement to the Special Defence Account Act, which was already recommended by this Select Committee during the 1981-’82 financial year only came into force on 1 April 1982. This amendment legalizes such an overdraft on the Paymaster-General’s account resulting from a shortage of cash until the first opportunity it can be approved by Parliament. This problem will not therefore be experienced in the future.

During the last week of March 1983, at the request of the Chief of the Defence Force, the hon. the Minister of Finance, approved that commitments up to a maximum of R233 million be entered into by the Defence Force. As was proposed in the budget speech, the hon. the Minister of Finance is using the surplus in the State Revenue Account, inter alia, to finance this extraordinary defence expenditure. Clause 1(1)(b) puts this proposal into effect.

Clause 2 also arises from the recommendations in the Second Report of the Select Committee on Public Accounts on unauthorized expenditure. After the Select Committee had investigated matters, it recommended unanimously, I repeat unanimously, that an amount of R28 055 237, 30 be made available by Parliament, in the first place, under Vote 17—Water Affairs, Forestry and Environmental Conservation—which receives R3 336 442, 16; in the second place, under Vote 19—Defence—which receives R10 976 468, 92; and in the third place, under Vote 20—Agriculture and Fisheries—which receives R13 742 326, 22. As far as Water Affairs, Forestry and Environmental Conservation is concerned, two components in the main resulted in the appropriation being exceeded. The first component was an over-estimation of R711 000 on internal levies. It was estimated that timber valued at R800 000 would be utilized by the Water Affairs division, but for various reasons timber valued at no more than R89 000 was supplied, and this gave rise to the appropriation being exceeded by R711 000. The appropriation was also exceeded by R2,6 million owing mainly to late adjustments to machine rentals, increased prices of rations, etc., as well as increased tariffs for rail transport, Government motor transport and lodging allowances. There was also flood damage in the Cape and a drought in Natal.

Under Defence the appropriation was exceeded because one cannot budget for unforeseen operations and price escalations. The 1981-’82 financial year was also the year of the major operations, namely Operation Protea and Operation Daisy. The amendment requiring that the increased cash flow against larger commitments has to be authorized by Parliament only came into effect on 1 April 1982, as I have already mentioned, and just as in the case of clause 1(1)(a), it should no longer be a problem.

Under Agriculture and Fisheries an inexplicable computer error of approximately 10% was made in the cost investigations division in connection with the subsidy on bread. When the error was spotted, it was no longer possible to make provision for the additional expenditure, because the additional expenditure had already been approved by Parliament and there was insufficient time and opportunity before the end of the financial year to submit a second additional appropriation. Now I found it interesting that the hon. member for Yeoville had such a lot to say about the bread subsidy. We argued about this matter at length. The evidence is there and the Treasury has stated unequivocally that there cannot be any doubts about the merits of the case. In addition, the hon. member for Yeoville is now kicking up a tremendous fuss about this error which crept in. When we had to decide whether we would authorize this amount or not, the hon. member for Yeoville voted for it with the other members. But now he is kicking up a fuss about it.

I should like to support this legislation.

Mr. Speaker, I should like to join the hon. member for Yeoville in saying how pleased I am to see that the hon. the Minister of Finance has recuperated sufficiently to be able to return to the House. Nothing in this life is worth as much or is as precious as one’s health. When one no longer enjoys good health one cannot buy it back with all the money in the world. For that reason we are both glad to see that the hon. the Minister is looking so well.

This Bill is introduced in Parliament every year to implement certain provisions, inter alia certain things envisaged in the budget and also, as the hon. member for Smithfield pointed out, certain resolutions adopted by the Select Committee. The position is therefore that these things have either been discussed thoroughly during the Second Reading of the budget, or on the Select Committee. We therefore have no problems with the Bill. We accept it.

However, I should just like to draw attention to one clause and today I want to express my thanks, particularly as far as the hon. the Minister of Transport Affairs is concerned. We welcome him back in South Africa after his visit to London. I am referring to clause 14 of the Bill. The proposed section 27C(1) reads—

Sir, I myself have asked for this in the past. I do not like the idea of one Government department owing money to another department, whereas it can only be considered to be capital. I therefore want to express my thanks for this; I think it is a very good step.

Another item is the R18 320 000 paid to the Deciduous Fruit Board for the facilities they introduced here in Cape Town harbour. I think it is fitting that we express our appreciation for this.

For the rest, we support this Bill.

Mr. Chairman, I want to refer to clause 14 of the Bill, in terms of which provision is being made for the transfer of certain funds from the Treasury to the S.A. Transport Services. This is a sound principle, but I think we should consider the size of the amount involved, namely R525 million. We have to bear in mind the size of this amount when we consider the total loans of the S.A. Transport Services. The S.A. Transport Services’ accounts as audited on 31 March 1982 showed a total investment at that stage of R11 500 million, of which R6 000 consisted of loans. In this case loans from the Treasury total R4 600 million and I want to express my thanks to the hon. the Minister of Finance that R2 300 million has already been written off in the form of loans to capital. The total interest paid annually by the S.A. Transport Services on these loans is in the vicinity of R681 million. Of this amount R580 million goes to the Treasury. Now we have this added advantage that R51 million will be saved annually. This R51 million is, however, a drop in the ocean in comparison with the losses the S.A. Transport Services is suffering. In this connection the Minister has already budgeted for a loss of R750 million on passenger services for the 1983-’84 financial year. Consequently I do not think we should be ungrateful for this amount of R525 million which is being transferred to the S.A. Transport Services as capital and the resultant R51 million which will be saved on interest. What is causing a problem is that when the economy is in a recessionary phase there is no possibility of internal subsidizing. That is why the S.A. Transport Services will close this financial year with such a tremendous loss. I want to ask the hon. the Minister of Transport Services to offer the hon. the Minister of Finance a trip on the Blue Train, and then, as regards the losses on the passenger service account which are at present increasing steadily and can no longer be borne by the other services in the department, we shall ask the hon. the Minister of Finance to transfer more money to the S.A. Transport Services in this way next year. Perhaps we should also offer the Deputy Minister of Finance such a trip and then hope for a phenomenal increase in the amount transferred in this way.

When railway lines are being considered in future I should like to ask the Minister of Finance—here I am thinking in particular of the railway line which is going to be built to Khayelitsha and also to Onverwacht near Bloemfontein at some time in the future—for clear ratio to be worked out between the hon. the Minister of Finance’s department and what will have to be recovered from the S.A. Transport Services and the passengers in order to convey passengers over that distance. I do not think we can expect these losses to be covered by internal subsidization alone.

In the proposed section 27D(1) an amount of R18 320 000 is being transferred by the Treasury to the S.A. Transport Services in connection with the erection of a refrigerated container holding shed at Table Bay Harbour for the Perishable Products Export Control Board. This money does not go directly to the S.A. Transport Services, but is an indirect subsidy to the deciduous fruit-growers of the Western Cape.

Sir, I take pleasure in supporting this legislation.

Mr. Speaker, the matter on which I wish to address the House is the unauthorized expenditure of the Department of Agriculture of approximately R14 million. In early March 1982, according to the evidence—

The department investigated the matter and found that a cost overrun of R26 million could be expected in respect of the bread subsidy for the 1981-’82 financial year, a year which had already passed. I quote further—

That is a lot of money, Mr. Speaker. The department immediately approached the Treasury with a request for the additional funds because it was still “’n rukkie voor die einde van die boekjaar”. The Treasury refused on the grounds that they were not prepared to put a second additional estimate before Parliament, and said the amount would have to be regarded as additional expenditure. Then followed a frantic searching of the department in order to find whether there was any loose change lying around to try to make this issue look respectable. In this manner the amount of unauthorized expenditure was reduced to between R13 million and R14 million.

As I will show just now, if the department had found its problem earlier, there would have been no difficulty in getting this amount placed on the additional estimates. That is an interesting sidelight to the whole issue. The matter of unauthorized expenditure of R13 million was referred to the Select Committee on Public Accounts. This body called for evidence from senior officials of the department.

The amount of the bread subsidy is budgeted annually. When the wheat and bread prices had been established a further estimate of the amount of the subsidy was made. Sales of bread are monitored to ensure that the amount provided for the subsidy is sufficient. The Wheat Board is responsible for the administration of this fee. It establishes the amount of the subsidy in co-operation with the department and, through an inspector, it pays this amount to the baker and also checks the baker’s records.

Three divisions of the department are involved in this—cost investigations, marketing administration and finance. The program budgeting system is being used and the Director-General informs us that the staff handling subsidies has the necessary knowledge. In fact, he even says there are people who have a sixth sense in respect of the subsidy issue. The payment of the subsidy was based on bread sales and should not be confused with projections made. In this respect I refer to the evidence given by Dr. Immelman, which is to be found on page 35 of the report.

The department’s accounting and statistical work is done on their own computer, and this computer is described as one of the biggest in the country. In evidence before the Select Committee witnesses indicated that there were certain difficulties in establishing the amount of the subsidy when they were budgeting for it. The relative price of brown bread and white bread is unknown, and this can affect the relative demand. There is also the problem that the price of wheat might not be known when that subsidy is established, and then there is also the question that the price of wheat and the price of bread might not be established simultaneously. That actually occurred in the year to which I am referring.

What must also be remembered, however, Mr. Speaker, is that it was not maintained anywhere in the evidence that these difficulties were the cause of the R26 million overrunning expense that we are now considering. This brings us to an analysis of the explanation for the R26 million excess expenditure. The Director-General rightly says in a circumstance like this that the first responsibility is to establish what caused the problem—it is incidentally interesting that one and a half years later they still do not know what caused the problem—and the second is to ensure that it does not happen again. His explanation is that in the first place an error took place in the “Departement Kosteondersoeke”. But he was far from specific. “Daar is bepaalde vermoedens”, he says, “maar die feit is dat ’n berekeningsfout van ongeveer 10% plaasgevind het”. The Department suspects that it happened in August and was carried forward in the accounts, but it was not even picked up in November when the whole expenditure was reviewed and the budget was reviewed, because at that time the budget is checked and reviewed for the total year. Even in mid-February 1982, right at the end of the financial year, there was still no indication of excess expenditure.

The explanation is entirely unsatisfactory, even to the officials who make it. This comes through clearly in the evidence. To quote Dr. Immelman again what he says is that because the error which crept in was approximately 10%, the suspicion exists that it originated in a misunderstanding concerning the weight in kilograms and the number of loaves. When pressed to explain how a misunderstanding of this nature could occur when both the weight of the wheat and the number of loaves is known, the doctor replied that it was quite inexplicable. This is fifteen months after it all happened. There is unauthorized expenditure of R26 million and we are told: “You will understand why the suspicion now exists that an error crept in with the kilograms”. That gives a sinister character to these kilograms and this error. Surely more than a year later we should know the facts and we should no longer be concerned with suspicions. I cannot imagine how, when a mistake of this proportion occurs in any account kept anywhere, 15 months later we can still be concerned with suspicions.

Perhaps the most extraordinary aspect of all we have been told, however, is this statement—

R26 million of public funds have disappeared into thin air and we cannot get hold of the individual who was very intimately concerned with the whole issue to ask him some questions about it. Nowhere are we told that the records were examined and that the nature of this enormous error was identified. We are asked to content ourselves with “bepaalde vermoedens” and are told, when we pressed the issue, that it was “to-taal onverklaarbaar”. The more one studies the evidence, the clearer is it that the department does not know, and probably never will know, how the problem occurred. There is a more sinister explanation, and that is that someone does know and will not say. Evidence led—I refer hon. members to page 32 of the report—is that payment is based on loaves and not weight but that payment was not made against a statement on which the number of loaves were recorded; nor was payment made on anticipated sales but on actual sales. We are told—and this is a quote: “There was nothing wrong with the payment of the subsidy on the sales but there was something wrong with the projection so that we could not pick up what was going to happen in two or three months.” Can you credit it, Sir? I cannot believe it. This is a departure from the explanation that, because the total error was approximately 10%, it has something to do with kilograms and loaves. When it was pointed out that the explanation was for an incredible increase in the rate of subsidy over two months in that from approximately R32 million between 2 January 1982 and 23 February 1982 it increased by R14 million in the following week, Dr. Immelman asked: “Can you see how suddenly the tempo of payment increased?” But Mr. Nortjé remarked: “It appears there was a backlog”. It is a can of worms that we are looking at. The bakers were being paid the bread subsidy every day. I quote again—

Dr. Immelman also says—

Are we to assume that the bakers spent 11 months of the year being short-paid and never disputed the matter? Certainly not like any private enterprise I have ever heard of. The only alternative is that there was a dramatic inexplicable country-wide increase in the amount of bread that was eaten in the last two months of the year. This of course is arrant nonsense. It could not have happened. Why did the computer’s running total conform with the subsidy paid for 10, 5 months of the year so that it was not even thought necessary to revise the budget in November, and then spew out vast amounts of bread that were apparently eaten in the last two months?

The state of the department’s accounting situation gives cause for serious alarm. Why did it not know of the other compensating savings it had made at the time of its application to the Treasury to have R26 million placed on the additional estimates? After all, it had already asked Parliament to sanction additional expenditure, in terms of the additional estimates, of R15 million. How had it done these calculations? R1 million was for the deciduous fruit industry, which is given as one of the sources from which the savings came, which enables it to reduce the R26 million overrun in expenditure to a R13 million unauthorized expenditure.

It is a cover-up.

The nature of these savings is interesting. Mr. Nortjé states—

If it was available to reduce unauthorized expenditure of R26 million why was it necessary for the department to ask for R15 million in additional estimates, which it got, before it was aware even of the R26 million deficit?

The evidence paints a frightening picture of people playing dangerous games with a technology which they do not understand. I quote again from the evidence as stated by a witness—

A witness explained—

Everybody sounds so helpless. Never mind how many loaves we sell, never mind that the bakers are satisfied with the payment they are getting in subsidies, the computer suddenly says that millions more loaves of bread were sold and we pay. One gets the impression that the department gazes at this machine, its magic computer, like Snow White’s stepmother saying: “Mirror, mirror on the wall, send me another financial windfall”. Nobody can be satisfied with the grotesque explanations we have received. There are questions that must be asked. That side of the House should be as keen to get the answers to these questions as we are on this side.

Firstly, does the Auditor-General’s certificate that the subsidy was for bread sold show monthly sales? Secondly, how did March 1982 sales compare with the average for the rest of the year? Thirdly, what was the monthly variation throughout the year in respect of bread sales? Fourthly, what was the amount of subsidy paid out in each month of the year, not subsequently but during that month? Fifthly, on what grounds can the Treasury possibly say that this matter has arisen for technical reasons? Sixthly, how can the Treasury say it has no doubts about the merits of the claim. According to the evidence of the department’s own officials, the matter is “onverklaarbaar” but the Treasury says that it has no doubts about the claim. The Treasury cannot know. Seventhly, how is it possible for Dr. Immelman to state that there was no “eie gewin” or purposeful neglect when he finds the situation completely “onverklaarbaar”, and obviously has not the slightest idea as to what happened?

Mr. Speaker, no doubt the hon. the Minister of Finance has received good wishes from many of his own members on his return to this House. On behalf of the members of my party I, like the other Opposition speakers on finance, also welcome him back. I sincerely trust that he has overcome whatever malady he had. It could, of course, be as a result of this wonderful weather that the Cape is experiencing. As Natalians, we have not seen rain for some length of time now and while the rain here may put a large number of people in bed, we would certainly not mind it up in Natal now! [Interjections.]

The hon. member for Walmer discussed at some length the evidence that was led before the Select Committee on Public Accounts and which is contained in its report. As the hon. member for Smithfield, I think, said at its meeting on 15 March earlier this year, after discussing at great length the matter which the hon. member for Walmer raised, the Select Committee agreed to approve the amount as unauthorized expenditure to which the hon. member referred. This means that after listening to the evidence the Select Committee decided in its wisdom to approve that expenditure as being unauthorized. Having said that, however, I do believe that the matter raised by the hon. member for Walmer—and in some detail—does give one cause for a considerable degree of concern. We are dealing here with a State subsidy to those people who purchase brown bread. This is taxpayers’ money and I should like this opportunity of establishing the amount of that bread subsidy. If I remember correctly I think it is in the neighbourhood of some R90 million. This is a considerable amount of taxpayers’ money that is paid out in respect of a subsidy to the people of South Africa generally. I am not referring here to the poor people only. Everybody who eats brown bread is subsidized very heavily to the tune of a total amount of some R90 million per year. I emphasize this fact because I think that all too often the public are inclined to take certain things for granted. In fact, a large number of them do not even know that certain items that they consume are being heavily subsidized by taxpayers. I do believe that the department concerned needs to take a very good look at the administration of this subsidy and the way its computer is being managed because I do feel, as the hon. member for Walmer has said, that there is great cause for concern in this particular regard.

The Bill before us contains many different provisions and I should like to refer to only two or three of these. We in these benches welcome clauses 5, 6 and 7 dealing with loans that are now to be granted to local authorities. These provisions are the result of many investigations. Local authorities will now have access to certain funds at rates of interest that are well below market rates in order to assist those local authorities in their capital expenditure programmes, and I do believe that this is going to be of great benefit to them.

I want particularly to refer to clause 14, which seeks to insert inter alia a new section 27C in which reference is made to an amount of R525 000 000 as a loan which the Treasury has made to the SATS and which is now to be converted into permanent capital. The hon. member Dr. Welgemoed said fairly correctly that this will save the SATS something like R51 million in interest per annum which will assist greatly in reducing the loss which the SATS is incurring at the present time. I think the significant thing here is that the total amount which is still owing by SATS to the State is to the order of R3 740 million which is creating an interest burden, calculated at the same sort of interest rate which will yield R51 million on R525 million, of roughly R374 million per annum. I believe the hon. member Dr. Welgemoed, if I heard him correctly, said that the interest burden was something in the region of R580 million. If that is correct, I think this bears a little bit of discussion.

On the one hand we hear from the SATS that they are running into a very heavy loss and yet we find that they are paying out in interest to the State—after all, the State owns the railways—to the amount of R580 million per annum. It is the equivalent of saying that a company is running at a tremendous loss, but its major shareholder is being paid a whacking big interest each year so that the is all right but the company is not. In order to correct that, the rates or tariffs which the company applies have to be increased so that the company can make a profit. One could say that were the State to convert this entire loan capital into permanent capital, in other words that it should become the so-called own capital in the books of the SATS, they would incur a saving in costs of about R580 million per annum and that could possibly wipe out their loss for this year.

I should also like to put this thought to the hon. the Minister of Finance and his colleague the hon. the Minister of Transport Affairs that we do know that the cost of operating the SATS has increased considerably in recent years because of the change in the form of depreciating its assets. We have converted to the higher replacement cost system and if one studies the books of the SATS, one finds that this interest burden and the depreciation burden have risen considerably in recent years, probably out of all proportion to increased capital investment in the SATS.

During the debates on the budget of the SATS—I mention this for the information of the hon. the Minister of Finance—I queried as to whether this higher replacement cost depreciation factor was really legitimate in the light of the way in which the SATS is structured. There is a thing which is called a gearing ratio which means that the amount of depreciation charged on the higher replacement cost depreciation factor is reduced according to the amount of own capital in the business. The amount of R525 million is now converted into own capital and I therefore sincerely hope that the hon. the Minister of Transport Affairs is going to adjust his books so as to show a saving in depreciation on higher replacement costs.

The point I want to make to both those hon. Ministers is that should the State convert this total amount of R3 740 million on what is at present loan capital from the State into own capital of the SATS and then adjust the depreciation rate and not pay interest, one might find the books of the SATS look very good indeed. As I have mentioned before I am an engineer and not an accountant, but I do believe that if one looks at company reports today and one studies them, one finds often that they reflect a tremendous loss being incurred, but if one studies them still further, one finds that the company concerned, in this case the SATS, is getting wealthier and wealthier in terms of assets. Who pays in this particular case? It is the public who pays. I believe that the fact that this has resulted in faster escalating railway tariffs could be contributing to our inflationary spiral. While we welcome the conversion of loan capital to own capital, I just want to put these few points to the hon. the Minister in the hope that it may resolve some of these loss problems.

Mr. Speaker, the hon. member for Yeoville moved an amendment which you, in your wisdom, ruled out of order, but I would like to appeal to the hon. the Minister of Finance to clear up the matter of bonus bonds. I, like the hon. member for Yeoville and I am sure all hon. members here …

Order! I am not allowing any discussion on this topic under this Bill.

Very well, Mr. Speaker. However, I think the hon. the Minister of Finance has got the point.

It was mainly the matter of SATS loan capital which I wanted to discuss. Having done so, I want to say that we will support the Second Reading of the Bill.

Mr. Speaker, with reference to what the hon. member for Amanzimtoti had to say, I just want to say that this redemption of interest in regard to a capital sum of R525 million for the S.A. Transport Services represent a tremendous boost. The total of R3 700 million that the S.A. Transport Services has in the form of loans cannot be summarily be written off by the hon. the Minister of Finance. We pay just less than R400 million in interest, and it is not practicable for any Minister of Finance to write off so much for us. Since 1910, several hundred million rands have been written off for the S.A. Transport Services because we have had to render uneconomic services for the State. I rise merely to convey my sincere thanks to the hon. the Minister of Finance. We arrived at the figure of R525 million by way of negotiation. This will allow the S.A. Transport Services to breathe a little easier. I would have been pleased if it had been more, but I must also be reasonable to my colleagues. When we deal with the budget next year I shall reply to the hon. member’s question on depreciation. As the hon. member requested, these factors will be taken into account in calculating the depreciation. The conversion of R525 million into permanent capital will entail a saving in interest of R51 million for the S.A. Transport Services which will put us in a more competitive position as far as uneconomic services are concerned. I should like to thank the hon. the Minister and his department and the hon. members who are grateful about this.

As far as the refrigerated container holding shed is concerned, this is a write-off in respect of the deciduous fruit industry. This is a kind gesture on the part of the Government in an attempt to help the deciduous fruit farmer out of his dilemma. For that, too, I thank the hon. the Minister of Finance.

Mr. Speaker, I am pleased that the hon. the Minister of Transport Affairs is very happy with what his department has received. I welcome him back to South Africa and to the House.

Clauses 8, 9 and 10 of this Bill, dealing with the S.A. Mint, give legislative effect to measures that were mentioned under the Finance Vote and which were provided for in the estimates of expenditure. They provide for a new format for the Coin Manufacturing Trading Account. This was explained in the explanatory memorandum on the Finance Vote, in which it is said—

Annexure A of the programme sets out in some detail the expenditure estimates, and for that matter also gives a revenue figure. This was in the past shown under programme 10 in the Vote of the Department of Finance, but it is now included under the wider programme of “Related Services”, while the details are given in an annexure.

I should like to ask the hon. the Minister whether it is the intention to provide a similar annexure in years to come or whether it was provided in this form this year merely for the purpose of showing the effect that the new format will have. So it is merely a question of whether it is going to be repeated. If one looks at this annexure one sees that the items of expenditure are given in a certain amount of detail under headings such as “management”, “coin manufacturing”, “die and medal products”, “preparation and sale of gold and silver”—which apparently is done to supply jewelers, dentists and industrialists—and “provision of stores”. However, the anticipated revenue on the Vote is merely given as a globular sum and I think it would be useful to have that anticipated revenue broken down into some categories as well because the activities under this account are going to be widely divergent and not necessarily closely related to each other.

It is also gratifying to see that in the last financial year there was an anticipated surplus of R22 million and this year there is an anticipated surplus of R28 million, which is something like a 27% increase on a total revenue of R98 million. The explanatory memorandum on the Vote states further—

That is hard to take entirely at face value because in the recent past, the contrary has tended to happen. The hon. the Minister and the Mint have gone out of their way to withhold information and so stifle discussion on a matter of considerable and valid public concern, namely the sale of the 60 proofsets of 1980 mini Kruger rands, a matter which would have a direct bearing …

Order! The hon. member will note that the proposed subsection (1) in clause 10 of the Bill refers only to the fact that—

Sales from the Mint are not under discussion now.

Mr. Speaker, may I address you briefly on that point?

Yes.

Clause 9 in particular sets out a whole new method of accounting for the S.A. Mint. In the past it was done in a certain way, and the whole purpose of this now is to set up a Coin Manufacturing Trading Account. Detail is given in clause 9 of what is going to be provided for within that account. What I am talking about, and in terms of the explanatory memorandum, is what information is going to be available and how much use it is going to be to Parliament to account for the way the moneys are spent and the income received on that account. It is therefore in the context of the Coin Manufacturing Trading Account, which has exactly to do with expenditure on producing coins and the revenue received on selling those coins, that I am referring to, and I am concerned that if past practices are continued, what control this House will have and what information it will receive on those activities, activities about which we are being asked to amend the way in which they are reported on to this House.

Mr. Speaker, may I direct your attention to subsection (3) of the proposed new section 6, where it states that the account shall be audited by the Auditor-General. As clause 9 deals with the South African Mint I think the argument advanced by the hon. member for Cape Town Gardens is relevant.

The hon. member may proceed.

My concern about this is not a question of irrelevance or one of triviality. It concerns control of the account which it is proposed to be set up. The effect of what took place in September 1980 may have a direct effect on an account such as this. The 60 sets were sold for R473, 83 each to certain selected persons whose names have not been disclosed. For that sale the S.A. Mint received R28 429, 80. The market value of these sets has increased rapidly. In April this year, less than three years after they were launched, one set was sold for some R45 000—a profit of nearly 10 000% for some lucky beneficiary.

In total these sets are now worth more than R2, 5 million and it is the taxpayers who have lost out in that the State Revenue Account did not benefit at the time of the sale. Section 13 of the South African Mint and Coinage Act specifically precludes anyone other than the Mint, or to the order of the Government, from making or issuing coins. The Minister and the Mint are custodians of a very important and valuable right in that respect. The manner in which the 60 proof sets of 1980 mini-Kruger rands were sold was at best irresponsible and very poor management. However, the cover-up involved in witholding the names of the recipients is a disgrace.

There are certain other aspects of the Bill which I should like to draw attention to. This Bill makes provision for a coin manufacturing trading account and we ought to be asking ourselves what sort of control there is going to be and what accounting procedures are going to be followed in connection with this account. In this connection I should like to refer to three replies I received to questions I put to the hon. the Minister. The first question I should like to refer to is question No. 1 of 22 June this year. I asked the hon. the Minister—

To that the hon. the Minister replied that he did not know. Then, on 24 August 1981, I asked the hon. the Minister various questions relating to the guests at that occasion. The Minister replied—

The third question I should like to refer to is question No. 262 of Monday, 7 September 1981. I asked the hon. the Minister who the invited guests were, to which the hon. the Minister replied inter alia as follows—

Mr. Speaker, a disturbing question arises from this. In 1981 the hon. the Minister had all the information but was willing to disclose very little. In June 1983, less than three years after the launching of these coins in September 1980, the information was not available. That is why the hon. the Minister, when asked the question, said he did not know. So one must assume that between September 1981 and June 1983 the records of who bought those 60 sets have been destroyed. I find this most disturbing, and a number of questions arise from it. For instance, does the Mint destroy its financial records after less than three years?

Are you inferring that I am destroying them? [Interjections.] You are out of order anyway.

That sounds like contempt of the Chair.

My question is: Does the Mint destroy its financial records after less than three years? If it has been done in the past, is it, once this proposed trading account comes into operation, the intention to continue doing so? Is this normal practice for the Mint, or was a special procedure followed in the case of the sale of the 1980 proof mini-Kruger rands? If it is not normal, who requested it and who authorized that a special procedure be followed in that case? On a wider front let me ask: Are other Government departments also permitted to destroy financial records less than three years after a transaction has taken place?

This is a crucial matter—in general because the whole basis of Government accounting practices is being brought into question and, specifically, because if any person managed to obtain a number of those sets he would stand to make profits amounting to hundreds of thousands of rand.

So the Minister owes this House and the people of South Africa some very clear and explicit explanations. The public was taken for a ride to an extent of some R64 million in the Information scandal, a matter which was not satisfactorily handled. The State Revenue Account has suffered because of the way in which the 1980 proof mini-Kruger rands were sold. As a colleague of mine has pointed out, the public has been misled over the defence bonus bonds and are justifiably angry about it. The Government should remember that it is here to serve the people of South Africa and not vice versa. The public are entitled to be kept fully informed at all times, and the Government should account for every cent of taxpayers money that it spends.

Mr. Speaker, in his day and age Solomon said that what upset him most in life was a nagging woman. This story the hon. member for Cape Town Gardens keeps raking up can be compared to an incessantly leaking roof.

The same thing was said about the Information scandal.

The hon. member for Cape Town Gardens has repeatedly had it pointed out to him that he has every opportunity of referring this matter to the Advocate-General. That opportunity is still available to him today. Instead of doing that, he repeatedly raises the matter here in the House and, what is worse, each time bases his arguments on the false premises of what the “market value” supposedly is. Surely that has nothing to do with the price of eggs. The question is: Who suffered any loss as a result of the transaction?

The taxpayer did.

Nonsense, absolute nonsense. The premises on which the hon. member bases his arguments are wrong. Mr. Speaker, I have known the hon. member for Cape Town Gardens for quite some time now; I even knew him as a member of the provincial council. If that hon. member has one talent that is really remarkable, it is his talent for raking up the past. Even though the hon. member is not a member of the Select Committee on Public Accounts, he has tried, by way of members who are indeed members of that committee, to broach this matter there. I really think the hon. member has now wasted enough of the time of this, the highest Chamber in the country, with this story of his that he repeatedly rakes up here. The channel he ought to have recourse to, i.e. that of the Advocate-General, is open to him. This question of the Kruger rands is obviously dear to his heart, but only for one reason. He is not concerned about the public’s money at all. He is concerned about the fact that this story of his may perhaps not generate enough of a wonderful sensation. Besides, it is not an argument of any interest to the Select Committee. It pertains to a financial year that is long gone. I therefore really want to appeal to the hon. member for Cape Town Gardens to drop this argument of his now.

†In the second instance, however, I must point out that I listened with amazement to the hon. member for Walmer.

Yes indeed!

I thought this was really a debate in which to love more. Instead the hon. member for Walmer came along with a savage attack on the hon. the Minister as a result of the situation in respect of the bread subsidy. [Interjections.] According to the hon. member for Walmer he had discovered, what he referred to as a can of worms. I am surprised that he did not use that same argument in the Select Committee on Public Accounts, where this very matter was discussd ad nauseam. What is so very interesting to me, Mr. Speaker, is that the hon. member for Walmer as well as the hon. member for Yeoville, the hon. member for Edenvale and the hon. member for Amanzimtoti—although the latter hon. member appeared to be more satisfied when he spoke here in the House earlier today—all agreed with the decision of the Select Committee on this particular aspect.

They also supported it.

But read the evidence and you will see that we queried the very aspects that we are querying now. We still have not been given a satisfactory answer to that.

Mr. Speaker, I now want to tell the House why this matter is being raised here again today. I do not have the slighest doubt that the hon. member for Yeoville and the hon. member for Walmer want to make cheap politics out of this.

R26 million is very expensive politics. [Interjections.]

I have not the slighest doubt, Mr. Speaker, that that is the only reason why those two hon. members broached the matter here again today. If one could only bring home to them that in this situation, which is perhaps an unfortunate situation, not one cent of State funds has been wasted. No one who was not entitled to do so, pocketed a single cent in State funds. [Interjections.] In regard to the whole question of the bread subsidy, perhaps I should just tell the hon. member for Amanzimtoti that the subsidy does not amount to R90 million, as he said, but in fact more than double that amount. It is closer to R190 million than to R180 million that is paid in the form of a bread subsidy.

R190 million, yes. That is correct.

That is one of the biggest food subsidies paid by the Government. There is another statement I should also like to make. In spite of the subsidy paid on bread, it still remains the cheapest staple foodstuff in South Africa, and probably throughout the world. For 35 years now the Government has gone out of its way to make staple foodstuffs available to the public as cheaply as possible.

That is cheap NP propaganda.

What I find so very interesting, however, is that hon. members raised this matter in the Select Committee, agreed with the eventual decision there, and yet once again raise the matter here in the House, merely in an attempt to make political capital out of bread sales. [Interjections.] In their attempt to make political capital out of our country’s staple foodstuff is, I believe, absolutely scandalous.

Mr. Speaker, will the hon. member for Paarl kindly tell the House what, according to him, caused the error?

I should very much like to get to that, Mr. Speaker. I should very much like to answer that question by the hon. member for Yeoville. [Interjections.] I just want to try to explain to hon. members how this bread subsidy works.

That does not answer my question. [Interjections.]

The hon. member for Yeoville wants me to answer his question, Mr. Speaker. I would very much like to answer his question. Knowing him as I do, however, I realize that one has to do a little explaining. [Interjections.]

At the beginning of the year—or actually as early as the end of the previous year—the budget is submitted by the department itself. Then a Part Appropriation is submitted, followed by the main Appropriation. In that appropriation an amount is approved—it has happened again recently—that can be employed to subsidize bread. The Wheat Board’s financial year closes on 30 September, and on 1 October the hon. the Minister of Agriculture, with the approval of the Cabinet, must announce a new wheat price. That price has a very specific effect on the price of bread. If, at the end of this year, one were to start making certain calculations to determine what next year’s appropriation would be, and if one were also to determine, at the beginning of the next year, what the additional appropriation would be, with the wheat price increased on 1 October of the succeeding year, something which has a fundamental effect on the bread price, there is only one place where that shortfall could be made up, and that is in the additional appropriation. When the Select Committee discussed this matter, I myself asked why that shortfall of R26 million had not been made good in the additional appropriation. The very straightforward answer to that was that the additional appropriation is also drawn up quite some while before the end of the financial year. It was therefore impossible to rectify the situation at that stage. Hon. members must also remember that this is a matter that has to be monitored on a day-to-day basis.

There is another very troublesome factor, and that is that there are many parties involved in this whole matter. Each month bakers must furnish returns indicating how much bread they have baked and sold, because they only receive the subsidy on the bread they actually sell, and not on the bread they bake. Some of the hon. members in the Select Committee asked: What about the bread that is eventually fed to the pigs? Here one is only dealing with bread that is actually sold. That is the first fact. Secondly the Wheat Board must process the figures and submit them to the Department of Agriculture, which in turn must submit them to the Treasury. It is a very lengthy process. There is also another problem, and that is that bread weighs 900 grams and not one kilogram. Under those circumstances problems can very easily crop up.

I want to tell the hon. member for Yeoville and the hon. member for Walmer that in the Select Committee I was completely satisfied that the procedures prescribed by the Treasury, in conjunction with the Department of Agriculture and the Wheat Board, create an ideal situation today in the sense that the position is monitored on a day-to-day basis so that one knows exactly what the position is.

There is a final point I want to make in this connection. On 1 October 1981—this is what this problem is all about—there was a fairly substantial increase in the price of bread. In the past five years, each time there has been an increase in the price of bread, what has happened is that the consumer has changed from white bread to brown bread. At present the white bread subsidy is 5 cents a loaf and the brown bread subsidy 13 cents. Ten years ago the situation was that for every three brown loaves consumed, seven white loaves were consumed, but today precisely the opposite is true, because for each seven brown loaves consumed, only three white loaves are consumed. So one can very well imagine that there could be a considerable difference if, in the course of any year, there were to be a fairly substantial price increase.

Is brown bread going to fall under the Coloured Chamber?

If the hon. member for Bryanston would eat more brown bread, he would be healthier. [Interjections.]

When do you intend getting round to my question?

If the hon. member for Yeoville still does not know the explanation …

Order! I want to point out to the hon. member for Yeoville that I am not going to allow interjections to be made, because it was a short question that was given a lengthy answer. The answer has been furnished. [Interjections.] The hon. member for Paarl may proceed.

Lastly I just want to refer briefly to the second portion of clause 14. The hon. member Dr. Welgemoed has already referred to it, and the hon. the Minister of Transport Affairs has already conveyed his thanks to the Minister of Finance in this regard. It deals with the refrigerated container holding shed in the Cape Town harbour. I should also very much like to refer to this on behalf of the deciduous fruit farmers of South Africa, and there are many of them. Let me just say, in passing, that there are 2 000 deciduous fruit farmers in South Africa supplying work to 150 000 people. Last year they exported products valued at R364 million, thereby making a very great contribution to South Africa’s balance of payments position. On behalf of the deciduous fruit farmers I should very much like to conveys my thanks for this concession. I do, however, want to bring it to the attention of the hon. the Minister of Finance and, in particular, the hon. the Minister of Transport Affairs, that the question of the payment of higher replacement costs in regard to this holding shed has not yet been cleared up. In the light of the fact that the holding shed, in its present form, will not be replaced, since there are much better methods of refrigeration in existence, it is accepted that those using the facilities are not going to be burdened with higher replacement costs.

Mr. Speaker, I should hereby like to support the legislation.

Mr. Speaker, first of all I should like to express my sincere thanks to all hon. members who were so kind as to welcome me back here, for their thoughtfulness and kindness. I appreciate it very much.

†I am operating more or less on one ear. I would therefore appreciate if hon. members would talk more from the right than from the left! [Interjections.]

You have never been able to hear from the left. [Interjections.]

However, I should like to reply to some matters. I should like to thank a number of hon. members for very constructive contributions. I think it is a great pity that from one or two hon. members we had extremely negative contributions.

As far as the Defence Special Fund is concerned, I want to say that the hon. member for Yeoville knows enough about this matter to know that this account is extremely carefully administered. It is fully audited and as far as we are concerned we believe this system is operating very well. There are ongoing discussions between the Treasury and the Department of Defence, not only about the operation of the Defence Special Fund but indeed about the financing of defence, which is a very heavy item. I take a close interest in this matter personally and I am satisfied that the matter is under very careful control.

*The hon. member for Yeoville also referred to Vote No. 25, the provision of service benefits and salary adjustments. I want to point out to him that an accounting officer is allowed to draw funds from Vote No. 25 only after he has employed the savings of all other programmes to finance any over-expenditure on salaries. This is no easy task. It sounds very easy in theory, but to project what the cost of a salary adjustment for the whole Public Service would be is no easy task. It is impossible to provide an absolutely accurate figure. Consequently it will be necessary to continue using this kind of method. However, this is being done very circumspectly and in a very responsible manner.

†I now come to the question of the bread subsidy. A great problem that I have and I think which the House is also experiencing, is that as long as I have been in the House there has always been a tradition that when a matter has been referred to a Select Committee—for example the Select Committee on Public Accounts, which is the most senior Select Committee of the House—and has been thrashed out there and hon. members have reached agreement and have decided to make a unanimous recommendation to the House, then surely as far as those hon. members on the Select Committee are concerned, that is the end of the matter. That has been the tradition right through. Unfortunately, however, we have seen it again today that hon. members who serve on that Select Committee, that very responsible Select Committee, who have the opportunity to hear evidence at length if they wish, make a decision and come to an agreement, after which they make an unanimous recommendation, only to raise the matter critically when it comes before the House afterwards. It makes the system of committees extremely difficult indeed. I sincerely trust that hon. members, particularly of the official Opposition, will think about this matter and realize how important it is that we should follow the famous traditions of this House.

In the case of the bread subsidy my information is that this matter was thrashed out fully in the Select Committee. Evidence was heard—this fact was referred to by the chairman of the Select Committee and other hon. members—and, as far as my information in a nutshell is concerned, there was no overpayment of producers and there was no overpayment of retailers. Neither was there any irregularity per se. Therefore, I am quite at a loss to understand why this matter which arose as a result of an unfortunate technical error should suddenly be brought up in this House now as if all sorts of things were wrong and as if there was no agreement at all in the Select Committee which condoned this expenditure. That is so. That is a fact. I really do hope that hon. members in this House will follow the famous tradition that we have of accepting a unanimous report by a Select Committee.

The hon. member for Yeoville also asked me about the forward exchange position. The Reserve Bank Act of 1944 requires the Treasury from time to time to make good losses incurred by the Bank in this respect. Section 17D(3)(a) of the South African Reserve Bank Act of 1944 provides as follows—

In some periods, of course, there is a credit balance in respect of the provision of forward exchange cover while in other periods there is a debit. Usually after a considerable time we weigh up the position, we look at the position of the Reserve Bank and we listen to their representations and then we make adjustments from time to time. This is what we have done. I should just like to give the following information to the hon. member for Yeoville because I think it will probably set his mind at rest.

*The Reserve Bank provides forward exchange cover in dollars at rates which vary from time to time and are based on the interest rate differential between local and overseas interest rates. Cover is made available to the public sector bodies for the period of all overseas loan transactions entered into in the interests of the country, for example, to Escom in respect of the loans it negotiates overseas in order to finance the erection of power stations, and so forth. Furthermore, to the extent that authorized currency dealers—i.e. banks—cannot clear them themselves, the Reserve Bank makes coverage available to the banks in respect of all commercial transactions—that is, both imports and exports—provided the term does not exceed 12 months. When the relevant accounts were created on the books of the Reserve Bank on 11 April 1978, there was a credit balance of R556, 4 million. At the end of March 1983 the various accounts showed the following balances: Initial credit in Gold and Foreign Exchange Contingency Reserve Account, R556, 4 million; Foreign Exchange Adjustment Account, R75, 8 million; and Gold Price Adjustment Account, R2 295, 2 million. These are all credits. Then we have a debit: Forward Exchange Contracts Adjustment Account, R3 783, 8 million. Therefore, the final debit in the Gold and Foreign Exchange Contingency Reserve Account is R892, 3 million. We had to take a decision and it was our opinion that it would be only right for us at this stage to compensate the Reserve Bank for that loss at that moment. This is a withdrawal from the Stabilization Account. The Stabilization Account was in a strong position and we felt that that was absolutely the correct step to take. I trust that I have now dealt with that matter effectively.

†I am sure that we are all very anxious that the State Trust Board should come to finality. They are doing their very best and I think they have done a very good job. They need a little more time and I have no doubt that they will bring this latest matter to finality just as soon as is humanly possible.

*I should like to express my sincere thanks to my hon. colleague, the Minister of Transport Affairs, for his kind words, and also to the hon. member Dr. Welgemoed who spoke about the same issue. The hon. member for Amanzimtoti also referred to it. In fact it is gratifying to have been able to afford the Railways that slight relief. I think it was done on a very reasonable basis. The hon. member Dr. Welgemoed did an excellent job of putting the matter in perspective.

I should like to express my sincere thanks to the hon. member for Paarl who really knows something about bread and suchlike products—I think he knows more about them than any other hon. member in this House—for the background he sketched for us as far as the bread subsidy is concerned.

†Sir, I am going to honour your ruling about bonus bonds. I agree with your ruling because I cannot see how that matter can be relevant here. All I want to say is that I think there has been a great deal of mischiefmaking about a scheme which has worked extraordinarily well and which has brought in nearly R900 million to the great benefit of defence. The greater part of that undoubtedly has gone to defence and I would deny any suggestion that we have misled anybody. I think it has been a very fine scheme. I can only deplore the adverse publicity that has been hurled about.

Finally there is the S.A. Mint. The Mint is a very fine organization. The director of the Mint has an international reputation and is very highly regarded. I think he is doing a magnificent job with a remarkably small staff. It is a highly technical operation. I think that the scheme which is proposed in the Bill is the right one. It will give the Mint a greater measure of autonomy to conduct its affairs in the excellent way it is. One finds that the revenue is increasing due to a very efficient operation. As far as information is concerned, the House can be quite sure that from year to year, as far as I am concerned and as long as I am here, it will be a pleasure to give as much information as we can about the Mint because it is very much to the credit of the Mint and the Government. I think it is a very great pity that the hon. member for Cape Town Gardens should have gone out of his way to refer to a very unpalatable and a very unpleasant affair for which he is fully responsible in this House. I do not know how it can be relevant. All I want to say is that we shall go from strength to strength as far as the Mint is concerned. I should like to take this opportunity to say deliberately that I pay tribute to this very fine institution which does not get very much by way of kudos but which carries on an excellent operation.

I hope I have replied to most of the issues. I should like to thank the Opposition parties for agreeing that we take the Second Reading. I appreciate that very much.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, I want to deal with this clause as far as it relates to the Special Defence Account. There are two issues which I raised during the Second Reading debate and to which I did not get answers. I want to deal with them again now.

The first question is the ability of a particular fund to raise money on overdraft without accountability to Parliament. That has been demonstrated, because that is the item we are dealing with here. I am concerned about it. I do not have an answer to it, but I think there should be an answer. There is the question of accountability. This House is responsible for that money and yet there is no accountability in respect of this matter. Particularly now that the law has been amended, as far as this item is concerned, it will never come up for ratification. It actually means that not only the Special Defence Fund, but other organizations as well, can do the same thing. To my mind that is wrong, because there is no accountability.

The second point which I feel is equally important, relates to the funding of the Special Defence Fund. I am now not dealing with bonus bonds from the point of view of the scheme, the undertaking or any of that which you have ruled out of order, Mr. Speaker. I will deal with that tomorrow and the hon. the Minister can deal with that tomorrow. What he hasn’t explained, is why this shortfall cannot be made up from the proceeds of bonus bonds, so that the money would go to the Special Defence Fund. If there is legislation necessary to do it, why is it not introduced in the House? Why does the hon. the Minister of Defence sit so quietly? He does not say a word. His department is being discussed, his money is being discussed, his Special Defence Fund is being debated, but he sits there as if it is none of his business. I would like to hear what he says about it. Why does he not get up and tell us where he stands on this issue? Does he want money for the Special Defence Fund? Does he think it is wrong what I am saying here? Let us hear from him. He cannot be silent or sit there like a mummy. There must be some life left in him. If there is no life left in him, we are more than worried. With great respect, let the hon. the Minister of Finance rest a bit. Let the hon. the Minister of Defence get up and deal with this. We want to hear from him.

Mr. Chairman, although the hon. member for Yeoville is very keen to hear the hon. the Minister of Defence, I want to say that the hon. the Minister of Defence has never hesitated to put any case he wished to put or to answer any argument that needs to be answered. I would like to say to the hon. member for Yeoville that as far as the Special Defence Account is concerned, if he is not satisfied with the way it is operating, surely the right procedure is to raise the matter in the Select Committee on Public Accounts.

I have raised it. Read the evidence.

That is the place to raise it.

I have done it.

Well, raise it again. The hon. member can call for any evidence he can obtain on the matter. He can put his views. I think the hon. the Minister of Defence and I are absolutely at one. We are not concerned about the matter like the hon. member for Yeoville. This account is under very careful supervision and is operating well. If the hon. member for Yeoville is not satisfied, he must raise the matter in the Select Committee.

The hon. member asked why we do not earmark funds for Defence. To do so would, in fact, be a very poor principle of public finance. The hon. member will realize that if you do it for one purpose, there is literally no end. Then you will be earmarking a certain part of revenue for housing, a certain part for health, a certain part for salaries, etc. It has been tried in one or two countries with devastating effects. What does it do? Apart from anything else, it absolutely plays havoc with one’s priorities. In the end one has no flexibility left. It is a matter which has got to be very, very carefully thought out. It is very easy to say “Earmark this income for purpose A, earmark that income for purpose B, for purpose C or for purpose D”, but in the end one’s whole order of priorities goes by the board and one has no flexibility left. I must ask the hon. member for Yeoville to think about that carefully. That has always been our considered view and we cannot possibly at this moment see how we can change that. I hope I have answered the hon. member.

Mr. Chairman, I am indebted to the hon. the Minister of Finance for coming into the debate, but I am still amazed at the sphinxlike approach of the hon. the Minister of Defence. He has apparently decided that he is not going to say anything. I must say, with great respect to the hon. the Minister of Finance, that a precedent exists for the raising of money for a specific purpose.

No.

It is no use saying “no”; it is a fact. Let us take housing, for example. The Housing Commission is raising money with a bond issue specifically for housing. There sits the hon. the Minister of Community Development. Ask him. He is doing it.

The hon. the Minister of Finance allows me to do so.

That is right. He allows that hon. Minister to do so. There is a loan issue for housing. It is directed specifically at the provision of housing and it has our blessing. But the hon. the Minister of Defence does not appear to have the influence that the hon. the Minister of Community Development had. That is the only conclusion that I can come to. There are other examples. Let us take power. Escom, which is a separate entity, raises money specifically for the provision of power.

Escom is not part of the State Revenue Fund.

Escom is a parastatal institution. Of course it is. Is housing not a State function?

It is not a State function.

It is an autonomous commission.

There is a Special Defence Fund, which was specially created in terms of a special Act of Parliament and it has the power to raise money. I am going to prove to hon. members that it has the power to raise money on its own. If one looks at the time we are ratifying at the Auditor’s report, one sees that this particular fund borrowed R140 million on overdraft. Is that not borrowing money? I say with great respect that it can be done and it is being done. If there is a slight technical legal problem, surely the hon. the Minister of Defence should be able to say that he would like legislation to be able to raise money for defence so that the public can decide whether they want to invest there or not. They can decide whether they want to invest in housing or not. That is a reality, but the hon. the Minister of Defence sits back and he uses his sphinx-like approach to this matter and says nothing. He does not care whether it is raised or whether it is not. That is wrong. I find it utterly amazing that this so-called unpatriotic Opposition is the one that is asking for the raising of money for this purpose and the hon. the Minister of Defence says nothing. He does not even support us. I really do not know what is going on in the mind of that hon. Minister. I find it remarkable that he sits here and intends to sit here but does not participate in a debate that fundamentally affects his department. I really cannot accept that.

Clause agreed to.

Clause 2:

Mr. Chairman, I want to come back to the question of the bread subsidy. I am a little amazed at the hon. the Minister of Finance because he says there is a tradition which says that when one has discussed a matter in the Select Committee and has agreed on what should be done with regard to unauthorized expenditure, one does not come to this House and redebate it. We have not said that we are voting against the ratification of this expenditure. What we have said and still say—and I think it is an important issue—is that no explanation has been given up until now as to how this ever arose. That, to us, is fundamental.

Mr. Chairman, if hon. members would care to look at the evidence that was given before the Select Committee, they will appreciate my argument. The only reason why we on this side of the House voted in the Select Committee in favour of this proposal was because the Auditor General gave us an assurance and said he was completely satisfied that the money had indeed been correctly paid. He gave us that assurance, but neither he nor anybody else could give us the assurance in connection with what had caused this error. The hon. member for Paarl, who is unfortunately no longer in the House, when I asked him what had caused the error, spoke for another ten minutes without answering my question.

The hon. the Minister of Agriculture sits here in the House as one of the members of the most silent Cabinet one can get. He has not told us what caused the error. Nobody tells us what caused the error. The evidence is irrefutable where it says that they cannot say what caused the error. There is no tradition which forbids one from raising these matters in the House. The Select Committee is merely a branch acting on behalf of this House in this respect. We are not going back on what was agreed to in the Select Committee. All we are doing is to say that nobody gave us any explanation in the Select Committee. The hon. the Minister still cannot give us an explanation. Neither the hon. the Minister nor the Chairman of the Select Committee nor the hon. member for Paarl nor the hon. the Minister of Agriculture has given us an explanation.

To this day this record stands unanswered. No explanation has as yet been given about how this error arose. We are still waiting for an answer. The hon. the Minister of Agriculture can get up right now and tell us what-caused the error. All he can say presumably is: “Daar is ’n vermoede”. That is all the Director-General could tell us. All he could say was that they had a suspicion. All he could say was that there was a belief, a suspicion about what caused the error. Nobody can tell us, however, what really caused this error.

Mr. Chairman …

The hon. the Minister of Agriculture at least shows us the courtesy which the hon. the Minister of Defence lacks. He is at least prepared to get up and speak. [Interjections.]

Order!

Mr. Chairman, in his evidence the Director-General stated very clearly and expressly that a calculating error had been made in this regard. Very definite instructions have been given to my department that the price of bread and the subsidy paid thereon is to be monitored on a daily basis. This has to be done for very specific reasons. That is to say, there are constant fluctuations in the consumption of white bread as against brown bread, and the matter becomes absolutely impossible if these prices are not monitored daily. These trends have to be monitored daily, and accordingly the computer and the staff have to be geared to doing this.

Since the bread price was fixed last year, there has been a wider gap between the subsidy on brown and white bread. In the nature of the matter the trend and the flow of consumption has changed, more so than we could have foreseen. For that reason these prices will be monitored very stringently. I accept responsibility for this and the department has a specific directive to carry out in this regard.

Mr. Chairman, I thank the hon. the Minister of Agriculture for saying that he takes that responsibility.

I just want to make the matter quite clear so that we know where we stand. A question was asked, and hon. members who have the Select Committee report can look on page 31, where they will find it. And this is only one occasion on which that question was asked. It was asked repeatedly, and every time the same answer was given. I quote, as follows—

*He then went on to give a further explanation. However, he said clearly that it was only a suspicion because they could not confirm it.

At that stage, yes.

In that case, can the hon. the Minister confirm it now? He did not, in fact, do so in his speech. If the hon. the Minister can in fact confirm this now, if he can inform us what the error really was, we should appreciate it. [Interjections.]

Mr. Chairman, I want to refer the hon. member for Yeoville to page 36 of the report. There Mr. S. P. Barnard asked a question which Dr. Immelman replied to, as follows—

Mr. Nortjé then added, and this is important—

Surely the hon. member knows how a computer works. As one feeds data into it, it gives them back. Mr. Nortjé went on to say—

The hon. the Minister gave the assurance that since then it had been monitored on a day-to-day basis.

There is another very interesting aspect that I want to point out. I asked Mr. Wronsley, the Secretary of the Treasury—

Mr. Wronsley’s answer was “Yes”. I refer hon. members to Appendix A in which the whole motivation is submitted. The best part of the whole story is that, as the hon. member for Yeoville, too, has already said, he himself asked—

The Auditor-General’s reply was: “I am satisfied”. Mr. Nortjé added—

Why did he not quote that?

The hon. member asked nothing further. When we concluded this discussion, I asked Dr. Immelman—

This was after this matter had kept the Select Committee busy for two days and the whole matter had been thrashed out. Dr. Immelman’s reply was—

I want to conclude by saying that because the hon. members opposite have problems with the constitutional situation, they are now trying to make political capital out of these other matters.

Mr. Chairman, we all agree that the subsidy was paid on the number of loaves of bread sold. At the bottom of page 32 of the Select Committee’s report this is made very clear. Dr. Immelman says—

Must we now understand that nine months into the financial year, in November, when one had to re-assess the value of the budget, we did not know how many loaves of bread had been baked and sold? Were we not able to calculate that? Could the computer not keep a running total of the amount that had been paid out? This was confirmed by Dr. Immelman when in later remarks he said that in the beginning of March, when he got figures from the computer, suddenly it appeared that within the immediate future there was going to be an increase in the amount of subsidy required. Are we actually saying that somebody paid out this subsidy without keeping a running total? I was very interested in the hon. the Minister’s remark and the impression he gave that this information has been superseded by new information. If that is in fact correct, it shows how important it is that this matter should be raised in the House, because at the moment we are left believing that the department does not have the foggiest idea how this R26 million arose. If one reads this document carefully, one sees that there are two distinct conflicting reasons given for the expenditure of R26 million. If a new reason has been given, I think the hon. the Minister should tell us what it is because it would put us all at rest. It is not something one can shrug off. It is R26 million, an enormous amount. There has been no satisfactory explanation. A lot of confusion has been thrown on the issue by hon. members on the other side. It only raises more doubts. If the hon. the Minister has a clearcut and simple explanation, we would honestly love to know about it.

Mr. Chairman, a moment ago I tried to explain how difficult it is to estimate the expected consumption in advance. The problem arose with regard to a purely technical situation. Towards the end of my speech I pointed out that a loaf weighs 900 grams and that a subsidy of 13 cents or 5 cents is paid on that weight.

That was only a supposition.

That was only a supposition, but in my opinion that is in fact what happened during those last few months. A subsidy is calculated on a figure suggested by the Wheat Board. However, that figure did not comprise a number of loaves but the number of kilograms. Accordingly, if one claims a subsidy on 1 000 loaves and it is paid out as if it had been on 1 000 kg, then surely it will be 10% too little. That is the answer.

Clause agreed to.

Clause 3:

Mr. Chairman, as I understood the figures which the hon. the Minister of Finance quoted, the actual cost of the forward exchange cover, i.e. the negative item on the account, was some R3 783, 8 million. If that is correct it seems to me that that is a tremendous amount to pay in respect of forward exchange cover during one particular year. It is true that there are credit items on that account, but unless I misunderstood the hon. the Minister this figure creates, to my mind, quite the wrong impression. If it had created the wrong impression I think we should try to correct it at the earliest opportunity.

Mr. Chairman, I have my speech in front of me. Nowhere did I say that that amount was for one year only. That is an accumulated figure and it also includes a number of credits.

Mr. Chairman, if that is so, is the hon. the Minister able to tell us what in fact the cost of forward exchange cover was during the past financial year? The cumulative figure is extremely large, as the hon. the Minister will appreciate. I am pleased the hon. the Minister says it is not for one year only because it shook me when I heard it.

I will try to get the information.

Clause agreed to.

Clause 9:

Mr. Chairman, in his reply to the Second Reading the hon. the Minister did not give any information relating to the financial procedures or accounting practices of the S.A. Mint. He made a point of praising the Mint and its director. It may well be a very efficient operation run by a very efficient gentleman, for all I know.

As far as aspersions are concerned, the hon. the Minister has always suggested that I am criticizing the Mint. In actual fact, the information that he has declined to make available has always made it impossible to know who has made the decisions that I have criticized repeatedly, and will continue to criticize. Just as an example, on the question of who the guests at that particular function were, the Director of the Mint has been reported saying that that is exactly what the hon. the Minister does not want revealed. In that sense I have no criticism to direct at the Mint. It is the hon. the Minister who does not want to divulge that information.

What these three clauses, and this clause in particular, purports to do is to give greater autonomy to the Mint in the way it reports and the way it acts in an accounting sense. I think it is critical for us to ask firstly, in relation to this Coin Manufacturing Trading Account, what exactly the nature of the records is which are kept by the Mint in its transactions and, secondly, and equally important, for how long those accounting records are kept before they are destroyed. In answer to a question earlier this month which I asked in this House, the suggestion was that at least some of the records are destroyed after less than three years. This is very surprising to me, but I cannot claim to know what the specific practice in the past was. I would like to ask for replies to those two questions.

Mr. Chairman, I will not waste much time on the hon. member for Cape Town Gardens. He made the allegation that the taxpayers had been deprived of funds as a result of the transaction, a matter which he raises every time he gets the opportunity, repeating it like a gramophone record. It may interest the hon. member to know that in 1899 President Paul Kruger issued 102 golden sovereigns at par. One of them was sold the other day for R132 000. President Kruger according to that hon. member then defrauded his taxpayers.

Does he imply that Paul Kruger was a “skelm”?

President Burger issued the “goue pond” before that at par and I am told that not long ago one of these golden sovereigns, the “Burger-ponde”, was sold for over R30 000. Who is now defrauding whom? Every single time the Mint issues a gold coin it does so at a certain price. It works out the cost and then puts a certain margin on it. Immediately that coin increases in value. Therefore, according to the hon. member, on every coin that the Mint is selling the public and the taxpayer is being defrauded. That is absolutely laughable. I am very surprised that the hon. member for Yeoville, who is the chief spokesman of the Official Opposition on finance, allows this sort of thing to go on in this House all the time. I think it is a great shame if this is the way in which we are to argue. The hon. member for Cape Town Gardens has never withdrawn his remarks and he has never gone to the Advocate-General. He is a judge of the Supreme Court, but the hon. member knows what will happen to him if he goes there. I therefore do not intend wasting any more time on that hon. member’s remarks.

Mr. Chairman, I would like to deal with one aspect and that is that members on this side of the House tried to settle and finalize this whole matter on the Select Committee for Public Accounts. They were frustrated in that, and it is not our fault that we were frustrated. We actually want to dispose of the matter in toto.

Mr. Chairman …

Sit down, you UP supporter!

You were a bad Nationalist. [Interjections.]

Order! The hon. member for Turffontein is raising a point of order and I expect hon. members to give him an opportunity to do so.

Mr. Chairman, on a point of order: The hon. member for Yeoville made certain allegations here, i.e. that in the Select Committee on Public Accounts the official Opposition were frustrated in their efforts to do certain things. I am afraid that it was not the Select Committee that frustrated them but a ruling by the Chairman, a ruling which was later confirmed by Mr. Speaker. I think the hon. member for Yeoville is now attacking a ruling by Mr. Speaker.

Order! I am not going to allow hon. members to discuss this matter any further under this clause.

Mr. Chairman, the hon. the Minister has again ignored the key question and has set up a diversion by referring to what President Kruger and others did.

Order! I am not prepared to allow the hon. member to discuss that matter in terms of this clause. The hon. member must deal with the details of this clause and not with general matters affecting the Mint.

Mr. Chairman, may I address you on this point?

Yes.

Mr. Chairman, in speaking to this particular clause, I specifically asked questions in regard to the period for which records were kept and so forth. In his reply, at this stage of the debate, the hon. the Minister chose to refer to President Kruger and various other people who issued coins, and I should like to have the opportunity to state why I feel that his remarks were irrelevant to the questions that I posed on this clause.

The hon. the Minister of Finance replied to certain points raised by the hon. member. However, I am not going to permit the hon. member to pursue this argument. The hon. member must coniine his questions to the details contained in this clause.

Mr. Chairman, on a point of order. A similar point to this was considered during the Second Reading debate and Mr. Speaker permitted the hon. member for Cape Town Gardens to discuss the matter of the minting of gold coins. It was in respect of this very clause that Mr. Speaker gave the hon. member permission to discuss this matter during the Second Reading debate. That is why the hon. member is again raising the matter now in order to pursue the arguments he raised during the Second Reading debate. I wish to repeat that this Clause deals with the essence of the matter raised by the hon. member for Cape Town Gardens and also by the hon. member for Yeoville.

That is the reason why I permitted the hon. member for Cape Town Gardens to raise this issue. The hon. the Minister of Finance replied to the hon. member in this regard and I now want the hon. member to come back to the details of this clause. [Interjections.]

Mr. Chairman, in terms of the proposed new section 6(5)—

I believe that the Mint should be attempting to maximize its revenues and, by so doing, to maximize its possible surplus that is to be fed into the State Revenue Account, because the more money that is paid into that account the less money taxpayers have to fork out in other ways. I do not believe that selling proof coins when there are only 60 sets at a price which is the same or lower than the price for which 12 000 sets are being sold, makes any sense at all.

The hon. member is again discussing that transaction and I cannot permit him to do so.

Any transaction, Mr. Chairman?

Only that particular transaction.

I am referring to a hypothetical transaction. [Interjections.]

Order! The hon. member is not abiding by the ruling from the Chair.

He is trifling with the Chair.

Mr. Chairman, I shall not refer to that transaction directly. In its trading account and in terms of maximizing its surpluses, I maintain that the Mint should take into account the scarcity value of its products when placing a value on those products. As I understand the position at the moment, the list of persons who may receive proof coins of any sort is now, rather like the position in regard to postage stamps, more or less open-ended. Therefore, there is no particular privilege accorded to some people and not to others. As I understand the position, there is not even a waiting list of any significant length. In that regard, I feel that what we have been discussing—the suggestion that scarcity value has no relationship to the value that the Mint should be charging for the goods that it produces—begs the question.

Mr. Chairman, the hon. member for Cape Town Gardens made a statement here which, unfortunately, cannot be allowed to pass unchallenged. He mentioned the fact that they were frustrated in the Select Committee.

Mr. Chairman, on a point of order: If I am not permitted to discuss this matter, then I suggest that the hon. member for Smithfield is not allowed to discuss it either.

I am listening carefully to the hon. member for Smithfield and I shall decide in due course.

Mr. Chairman, if those hon. members say that they were frustrated, I cannot allow that to pass unchallenged. I think it must be pointed out …

Order! The hon. member for Turffontein has already referred to that and I am not going to permit that matter to be discussed further now.

Clause agreed to.

House Resumed:

Bill reported.

Bill read a Third Time.

Mr. Speaker, this is the next instalment in the series of financial measures which appear now to becoming a custom to deal with in this form. During the few minutes I had previously I motivated an amendment which I intended moving. I now move as amendment—

1. (1) methods of combating the increasing effect of fiscal drag;
2. (2) adequate incentives for job creation;
3. (3) effective incentives for the building of accommodation for lower income groups;
4. (4) for a realistic assessment of the position of working married women; and
5. (5) adequate fiscal instruments to deal with inflation.”.

As I have indicated, I motivated the amendment in all respects. I therefore should like to touch at this occasion just briefly on an aspect on which the hon. the Deputy Minister touched and which since the commencement of the debate received a fair amount of publicity. I refer to the question of tax avoidance and tax evasion.

We must get the picture quite clear. Tax evasion is a contravention of the Act. Tax evasion can be dealt with in terms of the law as it stands and if the methods available to deal with tax evasion are not effective enough, then the hon. the Deputy Minister can come to the House with additional measures to deal with it. Tax evasion is a contravention of the law and it is condemned by this side of the House and I would imagine it is condemned by all sides of the House.

When it comes to tax avoidance the situation is that it has been accepted in our laws throughout that it is perfectly proper for an individual by legitimate means to arrange his affairs in such a way so that the conduct of those affairs does not attract tax. As long as he acts legitimately, as long as he does not act in contravention of the law, that is an accepted practice. Therefore if he takes the advice which enables him not to pay the tax legitimately, that is a perfectly legal and proper action. It is also correct, however, that where tax avoidance assumes such proportions that the Exchequer is adversely affected by it and that the laws that exist do not serve their purpose, then there is every reason in the world why the laws should be changed and why it should be done on such a basis that equity comes into the tax system. One of the things that is objectionable about a tax system, is that people can earn vast sums of money and not pay any tax on it, albeit they do it legitimately, whereas the man who is a small earner, has to pay his taxation in the ordinary course because he does not have the mechanism available to him to enable him to avoid taxation. That is why, when it comes to tax avoidance, we have no problem when the Government wants to close the loopholes, but what we do have a problem with, is where the Government seeks to do this retrospectively. One of the examples of that in this legislation is the application of clause 7, where it is provided that transactions which took place before the Bill became public knowledge, but which fall into a particular tax year, will in fact be affected by the legislation. That would be a retrospective application, that is why we are opposed to it and that is why we have an amendment on the Order Paper, which we will probably, because of the way this debate is structured, not be able to move. We appeal to the hon. the Deputy Minister that he should do something to put it right, because to deal with something retrospectively is not acceptable.

The second thing I want to deal with, are the amendments which deal particularly with the encouragement of savings and with retirement benefits. One of the problems to which I think attention has been drawn, is the low level of personal savings that exist in South Africa. What is even more significant is that not only is there a low level of personal savings, but that those savings that do exist on the part of the private individual, are very largely today being channelled into the life insurance industry. Outside of the life insurance industry, there is hardly any incentive to personal savings. When there are incentives to personal saving, as for example the tax-free shares of building societies, measures are introduced to stifle that incentive to personal saving. I want to say to the hon. the Deputy Minister that it is important to South Africa that there should be an encouragement of savings to the private individual. The Government is not doing everything in its power to encourage that kind of saving. In one respect in particular it does not do so. When I first came to this House, one of the very first speeches I made nine years ago related to the question of index bonds. Today we are still in a situation where people cannot protect themselves against inflation to save for their old age, because there is really no mechanism available which enables them to save in a manner where their savings are inflation-proof. Ordinary people do not have the sophisticated investment advice available to them so that they can perhaps invest in the kind of investment that do hold their own against inflation. I want to appeal again today to the hon. the Deputy Minister that the Government should consider the question of an index bond to be made available to people so that they can save for their old age, so that they do not become a burden to the State, so that they can look after themselves, so that they do not require social pensions and so that they do not find themselves in a position that, thinking that they have provided for their old age, they find that inflation has destroyed the standard of living that they had hoped they would be able to enjoy.

In respect of some of the other detail provisions relating to pension and retirement benefits, I would like to make one suggestion for consideration by the hon. the Deputy Minister and his department. The gratuity which is paid on retirement in terms of the proposed section 10(1)(x) normally only applies to people in very senior positions. It normally only applies to people who are executives. The amount involved does not really become available to the ordinary individual. It is a discretionary amount. There can be a practice in a firm to pay it, but it is by and large a discretionary amount. There is a tax-free benefit that arises in terms of this provision. I would like to suggest to the hon. the Deputy Minister that the portion of the lump sum benefit in terms of a retirement gratuity fund or a pension fund which is tax-free, should be consolidated with this, so that the two will be together. If a man who therefore only has a pension fund and who gets no gratuity, can then get the same form of tax-free relief. In other words, if we put the two together and operate with them as one entity so that if you get too little on the one you can make it up on the other, I think that would be attractive. I do not think it would cost very much in so far as the fiscus is concerned.

The other matter that I want to come back to is the amendment to section 7 of the principal act, i.e. the question of the giving away of income as an asset to people. The argument that is advanced for this is that when one makes donations to charity or to some other cause one should do it out of one’s after tax income. It is perfectly true that that is a legitimate argument, but what I should like to suggest to the hon. the Deputy Minister is that the entities who are actually going to suffer as a result of this amendment are not going to be the taxpayers who are doing it, but the charities, educational institutions and the other worthy causes that have received this money in the past are in fact going to be the losers. Someone who, for example, is today giving away R1 000 is still going to give away the same after tax amount, but he will give only R500 to the charity. Therefore the ones who are going to suffer are not going to be the taxpayers, but the charities and the worthy institutions in this regard.

The other point is one which I made earlier, i.e. donations that were made during this particular year prior to the Act becoming public knowledge, would surely be allowed to stand because the way in which the Bill has been drafted means that any tax year which ends after the beginning of next year affects this. It does seem to me to be wrong retrospectively to effect those transactions which took place in the tax year starting from 1 March 1983 and which took place before the beginning of June 1983. I think those transactions should not be penalized.

The other matter upon which I should like to get clarity so that there should be no misunderstanding is that if there is not a transference of an asset, but merely a loan; in other words, if an individual makes a loan to the charity in the ordinary course of business and the loan is an interest-free loan or a low-interest loan, then that will not be affected by the provisions of this clause. In that case it is not the transference of an asset, but he actually takes the risk that his loan may or may not be repaid. Whether or not it be secured or otherwise does not really matter, but it is not a transference of an asset which comes back to him. He actually relies upon the institution to give him back the money to repay the loan if that has to arise. I certainly would like to see that sort of transaction to continue to exist.

I should now like to deal with clause 25 of the Bill, the clause which deals with the question of the write-off in respect of mining companies. I think it is correct to state that this privilege has probably been abused, in the sense that losses have been incurred as a result of the write-off of capital expenditure and those losses have been used in order to offset other income. I think the fiscus is entitled to protect itself against that kind of situation. One has a suspicion that some of the institutions which were previously never in mining, but which suddenly had large profits which were taxable, suddenly went into a particular type of mining activity that was not merely motivated by the desire to be in mining, but by a tax objective. I think the hon. the Deputy Minister knows the kind of companies I am referring to. It is the companies which were never in mining before and which suddenly went into a particular type of mining. There is no doubt that that should be dealt with. There are two matters that I should like to raise in this regard. The one is that there are mining activities which are started and which are the first step of a continuous process. In other words, there is a step beyond the ordinary mining which is related to the mining itself. I should like to submit that in those circumstances where there is a continuous process which relates to the mining operation the profits of the other part of the process can actually be offset against the losses which arise from the write-off of the capital expenditure on the mining itself. The second point is where one raises money specifically for capital expenditure and one obviously does not use the whole amount all at once, but one has to invest it so that one can use it as the capital expenditure is incurred, I believe that the interest which is earned on capital which is raised specifically for capital expenditure for mining should in fact be allowed to be set off against the loss which is caused by the write-off of the capital expenditure in those circumstances. I ask the hon. the Deputy Minister to urge the hon. the Minister of Finance to consider those proposals because they will indeed assist considerably in the development of mining in South Africa.

There is just one final point I should still like to deal with. Unfortunately time does not allow me to deal with other matters in this Bill to which I would also have liked to refer. The matter I want to deal with in the final instance is the following. I must state that I rather like the approach that has been adopted, and which is reflected in clause 40. That is that the hon. the Deputy Minister is not going to become involved in the administrative mess caused by refunding small amounts of money. What is also attractive here, I believe, is that the fiscus realizes that what is R2 to the ordinary man is R10 to the fiscus. The fact that the fiscus does not deal with it on a R10 basis when a man has a right of R2, I believe, demonstrates that relationship and shows the right kind of approach.

We do look after the poor.

Well, Mr. Chairman, I nevertheless believe it is an administrative gesture which, in these circumstances, one does appreciate.

Mr. Speaker, it was a pleasure for me to listen to the Second Reading speech of the hon. the Deputy Minister on Friday. He clearly spoke with confidence. His attitude was a positive one, and there was clear evidence of the confidence with which he announced the rebates that have been granted. On the other hand, he clearly said where and why it was not possible to allow rebates on income tax. His whole speech reflected his utmost confidence in the economy of the Republic, and that is why the hon. the Deputy Minister was in a position to say, at the end of his speech, how nice it was for him to have been able to deliver such a speech.

In contrast, however, the hon. member for Yeoville, as usual, immediately began to detract from the positive aspects, as if there were no encouraging signs embodied in the Bill. According to him, the hon. the Deputy Minister is the only one who could derive any enjoyment from it. He then went on to brush the legislation aside as unacceptable. One can, of course, understand this. I suppose it is the official Opposition’s job to attack the Government.

The hon. member for Yeoville immediately gave evidence of his opposition to indirect taxation. He sees indirect taxation as a factor making it impossible for poor people to keep their heads above water.

The Income Tax Bill comes before Parliament each year as an instrument for the implementation of the provisions contained in the annual Appropriation Bill. It is therefore necessary to ratify provisions in regard to the payment of taxes, and also to regulate the normal tax rates. It is probably one of the pieces of legislation that generates the most interest amongst members of the general public because it affects everyone’s pocket. One of the most interesting characteristics of the Bill now before the House is that certain amendments to the principal Act are being effected with a view to changing the provisions applicable to South West Africa, because the implementation of the Act in South West Africa is being transferred to the Director of Finance of South West Africa. The removal of these provisions has entailed approximately 50 amendments to the principal Act. In his budget speech earlier this year, the hon. the Minister of Finance made provision for several rebates, including certain concessions, for which we should like to thank him most sincerely. I should like to refer to a few of them.

Clause 4 seeks to amend section 6 of the principal Act. The effect of this amendment is to make the special rebate applicable to people over the age of 70 years, the rebate also being increased from R80 to R180. It is a rebate that is welcomed by pensioners. Pensioners frequently ask me: “Why is tax deducted from my pension?” I think this is a question that all hon. members are regularly asked. Obviously it is not difficult to answer that question. I am nevertheless convinced of the fact that this increased rebate is going to make it easier to give a satisfactory reply. It will make many of the aged happier.

Clause 31 relates to the tax on donations. I should like to refer to section 56(2)(b) of the principal Act which provides that a donation by a parent to his child, up to an amount of R15 000 per child, is exempt from tax. This amount is now being increased to R20 000 per child. I think it is a reasonable concession. It takes cognizance of the depreciation in the value of money. This is definitely very welcome. Taking cognizance of inflation is the realistic thing to do. This also means that members of the public will not be worse off than they were previously.

An important provision is that contained in clause 44. It inserts a new paragraph in the first schedule to the principal Act and relates to drought relief measures. The drought that has hit us in this country, and which has persisted for several years now in some areas, spreading its tentacles over large areas of our country in the season that has just passed, makes itself felt far beyond the boundaries of agriculture. It affects virtually everyone in the country. It is alarming to think that the effects of this drought have not yet reached a climax. Some farmers simply cannot go on farming. If, through the exigencies of drought, a farmer is compelled to sell his livestock—the proceeds of such a sale normally being calculated as taxable income—that income can be so substantial that he may have to pay up to 50% of the proceeds in tax. That means that after the drought has broken, such a farmer will no longer be able to set up an economic farming enterprise. In terms of this measure, if, after 1 March 1982, a farmer has had to dispose of his livestock as a result of the drought, and deposits the proceeds, wholly or in part, with the Land Bank, he can subtract the amount from his gross income, and for a period of four years that amount would not be taxable. The result is that within those four years, when the drought has broken, conditions have returned to normal and the farmer can again purchase livestock, he will have the full amount available to him. He can then continue farming in the normal way. This is a tremendous incentive which reflects the sympathetic way in which the Government views the terrible consequences of the drought and also looks after the interests of the farmers in South Africa. We should like to support the Second Reading.

Mr. Speaker, firstly I want to thank the department most sincerely for the explanatory memorandum we received. This Bill is quite bulky, and especially if one bears in mind that about 50 clauses relate to South West Africa, it is encouraging to have such an explanatory memorandum to work through. I hope that we shall, in the near future, have a consolidating income-tax Bill before us which will omit all the measures to be deleted so that we can have an uncluttered Act on the Statute Book. This is of particular importance to people such as accountants and auditors, and also to private individuals. For a person who has to apply the law in practice, it is not pleasant to find himself saddled with a 2-inch thick Act with half its provisions deleted. This would also be of benefit to the State, which would then be in a better position to handle its returns and other tax matters. It would also facilitate matters for the Receiver.

The hon. member for Yeoville moved an amendment, and I fear that of the five points contained in that amendment, three are completely out of place here. The other two are applicable to the Bill, but I think they would be more at home in the Appropriation Bill than in this Bill. I shall therefore partially ignore them, if I may use that expression.

Last week we dealt with the Revenue Laws Amendment Bill, and on Friday the hon. member for Vasco tackled me and said that today I should bring to light the necessary proof. What did the hon. member say? According to his unedited Hansard speech, I referred to the mixed training centre in Krugersdorp and created the impression that training was being given there to Whites, Coloureds, Indians and Blacks on a mixed basis. That is what I said. The hon. member also said that I had launched a fierce attack on him and said that he hoped I was referring to Chamdor. The hon. member said there was no mixed training taking place there. In this connection I should like to quote from a question I put to the hon. the Minister of Manpower, and I should also like to quote from his answer (Hansard Questions and Replies, col. 1514)—

The hon. the Minister’s reply was—

Order! I would not like to deny the hon. member an opportunity to reply to an attack against him, but what clause of the Bill is the hon. member dealing with now?

The Income Tax Bill and this legislation deals with tax that has to be collected. They are both income tax Bills. I should like to reply to the question of taxes that are collected.

Order! The Bill now under discussion is the Income Tax Bill.

Yes, that is correct.

Is the hon. member speaking about any particular clause of this Bill? [Interjections.]

Mr. Speaker, if you are not going to allow me to speak about this any further, I am going to request that a commission of inquiry be appointed to investigate that hon. member’s allegation. He told an untruth in the House. [Interjections.] He misled the House. In due course I shall be asking for a Commission of Inquiry to be appointed.

There is not much difference between the taxes being levied in this Income Tax Bill and that of the previous year.

Mr. Speaker, on a point of order: May the hon. member for Sunnyside say that another hon. member has misled the House?

I have specifically stated that I am going to ask for a commission of inquiry to be appointed. The hon. member has misled the House, and that is why I shall be asking for a commission of inquiry to be appointed. [Interjections.]

The hon. member may use the word “misled’ but he may not use the expression “deliberately misled”. He did not use that expression.

Did you mean that he had been misleading deliberately? [Interjections.]

Order! The hon. member for Sunnyside may proceed.

Apart from a large number of adjustments to rectify the legislation in regard to South West Africa, there are not many taxation changes in this Bill. We on this side of the House are going to support the legislation. I should, however, like to make one request to the hon. the Deputy Minister. According to the schedule an individual with a taxable income of more than R40 000 per year has to pay 50% of his income in tax. Over and against that, companies pay 42 cents in the rand, plus an additional 10%, giving a total of 46, 2%. At that marginal rate one is not being fair to the private individual. Why is it so? The marginal rate has been reduced over the years, but it is not yet good enough.

It is a pity that I cannot give the hon. the Minister an immediate reply on the question of interest rates, because on that issue we are also going to lock horns. Interest rates have now been increased from 14% to 16%, after the hon. the Deputy Minister told me on Friday that this would not be the case. [Interjections.] This marginal rate of 50% is applicable to individuals with a taxable income of more than R40 000 per year. He is the very person who generates savings. Private savings come very largely from that source. Those are also the people who provide jobs and make investments. I think it is absolutely essential, at this stage, for us to examine the possibility of decreasing this marginal rate. It is true that professional people earning such salaries do not sit around the House or merely work eight hours a day. Anyone earning that kind of money would have to work 16 or 18 hours a day, though perhaps not every day, but for him there are hours of blood, sweat and tears to earn that kind of money. I think it is unfair to that section of our community. The only point on which I can support the hon. member for Yeoville—and this concerns another problem that must also be looked at—is the fact that married couples pay more tax after they are married than before they were married. That matter has been looked at, and it has been discussed in the past, but I should like the hon. the Deputy Minister to take another look at that problem. He must instruct the Standing Commission on Taxation to take a look at it. For the rest we do not have much to say about this matter. We support the Bill.

Mr. Speaker, I am afraid we will all have to be very brief tonight as far as our speeches are concerned as this debate must be completed by 18h05. I will therefore attempt to be very brief in an effort to accommodate the approximately six other speakers who have put down their names to follow me.

The hon. member for Yeoville stated that the real test of wealth in any country was the growth in its per capita gross domestic product. I agree with the hon. member entirely in this regard and it is something which I believe we must not lose sight of. In fact, I believe we should be very concerned about the situation as it exists today because we know that in the last year the economy experienced a negative growth of 1% and the latest figures indicate that growth in the current year is declining by a further 3, 3%. If this is correct then the hon. member for Yeoville is correct when he says that at the moment South Africa is getting poorer because the GDP is not growing at the same rate as our population. I therefore believe that there is a tremendous responsibility upon the hon. the Deputy Minister and the hon. the Minister to so use the fiscal mechanism in a manner which should promote growth.

The hon. member for Yeoville then went on to say that he believed that indirect taxation was a bad thing. He said in the present situation where there are tremendous gaps in incomes, indirect taxation places a heavy burden on the poor. He says, in fact, that consumption taxes prejudices the lower-income group. I believe this is something which we can debate for many hours but I would like to put it to the hon. member for Yeoville that there should be equal tax responsibility at all levels of our society. That means that the person with the lowest income should feel that, to a degree, he too is contributing in one way or another towards the taxation of the country. I say this because the State provides many services and I want to ask the hon. member for Yeoville to consider for a moment all the subsidies which are presently being enjoyed by many people. We know that transport subsidies are today costing the State something like R900 million. We heard today that wheat subsidies are costing the State R190 million—and not R90 million as I stated earlier this afternoon—for the subsidy on brown bread. There are housing subsidies and many other subsidies which the low-income earner enjoys. I think we have to take that into consideration.

The other question which I would like to ask is: What about tax avoidance at the higher-income levels? There are many people who enjoy a very high level of income and who, as a result of tax avoidance schemes which we have heard about today, are paying a lot less than they should. I believe that this is becoming increasingly a problem in this country in relation to these so-called perks that people are obtaining today. I believe that this means that the people who should be paying for tax are paying less and, at the same time, I have the feeling that a large number of these perks are adding to inflation. I certainly believe this to be the case in regard to housing subsidies or perks many employees receive from their employers. We find now that people are trading upwards in the price of houses and are buying houses way beyond the level they would normally be able to afford. Therefore, I want to put it to the hon. member for Yeoville that it is not quite as simple as he makes it out to be. I will say, however, that what he says is very good copy for the Press when he says that the wage gap is getting wider and the poor are getting poorer. [Interjections.]

The hon. member has a Press phobia.

The hon. member for Durban Central says I have a Press phobia. Unfortunately, however, this is what the Press prints. What it is printing is not really the truth.

I should like to refer hon. members to Hansard of 25 February of this year, col. 1843. During a debate on inflation I quoted certain statistics in this regard which I feel bear repeating. Looking at Government statistics over the period 1970 to 1979, I said that the White standard of living had actually dropped by 1, 3%. I also pointed out that the statistics clearly showed that during the same period—

I want to point out once again, therefore, that the real incomes of Coloureds, Asians and Blacks are actually growing at a far faster rate than are those of Whites. I feel, therefore, that this is a factor of which cognizance must be taken.

At this stage I should like to move as a further amendment—

1. (1) stimulating productive work for South Africa’s unemployed;
2. (2) stimulating an increased commitment on the part of employers and employees to provide for adequate retirement benefits; and
3. (3) reducing the ever-increasing percentage of inflation-ravaged incomes being taken by tax.”.

As I have said, I have very little time but I want to put it to the hon. the Deputy Minister that there should be greater tax incentives in order to stimulate productive work for South Africa’s unemployed. I believe that one of the finest areas in which this type of work can be obtained is in the rural agricultural area. As in the past we have had tax incentives for industrialists to encourage them to invest in capital equipment, so I believe that there should also be a tax incentive for employers to employ rural people and predominantly Blacks in productive work in those rural areas. I should just like to give the hon. the Deputy Minister two examples of what I have in mind.

The first of these is that in our agricultural sphere there are vast tracts of land which are not arable because they contain large numbers of rocks and stones. I am speaking now as a practical farmer. The value of this land would be considerably increased if one could get rid of the rocks. It is very easy to loosen these stones and rocks by using a large ripper behind a heavy tractor but the real cost is involved in the collecting and the removal of those stones and rocks from the fields. When one travels in Europe or in places like Mauritius one will see large stone walls and piles of rocks as evidence of the fact that over the years manual labourers have picked up those stones and removed them from the fields. Now the land is being used productively. My suggestion is that farmers should be given a tax incentive to employ labour to remove stones from land so as to make it more productive, and in so doing create a national asset which will last for all time. We have subsidies to farmers to assist them to construct soil conservation structures which are supervised by extension officers, and I believe that this system of administration and control could be applied to the tax incentives I am suggesting.

Secondly there is the problem of the growing threat of noxious weeds. We have lantana in Natal and there is another weed, the name of which escapes me at the moment. I know what the agriculturists call it, but I do not know whether I am permitted to use those words. However, they call it “the bloody bastard” because that is what it is as its prolific growth habits soon destroy the productive use of land. The problem with these weeds is that one has to employ much labour to eradicate them completely. I believe that at the present time when there is a tremendous amount of unemployment in places like kwaZulu which is also being ravaged by drought, there should be tax incentives to encourage farmers to employ these people in productive work. Not only would jobs be created, but the type of employment I have suggested would bring into production land which could otherwise be useless.

Moving to the second leg of my amendment, I believe that employers and employees should be motivated to invest more for their retirement. The hon. member for Yeoville mentioned an indexed bond. There may be merit in this, but I do believe this is a problem to which we must give increasing attention. We know that in places like the USA the social security system is on the verge of bankruptcy and I believe that we have to make our people in South Africa realize that they have to plan for their retirement. Both the employer and the employee should invest more in retirement schemes. I believe that the taxation proposals should have given greater incentives in that regard.

Finally, in the last minute I have I want to say that some provision should have been made to reduce the fiscal drag. It seems to me that the hon. member for Yeoville and I have three points in common in our amendments. I do believe that the fiscal drag is causing an increasing burden on many taxpayers and I believe that some consideration should be given to that.

Mr. Speaker, the hon. member for Amanzimtoti had one a little confused a few times in the course of his speech, particularly at the outset when he was advocating that the hon. the Minister should give special attention to “perks”. He said “the hon. the Minister must take special notice of the existing perks which are adding to the question of inflation”. Bearing that in mind, and looking at the amendment he moved later to the effect that work should be stimulated, that employers should be stimulated, and his motivation of the idea of the utilization of certain incentives to bring this about, one sees that according to him specific attention must be given to greater use of manual labour, for example stonecutting. One gets the idea that one first has to have stones cut, and then one uses them to build the road. Then one has to find new stones to cut so that one can use them to build a new road to nowhere.

One must bear in mind that manual labour is one of the least productive types of labour, and this very matter of productivity is one of our biggest problems. As far as this is concerned, the hon. member for Amanzimtoti agreed with the hon. member for Yeoville who put forward an argument he had rejected in the course of a different debate. It is that job opportunities should be created. It is very easy to do this but then he must make sure he does not come up against too high inflation and too high production costs. The hon. the Deputy Minister’s problem is specifically to strike a balance between manual labour and the creation of job opportunities on the one hand, and productivity on the other. One must ensure that one’s productivity is not too low, because this is something that is rife in South Africa when it comes to diligence in the industrial sector. However, taking a general view of the hon. member’s motion, I have to reject it. He speaks about “fiscal drag”, but he does not take into account the fact that over the past number of years South Africa’s tax structure has dropped from 60 to 50 as the hon. the Deputy Minister mentioned in his speech, in order to counteract that. The hon. member need only go and read the resolutions adopted at the Good Hope Conference and the decentralization benefits that arose from that, to find that this is in fact what this Government is making a point of doing. He must then consider withdrawing this amendment.

Mr. Speaker, I hope you will permit me to refer just briefly to the hon. member for Sunnyside. For a moment I could not recall whether he had called for the appointment of a commission of inquiry into me or into him. I take it that it must be me and not him.

Mr. Speaker, on a point of order: May the hon. member for Vasco elaborate on this matter, whereas I am not permitted to do so?

Order! The hon. member may not react to that matter.

Mr. Speaker, I shall abide by your ruling and shall therefore not take the matter any further. The rest of the speech by the hon. member for Sunnyside did not really contain arguments to which one could reply. I shall therefore leave him at that.

As the hon. the Deputy Minister pointed out, income tax is not merely a source of revenue for the country, but also an economic stabilizer. If one bears in mind that in the 1983-’84 financial year approximately 57,9% of all tax was derived from income tax, one realizes the extensive influence it exerts on the daily lives and activities of all of us, how it can affect our plans for the future, how it can influence one’s achievements and dreams. The tax rate in accordance with which one is assessed, is therefore very important. Therefore income tax must cause as little disruption as possible for the community and the individual. The hon. the Deputy Minister pointed out that the marginal tax rate had dropped from 60% to 50%. Effectively this represents relief of 17%. When I worked the amount out, I wondered where the hon. member for Yeoville was. In the course of my speech I shall come back to him a few times. I had thought that he would ask the hon. the Deputy Minister whether 17% was really justified over a period of four years. Should we have afforded so much relief? Could we not have made it only 12%? However, I did not hear anything from the hon. member for Yeoville.

Thus the 1978 maximum tax rate of R28 000 has been increased to R40 000 for the present tax year. This has afforded relief to the tune of 43% over a period of five years. I wondered what the hon. member for Yeoville was going to say about that. Why does he not ask the hon. the Deputy Minister why he is so liberal with his concessions? Why does he not ask whether it is in fact necessary to grant this relief? By doing so, the hon. the Deputy Minister is surely feeding the “fat cats”. After all, those are the people that the hon. member for Yeoville does not want feed. Why does he not ask why the hon. the Minister is doing this and why he did not make it a little less? If the hon. the Deputy Minister had done that then surely there could have been a different effect. Once again, however, we heard nothing from the hon. member for Yeoville.

I now want to come back to the legislation itself. One notes that references to South West Africa are being deleted from the legislation. Clause 3 provides that specific income earned on gratuities can now be spread over three years instead of over one year. This is to be welcomed. If the abnormal income in one year were to be taxed, it is estimated by some economists that this could entail an increase in income tax of up to 209%. I therefore believe that this amendment enabling people to spread the tax on this income over three years will mean a great deal to individuals and I thank the hon. the Deputy Minister for that. When one looks at the older people over the age of 70 years whose special rebate is now being shifted up from R80 to R180, viz. an increase of 125%, I once again expected a remark from the hon. member for Yeoville, but once again there was a deathly silence and we heard nothing, either positive or negative, from him.

As regards clause 7, which deals specifically with the question of tax avoidance, I want to remark that it is said that the majority of post-war multi-millionaires in America have two characteristics. Before the electronic millionaires came to the fore after the Second World War, the majority of the millionaires in the USA after the Second World War were, firstly, “college drop-outs” and, secondly, tax experts. We all agree that tax evasion contributes towards disturbance of a fair pattern of distribution of taxation. The rhythm is disturbed and this means that the Minister has to impose taxes that disturb the general rhythm of tax payment by the population. However, it is still recognized that “tax avoidance is legal”.

†It is tax evasion which is illegal. I think that is something that we must recognize; it is something that we must grant to every individual in South Africa, i.e. that he is legally allowed and entitled to avoid paying tax that he should not pay. But he is not allowed to evade any taxes illegally. I think that is one thing with which we will all agree and in which we shall all try to assist the hon. the Minister.

* As far as clause 8 is concerned, I should like to put it to the hon. the Minister for his consideration that although we all believe that tax should be paid at the beginning and the end of a financial lease, one wonders whether, in a case where it is the same article between the same people, the hon. the Minister would not want to consider collecting tax only once instead of twice. I shall leave the matter at that. With these few words I hope I have achieved a greater effect with the words at my disposal, if I listen to the hear-hears it evoked.

We welcome the fact that in clause 11, normal expenditure in regard to scientific research is now being permitted, and we express the hope that in future this may be further extended.

Clause 12 deals with the question of hotels, and although the hon. the Minister has spoken to me about this, I should be obliged if he would react in this regard so that we may have this matter in Hansard for record purposes. In this regard I refer specifically to subsection (2) which provides that this amendment will be retrospective to 24 August 1981. It is of course an unusual step to make a provision retrospective. I should therefore be obliged if the hon. the Minister would react to this specifically.

Clasue 14 gives rise to some concern, when one considers that sports sponsorships will no longer be deductible for income tax purposes, because it will no longer be regarded as marketing expenditure, and there is perhaps reason for concern about the effect of this on sport in general.

Particularly in the WP.

The WP has never needed any subsidies or outside players to achieve victory, particularly not this year.

Clause 16, which concerns donations to universities, colleges and other educational establishments and institutions, is particularly gratifying. What the amendment amounts to, is that donations need no longer be in cash; donations may now be made in kind as well. I think that this extension will suit everyone very well, particularly in view of the possibilities which this opens up. Therefore I should like to welcome this. On reflection, I must say that several sound amendments are contained in this legislation. I accordingly support it, and I cannot support the amendments moved by hon. members of the Opposition.

Mr. Speaker, the hon. member for Vasco made a point which, I believe, we should emphasize. He said that tax avoidance was in fact perfectly legal. I think it is a point that we should bear in mind. I actually prefer the term tax minimization. Tax avoidance is legal until one has actually closed the loopholes. Tax evasion is of course not legal.

The hon. member for Vasco also raised the point of fiscal drag, which I should like to come back to during the course of my speech.

If one looks at the debate on this particular measure, and also to the debate on one of the previous Bills which we discussed earlier, the Revenue Laws Amendment Bill, it is clear that a number of clauses have been introduced to close tax loopholes. People have avoided tax by making use of loopholes existing in specific statutory stipulations. They have been doing so in order to avoid paying tax in a way which was not originally intended for that purpose. We have no problem with this in general because what happens with tax avoidance is that as more and more people begin to avoid paying income tax one begins to erode the tax base. The result of that is that those who do pay tax end up having to pay more and more. With income tax there is no such thing as a free lunch because a concession made to one has to be paid for by somebody else. This is an important point to bear in mind.

With a Bill of 62 clauses it is very difficult to talk to specific clauses. The point I should like to dwell on, however, is a theme similar to this, the erosion of the tax base. The matter I should like to raise with the hon. the Deputy Minister of Finance is that there is a situation in South Africa in which we indeed encourage that erosion of the tax base. What I am referring to here, Mr. Speaker, is the so-called fringe benefits that one can get. This is an important point because here we are not talking of tax avoidance; we are talking of cases in which legislation actually allows people to get things such as a company motor car, high entertainment allowances, etc. I submit that we must have a look at the implications of these things. What are we in fact doing here?

During the course of his speech the hon. the Deputy Minister repeatedly pointed out that the tax policy affected the economy. Fiscal policy also affects the economy. It has an impact on the economy. The point that I should like to raise in this respect is the following. If one has a look at our present tax structure at this particular point in the economic development of South Africa, and if one has a look at the job opportunities we have to create, as well as the fact that a large portion of South Africa’s population is not wealthy, the question arises whether our tax structure should be allowing people to drive around in luxury motor cars, to live in very grand houses, and to enjoy entertainment expenses on a lavish scale at the taxpayers expense. I submit that if they enjoy those benefits somebody else is paying for that. Let us just have a look at this, Mr. Speaker. If someone has a Mercedes Benz which is fully maintained by his company, I do not know what the tax man takes now. I do think, however, that it must be in the neighbourhood of R1 200 a year, which will, of course, be added to that particular person’s taxable income. If he is on a marginal tax rate of 50%, it means that fully maintained car is actually costing him R600 a year. The point I want to make, is that where one has a system like this and people can actually see others enjoying these advantages, I believe it actually encourages them to try to seek ways of avoiding tax. I think that the only fiscal system or tax system that is legitimate is the one in terms of which, irrespective of how one gets one’s income, one will be treated in an equal way. There is no justification for a system—and this is what the Carter Commission also found—where the man who draws an income of, say, R40 000 and who enjoys R30 000 in fringe benefits is considerably better off than a man who is drawing R70 000 as a straight income and is paying tax on that. I think we must look at the consequences, because I want to ask again: In regard to the three areas of flashy motor cars, over-luxurious housing and excessive entertainment expenditure, is this what we need in this country in the present context?

During the course of his speech, the hon. the Deputy Minister pointed out that tax avoidance was in fact a growth industry in South Africa. I think that that is true. We must, however, ask ourselves why it became a growth industry. To some extent I think it became a growth industry because, when we had a very high rate of marginal tax—I think that at one stage with the loan levy our top tax bracket reached approximately 78%—and a person found himself in a situation where with an increase of R1 000 all he was going to be left with was R220, then of course he looked for ways of getting income without paying tax on it. This gave tremendous impetus to the fringe benefit situation. In this way an occupation was brought into being and an awful lot of very clever brains were involved in seeking ways in which people could pay less tax. Once this industry had been brought into being, the people involved had to find continued employment for themselves, but in the period after the tax reforms I believe there was a movement away from tax avoidance schemes. The question I want to ask, is: Why is it coming up again? I believe that the reason is the impact of inflation. My colleague, the hon. member for Port Elizabeth Central, spoke about bracket-creep and many people have spoken about fiscal drag. When we talk of fiscal drag, we are not referring to the clothes the hon. the Deputy Minister wears. What we are actually referring to is the impact inflation has on tax without the marginal rate of tax being increased. Let me give an example. If a person has a taxable income of R40 000 and he gets a 15% increase in salary, roughly half of that will go in tax, so that instead of getting an increase of R6 000, after tax he gets an increase of R3 000. Looking at the inflation rate, he will then conclude that he is worse off and therefore he will seek ways of being remunerated on a non-taxable basis. I think that this is why we are now seeing a new spurt of activity on the part of people seeking schemes for tax avoidance. It is the result of the impact of inflation.

During the course of this debate, hon. members have said: “Look at how the marginal tax rates have been brought down.” That is true; they have been brought down. It has also been said: “Have a look at how the threshold at which one pays income tax has gone up.” That is also true; the threshold has gone up. The hon. the Deputy Minister referred to the change in the rates from, I think, 1978 to the present day. The point is, however, that individuals are paying more tax as a group. Consider the following figures: In 1979-’80 the amount collected from individuals was R1 944 million; in 1982-’83 the amount collected was R4 350 million. That represents an increase of approximately 150%.

That is exploitation.

And that is without an increase in the rates.

As my hon. colleague points out, without an increase in the rate. In fact, it increased as tax rates were coming down and tax bracket thresholds were going up.

For 1983-’84, the current year, we are budgeting for R5 300 million. That is a tremendous increase in the amount of tax collected from individuals since 1979-’80. If one looks at tax collected from individuals as a percentage of the total tax, one sees that it has increased from 19,5% in 1979-’80 to 27% in the estimated budget for 1983-’84. Somebody has been paying that. Can it come from an increase in the tax base? I do not think so. In fact, what we are doing is that via the reforms that we bring about a lot of people do not have to render tax. In South Africa there are a few people who pay an awful lot of tax. 7,29% of all taxpayers have to pay more than half of the tax collected from individuals. 2,16%, a mere 43 000 people, in the R30 000 plus group, pay more than a quarter of all individual tax collected. These are the people who, when affected by fiscal drag, look for ways in which they can arrange their affairs so that they do not pay so much tax. This is what has given the tax avoidance industry a new lease of life.

I should like to raise just a few other points. The increase in the rebates for people over the age of 70 is to be welcomed. The point I should like to raise with the hon. the Deputy Minister relates to people who earn less than R7 000 from employment. These people, who are on a PAYE system do not have to render income tax returns. They are not freed of income tax, but they do not have to render income tax returns. From the figures given by the hon. the Deputy Minister in his speech, it seems to me that a retired person does not start paying tax until he reaches an income of about R6 800. However, these people battle when it comes to rendering a tax return. One of the things I found when dealing with pensioners, and the one thing that frightens them more than anything else, is not the fact that they pay tax, but the tax form itself. They find the tax form a nuisance and tend to find it confusing. What I should like to ask the hon. the Deputy Minister is whether we cannot get some sort of concession which would allow retired people who are getting incomes of less than R7 000 per annum to be freed from rendering tax returns.

Mr. Speaker, I do not want to argue about what the hon. member for Edenvale had to say in his speech. However, I do want to refer to his remark relating to tax on “perks”. The hon. member is a member of the commission which investigated this matter and we are still discussing the matter. The fact that perks can be used to avoid tax is probably not acceptable to anyone in this House. The commission that is investigating this matter is still to issue its final report in this regard.

As far as the effect of inflation on taxation is concerned, I shall come back to what the hon. member for Edenvale said in the course of my speech. I just want to begin by making a few general statements. Direct income tax is, and is generally recognized as, the most effective and acceptable form of tax. This type of tax possesses the inherent potential of being a stabilized revenue for the State that can be determined in advance. Moreover, it can be calculated with greater precision and this, in the nature of the matter facilitates budgeting. It can also be used with success as an economic regulator. Therefore direct tax has inherent possibilities for adjustment which, if judiciously employed, can bring about a considerable degree of certainty. However, there are certain requirements that must be complied with. Firstly, it must at all times be kept to the most effective level. This is something that we certainly must not overlook when discussing the rate of income tax. It must be capable of being adjusted to changing cirumcstances and must ensure fair and equal treatment for all taxpayers. Now the hon. member for Edenvale argues that this is not the case. However, if one considers the rates of the various income groups and compares the increases with the inflation rate, then his argument is not quite correct. Tax from income still forms the basis of State revenue, bearing in mind that it is expected that 58% of State revenue will derive from this direct taxation in the present financial year, viz. 1983-’84. I contend that this is a sound and reasonable percentage. It is a reasonably large proportion of the total State revenue. It would be useful to discuss the merits of an increase in this percentage, but time does not permit and I shall therefore confine myself to saying that I am of the opinion that we shall not be able to increase this percentage by very much. Accordingly I cannot associate myself with the view of the hon. member for Yeoville, who totally condemns indirect tax. Accordingly a constant effort will have to be made to find a broad basis for tax collection. Therefore it is cause for gratitude that in his Second Reading speech the hon. the Minister mentioned that indirect tax still plays an important role and will have to play a still greater role in future, but that as yet it will not be possible for it to play a predominant role in the pattern of taxation.

I also want to refer to the hon. member for Sunnyside, who spoke about the reduction in the rate of income tax. Over the past number of years, particularly since 1978, we have succeeded in bringing about a general reduction in the rate of tax from 60%-66% if one includes the loan levy—in 1978 to 50% in the present financial year. In contrast—and it is very important that we should take this into account—the level at which the maximum scale is reached, has also been increased from R28 000 in 1978 to R40 000 in 1983-’84. It is the positive result of the increase that is not so drastic, as well as the fact that in view of the increase in revenue, there is a more gradual increase in taxation. It is important to take cognizance of this and to set this against inflation, because often complaints are received that the increase in tax is not keeping pace with the effect of inflation on tax. If the increase in salaries were to keep pace with inflation, the tax rates could create an improvement after tax. In his speech the hon. the Minister referred to three examples. I want to quote only one. A person with an income of R30 000 before tax in 1978 gets an 11% after tax improvement in 1983-’84 above the inflation rate viz. if his salary has increased in proportion with the rate of inflation. As it seems to me, the problem is apparently that if the rate of the increase is far above the increase in the rate of inflation, there will be an after-tax loading.

How many votes did you get at the control board election?

Mr. Speaker, I should very much like to reply to that interjection by the hon. member for Jeppe, but unfortunately you would rule me out of order. However, that is typical of the mentality displayed by those hon. members in our cultural life—to infiltrate into spheres which we want to keep out of politics.

We should like to thank the hon. the Minister for the fact that account is being taken of this problem of inflation catching up on after-tax income, and we should like to ask that on-going attention be given to this problem. We should also like to express our thanks for the amounts exempted with regard to the taxation of persons older than 70 years. All those who have spoken have referred to this and I want to say that we are very grateful for this fine concession. We take pleasure in supporting this Bill.

Mr. Speaker, I shall have to be very brief. I want to deal firstly with the question of the leasing of plant and equipment—the amendment of section 8 of the principal Act by the substitution of subsection (5)(b) and (c). The new provisions provide that there should be a depreciation for certain purposes calculated on leased equipment at the rate of 20% on reducing balance. We believe that this should be calculated at the rate of 20% on a straight-line basis because that is the more modern and the more generally accepted way of calculating depreciation. A large amount of tax is going to be paid on this calculation after the end of every major leasing agreement. We believe that this is going to lead to a great deal of wrangling and many problems and I have accordingly placed an amendment in this respect on the Order Paper which I shall move during the Committee Stage.

The next item I wish to discuss deals with the situation of improvements effected to leasehold properties. As we all know, this is something of which people have taken advantage. Where in future a property is leased by a non-taxpaying entity, people who have undertaken to carry out certain fixed improvements will not be able to deduct the cost of those improvements over the lease period. We believe this to be a good thing in so far as it prevents a situation that has been exploited up to now although it could be a grave disadvantage to certain public authorities. We may have a situation where local municipalities, for example, have properties which they lease out for development which will be of great advantage to that particular municipality. Many of these bodies will not go ahead if the entrepreneur who has the skill and the capital to effect that development, is not permitted to deduct the cost of that fixed development over the course of that lease period. In this respect, too, I have an amendment on the Order Paper which I shall also move during the Committee Stage.

The next point I want to raise briefly is in regard to allowances granted in terms of section 11bis as incentives to exporters. We endorse the decision to disallow as export marketing expenses money spent on the promotion of sporting or other events in the amendment effected by clause 11 (1)(a).

I should like to take this opportunity in passing a few more general remarks on export incentives and on the South African export quality. Firstly I believe that we are all agreed on the importance of export to our economy. We have the potential to create employment that will produce economic growth, but we must have a capital mobilization. Exports augment savings and overseas investment. Exports are a source of foreign exchange and they contribute to a healthy balance of payments situation. Ultimately industrial exports will have to replace gold as a source of foreign exchange. In the second instance export incentives alone cannot create a healthy export-orientated industry. Applied in isolation they will have the complete opposite effect. They can have a cost-raising effect, undermine competiveness at home and abroad, they can be inflationary and they can lead to a misallocation of resources.

Business interrupted in accordance with Standing Order No. 74.

Mr. Speaker, there were quite a few questions put by hon. speakers on the Opposition side, and I shall try to reply to them as far as I possibly can and as briefly as I possibly can.

†The hon. member for Yeoville made a debating point of the question of indirect taxation in the South African situation. I think he is also on record as being against high direct taxation. The question is where all the funds must come from.

*In this connection I should like to quote to the hon. member what I said in my introductory speech—

†A couple of the hon. members who took part in the debate spoke about tax avoidance. The hon. member for Yeoville also raised the matter. He said that it was perfectly legitimate to regulate one’s affairs in order to pay the minimum tax. He said that it was also proper for the Government to close loopholes. In this respect I should once again like to refer him to what I said when I introduced the Second Reading debate—

I may add even if legitimate—

The question can be asked just how respectable tax avoidance is, even when carried out legitimately. I want to quote from a judgment in a decided case Collector of Tax vs. Ferreira, 1976, SA 5653. The learned judge said—

He went on to say—

*In other words, we can argue as much as we like, but the fact of tax avoidance, even if it is legal, is not to be recommended, as the learned judge said in this case.

The hon. member also asked what this Bill was doing to create job opportunities. I want to say at once that this legislation does not deal with labour questions. The legislation does, it is true, make provision for the necessary financing for the possible creation of job opportunities. I want to point out to the hon. member, and to other hon. members who referred to this—the hon. member for Amanzimtoti also referred to it—that over the past 12 months more than R1 200 million has been invested in decentralized areas, providing more than 56 000 people with job opportunities. So although this legislation does not directly address that problem, job opportunities are an indirect consequence of these financial measures.

I also want to refer to the question of the retrospective effect of clause 7, a question to which the hon. member for Yeoville referred. It relates to someone ceding income from investments to someone else, that income then not being taxable. Continuing with that practice is discriminatory, because the man in the street must make his donations from his income after tax. It is incorrect to say that it is a transaction that is retrospective in nature, because the money paid in terms of that transaction would only be taxed from 1 July 1983. I further want to point out that by saying that past transactions will not become taxable, even if future income does become taxable, would not be good practice. One would then only be creating a new loophole. All that persons wanting to circumvent the Act would then have to do would be to back-date the transaction.

The hon. member for Yeoville also referred to the so-called index bonds. I must just point out to him that in the light of our inflation rate, indexing is a very dangerous step to take. The moment we start with indexing as a measure in our struggle against inflation, we are immediately acknowledging that we have lost the struggle.

The question of annuities, which the hon. member raised and which has to be looked at in its totality, is something to which we shall be giving attention.

†The hon. member also referred to an interest-free loan to charitable institutions. There is no objection to that and there is no law prohibiting it. It is perfectly legal to do that. There are no tax implications.

*On the question of the benefit that the mines have of deducting capital expenditure from their mining revenue, the hon. member asked that that concession also be granted in regard to mine revenue not specifically derived from mining activities. It is unfortunately not possible to grant that concession, because then we would be violating another principle that is applicable in agriculture. Agriculture has the same benefit of being able to debit capital expenditure against agricultural revenue. If a farmer saves money and invests it, however, and he earns interest on those investments, he cannot debit capital expenditure against that income either. In other words, we would not like to deviate from that principle.

That is a pity.

Let us rather talk some more about married women.

Mr. Speaker, I should like to ask the hon. the Deputy Minister—perhaps he can reply to the question at some stage later—whether he can tell us something about clause 9, which, according to the explanatory memorandum, provides for a special and temporary increase in the exemption granted to taxpayers who before 1 April 1982, made an investment in excess of R40 000 in Post Office savings.

If the hon. members wants some more information with regard to that matter, I shall ask the department to let him have the information by letter.

Thank you.

The controversy surrounding the question of married women has been raging for a long time. The overall majority of these working women would have to pay more income tax than they would if they were taxed separately. A week or two ago there was a conference on research that had been done by one of these women. I do not have the particulars, but hon. members can look them up. I think they were published in the newspapers two or three days ago. The woman concerned investigated approximately 4 000 married working women. What struck me was that these women did not see the question of taxation as a big problem when it came to their working. The Standing Commission on Taxation Policy is carrying out a further investigation into this matter. We have already investigated the matter with reference to both the British and the American systems. At present we are examining the system in West Germany. If any promising aspects emerge in this connection we shall certainly make use of them. In general, however, let me say that this is a much easier problem to talk about than to solve.

I also want to thank the hon. member for Middelburg for his clear exposition of certain problems, particularly the question of the sale of livestock as a result of the drought. I think this is a great concession that is being made to farmers who are experiencing problems at the moment. When the drought has finally broken, I think it will definitely, as the hon. member has said, enable the farmers to again build up their industry with greater confidence.

The hon. member for Sunnyside referred to the limit of R40 000, above which an individual paid tax to the tune of 50c in the rand. That is correct. He said that this was unfair discrimination if one bore in mind that a company only pays 46c in the rand. What the hon. member did not take into account, however, was the fact that a company pays 46c in the rand from the first rand, whilst the individual only pays that 50c in the rand for an amount in excess of R40 000. Up to the R40 000 limit it therefore increases progressively, so that on a large portion of his income the individual is only paying 10%, whilst the company is already paying 46%.

†The hon. member for Amanzimtoti also had it against tax avoidance, and also said that perks were adding to the problem of inflation. I agree with the hon. member on that point. The hon. member for Edenvale also referred to that. I agree with him too. It is true that perks do to a certain extent raise the standard of living, and sometimes even far above the level to which it would otherwise have been raised if the person in question had earned a straight salary.

In respect of tax incentives for productive work or manual labour, if I may refer to it in that manner, I should like to point out to the hon. member that wages and other costs in connection with the type of manual labour to which he referred are deductible. That is indeed so. I do presume, however, that the hon. member referred to the extra incentives, and I can therefore give the hon. member for Amanzimtoti the good news that the Standing Commission on Tax Policy is in fact looking into that at the moment.

Mr. Speaker, could the hon. the Deputy Minister tell us whether he is aware that in respect of the specific problem I put to him this afternoon in relation to the collecting and removal of rocks from arable land in order to increase the capital value of that land, it is easier and quicker to do that particular job manually than mechanically?

Mr. Speaker, I do not know to the clearing of what particular rocks the hon. member is referring. I will accept his word, however, that there are certain types of rock that can be cleared more easily by hand than mechanically. [Interjections.]

The hon. member for Amanzimtoti also referred to the matter of fiscal drag, to which the hon. member for Edenvale also referred. I just want to point out that I emphasized the matter in my Second Reading speech as well. It is true that salaries did increase—and I want the hon. member for Edenvale to take note of this as well—in excess of the rate of inflation. It is also true that fiscal drag is not only owing to inflation but also to increased income.

*Mr. Speaker, I also want to express my thanks to the hon. member for Vasco, who gave a very clear exposition of how the marginal rates have decreased and how the amounts on which maximum tax is paid have actually increased. I thank the hon. member for that. In regard to the hon. member’s reference to the hotel industry, I shall have the department send him a confirmatory reply.

†The hon. member for Edenvale referred to the erosion of the tax base. I have no quarrel with him in that connection. I agree with him whole-heartedly on what he said. As regards the encouragement of fringe benefits I could not understand quite clearly whether the hon. member for Edenvale is totally against fringe benefits or not. Is the hon. member completely opposed to fringe benefits?

I believe they should be taxed in such a way that they hold out no advantage to those who enjoy those fringe benefits.

The problem I have on that score—and that also affects the next argument of the hon. member where he said that only 7,5% of the taxpayers pay half of the total tax income—is that the fringe benefits to a very large extent are particularly applicable to that particular section. So they would be taxed even more…

But you could reduce the tax rate.

Yes. I also want to mention the matter of the pensioners with an income of R7 000. I think that that is something that can be looked at and we will certainly do that.

Then I should like to say thank you to the hon. member for Gezina for his very informative contribution. I thank him very much for it.

The hon. member for Walmer raised the matter of the 20% and taxation by a direct method or on a reducing balance. If we were to accept his suggestion, we would of course defeat the object of that particular clause, which is to retain a balance after the calculation, after the decrease. One must retain a balance for income tax purposes. If we were to follow his suggestion, there would be no balance after five years. So that would in fact defeat the object of this clause.

I think I have answered most of the important questions and I should like to thank hon. members for taking part in the debate.

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

Question affirmed and amendments dropped (Official Opposition and new Republic Party dissenting).

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Speaker, I move—

As hon. members know, the rate of sales tax was increased from 5% to 6% on 1 September 1982. The Government Notice in terms of which the rate was increased will lapse 30 days after the end of the present Parliamentary session, unless otherwise provided by Parliament. In clause 15 it is being proposed that the Government Notice concerned be withdrawn, and in clause 2, an amendment to clause 5 of the Sales Tax Act is being proposed in terms of which the rate of 6% will continue.

The estimate of State revenue from sales tax, as envisaged by the hon. the Minister in the budget, is based on the increased rate, and a lowering of the rate cannot be proposed in the present economic climate. Although the levying of taxation always calls for some sacrifice on the part of the public, the sales tax can by no means be regarded as onerous. In fact, it has been possible to keep the rate of the tax fairly low—and 6% is low by world standards because of the broad base of the tax and the fact that exemptions and exceptions are kept to a minimum.

A number of other amendments are being proposed in the Bill, some of which are of a technical nature. An explanatory memorandum containing detailed explanations of the proposed amendments has been made available to hon. members. Apart from several amendments which deal with the exemptions from taxation and which are necessary mainly in order to avoid excessive escalation of the tax or to solve problems of interpretation or other difficulties, there are a few further amendments relating to the taxability of transactions or the payment of tax. Here I am thinking of the amendments proposed in clause 6 with regard to the debtors’ allowance which is being granted to vendors and the amendments proposed in clause 11 with regard to financial leases.

The debtors’ allowance: Sales tax is levied mainly on transactions, and in most countries in which it is levied, the full tax on a transaction has to be paid at once, irrespective of whether the purchase price or other compensation is paid in cash or instalments. South Africa is one of the few countries which allow the tax payments to be spread over the period of payment. The debtors’ allowance was originally introduced to accommodate retailers, especially furniture dealers. It is a form of reserve which is recalculated every month, and in this way, a part of the tax is spread over the period of payment. Because of the problems which retailers would have experienced in apportioning each payment of a debt between capital and finance charges, it has been decided to allow dealers to calculate the debtors’ allowance on the finance charge element of outstanding debts as well. In this way, the payment of tax is delayed, but where the period of payment is three to four years, the tax is paid in full during that period.

However, certain contrived schemes have come to light in terms of which the payment of tax is delayed for long periods. This is done simply by extending the period of payment and calculating the finance charges for the full period so that these are added to the capital amount as part of the outstanding debt. In this way, the finance charges can amount to approximately three times the capital amount over a period of 20 years. In this example, the debtors’ allowance is 50% of four times the capital amount, i.e. twice the capital amount. This means not only that the payment of tax on the transaction concerned is delayed for about seven to eight years, but also that the payment of tax on other transactions is delayed. It will be realized that the amount of finance charges eventually paid may be less than the amount originally debited, especially where the period of payment is reduced. In terms of the amendment introduced by clause 6, the finance charges do not qualify for the debtors’ allowance if the period of payment is more than 60 months. It is expected that this amendment will have no effect on transactions concluded in the ordinary course of the retail trade, since the periods under such transactions usually do not exceed 48 months. The transactions which will be affected are bigger transactions which do not fall under the Credit Agreements Act, No. 75 of 1980, and which are financing transactions rather than ordinary commercial transactions. The apportionment of payments between capital and finance charges does not give rise to any problems in such cases. The amendment will apply to periods of payment commencing on or after 1 September 1983 and to sales concluded before or after that date. It is true that more tax will be payable in respect of the periods concerned than otherwise would have been payable. This is as a result of the fact that the debtors’ allowance will no longer be granted in respect of finance charges in the cases I have mentioned. The amendment is not retrospective. To a certain extent it simply expedites the payment of tax which has already become payable as well as the payment to the Receiver of Revenue of amounts of taxation already recovered from buyers by some vendors.

†Financial leases: Clause 11 of the Bill proposes certain amendments to the Act in regard to financial leases. The technical aspects of these amendments are dealt with fully in the explanatory memorandum, and I shall therefore confine my remarks to the background of the amendments.

The Sales Tax Act distinguishes between financial leases and rental agreements. The tax on a financial lease is paid in full at the commencement of the lease on the cash value of the property leased while the tax in respect of a rental agreement is paid on the rental payments as they become due. The purpose in taxing a financial lease in this way is to eliminate tax on the finance charge element of the rentals, and so as to secure equality of treatment between financial leases and sales subject to suspensive conditions, a tax is not leviable on the finance charges payable under such sales. The tax is on a transaction as a lease and not as a sale. The majority of financial leases are also leasing transactions as defined in the Limitation and Disclosure of Finance Charges Act, 1968. The definition specifically precludes any transaction whereby the lessee becomes the owner of the leased property at any stage during or after the expiry of the lease or whereby after the expiry of the lease the lessee is to retain possession or use or enjoyment of the property, except as provided in section 6K of that Act. Section 6K gives the lessee the option of purchasing the property at a price notified by the lessor or of entering into a new lease based on that price. The Act thus envisages a new transaction on conclusion of the lease, that is a sale, a financial lease or a rental agreement. In each case sales tax is payable because the tax is leviable on transactions. In many cases the procedure laid down in the Limitations and Disclosure of Finance Charges Act is followed and tax is paid. In many other cases, however, nothing is done and the lessor lets the lessee do what he likes with the leased property. To all intents and purposes the lessee becomes the owner. For the purposes of the Sales Tax Act “sale” is defined as including a donation of goods and also any transaction whereby the ownership of goods passes or is to pass. Clearly, in many cases, there is a tacit agreement between the parties to this effect and that being so, sales tax is clearly payable. In practice the tax is in many cases claimed by Inland Revenue and is paid. To a great extent therefore the proposed paragraph 3A inserted by clause 11 of the Bill confirms existing practice. The real difficulty that arises in these cases is the problem of readily determining the value of the goods in question, and for this purpose the amendment to section 7 of the Act, which is proposed in clause 4 of the Bill, lays down a method whereby this may be done. One of the main purposes of this amendment is to ease the administrative burden on the banks and Inland Revenue.

Refunds: The Sales Tax Act lays down procedures for obtaining goods and services free of tax in certain circumstances, for example, the purchase of goods intended for resale. A vendor who wishes to avail himself of such an exemption must normally be in possession of a vendor’s certificate and produce it or a photocopy thereof before the exemption can be applied. It is to be expected that businessmen and financiers will acquaint themselves with the procedures to be followed. It is found, however, that in complicated transactions involving third parties genuine mistakes occur and tax is paid in error. It is doubtful whether the existing provisions of section 32 of the Act enable the Commissioner to authorize refunds in such circumstances. The amendment introduced by clause 7 will remedy this.

Advertising and publicity services: The hon. the Minister announced in his budget speech that the provision introduced last year whereby advertising and publicity services were to become taxable services are to come into operation on 1 January 1984. This will be done by notice in the Government Gazette and it is, therefore, not necessary to include any provision in the Bill in this regard. Before proceeding any further, however, persons rendering these services will be given an opportunity of discussing with the Commissioner any problems they may have as to the practical implementation of the provisions.

Mr. Speaker, when the first of these revenue measures was introduced, we said that we would demonstrate that what was in fact taking place throughout was that the result of the actions of the Government in regard to these various taxation measures was that costs were increasing to the consumer. I think we have demonstrated this in regard to the Revenue Laws Amendment Bill and the Income Tax Bill and, in regard to this Sales Tax Amendment Bill, it is self-evident that that is so. That is why we charge this Government with not acting in the interests of the consumer and that their actions do in fact result in cost increases to the consumer at a time when the consumer already has far too many problems because they also add fuel to the flames of inflation. At this stage, therefore, I should like to move the following amendment—

Let me say right at the outset that GST flourishes on inflation. As prices go up, so the amount of sales tax collected also increases. It is therefore in the interests of those who are seeking to collect the largest amount of sales tax possible that there should be inflation because that is the reason why prices increase. This question of the flourishing of taxation by reason of inflation is one of the most obvious situations in regard to the GST that we have in South Africa. If we add to this in the South African context that in February of last year GST was only 4%, we find now that we are dealing with a sales tax that is 50% higher than it was last year. In addition to this, we have in inflationary factor so that, quite clearly, the amount of revenue that is being collected must be substantially more than was ever collected before. Step by step we have tried to bring the budget within the limits of what we believe the Government requires as far as finance is concerned, and each one of these steps has been turned down. Here, therefore, we again find ourselves in the situation where we say that we believe that the tax should be reduced. It is not, as the hon. the Deputy Minister said earlier today, that we want to abolish all taxation. His argument was that we are opposed to all taxation. Certainly, in an ideal situation, the State would have other sources of revenue. However, we recognize that taxation is a necessary evil in our society. We recognize that it needs to be there, but the fact is that one needs taxation only to the extent that one services the requirements of the State within reasonable limits and a State that is efficient. In this State, the Government has not demonstrated that it is able to run the country efficiently and it has also not demonstrated that it needs all the money which it is seeking to extract from the taxpayers. That is why, as far as we are concerned, we cannot support the proposal to increase the sales tax even though it has been in force by Government notice before. We believe it is wrong and we believe it is unnecessary.

In addition to that we have consistently said that in our view sales tax should not be imposed upon essential foodstuffs. If ever there was a time when this was apparent, it is now going to become clear because the effects of the drought in South Africa have not really been felt. If anything, to some extent the drought has, because of the situation in regard to farmers putting their cattle on the market, had an effect of reducing or containing meat prices within certain limits. Once that situation changes, however, one will find that meat prices will go up and when the real effect of the drought becomes apparent, then one will see how the prices of foodstuffs unfortunately are going to rise in South Africa.

The other factor which is so often ignored in our society is that if one looks at the consumer price index, one will see—I have taken the latest one which is indicative of everything else that has happened—that in so far as the rate of increases in prices for the lower income groups is concerned it is at a higher rate than for those in the upper income groups. Let me give the statistics. The rate of increase for the higher income group as shown in the May 1983 figures was 12,4%; for the lower income groups the figure was 13,2%. That has been the trend. The trend is obvious, the reason for it is that food prices go up and the lower income group has to spend more of the money they earn on the essentials of life. That is why we believe there should be relief for the lower income groups, and the only way in which one can do it, is by removing general sales tax from essential foodstuffs, and we ask for that accordingly.

The debate on inflation continues in the House and needs to continue in the House. We are always told we are wrong. Either we are told that there is a higher rate of inflation in some South American country or we are told that the Government is doing everything it can to contain inflation, but we do not get compared with the economies of our major trading partners which is the real test. We find ourselves in a situation that Government speakers look for any kind of argument to say: Well, if inflation is low, it is good; if it is high, it is good and whatever it is, it is not the Government’s fault. That is the line which they take.

Recently we have had the IMF dealing with this. The IMF has been quoted in the House so often by the senior of the hon. the Deputy Minister, if I may use the term—in other words the hon. the Minister of Finance—and yet on this occasion the IMF has clearly indicated that whereas in the industrialized countries there is an improvement in regard to inflation, in so far as South Africa is concerned the progress is extremely disappointing. Here perhaps is a more objective view of the scene. The reality is that in South Africa, at a time when we are in recession, at a time when there are so many factors which help to bring down the cost of living in the ordinary course, at a time when demand is said to be dampened and when the statistics clearly show that we are not even in the lowest part of the recession, the Government is still unable to deal with the problem of inflation adequately. It is unable to deal with it adequately not only in the eyes of the Opposition but also in the eyes of impartial observers from the outside world. In those circumstances one will appreciate that the argument is respect of inflation is one that the Government has not answered and cannot answer because it is not prepared to take steps to alleviate the position, steps which can be taken particularly in so far as the lower income groups are concerned.

Here we have a test. Here we have a very simple test: Is the Government prepared to do anything for the lower-income groups in South Africa? Is the Government prepared to do anything in respect of essential foodstuffs? I have little doubt that the answer that will come from the Government benches will be: “No, we are not going to do it.” That is the reason why we move this amendment. We believe that the Government is acting contrary to the economic interests of the people of South Africa.

Tell us about unemployment.

I think that if you look at the statistics, you will see that unemployment is rising. [Interjections.] No, I do not want to talk about his R20. In any case, with inflation I think it will have to be R30 by now. I do not want to go into that. We actually have a serious unemployment situation. If the hon. the Minister is so concerned about it—I am pleased to hear that he is concerned about the unemployed—he would in fact support our amendment which is aimed at removing general sales tax from essential foodstuffs and to bring people some degree of relief.

I now want to turn to some of the provisions of the Bill itself. Again we have tax avoidance provisions, which we will support. We believe that where people, as we have indicated during the discussion of the Income Tax Bill, legitimately arrange their affairs, they are entitled to do so—I do not want to argue with the Deputy Minister about the morality of it, because I am talking about the law of it—but that in the same way the Fiscus is allowed to close the loopholes. Nobody can then argue that there is something immoral about the Fiscus trying to close the loopholes which certain people have found. We will support those provisions. We believe that that should be done and there is no dispute between us on that.

Some of the allegations which have been made in the past in regard to tax avoidance have not really been tax avoidance, but have been tax evasion. We had the exposures which were made some while ago in regard to foreign enterprises which were operating in South Africa and which were in fact not paying the general sales tax. When the day arrived that general sales had to be collected, they had disappeared off the scene. We tackled the Government on this and the Press reported some of these things. We are pleased that we now have provisions which are designed to deal with this. However, there is one flaw in these provisions, namely that it is all very well to say that the purchaser is liable for the general sales tax in those circumstances. I think there needs to be a knowledge on the part of the purchaser that the business either is a foreign concern or alternatively does not have an exemption certificate. Without that knowledge, you may well be imposing a liability on innocent people which I believe should not be imposed. I think that there needs to be an amendment, and I would hope that the hon. the Deputy Minister would introduce it, because with the kind of system they are operating here where there is only a two-hour period of debate on this subject, we do not have a chance of moving an amendment. In fact, in these particular circumstances it becomes a farce from the Opposition benches to even try and get an amendment accepted. In so far as this particular provision is concerned, we hope that the hon. the Deputy Minister will in fact do something about moving an amendment to that effect.

In regard to financial leases on which the hon. the Deputy Minister spent a little time, I want to indicate to him that in my view, where a financial lease means that at the end of the period the man retains the property. I do not believe that is a lease at all. I think that is a disguised transaction, and I think that the sooner the legislature deals with it on the basis that it is actually a sale and that the lease is merely being involved for tax purposes or for some other reason, the better it will be. To my mind there cannot possibly be a lease unless the essentials of the lease are contained in it, namely that the ownership remains with the lessor at the end of the lease. If there is to be a passing of ownership, in substance it can never be a true lease transaction.

And if he sells it afterwards?

If he sells it to somebody else, it is another story. If he sells it to the same person, we have to ask ourselves whether there was not an arrangement to that effect at the beginning of the lease. If there was such an arrangement at the beginning of the lease, I believe the substance of the transaction is not in the nature of a lease. If it was a genuine situation, namely that at the end of the lease, on an armslength basis, you come to terms on a sale at a proper purchase price, then it is another story. I think that is how I would view a financial lease. I do not think we should allow ourselves to be bluffed by what are in fact in the main disguised transactions.

With regard to the debtors’ allowances, which again the hon. the Deputy Minister spent some time on, we support this principle. But the problem is that, even in terms of the law as it is now, I am not sure whether it is not going to be abused. I think the Commissioner will have to watch this one very carefully because I think it is still open to abuse.

Then I come to a provision which I have spoken about before but which I find to be a grave disappointment in this Bill, and that is with regard to the coin collectors. Apparently somewhere someone does not like coin collectors.

Ken Andrew does not.

I think that there are many people who collect coins. There are even people in the benches opposite who collect coins. I can give hon. members many names of coin collectors. We take the view that when something is legal tender and one brings it into the country, or one has acquired it in the country, it is a coin, it is an article which is not to be subject to GST. What is the difference whether a man comes into the country by aeroplane and he has an English 50P piece in his pocket which is part of the change that he has brought back with him or whether he has a 50P piece that he is going to keep as a collector’s piece. I know the hon. the Minister of Transport Affairs had such a coin in his pocket and he did not pay GST on it.

But that is a lie, Harry!

I know that the hon. the Minister did not pay GST because he says he is not a collector. He only uses the coin to spend. Therefore he does not pay GST. Therefore if one intends keeping a coin to put it in a collection, one does pay GST, but if one intends spending the coin on a future overseas visit, then one does not have to pay GST. This is an illogical thing. Instead of bringing relief to coin collectors, the fiscus, having been told about the problem, has tightened up the regulations and made it worse for the coin collectors. If one refers to clause 1(1)(d) one sees that the proposed subparagraph (iv) states—

In other words, foreign coins—

In other words, this is designed to hit the collector of coins, and I say, with great respect, it should not take place. The exemption should apply to coins or paper currency which are not legal tender in the Republic, but which are legal tender. To make matters worse, not being satisfied with hitting the coin collectors, the Government then proceeds to hit the stamp collectors. In the preceding subparagraph the words “or imported” are included. This is to make sure that if one imports a stamp one is also going to have to pay GST because exemption no longer exists. I do not know what the Government has against people’s hobbies. I do not know what they have against normal healthy recreation. Maybe they want to encourage unhealthy recreation. However, I think we should encourage the healthy recreation of collecting stamps and of collecting coins and not seek to tax these by means of sales tax.

The other matter that I should like to deal with is clause 7. Clause 7 deals with a situation which on the face of it is highly desirable in the sense that where there is some sort of doubt about a situation and a person has acted in good faith, then, if the Commissioner is of that opinion, he can give certain relief. On the face of it is a provision of which I would approve. I have no problem with the Commissioner as he is now and I have no problem with his senior officials, but the question I want to raise is that the ability to negotiate a tax in certain circumstances by reason of the good faith of a person sometimes will put the Commissioner in a very difficult position because he then has a discretion. If he has no discretion in the circumstances, then there can be no pressures, there can be no suggestions or anything else. But it puts him in a difficult position when he has a discretion. As a general principal I do not believe that there should be discretions with regard to tax except in exceptional circumstances, because it actually protects the Commissioner for Inland Revenue. I would like to ask the Commissioner himself, and also the hon. the Deputy Minister, to watch the situation very carefully. With that I do not intimate that I am of the opinion that the Commissioner will do anything wrong, but I do believe that there are people who try to exert pressures on the Commissioner because he has that discretion now.

If one reads clause 7 of the Bill, Mr. Speaker, one will see there—and I refer specifically to the proposed new section 32(1)(a)—

1. (i) tax, penalty or interest paid by any person whilst in excess of the amount of tax, penalty or interest which should properly have been charged under this Act…

And then also subparagraph (ii), which reads as follows—

What I am seeking to achieve here is in other words to protect the Commissioner against pressure. That is something which, I would imagine, everybody would welcome in normal circumstances.

The final point I should like to raise in connection with this Bill is a matter to which the hon. the Deputy Minister also referred right at the end of his Second Reading speech. That is the question of the extension of general sales tax also to advertising services. Fundamentally one does not have an objection to having a general coverage in respect of sales tax, with the exception of course of what we regard to be the essentials of life. One does, however, have to draw a line somewhere. The question I should like to put to the hon. the Deputy Minister therefore is the following. Where does he, and where does the Government, intend to draw the line? Do they intend to extend this tax piece by piece to other services which other people render in South Africa? I can think of lots of examples in this respect.

In the United Kingdom for example VAT is to be paid on legal services. Does the hon. the Deputy Minister have in mind extending the field of general sales tax ultimately to cover all services? If that is indeed so I think we should be given some indication of this intention of his because I believe we should know where the line is going to be drawn. I think it is important for the business community in South Africa to know where this tax is heading. I think the consumer too should know where this tax is heading. Therefore we should get some indication from the hon. the Deputy Minister about what is involved in this.

Having moved the amendment on behalf of this side of the House, we hope that the hon. the Deputy Minister will effect some of the changes we have asked for in order to improve this Bill.

Order! I just want to refer to the use of the word “lie” by the hon. the Minister of Transport Affairs during the course of the speech of the hon. member for Yeoville. Although he used the word in a very friendly fashion and in a very humoristic way, I do not believe that even I have a discretion as regards the use of that word. I therefore ask the hon. the Minister of Transport Affairs very nicely to withdraw it.

Mr. Speaker, I withdraw the word “lie”. [Interjections.]

Mr. Speaker, firstly I should like to thank the hon. the Deputy Minister and the Department of Finance for the detailed explanatory memorandum which makes this very complicated Bill much easier for all of us to understand. I note it has even assisted the hon. member for Yeoville, who opposes the 1% increase in general sales tax, thereby trying to deny the Exchequer the sum of approximately R700 million to be collected during the period ending 31 March 1984.

The amount of R700 million is needed for essential services. The hon. member for Yeoville does not tell us where he thinks the money should come from for all those essential services. In other words, the hon. member and his party have a totally irresponsible attitude towards the financial affairs of the country. If one looks at the amendment moved by the hon. member for Yeoville it is clear that if this House were to be silly enough to accept that amendment, it would land us in a totally ridiculous situation. Let us look at what he asks for in his amendment.

He asks that general sales tax should not be increased by 1%. If one looks at the practical situation, however, general sales tax was already increased in September 1982, and until 31 March 1983 the Exchequer collected, by way of that extra 1%, an amount of approximately R350 million. If we were to accept the amendment moved by the hon. member for Yeoville it would be necessary for the Government to refund that R350 million to all those traders and vendors who paid that specific amount. They, in turn, would have to refund it to all consumers with whom they conducted their trade. [Interjections.] It is a totally ridiculous amendment, and I am certain that the House is going to reject it.

Then the hon. member for Yeoville complained to the House that the debate on a Bill of this nature is something of a farce because the members of the Opposition cannot get any amendment accepted. Let us, however, have a look at the most important amendment which the hon. member for Yeoville introduces and which he wants accepted in the Committee Stage. The amendment relates to clause 2. In terms of it he wants the House to accept that one cannot confirm the situation where the sales tax is increased from 5% to 6% already from September 1982. In other words, we would have the same situation that one would have to try to refund R350 million and, as I have already explained, that is nonsensical. So the hon. member for Yeoville has come with nonsensical amendments with no hope that they can possibly be accepted.

With a tax of 6% up to 31 March 1984 it is estimated that the Exchequer will collect a total of something like R4 000 million. This R4 000 million contributes enormously to improving the quality of life of the same consumers whose position the hon. member for Yeoville complains about. In other words, the consumer benefits from the way in which the Government spends the money. For example, when the Government spends part of the money on defence, it is done for the security of everybody living in South Africa. What is the hon. member for Yeoville’s objection to that? Surely he can have no objection to that. If one looks at education, housing, transport, social welfare and pensions, and provincial administration expenditure, one sees that it is the consumer who benefits. The Opposition criticizes the Government because it wants the quality of life of all South Africans improved. The moment the Government takes the necessary steps to obtain the funds to improve the quality of life, the Opposition tries to place the Government’s proposals in the worst possible light.

I have come to the sad conclusion that there are members of the Opposition who do not really want improvement in the political, social or economic position of all the other peoples of South Africa. The reason why some political parties would not like the Government to succeed is that they think they have a role to play if they can encourage confrontation between the Government and the other people of South Africa. The strategy of the Opposition is based on the knowledge that to finance the winds of reform blowing in South Africa the Government needs some additional funds. What do we, however, get from the official Opposition? We get from them a hurricane of resistance. They want to arouse suspicions about Government departments, Ministers and anyone spending funds.

I just want to give a few examples without going into any details. We can look at the disgraceful attitude the hon. member for Constantia adopts towards the Defence Force. We can look at the shameful attitude the hon. member for Houghton adopts towards security and the constant complaints against law and order, the Police and the Department of Co-operation and Development.

What does that have to do with sales tax?

Mr. Speaker, on a point of order: Are you going to allow—I think our speakers would like to know—a debate on defence, Black relations and things of that sort? If you are going to allow that, we would like to answer … [Interjections.]

Mr. Speaker, may I address you on this point? GST brought in R4 000 million. That money is then distributed to various departments. I am not going into any detail in respect of any department. In fact, I have only one more example to quote.

Mr. Speaker, with due respect…

Order! I think the hon. member has explained himself. In any event, I ask him to limit his discussion in this regard. He may proceed.

I shall quote my last example. The hon member for Pinelands made the absolutely shocking and scandalous statement…

Mr. Speaker, on a point of order: Is the hon. member allowed to debate what the hon. member for Pinelands or anybody else has said in respect of a matter which is not a sales tax matter merely because money is being spent for that purpose? You ruled this afternoon that I could not talk about bonus bonds when in fact there was an amount provided for in the Bill…

Order! I said the hon. member may proceed with his speech.

I wanted to refer to the scandalous and untruthful statement by the hon. member for Pinelands when with reference to the legislation of the Department of National Education he drew a comparison with Nazi Germany. That is an absolute disgrace.

[Inaudible.]

Oh, shut up. Sir, I do not mean that literally, but figuratively.

Today once again suspicion is cast on and attempts are made to stir up South Africans against a measure which will assist the Government to improve the quality of life of all South Africans. This party and this Government place a very high premium on helping those who have difficulties in making ends meet, including those senior citizens who are in the twilight of their lives. This is why the Government’s estimate of the subsidy that it is going to pay in 1984 in respect of maize, bread, flour and butter is approximately R282 million, and this cushions price increases. This subsidy is of enormous assistance to the consumer in keeping prices down, and reflects the actions of a government that cares about its people.

The decision to increase GST in September 1982 from 5% to 6% was a decision that was not taken lightly. The hon. the Minister, his Deputy Minister, as well as their very efficient team of experts can see what the priority financial requirements are. They have to make a very difficult decision to decide where money is going to come from. In this case the decision was that GST had to be increased from 5% to 6%. As I mentioned earlier, it means that in this financial year we will have an additional income of R700 million

Why do you not make GST 10%?

Is the hon. member for Yeoville now proposing that GST should be 10%?

Why do you not make it 20% or 30% or 40%?

Sir, now you see what would happen if the Opposition sat in the Government benches. We will get ridiculous proposals such as these by the hon. member for Yeoville. [Interjections.] The hon. member says that I am being foolish. The only reason why he says that is because he sees his own reflection in my eyes.

The Opposition knows full well that America, Europe, and many other countries, are going through the worst depression in living memory. Being our main trading partners this has obviously affected our situation very adversely. In the circumstances one would have thought that the Opposition would have had more understanding for the reasons why the Government was forced to increase GST. The Government has the responsibility for the wellbeing of all South Africans and, despite the negative attitude of the Opposition, it will take such measures as it considers necessary in the interests of all South Africans.

Financial leases have a definite advantage for both the lessor and the lessee. The lessor, obviously, is either a bank or financial institution and earns a better return on its money than it would lending out on, say, overdraft. The businessman or company that enters into a financial lease has enormous advantages. I should just like to mention just a few of these. Say the items to be leased cost R50 000. By leasing instead of buying, the businessman does not have to lay out the capital sum. He is able to use his capital far more gainfully. Secondly, the businessman is able to deduct the total instalment for tax purposes, and this is of course an enormous concession. Thirdly, it is the tax concession that makes it really worthwhile for him to enter into a financial lease. As GST is payable on each transaction the lessee pays GST on entering into the financial lease. In the case of a motor car the licence is taken out in the name of the lessee. When the agreement terminates the lessor and the lessee often have to enter into a fresh agreement at a nominal value, whether for sale or for rental. In terms of section 6 of the Limitation and Disclosure of Finance Charges Act. No. 73 of 1968, provision is made upon termination of the lease for a second transaction to be entered into. On this second transaction GST has to be paid, and many people pay the required GST. However, it has been found that this provision has led to tax evasion. The Bill before us remedies that situation.

On termination the Bill allows for a depreciated or market value to be placed on the leased article. This means that there can be no further uncertainty on the part of the parties and that the fiscus will not lose money.

Let us look at the simple example of where an asset is leased for, say, R10 000 over a period of four years. The lessee will register the asset in his name and pay R600 in GST. That R600 is deductible for income tax purposes. In addition the full amount of instalments, capital, interest and financial charges is deductible for income tax purposes. Then, at the conclusion of the four years, if the lease terminates and the asset is sold to the lessee and the market value is approximately R4 000, that is, if we depreciate by the 20% allowed for annually in this Bill on the second transaction the lessee, who now becomes the buyer and the owner, will pay approximately R240 in general sales tax. This R240 is also deductible for income tax purposes. The net cost in the second transaction is therefore approximately R120. If this R120 is spread over the four year period, it works out at approximately R30 per year, i.e. R2,50 per month. In view of the enormous benefits that the lessee receives by way of the tax concessions I cannot see any problems with regard to this particular clause.

If one bears in mind that a financial lease is either a disguised sale or a disguised hire-purchase agreement and that it has been developed to assist commerce and industry and the farming sector to obtain the maximum tax and credit concessions, then there can be no problem with regard to this particular clause. This clause should not affect the ordinary wage earner in any way whatever as he either buys on hire-purchase or he buys for cash in which case it is a single transaction and he only pays general sales tax once.

In the practical application of the Act it has been found that there are certain technical problems. These technical problems are now being remedied by this particular Bill. I foresee that just as the PFP have had a bite at the cherry, so the NRP and the CP will also have a bite at the same cherry. However, at the end of the cherry they will come close to the pip and then they will come to the crunch. The crunch is that the Government is responsible for determining the priorities of South Africa and has responsibilities for providing the necessary finance. This Bill will be acceptable to all the people of South Africa and I support it.

Mr. Speaker, of course sales tax is still relatively new in South Africa in comparison with other forms of taxation. For that reason it is true that there may still be quite a number of loopholes in this legislation or in the entire system of levying this tax. In the same way, there may still be a considerable degree of ignorance among the general public in connection with the rights and privileges they have in connection with certain things they need not pay tax on. Now I want to say that I think that sales tax is one of the fairest forms of taxation in any country, because it is a tax which is not only paid by some people; everyone pays it. The base is therefore very broad. But if one has such a tax the rate must not rise too dramatically either. In the past our rate was 4%. Last year the hon. the Minister increased it to 5%. However, the CP objects strenuously to the fact that it was increased from 5% to 6% in September. That represents an increase of 2% within a matter of eight months. We feel that when taxes have to be increased, it should be done in this House and not when this House is not in session. Although the hon. the Minister has the power to do this, we feel it is wrong. [Interjections.] We do not believe that taxes should simply be announced when Parliament is not in session. They should be announced here so that the issues can be debated here, with argument and counter argument. This cannot be reduced now because that would be impractical, but this tax should have been reduced from 6% to 5% at the beginning of the year. However, this could not be done. It was impractical. For that reason, we object strenuously to the procedure that was adopted. We hope that this will not happen again in the future. That is what the Parliamentary session is for. That is why a budget is introduced here. Is the Government not able to budget for a financial year? Is it so shortsighted? I do not believe that can be a reason. Is it too shortsighted to introduce a budget which can cover a period of 12 months? I think there was another reason. It was as a result of the balance of payments problem which arose. [Interjections.] Did this not become as a result of the balance of payments? [Interjections.] I also want to refer to clause 7. [Interjections.] I am very pleased about this. As I have said before it is a fact that the public, because of their ignorance, pay tax on things which are exempted from tax. The hon. member for Yeoville also referred to this. [Interjections.]

The hon. member for Yeoville also referred to clause 7 which is concerned with the opinion of the Commissioner. However, I have a problem with this. If we delete the words “in the opinion of the Commissioner”, in whose opinion must it then be? Who will then have to decide? That is my problem. The hon. member for Yeoville wants the words “in the opinion of the Commissioner” deleted, so that the taxpayer will then have to prove that he did not know. That is the only alternative. Otherwise a problem arises and I do not know how one could solve it. Perhaps the hon. the Deputy Minister could give us an explanation in this regard.

Hon. members also had quite a bit to say about inflation, etc. It is true that as far as the GST is concerned, a value is added to the price of the product. As we see it, inflation means a decrease in the value of money. However, here we have a amount which is added to the price of that product. For that reason I want to say that when we levy this tax, we have to be extremely fair in order not to burden the taxpayer too heavily.

The hon. member for Yeoville also referred to the IMF. Because this large loan is now going to be repaid to the IMF, could the hon. the Deputy Minister tell us what further conditions were attached to that loan? What other conditions which we have not yet been told about were attached to that IMF loan? This is a fairly cheap loan and therefore we should very much like to know why this loan is to be repaid later this year. Otherwise we have no problems with this Bill.

Mr. Speaker, the hon. member for Sunnyside objected to the fact that the GST can be increased when Parliament is not in session. Surely the hon. member cannot be serious about this because if economic policy is to be at all effective, it has to be flexible and adjustable and adaptable to any situation. If such a policy is not flexible, it cannot be effective at all. There is only one thing that is certain in the economy and that is that everything is uncertain and a policy has to be of such a nature that it can be adapted. [Interjections.] The Minister simply must have these powers in order to act in good time.

I should also like to refer to what the hon. member for Yeoville said. With reference to the GST, he said that this was a tax we had to get rid of because it was such a tremendously unfair tax and because it was a tax which imposed a heavier burden on the poor. This is the old “taxing of the poor” story. The hon. member argued that rich people had more savings and that they therefore had a wider choice when it came to not spending money on consumer goods, and that if one did not purchase consumer goods one did not need to pay tax. The hon. member for Yeoville tried to make out that the money rich people set aside has savings is not subject to tax. Yet it is part of their income and that income is taxable. They do not have a choice as they do in the case of consumer goods, either to pay or not to pay tax. These savings form part of their income and as such they have to pay tax on it. What is more, they are not paying only 6% on it; they are paying up to 50% on it. So what becomes of the argument that the poor are being prejudiced? In this connection the rich are very definitely being taxed far more heavily than the poor. It is simply not fair to advance this simple argument of singling out one tax and trying to shoot it down and saying that it is a bad tax. One has to consider taxation as a whole. The disadvantages of one form of taxation are cancelled out by the advantages of another. I repeat that one cannot single out one form of taxation and then argue that the entire tax system is unfair. One also has to consider the benefits offered to the underprivileged. The hon. member Mr. Aronson referred to this in passing. There are the housing subsidies, the transport subsidies, the decentralization programme where the work is taken to the worker, medical services, subsidies on staple foods, pensions and education. The argument that the Government does not take care of the poor is simply devoid of all truth.

On Friday during the debate on the Income Tax Bill, the hon. member for Yeoville said on the one hand that the GST was unfair to the poor, while he complained on the other that the Government was doing nothing to create job opportunities. He did not suggest any solutions. He did not mention where the money collected in the form of GST at this stage should come from instead. If one wants to make a constructive contribution, one must tell the Government where it should get that money from. The only solution is the obvious solution, and that is if sales tax is abolished, personal income tax will have to be increased considerably. However, the hon. member did not say that.

What would be the result if that were done? Entrepreneur’s remuneration would drop considerably and as a result the people who have to create job opportunities would receive less money with the result of course that there would be no encouragement for people to create job opportunities. This is the last thing we want in this country. It may be argued that this country has sufficient raw materials, sufficient capital and sufficient unskilled labour, but it definitely has a shortage of entrepreneurs. This is what we have to stimulate. It is simply not fair to single out one form of taxation and shoot it down without considering the tax system as a whole.

General sales tax is definitely the form of taxation which has increased more rapidly in importance than any other form of taxation in our history. If one considers the first full year in which the tax applied, 1979-’80, one notes that sales tax constituted 14,7% of the total revenue of the Government. In 1980-’81 it dropped slightly to 14,1%, but in 1981-’82 it rose to 17% and in 1982-’83 to 21%. It is estimated that it will be 23% in 1983-’84, which represents a total amount of almost R4 000 million. This is only slightly less than the tax earned from the mines, namely R4 100 million, and personal income tax, namely R5 300 million.

It is also interesting to note from which sectors this revenue is derived. The agriculture and fisheries sector contributes only 0,4% to our sales tax; mines and quarries contribute only 0,6%; factories contribute 17,5%; wholesalers and services, 17,3%; retailers and services, 53,2%; personal services, 0,5%; catering services and hotels, 3,8%; and business services, 6,7%.

The advantages of general sales tax are general knowledge; this has also been debated in depth in previous years. What is, however, very important, apart from the nature of the tax, is the attitude with which and way in which this tax is being levied. I want to suggest that this legislation is a clear demonstration of the favourable attitude and fairness with which this tax is being levied. The cases in which exemption is being granted, even with retrospective effect in various respects, are good examples of this favourable attitude. I want to refer to a few of them. In clause 2(1)(c) exemption is being granted in regard to certain bona fide agreements concluded prior to 16 June 1982, and which were adversely affected by previous amendments to the principal Act. In clause 3(1)(c) a rental firm which is itself responsible for the repair or maintenance of its vehicles is exempted from GST in respect of oil, lubricants, and materials required to maintain these vehicles in a letable condition. This would seem to be aimed at preventing double taxation.

Another interesting exemption is contained in clause 1(1)(c) in which the definition of the term “foreign-going aircraft” is being expanded to include an aircraft flying from one airport to another in South Africa with the purpose of taking on board passengers or goods prior to flying to another country. This means that international airlines flying from Johannesburg to Cape Town, for example, to take on board passengers or goods before flying to another country, will be exempted from general sales tax on repair and maintenance costs. This exemption is with retrospective effect from 1 December 1981.

Another interesting exemption is concerned with expanding the definition of the term “foreign-going ship”, to include a ship sailing between a harbour in the Republic and any exploration or production platform outside South Africa territorial waters so that the repair and maintenance costs of such a ship will be exempt from general sales tax. This concession is with retrospective effect from 1 February 1983.

I take pleasure in supporting the Bill.

Mr. Speaker, the hon. member Mr. Schutte has gone into some detail in regard to certain of the clauses in the Bill before us. I do not intend to dwell any further on that. We in this party welcome some of the provisions which are included in this Bill. It is generally speaking a technical Bill. There are amendments which will improve the administration and implementation of the Act which we think are worthwhile. For example, there are a number of provisions which avoid double taxation. One finds this especially in clause 3. We welcome this because, as has often been said by hon. members of the NRP, we want to ensure that there is not double taxation because that is one of the causes of price escalation. It is for this reason that we are particularly pleased to see that the hon. the Deputy Minister and his staff are ensuring that one does not have double taxation, I do not know whether hon. members realize it, but in clause 3(1)(c) one finds that where at present a rental agency may be hiring out a piece of equipment to a second person, parts that are required for the repair and maintenance of that equipment are excluded from general sales tax. That is desirable. However, one finds that, technically speaking, should such a person have to lubricate it or paint it to keep it operating, the materials used to do this are at present subject to general sales tax. The provisions in this Bill exclude those items from general sales tax. This is one example of where the hon. the Deputy Minister is endeavouring to reduce double taxation, and we welcome it.

One finds in clauses 4 and 5 that there is an attempt to ensure that GST is paid on as broad a plane as possible so as to ensure that there is an even distribution of GST throughout commerce and industry. One welcomes this because if it were not the case, as in the case of tax-free fringe benefits, those who have to pay would have to pay more. We therefore welcome these clauses.

One also finds that there are provisions which are designed to prevent unnecessary tax avoidance practices. The hon. the Deputy Minister is attempting to close loopholes so as to ensure once again that this tax is spread as evenly as possible among the public. Therefore these are amendments of a technical nature that concern the administration and implementation of the Act and which we welcome.

However, there is one clause that we are going to oppose on principle—I intend to dwell somewhat on this—and that is clause 2(1)(a), which has been referred to quite often, where Parliament is now being asked to ratify the increase in the rate of GST from 5% to 6%. I agree with the hon. member Mr. Aronson that the higher rate of 6% has been applied now for some months and in fact it is still being applied at the moment. However, according to the Act the hon. the Minister has to come back to Parliament to have it ratified when he has increased the rate during the recess. We have decided in our wisdom on a matter of principle to oppose the continuation of the increase of 1%, i.e. from 5% to 6%. The reason we do this is because we believe that the hon. the Minister has not tried hard enough to reduce the direct tax which is presently being imposed upon the individual. As I have often said, this party desires a correct balance between direct and indirect taxation so as to ensure that the direct income tax on individuals and companies does not act as a disincentive to the entrepreneur and businessman who, after all, are the power-house of our industry and commerce. It is the man with fire in his belly and it is the company that goes for development and growth and for profits who are the ones that create the jobs and generate the wealth in this country. Unless we have a sufficient number of people who are so motivated that they are prepared to work if necessary, 14 or 16 hours a day, as many of them do, in managing, operating and developing their businesses, we will not be able to generate the wealth that this country requires in order to meet the rising aspirations of our people. I am prepared to concede that over the years the hon. the Minister has reduced the upper marginal rate of income tax from a high of about 72% to the present rate of 50%. When one studies the figures one finds, however, that income tax, as a percentage of the total tax collected, has increased over the past five years. We believe that there should have been a greater effort on the part of the hon. the Minister to reduce the marginal tax rate still further so as to create even greater incentives for the entrepreneur and those persons who are prepared to work harder and to earn higher increases. Such a development would also reduce the necessity for many entrepreneurs and businessmen to look for tax avoidance schemes which we know burn up a tremendous amount of energy and money. We have before us today in this Bill and in others amending legislation which is designed to close loopholes. However, one thing one can rest assured of is that whenever there is a loophole which enables a person to avoid paying a very high rate of tax, the entrepreneur will pay someone to find it for him. We are of the opinion that if the marginal tax rate is brought down sufficiently enough the incentive to find these loopholes and to expend this money and effort in finding them will not be so great and that this will be to the benefit of the country as a whole. We are not going to oppose the Bill at the Second Reading, but in the Committee Stage we are certainly going to oppose the increase in GST on a matter of principle, because the hon. the Minister has not reduced the marginal rate of income tax. He has not lived up to his promises—he can’t have both high income tax rates and a high rate of GST.

The hon. member Mr. Aronson said that a 1% increase in GST will increase revenue by about R700 million. He also said that the total income from GST is going to reach the figure of about R4 000 million. Then he said that the consumer benefits as a result of this tax collection. I want to say to that hon. member: Nuts to you. I want to say to that hon. member and to the hon. the Deputy Minister that I can spend my own money far better than that hon. member or that hon. Deputy Minister can spend it for me. As an individual I would like to think that I am self-sufficient, that I can look after myself and that I do not want the State to pay for my living. I am prepared to earn my own living. We should get rid of the idea that the State is going to solve all our problems for us. We are not a socialist State. We are a private enterprise State. [Interjections.] All the State has to do, in the opinion of the NRP, is to ensure that we have a sound basic infrastructure, that our people are educated and trained to work and to produce, and that the infrastructure is sufficient to ensure that the wheels of industry and commerce will roll efficiently so that the entrepreneur, the businessman, the tradesman, the artisan, the worker can get on with the job and earn themselves a decent living: Any hon. member in this House who says that the State is going to provide benefits for us as individuals, I say “nuts” to him. [Interjections.]

The hon. member Mr. Schutte, for instance, said—and that is after all what caused me to say “nuts” to the hon. members—that we had to look at all the subsidies the State was providing—housing pensions, transport, food, etc. This is a philosophy, Mr. Speaker, of which we must rid this country. We must get rid of the idea that the State will provide us with housing, pensions, transport and food. [Interjections.] I want to tell the hon. member Mr. Aronson that it is the duty of the Government to so manage the economy as to ensure a growth rate which will be sufficiently high that every man who wants to work will find work. Work which will pay him a decent wage so that he will be able to live independently without having to depend upon the State to support him. [Interjections.] That is the policy of the NRP, and we will press for this continuously as far as is possible. [Interjections.]

I now want to address myself to the amendment moved by the hon. member for Yeoville. Hon. members will of course realize by now that we are not going to vote during Committee Stage for the increase of GST, but possibly for totally different reasons from those put forward by the hon. member for Yeoville and his party. We cannot support the hon. member for Yeoville on the second leg of his amendment, in which he states that the Bill does not make provision for removing GST from basic foodstuffs. [Interjections.] We accept the hon. the Deputy Minister’s assurance, and also the assurance given by the Director General that the cost of executing what the hon. member for Yeoville is asking for would far exceed any benefits. The cost would be so high that it will not be worth the trouble. We accept that. They are the people who have the experience, and we respect their views and opinions in this regard.

However, should the hon. the Deputy Minister or the department ever turn round and say that they have now decided that it is worthwhile, then I assume them that they will have to answer for such a turnaround by way of a debate in this House. As I have said we cannot support the amendment moved by the hon. member for Yeoville in that particular regard. However, the hon. member says that sales tax flourishes with inflation. I want to put it to the hon. member for Yeoville that all tax flourishes on inflation. We believe that inflation has to be curbed. Once we curb inflation we may find that we have to pay less tax.

I also want to point out that the hon. member for Yeoville uses generalizations, which if they had to be tested in practice, would be found wanting. That is what we in this party believe. [Interjections.] I want to ask the hon. member for Yeoville how he is going to finance the social democracy for which he stands. In every tax Bill that has come up for discussion so far this session the hon. member for Yeoville and hon. members of the PFP have said that Government should reduce taxation and should cut down the rates of taxation, etc. Therefore I should like to ask the hon. member for Yeoville and his party how they plan to finance the social democracy in which they believe. They stand for the redistribution of wealth. They do not stand, as this party does, for the creation of wealth. That is what brings prosperity to all people—an economy and a Government which promotes the creation and the fair distribution of wealth; certainly not the type of redistribution of wealth which the PFP will resort to in their policy of social democracy.

As I have already said, Mr. Speaker, we will support this Bill at Second Reading but during Committee Stage, as a matter of principle, we will be voting against clause 2(1) which seeks to amend section 5 of the principle Act.

Mr. Speaker, I was always under the impression that the PFP was the only “fat cat” party in this House. To my dismay I found out this evening that the NRP is also a “fat cat” party. [Interjections.] The hon. member for Amanzimtoti said “No subsidies”. He said he was a consumer and he wanted absolutely nothing. I do not begrudge him that, but I want to say that this party is also concerned about less wealthy people. In the previous debate the hon. member for Amanzimtoti spelt out that bread was subsidized by no less than R190 million. Does he want us to do away with that subsidy? Do those funds not come from the general Treasury funds?

If your party created the right economy it would not be necessary.

I want to ask the hon. member whether sugar is not being subsidized as well this year. Does he not want sugar to be subsidized?

There are no subsidies for sugar.

Yes, there are.

There are no subsidies for sugar. Loans, yes. We borrow money.

And you do not pay it back.

What about the interest rate on those loans. He cannot get away with that.

The hon. member went on to say that his party refused to approve the increase in the general sales tax from 5% to 6% because there was no reduction in taxation. He is that party’s main speaker on finance and he ought to know that the hon. the Minister said expressly in his budget speech that concessions were in fact made. For example, the loan levy is being lifted. There are greater concessions to pensioners. There are also greater concessions in regard to donations tax. I could give a long list of concessions which may not be large, but which benefit the smaller man tremendously. So the hon. member was wrong in that respect as well. However, I do not want to quarrel any further with the hon. member. Apart from that I agree with him that this is good legislation. I also agree with him on the other matters he raised.

In a previous debate already I said that the PFP and their spokesmen always trundled out the same old clichés. I said that they always discussed inflation, low GST and the exclusion of GST on food. I spelt this out in the previous debate. Let us consider this briefly. These are vague statements, as the hon. member for Amanzimtoti said, but the hon. members of the official Opposition will never spell out their practical implications. In the first place, what is food? How does one decide which items should be excluded as far as food is concerned?

Maize porridge.

At some or other stage the hon. member for Yeoville will have to give us a reply to this. Is he referring to corn flakes and milk or any kind of food? How will any general dealer be able to determine in practice which items fall into the category of food and which do not? In addition, how can one protect the consumer by means of a long list while no one knows exactly where to draw the line in respect of what is food and what is not?

Then the hon. member always comes along with his inflation story. In all these years he has not yet suggested a single solution to the problem of inflation in this House, and he did not do so tonight either. I challenge him to make concrete proposals during the Third Reading debate on the budget on how to overcome inflation.

I want to quote to the hon. member an excerpt from a report in the Citizen of 15 March 1983. This report appeared before the budget speech was made. It dealt with what Assocom had had to say about the budget. I am quoting—

The report goes on, and this is very important—

Surely that is the crux of the entire matter. If one brings down inflation, unemployment increases. I want to quote the following as well—

That was before the budget was introduced. If one analyses this, one sees that this exactly what the hon. the Minister did.

The hon. member also referred to the GST. I have already pointed out to him on two previous occasions—the hon. member Mr. Aronson also referred to it this evening—that 1% in GST brings in between R500 million and R700 million. If one takes away that amount in one sphere, one has to make provision for obtaining it from another source if one wants one’s books to balance. I have already pointed out to the hon. member twice that if one were to take this amount away here, it would have to be added to direct taxation. This would mean an average increase of 6% in taxation. I asked the hon. member whether this increase in taxation should be made applicable to the lower income or to the higher income group. There have also been requests for the marginal rate to be lowered. I should therefore like the hon. member to give us a reply to this. I think it is time that party stopped making these vague statements. If one analyses them in depth, one finds that they are coming to this House with nothing but hackneyed political plays.

I should now like to return briefly to the Bill now. Section 49 of the Act authorizes the Minister of Finance to change the tax rate when Parliament is not in session. However, any change in the tax rate lapses 30 days after the end of the next session of Parliament. The rate was increased from 5% to 6% on 1 September 1982. It is therefore necessary for Parliament to confirm this new rate if it is to remain in force. This is what is being done in clause 2(1)(a).

The hon. member Mr. Schutte referred to certain exemptions. I should like to add a few exemptions which he did not refer to. Provision is being made for these exemptions in clauses 3 and 12. I should like to mention a few of them. In the first place: Material or components purchased by vendors for the purpose of erecting, constructing or assembling movable plants with the intention of selling the completed plant thereafter are being exempted. The levying of sales tax would under these circumstances lead to double taxation, and it was never the intention to tax the purchase of these goods under these circumstances. In the second place: Services rendered by a banker or financier in connection with machinery or plant let by him also being exempted. Materials such as oil, lubricants, etc., required by a registered rental vendor to maintain the goods in a lettable condition are also being exempted.

Sir, I see the Whip is right next to me. I therefore conclude with are final exemption, namely goods withdrawn and used by a registered undertaking for research purposes, provided that only goods which are to be consumed, destroyed or lost for the purposes of quality testing or research may be exempted.

With these words I take pleasure in supporting the legislation.

Mr. Speaker, the hon. member for Smithfield was quite right to speak on inflation for a while because it is the background against which we look at general sales tax. It is very relevant indeed. He asked what positive contribution we can make towards solving inflationary problems. I can tell him of one right now. We are being told that 777 new industrial enterprises are going to take advantage of the decentralization scheme by establishing themselves in decentralized areas and that an amount of R2 000 million is involved. We are told about this as a major triumph.

Are you against it?

I am certainly against the current trend.

Are you against Port Elizabeth as well? [Interjections.]

No, nor Port Elizabeth. That hon. member should read my speech. I made it quite clear. I mentioned East London, Port Elizabeth, the Western Cape and Pietermaritzburg. I am against out of the way areas and I can give hon. members a list of them. I believe this can cause the most alarming inflation that this country has ever had to live with. If one wants to avoid inflation, one will have to swing the decentralization scheme away from some of the peculiar places to which the Government is enticing industry. These industries must be attracted to established centres which have an infrastructure and natural advantages. If this is not done, inflation will never ever be controlled and will get completely out of hand.

The second item which the hon. member for Smithfield mentioned was unemployment. The hon. member said that the problem was that we could not let unemployment go wild and that we could not adopt policies like the ones that were adopted in countries overseas where they had succeeded in controlling inflation to a degree. That is correct, is it not? The thing that we must remember, is that those countries overseas have social services which enable them to assist unemployed persons and help see them through their period of unemployment. In this country we have that to a very limited degree. I would suggest that the Government does not know and does not want to know the degree of unemployment in this country. The figures that the Government produces, are absolutely meaningless because the figures are compiled only of those people who applied for work and were registered as unemployed in the previous thirty days. The degree of unemployment is therefore really alarming at this stage.

One other matter that I want to bring up, is the point that the hon. member Mr. Aronson made that if Parliament failed to ratify a decision that the hon. the Minister might make between one Parliamentary session and the next to increase the amount of sales tax, then, in some way, the money would have to be refunded. I want to refer the hon. member Mr. Aronson to section 49 of the Sales Tax Act, 1978, which reads as follows—

The hon. member Mr. Aronson therefore produced a typically unresearched speech. The theory of GST follows a pattern. It was introduced at 4% and ushered in with prospects of other concessions and it was accepted by the public. Once it had arrived, it took root, it grew, and developed a character of its own. In March 1982 it was raised by 25%. Six months later, it was raised by a further 20% to 6%. As a percentage of total inland revenue, it has increased from 10% in the 1978-’79 financial year to an estimated 23% in the 1983-’84 financial year. Now the Standard Bank review of the economy warns that revenue estimates made in the budget may not be met, in which case GST could be raised again. The ability of the hon. the Minister to raise the rate of GST when Parliament is not sitting, is an extremely convenient instrument for dealing with any emergency. It is a tax which is so widely distributed that the opulent do not notice it and those who are comfortably off need not heed it. However, the average man finds that it erodes his standard of living and for the poor, the wage earners, the old and the unemployed, it represents the difference between anxiety and contentment, sickness and health and even food and starvation. The problem is not in regard to the method of taxation because the type of tax has a number of advantages. The problem is in regard to the manner of its imposition. It is this fact which makes comparison between GST and similar taxes in other countries, when such a comparison is drawn in a spurious and superficial fashion as was done by the hon. member Mr. Schutte, quite meaningless. The hon. the Minister himself made some of these comparisons a few months ago. When we compare GST in this country with, for instance, the value added tax, or VAT, in Great Britain, one has to take into consideration all the aspects of that tax. For example, unless one knows that as far as VAT in Britain is concerned, foodstuffs have a zero rating, books are excluded, children’s clothing is excluded, medicines are excluded, buildings are excluded, exports are excluded and fuel is excluded with the exception of the fuel that one uses on the road, then no comparison is possible. One has also to give consideration to the manner in which the poor are protected in those countries against hardship and then compare that with what we have; in other words, what do the people who pay that tax in a country like the United Kingdom, get back for that tax? When comparisons are made in this regard it must be remembered that it was not we who made the comparison initially. It was made by hon. members on that side of the House. However, when such a comparison is made between GST in this country and similar taxes elsewhere, it is relevant to know what benefits are available to the unemployed in those countries so that they can be compared with the social services available to the unemployed in this country, particularly the unemployed who are returned against their will to remote places like Ciskei. These investigations will establish that GST is in fact a moderate and convenient tax for the 18% of the population who share 72% of the total national income but that it is a very different kettle of fish in respect of the 70% of the population who share 19,3% of the total national income. There can be no justification for the imposition of GST on basic foodstuffs. Whereas the GST spent by hon. members opposite in respect of basic foodstuffs represents a very small amount per month to them, it represents 53,5% of the amount spent by urban Blacks and a great deal more in respect of the amount spent by rural Blacks. The percentage of total income represented by GST is therefore far higher in the case of Blacks than it is in the case of Whites. It represents an inequitable and discriminatory tax on the poor and an arbitrary redistribution of wealth that goes the wrong way.

Unfortunately, one talks about these issues in terms of Black and White, and that is a pity. They should be talked about in terms of rich and poor but that is the way we have grown up and that is the way we have been conditioned. We have made a reality of these concepts through our actions. South Africa remains at the very top of the inequality league. The 1970 figure, which is the only one I have here, shows that the top 20% of income earners received 70% of the aggregate personal income while the bottom 40% of income earners received only 4% of the aggregate personal income. Whether this is correct and wise and the best thing for those hon. members, is a point Whites should spend more time discussing than Blacks.

We can do something about this problem immediately. We can show the wisdom necessary to reduce GST on essential foodstuffs.

Mr. Speaker, hon. members have touched on just a few aspects I should like to reply to.

The hon. member for Yeoville stated that GST thrived on inflation, as it were. That was why this Government wanted increasingly more inflation so that it could collect more GST. Not only is that an extremely rash statement; it is also a half-truth …

You concede, then, that it is a half-truth?

… since GST will never increase merely as a result of inflation; there has to be an increase in salaries. There can only be an increase in salaries in a country with a healthy economy. There are therefore only two things one can do when there is inflation. First, one has to see to it that the rate at which salaries are increased is higher than the rate of inflation, and that is what is happening in this country. Secondly, one has to keep the rate of that tax as low as possible, and that is also happening in this country. 6% is virtually only a third of the rate in England, for example.

I should like to make a few remarks on the question the hon. members for Yeoville and Walmer referred to; this story about basic foodstuffs they speak about vaguely, without anyone knowing what they are really referring to. Let us assume they are referring to products such as milk, bread, meat and ordinary maize products. Very recently, Unisa’s Bureau for Market Research undertook research and found that in the Vaal Triangle the average worker earns approximately R220 per month. They also found that the worker spends 16,5% of his income on the so-called basic foodstuffs I referred to. That means he spends approximately R435 per annum on them. The GST on that is R26,10 per annum, which is precisely 0,08% of his gross income. The fact of the matter is that once again, as in previous debates, they are really splitting hairs in an effort to suggest that a terrible injustice is being committed by way of GST.

The hon. member also referred to clause 5, but since there is probably sufficient time to have a Committee Stage, I shall not deal with that now. Reference was also made to coins imported for numismatic purposes, but I shall reply to that during the Committee Stage as well.

†The hon. member also referred to what he called a negotiated tax and a discretion of the Commissioner in that regard. The fact is that these are matters which cannot be precisely defined and that one therefore must allow the Commissioner a discretion. This is something which will of course be handled judiciously.

*On the question of advertising services, the hon. member wants us to disclose at this stage how we are going to extend them. I really think this is a question which could just as well have remained unasked. Surely the hon. member is aware that we are trying to establish this tax on as broad a basis as possible. We shall extend it to the extent that it is practicable and administrable to do so.

May I ask the hon. the Deputy Minister whether he said that a family in the PWV area spends only R35 of their income on foodstuffs—in other words, R1 per day?

According to the figures obtained from studies undertaken by the Bureau of Market Research at Unisa, a Black worker in the Vaal Triangle spends approximately 16,5% of his total income on those commodities, namely milk, meat, bread and maize products. The average income per wage earner in the Vaal Triangle in 1980 was R2 628 per annum. His annual expenditure on those commodities would have been R435, while the tax payable on that is R26,10. If this basic foodstuffs were excluded from general sales tax, his saving would have amounted to R2,17 per month or the equivalent of 0,08% of his gross income. It is evident that the hon. member for Walmer has never considered this matter in earnest.

*The hon. member for Yeoville was concerned about certain services, and I told him that they would not be introduced unless Parliament had made a decision on them.

I want to tell the hon. member Mr. Aronson that his speech attested to sound insight into economic and fiscal matters. I think he did a very good job of putting into perspective the question of financial lease in clause 11. I thank him for doing so.

The hon. member for Sunnyside said that he protested vehemently, on behalf of his party, to the Minister’s right to increase general sales tax outside this Parliament. I find this odd, since the hon. member was with us in agreeing to the legislation that empowered the Minister to do so. That was in 1978.

The hon. member also put questions with regard to the repayment of our loan from the IMF. He wanted to know why this was being done. I need only give the hon. member one reason. There is no better investment than to repay one’s debt. If one is able to repay one’s debt, one does so.

But what are the interest rates on the other loans we negotiated?

Most of our loans are domestic loans. That loan was a foreign loan. If we are able to make use of our own funds, so much the better. What does the hon. member think of that?

The hon. member Mr. Schutte argued about the fairness or otherwise of general sales tax. I think he placed the whole matter in its proper perspective. The hon. member showed that he had studied this legislation thoroughly and he was able to speak about it with authority. I thank him for his contribution.

†The hon. member for Amanzimtoti opposed the increase from 5% to 6%, but he holds himself out to be a supporter of indirect taxation and he advances the reason that we did try hard enough to bring down direct taxation. Once the hon. member argues in that direction, he must tell us in what respect we must cut down on our expenditure, but he did not do that.

You must cut down further the rate of increase of expenditure.

We have had many financial debates during this session and not a single positive suggestion has been put forward as to how we should meet these expenses that the hon. member also did not refer to tonight.

*I should like to thank the hon. member for Smithfield most sincerely. He spelt out the consideration shown by the Government towards the small man in the street and the lesser privileged. He provided detailed evidence of how concerned the Government was about this and he further pointed out the untenability of the generalizations being made about so-called basic foods. The moment one gets to definitive definitions, many of those arguments fall away.

Finally, there was the hon. member for Walmer.

†The hon. member for Smithfield accused him of making no positive suggestion. In reply, he referred to the 777 applicants involving R2 000 million of investment, and he criticized it. He remained vague and negative.

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

Question affirmed and amendment dropped (Official Opposition dissenting).

Bill read a Second Time.

Committee Stage

Clause 1:

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

As the hon. the Deputy Minister did not to any extent reply in this regard, I assume he agrees with this amendment and I hope he will accept it.

Mr. Chairman, coins brought into South Africa for numismatic purposes are, of course, taxable and that is the objection that the hon. member has. Foreign coins for exchange purposes are not taxable.

*If the hon. member for Yeoville were to enter South Africa with foreign money in his pocket, and if he were to tell the customs officials that it was money he had left after having done business overseas, and that that money was not for numismatic purposes, they would accept his word for it. If he wanted a clear conscience, however, he would exchange that money at the bank within a certain period of time. The rule with regard to coins is that when they are legal tender, they are not taxable. However, neither a dollar nor a British pound are legal tender in South Africa. A person who keeps that kind of currency in his possession in this country, is keeping them as collector’s pieces. In that case they are indeed taxable. Consequently, I cannot accept the amendment of the hon. member for Yeoville.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

Clause 2:

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

I believe I have adequately motivated why we do not want to agree to this. I therefore leave it at that.

Mr. Chairman, I reiterate what I said at Second Reading. We are opposed to clause 2(1)(a) in terms of which the rate of GST is increased from 5% to 6%. We are opposed to that for reasons that I motivated during Second Reading, and which I do not want to repeat now. We will therefore not support this clause.

Mr. Chairman, as I said during the Second Reading, we also object to GST being increased again within the short space of eight months. That is really too much, and we shall therefore not be voting in favour of the present clause.

Mr. Chairman, I do not think it is necessary for me to speak about this at length. We disagree on basic principles with the hon. member for Yeoville, as well as with the hon. member for Amanzimtoti, who said that we should not increase GST, since we were not decreasing direct taxation in the process.

The increase in GST was imposed in September 1982. This year’s budget is largely based on that, and consequently it is really unnecessary for me to say that we cannot accept the amendment of the hon. member for Yeoville.

Amendment negatived (Official Opposition dissenting).

Clause agreed to (Official Opposition, Conservative Party and New Republic Party dissenting).

Clause 5:

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

Again the hon. the Deputy Minister did not react to this matter during Second Reading. I therefore assume he is in favour of what I propose. I should, however, want to make only one point in relation to this clause. Whereas the amendment contained in clause 7 of the Bill covers the situation of a bona fide action which does not comply with the provisions of section 14(2) of the principal Act, that does not appear to apply in respect of clause 5, which seeks to amend section 9 of the principal Act. If one looks at the explanatory memorandum, one sees that the whole motivation for clause 7 is that relates to a bona fide action by a purchaser. So it does seem to be that there is a case to be made out either for accepting the amendment or, if the hon. the Deputy Minister refuses that, for him to say that he will at some stage amend section 32 of the principal Act in order to cover the provisions of section 9 which we are dealing with here.

Mr. Chairman, this amendment of the hon. member relates to a taxable service rendered by a person who is not a registered vendor in this country. The provision being made here is that if the seller does not pay the tax, the purchaser will be liable to do so. Now the hon. member wants the purchaser to be liable only if, to his knowledge, the tax has not been paid. Unfortunately, we cannot accept this, since this would once again create a loophole. All the purchaser has to say in that case, is that he was not aware of it, or that he did not know about it. In this way we would merely be creating a new loophole. Unfortunately, therefore, we cannot accept this. I should accept a good amendment with pleasure, but unfortunately I cannot accept this one.

Mr. Chairman, I have another minute or so available to me, so I should like to ask the hon. the Deputy Minister why in the case of non-compliance with section 14(2), i.e. in the case of non-compliance in good faith, the Commissioner has a discretion whereas in the case of non-compliance with the provisions of section 9, which is the provision we are dealing with here, and which also relates to non-compliance in good faith, the Commissioner does not have a discretion.

What clause are you talking about?

I was referring to clause 7 which amends section 32. On page 14 of the Bill he will see that provision is made that when section 14(2) is contravened, the Commissioner, if he thinks one is acting in good faith, has a discretion. Now why is there that discretion in regard to section 14(2) and not in regard to section 9(c)(ii)?

Mr. Chairman, the repayments provided for in clause 7 really relate to cases where tax should not, in fact, have been paid. The Commissioner therefore has the discretion to repay it. Clause 5, however, relates to tax that has not yet been paid. These are therefore two completely different matters.

Amendment negatived (Official Opposition dissenting).

Clause agreed to.

House Resumed:

Bill reported.

Third Reading

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

Mr. Speaker, unfortunately the hon. the Deputy Minister did not see his way clear to accept what we regard as fundamental amendments to this measure, amendments which we outlined in the Second Reading. I do not propose to redebate them, nor do I think time is available to deal with the arguments which were advanced in the Second Reading. Suffice it to say that we have grave difficulties in accepting that a family in the Vaal Triangle can as far as foodstuffs are concerned, possibly live on an amount of just more than R1 a day. We do not believe that that is a practical possibility. Sir, if you want people to be on an almost subsistence level, they might be able to exist, but what kind of existence is that? As far as we are concerned we believe that basic foodstuffs should not be subject to tax. We believe it is in the interests of the underprivilege people with low incomes. Therefore we regret that we cannot support the Third Reading of this measure.

Mr. Speaker, I just want to point out that the figures I quoted are taken from an investigation conducted by Unisa. It is very clear to me that the hon. member does not really know what he is talking about when he speaks about basic foodstuffs. As yet, no one has tried to define the term. I wonder whether the hon. member knows what a loaf of brown bread costs. Does he know? [Interjections.] He does not even know that. How can he speak about it, then?

Question agreed to (Official Opposition dissenting).

Bill read a Third Time.

Mr. Speaker, I move—

As is customary the amendment Bill this year again deals with diverse matters, and as usual not one of the measures is contentious. No existing rights of pensioners or members of pension funds or schemes are being adversely affected. On the contrary, new rights are being created which will give rise to improved benefits. It is therefore not necessary for me to make a long speech on this Bill, but I do nevertheless want to explain a few of the provisions.

The purpose of a pension is to make provision for an income to compensate for a loss of salary after retirement. It is for this reason that the pension funds and schemes administered by the Department of Health and Welfare are designed in such a way that a person who was, during his economically active lifetime, or the greater part of it, a member of a fund or a scheme, must upon retirement be able to rely on an income related to his salary at the time of his retirement.

The amendment in terms of clause 1 will give effect to this objective. In terms of this clause a member who was employed by a statutory board on a full-time basis for 30 years may now elect to receive a pension almost equivalent to his final salary.

Clause 3 also makes provision for the benefits, payable to the widows of former members of statutory bodies, to be increased from half to three-quarters of the pension their husbands received at the time of their death. This will therefore bring the benefits received by these widows into line with the benefits paid under other comparable schemes.

As far as the pension scheme for Parliamentary Service and Administrators is concerned, the intention is to make provision for the following three matters—

1. (a) The pension rights of the Administrator-General of South West Africa;
2. (b) The recognition of previous service in the President’s Council;
3. (c) Amending the basis on which gratuities are calculated.

The prescribed formula for the calculation of gratuities is being repealed and replaced by a provision to the effect that the State President decides on the formula. I have heard that an amendment is to be moved to the effect that this formula be published in the Gazette. It gives me pleasure to announce that I am prepared to accept that amendment. The post of “District Pension Officer” was introduced for the first time in the Old Age Pensions Act, 1928. He was responsible for the receipt, registration and investigation of pension applications. Over the years this post has fallen into disuse, however. For many years now district pension officers have not been appointed.

The amendment to the Social Pensions Act, 1973, by clauses 12 up to and including 15 of the Bill, is merely intended to abolish this post and to bring the legislation into line with what is happening in practice.

A parent of a deceased member is only entitled to a pension in terms of the Military Pensions Act, 1976, if he was mainly dependent on the deceased member for his maintenance. At the request of the Council of Military Veterans’ Organizations of the RSA the degree of dependence is now being reduced somewhat to include parents who were only partly dependent.

The history of section 6 of the General Pensions Act, 1978, can be traced right back to the seventeenth century “Petition of Right” procedure in Britain. Although hon. members may find it interesting, I shall not discuss this history further.

In terms of section 6 all claims which may arise in terms of a pension Act became prescribed after one year. As far as I know, the Department of Health and Welfare has never relied on prescription to avoid its responsibilities. There is consequently no good reason why, as far as prescription is concerned, claims in connection with pensions should not also be regulated by the Prescription Act, 1969.

Maintenance and family allowances, commonly known as social allowances, have thus far been paid in terms of the Children’s Act, 1960. Old age, veterans’ and disability pensions, generally known as social pensions, are paid in terms of the Social Pensions Act, 1973. In essence these pensions and allowances are one and the same thing. The same means test is applied and they are administered in exactly the same way.

The different legislation which has thus far existed in regard to pensions and allowances can only be explained in historical terms. The Children’s Act was administered by the former Department of Social Welfare, and pensions by the former Department of Pensions.

As hon. members know, the two departments, namely the Department of Social Welfare and the Department of Pensions were amalgamated in 1958. Since then this dual administration of social pensions and allowances has given rise to quite a number of administrative problems and unnecessary red tape. For this reason the provisions in connection with social allowances are no longer included in the Child Care Act, 1983. Clause 22 of the Bill is only an interim measure to provide for the continued existence of the relevant allowances until the Social Pensions Act can be amended.

Mr. Speaker, the hon. the Deputy Minister has set out in some detail the provisions of this Bill. We will be supporting this Bill, but there is one or two comments which I would like to make.

I like the idea of a three-quarters pension for widows because the problem of the aged is essentially a female problem. It is not necessarily so but in general women live longer than men—in South Africa, in fact, seven years longer—so we have to provide for the widow. I think it is a truism today that if one of a couple dies, the surviving spouse cannot live on half the income; so we welcome that provision. As far as the question of the transferability of pensions in public life is concerned, as a party we support that principle. Perhaps it would at some time be interesting to have a debate about people who come into Parliament from other areas in the public sector from where they cannot transfer their pension. However, we do not have a problem with that here.

In clauses 7, 8 and 9 we have three amendments which we will move during the Committee Stage and the hon. the Deputy Minister has indicated that he will be supporting these amendments. These amendments are self-explanatory, and I do not think we need to expand upon them at all.

Mr. Speaker, it is true that in the main the legislation at present before this House, envisages nothing more than the improvement of the present Act. It amounts to a modernizing of the Act whereby outdated sections are to be deleted in the Act. However, it is also true that the amendments set out in clause 1, the charging of 20 years’ full-time service to 30 years’ fulltime service as a member of a statutory board, will have certain practical implications. If a person now accepts the gratuity and the annuity, this means that he will only receive 56% of his salary on his date of retirement, but in terms of the present amendment before this House reads, if a person elects to receive an annuity only, this will mean that he will receive 99,9% of his final salary.

I also welcome the idea that the pension for widows has been increased. The hon. member on the Opposition side also pointed out that this is an improvement. We realize that we are dealing here with women who are getting older by the day. The fact that the benefit of 50%, which they now receive, has been increased to 75%, is of tremendous benefit to them. I welcome this.

There is another matter I want to touch on. Whereas in the case of pensions for members of Parliament we are now making provision for a formula and leaving the right to determine it in the hands of the State President, I just want to ask that in determining the formula the following aspect should be borne in mind. Many members are elected to this House, but owing to the fact that one only qualifies for a pension after one has served seven years and six months as a member of the House of Assembly, in the past many members left the House of Assembly without qualifying for a pension. I want to ask that in determining the formula serious consideration should be given to this.

It gives one grounds for great concern when one considers that many people who come to this House have to sacrifice a pension fund they have contributed to for many years owing to the fact that there is no transferability between the pension fund to which they belonged before they came to Parliament and the parliamentary pension fund. I am also asking that this matter receive serious attention.

I feel that contributions paid into a pension fund should only be withdrawn from it when that person reaches retirement age, dies or is medically disabled. In reviewing a specific four-year period one finds that more than R60 million was paid out to people for reasons other than that the member of the fund had died. I want to make a serious appeal for an investigation into the possibility of allowing people, when they become members of this House, to transfer their membership of an approved pension fund to the parliamentary pension fund so that members can qualify for a pension even though they have not been members of the House of Assembly for a period of seven years and six months. It disturbs one to think that members who have been members of this House for less than seven years and six months do not now have a pension for themselves or their dependants. I take pleasure in supporting the legislation.

Mr. Speaker, we on this side of the House support the Bill. The large number and variety of clauses and matters contained, and dealt with, in the Bill were explained in detail by the hon. the Minister, and I feel it is unnecessary for us to go into this any further. Here we are dealing with important pension improvements. These are important pension provisions benefitting a variety of people, and we feel that it is in their interests that this should be the case.

There are only three matters I want to refer to very briefly. I want to express the hope that the hon. the Minister will not merely dismiss this by saying that it does not apply here. I want to mention these three matters in the hope that he will indicate to us that he will give them the attention in the future.

As far as the first matter is concerned, I want to associate myself with the hon. member for Witbank and ask that the period which must elapse before an MP qualifies for a pension be reduced.

In the second place, since a person serving in a provincial council may transfer a number of years of his service in the provincial council to the House of Assembly for pension purposes, when he becomes a member of the House of Assembly I want to ask that this should also be the case when MPs later become MPCs, so that provision can be made for their period of service in the House of Assembly to apply as service in the provincial council.

In conclusion I just want to ask whether, while we are discussing pensions, we cannot, once and for all, also give attention to the matter of the husband of a female MP also qualifying for a pension. [Interjections.] With these few thoughts let me indicate our support for the Bill.

Mr. Speaker, the extension of years of service for annuity and pension purposes provided for in clause 1, is to be welcomed. Equally welcome are the new provisions for widows in clause 2. In this respect I think the hon. the Deputy Minister referred to clause 3. Perhaps he mixed up his clauses slightly. I am referring to the increases in the allowances for widows from two-thirds to three-quarters. I particularly welcome the provisions of clause 2 in respect of widows in that in many cases men often sacrifice far more than is acknowledged in serving on statutory bodies, often to the detriment of their own personal and financial lives. This amendment will certainly ease the position of the widow of such a person. It also serves as some recognition to these women whose value is so often underestimated, underplayed and rarely recognized in respect of the sacrifices they too have made in the interests of service to others. I believe that they are unsung heroines and deserve this consideration.

There are many clauses in this Bill which merely update changes in the designation of officials and which should be supported in toto. Clause 17 which deals with the Military Pensions Act and the definition of “dependant” will certainly make it easier to administer these provisions. The new proposals are clearer and more specific and make for easier understanding which, hopefully, will lend themselves to a more compassionate application by the officials concerned in the department.

Clause 19 is of the utmost importance because it deals with the deletion of the time limit. [Interjections.] I should like to tell the hon. member for Tygerberg that he may whip that party but he does not whip this one! The removal of the time limit of 12 months in which legal proceedings have to be instituted against the Government is something which I as sure will be welcomed by everyone. It is a distinct improvement on the status quo and the Government is to be congratulated in this regard.

Clause 22 is also to be welcomed because it will ensure that the maintenance grants will be continued pending regulations issued by the State President.

The NRP has much pleasure in supporting this Bill.

Mr. Speaker, I want to be very brief in thanking hon. members for their contributions to this debate.

The hon. member for South Coast made a very eloquent plea on behalf of widows and, in doing so, he emulated the action of the hon. member for Koedoespoort who made a plea for the lady sitting next to him. I am very pleased to be in the fortunate position of being able to do something for those widows of members of statutory bodies.

*I think the hon. member for Koedoespoort made a very fine plea in favour of pensions for the widowers of female members of Parliament. I think one has to be consistent, though. We have already conceded the principle by making provision for this in the case of judges.

†The hon. member for Edenvale spoke about the transferability of pensions. This is a matter that we have debated in the past but in regard to which there has been no final word. I trust that he and I will be in Parliament long enough to see provisions of that nature implemented and become compulsory.

*The hon. member for Witbank, too, mentioned the transferability of pensions. He raised a very interesting point. He asked whether that transferability could not apply in respect of members of Parliament who had contributed to a pension fund in respect of a previous office as well. This is a very interesting point of view and we are looking into it.

Mr. Speaker, I should like to thank hon. members once again for their support of this Bill.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 4:

Mr. Chairman, I move the following amendments—

1. 1. On page 6, in lines 26 and 27, to omit “1960 (Act No. 42 of 1960)” and to substitute “1980 (Act No. 32 of 1980)”.
2. 2. On page 6, in line 46, to omit “Internal Affairs” and to substitute “Constitutional Development and Planning”.
3. 3. In the English text, on page 6, in line 55, to omit “External” and to substitute “Foreign”.

Amendments agreed to.

Clause, as amended, agreed to.

Clause 7:

Mr. Chairman, I move as an amendment—

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

Amendment agreed to.

Clause, as amended, agreed to.

Clause 8:

Mr. Chairman, I move as an amendment—

Mr. Chairman, I accept this consequential amendment as well.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 9:

Mr. Chairman, I move a similar amendment to this clause, as follows—

Mr. Chairman, I also accept this amendment.

Amendment agreed to.

Clause, as amended, agreed to.

House Resumed:

Bill, as amended, reported.

Bill read a Third Time.

Mr. Speaker, I move—

This Bill gives effect to a recommendation contained in the first report of the Select Committee on Pensions. As hon. members are aware, this recommendation has already been approved by this House.

Mr. Speaker, the PFP supports the Bill.

Mr. Speaker, the CP takes pleasure in supporting this legislation.

Mr. Speaker, we on this side of the House take pleasure in supporting this legislation.

Mr. Speaker, the NRP takes pleasure in supporting the Bill before us.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I move—

Agreed to.