Mr Speaker, my voice is a little subdued today. I trust you will forgive me. May I, however, assure hon opponents of mine in the NP that it will be only temporary. I will be back to form shortly! Secondly, I should like to take the opportunity, right at the beginning, of welcoming the Commissioner for Inland Revenue, Mr Schweppenhäuser, to this his first Budget. As far as I am concerned—irrespective of what anybody else may think—he shows great skill and great patience in respect of some of the laws he has to administer. One knows that that is essential in order to deal with members of Parliament. I also think it bears proof of a very great degree of fairness in the application of the law. I wish him well in his current office. I am also sure that he will contribute in no small measure to the tax reform which we are to have.

Furthermore, Mr Speaker, the report of the Fringe Benefits Commission has been tabled. I should like to congratulate the chairman of that commission and also the other members of the commission on the work they have done. I regarded it as a privilege to have been able to serve under the chairman, who, I believe, not only did an extremely good job and produced a very fair document, but demonstrated too that one can indeed get consensus among people who think differently in respect of very difficult matters. I should like to extend to him my very sincere congratulations.

While I am on the Fringe Benefits Commission—I do not intend to talk at great length about it; another opportunity for that will certainly come along—I should like to appeal to the hon the Minister not to introduce the tax on fringe benefits in the middle of a tax year. I know he thinks he is going to get extra taxation from it but I have some doubt on that. I believe the inconvenience, the disruption and the problems that will be involved in introducing such tax in the middle of a tax year will not warrant it being done. I should therefore like to appeal to the hon the Minister not to do that.

Before proceeding I should like to move as an amendment:

1. (1) undertakes to present and implement adequate plans for the economic and social future of South Africa;
2. (2) introduces more effective financial management;
3. (3) takes more effective steps to combat inflation;
4. (4) undertakes to remove general sales tax in respect of essential foodstuffs;
5. (5) introduces more equitable systems of taxation;
6. (6) takes more meaningful steps to improve the position in regard to pensions, including the means test;
7. (7) introduces measures in order to deal with the serious poverty and unemployment problems threatening the country;
8. (8) abandons wasteful concepts which are purely politically motivated; and
9. (9) undertakes immediately to remove from all legislation those provisions which discriminate on the grounds of colour and race.”.

This amendment highlights what other hon members of this party will also be saying during the course of this debate.

There is one other matter with which I should like to deal before going further. That is that since the hon the Minister introduced this Budget last week, one has received a variety of telegrams and other correspondence, as well as telephonic requests, in respect of various hardships that are being caused by this budget. There is one particular one—a telegram—which I should like to read out to the House in order to convey to the hon the Minister its contents. The particular telegram reads as follows:

I, and I am sure many other hon members of this House, are sentimentally attached to ex-servicemen. Nobody can, however, be more sentimentally attached than I to that group of people who are now in their eighties and who are very small in number. I believe they earnestly require the hon the Minister’s attention. Therefore I should like to deal with this question right at the very beginning because I believe this plea should really not be ignored by us.

Since the presentation last Wednesday of this Budget it has been the subject of debate and discussion in simposia, by businessmen, by academics, etc. Everybody has taken the opportunity of expressing his opinion on this budget. Therefore I do not want to repeat everything that has been discussed so far in this manner. I do think, however, it is necessary to draw attention to some broad trends which have emerged from the comments, even when those comments have, on some rare occasions, been complimentary to the hon the Minister. [Interjections.] I am expecting the hon the Minister to come along again with his bunch of newspaper clippings this year in order to show what a wonderful chap he is. However, he is going to have great difficulty finding more than two or three such comments because there is a whole big bunch of clippings—hon members should see mine; I just do not want to waste my time referring to them all—in which it is shown that the position is indeed quite different; that this is a Budget that very few people like. Those that say that they like it do not really like it but must have some personal reason for saying they do like it. [Interjections.] We know that of course.

The first matter I should like to refer to is the fact that there has really been no endeavour to explain away South Africa’s current unsatisfactory economic position. Not even the hon the Minister was able to do that. Furthermore, while there may be differences of opinion on the palliative effect of the Budget, there is no suggestion of consequence that this Budget offers any long-term solution to South Africa’s problems.

We appear to be waiting for extraneous circumstances, and we have the picture of the hon the Minister waiting for the rain to come down and for the gold price to go up. Instead of waiting—like waiting for Godot— the hon the Minister is sitting there with his little umbrella hoping instead of getting down to the nitty-gritty of good housekeeping, which is what is required of him.

Thirdly—and this is a matter of perhaps even greater concern—academics, businessmen and the public in general are seriously concerned about the degree of reliance which can be placed in the figures which have been presented by the hon the Minister in respect of the year ahead. This is particularly so in regard to the figures he presented on Government expenditure. I can quote one instance after another in this regard. Whether it is a bank that states that the figures will be overshot, whether it is the head of a major insurance company who says: “Quite frankly, these figures lack credibility,” whether it is a professor at the University of Cape Town who normally supports the hon the Minister who says: “We have a real problem here of credibility,” or whether it is the Chamber of Commerce or any one of a number of bodies, the fact remains that all of them no longer believe the hon the Minister’s figures. Coming from us, this in itself would not be that serious but if one can no longer rely upon the figures presented by the hon the Minister, when they no longer have any financial credibility, when the Budget merely becomes a bookkeeping exercise with movable figures, then it is the country’s credibility and the country’s financial status that are at stake. That is why we cannot regard this as merely being a party political matter. It is national matter when people of consequence, as I have mentioned, say that they cannot believe the figures presented by the hon the Minister. This is so serious a matter that it simply cannot just be left in that form. I repeat that it is not we in the official Opposition who say this but in fact the financial, business and academic community themselves.

The following matter to which I wish to refer which, I think, arises from the general trend of opinion, is that the view has been expressed that Government expenditure is taking far too great a share of the domestic product. That is remarkable because this grabbing of the lion’s share of the domestic product is on the part of a Government that has nailed the capitalistic flag to its mast. This it has done when it is apparent to everyone that the economic problems of South Africa can only be solved by greater investment in job-producing activity which can only really be done by the private sector.

The fifth major trend in this Budget arises from the fact that nothing is being done to curb inflation. Once again, people are saying this one after the other. I think it goes beyond question that there is need for action to deal with inflation. After claiming in the second half of 1983: “We regained …" —I want to stress the word “regained”—” …control of the money supply—I want to say with great respect that one cannot regain control of something unless one has already lost control of it—the Governor of the Reserve Bank then went on to say: “Since then …”—and I want to stress the word “then”—”… we have kept a tight control of the money supply …”, and then he added: “… and now it is over to fiscal policy”. However, the Budget has come and gone and nothing of any consequence has been done by the hon the Minister of Finance to fight inflation by means of fiscal measures. Nobody needs to talk about the toll taken by inflation because we all know it. However, the hon the Minister has failed in this regard because he has not produced the fiscal measures needed to combat it. On the contrary, there is every indication—and studies at the University of Cape Town show this too—that inflation is about to take off again.

What should I have done?

I shall deal with that in a moment, I shall list the things the hon the Minister should have done. I knew that he would be asking that question because he is the most predictable Minister of Finance that we have ever had. [Interjections.] The hon the Minister’s mistakes are so predictable that it is quite possible to deal with them in advance. If the hon the Minister had listened to what I had said publicly before the Budget, he would not have found himself in this predicament. However, either the hon the Minister does not take advice or he takes advice from people who lead him astray. We have the hon the Minister’s own admission in relation to this matter and I shall deal with it in a moment.

The remarkable aspect of the Budget is actually its uncertainty and the absence of stated economic objectives. I ask the hon the Minister where in his Budget speech does he state his growth target. Where does he say at the end of the Budget Speech what growth he wants for South Africa? One would have expected him to make reference to steps to combat unemployment and the hardship caused in recessionary times. One would have expected a statement of the social objectives and whether the country could pay the economic price or is prepared to pay the economic price to attain it.

Nowhere in his speech is there any target set in respect of the level to which inflation should be reduced. I ask the hon the Minister to tell us where in his Budget Speech he says to what he is hoping to reduce inflation. No, he does not have any target. The issue is that he should confront us and say to us this is what we can do with inflation; are you prepared to pay the price, the social price in order to do it and can South Africa afford to do it? Instead we have some new definitions of words which the hon the Minister often uses and in almost every speech that he makes he talks about “financial discipline”. Let me give the House his definition of “financial discipline”. This he says means:

In other words, discipline means that one wants to be disciplined but one ends up not being disciplined. Let me use another of his favourite phrases and give his definition. “Stable economic growth”. What does this phrase mean in his terminology? For the last two years we have had negative growth in the domestic product and in per capita terms every South African got poorer. That is the kind of growth that we get. The hon the Minister says “optimal and stable economic growth” is and was his target.

The hon the Minister talks about an objective being a “high and stable level of employment”. What do we find in reality? After two years Government statistics show that despite a growth in population at an average rate of 2,6% per annum, there are fewer people working today than there were two years ago. That is what is called a “high and stable level of employment”.

The challenge that I make to the hon the Minister is that he should set targets and not use generalities, and when it comes to targets, he has failed utterly and miserably. How did this happen to South Africa? How did we get into this situation? I do not deny the unfortunate adverse effect of the extraneous factors over which the Government has no control. They are, however, now the only causes of his misfortune. In one of those magazines which he has in that pile there, he may find the following quotation. He may find it in one of his favourite newspapers, the Financial Mail, because that even says, talking about the hon the Minister:

Even his friends say that to him; can one imagine what his opponents say?

Inability to manage the economy adequately and efficiently and incorrect policy decisions, inadequate application of the avowed policy of financial discipline are factors which cannot be ignored. There is no denying that last year, the economy went where the hon the Minister in accordance with his 1983 Budget told us it was not going, but this year he does not tell us where he is taking us because he is not sure where he is going. That is the problem about the Budget and the problem about the projections.

What went wrong last year is well known. Financial discipline was such that Government expenditure was substantially in excess of budgeted figures. The issue is not only the additional expenditure but whether it could have been foreseen. In the first half of the year the rate of the money supply was excessive, particularly when we bear in mind that he used the Stabilization Fund and other inflationary means of financing at that time. A third thing is that we had a limited premature recovery of some of the consumption sectors. Imports were allowed to rise substantially and so affect the current account of the balance of payments. This was clearly encouraged by the exchange rate and tariff policy which the Government applied at the time. I want to say now that the debate on whether tariff increases alone and not import control is adequate for an economy in our state of development and the need for bilateral trade agreements is not over, far from over. We cannot act as a major industrial power and open ourselves to the forces of others who can, if we are not careful, ruin carefully nurtured industries and beneficiation activities, something we cannot allow.

The timing of the removal of exchange control from non-residents is open to serious debate as the loss of foreign exchange through the sale of previously firmly held equity holdings has shown that over a billion rand left the country, the substitute being investment on the stock exchange which goes in and out and loans which have to be repaid. Interest rates were allowed to go down too far prematurely as a result of which we are now at historically high levels, with the prime rate at 21%. Two years ago I think it was 10%. No real endeavour was made last year or before to control consumer credit, which is more influenced by deposit and repayment periods than by the rates of interest themselves.

It is therefore obvious to anyone who examines the situation that the Government’s mismanagement of the economy has contributed towards the situation in which we are now. One cannot just blame the gold price and the drought. It is Government mismanagement which has done this.

The hon the Minister talked about what should have been done. I am not just going to tell the Minister to cut down Government expenditure. I want to say how he can cut it down. The first thing he can do in order to cut down Government expenditure is stop removing people and pushing them around. By stopping to remove people he will not only save money but will also improve race relations, thereby assisting to maintain stability and improving South Africa’s image abroad. So I say stop pushing people around; stop shifting them around and you will actually save money.

Secondly the Minister should reduce the size of the bureaucracy. I believe we should launch a campaign to reduce the number of people employed in the Government sector. They are doing it in Great Britain. This can be achieved not by dismissing people but by redirecting energies and changing recruitment policies. The multiplicity of activities which are being engaged in to enforce ideological laws, the unnecessary duplication of work and institutions due to concepts of artificial separation are not only objectionable; they are also not cost effective. By doing this we will not only save money but there will be a redirection of skilled manpower from the public to the private sector, when even at a time of recession there is in some instances underutilization of activity due, not only to insufficient demand, but also due to manpower shortages. Sir, we experience manpower shortages even in times of recession. It is unbelievable, and when we move up again that shortage will again cause bottlenecks and again accelerate inflation. I can give statistics, Government statistics, to show that at a time of recession we in fact experience a skilled manpower shortage.

I have already dealt with another way of saving money, that is by greater efficiency in management and the economy as demonstrated by last year’s lack of good management. Then there is the question of a greater degree of privatization, the disposal of those activities which can be better run by private enterprise and which will then leave money for the fiscus. I only need to refer to Sasol in order to show how that can be achieved. Lastly, when we talk about discipline, the Ministers sitting over there should be disciplined. They have to be disciplined. They have to be kept to their budgets, to the estimates. That is where we need real discipline in South Africa.

I want to point out another matter, namely whether we really need a tax increase. Long ago, in Roman times, somebody said that it is part of a good shepherd’s task to shear his flock, not to flay it. I cannot exactly call the hon the Minister a good shepherd in this regard because he appears to be flaying the flock. I want to take his figures, and I am going to work purely with his figures and with nobody else’s. When one takes the increases he has imposed on the consumer, whether it is for beer or cigarettes—something of which I approve—the ad valorem duty where he has put tax on some luxuries and other items which by no stretch of the imagination can be called luxuries, and one adds on the stamp duty on credit cards, which I think is utterly unnecessary and not cost effective, and one takes into account the delayment of the fringe benefits tax and the consequential loss in GST, one arrives at the figure of about R250 million. If one adds on the company tax increase of about R203 million, and even throws in the gold mines, because I do not think it is the time now to tax them, and if one, in addition to that, allows for the adding back of training allowances, in respect of which one agrees that there is abuse but also that the hon the Minister has overreacted, and allow another R300 million in respect of that, one arrives at the sum total of about R480 million. If one adds the fringe benefit tax, one arrives at a figure of R530 million. R530 million is all the hon the Minister is raising in extra taxation and one only has to look at the cost of the Sasol investment, which was R259 million and which is coming back, to start wondering about it all. Interestingly enough, the remaining R628 million which represents the profit is not being brought back. If you bring that back, you do not need to increase taxes. What kind of bookkeeping exercise are we doing here? It just does not make sense. If you can bring back the cost, why can you not bring back the profit? Nobody has explained why you cannot bring it back. The new stock issues to finance the deficit before borrowing are going to be about R915 million, and every commentator and expert has said that that is more than reasonable, that the market can easily handle it and that we can in fact raise more. If one looks at what has happened to the gilt market in its reaction to this, it shows that that proposition is right. As regards the Public Debt Commissioners, the same amount of money is going to be taken while reinvestment from maturing stock and foreign loans are in fact budgeted to be lower. If I take all these things—I do not have to be right on all; I only have to be right on some or partially right on one—the need for an actual tax increase falls away. On top of it, if we look at the estimate for the gold mines, it is all very well to look at the dollar price of gold but the rand has been managed in such a fashion that the dollar price of gold in dollar terms has not had such an impact on the taxation. If only another R30 per ounce is added to the present estimate, we will collect another R450 million. What has happened is that we have already had our increase in tax, because GST has gone up. Fiscal drag has accounted for a lot of the increase in tax, and the Sasol funds are available. I make the submission that the tax increase was absolutely unnecessary if the figures of Government expenditure are correct. If they are not, we have another ball game and are in another situation altogether.

There is one thing which I found remarkable about this Budget. If one looks at the estimates, it seems that there is no new constitution and that Chris had been misleading us. I turned the pages of the estimates and looked, but Chris’ new constitution did not appear. I withdraw the word “Chris” and refer to him as the hon the Minister of Constitutional Development and Planning. [Interjections.] I used “Chris” as a term of endearment.

In the speech of the hon the Minister of Finance, he dealt with the constitution in one small passage. I do not know whether the constitution is on or not. We passed a new Constitution Act and somebody should have read section 82, 83 and 84. I do not think the hon the Minister of Constitutional Development and Planning gave the hon the Minister of Finance a copy of the new constitution. He gave me one. In terms of that each House will have its own affairs and there will also be general affairs. However, this Budget is based on the assumption that there are no own affairs. For own affairs money needs to be appropriated. There needs to be debate in Parliament to appropriate moneys for the different Houses.

Do you still believe in Father Christmas?

No, I believe in Chanuka.

It seems to me that the situation indicates that there will be no new constitution halfway through the year, that Parliament will not sit in September or, alternatively, that there will be no money for own affairs in September. I do not understand this and I hope the hon the Minister of Constitutional Development and Planning will explain this during the debate.

There are three alternatives available. Firstly, it is obvious that the Exchequer and Audit Act will need to be amended in any case as we cannot go into the new constitution with the existing Exchequer and Audit Act. The second alternative is that this Budget be amended now. There can be an amendment to the Appropriation Bill in terms of which we can debate and appropriate what should go to own affairs and what should go to general affairs. I do not know if my opponents on my left who are on my political right, will accept the present situation without a murmur or a word. As far as we are concerned, we will certainly not accept it and I do not think that the NRP will accept it either.

What are we actually going to do? Will this White Parliament, in its last stages, amend the Appropriation Bill in order to make that allocation, or will we meet in September and have another Appropriation Bill? Will we then share the money which we appropriate now between the various general and three own sections? That is what we will need to do. The only other alternative, and having a terribly suspicious mind I have a feeling that is which somebody has at the back of his mind—it might be the hon the Minister of Constitutional Development and Planning or the hon the Minister of Finance—is that somewhere in the Exchequer and Audit Act a small clause will be slipped in that will allow the executive to do the appropriation and not Parliament. The Government will not get away with that. The appropriation of funds is the function of the elected members of Parliament. I do not speak for other Opposition parties, but the official Opposition will not allow the executive to usurp the function which is traditionally the function of the elected members of Parliament. We want to see and debate what will be appropriated to own affairs and general affairs and to each of the separate Houses. This needs an explanation. We cannot be sitting here on 2 April 1984, the year in which there will be a new constitutional dispensation, and like Alice in Wonderland be presented with a budget which pretends nothing is going to happen and all is going to work out in some mythical and imaginary way. I must say that this is a matter which certainly requires major explanations. One we cannot leave as it is.

There is a last matter I should like to touch on. I have tried to indicate that one of the major criticisms I have of this Budget is that in fact it is a bookkeeping exercise and not what it should be, namely the presentation of a plan to solve the problems of 1984 and of the future. It need hardly be said that South Africa is not short of problems. We have, however, had an endeavour to bring about constitutional reform—whether we agree with it or not is irrelevant. We have had, I think, a very clear endeavour, and so far a very successful one, to achieve peace in Southern Africa. We hope that that initiative will work out and one congratulates those who have tried to do something in that regard. What is however, not understood— although the hon the Minister of Constitutional Development and Planning understands it, because I have heard him refer to it—is that constitutional reform must go hand in hand with social and economic reform. If we have constitutional reform—and it is alleged that we do have constitutional reform—where is the social and economic reform? It is not in this Budget. It is nowhere.

Why do you call it “alleged” reform? It is a fact.

That is the point. The hon the Minister is strengthening my argument. I ask him not to ask me that question but to answer the question: Where is the social and economic reform that is going hand in hand with his constitutional reform? [Interjections.] Well, someone must say where it is, because it is not in the Budget. Anyone who knows the history of the world will know that, if one has constitutional reform without social and economic reform, one is in fact breeding revolution. One cannot do it. It does not work. In fact, it makes things worse. The hon the Minister knows that, because he referred to it himself.

Yes, I have said that myself.

That is right. Why then does he not tell the hon the Minister of Finance that? Or are they not on speaking terms? What is the problem? [Interjections.]

There are five major issues which I believe have to be dealt with and not just year-by-year so-called fiscal problems on a patch-work basis. We have to deal with major issues which are legacies of the so-called old dispensation. I shall mention them. Firstly, how can the aspirations of South Africa’s people be met in respect of the provision of non-discriminatory services by the Government? That is going to be one of the major issues after September 1984. Secondly, how near to equality of opportunity in the economic system can we get in South Africa? Thirdly, how will South Africa deal with the job creation needs of the future. Fourthly, what is the real order of priorities in the economy? Fifthly, how can the country generate the resources to pay for the reform in the political, economic and social fields necessary for stability? Each one of these topics is a major and urgent one but, with very minor exceptions, every single one of them has been ignored in the budget.

Exchequer expenditure appears to depend upon the needs at the moment and the pressures on the Ministers and departments concerned. If there are priorities, they are open to debate and they appear not to be adhered to in the actual expenditure. We are on the verge of having Coloured and Indian Members of Parliament, albeit in separate Houses. Yet there is no proposal to eliminate discrimination in respect of the provision of Government social services. Are these new Members of Parliament likely to accept that situation for their own people, or for he Blacks?

Ask them.

Certainly I will ask them. There is a lot of talk about the free enterprise mechanism, about competition and about incentives to create wealth, but the circumstances in the present system and the laws which restrain some groups and not others continue to exist, and that certainly does not tie up with equality of opportunity. If anyone has pointed to that, even if in a very limited way, it is the President’s Council in its recent report. That proves my point, although it is in fact a very mild report. If anything demonstrates it clearly, it is the debate, which started in the President’s Council and has been carried on here as well, about the manner in which Blacks will be accommodated in the central business districts, in parts of them or only in some of them as compared with the manner in which the Coloured and Indians will be accommodated in them. That debate demonstrates how confused the thinking is and how difficult it is for people to shake off old prejudices.

However, the greatest problem, and perhaps the greatest challenge for South Africa, is the problem of the population explosion and job creation. We speak of the year 2000 and estimates of the population then and the jobs needed as if this is a date which is so far away that it does not actually concern us. The reality is that the year 2000 is just around the corner. The need for skills for education and training are stressed again and again. We do have a substantial increase in the education budget, for which we are grateful and appreciative, but there is no doubt that in the year 2000 the percentage of Blacks in managerial and skilled jobs will be quite different from what it is today. History shows that the potential for instability and conflict is even greater when educated and trained people are unemployed than when people are not trained or educated at all. Hand in hand with education and training must go the creation of jobs to satisfy the aspirations of skilled and unskilled alike.

Dr Spies of the Stellenbosch Future Research Unit, after talking about this change in managerial and skilled jobs in the year 2000, is reported as saying:

The spectre of “scavenging millions” of the year 2000 should be enough to galvanize into action any Government not blind to reality. It is correct to deal with family planning and it is satisfying to see that the authorities recognize that the proven and best method of family planning is a higher living standard, but the reality is that 15 year-olds of the year 2000 have already been conceived, and the new job-seekers of that year are already three years and older. Raising living standards, while desirable and a correct approach, is unfortunately not a short-term solution.

We find today, as I have indicated, that there are fewer people in actual employment than there were two years ago. The figure of people in employment in manufacturing, mining and construction in Seprember 1983 was the lowest since 1980. In the third quarter of 1983 there were 5,2% fewer Blacks employed in manufacturing and 4,5% fewer in construction. In September 1983 there were 4,855 million employed as against 4,934 million in September 1981. If there are fewer people employed now than two years ago, and there has been an extra ¼ million new job-seekers every year in those two years, where are those people now? The situation is getting worse every single year and a backlog is being built up. The reality is that statistics do not show the true picture because there is a reservoir of unemployed being built up in the homelands and which do not show up in the statistics.

The growth of the economy in the last few years had offered no solution to these problems. As is well-known it has been in negative terms for more than two years. I venture to say that there can be no stability if there are “scavenging millions” or even scavenging hundreds of thousands in any society, and certainly not in this society. Job creation at low cost should be and must be a major priority. Without it constitutional reforms and peace in Southern Africa are not given a fair chance. It is those “scavenging millions” that I am afraid of because somewhere in South Africa somebody has to say and enforce that in our kind of existence one may have to choose between sacrifice and disaster. Sacrifice is the easier choice, but it requires action and determination by the Government. That is where I believe this Budget fails miserably. It does not even deal with 1984, let alone with the problems that we are going to leave for our children to inherit when the year 2000 comes around. That is why we cannot support this Budget.

Mr Speaker, at the outset I just want to say—and I say it with satisfaction— that I am pleased that the hon member for Yeoville is able to be back with us today after his absence due to quite a serious illness. I say in a good spirit that: “For better or for worse, we missed him”. The hon member for Smithfield, who is the Government chief spokesman on Finance, is also indisposed and we hope that he, too, will be able to take his place here shortly. [Interjections.]

Once again today, as so often in the past, the hon member for Yeoville launched into a long tirade about a series of generalities, but when he had to come up with specific answers, nothing happened. The hon member advanced certain points of criticism on the basis of newspaper cuttings and said that newspaper editors, journalists and academics were referring to the credibility of the hon the Minister supposedly being at stake because the amounts spent were larger than those budgeted for. However, any financial exercise involves certain advance estimates and hunches, and the man who is responsible for them is none other than the hon the Minister of Finance. Only time will tell whether he was right or wrong in his estimates. Moreover, every time over-expenditure occurs the hon the Minister has to come back to Parliament and explain it. Then the hon member for Yeoville and his fellow members sit there without saying what expenditure should be curbed.

The hon member referred once again to the question of control of the money supply and openly attacked the President of the Reserve Bank in that regard. The President of the Reserve Bank expressly and openly stated, during the conference on inflation held in Pretoria, that he admitted that he had perhaps been to lenient as regards the money supply, viz when so much money entered the country at the time when the gold price rose so drastically and rapidly. However, he added that if he had not done that then the subject of the conference would probably have had to be unemployment. The few alternatives the hon member for Yeoville suggested as regards how to control Government expenditure, once again included the old ideological argument that we should not resettle people. In the meantime that hon member and his fellow fat cats flourish under the stability that this very system has provided. The hon member says: “Reduce the number of officials.” Just like that. According to him it costs too much to retain officials; therefore we must reduce their numbers. On what does he base this argument? Has he carried out any investigation whatsoever into this? No, he simply sucks it out of his thumb and presents it as a solution. He goes on to say: “Keep Ministers within their budget limits”. Once again I point out to the hon member that we discussed an additional appropriation in this House and that on that occasion hon Ministers had to explain why the permitted budgetary limits had been exceeded. During the debate on the Additional Appropriation hon members of the Opposition sat in this House as quiet as mice and were unable to single out even one vote for which we should have reduced the appropriated amounts, or amounts which should not have been utilized.

The hon member for Yeoville is so quick to say: “Do not increase taxes; borrow money”. We must simply borrow. Is the hon member aware that there is such a thing as interest that has to be paid on loans? Is the hon member aware that when one borrows too much money, ultimately one’s creditworthiness is jeopardized? Is the hon member not aware that one should refrain as far as possible from borrowing to cover one’s current expenditure? The hon member is irresponsible. He would not mind the Republic falling into the same category as countries such as Mexico, Brazil, the Argentine and Poland. They are doing what the hon member proposes. They borrow money to pay for their current expenditure. That is what the hon member is proposing for South Africa as well.

What about the Sasol money?

Surely those details appear in the Budget. Explanations are provided as to how that money had to be used. The hon member ought to know that, Mr Speaker.

The hon member makes a great show of asking here why this Budget is not providing for own affairs and general affairs. Surely one can only budget within the limits permitted by the existing legislation of the country. Surely we can not yet budget for things that must be provided for by way of an amendment of the Exchequer and Audit Act—legislation which has not even been accepted by this House yet. The hon member for Yeoville sets up a whole row of straw dolls for himself and then shoots them down, all the while saying what a wonderful shot he is.

He goes on to ask, “What, then, about social and economic reform?” He behaves as if nothing had ever happened in this field. Surely there is already a tremendous improvement in the income of the people of other races in this country. Moreover there is a tremendous improvement in the housing of the members of other races in this country. Surely there has been a tremendous improvement in the educational facilities and standards of the other races in this country. [Interjections.]

The hon member did something which I find very strange. The hon the Minister delivered his Budget speech here last Wednesday. The hon member for Yeoville spoke for a few minutes after that. To my amazement I discovered yesterday that he continued his speech in the public Press. [Interjections.] Surely the hon member is a professional man. Surely he has never acted in court as a legal representative and then, after the adjournment of the court, stood in the street that same evening announcing the court proceedings. However, that is exactly what the hon member did in this instance. One of the most important debates we conduct in this House every year was on this occasion dragged into the streets by the hon member before we had had the opportunity to discuss it in this House. I believe that he owes this House an apology for that. [Interjections.]

Of course, I do not mind at all that the hon member wrote about these things. However, I just wish to refer to this one aspect. In any event, the hon member spoke a lot of nonsense. He drew up a list of charges. That is just about what it amounts to. What he said in this article he said again today in the amendment he moved here. He drew up his list of charges, and in the article to which I refer he went on, and I quote:

He says that he wants correct management of the economy. The hon member made a speech here consisting of generalities. He brought forth a mouse and produced nothing. I think that the hon member for Yeoville should begin by analysing himself before trying to analyse the Budget, because he did not succeed in doing so. He should first analyse himself to find out exactly what he wants because he is always wanting the best of two worlds. He is like a brickmaker and a cattle farmer on the same farm. The one prays for drought and the other for rain. That is simply impossible, Sir. I think that the hon member should rather learn the song entitled “My voete loop na Wellington maar ek gaan Worcester toe”. [Interjections.] That is what the hon member is trying to do. He is trying to move in two directions at once.

To manage the economy of South Africa in the present economic circumstances is like piloting a ship through a narrow canal. Neither the ship nor the canal must be harmed. On the one hand one has inflation and on the other, unemployment. One cannot drastically reduce a high rate of inflation and at the same time enjoy high employment. That is not feasible. This was proved by the USA and Britain. On the one hand one has one’s money supply and on the other, one’s interest rates. One cannot limit the money supply and think that interest rates will drop. That is not feasible either. On the one hand one has one’s balance of payments and on the other, the stimulation of one’s economy. One cannot significantly stimulate an open economy like South Africa’s, which is strongly import-oriented, without realizing that one’s balance of payments will come under pressure. We could continue in this vein. In a developing country like South Africa it is only by way of balanced and considered action that one is able to bring the ship of the economy safely through that canal.

The hon member for Yeoville wants the best in respect of all six of the factors I have just mentioned. I say that he would proceed from one collision to another if he were to manage the economy of this country, and eventually nothing would remain of the ship, the canal or him.

As far as the question of ad hoc Budgeting without long-term planning is concerned, I want to say that any budget is ad hoc to a certain degree because it has been drawn up for a year. One has to deal with the changeable factors in the activities of the State. One also has to take into account unforeseen circumstances, in the way we are dealing with the present drought.

However, there are certain long-term trends and aspects of planning which run like a golden thread through the Budgets of several years, on at least the Budgets dealt with over the past years. The first is the increase in productivity by way of the training of our people. This year education was allocated R4 200 million—an increase of 23% this year, and an average increase of 18% per annum over the past five years. As regards our stability and our security, this year R3 755 million is being budgeted. Over the past five years there has been an average increase of 15,5% as far as this is concerned.

In order to reduce the pressure on direct tax and transfer it to indirect tax, after years of work we eventually introduced the GST system of taxation, and we are systematically extending it. This has resulted in the marginal rates dropping from 72% to 50%. These are long-term trends built into each of the Budgets.

Then there is the refinement of our system of taxation, the phasing-in of Black taxation, the quantification of fringe benefits, the adjustment and regulation of incentive measures for investment, training and decentralization—all long-term trends and long-term measures to enable us to make this country prosperous so that it may also be stable.

When the hon member spoke last Wednesday he launched a tirade about the question of the increase in social pensions. I think he was referring to those of the Whites which were increased by R14 from R152 to R166. He immediately said that that was an increase of 8,4%.

I made a mistake.

That is the first time I have ever heard him say in this House that he had made a mistake. Accordingly I shall not take that point any further. The hon member for Amanzimtoti can also say that he made a mistake and I shall accept that, too. [Interjections.]

It is well worth reading the hon the Minister’s Budget speech. He said that leaving aside the statistical effect of the latest increase of 1% in GST, it was only 9,2%. That is precisely what the increase in pensions amounts to.

Pensioners cannot eat statistics.

There are thousands of people receiving social pensions who are grateful for what the Government has done. It is only with the utmost effort, financially speaking, that it was possible for us to do this. I accuse the hon member for Yeoville and the hon member for Amanzimtoti of being irresponsible and of politicizing social pensions, whilst knowing full well that it is not possible to increase those pensions, in the present economic climate, by more than we have done. [Interjections.] I challenge the hon member who says that this is not right to say what appropriation we should have reduced or increased in order to increase those pensions. Should we perhaps have borrowed more?

What about the profit of R600 million on Sasol?

I want to tell the hon member something which is more relevant to this point. Between 1973 and 1983 social pensions and allowances have been increased by between 500% and 600%, and it is projected that in a matter of 16 years they will increase to approximately R5 000 million per annum. If those are the facts—and those are indeed the facts—then it is only people who realize that they will never occupy the Government benches who would speak as the hon member for Yeoville does.

What about the profit on Sasol?

But the R259 million has already been included in the Budget. Has the hon member not studied the Budget?

But not the profit.

That was deposited in the Treasury. The hon member says that we must remove it from the Treasury and use it to cover current expenditure. No, Mr Speaker, the hon member wants to borrow money to cover current expenditure. He wants to see this country in the abyss, as an indigent country.

I think that the hon the Minister caught the hon member on the wrong foot. He had expected GST to be increased still further and on that basis he said that the Budget was affecting the man in the street. But in fact it is the companies that are being hardest hit by increased tax and reduced concessions. But to that I want to add that the increased tax in fact entails an outstanding distribution of tax pressure. In the Rand Daily Mail of 29 March the editor states in his editorial, after having begun by criticizing the Government:

I now turn to the issue of increased personal tax due to the so-called “fiscal drag”. The biggest group of taxpayers in the country are those who earn less than R8 000 per annum. The rate of taxation for those people is fixed at 12%. In fact, therefore, there is no fiscal drag for those with an income of less than R8 000 per annum. Before “fiscal drag” can occur, there must be an increase in the man’s income. If the hon member, as a member of the boycott party, wants to do something positive, then surely he can go and tell the wage-earner to refuse to accept increases because then there will be no fiscal drag.

If there is no inflation.

Then inflation would also drop.

You are talking rubbish.

The hon member makes the unqualified statement that due to this fiscal drag the State had an extra income of R1 515 million. That is a half-truth. The hon member takes no account of the fact that that amount includes the extra tax we are now going to levy from Black people. He also neglects to take into account that we shall obtain extra revenue due to the increase in the number of taxpayers and he also takes into account that due to the small difference between companies and individuals, many people who previously did business in companies will now again begin their personal businesses.

The hon member also referred to the question of the increase in the excise duty on beer and asked why we were hitting the ordinary man so hard with the increase of one cent on a pint. In this regard I should like to refer him to the good advice that Mr John Scott gives in today’s Cape Times. He says that one need only drink one beer less out of every 50 to save enough to pay the tax on the other 49. The hon member speaks without responsibility and without offering anything substantive. He asked why the excise duty on whisky had not been increased.

Yes, why beer and not whisky?

Is the hon member not aware that there is a GATT agreement with regard to whisky and that it is not so easy to tamper with the price without prejudicing oneself? After all, this matter is being investigated at the moment.

I also wish to deal with the hon member’s alternative way of obtaining the revenue. He speaks about loans, and expressed his amazement that tax could be increased at a time like this. A few months ago the hon member said that if the gold price did not increase the hon the Minister would have no alternative but to increase tax.

In rand terms.

The hon member did not say that. He made the unqualified statement that the Minister would then have to increase tax. The hon the Minister then increased GST. When we discussed the matter in the no-confidence debate the hon member said that he had not said which tax should be increased. Indirect taxation and company tax was also increased. All that now remains is personal tax.

May I ask you a question?

No. Unfortunately I do not have the time. The hon member is opposed to all these increases. What he really wants, therefore, is for personal tax to be increased. However, he is too afraid to say that. The hard reality is that a country does not become richer during a recession. A country does not become richer if it suffers three failed harvests in succession. It does not become richer when the price of its major export article drops. Nor does it become richer when those who have to buy the article are unable to buy it due to a depression. The Budget deals with these hard realities in a balanced fashion so as to minimize the pain it causes. This Budget deals with inflation by way of increased taxation and Government expenditure. In fact, the financial editor of The Argus says:

This Budget is dealing with unemployment by way of continued investment allowances for training and decentralization. [Time expired.]

Mr Speaker, I want to associate myself with the hon the Deputy Minister of Finance and say how pleased I am to see that the hon member for Yeoville has recovered from his illness. I want to wish him a healthy session in this House. I also hope that the hon member for Smithfield, the main Government speaker on Finance, will recover fully and soon be back on his feet again.

Before I proceed with my speech, I wish to move the following further amendment:

1. (1) shows no appreciation of the disastrous situation in which the farmers find themselves;
2. (2) causes the salary earners to be impoverished by price increases, high interest rates, redistribution of income and high taxes; and
3. (3) has lost control of the national economy—
   1. (a) by failing to curb unproductive Government expenditure;
   2. (b) as a result of its inadequate export promotion policy.”.

This Budget is the tenth budget of the hon the Minister of Finance, and in any democratic country this is a fine achievement. The first eight budgets of the hon the Minister were financial budgets. For the past two years, however, he has been forced to introduce political budgets. [Interjections.] I shall refer to this again during the course of my speech. To confirm this, I want to refer to what the hon the Minister said in his Second Reading speech last Wednesday. He had to reduce the estimates of expenditure of his hon colleagues by approximately R5 000 million. Where is their sound discipline? The hon the Minister of Finance is the man who has to find the money. His colleagues simply go on spending, and do not apply any self-discipline.

The hon member for Yeoville was concerned about the Budget not making provision for own affairs and general affairs. The day of reckoning has arrived for the NP. There are no own affairs. Schedule 1 to the Constitution Act provides that everything is subject to a general law and as the hon member for Yeoville remarked, there are no estimates of expenditure for own affairs, except for an own borehole and irrigation.

The hon the Minister of Finance tried to introduce a Budget which would be popular with the man in the street. I do not blame him for doing so. Everyone said that it was a good Budget and wherever anyone expressed criticism it was suppressed by the SABC. The SABC covers up everything. [Interjections.]

This Budget definitely does not create employment, and that will be one of our problems in future. A great deal more is in fact being spent on education and training, but it is no use training people if they are not utilized correctly. That is the dilemma in which South Africa finds itself. Our productivity in South Africa is declining, against that of our trading partners as well. This is something we have to face. I shall deal with some of these points, and some of my colleagues will take them further.

Let me refer to the real gross domestic product in South Africa. In 1978 it was R1 014 per capita. Five years later—in other words, after five years of the Botha Government—it had decreased to R1 012. We have therefore become poorer. During the period from 1981 to 1983 it decreased by 8,4%. It cannot be said that this was due to poor agricultural conditions, because the contribution by agriculture to this figure was only 6,2%.

Let us consider growth and savings. The country must grow, and there must be more savings. To be able to grow there is a need for investment in productive assets in particular. If that does not happen, there is no growth. To be able to invest in growth, one needs savings. Saving is that part of the production which is not utilized. Consequently this is the money which one can set aside for investment.

What is the position to date in South Africa as far as savings are concerned? Personal savings presents an extremely poor and even deplorable picture. Three reasons in particular may be advanced for this. The first is the high marginal scales of taxation, because it is the more well-to-do people in particular who save. If the scales are too high, people do not have any money left to save. The second is inflationary expectations. There is no longer any confidence in this Government’s ability to break the back of inflation. Although the inflation rate has declined during the past year, everyone expects inflation to grow. The reason for this is that everyone is investing in property. People are trying to counteract inflation in this way. Thirdly there is a lack of confidence in the future under the present Government. People are saying: “Let us spend our money”. [Interjetions.] That is why there is such tremendously high consumer spending.

The hon the Minister of Law and Order, who has so many remarks to make, can rise to his feet later and try to refute this. I am quoting official figures. Personal savings in 1974 amounted to 10%. What was this figure in 1982? It was 3,5%. In 1983 it declined to 3% and during the last quarter of last year to 2,4%. It is continuing to decline. Surely that indicates that there is no confidence. People do not want to save. [Interjections.] What has been saved by this Government? The colleagues of the hon the Minister of Finance are not helping him. They are simply spending. There savings have been negative. Worst of all is that the annual savings of the central authorities is a negative figure for the first time during the post-war period.

Let us consider the individual, the man in the street. In 1982-83 his current income rose by 31,6%; a third more—that was fine. But what happened then? His direct taxation on that income increased by 61,4%. Surely that is a tremendous increase. Are hon members now able to understand why the man in the street is becoming poorer? This is no secret either. If it is considered to be a secret, it would surprise me because all the hon members know about it. The inflation rate over this period was 28%.

Let us know consider agriculture. In the years 1982 and 1983 the cost of farming requisites rose by 33,9%. If one also takes into account the drought and similar factors, one realizes that people in this sector are unable to make the grade. [Interjections.]

Let us consider the foreign debt position. If a man’s debt keeps on increasing, he is in trouble. Government debt was R630 million in 1980-81. What was this figure in 1982-83, however? It was R2 167 million. This is a 244% increase. [Interjections.] The hon the Minister of Finance is still borrowing overseas quite frequently. It speaks volumes for his personal stature that he is still able to borrow money overseas. But we can only borrow money up to a certain point, and after that the outside world tell us that we cannot borrow any more money. What is the situation in regard to this extra debt? The burden of interest on our Government debt is becoming tremendously heavy. Government spending is increasing enormously, and consequently more taxes have to be levied. Since taxation cannot increase so rapidly, it will be necessary to borrow again. Surely that is logical. Even at this stage this burden of interest is stifling South Africa’s economy.

This was one of the problems the hon the Minister had to contend with in his Budget this year, because the burden of interest was too high. In the 1973-74 financial year the burden of interest was 10,6% of Government spending, while it was 12,2% in 1983-84. In the 1984-85 financial year this figure is expected to be 13,08%. The worst aspect is that when this year’s figure is compared with last year’s figure, there was an increase of 25,3%, and that in a period of only one year.

That cannot be true. It is terrible.

It is terrible. [Interjections.] Another problem is that of bank credit. I want to quote what the hon the Minister said in his speech:

I wish we could say that it was not only probable, but that it will really happen. We do not have the full figures for the year yet, but in the first three quarters for which figures are available, an amount of R241 million was used for money creation. Consequently use was made of bank credit. Hon members may say that an amount of R241 million is not such a large amount compared with the entire Budget, but I would not mind having such an amount in my pocket. [Interjections.]

There is another matter which causes us great concern. In his reply I should like the hon the Minister to furnish us with more detailed information of the amounts which are being paid over to the countries that form part of the customs union. The amounts of customs and excise duties collected which are being transferred to these countries are increasing alarmingly. The actual percentage of receipts paid over in 1983-84 was 29,7%, while this percentage, according to the Budget in front of us, will increase by 36,6%. I should very much like the hon the Minister to elaborate on this matter. If he does not do so, I shall simply have to place a question on the Question Paper.

Surely the Minister has not said “no” yet.

I am simply telling the hon the Minister in good time. If I were to ask the hon the Minister of Law and Order something like this, I would never get the answer.

Let us now consider the position in respect of capital works. The Government must see to it that capital works are initiated. Throughout the world it is a general policy that in times of economic recession one should ensure that infrastructures are created and expanded so that when the economic upswing occurs there are no problems and there is sufficient capacity. Percentagewise, the Government is spending increasingly less money on capital works. In the 1982-83 financial year the central Government, provincial administrations and local authorities spent 14,6%, and in the ensuing year 13,3% on capital works, while the expected figure for 1984-85 is 12,7%. This is an important aspect. One can save on certain social and economic facets, but the infrastructures must be there.

I want to point out to the hon the Minister again—I said this last year, too—that we must have growth in this country, but that it must take place in line with the balance of payments. The first matter to which attention should be given is export promotion. We must encourage growth. We must have more exports. [Interjections.] Something must be done to promote exports, while imports must be counteracted. This is one of the things that must be done, otherwise we are definitely going to have balance of payments problems. If necessary, import control must be applied as a temporary measure, even though the Government has already accepted as policy that all restrictions should be lifted. I also think that we should reintroduce the “Buy South African” campaign.

I want to bring one further point to the hon the Minister’s attention, namely civil pensions. With effect from 1 October our senior citizens are receiving an additional R16 per month more in pensions. I have already pointed out in the past that these people are having a difficult time. Why can their pensions not also be increased with effect from 1 April?

The hon the Minister also said in his speech:

The people who retired prior to 1 July 1973 are already lagging behind. Why cannot they, too, receive that 10%? The amount involved will not be all that large. I want to make a plea to the hon the Minister to consider the position of those people. They are not rich and they are having a difficult time.

Mr Speaker, just before I deal with the hon member for Sunnyside, I should like to notify the hon member for Yeoville that I shall talk to him later.

I shall deal with the hon member for Sunnyside first. He said inter alia that the Government was doing nothing in this budget about the drought conditions and the farmers who were in such desperate straits. However, I want to point out to him in the first place that during 1983 the Treasury contributed more than R400 million in aid to farmers. Over and above that the Government contributed more than R300 million in the form of aid to farmers in the drought-stricken areas. If he had read the most recent newspaper reports he would have seen what the hon the Minister of Finance has already announced in connection with aid to farmers. There has even been a cut-back in the budget for South West Africa and mention was made of the fact that several million rands from that budget would be used to assist the farmers of the Republic of South Africa. The Chairman of the SA Agricultural Union, Mr Wilkens, had the following to say, for example:

I shall quote several paragraphs from this report to indicate to the hon member for Sunnyside what the Government has done for the farmers:

The hon member would do well to take note of the date: 31 March 1985. It can therefore be said with justification that this is an inherent factor that occurs consistently in this budget through into next year. I am quoting further from the report:

I could continue in this manner, but let us first consider what the hon member went on to say about the economic activities of the hon the Minister of Finance. In this connection I want to refer to The Argus of 23 March 1984 in which the following report appeared under the headline “Kantor sees no rise in tax rate”:

According to figures quoted there is now, as a result of stricter control by the hon the Minister of Finance, far more latitude below the safety factor of 10% than was previously the case. The report went on to state:

This is the situation. This is the situation the hon member is not taking cognizance of. According to the Sunday Times of 14 August 1983 the situation with regard to inflation is as follows, and I am quoting:

Surely these things are still continuing. Surely they also count in the Government’s favour. For the information of the hon member, who does not want to believe this, I should like to quote the following figures again:

I could quote many such figures to the hon member. In 1960 the working time in connection with the manufacture of cigarettes was 2,8 minutes. At the moment it is 2,3 minutes. In 1960 clothing-factory workers worked 4,106 minutes to be able to afford a loaf of white bread, whereas this had dropped to 1,383 minutes in 1982.

When was that?

Now. These figures refer to 1982 and 1983. I have also quoted the figures with regard to 1984, figures which prove that the position at present is better than it was in 1983. If the situation this year is even better than last year, surely this speaks volumes. The hon member for Brakpan, when he occasionally tries to be intelligent, ought then to believe that the situation has improved considerably between 1983 and 1984. [Interjections.]

I want to tell the hon member for Yeoville in passing that the difference between him and the hon the Minister of Finance lies in the fact that the hon the Minister of Finance has to answer to this House at least once a year regarding what he has done and what he is still going to do and concerning what he has said and what he still intends to say in connection with the finances of South Africa. The hon member for Yeoville comes along and says his piece once a year in this House, but he never returns after that. That is precisely why I asked him to be present here this afternoon. This afternoon I should like to address a word to two specifically to him. However, I see that the hon member is not in the House yet, although I specifically requested him please to be here. [Interjections.]

If we really want to ascertain what the situation is, surely we have to review all the relevant facets of the case. When we do that, we come across newspaper headlines everywhere praising the hon the Minister. I shall quote only a few of them. Here is one: “Bravo for Horwood!”

Mr Speaker, one of my party’s Whips has just informed me that the hon member for Yeoville has had to return to hospital. I am sorry to hear that. I therefore accept that is was not possible for him to be here. I apologize if I perhaps gave offence to the hon member in his absence. However, I am sure the hon member for Hillbrow will not mind replying to the questions I actually wanted to put to the hon member for Yeoville. [Interjections.]

If we really take note of what is at issue here and what the situation actually is, it is clear that in the first place we are not dealing with the problems of the hon the Minister of Finance. Surely we must also concede that the drought cost South Africa at least R1 000 million. Surely we must also accept that at the moment the gold price is having a damping and negative effect on our economy. Let us consider a statement made by Dr Zac de Beer. He is a man who is well-known to hon members of the PFP in particular. I am quoting what he himself said, as follows:

Are these the problems of the hon the Minister of Finance? Surely this indicates a syndrome which the hon the Minister has to contend with. Surely this is a situation which he himself can do nothing about. That is why he has, during the past few years, achieved things by means of realistic budgets which this country is going to rejoice at for many years. We owe it to him that South Africa is so high up on the economic ladder in the world today. We owe these things to what the hon the Minister has accomplished in the 10 years since he took over this portfolio. In passing I just want to associate myself with the hon member for Yeoville’s congratulations to the hon the Minister on the introduction of his tenth Budget. What annoys me about the hon member for Yeoville is the fact that he can say such exemplary things and then negate them almost immediately with the banalities he sometimes utters. Of course I agree with the hon member when he says that a budget should not only be a monetary and fiscal exercise. It should be precisely what the hon the Minister has succeeded in doing so well during the past ten years, namely to envisage the directions in which the people of South Africa have to develop. This is also the great secret behind the success which the hon the Minister has achieved to date. That is also why we have been able to improve the position of this country in the international world to such an enormous extent during the past ten years. Which one of us cannot remember that in 1977 South Africa’s long-term loan potential on the international money market was 12 months at most? We all remember that. We know that at that stage we were the polecat of the international money market and we know where we stand today. Recently the hon the Minister of Finance again succeeded in raising certain loans abroad and that is because today South Africa is highly valued on the international market. Why is this the case? It is because realism and discipline have been discernible in the Budgets of the hon the Minister of Finance during the past ten years. We are therefore grateful that we are able to thank the hon the Minister today for what has been done for us.

There are only a few matters in connection with which I should like to put certain questions to the hon the Minister of Finance. The first matter I want to refer to is the Customs Union Agreement between South Africa and the BLS countries. It is my humble but considered opinion that it is high time this matter was reviewed. I feel it is in fact our duty to review this matter. Certain bodies are of the opinion that if this agreement were to be analysed purely from a financial point of view, there is very little benefit to be derived from it as far as South Africa is concerned. As a matter of fact, it is being said that some of these countries are getting more out of this agreement than they put into it. I have no problem with this today because whether we use the agreement or whether we give them the money in some other way, basically makes no difference to me. However, the basic principle does make a big difference to me. I therefore want to ask the hon the Minister to reconsider this agreement. In addition it should be reconsidered on a realistic basis so that everyone will get his due. If ex gratia payments have to be made, these should be made through the respective departments because I feel that the present basis on which this is being done is unrealistic. This will contribute to the people who receive these payments on an ex gratia basis appreciating them more instead of being able to lay claim to them unfairly, as is the case at present.

I also want to refer to the question of social and civil pensions. I welcome the appointment of a select committee in this connection by the hon the Minister of Health and Welfare. I want to point out that by the end of this decade an approximate amount of R5 000 million per annum will have to be spent on pensions. We cannot allow this amount to continue to grow while there are people who evade their obligations. I feel very strongly about this. I am always prepared to listen to everyone—I say this as a member of the committee—and I also want to say that I appreciate the appointment of the committee and I want to express the hope that the committee will be able to complete its work as quickly and as effectively as possible so that something realistic and drastic can be done in this connection.

Another matter which I feel deserves serious attention in South Africa is the building industry. It is not at all unusual to hear of profits of between R20 000 and R35 000 being made on an ordinary house costing between R70 000 and R80 000. Today I want to state that the housing future of our young people in this country is becoming darker and gloomier. If we do not give this matter our serious attention and if we do not exercise some or other form of control in this connection, we shall experience an economic and political problem as far as housing in this country is concerned, a problem which will seriously prejudice us. Perhaps we could reactivate our local authorities, with their teams of building workers, so that the abnormal profits that are being made in this connection can be effectively controlled. Not only are our standards too high, but our people have not yet learned to help themselves. I think people will have to get used to more realistic criteria and that they will then have to help themselves in order to get what they really need.

I now want to refer to the question of taxation. The hon the Minister has in fact increased company tax from approximately 46% to 50%, but one has to take this into consideration together with the accepted concept that the effective rate of company tax is approximately 26% as well as the fact—I have already mentioned these figures—that as a result of the concessions granted, it is even possible that some companies paid the following effective rates:

My request to the hon the Minister is that we should weigh up the question of company tax as a local source of revenue against the image this creates in the international market. The hon the Minister is aware of the fact that there are quite a number of places, such as Hong Kong and also South Korea, which have specifically formed “tax havens” for companies so as to be able to obtain that capital.

That is why I want to state that the choice lies between the percentage of an effective tax revenue from the company and making it low enough to make it an attraction in the international set-up so that it will be an incentive for international companies to come to South Africa to be able to make use of it. I therefore want to ask the hon the Minister whether he cannot consider fixing the effective rate in future so that what is placed on the Statute Book has to be introduced effectively, but then it should be kept at that rate in order to allow the effective rate to operate as beneficially as possible. Let us assume the effective rate is 26%, then it should have been 26% because this would be an attraction in the international set-up and serve as encouragement for investment in South Africa.

My time has nearly expired and for that reason I am happy to be able to say that I see there is a committee of inquiry on the matter of joint taxation. Together with that, consideration should also be given to appointing a joint committee to investigate the tax structure in South Africa again. Today we have two divergent alternatives in the world, which we can consider. The first is the system adopted by the USA and the other is the system referred to in the most recent British Budget. The latter is described as “a break for taxpayers”. I am quoting:

The writer of the report goes on to describe the symptomatic changes made in the new-look Budget in England.

We have to accept that both Britain and the USA were successful in their struggle to combat inflation. Having said this I want to congratulate the hon the Minister on the success he has achieved in combating inflation. At the same time, however, I want to ask him whether the time has not come for us to change our system. We have been offered different variations. Mr Nenof suggests “a turnover tax to simplify the revenue procedure”. This is very interesting and many interesting questions are also being asked, for example: Why should the revenue department have to wait for its money; why should the revenue department lose money because people run their businesses badly and do not make a success of them? All this gives rise to very interesting questions. My question is whether we should not consider the matter again, if the Americans could appoint the Drury inquiry into tax reform at this stage and Britain is adopting a new system, has the time not also come for us to investigate it?

I want to raise quite a number of other points but my time is very limited. The hon member for Yeoville is now represented by the hon member for Hillbrow. I now want to put certain questions to the hon member for Hillbrow, as the proxy of the hon member for Yeoville. I want to ask him whether the PFP still stands by what they said in 1981 in their Report of the Economic Commission of the Progressive Federal Party. The commission consisted inter alia of the hon member for Yeoville, as chairman, the hon member for Pinelands, Mr Daniels, Mr Z de Beer and Mr Winchester. Does the PFP still stand by the recommendations of this commission?

Yes.

In the same newspaper in which a report appeared on this commission it was said that a detailed explanation of the basic principles contained in the report would be issued a short while later. When did it appear, where did it appear, and if it has not yet appeared, when is it going to appear? This statement was issued two and three-quarter years ago.

†Is the hon member for Hillbrow prepared to answer the question? I know that the hon member for Yeoville would have reacted to this immediately. In his absence, what is the hon member for Hillbrow’s reaction to this?

I will answer you in due course.

I am prepared to wait.

*That is why I said at the outset that the difference between the hon member for Yeoville and the Minister is that the hon the Minister has to submit his proposals once a year whereas the hon member for Yeoville need not do so. I wish the hon member for Yeoville a speedy recovery and hope that he will soon be back with us.

We do not have a Budget, but a policy.

Then what I have said applies all the more. In consequence of that policy the following statement was made in the Financial Mail:

Mr Schwarz is trying to sit on two stools, and he is going to fall inbetween.

They went on to say:

†We have been waiting for this explanation for two and three quarter years. The hon member for Hillbrow agreed to substitute for the hon member for Yeoville, but now that I ask him to answer a few questions, he asks me to wait for another two and a half years. I am sure the hon member for Hillbrow remembers what was said in that report and he should therefore be able to answer questions on it. Does the hon member first want to read what was said in that report and reply to me later?

The hon member for Yeoville said in his criticism of the Budget and of the hon the Minister that there must be freedom to work, freedom to move around and that there must be a free economy. In fact, the 1981 report states:

My question to the hon member for Hillbrow is whether that implies that they are going to scrap all pass laws and that everybody will be able to move whenever and wherever they want to?

Yes.

Does the hon member also say that there must be work for everybody, and if not, that the Government must provide for dole?

Mr Speaker, I would like firstly to associate myself and the NRP with the hon member for Sunnyside’s expression of good wishes for a speedy recovery for the hon member for Smithfield and we also hope that the hon member for Yeoville will be restored to full health.

Secondly, like the hon member for Yeoville, I must admit that I was wrong when I stated in a press release last week that the increase in pensions was 8,4%. The actual increase was 9,2%, which is a 0,8% difference. I was also wrong in relying on the figures mentioned by the hon member for Yeoville in his reply to the speech of the hon the Minister of Finance last Wednesday. I should have learnt long ago not to trust the figures given by the PFP.

The hon member for Vasco congratulated the hon the Minister on his performance over the past 10 years. I would also like to wish the hon the Minister “happy anniversary” with his tenth Budget. I have been in this House for 10 years and I have listened to all his Budgets.

The hon member for Vasco and the hon the Deputy Minister of Finance—who is not here unfortunately—referred to the tremendous improvements in income and housing. The hon member for Vasco gave an indication of what five or ten minutes’ work by a Coloured or Black can now buy compared with previous years. It reminds me of the debate which we had on inflation last year in which I quoted the same figures. One can quote these figures and refer to the obvious examples of how South Africa has prospered. We can point to the Sun Cities, the Cape Suns, the beautiful resort towns in, for instance, Plettenberg Bay and Umhlanga Rocks, the Mercedes’, Porsches and Ferraris driving down our beautiful highways, and say that South Africa has really prospered and progressed in the past few years. When one looks at the tens of billions of rand which have been invested in our infrastructure in organizations such as the SATS, Sa-sol, Iscor and Escom we can say that we have really made progress. However, the facts are that despite all this—I want to put it to the hon member for Vasco—the average South African today is less well-off than what he was 10 years ago. Those are the facts although we may have many outward appearances of prosperity. We can refer to our wonderful educational facilities, the vast amounts of money that have been spent as tax allowances—given by the hon the Minister—for capital investment in industry, for the training of our labour, but despite all these outward appearances, South Africans are less well-off than they were 10 years ago. I am now referring to the average South African.

Hon members on that side of the House cannot dispute this, and certainly not the hon the Minister of Finance because, if one studies his economic reviews and statistics, one finds that this is the case. The hon member for Sunnyside quoted it. I want to take it further back into the past. In 1974 the average real gross domestic product per capita was R1 042 per annum. In 1983 it had dropped to R1 012. The hon member for Sunnyside quoted figures from the year 1978 and said that during the Botha era it had dropped to R1 012. He should quote his figures extensively. In 1973, which was in the Vorster era, it was R1 042 and it dropped during this era to R1 009. During the Botha era it reached a peak of R1 105 and then dropped to R1 012. However, on average over the past 10 years, South Africans have grown less prosperous than they were 10 years ago. Certainly, many have prospered. Indeed, I have said as much. However, it being so that there are many people who have prospered, it is logical to assume that there are many more who are today far worse off economically than they were 10 years ago. These people are the pensioners. They are the people living on their investments which they have built up over a lifetime of work. I received a letter in the mail just today from a person appealing for help. He spent 45 years working for the Public Service and went on retirement in 1972. Now he and many others are, to use the expression, on the bones of their backsides. They are finding it extremely difficult to survive.

I believe that, as we approach the realities of the political changes that are about to take place in a matter of months, it behoves every hon member in the House to give serious consideration to the consequences of the facts I have mentioned. I believe we have to contemplate our future over the next few years. South Africa has a tremendous potential. We have vast material and human resources just waiting to be developed. We have the expertise and the technology and we certainly have access to finance in order to develop these resources. What is more, because of our vast human potential, which is just waiting to be developed into a huge consumer market, we have the potential for real economic growth within our own borders, something which most other industrial nations lack. Yet, despite these things, despite all the inherent economic strengths of our economy, our economy has failed to grow as it should have over the past 10 years with the result that we can honestly say—I stress this for the benefit of the hon the Minister—that the average South African is today less well off than he was 10 years ago.

In the light of this economic reality of the past 10 years, I should now like to address myself to the Budget. I believe that it is clear from the Budget that the Government has still not got on top of the basic economic problems facing South Africa. These are the lack of real productivity in the nation as a whole, the profitability of our operations and real economic growth. It is now clear that South Africa’s economy is just drifting merrily along without achieving the required objective of an average annual growth rate of 5% in the gross domestic product, which we all admit—the hon member for Vasco has spoken about it in the past—is required in order to ensure a safe economic future for our people by the turn of the century. I believe that the Government has not come to grips with our real problems, the real problems of population growth, rising expectations and evolving political aspirations. The facts clearly show that not only does our economy lack the horsepower to meet these problems, but it also just does not have sufficient built-in reserve power to withstand contingencies like the drought or the lower gold price. The reason for this, I believe, is the ever expanding Government expenditure which is placing an ever growing burden on the productive sectors of our economy. To finance this expenditure, South Africans are becoming today some of the highest taxed people in the world. The hon the Minister shakes his head. He must, however, look at the facts. In his efforts to finance his Budget deficits, the Minister sallies into the money markets and this has contributed to the high interest rates which are now reaching alarming proportions. The high prime interest rate of 21% is stifling sorely needed investment in the productive sectors of our economy. Where these funds have in the past not been available to the Minister, we know that he has had to resort to Reserve Bank credit and we know that this is a major cause of inflation.

We believe that the hon the Minister just cannot escape a large measure of responsibility for our present economic plight and I therefore move as a further amendment:

1. (a) timeously to establish State expenditure priorities which would ensure the economic growth necessary for the successful implementation of the imminent political and constitutional changes facing South Africa;
2. (b) to collect taxes due to the State through proper control and policing of the tax laws, thereby condoning the abuse thereof by some taxpayers to the detriment of the general public; and
3. (c) to compensate social pensioners adequately for the erosion of their standard of living as a result of inflation.”.

The hon the Minister is aware of the fact that over the years I have constantly called for a reduction in the rate of increase of Government spending, especially as a percentage of the GDP. Despite the fact that others have made similar pleas, he has allowed expenditure to increase each year at a rate which has outstripped the rate of growth of the economy as a whole, even after taking inflation into consideration. The basic economic reality is that South Africa cannot expect to achieve the desired real economic growth as long as this situation is allowed to continue. May I say to hon members on the Government benches, including the hon the Deputy Minister—unfortunately he is not here now—that it is just not good enough for them to ask us, as the hon the Deputy Minister did today, and as the hon the Minister and others have done in the past, where we believe they should cut expenditure when we say they should do so. The hon the Minister and the hon the Deputy Minister, together with the officials of their department and the hon the Minister’s Central Economic Advisory Service must set expenditure priorities. They must set the limits. After taking due cognizance of the economic situation in South Africa it is they who must decide where it is best to cut expenditure. All we know is that the hon the Minister has been spending far too much. If he, his officials and his advisory services do not or will not realize this, then we on these benches believe that they have failed in their duty to South Africa.

One reads daily in bank and economic reports that a case can be made out to appeal to the hon the Minister to cut Government spending. We read about this daily. I understand the problems of the hon the Minister. I will concede that overspending by Government is not just a South African problem. One finds it in Western democracies today, especially where liberal or socialist Governments hold sway or where they have held sway in the past, such as in the United States. We know the United States is struggling with a budget deficit of $200 billion. I read an interesting comment in Time of 5 March which I think will be of interest to the hon the Minister. I quote:

The report goes on to quote a British economic commentator saying:

That may be the dilemma the United States is in today, but one thing is sure: They are going to have to face the economic realities of that country sooner or later, as we in South Africa, I believe, have to do, and the sooner the better. Unfortunately the hon the Minister and his colleagues always seem to leave things to the last moment, almost too late. I was therefore rather amazed to hear the hon the Minister say on Wednesday during his Budget Speech that his department and the Central Economic Advisory Service are only now “engaged in an exercise to set up a logical, long term framework within which to set and judge expenditure requests, whether of a capital or current nature”.

[Inaudible.]

He said this was in regard to the new dispensation which is coming about in September of this year. The hon the Minister said the investigation was set up 18 months ago. I would have thought he would have been well advanced with the setting of priorities. I would have thought that he would have used this Budget, the last Budget before the tricameral Parliament comes into being, to make the necessary adjustments in our expenditure in order to accommodate the political and economic realities of the new dispensation. I want to warn the hon the Minister that he is going to have an extremely rough ride in the new dispensation.

Talking about budgeting options, Time also had this to say:

Within the next few years our economy is going to be placed under tremendous pressure to meet the demands for more Government expenditure as a result of the new political dispensation. It is absolutely of paramount importance therefore that we face the economic realities of South Africa and clearly set correct expenditure priorities so as not to cripple our national economic machine, as has happened elsewhere in Africa, but rather to enhance, build and encourage it so as to produce the desired and required wealth through real economic growth.

We in these benches are not just speaking with hindsight. Five years ago the hon the Minister was warned by the then finance spokesman of the NRP. On this exact day, 2 April 1979, Mr Bill Sutton had this to say when referring to the fact that we were disposing of the Senate and moving into a new dispensation (Hansard, Vol 80, col 3815):

Actually he was out there; it was the fourth last time:

Then he went further to say (col 3916):

Before I leave the subject of Government expenditure, I should like to ask hon members on the Government benches to project their thinking into the future, possibly another five years from this day when the new Southern African confederation comes into being. There is no doubt in my mind that in due course a political arrangement linking this Parliament with those of the ten Black national states will come about. We in the NRP envisage a confederation of Southern African states, a confederation which will divide political power and thereby give a large measure of self-determination to the member states. We envisage that it will be a confederation which will give to Whites, Blacks, Coloureds and Indians the right to free mobility around the confederation, seeking employment and earning a living in a common economy. This has got to come about because it is a reality of South Africa that we are all economically interdependent one upon the other and therefore some form of political dispensation will have to be devised in order to bring about order and stability to the confederation. Therefore I envisage the day in the not too distant future when a confederal budget will have to be presented, a budget which will have to accommodate the needs and aspirations of all our peoples.

It is in this context that I believe that we who sit in this Chamber at the present time have not only a tremendous responsibility to South Africa and to our children but also a great challenge before us. I say this because it is this Parliament which has the experience, not only in the political field but in the context in which I am speaking and probably more importantly in the economic field, to ensure that these transitions which we are about to go through and will go through in the future will leave a free enterprise economy in South Africa intact and prosperous.

I now wish to refer to the second leg of my amendment, namely the Government’s failure to collect taxes due to the State through proper control and the policing of these laws, and thereby condoning the abuse thereof by some taxpayers to the detriment of the general public. That there has been abuse of legitimate tax allowances has, I believe, been conceded by the hon the Minister. He mentioned some of these during his Budget Speech then he spoke of the alarming drain on revenue resulting from the growing momentum in the sale of tax bases for the purpose of taking advantage of concessions involving incentive allowances to their source. He conceded that unrestricted tax expenditures of this kind have a distorting effect and militate against his efforts or any efforts to spread the tax burden more evenly. I will certainly concede that the hon the Minister has now acted to close this drain on his revenue. He has made adjustments to the initial allowances in respect of machinery and plant and he estimates that he is going to collect an additional R285 million this year.

We also know that some taxpayers are abusing the training allowance, often an extravagant and basically worthless expenditure as far as training is concerned. This abuse is also draining revenue from the Exchequer. The net result of this, as the hon the Minister himself said, is, and I quote:

Here I do agree of course with the hon member for Vasco, and I am very pleased that he made a similar appeal to the hon the Minister to look into this matter. The effects are that whereas the basic tax rate plus surcharges for companies is about 46,2%, we read in Rapport recently that on average only about 26% is collected. The net result of this is that the so-called smart guys get away without paying tax at all, while those uninitiated taxpayers have to carry an increased burden.

I should like to make my position on this quite clear. I am most definitely in favour of any tax allowance which genuinely results in greater real investment in South Africa’s productive sector or which genuinely improves the productivity and the efficiency in our economy. When taxpayers use these allowances, however, to waste valuable, hard-earned money on extravagant schemes only in order to avoid paying tax, I believe that either the allowance has not been well thought through in the first instance or that the hon the Minister, as I state in my amendment, who has the responsibility for the collecting of taxes, is not doing his job properly. There is no better example of this lack of control than the tremendous growth in the so-called tax-free fringe benefits. The fact is that as the legislation presently stands most of these benefits are indeed taxable. The trouble is that the hon the Minister has just not been able to police this form of benefit effectively. The net result of this has been a great proliferation of so-called fringe benefit schemes. It has been estimated—it was written up in the weekend newspapers—that these so-called tax-free fringe benefits are costing the Exchequer R700 million a year in lost taxes.

I do not have the time to elaborate on this at the present time. However, I will certainly do so later in the session when, I know, we will have ample time to debate this matter further. However, I do want to conclude what I want to say on this subject by stating that it is absolutely essential that tax revenues are collected on as broad a basis as possible, and in as equitable a manner as possible, in order for the public to retain their respect for the tax laws.

What has been happening in recent years? That is that the abuses to which I have referred have enabled some people virtually to get away with murder. It has encouraged extravagant expenditure way beyond the normal means of the individual concerned, and indeed, I believe, way beyond the means of the country as a whole. When it comes to housing, motor cars, luxury flats, holiday flats, etc, we are spending money on so-called fringe benefits as though money is going out of fashion. Worst of all is that it has thrown our taxation system into disrepute. We can ask the average South African on the street what he thinks about our tax laws. He has no respect for them at all. The average man in the street says the big boys are getting away with murder while the average man has to carry the extra burden. In addition the general public, I believe, has suffered as a result of this. Some have to carry an additional tax burden. The 1% increase in GST is an example of this. Had the hon the Minister collected his tax correctly it may not have been necessary for him to increase GST by 1%.

Worse than this even is that the average man is suffering as a result of the ravages of inflation, which, I believe, has been spurred on by these abuses.

This brings me to the third leg of my amendment—the Government’s failure adequately to compensate social pensioners for the effects inflation has had on eroding their standards of living. Another hon member of my party will elaborate on this. It is these people, however, the pensioners—especially the social pensioners, but also the civil pensioners—and those people who have invested throughout a lifetime of hard work in order to see themselves through the latter years of their lives, who are really suffering because of inflation. They are the ones who are taking the beating. I do therefore appeal to the hon the Minister to realize that inflation is the number one enemy of South Africa, not only as far as the pensioners, the elderly and the low income people are concerned but also because it erodes the will of all the people to work and to create wealth. That is exactly what a growing country like South Africa needs. This country, as we move into a new political dispensation, a dispensation in which there will be Coloured, Indian and Black people playing an ever-increasing role in our economy, is direly in need of one thing. That is that we should inculcate in these people the desire to work and to produce and not to sit on their backsides and let the State pay for their housing, their living, etc.

I believe the hon the Minister has a great responsibility in this respect, and it is for this reason that I have moved my amendment.

Mr Speaker, I join the hon the Deputy Minister in wishing both the hon member for Yeoville and the hon member for Smithfield a speedy recovery.

We welcome Mr Schweppenhäuser as the new Commissioner for Inland Revenue and we trust that his tenure of office will not be too taxing!

The hon member for Amanzimtoti spoke about productivity. The hon the Minister of Finance has done everything possible to try to increase productivity and, when the hon member for Amanzimtoti spoke about increasing productivity, I heard no positive suggestion from him as to how productivity in South Africa should be improved.

The hon member also mentioned the question of failure to collect tax. Once again, however, he made no constructive suggestions in regard to the taxes he wanted to be collected and neither did he specify which taxes were in his opinion not collected. No country in the world has a tax collection system that is 100% successful. The hon the Deputy Minister of Finance gave us examples two months ago to show that over a three-year period we had budgeted for a certain amount in GST, and that we had come very, very close indeed to collecting the full amount budgeted for. I think it is wrong for the hon member for Amanzimtoti to have said that if we had collected the full amount in respect of taxation it would not have been necessary for us to increase GST. That is totally incorrect because we had no alternative but to increase GST. I shall deal at a later stage with some of the other remarks that the hon member made but I also want to point out to him that where the staff shortage in the particular office was 23% a few years ago, in an effort to collect as much money as possible in taxation we reduced that staff shortage to 10%. In his Budget Speech the hon the Minister of Finance himself told us that an investigation was taking place but, as I have already said, there were no constructive suggestions forthcoming from the hon member for Amanzimtoti or his party in regard to what they would like to see done as far as the tax situation is concerned.

The hon member for Amanzimtoti gave us many constructive suggestions in regard to a Budget five years hence but he gave us no constructive suggestions in regard to the Budget under discussion at the moment. We all agree with the hon member for Ananzimtoti that inflation must be reduced and, as he well knows, one of the best methods to lower the inflation figure is to drastically reduce the money supply. If one reduces the money supply in South Africa too drastically there will be massive unemployment, and I am certain that the hon member will be the first one to agree with me that we in this country cannot afford massive unemployment.

I wish to refer briefly to what was said by the hon member for Yeoville. He chose to question the hon the Minister of Finance’s financial credibility. The hon the Minister stands like a colossus on the South African financial scene. Every financial institution, both locally and abroad, has the greatest respect for the hon the Minister of Finance’s credibility. Representatives of the International Monetary Fund, who are absolute experts, were in South Africa a short while ago and they were happy in every respect with the financial administration in this country. What about the IMF loan of R1 200 million that was made to South Africa despite the United Nations voting 121 to three against the loan being granted to South Africa? Once again, this is proof of South Africa’s financial credibility in the world market. [Interjections.] The hon member for Houghton keeps interjecting but I am unable to hear what she is saying. If I know her, she is probably upset that we were granted the loan by the IMF. [Interjections.]

South Africa’s financial credibility is so great that recently the hon the Minister of Finance signed a public bond issue that will be quoted on the Luxembourg Stock Exchange. This will be the first time that the Government has made use of a quoted floating rate facility. South Africa has been offered many other loans which for obvious reasons the hon the Minister of Finance was very wise in not accepting. As the hon the Deputy Minister of Finance pointed out, we do not wish to find ourselves in an over-borrowed situation because that money has to be repaid. If I heard the hon member for Yeoville correctly, he criticized the system of exchange control because of all the money that had left the country, but if my memory serves me correctly, then at the time when exchange control was relaxed, the hon member for Yeoville did not oppose the relaxation of exchange control; in fact, my recollection is that he approved the relaxation. If I am wrong, I should like hon members to point it out. To the best of my recollection the hon member was in favour of the relaxation of exchange control.

The hon members of the Opposition refuse to face the facts of life and they live in a world of make believe. It is a fact of life that with the drop in the gold price South Africa has lost thousands of millions of rand per year. It is a fact of life that we are facing the worst recession since the 1930s. It is a fact of life that our trading partners and South Africa are down thousands of millions of rand on exports. It is a fact of life that we are probably facing the worst drought in living memory. It is a fact of life that we have taken the necessary expensive counter measures against the onslaught against South Africa. It is also afact of life that all of us want to improve the quality of life of all our people in a country which is economically and militarily strong. There are other facts of life as well, but why does the Opposition not deal with the facts and suggest solutions to solve the problems of South Africa? Instead of dealing with the existing situation, the Opposition is out of touch with the realities of the South African situation and therefore instead of helping to solve the problems, they are creating some of the problems with which we are faced.

On 25 March 1984 the Sunday Business Times in a Budget preview said:

It is obvious from those remarks in that paper that those people know about the financial situation, that they have analysed the financial situation. It can be seen that the hon the Minister did the best he could under very difficult circumstances.

Let us look at the kind of remark which we had from the hon member for Yeoville. On Wednesday he referred to the Budget (Hansard 1984, col 3921) as:

The next day in The Cape Times a PFP leader, a frustrated and embittered Naval Commander McMurray, a past and aspirant candidate of the PFP, referred to the Budget as one “with an agricultural mentality”. He also said that we were “operating on an island economy”. The last man who referred to our Budget and finances as those of a “banana republic” was a member for the PFP then sitting in Parliament. As all know full well, after that his career in Parliament was finished. I predict that this aspirant candidate Commander McMurray will never see the doors of Parliament in any other capacity as a visitor in the visitors’ gallery.

How did you get back to Parliament?

I am a nominated member in the same way as the hon member Prof Olivier except that I do not hold the title of professor.

The hon member for Wynberg referred to the allocation for defence and he said that it was ironic that there had been an increase in real terms in defence expenditure. PFP leaders would like us to spend less on defence and agriculture, and those leaders who want us to do that do not have the interests of South Africa at heart. Because we have a strong economy and we are strong militarily, we are a power to be reckoned with, but the PFP would like us to be less strong. I challenge the PFP to tell us what we must cut in defence and agriculture expenditure.

Mr Speaker, may I ask the hon member a question?

No, Sir, I do not have enough time to answer to questions.

The hon member for Yeoville made the simple statement that the Budget was not in the interests of South Africa. This is the biggest Budget we have had and the biggest expenditure will be in defence and education. Why did the hon member not say exactly on what we are overspending in those two departments? He should tell us what must be cut and in what manner. In regard to the budgeted increases he said that the tax on certain luxury items had been increased while company tax was also raised. He is free to disagree when it comes to certain items, but to condemn the Budget as not being in the interests of South Africa, is to be totally out of touch with reality. The IMF, the foreign capital market and South Africans show appreciation for the way the Government manages the financial affairs of South Africa. These people are recognized experts, but now we have the so-called experts in opposition who have done nothing constructive towards the governing of South Africa, who want to tell the Minister how to budget. The PFP and the CP have on many occasions acted in a manner that is destructive towards the people of South Africa. I have listened carefully to Opposition members and their amendments, but these members are totally irrational in that they have no understanding whatsoever of the very difficult circumstances under which this Budget was presented. Opposition members have no conception whatsoever of the effects of the drought, the effects of the drop in the gold price and the effects of the international recession on our exports. They have no understanding of the absolute necessity for certain spending, for example for defence, education and other vital departmental spending. They have forgotten that in a relatively short space of time we have had to secure South Africa by spending thousands of millions of rand in order to make our country more self-sufficient. Here I refer to Sasol 1, 2 and 3, to Escom, Armscor, Koeberg and many other projects.

*South Africa has had to assist South West Africa with many thousands of millions of rands. I now want to ask the hon Opposition which items of expenditure the Government should have cut back on. Which of the projects should the Government not have embarked upon? They must tell us this today. The completion of these projects is of vital importance to all the people of South Africa. Future generations will know that these projects enabled them to ensure the survival of our country.

†This is a historic occasion in the sense that this is the last Budget before the new constitutional dispensation comes about. The Prime Minister, the Government and the NP have dedicated themselves to cementing the foundations for a South and Southern Africa where people can live in peace, prosperity, stability and hope. The NP has a vision for South and Southern Africa in respect of which the quality of life of everybody can be improved. The success of this policy is dependent on every leader, whether he is in politics, religion, industry, commerce, the professions or in whatever field he may be in. These can be the golden years of our continent if every leader is prepared to make an input. The Press and other news media have the opportunity of a lifetime to make an invaluable contribution. The people of South Africa are determined to rise above petty party politics in order to be of service to South Africa. What worries me, is the lack of leadership in the PFP and the CP. They do not seem to have the ability to shake off their negativity and they have nothing constructive to offer South or Southern Africa. Despite the most difficult circumstances under which this Budget has been presented, the Opposition has shown that it has no understanding of the situation. The PFP and the CP must face the realitiesof the South African situation. The realities are that the hon the Prime Minister and the NP have a mandate and that they are proceeding in terms of that mandate. The PFP and the CP have not accepted the outcome of the referendum and will go out of their way to act as spoilers in SA politics. The PFP says that it will work within the terms of the constitution, but there are definite examples of the PFP not acting in good faith and that they have merely paid lip service to this resolution passed at their congress. In fact, there are examples of the PFP having acted in bad faith. The CP has, despite the referendum, continued to reject the new constitution. Both the PFP and the CP are motivated by negativity and they are doing their best to project an air of pessimism throughout the country. According to The Citizen the hon member for Pietermaritzburg North said:

What absolute nonsense! That is what the PFP want people in South Africa and overseas to believe. Economic, military, trade, financial, United Nations and other sanctions are applied to South Africa. Young South Africans have fought border wars and have made the greatest possible sacrifices. Russia, Cuba and East Germany are operating in neighbouring states. With some exceptions, the Press and the news media encourage hostility towards South Africa by way of their reporting. Internally terrorist groups and well-meaning liberals have done their utmost to cause internal unrest. If one takes the cumulative effect of all those actions the PFP cannot still say that there is not a total onslaught. [Interjections.] If they do, they cannot claim to have the best interests of the country at heart. I want to ask the hon member for Pinelands who is interjecting if he will publicly reject the UDF from platforms in this country.

I reject you.

You may reject me, but you will not reject the UDF. [Interjections.] The hon member will not reject the UDF because he has too much in common with it. The hon member has a common stand which he would like to take with the UDF.

I want to refer to examples of what the Government has done in order to combat the problems I have mentioned. In the financial field South Africa has, despite all adversity, been able to borrow on the financial markets of the world. One can look at our trade figures to see how we have encouraged industries, commerce and farming to develop in order that we do not only use it for local consumption but for export as well so as to earn foreign currency. There have also been our efforts with Sasol 1, 2 and 3 in an effort to alleviate the oil boycott. The development of Koeberg and Escom has been undertaken in order to ensure our power requirements. The development of Armscor has been absolutely phenominal to the extent that we have not only developed arms for export and to equip our own army but have also gained sufficient expertise in the production of arms to stand us in good stead in the years ahead. There are many examples, but these are a few that give one an idea of the thousands of millions of rands that we have spent to ensure the safety of the RSA. These funds have come from the public of South Africa who are full partners. Often these taxes are paid by people who are very poor and who are going through very difficult times. They realize, however, that collectively all these taxpayers lay the foundation for present and future generations.

The PFP have gone out of their way to whip up feelings against certain parts of GST. The official Opposition is very well aware of the very real efforts by the Government to improve the quality of life of all the peoples, especially the poorer peoples, of South Africa. Money is so badly needed for essential services that there was no alternative but to increase GST. Despite this necessity, the PFP and part of their Press say that part of the tax raised was deliberately raised to tax the poor and that it is evil. One newspaper in an editorial advocated a national campaign against certain aspects of GST. These tactics are an attempt to undermine the morale of the people and to cause bitter resentment when in fact the proceeds of GST are helping the very people that pay it.

There is a matter which I wanted to clarify with the hon member for Yeoville but, as he is not here, I will not raise it.

One should test the attitude of the PFP in regard to the statements they make. It is common knowledge that we are on the eve of the greatest constitutional development this country has ever known. This development can be most successful if all political leaders of all people pull their weight. Leaders who are prepared to rise to the occasion and who can leave their pettiness and negativity behind, have a most important role to play.

I want to refer to some examples of things which hon members of the PFP do and say. The hon member for Green Point, for example, said the following in a discussion on a Bill:

The hon member will find that this statement is treated with the contempt it deserves by employers in South Africa.

In The Cape Times Lansdowne hit the headlines because the young Progs turned it into a political football. [Interjections.] The PFP were prominent in trying to stir up trouble because people of colour were affected. Why did the PFP not allow the Coloured leaders to handle this matter? It is another way of condemning the Coloured leaders.

The PFP also made allegations in regard to the funding of one of the Coloured parties which is once again an effort to undermine the Coloured leaders.

During a discussion on legislation on 20 March 1984 the hon the Minister of Internal Affairs asked the PFP if they wanted the elections of the Coloured and Indian people to succeed. The hon member for Green Point said that it had nothing to do with the PFP; in other words the PFP could not care. It shows once again that they have no intention of playing a constructive role in the new constitution. It shows the same boycott mentality reflected by their refusal to serve on the President’s Council and their negativeness throughout the referendum.

Let us look at where the United Democratic Front and the PFP stand. We have already had it from the hon member for Pinelands that he will support them throughout the country. [Interjections.] Let us look at how they compare in policy. Firstly, the UDF is against the new constitution and the PFP support them. Secondly, the UDF believe in a common voters’ roll and so do the PFP. Thirdly, the UDF believes in majority rule and so do the PFP. Fourthly, the UDF and the PFP have the same views on a host of matters like detention, group areas and many others. In other words, the PFP are encouraging leftist extremism and political unrest in South Africa. There are many PFP speakers who will follow in this debate and it will be interesting to see whether any of them will repudiate the UDF.

There is one other matter I should like to raise and that is the question of the decentralization concessions which have been made and which have had an enormous impact on the economy of South Africa and will play a vital role in creating employment opportunities. The decentralization agreement was signed by South Africa and certain states that became independent of South Africa. Since 1 April 1982 and until 31 December 1983, 1 593 applications have been approved amounting to R3 314 million and these will create 116 000 jobs. On the basis of six people per family, that means that approximately 700 000 people will benefit.

But Helen says it’s failing.

Yes, the hon member for Houghton says it’s failing. I wonder what success is if that is not success. Foreign investors had applications approved involving R212 million. This terrific success was during the 21 months of the recessionary period and it is therefore obvious that during an upward swing in the economy millions of people will benefit.

In supporting this budget, I want to pay tribute to the hon the Minister, the hon the Deputy Minister, the Director-General and all the officials for their dedication in handling the financial affairs of South Africa so competently and efficiently.

Mr Speaker, the hon member Mr Aronson is obviously so happy in his position of complete subservience to the Establishment that it would be almost a pity to disturb him. He is apparently totally unaware of the fact that over the last four years the average growth in our GDP has been just barely over 1%. He speaks of the economy as if everything is fine. It is most extraordinary.

What does the position look like outside South Africa? [Interjections.]

Order! I have given the floor to the hon member for Walmer and to no other hon member.

Thank you, Sir. In considering this budget, I must begin by repeating some of the things that were said this time last year when the hon the Minister set himself a flight plan for the year. One must ask how that actually worked out, because we are in the process of getting next year’s flight plan. This time last year he said that the policy was one of continued market-orientated financial discipline to lay the foundation for higher growth, less inflation and stability in the balance of payments. One has to ask oneself whether this actually materialized.

It is a flight from reality.

Completely. Monetary discipline during the first half of last year left a lot to be desired with the result that the money supply grew fast. There was a resurgence in the economy much too prematurely and the inflation rate really took off. Strenuous efforts subsequently, in the second six months, did a lot to bring the money supply under control again, but by that time the damage had already been done. What we did was to put off until an indeterminate date the time when the economy could really begin its upswing. It was in his attempt to exercise fiscal discipline however that the hon the Minister had his most abysmal failure. The reason was that his colleagues were completely uncontrollable. Every single department overspent. His original estimate for total expenditure for the year of approximately R21,2 billion was 10,3% higher than the figure for the previous year. It is common knowledge that the amount spent was a massive R22,8 billion, almost 19% higher than the figure for the previous year. That is the measure of the fiscal discipline that we saw applied. This brings us to the nub of the problem. Once again we stand on the thresh-hold of a new year and we listen to the reassuring voice of the hon the Minister of Finance taking us through a set of figures that nobody in the private sector actually believes.

Really?

Yes. The public sector by its nature cannot be quite so open about this, but I have very good reason to believe that significant areas of the public sector are more than a little sceptical about the hon the Minister’s ability to maintain expenditure at a growth rate of approximately 10%. This credibility gap—it is very serious—accounts for a most peculiar dichotomy in the criticisms that economists make of this Budget. They find themselves analysing two Budgets, the one which the hon the Minister has just presented to the House and which they do not believe will ever come to pass, and the other in which total Government expenditure is not R24,9 billion but conservatively estimated at somewhere between R26 billion and R27 billion.

By whom?

We will see. These two sets of figures obviously give profoundly different answers to how the economy is likely to look in 1984-85.

Another hidden agenda.

Right. If the hon the Minister were able to control his bank-rolling colleagues and keep expenditure at the budgeted figure of R24.9 billion this Budget would be restrictive. It would after all be taking R1 billion off the deficit and reducing the GDP growth by approximately 1%. It would be anti-inflationary, although it is doubtful whether the inflation rate is going to be conducive to being pushed down much in any circumstances as a result of recent events. It would not be conducive to growth and employment creation. It would curtail investment spending, taking money away from the corporate sector. It is a totally unimaginative Budget, the Budget of a Minister whose only initiative is to pray that the price of gold will transform the economy into a golden fairyland so that a leading player may depart the stage in a blaze of undeserved glory. [Interjections.]

If the hon the Minister is unable to control Government expenditure—I have yet to come across anybody who believes that he actually will be able to do so—we will have a quite different scenario for 1984-85. The deficit before borrowing, if revenue is to be as budgeted, which is 15,4% higher, could be between R4 billion and R5 billion. The Government’s problem would then be how to finance this. It would be totally irresponsible obviously to go to the bank sector. This would put inflation through the roof and the value of the rand through the floor. If the Government were to finance this deficit by recourse to the capital market it would crowd out private sector borrowers, interest rates would be forced to a level which would stultify all growth, and it would also end up financing current expenditure out of Loan Account. Consequently the Government would have to raise taxes. The hon the Minister has already hinted at this twice in his Budget Speech. I believe this is an indication that he probably thinks that there is no more chance that he will retain expenditure at the budgeted amount than we believe he will. In this very likely event the chief economist of the Bureau of Economic Research has said that South Africa can expect the recession to last the year out. I am sure that it will at least do that but more critically than that, it will lose the synergistic advantage of timing our upswing with the resurgence in the economies of our main trading partners. With this background one can make some prediction for the coming year.

First of all, inflation will remain in double figures with serious implications for our international competitive position. Secondly, there will be low economic growth—and the hon the Minister does not even commit himself to a growth figure—of probably 1% or 2%. The rand will continue to depreciate. The Government has allowed us to be pushed into a classic Catch 22 situation. If the economy is to create job opportunities there must be increased private investment spending and this must be stimulated by consumer demand. It therefore follows that it must follow consumer demand; it cannot lead it. However, unlike the situation that the USA was in at the time when its economy started to pick up, our consumers are borrowing as never before and the cost of their borrowing is higher than it has ever been before. Their savings rate dropped to an all time low of 3,5% in 1983 and real consumption has risen by 6,5% in that same period.

Our consumers’ debt thirst has left them in no position to stimulate the next upswing in our economy. Consequently, an economic recovery must be export led, but several factors have adversely affected our ability to take advantage of export opportunities. First of all, the Government’s complete failure to handle the inflation situation has left us in a very adverse position relative to our competitors, particularly in regard to our manufactured goods. Secondly, the Government has failed to work out with industry an effective industrial strategy conducive to manufacturing at competitive rates. Thirdly, its ideological policies have handicapped us at home and have closed many of our most natural markets where we do have a distinct advantage. Fourthly, we meet stiffening competition in the export of our resources abroad because of the increasing competition from Third World countries who are also now selling those resources. Where, therefore, does the upswing come form? It reminds one of the Burl Ives song “There is a hole in the bucket, dear Liza, dear Liza”—it goes round and round.

It is quite obvious that the hon the Minister stands helplessly in the midst of a situation which he lacks the resolution to tackle. His policy can be described as trying to keep the show on the road until the price of gold goes up. Hon members on that side of the House may say: “This criticism is all good and well but tell us something positive; what should we do in these circumstances?” I will attempt to do that to a degree.

We can spend a great deal of time discussing where and how the Treasury raises its money. It can be done in an inflationary or a non-inflationary manner, expensively or cheaply, so as to identify certain target areas in the economy and either load or unload them. Every businessman knows that it is important how money is raised but what is far more important is how money is spent and that in the spending of that money one gives priority to essential needs.

I have a strong feeling that the hon the Minister has virtually undisputed authority on the revenue side of the Budget but is all but ignored on the expenditure decisions because these involve political issues. It is this that accounts for a predilection for monetary control but time and again this control has been rendered ineffective for lack of supporting fiscal measures. Unfortunately the hon the Minister’s colleagues have no grasp of the dimension of essential spending that has to take place over the next 20 years. It is touch and go whether this country pulls itself clear or is submerged in a witches’ brew comprised of poverty, terrorism, repression, exploding numbers and a stagnant economy. Neither do the hon the Minister’s colleagues have a feeling for the wealth of this country—what it can and what it cannot afford— nor do they understand where the money they spend originates. South Africa urgently requires a Budget that spells out specific objectives. No enterprise can prosper for long unless it has these objectives. The private sector needs these objectives because it is the wealth producing sector and cannot plan without them. The private sector is beginning to believe either that these objectives do not exist or else that they are locked away because the hon the Minister does not want to be measured against them. Statements such as: “We shall continue to follow a conservative policy to maintain a sound balance of payments and reduce inflation” cannot in any way be used as an objective and neither can the private sector plan around a motherhood expression such as: “We continue to attach great importance to optimal and stable economic growth and a stable level of employment”. Where does one begin to use this sort of statement? How does one actually start? One needs quantified and stated objectives. There is no reason why they cannot be spelt out. One can spell out the inflation rate that one is aiming for, one can also spell out the growth rate that one is aiming for, and one can spell out the measures that one intends taking to achieve these ends. The business sector can then plan around them. However, now, with this mixture of despair and incredulity, how are they expected to make their investment decisions?

This brings me to a further aspect of South Africa budgeting, namely its ad hoc, year by year approach. The wealth producing sector of the economy cannot plan on this basis. Medium and long term aspects of financial planning get no attention in the hon the Minister’s Budget whatsoever. If the hon the Minister had provided some meaningful stimulation tied directly to export achievement, he could have addressed certain critical issues in the only non-inflationary manner that was available to him at this junction. He could have achieved job creation, he could have improved the balance of payments, he could have helped promote an export-led upswing in the economy. The possibility that the gold price will not rise sufficiently could also have been prepared for in such a fashion. There is also the difficulty that we are experiencing now in respect of the recent very considerable increase in our imports.

I wish to conclude, Sir, by stressing three issues. Firstly, South Africa is now adult enough to be told the truth. It is mature enough to take bad news as well as good news. The bad news is that increases in salaries and wages cannot take place as swiftly or more swiftly than the future inflation rate. If inflation is not controlled, salary and wage increases will be a cynical sop—the giving with one hand and taking back with the other in the form of reduced purchasing power and increased taxation. Secondly, the private sector and the utilities cannot be allowed to use concentrations of power to push prices up in order to maintain profits in periods of stagflation as we are experiencing at the moment. Thirdly, the hon the Minister’s economic policy is to pray that a rising gold price will once again have us awash with money. His colleagues will then be able to indulge their ideological visions and reward their acolytes as they choose. This sweepstake approach saps our economy of purposeful initiative and must not be tolerated. We just cannot afford it. The economy should be run as if the price of gold will never again move up faster than the rate of inflation.

Mr Speaker, in his speech the hon member for Walmer claimed that the lack of fiscal and financial discipline was the cause of the recessionary phase in which we find ourselves at present. I shall try to prove the contrary later in my speech. The hon member went on to speak of public spending and said that the Government had permitted the authorities to spend recklessly. Once again, however, just like his predecessor, and typical of the PFP, the hon member for Walmer offered no solution with regard to those items in the Budget on which there should have been a cut-back. It is wonderful to argue the way he does. It is enjoyable simply to attack and criticize without offering any solution whatsover. I think the time has come for the PFP to learn once and for all that they are not in a position to govern this country and that the solutions to the country’s problems, its financial problems, too, will come from this side of the House.

I also want to say something about the question of consumer spending, to which the hon member also referred, later in my speech. I should like to deal with this in detail.

The hon member went on to attack the hon the Minister and claimed that there was no long-term planning in his budget. Surely that statement by the hon member is incorrect. Surely it is the very far-sightedness, the built-in discipline which the hon the Minister has incorporated into his financial policy, as well as this Budget, that have helped us out of these financial problems over the past two or three years. Before the hon the Minister made his Budget speech last Wednesday, there were a number of economic and financial profits of doom who tried to sketch a black and oppressive picture. The hon the Minister had already been lead to the slaughter with the rope around his neck, and many economic profits sketched a very dismal picture of South Africa’s financial position. They simply did not believe that we would made ends meet without drastic, fundamental tax increases being announced. What happened, however? As has happened so often in the past, the policy of the hon the Minister and his competent department, who are intent on establishing financial discipline, served as the core premise and yielded an absolutely appropriate result. Once again, the fruits of that policy have been reaped.

To be compelled at times to tighten one’s belt a little has always had the desired effect in the economic set-up. The inhabitants of South Africa have the built-in potential to overspend in times of prosperity, and even in times of average economic activity; a kind of spending which borders on recklessness. The hon member for Sunnyside also referred to this. However, the reason he advanced as to why the country overspends economically is ridiculous, of course. The hon member claims that it is the policy of the Government that compels people to overspend. Spending cuts both ways. Spending has the effect that it can promote growth. The more spending that takes place the greater the potential money supply and the greater the potential consumer spending. However, it also has the effect that excessive spending necessarily leads to price increases.

We are always complaining about higher prices and rising costs. However, have we as consumers ever sat still for a moment and reflected on the degree to which we ourselves are responsible for the so-called rise in the prices of consumer goods; more specifically, the prices of luxury items?

The golden rule of supply and demand still applies in our economic activities. As long as the consumer is prepared to spend, the dealer and the manufacturing sector will be available to offer their products at the price the consumer is prepared to pay. Do we still have a degree of consumer resistance in our buying pattern? I get the impression that we do not. Rising prices have become so general and commonplace, that the consumer regards it as normal. I maintain that at present there is almost no consumer resistance in South Africa. After all, the consumer is the one side of the coin, the one party in the trading partnership, but if this partner or component in the transaction has become weary and fatigued, even defenceless or passive, and is being pushed around like a pawn by the other party it must be assumed that he will ultimately be eliminated from the entire process.

Today I want to appeal to the consumer to be a lively, active partner in economic activities, as he was a few years ago. Surely a transaction cannot be entered into and economic activities cannot take place without the participation of all the parties, and that includes the consumer.

The Consumer Council is the statutory body established to look after the interests of the consumer, but I am afraid that this has indeed been the cause of, or has had the effect that the consumer has pushed himself aside and is no longer prepared to place his resistance to high prices on record, as is his right. The rise in prices, the rise in the consumer price index and the resultant increase in inflation must not simply be ascribed to the wilfulness on the part of the public sector and the commercial sector. The consumer component, us, the man in the street, will have to make his voice heard once again, he will have to re-analyse his spending, he will have to reconsider and cut back again. If we can succeed in effecting a better method of spending the next step is much easier and simpler, viz saving.

I wish to make a plea that we give this facet of our economic activity, ie saving, urgent attention this year. During the past few years we have enjoyed ourselves tremendously whilst spending. Could we not make this year a year of saving? Can we not tell ourselves, our wives and our children and each other today: Let us save for a change. Once we have succeeded in learning to save again we can go on to the next step, and that is investment, since, after all, investment is the growth potential in our financial and economic activities. We have come to the turning point in the downward business cycle. I believe and I hope that things will be better in the foreseeable future. However, things will only be better if, in the first place, we are prepared to save and, secondly, if we are prepared to invest, so that when the upswing comes we will be able to produce more.

This brings me to the second aspect to which I wanted to give attention, viz productivity. In Volkshandel of March 1984 I read the following paragraph:

What are we not being charged with here! Productivity in the manufacturing industry decreased by 6% in one year, whilst remuneration increased by 18%. Do we really ralize what the ultimate affect of this could be on our economy? If we in South Africa wish to survive—and I include all population groups—we shall have to give urgent attention to this matter. We all plead for higher and better salaries and wages. We all accept the principle of parity with regard to salaries and wages. Women must earn the same as men and there must be parity in the salaries of the various population groups in South Africa. This is all very well, but if we are not all prepared to contribute our share this whole campaign could simply fall through, since we would then be trying to solve one problem, whilst creating an even bigger problem, viz that the economy is financing itself with money that does not really exist. Dr Jan Visser, the executive director of the National Productivity Institute, makes the following statement in an article he wrote on productivity:

I do not think this is the case in South Africa at present. If consumption is increased without more being produced we must accept on the basis of the simple economic principle of supply and demand and the influence it has on prices that we are going to have problems in the future.

Within a few months we will be entering a new constitutional dispensation. It is new, it is challenging, it is far-reaching by nature. However, one thing we have to identify and obtain clarity on in this whole new dispensation is the fact that a new era will have to dawn in respect of the generation of funds as well. It is very clear, and I assume that it is generally accepted, that the White man will in future no longer have the sole right to, and the sole say concerning, the spending and generation of State funds. Up to and including this Budget we as Whites have had to accept the responsibility for working out a practicable formula as to how the necessary funds for the Treasury could be found and how those funds should be voted and spent. It is this Parliament, this White institution, that has had to take the sole decision until now. We had to decide, for example, how much should be appropriated for the education of Coloureds and Indians. We therefore decided on their lifestyle, what their houses should look like and how their residential areas should develop. In the world of delusions and dreams in which we were living we still believed until recently that we had the exclusive say in the decision-making processes in matters affecting other groups. I want to state unequivocally today that I am grateful and proud to be a member of a party that was able to disengage itself from such an egoistic point of view and that can grant other groups a say in a systematic and purposeful way so as to enable them to decide on their own affairs in a responsible way. They are also being given the opportunity to decide together on matters of common interest. This will necessarily mean that everyone will have to display a greater degree of responsibility. I find this kind of responsibility lacking in some hon members in this House. This will also lead to financial responsibility. There will have to be responsibility with regard to the Budget, ie, the giving and taking, collecting and spending of funds.

I am of the opinion that the Coloureds and the Indians are tired of simply receiving. I think they, too, want to accept responsibility for what they have to contribute, particularly since we have switched to complete parity as regards income tax. Furthermore, I accept that the Coloureds and Indians do not have the necessary management expertise at their disposal to let everything run smoothly from the beginning. However, I think that if there is mutual goodwill and tolerance, if we are prepared to speak to one another and confer, we will also get over this hurdle in this regard, in the sphere of economic and financial interdependence. Just as we should not be afraid of the financial implications and the price we have to pay to make Black peoples in South Africa independent, we must not shy away from the financial demands this new dispensation of ours is going to make. I want to plead with the Whites of South Africa not to be afraid of the financial implications that lie ahead. We must tackle this new dispensation with trust in God, enthusiasm and faith in our own abilities in the knowledge that He who directs and guides nations will also guide us here at the southern tip of Africa.

Mr Speaker, it is a pleasure to speak after the hon member for Gezina because I think he really believed in what he said here today. I do not want to refer to the days when he was still with us, since that would not be appropriate now.

Do not say anything about the secret meeting either.

Yes, I shall say nothing about the secret meeting the hon member wanted to take me to either. [Interjections.] All I want to say is that I think that the appeal the hon member made to all of us today must be considered. [Interjections.] Mr Beerstedt once put it in a nutshell: “He who is intelligent, is able to adjust adequately to the situation for the good of his own people”. I am not sure that that could be said of the hon member today, but I concede that there have been times when he thought differently. However, I believe that he is convinced that he is right today and no man should point a finger at another who is following a certain path with conviction. Nor should one try to make him change direction. He is a man who is legally of age and therefore he can make his own mistakes. [Interjections.]

†There is one man in this House of whom I am very fond and that is the hon the Minister of Finance. [Interjections.] I want to tell him he has a terrible job. Over the last 10 years it was very difficult for him, even when I was in that party, to cope with all the problems the NP gave him as Minister of Finance. Today he again has a problem, and I want to ask him—and I do so in a friendly way—if he can tell me where in this Budget I can find provision made for the pay for the Coloured and Indian representatives. I cannot find it. Maybe I am wrong; maybe it is somewhere. But I cannot find it. I would ask the Minister to reply to that. I cannot find it under Vote No 2, “Parliament”, nor under the Vote of the Minister of Constitutional Development and Planning. It may appear somewhere else. If it is not there, however, I must ask the hon the Minister whether that means that we will have to consider another Budget, another form of Budget, another appropriation, in approximately September and, if so, where the required money will come from if the gold price shows no increase.

I have full confidence in the Minister, but not in the Government. In the mere 15 minutes at my disposal, I do not think I can touch on every statement the hon the Minister made.

*Particularly in the field of the economy it is a problem to deal with a budget in such a short period. In the first place there are the problems the hon the Minister had as regards extending the taxable basis. That is not easy. The population structure is such that the taxable basis remains approximately the same. The difference in ethnic incomes, as well as the difference in ethnic households as between Whites and non-Whites, creates a problem. Whether the hon the Minister should give precedence to growth or whehter he should combat inflation is another problem. The economic problem with which the Minister is faced has to a large extent been created by the political philosophy of the Government. The political leaders of South Africa have not yet learnt that one cannot buy the friendship of an individual, let alone that of a people. Nor is the tax basis of South Africa getting broader. There is only an outflow of funds across our borders which is assuming dangerous proportions, particularly since our Nkomatis and since the hon the Deputy Minister was in Portugal. I can say to hon members that if what the Portuguese told me is the truth, then that man can expect a beating, because I understand that considerable expenditure was involved. All I ask is that binding economic agreements are not concluded with these countries. We cannot afford it. The Whites in South Africa pay approximately 90% of all tax. Although there was no increase in personal income tax this year the White taxpayer still pays 56% of the total amount of tax. And then we are expected to thank the Government! Over the past financial year the White taxpayer paid R12 331 000 in tax, out of a total tax revenue of approximately R24 million. Therefore the White taxpayer contributes 56% of the total tax burden of the country. [Interjections.] I am now referring to the White taxpayer, the ordinary worker, the man in the street. [Interjections ] I knew that those hon members were unaware of these facts. They should rather be quiet and wait until I have finished speaking.

What point are you trying to make?

The point I am making is that in the coming 1984-85 financial year the taxpayer will pay 56% of the total tax revenue of the country. This will be utilized inter alia to finance the new dispensation as well. [Interjections.]

As far as companies are concerned, I like the remark by the hon the Minister that the income of companies is tending to drop. What did companies pay in tax this year? Including gold mines and other mines, they paid only 24,8% of the total amount of tax.

What point are you trying to make?

Oh really, that hon member for Wellington! [Interjections.] In 1980 companies bore 45,5% of the total tax revenue whereas at present they are responsible for a mere 24,8%. The fat cats saw an aspect of the Government’s philosophy that they could sink their teeth into. Do hon members know what they sunk their teeth into? After all, we had a tremendous increase in the price of steel. Highveld steel made many times more money out of it than did Iscor. One should not underestimate a businessman. I am not angry with them either. However, I can indeed say that as regards benefits relating to training offered to large companies, they skimmed off the cream and registered people. This applied with regard to in-service training and decentralization benefits. Analyse these data and see where they lead one. The hon the Minister lacks a method whereby to clamp down on those people properly. It is due to the philosophy of the Government that these problems have arisen. Sir, I want to prove hereby that there are major problems for the workers.

One need only look at the costs. An hon member who spoke earlier referred to the farmers’ costs. The high interest rates that the farmers have to pay, whether payable immediately or only in six months, are going to destroy them. If fertilizer is ploughed into a field and it does not rain, the fertilizer remains in the land and is only utilized the following year, but interest grows like a cancer. The farmers will disappear off the land if special attention is not given to their problems. Why the R1 500 million interest-free loans to the Black national states, channelled through the Department of Foreign Affairs? They are nothing but “soft loans”. It is right that the Whites, who are handing over two-thirds of their Parliament to people of colour, should bear 90% of the burden and pay the highest interest rate in the country—prime rates are at present running at 20% to 21%—and then have to be beholden to others as far as his own political future is concerned? Is that right?

A house which cost R10 000 ten years now costs R53 000. Building costs have increased by 430%. The majority of hon members, like me, only see a leg of mutton on television. [Interjections.] My voters only see a leg of mutton on television, if they want to indicate the distinction between lamb and mutton, because the man in the street no longer knows the difference between the two. The worker cannot afford mutton and the farmer is being squeezed out, cost structures are being built in and the farmer can no longer be productive. [Interjections.] The annual increase in salaries only means that the taxpayer falls into a higher category in which he can no longer lay claim to tax benefits.

Another question I want to refer to is this 71% tax-free interest. This is nothing but highway robbery in a cloak of decency, because how is it possible that one can only pay 7½% and 9£%, while in the meantime the inflation rate is 10% and 13%? One loses one’s capital. [Interjections.]

I want to mention another example. Five years ago the hon the Minister of Posts and Telecommunications could feed a pensioner on R20 per month; can a Post Office pensioner pay anything more than his stamps and telephone account with R20 nowadays? He cannot. Nowadays the pensioner no longer has a place in our community. The older man who fought for Sasol during the thirtees now sees the Government using his capital to pay current accounts. Where are we heading? What has become of my people?

Here I have a newspaper, Ekstra Rapport, in which houses for Coloureds are being advertised at prices ranging between R2 000 and R7 500, and the address where one can apply for them is also provided. Why is this not being done for my people, the Whites, as well? [Interjections.] Why does this advertisement not appear in the Rapport for Whites as well? I am not blaming the hon the Minister of Finance for this because he has nothing to do with it, but I say it is shameful. Without that hon Minister this Parliament and the Government will collapse in ruins. I am warning the Government. They must not permit him to retire on pension. [Interjections.] Yes, that is true. [Interjections.]

When I take all these matters into account, it is very clear to me that the years of secrifice by pensioners are apparently of no significance. Precisely the same is happening with regard to money on which minor children draw interest and on which their parents have to pay tax. This is a matter which I believe must be given the urgent attention of the hon the Minister. A child who has, say, R5 000 or R10 000 of his own and who invests it and draws interest on it, does not pay tax on it himself. It is added to his father’s revenue and the father then has to pay tax on it. In many cases, of course, this means that the father is pushed into a higher tax bracket purely as a result of this. I suggest that the hon the Minister bring about a change in this regard.

Mr Speaker, once again we have just heard a typical distortion of the facts by the CP. These are the things they go and peddle in the rural areas. This is also what they use to scare people in Potgietersrus and elsewhere. They distort the facts and proclaim untruths and halftruths. By the way, this afternoon’s proof was furnished by the man who is regarded as the biggest fat cat in this House. [Interjections.] The hon member for Langlaagte came and juggled with figures and tried to indicate how the poor man has to pay for everything in this country. I want to bring it to the hon member’s attention that more than 1,2 million of the 2 million taxpayers in this country pay R14 a month in income tax. Only approximately 7,3% of us in this country …

Are you saying that what appears in these newspapers is not the truth?

Well, I shall furnish the hon member with figures on the basis of a statement issued by the Treasury. I do not use second-rate newspaper articles like the ones the hon member for Langlaagte quotes here. Approximately 7,3% of the taxpayers in South Africa pay almost 49,8% of the total income tax in this country. In fact, our entire structure is completely wrong. The greatest pressure is placed almost solely on the group at the top. The middle group really pays too little income tax. [Interjections.] If we take cognizance of the subsidies paid in respect of education and health it appears that the contribution made by the largest section of the White population in the form of income tax does not even cover the subsidies paid in respect of health and education on their behalf. On the one hand, the Government is criticized about State expenditure on housing, and Ministers are accused of not being able to control their departments. Let us analyse how that money is spent, however, particularly as regards housing, health and education. The Government is always being accused of not looking after the poor man. In this respect we need only take note of the increase in the poor man’s wages and salaries recently. The increase in this respect was 18,6% in 1982 and 13,5% during the first three quarters of 1983. Why do those hon members not give people the correct figures? [Interjections.]

Our country finds itself in an economic recession. The latest figures with regard to unemployment, however, indicate that in June 1983 there were 40 000 unemployed Whites, Coloureds and Asians in this country, as opposed to 30 000 in October 1983. And this is in a country that finds itself in a deep economic recession. I really think that the distorted image that is being created in this respect is reprehensible. It is wrong to try to intimate that the poor man really carries the economy. The poor man does, in fact, carry the economy, in the sense that he gives his labour to the country. However, that the poor man carries the economy by way of income tax is an untruth as far as I am concerned. I regret that I simply cannot accept that. I challenge the hon member for Langlaagte to go and tell the farmers of Potgietersrus that the price of mutton and beef is too high. He must go and tell them that those prices must be lowered. I challenge him to go and tell those people that meat prices must drop so that the poor people can also afford meat. I know who those people will vote for in the future then. [Interjections.]

Who said that?

The hon member for Langlaagte said that. I am not deaf. He said that nowadays one only saw mutton on television. [Interjections.] Be that as it may, Mr Speaker, these arguments of hon members of the CP are totally distorted. Of course, we are well acquainted with the kind of reporting Die Patriot engaged in. Die Patriot tried to tell so many lies that it, too, has become a lie and has disappeared from the scene completely. [Interjections.] I wonder what losses Die Patriot has incurred due to the distorted truths and the untruths they tried to present to the poor man. [Interjections.]

I wish to go even further. An attack was also launched on the Government with regard to government spending in respect of the salaries of public servants. They are simply harping on the same thing again. [Interjections.] Recently there has been a continuous attack on the Government regarding the increase in the salaries of public servants. At the same time, however, the Government is told that the Public Service is in the process of falling apart and that the public servants are no longer able to render a service to the public The salaries of Ministers, as well as the salaries of Members of Parliament themselves also became an issue. I asked an average businessman how many of his employees earned more than R60 000 per annum. He told me: “A dozen or so”. I then asked him how many people there were in the Department of Finance who earned more than R60 000 per annum, and he said: “Probably only Joop de Loor”.

This Government cannot carry out its policy if it does not have a sound government machinery. Just as a matter of interest I want to mention a few figures in this regard. The average salary of a White public servant has increased from R9 200 in 1981 to R11 800 in 1982 and to approximately R13 200 in 1983. In view of the considerable amount of criticism being expressed by certain institutions I want to mention the example of the civil engineering industry in South Africa. In this industry the average salary has increased from R15 700 to R18 300 to R20 600. As regards the banks, the average salary of a White employee has increased from R10 500 in 1981 to R11 500 in 1982 and in the insurance field, from R13 000 to R14 700 in the same period. If we compare the average salary of a public servant with the salaries paid in the private sector I wonder whether the public servants are not still worse off.

We are soon to enter a new constitutional dispensation, and I hope that as far as the staff of the State President is concerned provision will be made to appoint the best people. Since we are entering a new direction we will only be able to implement our policy if we make use of the services of the best possible people.

I now come to the hon members of the PFP. I have not heard such a lot of confusion for a long time. Firstly, they placed a small section of the Budget under a magnifying glass. However, a Budget is simply one element in the economic policy of a state. A state’s economic policy can be attacked if it does not have any goals, but if we consider the actions of the hon the Minister of Finance over the past 10 years we see very clearly what those goals are. We can see a clear-cut direction in our monetary policy. One cannot isolate one’s government finances; one must take one’s monetary policy into account. Under the leadership of the hon the Minister of Finance, Dr De Kock is breaking away from the whole question of direct intervention. A short while ago I asked hon members of the PFP whether they were opposed to this new market-orientated directions as indicated by the Reserve Bank. They said that they agreed with it, but when I listen to them now it seems to me that they are opposed to that new direction. To a certain extent they have ignored it completely. They speak about targets. It is nothing new to speak of monetary targets. We know that this is the direction in which Canada moved, for example. From 1979 to 1982 Canada also spoke of monetary targets. This means that one fixes the interest rate one has in mind. One also fixes the inflation rate one has in mind. In this way one tries to strive for one’s goals. The most interesting thing of all is that Canada gave up as far back as 1982. They realized that these monetary targets were not working. The Americans also did away with this concept. Now the PFP are telling us in 1984 that we should begin fixing targets. In particular, they want to have monetary targets set. I regret having to say this, but they are completely out of fashion.

The policy we have is a market-orientated policy. Without being theoretical, one could say that we have a mixture of the Kenyesian and monetarist approaches. On the one hand one looks at the total spending and on the other, one looks at how one should steer one’s monetary policy. It is not an ideological view; it is a pragmatic view which is being pursued by the Reserve Bank at present. This is particularly valuable, since we cannot try to attain set goals and rates. We are faced with too many exogenous factors, which is something I will deal with at a later stage.

Let us look at what happens when one want to combat inflation. Let us say that one wants to bring inflation down immediately, something which is impossible, of course. Mr Rob Abrahamse of Nedbank said the other day that it is politically and economically impossible to bring inflation down suddenly. If one wants to bring inflation down to 5% next year one has a problem, since one has to limit one’s money supply tremendously. One has to push them the M2 lower than that but if one pushes the M2 that far down, what happens to interest and exchange rates? Interest rates would rise to such an extent that the farmer, as well as the small businessman would be ruined. This means that the Government cannot use monetary goals of this nature, but has to be realistic. If interest rates are forced up that high the exchange rate with regard to foreign exchange is going to be strengthened to the extent that one wonders what is going to become of our exports.

The hon the Minister and the Reserve Bank have goals, but not targets—to put it that way. They are striving to keep an equilibrium as regards the balance of payments. They are striving to bring inflation down, and they are succeeding. They are striving to establish full employment, but at present we find ourselves in one of the greatest depressions ever, and I shall come back to this. They have long-term goals, and in order to achieve long-term goals one has to have intermediate goals, and they vary according to circumstances. The PFP is attacking the hon the Minister about the intermediate goals the Department of Finance, in conjunction with the Reserve Bank, wishes to achieve with its monetary policy—this is what the PFP are neglecting to take into account.

Perhaps I should tell the Opposition what monetary management is, since I gain the impression that they do not always know what it is. “Monetary management” means “the management of public debt, open-market transactions, discounting and general accommodation, intervention by the State in exchange rate markets, but only when it is necessary.” We have done away with total intervention. Cognizance must be taken of the total monetary aggregates. The Government began fighting inflation, but it struggled to do so because it developed tremendous balance of payments problems. When it succeeded in re-establishing an equilibrium in the balance of payments the Government began combating inflation successfully. The Reserve Bank admits that to a certain extent it was too accommodating, but is it not better to be too accommodating rather than to destroy the economy completely? One must look at the effect of the intermediate policy as far as long-term goals are concerned. In order to do this one must determine the results. Monetary fiscal policy and natural forces must be seen in conjunction with one another. The hon member for Yeoville says that the gold price and the drought do not matter. This is completely ridiculous if one takes into account how much money the State has lost as a result of the fluctuations in the gold price. A fall of 100 dollars in the gold price means that South Africa loses R2,4 billion on exports, whilst the State receives R1,3 billion less in tax. However, the hon member for Yeoville says that that is not important.

Which exchange rate are you using?

The exchange rate did help, but the State’s revenue is being affected. One cannot reason away the fact that the drop in the gold price has a tremendous effect on our economy. One hon member opposite said that we must not come with stories about gold, since they are dreams. However, since gold was discovered in this country it has been one of our basic economic pillars. Surely one cannot say that it is no longer important. If gold constitutes approximately 40% to 50% of one’s total exports surely one cannot say that it is not important. That is ridiculous.

I now come to the results of the State’spolicy. At present the world is experiencing one of the greatest depression periods after 1932. What has happened in South Africa? On occasion the hon the Minister said: “We want a soft landing.” He is being criticized for this, but if one looks at what he has achieved we can say that our country has not really experienced a great depression. Half of the decline in our gross domestic product can be ascribed to the drought. I could almost say that we have lived too well and that we are now bearing the consequences. Despite the problems with the balance of payments, the State has succeeded in getting the inflation rate of more than 16% to drop to just below 10%. The Government has also succeeded in bringing the M2 down, and we know that it is now less than 16%. It is even said that for the past few weeks it has been only 8%. What is the position in the construction industry nowadays? The recent depression has had very little influence on this industry. Spending on non-durable and semi-durable goods and services has increased moderately in recent times. The remuneration of employees increased by 13% and 19% respectively in 1981 and 1982, whilst it increased by 14% in 1983. The rate of increase in the gross surplus, ie our profitability, accelerated from 2è% in both 1981 and 1982 to 10½% in 1983. Savings as a percentage of the gross domestic product are more than 24% at present, and now it is being said that the State’s loan financing will lead to crowding out. With savings at 24%, however, as opposed to loans of approximately R3 billion, or approximately 3% of the GDP, surely that is not crowding out. I do not know where the Opposition gets it from that these loans of the State constitute crowding out. The Government is also being attacked about the outflow of R1 billion last year when it permitted foreign investors to take their money out of the country. The Reserve Bank is in the process of creating an international market in foreign exchange for our banks. We need only look at what has happened with Nedbank recently. Nedbank admits, and is very pleased with the fact, that when it comes to money we should no longer think of the rand but of all the different kinds of foreign exchange. The Government is being attacked on this score, however. The hon member for Yeoville attacked the Government on the increase in imports during the third quarter of last year. However, he did not go and look at what those imports were. It was maize. His argument was that the stimulation of the economy had caused this.

In conclusion, I want to say that this Government is preparing the country, under the leadership of the hon the Minister of Finance, for a healthy growth rate at the end of this year and next year. We thank him for this.

Mr Speaker, my time is limited, and the hon member for Waterkloof will understand if I do not react to everything he said. If time allows me, I shall also react to a few points made by the hon member Mr Aronson.

I wish to refer to the defence budget because it forms such a large part of the main budget. It is appropriate, therefore, that I should deal with it today. When we examine the Government’s defence policy since 1948, we find that the continuous thread running through these years was the attempt of South Africa to involve the West in the protection of South Africa and, at the same time, the willingness of South Africa to assist the West wherever this might be necessary. That is why the SA Defence Force got involved in Korea. That is also why South Africa became involved in the early 1950s, when troops had to be made available for the Middle East Defence Organization, and that is why we participated in the Nairobi and Dakar conferences, which also took place during that period. That is why the Government of the day negotiated and signed the Simonstown Agreement in 1955.

However, the possibility of close co-operation came to naught as a result of the attitude of the West shortly after South Africa had left the Commonwealth, and shortly after Sharpeville as well, when the co-operation began to deteriorate very rapidly. Voluntary arms embargoes began to be imposed, and eventally gave rise to UN actions as a result of which South Africa became almost entirely dependent on its own manufacturing and development potential in order to defend itself.

It must also be said in this connection that South Africa’s domestic policy, the policy of separation, also played a very important role in the alienation between the West and South Africa in the military sphere. But I do not want to devote too much attention to this now. I just wanted to refer to it.

As a result of this arms embargo, and of the growing and calculated threat against us, our defence expenditure has increased enormously over the years. In 1960, it was only necessary to budget approximately R44 million for defence. By 1970, this amount had grown to R264 million, and by 1980, it had reached R1 890 million. This year, Parliament is being asked to spend the enormous amount of R3 754 million on defence. This is a large amount, but I do not wish to take a stand at this stage as to whether the amount is too large or too small. I just want hon members to realize that this is a large amount that we are talking about. Over the last 10 years, our defence expenditure has increased by 296%. Expressed in real terms, it has increased by 46,6%. That is an enormous increase. So you see, Sir, that the cost to which I have referred is extremely high. It would have been particularly high if the South African community as a whole had not derived any real material or other benefit from it. Fortunately, this is not the case. While it is in fact possible to argue about whehter it is too much or too little, it is a fact that compared with many other countries, South Africa has been a peaceful country up to now. We may argue about the amounts that have been spent, but I think that all hon members will agree that this is a peaceful country, compared with many other parts of the world.

†So I say that all defence expenditure would be wasted if no benefit accrued to the people of South Africa but, as I have pointed out, this is luckily not so. What is even more important is that luckily for us the tide has now turned and there is now a willingness apparent both on the part of our own Government and on the part of the Governments of neighbouring frontline states to seek peaceful ways of co-operating and coexisting in Southern Africa. I believe that it is largely irrelevant why this change in attitude has come about. There are many views in this regard. Some attribute it to the Marxist experiments in our neighbouring states and the inability of the patron states of those countries to provide meaningful development aid to those countries, others ascribe it simply to crop failure and the drought, while there are others who argue that South Africa has destabilized its neighbours into a position where they, the neighbours, simply had to reach an understanding with us. There are many theories in this regard.

What do you say?

Whatever the reasons may be—and we can talk about that later, for instance under the Defence Vote, if the hon member is willing to do so—I believe that South Africa has chosen the right way to turn the situation to Southern Africa’s advantage.

None of us must imagine, however, that merely by signing non-aggression pacts with Mozambique there will be peace on the subcontinent. Peace needs to be worked at and, when established, peace in fact has to be guarded, sometimes with great care. The Accord of Nkomati must, I believe, lead to other agreements with Mozambique—and the Government has already referred to some of those—and to agreements with other neighbouring states. Therefore the news announced over the weekend is to be welcomed. It is of great importance. I believe that for peace to be genuine and of long duration it will have to be based on a sincere meeting of minds and a genuine desire to co-operate with one another. If it is based only on the desire to do away with destabilizing bands of guerrillas, then peace will last only as long as those bands continue to operate. If peace is to be dependent on a drought, it will disappear after the first good rains. If we want an enduring peace, we will have to pay for it. That is the point which I believe must be made: We will have to pay for it.

In this regard I want to say that, looking at the Budget, I find no or very little indication that the Government of the day realizes that we are actually going to have to pay for peace. We are going to have to be prepared to sink large sums of money, material and expertise into the economies of our neighbouring states to help them in their endeavours to satisfy the material aspirations of their people, as we also have to satisfy the aspirations of our own people. I believe that in the time ahead we will have to be prepared to live through many disappointments. Things are not always going to run as we hope they will. In experiencing disappointments I hope the Government of the day and those responsible will exercise the necessary restraint and at times even be magnanimous, especially when it would appear that military action could perhaps solve the problem which is at hand.

Above all, I believe we in Parliament must realize that we have to include our allies in the West in our peace moves. That is also vital. We should encourage involvement of the United States and of the EEC countries in the development of Mozambique and the other frontline states. This will demonstrate to those neighbours that we are prepared to put our money where our mouth is. Let us face it, in the past few weeks much publicity has been given to our peace initiatives. We therefore have to demonstrate the fact that we are prepared also to invest where we want to see development taking place. This we must do together with the West. In this way the non-aggression pact can in fact be extended to something that will be somewhat more substantive. I believe that in drawing in the West we will make them partners in South Africa’s search for peace. We will find it a great deal easier to involve those countries in the protection of Southern Africa, of all it stands for, if our posture towards our neighbours is a less agressive one. I do not want to rake up the past, because we are now talking about the future.

I should like for instance to see in the near future American ships once again calling at Table Bay. I should like to believe that we would have access to the communication data which can be made available from the satellites circling the Southern African continent. However, all this can only take place if we involve our allies in the West. Equally important is that all that co-operation between South Africa and the West can only take place if we show them that our relationships within our own country, among our own people, are as they should be. Obviously, I am talking about the relationship between this Government and the Black citizens of South Africa, and also the people who previously were citizens of South Africa. We cannot expect and we will not get the co-operation at the level which we require unless we put our own house in order, to use a phrase which hon members on the Government side so often use. South Africa’s house can only be put in order if we create a system in which the Black people of this country together with the White people of this country have some form of co-operative decision-making, if we create a society in which discrimination against those people will be done away with.

Who are you bluffing now?

It is strange that the hon the Minister, one of the leading members of the Government involved in bringing about the accord of Nkomati, today expresses across the floor severe doubts as to whether …

All I say is …

Let me do the talking. [Interjections.] We say we need the cooperation of the West and that it will only be forthcoming if we put our own house in order. If the hon the Minister does not believe in putting our own house in order, let me tell him that 99% of other South Africans do. [Interjections.] That is the only point that I should like to make. That hon Minister will find himself …

When did you ever talk about co-operative decision-making?

We cannot talk simultaneously. That hon Minister will find himself out of step with the hon the Minister of Defence, the hon the Minister of Finance, the hon the Minister of Foreign Affairs and possibly with the hon the Prime Minister as well. He now sits grumbling while I am trying to put across my views. Why not take part in this debate and point out where I went wrong? Perhaps then we will be able to understand each other [Interjections.]

I believe that we should get our own house in order, and in my opinion we can only do so if we reach an accord with our own Black citizens in this country. With their assistance and their co-operation we will make the peace initiatives work in Southern Africa because we will have their backing. If we do not get their backing, I am afraid that all the good work that has been done by the hon the Minister of Defence may well be in vain.

Mr Speaker, I should like to congratulate the hon member for Wynberg on his positive contribution. It redounded to the credit of the SA Defence Force. I appreciate the fact that the hon the Minister singled out the discussion with regard to the Defence Force in this way, but he did also say things that I cannot allow to pass unchallenged.

In the first place he contended that the arms embargo imposed on us at the time originated due to our policy of separate development. This is one of the arguments advanced by the hon member. Although I differ with him in this regard I do want to ask him: Was that embargo ultimately to our benefit or to our detriment? Was it to the country’s benefit or to its detriment? [Interjections.] Surely that embargo was ultimately to our benefit because it compelled us to use our own skills to provide our own arms and ensure that our defence was prepared.

The hon member also indicated how the pattern of expenditure for our security services has increased—the expenditure and its utilization. However, I think that he mentioned the figure for the SA Defence Force only, and not the figure for our total security services. I must point out to the hon member that the onslaught on our country has been a bitter struggle since 1960. The hon member was at school a long time after I was and I can give him the assurance that the word “terrorist” did not even appear in the spelling list; it was not part of our daily vocabulary. Since the sixties the concept of terrorism and urban terrorism in particular has, however, become an everyday phenomenon. The onslaught and the struggle against us as a country and against other countries has increased and therefore one must expect an increase in expenditure on arms and so on.

The hon member went on to say that he conceded—and in fact this is a tribute to the Government and our security services—that we lived in a relatively peaceful country. The fact that the hon member’s party admits that the security services of our country are prepared and available to keep our country secure, is indeed a compliment.