I move as an unopposed motion—

Agreed to.

May I have the privilege of the half-hour? Sir, when we dealt with this Vote last year the hon. the Minister took the opportunity to make what was in effect a postscript to his Budget speech. He made a number of important statements of policy flowing from his Budget statement. At that time he made that speech just before the adjournment of the House and we had an opportunity to examine the speech and a fairly full debate followed. This year, the hon. the Minister, I gather, prefers to wait until he has heard what this House has to say about the policy of his Department before replying. At that time I offered some observations to the hon. the Minister and asked him some questions, to which he may reply later in the course of the debate.

On 24 March, nearly a month ago, the hon. the Minister made his Budget speech here and he announced that he expected to have a surplus of R110,000,000. From the latest figures published in the Gazette it would appear that that surplus has now proved to be somewhere in the vicinity of R145,000,000. The Minister will no doubt correct me if I am wrong and give us the accurate figures. He might have made it easier for us to take part in this debate if he had got up earlier and made a full confession. However, I think it is common cause that the surplus is much bigger than the hon. the Minister indicated when he introduced his Budget. In fact it would appear that the surplus is some R35,000,000 more than it was reported to be a month ago. In other words, the increase in the surplus is nearly as great, proportionately, as it was last year.

Last year you will remember, Sir, it was something like 15 per cent and this year it would appear to be very nearly the same. The first question I would like to ask the hon. the Minister is whether this Committee is expected to believe that the hon. the Minister, when he introduced his Budget on 24 March did not know that his surplus was going to be much more than R110,000,000. Are we really supposed to believe that he did not know that it was more than R110,000,000? Because quite frankly I do not believe it. Why he did not take the House into his confidence on that occasion I do not know. His revenue, according to the Gazette, has exceeded his estimates by some R122,000,000; his expenditure, again according to the figures published in the Gazette last Friday is some R50,000,000 below his estimates. According to the Gazette, Defence expenditure alone is some R37,000,000 below what the estimate was. Sir, this deals with the whole policy of the Minister, because year after year he comes along here, he underestimates his revenue, he over-estimates his expenditure and in the result he comes along with a large surplus and in addition to that, having underestimated his revenue and overestimated his expenditure, even then he comes along in his Budget speech and still grossly underestimates the surplus which he is going to have.

Sir, what is the point of furnishing this House year by year with figures which are grossly inaccurate? Subsequently they are put right. There is no question of concealing the facts indefinitely, and there is no suggestion that there is anything wrong, but what is the point, what is the advantage, what is to be gained by being so careless in the presentation of figures to this House? Sir, let us consider the position. This year only one week before the end of the financial year the hon. the Minister told us that he anticipated that his inland revenue receipts would be about R89,000,000—nearly R90,000,000—more than he had estimated. He had underestimated his Inland Revenue by R90,000,000. A week later, when the figures were closed to the end of the month, the figure proved to be R95,00,000, not R90,000,000. He told us that he expected his customs and excise revenue to exceed his estimate for the year by just on R24,000,000—another gross miscalculation. A week later when the figures were published, it was shown that they were up by R27,000,000. Well, one can quite easily understand a discrepancy of R8,000,000 in the figures. One could not expect the Minister to give exact figures at that stage. Sir, then the hon. the Minister said the following in his speech—

A week later, when the accounts were closed, it transpired that the expenditure on Revenue Account was R50,000,000 below the estimate. Sir, again I ask: Does the hon. the Minister want to tell me that on 24 March he did not know very well that the expenditure was going to be well below the estimated expenditure? Defence expenditure alone was nearly R38,000,000 below the estimate. Surely the Minister must have had some idea that the total expenditure was going to be below his estimate. He should have known it. Either he did not think it politic to mention it in his Budget speech or he was ill informed by his Department, because I am quite certain that his Department knew, and if they did not know they could jolly soon find out from the Defence Department that they were not spending up to the whole of their Vote. Consequently I can only repeat what I said last year, and that is that one cannot attach any importance really to figures which are quoted by the Minister in his Budget statements in this House because it subsequently transpires that they are hopelessly inaccurate. He told us in the course of his speech that one of his main difficulties was his Loan Account. Let us just look at it. The Loan Estimates for last year amounted to some R412,000,000. The final figures show that the actual expenditure was some R390,000,000, an under-expenditure of some R22,000,000, which is not very much. The point is that when the hon. the Minister presented his Budget proposals to the House he made allowance for a shortfall of some R 19,500,000 in his Loan Account; that was a week before the end of the financial year. At the end of the financial year it appeared that there was an under-spending of R22,000,000, from which I conclude that there was not actually and in fact a shortfall at the end of the year in the Loan Account, but that it approximately balanced. On top of that, the hon. the Minister has an extra surplus, and I think he indicated that the extra surplus would be placed to Loan Account in the usual way, and in that case if his Loan Account has balanced this year, instead of showing a deficiency of nearly R20,000,000, and if he has an extra R35,000,000 from Revenue to place to Loan Account, it would mean that the hon. the Minister in his Loan Account is some R54,000,000 better off than he appeared to be a month ago. The Minister told us last month in his Budget speech that his main difficulty was to balance his Loan Account, but now he has R54,000,000 more than he expected, and I would like to suggest to him that in the course of this debate, if possible, he ought to re-state his loan financing programme, because if my figures are anywhere near correct, he should be able to amend his loan financing programme quite considerably and still be able to leave the taxpayers’nest-eggun-his loan programme. He may, for instance, be able to leave the taxpayers nest-egg un-robbed, which he proposed to do in his Budget speech or on the other hand he may not find it necessary to go to the private sector of economy for some R70,000,000, which he expected to have to do. That would be an important statement to be able to make in the state of the money market as it is likely to be in the next few months, when demands are going to be made on the investment market. One sees Escom in the next few days will be going to the market for some R30,000,000. One notices that they are having to pay nearly 6 per cent for it. Presumably the hon. the Minister will have to pay something like the same rate of interest. I think it works out at 5.9 per cent. Well that is a very high rate for a gilt-edged Government loan, but it would be important if the hon. the Minister could tell the country that he will not be making the same demands as he thought a month ago he might have to do. But generally speaking, Sir, it would appear to me that the loan financing programme requires restating and that the hon. the Minister should take the Committee into his confidence and explain what alterations he is able to make.

The other point on which we would like some information is another major problem which the hon. the Minister stated in his Budget Speech but did not indicate how he was going to deal with it, namely the question of the balance of payments. He referred to it as one of his main problems and he warned the country that the position as it then was could not be allowed to continue to deteriorate and that something might have to be done about it, but he did not indicate what. Well, the imports for the first quarter of this year amounted to something like R425,000,000, which is R72,000,000 more than in 1964. The exports showed a slight drop in the first quarter and now stand at R225,000,000, a drop of some R12,000,000. There is therefore a visible adverse trade balance, a visible deficit on trade of some R200,000,000 in the first quarter of this year, compared with about R114,000,000 last year. Of course, that gap is usually more than covered by our gold exports which amount to round about R190,000,000 a quarter. But, if these figures are correct, then for the first time in many years our gold exports do not cover the visible trade gap. The consequence is that if you allow for your invisible overseas payment, there would appear to be a trade deficit of between R90,000,000 and R100,000,000 for the first quarter, which is distinctly less favourable than the position was a year ago. In addition to that, the foreign exchange reserves continue to show a similar tendency. The hon. the Minister told us that during 1964 the foreign exchange reserves fell by some R89,000,000. He also told us that in the first three months of this year that drop had accelerated and that the foreign exchange reserves had fallen in the three months from January to the middle of March by another R44,000,000, and from the middle of March until last week they had fallen by another R8,000,000. That means that from December 1964, until last week, the gold and foreign exchange reserves have fallen from R466,000,000 to R413,000,000, a matter of some R53,00,000, which is quite a considerable figure. The important thing, of course, is that at the moment the drop is continuing. Of course, that figure is well below the figure suggested in the economic developments programme as being the figure which we might consider it safe to maintain in regard to our balance of trade. I think they suggested that the figure should be equivalent to five months’ imports.

Sir, these figures are important figures. I do not attempt to draw any conclusions from them. I think the subject is much too wide to be discussed in just a few minutes, but I think it is important enough and I think hon. members and the Minister will agree with me that it is important enough to justify my asking the Minister to deal with these figures in the course of this debate and to indicate what conclusion he draws from the trends which have been apparent during the first four months of this year and what steps, if any, he proposes to take in order to check those trends if he thinks that the time has come when they will have to be checked, or whether he is in a position to say that in his opinion, judging by information he has, the present state of affairs should be allowed to continue and that they will rectify themselves without any further steps being taken. I think those are the only questions that I would like to ask the hon. the Minister at this stage.

I do not know why the hon. member for Constantia (Mr. Waterson) is so upset because more money has come in than the Minister expected about a month ago. I am sure the hon. member has also in his lifetime made certain estimates of his income, as far as his own affairs are concerned, and found subsequently that his position had improved. Surely when that happens he is not dissatisfied with the position; surely he is pleased when that happens. What surprises me is that the hon. member who was a Minister for a long time thinks that the Minister of Finance should have telephoned every office that collects money throughout the Republic on the morning of 24 March, just before he made his Budget speech, and asked them: “Count how much money you have on hand so that we can know exactly what the position is because I have to tell the House of Assembly to-day how much money we have on hand.” Does the hon. member expect that the hon. the Minister should have gone to every Department and asked them to inform Treasury how much money they had paid out up to the previous afternoon of the balance they had to spend up to the end of March and also to let Treasury know how much money they expected to spend during the following seven days? No, that is not how it is done. Before he introduces his Budget in this House the Minister must get as near to a final estimate as possible from the Department and then he has to give those figures, figures which are as near as possible. If he is R35,000,000 out in the final figure early in March in respect of a Budget involving over R1,100,000,000 it cannot be regarded as such a very high figure; it is a very small percentage of the total Estimates. I want to know from the hon. member for Constantia whether something similar has not already happened in his business undertakings. Of course it has and he knows why it happens. It happens every year that Departments expect orders they have placed to be delivered in March. They expect the goods to be delivered before the end of the financial year. They wait until 30 or 31 March and the goods are not delivered with the result that they cannot make payment. All the money not spent is then paid back into the Treasury and is credited either to current account or to Loan Account.

The hon. member also referred to the Department of Defence. He ought to know that that is one Department which is to a large extent dependent on the delivery of orders placed overseas. The Department has no control over the date on which the goods arrive here and over the date on which payment has to be made. The goods arrive suddenly, un-expectedly, or they arrive after a long period, and the Department has to be ready at the beginning of March to pay for the goods in case they are delivered during the month. That is the figure on which the Minister has based his estimates and that also applies to the Minister of Defence. The hon. member was very unfortunate, therefore, in his choice of Departments because the Department of Defence is the Department in respect of which you can never expect the estimates to reflect anything like the true position.

The hon. member suggested—I think he was a bit unreasonable—that the Minister deliberately misled the House in respect of the figure he gave the House in his Budget speech. I do not know how the hon. member can make such an insinuation. He knows as well as you and I, Mr. Chairman, that it will not pay any Minister of Finance to try to mislead this House on 24 March by deliberately giving figures which are too low because within two or three weeks before the Minister’s Vote comes up for discussion the final figures are available. No, the hon. member must look at the matter objectively instead of trying to get something against the Government. Let us discuss the financial position of the country objectively and ascertain what the position is. I myself am anxious to get the final figures from the hon. the Minister. I am not so sure that the figures which appear in the Government Gazette as reflecting the position on 31 March cover everything. There may be other factors which have still to be brought into account, I do not know.

The hon. member asked whether the entire surplus which according to him is going to be R35,000,000 more than indicated by the Minister in his Budget speech, would be paid into the Loan Account. The hon. member takes it that that will indeed be done. But surely the hon. member was present when the Minister replied to the Budget debate when he said that any amount over and above R110,000,000 would be paid into the Taxation Reserve Fund which was established last year. Surely the hon. member knows that the additional surplus will not be paid into the Loan Account but into another fund.

The hon. member is also concerned about the balance of payments position. I think there is more substance in his argument in that respect than in his other arguments. Our balance of payments position may deteriorate and it may in the course of time deteriorate dangerously if we continue to expand at an annual rate of 10 per cent but I think we can rest assured that the measures already taken to curtail to some extent the available credit will have the desired effect. It is still too early to judge what effect measures of this nature will have. Our import figures will continue to be fairly high for some time because orders have already been placed overseas and some of these goods have already been shipped or are on the point of being shipped. The full impact of the curtailment of credit facilities will, therefore, only be felt within a period of months. The weekly import and export figures have improved gradually recently. I do not think, therefore, that we need worry about our balance of payments position. It is clear to me that we are heading in the direction of the recommendations contained in the economical development programme of the Department of Planning; that we are heading in the direction of the basis set out in that programme which is a sound basis for longterm economic expansion. It is very clear to me from that programme that if we can bring the figure to 5 per cent or 5½per cent per annum we shall have a very sound figure. That is something we can do without weakening the position of our reserves to such an extent that we eventually find ourselves in difficulty. I think we should give the measures already in operation another month or two to make their effect felt and I think the hon. member and all of us will then realize that the position is sufficiently sound not to give us any reason to feel concerned about the balance of payments position.

The hon. member for Pretoria (Central) (Mr. van den Heever) tried to divert attention from the very bad fiscal management which is taking place under this Minister by trying to draw an analogy with some sort of commercial transaction and reducing national finance to the level of petty cash.

Sir, as my hon. colleague has pointed out, this is an occasion where the hon. the Minister should have given the House a review of the financial position which existed on 31 March. The position can now certainly be disclosed far better than it could have been estimated on 24 March. The position is even more serious than my hon. friend indicated because the hon. the Minister made a statement as to what the surplus would be and said in fact that expenditure during the year would measure up to the estimates; that was on 24 March. But a week later, on 5 April, the Minister had another opportunity; he did have some sort of second thoughts about the matter because he then indicated that the surplus might well exceed R 110,000,000 but he was not sure. He indicated that if it did exceed R110,000,000, the surplus would go to the Taxation Reserve Account. Sir, we on this side of the House and I myself have repeatedly commented on the unreliability of the financial figures which the hon. the Minister presents to this House. It is quite obvious already that at the commencement of the financial year the hon. the Minister comes along with Budget figures which are purely window dressing. It has happened for two years in succession now that that window dressing has had to be changed within a matter of a month after the House has been given that information, and I can only say that the present figures indicate that window dressing of that kind has now become somewhat shoddy. There is an obligation and a duty on the hon. the Minister to take this House into his confidence and to indicate what the position is, because certainly this is the time when there should be a restatement of the hon. the Minister’s financial programme and particularly his financial programme on Loan Account. What he told the House on 24 March has substantially changed already, primarily because of the higher surplus, which is going to go into the Tax Reserve Account, and as a matter of course from the Tax Reserve Account into the Loan Account. I do not think the hon. the Minister is helping the Treasury side of the problem by not reviewing the matter and giving the House the figures that he should. Sir, over the years he has had a bulging Exchequer Account. The Exchequer Account at the end of March stood at something like R115,000,000, of which rather less than half was being invested, the other portion simply being idle money. I think that is unfair to the Treasury Administration because it also reduces financial administration to a pattern of shoddiness.

The hon. member for Pretoria (Central) indicated that it was quite easy to be out with estimates, but the gravamen of the complaint of this side of the House is that this is a repetitive factor. This has not happened for the first time this year, and the fact that the hon. the Minister is out by R80,000,000 in regard to his Inland Revenue receipts is a serious matter, in spite of what the hon. member for Pretoria (Central) tried to suggest here. It is a serious matter when in a national account you are out by a figure of that high order.

By how much have you been out in your estimates?

Interjections of that kind show how bankrupt hon. members opposite are when it comes to financial matters.

I therefore support what my hon. colleague has said. I think the hon. the Minister should take the House into his confidence and give us a clearer statement of the financial programme than he has done on two previous occasions, namely, 24 March and on 5 April.

There is one other matter I would like to raise with the hon. the Minister and that is the operations of the Custodian of Enemy Property. This is a matter in regard to which I think the House is, at this stage, entitled to as much information as possible. There appears again on the Estimates a provision for the Custodian of Enemy Property and looking at the Estimates themselves it is quite clear that there is no longer any permanent staff doing the work although there is authority in law for this staff to operate. I hope the Minister will be quite clear as to precisely how long the operations of this section of his Department are likely to be continued and what is involved in substance in the work still on hand.

Before the hon. member starts I just want to point out that hon. members may also discuss Loan Vote A, Miscellaneous Loans and Services.

The complaint of the hon. member for Port Elizabeth (South) (Mr. Plewman) is not that the estimates are out this year but that it has become customary to be out with the estimates. Incorrect estimates are absolutely unavoidable in the case of such a fantastic financial organization as the one we have in South Africa. You get the same position in smaller financial organizations. The question is whether you should follow the principle of over-estimating your expenditure and under-estimating your revenue. I just want to say to the hon. member that estimates have always been out. I do not regard it as wrong estimating because during the past 42 years we have always had this type of estimating which he calls wrong, namely, of under-estimating revenue and over-estimating expenditure in the South African Budget. I think Mr. Havenga was the most conservative Minister of Finance we have ever had. When Mr. Havenga became Minister of Finance he always under-estimated his revenue and over-estimated his expenditure. That policy was followed by Mr. Hofmeyr, by Mr. Sturrock and this Minister is to-day following that policy. What is wrong with the policy of under-estimating your revenue and over-estimating your expenditure? In the first place, it is regarded as a very conservative and a very sound financial policy in private business. I see absolutely nothing wrong with it. The only argument one could possibly advance against it is that the people have to carry a slightly heavier taxation burden. But is that really the position? Does it really place a burden on the taxpayer? Let us analyse the position in South Africa. We have been following this pattern since 1924; it has not changed since then. It has been done to a greater or lesser extent but the pattern has remained unaltered. I can tell the hon. member that Mr. Hofmeyr was often much more out in under-estimating his revenue and overestimating his expenditure than this hon. Minister. This policy has been followed for 42 years and how has it affected the financial position of the country? Our financial position has improved every year. The financial position of the country is more sound than ever before.

Let me deal with the objection of the hon. member that the people are over-taxed. Who has suffered from this over-taxation? The financial position of people has greatly improved as a result of the conservative policy which has been followed; not only has the financial position of the whole country improved but the financial position of the people has also improved. That is only one of the factors responsible for the fact that of all the countries in the world you have the least inflation in South Africa. By following that policy we have succeeded, not in over-taxing the people, but in keeping unnecessary money out of circulation. That is the sound policy which was started 42 years ago and which this Government is following to-day.

Let us compare our position with that of other countries. Would the hon. member for Port Elizabeth (South) rather have the position reversed? Does he want the position which obtains in England to obtain here? How long ago is it when Mr. Macmillan said in England: “You have never had it so good”? But as a result of a policy whereby they held out the reverse position to the people England finds herself in the financial position to-day where she has had to levy additional taxation to the tune of £600,000,000 on the people. You simply have to choose between a conservative policy and a reckless policy like the one they have been following in England in the past few years. You have to keep count of your exact financial position. I ask myself this question: How accurate can these estimates be? The hon. member for Pretoria (Central) (Mr. van den Heever) has referred to that. At the moment there are two factors which make it very difficult to estimate expenditure and the one is Defence. How the money voted for Defence is spent depends to a large extent on deliveries from overseas. You do not know how faithfully they are going to fulfill their obligations with the result that you cannot estimate your expenditure as accurately as you would like to do it. That was precisely the same problem which confronted Mr. Hofmeyr during the war years.

Then there is another problem, or rather not a problem, in my view, but a blessing, namely, the tremendous economic expansion we have had in South Africa. If the hon. the Minister of Finance has made one mistake it is that he has under-estimated his own ability and that of the Government. We know what a fantastic economic upsurge we have had in this country and how taxes have been collected so effectively by means of the pay-as-you-earn system that the Minister’s Department have received much more money than they ever expected to receive. That is not something to criticize the Minister about; it is something to praise him about. After all it is this Minister who introduced the pay-as-you-earn system which has proved such a boon in this country particularly to the salaried man. The man knows at the end of the month that he can spend the money he receives. One of the factors which has contributed towards economic stability in South Africa is the fact that the person knows that he can spend the money he receives at the end of the month and that he will not be called upon at a later stage to pay a large sum in the form of taxation. It is a new system which has only been in operation for two or three years and it has worked much more effectively than the Minister and his Department thought it would.

Then we had this terrific economic upsurge. That has brought about a tremendous increase in the Minister’s revenue. Has the Minister really been so grossly out in his estimates? Take a big municipality like Johannesburg. They are 7 per cent more out with their estimates than the Minister with his. The Transvaal Provincial Council was more out with their estimates than the Minister with his. Let us forget about the semi-State institutions and local authorities. What is the position in the case of private businesses, Sir, where will you find a set-up in which it has been less possible to predict what the position of private companies will be than the set-up we have had in this country over the past few years as a result of this tremendous economic upsurge? I think of the case of the Langeberg Co-operative Society. Not a single member of this House, who knows anything about business, expected Langeberg to convert its tremendous losses into a profit of nearly R700,000. We all thought Langeberg was on the point of going insolvent. But because of its improved marketing methods in England and Europe it has succeeded, contrary to all expectation, in converting the R 1,000,000 losses of years into a profit of nearly R700,000. You find the same position in the case of other companies. You have J. H. Vivian; there is Anglo-American and others. These are all companies who are riding on the crest of this wave of prosperity. All those companies have their planners, their economists and financiers who try to estimate what the economic position of the company will be in the ensuing year. They operate in a much more confined sphere than the Minister of Finance. To what extent they have been out in their estimates of income and expenditure is abundantly illustrated by the movements, to the good, on the Johannesburg Stock Exchange because you had a graph which climbed as it never climbed before in the past 20 years. Why? That graph would have been much more even had it been possible for those people to estimate more accurately but they could not mainly due to the tremendous economic upsurge in South Africa. Their profits increased; they paid bigger dividends; they paid bigger bonuses and that type of thing. That caused the graph on the Stock Exchange to climb and that only goes to show how difficult it is for private undertakings to estimate.

Are you giving us a review of the financial position?

The trouble with that hon. member is—and I do not hold it against him—that he has been an accountant all his whole life and that he still argues like an accountant. All he has to do is to see that the petty cash is in order. He thinks it is his job to-day to see to it that the petty cash is in order. We know it is important that the petty cash is right but there are more important things than that, as the hon. member for Pretoria (Central) has said, namely, to see to it that your economic growth rate is accordingly. I predict, with a view to the policy of the Government to try to push up the growth rate to 5? per cent, which is a high growth rate in comparison with other countries, that the estimates will be even more out in future but it will always be in the right direction. If you have a problem it is one of too much money and not one of too little money. [Time limit.]

No one objects to the Minister of Finance balancing his Budget and no one objects to the Minister of Finance budgeting for a surplus. The hon. member for Vereeniging (Mr. B. Coetzee) has tried to draw a red herring across the trail by saying that previous Ministers of Finance, like Mr. Hofmeyr, Mr. Sturrock and Mr. Havenga, were out in their budgets. Our complaint is that this Minister is far more out in his reckoning than those Ministers were. What is more this Minister is inaccurate over a short period of the financial year. The Minister gave us his Budget estimates on 24 March and within a month he is hopelessly out. When we are dealing with the Treasury Vote we should have a statement from the Minister indicating what position of the accounts is at this stage. The hon. the Minister pretends that he has the position under control but we find that he is so far out between the date on which he made his Budget speech and a month later that one wonders whether there is adequate Treasury control.

It is quite clear that anyone who studies the financial figures to-day must be very concerned because, as the member for Vereeniging has said, there is a boom but the Minister’s problem is how to contain that boom. If he takes steps which are too drastic he will close off the boom and create further difficulties for the country. The hon. the Minister knows that his balance of payments position is such that the latest figure shows that the balance is R413,000,000. As the Minister knows it is reckoned that the figure should be equivalent to approximately five months’ imports and imports run into more or less R140,000,000 per month. So that the figure should be in the vicinity of R700,000,000 but the reserves are down to R413,000,000. This must be causing the Minister considerable concern because, if there is inflation, the gold mines which are on the border line—approximately 35 per cent to 40 per cent of the gold mines are—will be seriously affected and some of them may have to go out of production. It is essential for the balance of payments position that we maintain our gold output. So the Minister is in a dilemma. If he does not control the position and inflation follows he may cause embarrassment. On the other hand if he attempts to control inflation he may close off the boom. The Minister is in a very difficult position indeed. It gives this side of the House no confidence when we find that the Minister has to take important decisions—some of them may be very drastic decisions—based upon figures which come to him from time to time.

We are inclined to be disturbed when we in this House are presented with figures that are so out that the figures which the Minister gets for his own departmental consumption must be equally out. Surely we are entitled to ask the Minister to what extent can we rely on any information given by him. At the date of the Budget he indicated what his surplus was going to be and according to the figures in the latest Gazette it is quite clear to us that the loan levy is not essential on his loan programme. On the figures that loan levy cannot be justified. While this is not the time or place to criticize the loan levy—we shall do so when we discuss ways and means— we are entitled to ask the Minister to what extent he has the position under control. The balance of payments position is very serious indeed. It indicates that some action will have to be taken and at an early date. We are entitled to ask whether the Minister is playing politics with the country? Is it the intention of the Minister to do nothing while Parliament is in Session? Is he waiting for Parliament to adjourn before he takes any drastic steps?

When we find that the finances of the country are handled in such a way that figures are presented to the country as late as 24 March and shown to be quite unrealistic a month later then I cross swords with the hon. member for Vereeniging who says it is good budgeting. He quoted with approval what this Minister’s predecessors had done but I do not think any other Minister of Finance has been over R30,000,000 out in his figures a month after his Budget in the whole history of this country. The Minister is so out in his calculations that one has no confidence whatsoever. I think the time has arrived in this debate when the Minister of Finance should come into it and give the House a clear indication of what the present position of the country is, what Treasury control he pretends to have, to what extent he envisages any further measures and whether any further measures are contemplated.

I think the matters that have been raised can be classified under three or four heads. The first is that my estimate of the main surplus, if I may call it that, shows that there has been bad financing. Let me say at the outset that I have not yet got any figures which I can say with any degree of certainty are final. The figures given in the Press are, of course, subject to many adjustments.

Not in the Press; in the Gazette.

The figures which appeared in the Press were taken from the Gazette and they are not yet final figures at all. I am accepting those figures for the moment.

I said I had a suplus of R110,000,000. But who would have imagined on 16 March 1964 that we would collect 13.4 per cent more under Revenue Account for the fiscal year than was actually collected in the year 1963-4? No intelligent person anticipated that our Revenue Account would go up by 13.4 per cent. We worked on a basis of a more or less 1½ per cent rise in the gross national product. The figure of R80,000,000 referred to by the hon. member for Port Elizabeth (South) (Mr. Plewman) which represents Inland Revenue collections alone is 13.3 per cent above the actual receipts of the previous year. That is income from income-tax, companies’ tax, mining tax, and so forth. Nobody could anticipate that.

The argument apparently is that I gave a wrong picture of the financial position on 24 March but I should like to know from the hon. member what reason I had for deliberately misrepresenting the position on 24 March? There would not have been any sense in it. I knew the figures would have to be disclosed. Hon. members do not realize, as has been explained by some hon. members on this side, that a large amount of money can be returned during the last week or fortnight. We can not say whether that money will be spent or returned. Take an item like defence, for instance. The Department of Defence must have the money available. Orders may be delivered before 31 March but until midnight of 31 March they do not know whether that money will be spent or not. If it is not spent it has to be returned to the Consolidated Revenue Fund.

The hon. members for Pinetown (Mr. Hopewell) and Constantia (Mr. Waterson) both referred to this additional surplus of R30,000,000 but I want to correct that figure at once. Hon. members will remember that I said in the Budget debate that it was not anticipated that the full amount voted for defence would be spent and that R20,000,000 of this unspent money had been transferred to the Defence Equipment Special Account. We did that last year and the year before. But just before the end of the month we were told that this was not legal even though we had done so in the previous two years. We were told it was not legal and in those circumstances —these were the words used—

That is just before the end of March—

That accounts for R20,000,000 of the difference between the R110,000,000 and the amount mentioned here. So when it comes to the point the only matter we are discussing at the moment is the difference between the final figures and the R130,000,000. As I have said it is very difficult for these Departments, certainly for the Department of Defence, to know whether they will spend the money or not. They do not know whether the goods ordered will be available and whether they will have to make a down payment or not.

The hon. member has said that as a result of this surplus of plus/minus R32,000,000 this money will now be transferred to the Loan Account and that that will necessitate my making a restatement of the loan position for next year. I think that was more or less the argument used by the hon. member for Constantia. Let me say at once that the amount will not be paid over to Loan Account. I explained in the Budget debate that should there be any surplus after provision had been made for the R20,000,000 which should have been in the Defence Special Equipment Account that surplus would be paid into the Taxation Reserve Account.

Will that be invested?

That is the point I am coming to. Last year I said it would not be invested but this year the R20,000,000 that is in the fund has been invested because of the stringency in the Loan Account position. Assuming for a moment that this will also be invested—I am not saying it will be invested—but assuming that it will also be invested I think hon. members must take into regard, as I have done, the fact that I assumed in my Budget statement on the Loan Account that I would be able to borrow internally the sum of R70,000,000. That is obviously a very tall order under the present stringent position of the money market. As an example of that I can tell hon. members that the stringent position of the money market is illustrated by the results of the conversation operation in respect of the R45,000,000 loan falling due on 1 April. I am not saying it is entirely due to the date on which it is falling due. This was nearly all held by the money market and the Public Debt Commissioners. Conversion was offered into three years’ stock at the favourable rate of 4i per cent. No new money was called for. Only about R18,000,000 was so converted. Some R3,000,000 will be covered by sinking fund payments and about R4,500,000 will be repaid to and re-invested by the Public Debt Commissioners, leaving a balance of R 19,650,000 to be redeemed. In other words, if there is, as hon. members suggest, this windfall for the Loan Account I think it is very necessary that we should have it in view of the very tight position of the money market at the moment.

A further point made was in regard to the balance of payments position. The hon. member for Constantia stated that the position was less favourable than a year ago. That is quite correct. He said there had been a drop in our reserves of about R50,000,000 for the first four months, I think he said. And what was I going to do about it. Now let me say at once that it was this position that we had in mind when we introduced the monetary and fiscal measures of my Budget. We think, and I think rightly, that the best way of putting your balance of payments, your reserves, right, is to see to it that your imports are reduced and that your exports are increased. I think that is common sense. We say that if this extraordinary monetary demand, which is the cause of our trouble at the moment, is curbed, then it means that there will be so much less money for imports and that imports will automatically be reduced. And we say that if this monetary demand is curbed, then our exports will rise, because our exporters by reason of this extraordinary large local demand have neglected to a certain extent their markets overseas. They have found that they could sell all they wanted locally and therefore our argument is that from every point of view the best thing you can do at the moment is to try and curb that monetary demand.

It is too early at this moment to say what the effect has been or will be of the measures taken. We are following the position very closely, and if the monetary measures that we have applied do not achieve the object that we have in mind, we shall have to apply more stringent monetary measures. They are after all the basis of the trouble in which we are. That is also the argument that has been used here from the point of view of the mines too: If we can reduce this monetary demand, it means that we can to a large extent counter the inflationary tendency which is present in the economy to-day, and if those inflationary tendencies are contained, it means that your gold-mines will not be in the troublesome position when there is an inflationary rise in the cost structure of the mines in every respect. Those I think are the points that have been raised in regard to the Estimates and the surpluses and the balance of payments.

The hon. member for Port Elizabeth (South) (Mr. Plewman) asked about the Custodian of Enemy Property. I want to give him a brief resume of the position. The position of the German Trust Account as at 31 December 1964 was: Amount on hand as at 31 May 1962 R9,113,000 plus additional receipts of R22,000, a total of about R9,136,000, less amount released between 31 May 1962 and 31 December 1964 R7,898,000, leaving a balance of about R 1,200,000. We have given back the 80 per cent that we had retained to the German owners, and subsequently released the remaining 20 per cent. As far as South African claims are concerned we have paid up to 31 December 1964 (with certain trade claims and other claims, R 1,055,000 and the net balance available as at 31 December 1964 was R 182,971. Now there are still some South African claims outstanding which we have not yet finalized, about R50,000. There are still certain German claims outstanding: under correspondence R 100,000, estates being administered R50,000. In other words, a total of R200,000 has not yet been finalized. The interest account and the reserve account are not part of this, so I will not go into that. The German claims which have not yet been settled mainly represent those in respect of which the rightful owner has died or cannot be traced. Attempts to finalize these cases accordingly involve lengthy correspondence. In other cases the previous owners are domiciled behind the iron curtain and up to the present no satisfactory method had been found to ensure that funds released to such persons will be received by them. In the circumstances the settlement of the still outstanding claims may still take some time, but consideration is being given to ways in which to expedite the finalizing of these claims. Apart from the German claims, there are also other accounts but the amounts involved are very small.

There is no virtue in bad estimating. It has many faults, but one cannot call it a virtue. I do hope that the hon. Minister is not getting his information about the extra surplus from the newspapers. I hope he has better sources of information than that. Now the hon. member for Vereeniging (Mr. B. Coetzee) says: “What is wrong with these surpluses.” I think a great deal is wrong with these surpluses and this kind of estimating. In the first place it leads to extravagance; it leads to extravagance in any country where you have this kind of estimating.

Give us an example.

It leads not only to extravagance but to squandermania in Government Departments.

Is the opposite also true?

To a great extent, yes. Good estimating means that expenses can be reduced in a business. But this kind of estimating leads to squandermania in Government Departments. Money is just thrown about.

Where?

It is the beginning of what the hon. Minister now fears: Inflation. And inflation has its effect on the whole country. Now I am coming to what should be done with the surpluses. When we have a surplus of this kind, surely the Government should reduce taxation in a more generous manner than it has done, encourage private enterprise by reducing taxation. Instead of that the hon. Minister looks around for methods to increase taxation. And when one thinks of the position of the old-age pensioner, who has had a few crumbs that have fallen from the rich Government’s table, surely he deserves something more? When I hear of an amount of R 130,000,000 being bandied about, and I think of Bantu Education with a pegged amount of R13,000,000 which has never been increased in spite of inflation, then I think we are not distributing these surpluses as we ought to do.

I want to raise one or two other points with the hon. Minister. The first is in regard to a subject which I have raised with him before: The operation of the Blocked Rand Account. In the Gazette which I have received to-day I see the Treasury are giving the usual advertisement for May. I think the amount is fixed at R3,000,000 for this account, and they say there will be a subscriber’s minimum of 90: The subscription is 90 to receive 100 in five years’ time. That is the system that is being followed. I think it is a bad system. If the hon. Minister would come along and say: I am not prepared to pay more than 2 per cent, or even less, but I will accept a loan for five years or four years, one could discuss it with him. He did that at the beginning and I think he was successful. I think the first plan the hon. Minister had was a good one.

You told me that it led to speculation.

I do not think there is much speculation now, because the hon. the Minister was thinking of Stock Exchange speculation. Now Stock Exchange speculation to-day has been reduced tremendously because the difference in prices is now down to about 10 per cent or 12 per cent where it was more than 20 per cent. The Minister is not running a great risk. Then a day or two ago we had the hon. Minister of Justice discussing “games of chance”. Now applying for a share of this Blocked Rand Account is a game of chance. A man can apply at 90 and not get anything. I should like the hon. Minister to explain to me how these loans are rationed. Does anybody know in advance what he has to offer? On occasion they have paid over R100, as a matter of fact R101 and a fraction, to receive R100 back in five years’ time.

Plus interest.

I should like the hon. Minister to reconsider the whole matter and to tell us how he can justify this scheme he has today.

Then there is one other matter I should like to raise with him. There have been questions on the Order Paper about a Stock Exchange Commission Report. The Minister has replied on two occasions, I believe, that he had been rather busy and therefore had not been able to read the report. Sir, I do not want him to read the report. I want him to lay it on the Table. We want to read the report. I realize he is a busy man and perhaps he has not the time to read it. There must be officers in the Department, such as an officer here whose name is “Controller of Financial Institutions”, who I am sure would want to read the report. Possibly they have read the report. But there are people in the country who would like to read the report. The Stock Exchange is a national financial institution and we want to see that report. I should like the hon. Minister to give us an undertaking to lay it upon the Table even though he had not read it.

There is one final point: I see on the Estimates an amount under Item G, on page 16: “R 1,000,000.—Compensation Coin Operating Machines.” Is that the full amount that will be required?

No.

Is that on account? I wonder if the hon. Minister could give us an estimate of what the full amount of compensation is going to be?

We are already accustomed to the hon. member for Kensington (Mr. Moore) always talking about blocked rands and of the system we had and the system we now have. I am afraid we shall just have to leave him there and tell him that there are certain points on which one is compelled to differ from him. We believe that the system we have at present is a sound one, and better than the one he advocates. But nothing prevents him from airing his ideas in that regard. I think the question he put to the hon. the Minister as to whether the R1,000,000 in respect of the coin machines, has been appropriated is not relevant either, seeing that he is one of the fathers of decimalization. He should be very glad to know that it is at least on the Estimates, and whether the amount is more or less, he should be the last one to complain about it.

I did not complain.

But of course if one asks questions in that regard one is not satisfied. Does the hon. member want to-morrow’s news to-day, or what is his intention?

I want a different budget, a sound budget this time.

I shall come to that. The hon. member says that there is no merit in a faulty estimate, and he says he has many ideas in regard to what we should do with that money. But it seems to me this is also one of those cases where he has ideas but keeps them to himself. Then he makes the allegation that if we underestimate revenue it introduces a bad element in the State structure, viz. a tendency to waste money. He calls it “squandermania”. I challenge him to mention a single Department which suffers from “squandermania”—a sort of epidemic, it seems to me. Can he mention a single Department where an epidemic of wasting money has broken out? The hon. member cannot mention a single one; he just makes an allegation.

Then he makes the peculiar statement that the Minister should have reduced taxation. Well, that is one of our problems at the moment. As the result of the sound management of the country, we again have confidence in the financial affairs of the country. That is the result of what the Government has done, and not the result of what the hon. member fo*. Kensington and his party have done. As the result of the fact that there is confidence, more capital has flowed into the country, and people in the country have invested their money, and there has been more money chasing fewer goods, and as the result of that we have had the inflation problem. We have discussed that at length, and the hon. member for Kensington, who is a well-informed person, ought to know what the position is. If we were to reduce taxation, it would mean that more money would come into circulation to chase still fewer goods. Evidently, therefore, the hon. member wants us to take steps to promote the inflation. He has only one reason for saying it, and that is that he can then get up to reproach us for not having taken measures to combat the inflation. The hon. member is already thinking of the lack of arguments he will have next year.

But, moreover, there may be some substance in the hon. member’s argument if in fact a problem existed in regard to the burden of taxation. But if we look at the burden of taxation in our country we find that it is very low, in any case not heavy enough by far to endanger our currency; that burden is at present ten points less than the point at which our currency would have been endangered, and this pressure has been relieved as the result of the sound management of this Government. The hon. member can ascertain that for himself. If we compare the burden of taxation in recent years, we find that in 1965-6 it was 14.3 per cent of the national income. Normally economists consider that taxation becomes too high only when it constitutes 23 per cent, 24 per cent or 25 per cent of the national income. In 1962-3 we had the particularly low percentage of 13.2 per cent. We would all have liked to keep it there, but there is a demand for increased services in the country, which we provide as far as possible, and what we have done has not yet made the burden of taxation so heavy that it has become unbearable or that it has endangered our currency. During the past year, 1963-4, it was 14.1 per cent, and if we have regard to the basis on which we levy taxation this year, with the possibility of a further increase in the national income, which we expect to have, it will be less than 14.1 per cent by the time we debate this matter again next year. The hon. member has therefore made allegations here which he cannot substantiate and he has suggested plans which are not justified in the light of the present state of our economy.

A little while ago in the Budget debate, arising out of the fact that I had reminded the hon. Minister of Finance that he had apparently found his inspiration in the nursery jungle: “Tinker tailor, soldier, sailor, rich man poor man, beggerman, thief’, he threw it back at me, without mentioning me by name, by commending me to read “Sartor Resartus”, a very fine book; and before I deal with the few points I want to raise under his Vote, I want to tell the hon. Minister that having read this book, I refreshed my memory about two quotations in “Sartor Resartus”, which in my diffident opinion, fit this hon. Minister as if they were written for him and about him.

Too late now. You missed your chance.

I would ask the hon. Minister to wait and hear, even if he will not wait and see. Just listen to this—I almost said “try this on your guitar”. Here on page 4, Shakespeare is quoted by Carlyle, and Shakespeare said—

If this does not fit our present Minister of Finance, I have never seen an apter quotation. Then when he talks about his character, Herr Teufelsdröokh, he says this about him—

Is that true, Sir? The Minister does not want to commit himself. Now I will tell the hon. Minister that one thing his brain apparently does not busy itself with, is the necessity of playing the game (to put it very mildly) with the very people who provide him with this enormous, not only enormous amount of money, but this enormous surplus, which has grown, as we have heard, to R142,000,000. And those people, of course are the poor men of the jingle, the taxpayers.

I had occasion to question the hon. Minister about the loan levy situation in his Department and he will remember giving me the figures, e.g. that in 1953 he collected R26,000,000. The total amount unclaimed (in round figures) was R1,000,000, the number of unredeemed certificates (that is taxpayers who had not seen the colour of their money for one reason or another) 47,000. In 1957 he collected R12,000,000, he retained R1,000,000 and 122,000 odd people did not get their money back.

Because they did not ask for it.

That is not the point. In 1958 he collected R21,000,000 and he retained nearly R2,000,000, and he did not pay back to 186,000 people. In 1959, the collection was R20,000,000, the amount retained almost R 10,000,000, and the number of people who did not see their money again was 269,000. The point is that by now the Minister holds an amount of over Rl3,000,000 which is due to 626,000 plus taxpayers. And what does the hon. Minister do to give them a reminder? We have heard from the hon. member for Standerton that they have not asked for the money back. I would say in passing to the hon. the Minister and to the hon. member, who should know the minimum standards of business morality, that any ordinary business that has a mechanized accounting system, whether it is a bank or a department store, sends you a statement every month, and the first item or numeral you see on it, Sir, is the amount that you are in credit, if you have over-paid. Did the hon. member know that, or does his bank not do that for him—or is he not usually in credit? I have several examples here of such statements, if the hon. Minister does not believe me. The simple fact is that the ordinary trader, who is held down in one way or other by Government legislation, meets his obligation to the man who pays the piper by rendering an account every month showing whether there is a credit due to him, whether the man has made a mistake and paid more than he should have paid, or has paid twice. That amount is shown as a credit. But not so in the case of the loan levy. All you get at the end of every tax year is a demand, with the threat that you will pay treble tax, that you will pay 7i per cent interest, or worse still that you may pay 10 per cent interest—but not a word in this entire set-up, which is the finest mechanized accounting system in the country, I believe, not a word to say to the 600,000 odd taxpayers that they are entitled to Rx each. When I asked the hon. Minister the question as to what he did, in all fairness, let alone business morality, to remind these people that they are entitled to the money, what reply did I get? I asked him how many announcements had appeared in the Press through these years, the dates of publication, etc., how many announcements over the radio, what was the cost involved of any announcements or advertisements; the Minister told me that he took such steps, and from the appearance of the question and the first answer, certainly the answer, it was clear that these steps were taken very frequently and very assiduously. But this is what transpired in the second reply: The hon. Minister said to me on 9 April—

No paid advertisements—

And then follows the most surprising statement of all—

Why was a record not kept? Every time you have made a Press announcement, surely in your Department there would be a copy? This hon. Minister comes to this House with Press clippings on all sorts of subjects. It is a common practice here, in order to confound an Opposition speaker, for a very trivial reason as compared with this one. The Minister continued—

Sir, there is a transcript available of every word that is uttered over the S.A.B.C. every day, and which his Department, surely, as a Government Department, is in a far better position to obtain than I, as a layman, as an outsider. I do not control the S.A.B.C., but the Government does. Then the hon. Minister says—

Again a remarkable thing. On the one hand no records are kept, on the other hand reports are traced. To cut a long story short, through the years from 1959 to 1965 it appears that there were eight publications in six years that the Minister could trace, in the entire Press of the Republic of South Africa, with any kind of reminder to the taxpayers that they were entitled, if they had paid the loan levy in a particular year, to repayment.

Then, says the Minister, and this of course might have been written for him by the hon. member for Standerton—

which I deny: They are reminded by the deposit-receiving institutions—

And so on and so forth. Now I want to put this to the hon. the Minister: If he is seriously of the intention to part with this large sum of money, and since he holds over R13,000,000 (and he will hold more after the current loan levy has been paid), which he owes to some 600,000 people, would he in all reasonableness at this stage take some urgent steps to repay that money—that is, if he wishes to part with it? For example, instead of these news items, of which only six could be traced for a period of six years, it is open to the Minister to insert an advertisement, as the Government does from time to time for all sorts of other purposes, when it calls for tenders, etc., to insert a regular advertisement in the Press, and in the Gazette, to give the numbers of the certificates, to give the names of the people who are entitled to the money. Why cannot the Minister if he wishes to repay the money, do something that an ordinary business undertaking would do? [Time limit.]

I want to come back to what the hon. member for Kensington (Mr. Moore) a moment ago called the wasting of money. The hon. member made a strong point of it that the Minister’s Department is wasting State funds. I do not think we can allow that to pass. The fact is that if there can be any criticism of our method of financial administration in this country, it is probably that it has already become so complicated and cumbersome that not only does this administration cost the country a lot of money, but the speedy and easy finalization of matters is increasingly being delayed, and that is so because it has such a tremendous volume. Increasingly more people have to be employed for it. If anything can be said about our financial administration, it is that it is probably one of the most effective methods in the Western world. But that is not all I blame the hon. member for. I also blame him for this. The hon. member was for many years a member of the Public Accounts Select Committee, and it is the task of that Committee to exercise parliamentary control over the expenditure of money. The hon. member has now been sitting there for many years as the watchdog over the expenditure of the money of the State, and anybody can read the reports of that Committee and see what role the hon. member played in recent years in ensuring that that wasting of money to which he refers did not take place. It was not a proper attack for the hon. member to make and I blame him for it.

But I am not a member of that Committee.

But the hon. member was a member of it for many years. Another point I wish to make, to link up with the one made by the hon. member for Standerton (Dr. Coertze) is this. If we have a surplus, then there is, as the hon. member has said, a negative corrective measure which can be applied to prevent the use of such a surplus causing inflationary pressure; and if it were to have happened that this amount of money had been ploughed back during the past two or three years—because we have now had appreciable surpluses for the past two years— then the inflationary pressure would probably have resulted in the Minister having been compelled to take other measures to combat it.

That is the one side of the matter, but the positive side of the matter is this, that we in South Africa, in the money market, increasingly have to rely on our own funds; because it is not only the State which is looking for funds; the private sector also seeks money increasingly in order to finance the tremendous economic development. But apart from the private sector which increasingly seeks money, it is increasingly being sought also by public bodies such as municipalities and other bodies. Now an amount like R113,000,000, which the Minister can partly use for capital expenditure, has the effect that the Minister gives the necessary relief to enable those other bodies also to compete for the available capital in South Africa, and that is a very important point.

I think that if we weigh the advantages and disadvantages, we may say, as the hon. member for Vereeniging also said, it is better to have a surplus than a deficit. But if we have a surplus, I think it would be very shortsighted not to use it, as the hon. member for Standerton said, to reduce the inflationary pressure, and on the other hand not to use it to relieve the capital position of all those bodies which compete for that capital. I think the Minister is very wise if by using that surplus he brings relief in regard to the demand for capital which we will increasingly need in South Africa; because in the years which lie ahead we will increasingly have to rely on our own funds to do our financing at all levels, and the contribution it can make towards putting the other bodies which also seek funds in the money market in a better position to obtain their money in South Africa without having to go overseas for it is a very laudable object, and I hope that the Minister will carry on with it in future.

I do not intend following on the argument of the hon. member who has just sat down, except to say that he has misinterpreted what my hon. friend the member for Kensington (Mr. Moore) said. He was dealing with the question of the huge surpluses such as last year and the previous year had produced, and he indicated that surpluses of that high order lead to spendomania, and secondly that by excessive taxation of that nature it put the brake on the expansion of private enterprise. Those were the two points he raised and I do not think the hon. member who has just sat down has answered them.

But I want to deal with the wherewithal to repay the loan levies which the hon. member for Hospital (Mr. Gorshel) dealt with. I want to ask the Minister whether the Government has now been able to settle upon a better name than “Trojan” for the proposed gold coin, the one-ounce gold coin, in the new coinage system. I would also like the Minister to indicate whether his survey of the situation or his study of the position enables him now to give a clearer indication as to what the Government’s intention is in regard to this coin. In that regard I should like to draw his attention to the comment made by the president of the Chamber of Mines in his presidential address in June last year, when he said this—

He then deals with something which is not germane to my argument. He deals with the fact that the Minister has indicated that the full implications of the issue of gold coins was still being studied, and then he went on to say—

I think that is a commendable suggestion by the president of the Chamber of Mines, and I would be glad if the Minister would deal with the position as set out by him.

It has been taken up in the Act.

I am asking what the Government’s intention is in regard to it. The Minister had indicated that the Government was studying the full implications of the issue of the gold coin, and this is the Chamber’s comment on that statement.

One other aspect is that in the specimen issue of the new coins which was recently made there was a notable absence of two coins, firstly of the silver rand piece and the silver 2i cent piece, commonly known as the “tickey”. So far as the first is concerned, I understand it is the Government’s intention that it will be issued in due course. As far as the second is concerned, I would like to point out that in recent months there have been some very disturbing Press reports which seem to indicate that there is an official reluctance on the part of the Minister’s Department to allow the recommendations of the Select Committee on Coinage to be fully implemented so far as the retention of the “tickey” is concerned in this new coinage system. The recommendation of the Select Committee of last year was that the “tickey” should be retained in the coinage system for as long as the public may decide to keep it there. In the Rand Daily Mail of 4 December, in commenting on the official announcement of the coming into operation of this new coinage system and on the functioning of the Minister’s Advisory Board on Coinage, the report stated quite bluntly in regard to the new coinage system—

Later on, in the Argus of 3 March this year, there was a report much to the same effect—

Now I accept that both these quotations I have given are journalese, but the clear indication in them is that the Press comments were officially inspired. What makes it almost beyond doubt is that when the second one was published, in the Argus, it contained this additional comment—

And the comment is, as I have stated, that they are on trial for their lives. But a still later report in the Cape Times of 10 April this year is to the effect that on the eve of the introduction of the new five-cent coin and the two-cent coin—

Reports like these, and of course the threats in regard to changing parking meters and telephone call-boxes leave one with the impression that there is in certain official quarters a pre-judgment of this issue about the retention of the tickey and a disinclination to leave it to the public to decide. I should like the Minister to give this House an assurance that there will in fact be no pre-judgment of the issue by his Department and that sufficient 2½ cent coins will be made available for circulation so that the public can decide, as recommended by the Select Committee.

Was not the evidence before the Select Committee that there was a surplus of tickeys lying unused in the banks?

I am not sure. I am dealing with the current position. I also have it from other sources that it is extremely difficult to get this coin to-day. I am not concerned merely with the retention of the tickey because it is the most traditional coin in South Africa. I am concerned about the fact that if this coin is not retained in circulation it will have certain side-kicks, and one of the worst side-kicks which it will have is that it will adversely affect the cost of living. The Select Committee dealt with the matter as fairly as it could, but the comments I have quoted leave one with the unhappy feeling that there is an official reluctance to allow the recommendation to take its course. I would like to have an assurance from the Minister, therefore, that there will be no officially inspired reluctance to the coin being retained, and that he will make sure, through the Mint, that there will be an adequate number of these coins in circulation in this trial period, during which I think the public should be allowed to have a fair say.

The hon. member for Port Elizabeth (South) (Mr. Plewman) will forgive me if I do not reply to his remarks in regard to the new coins. I am sure that is a matter he wants to leave to the Minister, and if the Chairman of that Select Committee, the hon. member for Pretoria (Central) (Mr. van den Heever), takes part in the debate I am sure he will also deal with that matter.

I should like to express a few thoughts in regard to two matters. Hon. members opposite have had a lot to say about the big surplus we again had this year. To me it seems that the State requires two forms of money. It requires working capital and it requires fixed capital. I think we draw far too great a distinction between these two forms of money required by the State. Now the matter is being complicated because we now have a so-called big surplus, and if we have a big surplus it is the most natural thing in the world for the Opposition to say that we must give that money back to the people. It is also a natural reaction on the part of the Republic to think that the Government has much money in its coffers and that it should now give some of it back to them. But in fact the Government has no surplus money. The Government needs certain sums of money, and the taxation policy it fallows, its fiscal policy, should really not be determined by the surplus it has in that year. It should really be determined by the monetary position in the country. One can imagine circumstances, with the same surplus where it would be financially wise to give no money back to the taxpayers at all; and then one can again picture circumstances where one has precisely the same surplus but where it would be wise of the Government to give that money back to the taxpayers by way of tax relief, in that way to give the economy an injection and from the point of view of general monetary policy then to reduce taxation. Therefore I am wondering whether one should not really regard these two so-called accounts of the State as being one, and say that the State needs so much money for its current expenditure, and it needs so much for capital expenditure, and here we now have the total sum it collected this year, and there is still so much money short which will have to be borrowed. There is not really an absolute separation between these two accounts, because from time to time the Minister transfers certain of the things he has on the Revenue Account and he borrows money for them, or items which traditionally fall under the Capital Account are transferred to the Revenue Account and he uses current income for it. That was, e.g., the position in regard to defence for the last year or two. Last year we borrowed money for defence, but not the previous year, nor this year. So there is really only a sort of traditional separation between these two accounts, and there are countries which no longer have this separation. There are countries which throw the two accounts together and then work out their whole monetary policy and the fiscal budgetary policy, their taxation policy, when they have collected the total amount of money for the year, and in the light of the financial needs of the country and of the position of the economy, the Treasury decides what its taxation policy will be.

But that makes no difference to the amount of money required.

That is quite right, but then we will get away from this natural pressure from the side of the Opposition and the expectation on the part of many of our people that if there is a surplus in any particular year it must necessarily be given back to the taxpayer. I repeat that that is not a consideration to be taken into account when deciding on one’s taxation policy. The requirements of the economy should determine what the taxation policy will be. The Opposition is of course traditionally opposed to that; they are opposed to this idea, but we have had the germ of this idea for many years now. I looked up all the Loan Estimates since 1948, and except for two years there was not a single year in which the Nationalist Government, since 1948, did not transfer an appreciable amount from the Revenue Account to the Loan Account, and without exception the Opposition opposed it every year. Actually the Nationalist Government, by doing that, was admitting during all those years that these two accounts were really more closely connected with one another than is indicated by this traditional and almost artificial separation there is between them. Over the years the Nationalist Government has already transferred an amount of approximately R700,000,000 from the Revenue Account to the Loan Account. To that may be added amounts spent from Revenue Account on, say, defence, which really traditionally should have come from Loan Account and for which money should have been borrowed.

The other matter in regard to which I want to say something is this one which the Opposition to-day merely touched on but which I think is a particularly important matter which they could perhaps fruitfully have discussed in greater detail. It is the monetary measures taken by the Minister, the balance of payments, the position of our reserves, and if these things do not go in the way expected, what are the Minister’s plans for meeting the position? It is a fact, as the hon. member for Pretoria (Central) has said, that if one reads this report of the Economic Planning Council, one gains the impression, particularly we who are laymen in this matter, that unless we can succeed in maintaining a net rate of growth of about 5 per cent to 5½ per cent we may expect trouble on certain fronts, inter alia, on the balance of payments front and the reserves, etc. I want to suggest to the Minister that if on this front we are perhaps not able to hold the fort—and in passing I just want to repeat that this is a very important front; in my opinion, the burning question in this Parliament this year is whether the Treasury will succeed in protecting the value of our rand, of our money, that unit with which we buy the necessities of life, which is the basis of our savings, that thing in regard to which the ordinary man in the street can do nothing, even though he wants to, but looks to us to do it for him. It is perhaps our main task in South Africa this year to protect the rand and the purchasing power of the rand. Our whole economy requires it. The gold mines need it and the man in the street needs it. It is an urgent task that has been laid upon us. The Opposition perhaps wants to insinuate that the Minister could have done more, but we have now had a curve of growth, a very strong upward curve. If one exerts too much pressure on that curve and one depresses it too much, one runs the risk of its going down instead of its going up. Consequently I think the Minister’s policy so far was quite correct and that he only tried to flatten this curve somewhat. But it is a delicate process. When one has gone too far one cannot easily remedy the position again. Therefore I think he has acted quite correctly and wisely, and it is too early to say now already whether his measures will have the desired effect. But if the Minister in the course of time, as the figures and statistics be come available, finds that it appears not to have had quite the desired effect, I believe that he will remedy the matter. The Minister himself referred to this and I am just adding to what he said in his Budget speech. If the Minister for some or other reason in this process finds it necessary to impose further measures, does he not think that before Parliament prorogues this year he should be given powers to apply additional measures if he wants to do so? I think, for example, of a sales tax on luxury goods. Rates of interest have already been increased appreciably and one almost thinks that if interest rates have to be increased still further to curtail credit still more, then it may be that one will be increasing the costs of production and that certain sectors of the economy will perhaps suffer. And in order to limit consumption, I am wondering whether a sales tax at some stage or other, particularly on luxury goods, will not be the right thing. Seeing that the Minister himself has mentioned it, I am also mentioning it here, and I want to ask him whether he will not consider clothing himself with those powers, without necessarily using them, whilst this House is still in session. [Time limit.]

In an earlier debate this year members on this side of the House made further representations to the Minister to extend the terms of reference of the Commission of Inquiry into the Parity Insurance debacle, to include those other nine companies and the four banks that went insolvent during the last three years. We had hoped that the Minister would give heed to our representations, especially in view of the demand by the public—the persistent demand that has gone on since this debate took place in Parliament—but much to our regret we now find that the Minister has confined the terms of reference purely to the circumstances which prevailed in regard to the Parity Insurance Company. This is all the more surprising as a result of the announcement that was made to-day by the Commission of Inquiry into the Parity debacle when the Attorney-General of the Transvaal asked the Commission to adjourn and not to hear any evidence from officials of, and people associated with, Parity in view of the fact that it would prejudice the police in their investigations against members of Parity and other people, with a view to prosecutions. That is all the more reason why the Minister should have included all these other companies in his terms of reference, and why, even at this stage, he should still reconsider the inclusion of all these other companies in the terms of reference of the Commission, because it is now apparent that the hands of his commission will be tied by the request made by the Attorney-General not to go into any evidence given by officials of Parity and directors of that company. Since this debate took place I, and a large number of members on this side of the House, and I believe certain members opposite, have received letters from members of the public and have had representations made to them by members of the public, once again to bring this matter to the notice of the Minister and to ask him to institute an investigation into the circumstances which brought about insolvency of nine other insurance companies and four banks. If we were ever justified in asking for the inclusion of these companies, I want to read from an editorial in Dagbreek dated 29 November 1964. It says—

Under the heading “Noodsaaklik” they then go on to say—

That is to say, the circumstances of Parity—

Sir, if that is not sufficient justification to ask the hon. the Minister to include all these other insolvencies in the terms of reference of the inquiry, then I do not know what sufficent justification is. But there is a further editorial in Dagbreek, on 15 March 1964, and this is what they say—

Here once again this newspaper says that “this chain of circumstances must be investigated”. Sir, what does one of the learned Judges say in the Johannesburg Insurance Company case. He said—

Then in the case of the Auto Protection Insurance Company, when they went insolvent, an advocate appearing for one of the claimants expressed criticism of the Registrar—

Sir, what is it that prevents the hon. the Minister from allowing an investigation into all these other companies? I say to the hon. the Minister that he is doing himself a disservice; he is doing a disservice to the Registrar of Insurance Companies, the Registrar of Financial Institutions, the Registrar of Banking, the Registrar of Pension Funds, the Registrar of Building Societies, the Registar of Union Trust Companies and the Registrar of Stock Exchanges. By the way, Sir, all these posts are occupied by one man. The hon. the Minister is doing that official a disservice in letting all the talk go on that is to-day taking place in South Africa. The Registrar’s name and other names are being bandied about. The Minister should allow an open investigation to be made into these matters, so that the good name of the Registrar of these various institutions, as well as the Minister’s Department can be cleared. It has been estimated that in three years up to March 1964—prior to the debacle of the Parity Insurance Company—R30,000,000 of the savings of the public were lost as a result of the insolvencies of these various companies, and if that does not justify an investigation. surely an investigation is justified by the fact that not only Parity policy holders were involved, but other people as well. Once again I ask myself why the Minister refuses to allow this investigation? What skeleton is there in the cupboard that he will not expose? [Time limit.]

I shall definitely not follow the hon. member for Springs (Mr. Taurog) in his parrot-cry about Parity. He can write his own chapters, “Parity by ‘parrot-cry’

I am not talking about Parity: I am talking about the other companies.

I leave that matter to him and to the hon. member for Hospital (Mr. Gorshel). I want to return to the matter raised by the hon. member for Port Elizabeth (South) (Mr. Plewman) in connection with coinage. I had the privilege of being present when the new set of coins was minted at the beginning of December, at which ceremony the hon. the Minister of Finance officiated. I must say that we were presented with a very fine set of coins. I have them here with me, but unfortunately I cannot show them to hon. members, because then I would never get them back! I have one difficulty in this connection: no half-cent coin was minted on that occasion. The reason given to us was that it appeared that the proposed half-cent coin could possibly be used to operate the five-cent coin slot machine. But something that worries me is that the Department submitted technical evidence before the Select Committee through the Director of the Mint and a departmental official, and gave us the assurance that if there was a difference of .2 mm. between two coins, and at most .4 mm. after wear, the one could not operate a slot-machine designed for the other; there would be no response from the slot-machine if one inserted the wrong coin. It seems to me that the evidence submitted to the Select Committee was not correct. The Government sent people overseas to go and investigate the matter. Those people, who were technicians, came back and gave us the assurance that things would work in a certain way, and now it appears that they submitted incorrect information to the Select Committee. I should like to know what was behind that. Did they do their work in too great a hurry, or what is in fact the reason why we were given incorrect information? Let us take as an example the half-cent and five-cent coins. The half-cent coin would have been 16.75 mm. in diameter and the five-cent coin 17.42 mm., a difference of .67 mm., which is much more than the 2 mm. mentioned by the Director of the Mint before the Select Committee. Let us take the half-cent and 2-£-cent coins. The difference in their diameters is .49 mm., which is much more than .2 mm., and now they are afraid that the half-cent coin could be used to operate 2½-cent slot-machines. I myself tested the two coins in a telephone coin box and found that the one did not fit into the slot designed for the other. They were tested on parking meters as well, and did not work on them either. If one inserts a larger coin into the slot, it produces the value of the smaller coin. It would therefore be to the advantage of the meter-keeper if one used the wrong coin. But the fact remains that the Select Committee was misled as far as this matter is concerned, and I want to add this: We have heard here that the Post Office has had to increase its telephone rates to a minimum charge of five cents; it had to buy new electronic machines in a hurry in order to fall in with this new set-up, and we now learn from Post Officials in Pretoria that the main reason for that was that our recommendations in regard to the two-cent coin were virtually rejected. We as a Select Committee recommended that the two-cent and one-cent pieces should not be brought into circulation before the existing half-cent pieces had been withdrawn. In other words, the two-cent piece had to be introduced at a later stage, and there were good reasons for that recommendation. Its size will now be very close to that of the old shilling, and the old shilling will also remain in circulation until at least the end of this year. The result of the fact that the two-cent coin has been minted is that the Post Office has had to go and make purchases in a hurry and bring about this change in order to be ready by 11 May, and I understand that it will cost the Post Office a couple of hundred thousand rands extra to be able to fall in with this idea. We said that one should start with the half-cent as far as copper money was concerned and then work up to the two-cent coin, which, in terms of our proposals, is the largest both in buying-power and in size; we said that the two-cent coin should come last, but here it has been done the other way round. Mr. Chairman, what worries one is the background to this matter, because the Department, the Mint and the technicians intimated to the Select Committee that they did not want a half-cent coin; that they did not want a 2½-cent coin; that they wanted a two-cent coin; and that they wanted to bring the two-cent coin into circulation first. They submitted a good deal of evidence in this connection, and after we had heard that evidence, we as a Select Committee considered the matter and decided that the two-cent piece should be introduced last. In spite of that they are introducing it first. I am mentioning this just to show that the members of the Select Committee have reason to ask why our recommendations in this regard are not being carried out.

I now want to come to the half-cent coin. I accept that the half-cent coin is no longer going to be 16.75 mm. in diameter as we recommended, but even before the parliamentary Session officials of the Mint and officials of the Treasury told me that a coin having the same size as the Dutch ten-cent nickel piece, i.e. 15 mm. in diameter, appeared to be the solution. I just want to inquire of the Minister when we are going to make the necessary change in our legislation in order to enable us to mint the 15 mm. coin. There is a large difference between the 2½-cent coin and this 15 mm. coin, and nobody can convince me that the 15 mm. coin can be used to operate a slot-machine the smallest coin for which is the 21-cent one. When there is so large a difference between the coins the one coin cannot operate a slot-machine designed for the other. I am mentioning this matter because I think members of the Select Committee are justified in feeling that the Mint and the Coinage Advisory Committee are doing things here which are in conflict with the recommendations of the Select Committee. They are trying to influence municipalities to change their parking meters in such a way that the 2½-cent coin will be eliminated, which will have an adverse effect on the cost of living.

There is just one other matter I want to raise, if I still have time. You will recall. Sir, that at the beginning of February, during the debate on the Part Appropriation, I raised the matter of hire-purchase and personal loans and rates of interest. I notice that what I said on that occasion is being interpreted in certain quarters as meaning that I am opposed to personal loans and to hire purchase. There is no truth in that; I have never suggested anything of the kind. I accept hire-purchase and personal loans as inherent and essential parts of our whole financial and economic system in South Africa. I have nothing against hire purchase and I have nothing against personal loans, but I am against rates of interest which are tantamount to exploitation. That is the point I made, and if the matter cannot be put right by means of legislation, I again want to ask the hon. the Minister whether it cannot be put right by means of financial regulations by fixing a maximum rate of interest for personal loans and for hire purchase. I am asking for the application of the same principle that we have in the Usury Act, which provides that the rate of interest which is charged shall not exceed 12 per cent. This principle is already embodied in the Usury Act, but there seem to be loopholes in the Usury Act, and people are circumventing it. [Time limit.]

The hon. the Minister, in replying to the hon. member for Constantia (Mr. Waterson) threw up his hands in a despairing attitude and said: “How was anybody to know that these colossal surpluses would result?” Sir, I recall that last year we had much the same plea, when a surplus was declared in the Budget speech, and within 30 days the Minister discovered that he had to declare an additional surplus of many, many millions. The excuse, which was then advanced, was that because of the introduction of the P.A.Y.E. system, which was something new, it was difficult to estimate the revenue. I say with all due deference, that the hon. the Minister has no excuse this year for advancing that defence. All the taxpayers in this country are very carefully watched by the Receiver of Revenue, and everybody knows that if his return is not submitted in time together with his cheque, he promptly gets a letter through the post calling for the money. The hon. the Minister must be aware, and his records must show, that over the past 12 months there was every indication that this enormous surplus was growing and was going to appear. I do not for one moment suggest that the Minister is not a good bookkeeper or that he is incompetent. There is every indication over his long history as Minister of Finance, that he is a competent person, but what I do say is, that to take R 142,000,000 out of the taxpayers’ pocket, and to refuse to give it back to them, in some form or other, when there is a surplus to that extent, borders in my humble opinion on sharp practice. The hon. the Minister knows very well from his long experience in handling the Treasury, that estimates by his departmental heads, and by the Ministers, very often do not come up to expectations, and he knows that very often they cannot spend the money for which they ask. He takes the example of defence and says that up to 31 March the Department is not sure that they are going to be able to spend the money. I say quite frankly, that I cannot accept that as a logical argument at all, because the type of material which is purchased by defence, must comply with certain specifications; the orders must be placed well in advance, and the Department must know exactly where it stands. I believe that the practice which evolved during the years, when we had difficulty in obtaining capital funds, has now grown out of all proportion and out of all recognition.

To-day the Government is relying upon this most unsatisfactory method of budgeting, to bolster the Loan Account. In the old days the surplus used to go to Loan Account and there was no complaint. But the taxpayer today, is being forced to pay for capital works, which will be enjoyed by posterity, capital works which are financed not out of loan funds but out of surplus funds. One hears the bleat from Government speakers, that to return taxes to the persons who paid them, is going to bring about inflation. I regard that as utter nonsense. The amount of money which is taken out of the taxpayers’ pocket is a matter of vital importance to him. There are thousands and thousands of young married people in the lower income brackets, and Coloured people in particular, who are paying taxes, and who could well do with the money which is taken out of their pockets to bolster up the finances of the Government on this extraordinary, excessive scale. I would appeal to the hon. the Minister to look into the P.A.Y.E. scales and to satisfy himself as to whether or not, it is fair that taxes should be paid by groups whose incomes are as low as the incomes of certain groups for whom provision is made in those scales. The Bantu are exempted up to quite a considerable sum but the Coloured man is not exempted. Coloured persons working on farms are exempted up to a limited amount and Bantu up to quite a considerable amount. Why cannot the same thing apply in trade and industry? Why must the Coloured man earning R1 to R6 per week have 3 cents a week deducted from his pay? Six rand may be nothing to hon. members sitting here but R6 although it may be very little, means a great deal to the man who earns it. It does not enable him to keep body and soul together and yet he is expected to pay income-tax on it. I submit that the time has come when the hon. the Minister should investigate this aspect and that he should return some of this money to the persons from whom he took it. It is true that the Minister is making provisions to meet tax levy certificates which fall due, but I say to him with the greatest respect that I do not want him to look after my money; I will look after my own, and everybody else would prefer to do so too. Moreover, I think I can make a better job of it. I do not regard any Government as being a proper custodian of my personal, private funds, and nor does anybody else. The hon. the Minister does not know what to do with the money so he has hit upon the idea of putting it away safely for the taxpayer. I think it would be much better if he gave this money back to the people from whom he took it. Let them save it themselves or spend it, whichever they prefer to do.

Sir, over many years there has been a consistent trend for prices to rise throughout the world without ever returning to their former level. Taxes are increased and are never reduced again. We even hear talk of purchase taxes and things of that kind. I think we should be very careful before we recommend any new source of taxation because once a new form of tax is introduced it is never abolished. That money is lost to the taxpayer and if it is returned to him at all, it is disguised to such an extent that he does not recognize it. I think it is time the price structure was examined right throughout the country, in the case of every commodity. There ought to be a positive move towards a reduction in prices. Throughout the country we have complaints that there is a shortage of labour, which is denied by various Ministers. We are told that people are asking for more money; that they cannot exist on what they are getting at present. I have examined these taxation schedules and I would like to see the Government giving a reasonable increase to wage earners out of this huge surplus. Let somebody get some benefit out of the surplus; do not simply bury it in the Loan Fund for posterity. Posterity is entitled to inherit something from us but not the entire estate. I think the hon. the Minister would be well-advised to put a stop to the method of financing and estimating which is current in Government circles to-day and has been for a few years. A method which obtains in all Departments is to estimate revenue on the low side, knowing full well that it will be high, and to over-estimate expenditure and then not spend the money; knowing quite well when the estimates are submitted that they will never be able to spend the money for which they are asking. The result is these globular surpluses that we get every year. The hon. member for Kensington (Mr. Moore) mentioned the word “squandermania” which was promptly pounced on by the hon. member for Standerton (Dr. Coertze). It is inevitable, in any undertaking where money flows into the till in unlimited quantities that those at the spending end, become lavish and a little bit over-generous. If, however, the money furnished to the Department was curtailed a little, they would have to count the pence a little more carefully, and may be cut a bit here and cut a bit there, and so give us better value for our money. I am not suggesting that there is a gross waste of money in the Government service because I have no grounds for saying that, but what I do say is that when the barrel is full and over-flowing with cash, everybody wants to dip into it. Some Departments ask for and get more than they can spend. I think the departmental heads and the Ministers concerned should be instructed to look into that aspect. [Time limit.]

The hon. member for Karoo (Mr. Eden) as well as the previous speakers on the opposite side have had only one theme this afternoon, and that is overtaxation. The argument put forward by them is that the taxpayers are being overtaxed because the surplus we have had is not being returned to the taxpayers by means of tax concessions. That is a completely wrong attitude. The fact that there is a surplus on the Revenue Account is no proof that the taxpayers have been overtaxed. The money received from the taxpayers to-day is in any case being spent on services which are in the interest of the taxpayers. If hon. members on the opposite side want to be honest, they should tell us what specific services which are being provided at present should not have been provided by the Government. They came along with this same querulous complaint last year and said that the people were being overtaxed. Sir, the money declared as a surplus at the end of last year is being used this year, inter alia, to supplement pensions, for instance. Does the hon. member for Karoo want to tell me that we should not have increased pensions this year? Is he opposed to that?

I was not speaking about pensions.

Why is the hon. member then complaining about this year’s surplus and about last year’s surplus? [Interjection.] I want to ask the hon. member for Green Point (Maj. van der Byl), who has just made an interjection, whether he is opposed to our having increased pensions. A portion of the money that was placed on reserve last year has been used this year to increase pensions. It seems to me as though the hon. member is opposed to that. In other words, he does not want this Government to do something for the poor man. In addition to being used for increasing pensions, that money has also been used to safeguard the security of the country. No, arguments of that type do not hold water as far as the public is concerned. This year’s surplus is being used to balance our Loan Account. It is clear to me that there is one fundamental difference between the policy of the National Party and that of the United Party. If I may use the example of two fathers, I want to put it in this way: The National Party looks after its children; it provides them with education and puts away something for the day when it is no longer there, so that they will have some means of support, but the United Party’s policy is: Eat, drink and be merry for to-morrow we die. I think South Africa can be grateful that we have a Minister such as the present Minister of Finance, a Minister who is following a sound financial policy and who is creating a healthy economic climate for the future. In 1948, when the United Party was in power, the national income was less than a third of what it is to-day, but as a result of the sound economic policy followed by this Government our population can make a very good living to-day in all sectors of the economy. You will recall, Mr. Chairman, that when the United Party was in power there were shortages of almost everything; there was a shortage of bread, and housewives had to stand in queues for nearly all their requirements. Look at the way in which all sectors of our economy are flourishing today. Look at the motor-car industry, transport, communications, etc. It is very clear that this Government is on the right road.

Hon. members on the other side also expressed fears about our foreign exchange and balance of payments position. Is the hon. member for Port Elizabeth (South) (Mr. Plewman) in favour of introducing import control, yes or no? No, he does not have the courage of his convictions; he refuses to answer, but this Government is not afraid to say that if our reserves drop to such an extent that it becomes necessary to introduce stricter import control, it will not hesitate to do so. The Government has done that in the past and it will do so again if it should become necessary. It will do the right thing at the right time. There are several reasons why a portion of this surplus must be held in reserve, and one of those reasons is to stimulate our domestic economy further so that we may become more self-supporting. A far greater number of things which we imported in the past are being produced locally now. For example, we are using much greater quantities of locally-produced material to put our motor vehicles on the road. That is one of the things being done under the leadership of the Government to keep our foreign reserves sound.

I want to come back to the hon. member for Springs (Mr. Taurog). He again referred to Parity this afternoon. Unfortunately the present occasion is not an appropriate one to reply to him with reference to a debate we had in this House recently, because I would be out of order. He attacked the hon. the Minister and asked why all those other companies were not included under this judicial commission of inquiry. That hon. member has another turn to speak and I shall be very glad if he will get up and tell us why that should be done. One person whom is attacking all along is the Registrar of Financial Institutions. Irrespective of whether the Parity case or the previous series of cases is being dealt with, the actions of the Registrar of financial Institutions are investigated. The hon. the Minister did not say this morning that the Registrar of financial Institutions was excluded. Both the Department of the Registrar of financial Institutions and the Department of Transport are being included in this matter. These two Departments are also the ones that were concerned in the previous 12 cases. The hon. member must please not come along and reveal his concealed motives here in this way. Be honest with the House; tell us what you want. Say what you want and do not employ these roundabout tactics. I do not think there is any sense in dragging in all those other companies. What will we achieve by that? If the hon. member had an idea that a lot of Nationalists were behind the matter and that they were the cause of the trouble, I would have understood his attitude, but it is his people who were implicated in the last case. If we go further back we shall perhaps find that more of his people are implicated in the matter. He must tell us what he wants.

Name them.

I say it may be. The hon. member wants to bring in those other companies now. If the hon. member comes forward with something substantial I shall support him. I am a person who has certainly done my share so far to expose fraud in this country. I think I have done more in that regard than that hon. member. I should therefore very much like the hon. member for Springs to tell us those few things when he speaks again, and then I shall again reply to him.

The hon. member for Pretoria (Central) (Mr. Van den Heever), in following me, said that I was again busy with my “papegaaikreet”. Well, Sir, if this is a “papegaaikreet” when I try to assist 260,000 people who suffered the loss of their hard-earned earnings, then I am happy to carry on with that “kreet”. The trouble with the hon. member for Pretoria (Central) is that he has not got a leg to stand on. He reminds me of the dog with four trees—he has not got a leg to stand on.

You did not say anything new. What you said, everybody knows.

Everybody knows! That is the whole trouble, Sir. That is why I want it investigated. Everybody knows about it; everybody is talking about it, and the Minister will not give it any official recognition and allow this investigation into all these other companies to take place.

The hon. member for Sunnyside (Mr. Van Zyl) has asked me to state why I feel these other companies should be investigated as well. He has asked me what it is that I am worrying about. Sir, I am worried about the fact that the Registrar of Financial Institutions, in carrying out his duties, was not sufficiently vigilant and diligent in looking after the interests of the public as far as these various insurance companies, credit corporations and banks were concerned. In April 1964 an article appeared in the Financial Mail headed “Resign Mr. De Villiers”, and it went on to say this—

My contention, and the contention of this side of the House, is that the Registrar of Financial Institutions did not carry out his job in a sufficiently competent and diligent manner, and was not sufficiently careful in looking after the interests of the money that came under his control. I go so far as to say that the Registrar has permitted his office of trust and responsibility to be reduced to a sham, and that is the impression of the man in the street in view of the financial control that has been exercised in all these other matters. The consensus of responsible opinion in financial and insurance circles is that the general conduct of the Registrar has been irresponsible and dangerous to the public welfare. A stage has now been reached where he commands neither the trust nor the confidence of those institutions which he controls. It is a bad state of affairs in the financial life of any country when the Registrar of Financial Institutions cannot command the respect and the trust of the public.

Sir, if you should feel that this is just my opinion, or the opinion of the man in the street, let me tell you what emerged from the evidence given before the Select Committee on third party insurance, where we had the amazing situation that the Administrative Officer of the Department of Transport said these words to the Registrar of Financial Institutions: “It is obvious Mr. De Villiers is quite unaware of what happens in New Zealand. I have noticed that right from the start.” This appears on page 181, paragraph 358, of the evidence given to that Select Committee. Here was a Registrar, who was giving evidence on a Bill before the Select Committee, and one of his own departmental officials said it was obvious to him that Mr. De Villiers was unaware of what happened in New Zealand (we were considering the system in New Zealand) and that he had noticed that right from the start.

What is more worrying is that the Registrar of Financial Institutions disagreed with one of his Deputy Registrars on a very important and fundamental aspect of the Bill on which he came to give evidence. On page 135, paragraph 228, the Registrar is questioned by—

There is a difference of opinion between Mr. Pretorius and myself.

This was as a result of Mr. Pretorius, the Deputy Registrar, having gone to New Zealand, submitting a report to the Committee, and !the Registrar admits he is at loggerheads with one of his own deputies! As if that is not enough, What happened on 5 March 1964, when, for the second time, the Registrar of Financial Institutions came before the Select Committee? This appears in the evidence—

The Registrar’s reply was—

Sir, have you ever come across a situation where a senior official, a head of a department, is virtually repudiated by other members of his staff in evidence before a Select Committee?

I want to go further, Sir. I accuse the Registrar of Insurance of withholding valuable information from the Select Committee on third party insurance when he appeared before that Committee. It was his duty to disclose to that Committee every bit of information he had in regard to the state of the insurance companies under his control. But what happened? The Registrar appeared before the first Select Committee on 15 May 1963, and he never disclosed anything at all to that Select Committee of what he knew was going on with the Parity Insurance Company, and the fact that he had imposed an embargo on the sale of their assets and their reserves in November 1962! When questioned by members of the Select Committee whether Parity was solvent or not, he said he was not in a position to know. He did not disclose to the Select Committee that he had imposed an embargo and a restriction on the sale of any of Parity’s assets and their reserves. Had he done so, the whole thinking of that Select Committee, in all its deliberations and eventual decisions, would have gone in a different direction altogether, because then that Select Committee would have known that it was vitally urgent and necessary that the legislation it submitted to this House must protect the 450,000 motorists who were insured with Parity at that time. [Time limit.]

On the 11th May the first group of new coins will start circulating in South Africa. We want to avail ourselves of this opportunity to convey to the designers and everyone concerned in the production of these new coins our congratulations and thanks both as regards the convenient size of the coins and as regards their appearance, according to illustrations we have seen. We are not all in the fortunate position in which the hon. member for Pretoria (Central) (Mr. Van den Heever) finds himself, in that we do not yet have some of these coins in our pockets. But we have seen illustrations of these coins and they make a very favourable impression.

But, Mr. Chairman, I have also risen to express my disappointment at the fact that the head of our present Head of State is not detected on one or two of these coins. I think that where we are busy giving form and content to our young Republic the present is a golden opportunity to depict the head of our present Head of State on at least one or two of these coins. In doing so we would not be dishonouring or rendering a disservice to Jan van Riebeeck, the founder of our nation. We should very much like to see the head of our present Head of State depicted on one or two of the coins which are now going to come into circulation. It is not necessary for me to say anything about the high office held by our State President in South Africa. It is defined in section 7 of our Constitution. I think we had a good opportunity here to depict the head of our State President on some of our coins, but I do not want to say any more about things that are past. I want to make a plea here this afternoon that next year, when, with State assistance, we are going to hold big Republican celebrations in the Republic of South Africa, we should mark that occasion by minting a set of coins on which the head of our present Head of State is depicted. I want to make a very strong plea for that, because I think we owe it to our Head of State. I think the time has come for us in the House of Assembly, or whomever is charged with the task, to take the lead in granting recognition in this way to the high office held by our State President. I am making a very earnest request that attention be paid to this matter. If it is not feasible we should like to hear from the hon. the Minister why it is not. I feel that we should bear in mind the fact that we are giving oui coins a character which is more in keeping with the present Republic of South Africa. Where our State President is the symbol of national unity, I think there ought to be no difference of opinion in this regard, but that we shall probably all welcome it if something like that could be considered

The hon. member for Kensington (Mr. Moore) asked me about the report concerning the Stock Exchange. I hope to table it shortly. I do not want to give a definite date, but I hope that in any case it will be before the end of this Session. He also asked whether the R 1,000,000 is the only amount in so far as compensation is concerned. According to our estimates the compensation for 1965-6 will amount to R1,000,000 and to R200,000 for the following year, therefore altogether R 1,200,000.

In regard to the blocked rands, the hon. member voiced certain criticism. I once again want to give him the assurance that blocked rands is not a method of obtaining loan funds. In the state in which our reserves are to-day, it is not desirable to allow too much money to leave the country for that purpose. That is why last year we set aside an amount of R3,000,000 for that purpose. I do not think that amount will be exceeded. The main object is merely to give people an opportunity to take their money out of the country. We do not want them to say that they had no such opportunity. We do not intend making it so attractive as to be an encouragement to speculators, as it was in the past.

The hon. member for Hospital (Mr. Gorshel) voiced criticism in regard to the loan levy. I just want to tell him that I do not think it is the function of the Treasury to run after people and to tell them that they must come and fetch their money. In this case there is a double reason why we cannot do so. We give the person a loan levy certificate. He can cash it at any time at a post office or, if it is a fairly large amount, pay it into a bank. As we are going to do it now, it will be a credit to his account. If the hon. member has any doubts about the old system, I just want to assure him that according to the new system we are planning he will not receive a certificate which includes interest to the end of the five-year period. He will receive a credit statement, and he will receive interest up to the date when the amount is repaid. In terms of the former system, no interest is payable after the due date of the certificate. In terms of our Income Tax Act, under which these loans are levied, there is no obligation on the Department to run after people and to say: Here is more money belonging to you. That is unnecessary, particularly when they have a certificate which is negotiable at a bank or the post office.

The hon. member for Port Elizabeth (South) (Mr. Plewman) asked what had happened to the idea of the trojan. We have encountered some difficulties. The Chamber of Mines has sent me a certificate from a Swiss bank saying that if there is no sight value on a coin of this nature it is not considered to be a coin but a medal. And if it is a medal, import duties are payable on it. They gave the example of Switzerland and Germany. I like the idea of having a larger gold coin of this nature. We again got into contact with them, and if they can bring it into line, not with weight but with the rand, it is still possible.

Is that R25?

It will perhaps be a little more than the face value because there will still be minting costs, etc. Then there is still the premium they would like to earn on it. If they are prepared to do it on that basis I cannot see how there can be any objection to stamping R25 and one fine ounce of gold on it just as an assurance. We are still investigating the position to see whether we cannot find an acceptable solution along these lines to the difficulty in which we find ourselves.

Has the hon. the Minister received any interesting names instead of “trojan”?

We received a number of suggestions, but when the matter was blocked because of this other difficulty we just abandoned it. I want to assure hon. members that it will not be “trojan”. I think that name is quite unsuitable because it is not even a troy ounce. The “troy” referred to here is not the “Troy” from which Helen came!

Nor is it the same Helen.

The hon. member for Port Elizabeth (South), I think, also asked for an assurance in respect of the tickey and the i-cent.

Just the tickey.

My instructions to the Department are that we must have the tickey and the 2-cent coin. It will have to be decided which is the most popular between the two. That is my instruction to the Department, and I do not know of any instance where my Department has departed from the principle that there should be free competition between the two coins. I have said all the time that the 2-)-cent coin does not fit into the whole system, but the Cabinet accepted it and I abide by the decision that there should be competition between the two. I think one of the two will eventually have to disappear.

Will the Minister see to it that there is an adequate supply of tickeys?

At the moment we have not minted any of the new tickeys. It is very difficult to keep ahead with our programme in view of the fact that we have to mint so many new coins. We encounter appreciable difficulty in commencing with the first two coins on 11 May. I received a progress report to the effect that there was much difficulty in that regard. If there is an actual shortage we shall have to mint more tickeys. We hope, however, that this will not be necessary because our minting capacity is fully occupied with the programme with which we are busy now.

The hon. member for Pretoria (Central) also asked a question in this regard. I do not want to go into details, but I do not think it is quite correct to say that the officials gave wrong information. I have gone into the particular questions and in the two which I consider relevant it was clearly stated that this was the information given by the manufacturers.

I did not say they had done so deliberately.

That is even better. The actual difficulty—and this is a difficulty we only discovered later—is that the figures given originally for the differences which the automatic machines can take did not take sufficient account of the tolerance. As soon as there is a little wear it changes the position tremendously. Consequently where there is a difference of .025 the real difference is only .017 if one takes the tolerance into account also.

According to the programme, the new ½-cent would be introduced only much later. There is no immediate hurry. We first want to issue the other coins so that we will know what the real problem is when we come to the ½-cent. In the meantime there is a large supply of the existing i-cents. There is therefore no immediate hurry. We expect the i-cent to be issued, at the earliest, only towards the end of 1966 or the beginning of 1967. Therefore we still have time to study the practical problems in regard to the size of that coin in relation to the automats.

The hon. member for Queenstown (Mr. Loots) raised two interesting points which were also raised in the Budget debate, namely that we should have one account instead of a Revenue Account and a Loan Account. In my reply to the Budget debate I said that I doubted whether we had reached the degree of economic development where we could switch over the the other system. I think it will come. That system is in use in many other countries, and I think some adaptations will have to be made. In the meantime, as the hon. member said, we transfer money from the one account to the other if circumstances demand it, and we reverse the process if circumstances are different. Another matter he referred to is something which I have also partly dealt with already, namely the desirability of additional fiscal instruments. Monetary steps can be taken at any time during the course of the year, but in regard to fiscal steps one is limited to once only per annum, and circumstances may change to such an extent that it becomes necessary to take further fiscal steps. I mentioned the matter and there was a discussion on it. I am sorry that there was not a wider discussion of it because I wanted to learn the sentiments of hon. members, but it is something which now has to be investigated. It is of course not something one can do hurriedly. I said at the time that the principle of parliamentary control must be maintained and we shall have to do it in such a way that that principle is not affected.

The hon. member for Springs (Mr. Taurog) asked that the Parity investigation should be extended to other institutions which landed in trouble. I have already dealt with that matter, and I have nothing to add to what I said at the time, namely that this was the matter which required immediate attention, and that if it was disposed of, and, in the course of it, it became clear to me that it was necessary to institute further investigation, I would do so. The hon. member also made a personal attack on the Registrar of Financial" Institutions. I do not think I can laud him for that. I just want to point out that, although he again referred to certain accusations and allegations made against the Registrar in the Financial Mail, the hon. member did not add to it the information I have already given the House, namely that I had asked a consulting actuary to investigate carefully all the allegations made in the Financial Mail and to report to me, and that he reported to me that those attacks had no foundation.

Will you table that report?

The hon. member quoted at length here in regard to differences which are alleged to exist between the Registrar and some of his officials. I do not know whether that is a reflection on the Registrar or on the officials under him. I think there are also certain small differences of opinion in the hon. member’s own party, but one cannot go into that too much now. The hon. member also said that evidently the Registrar did not want to divulge to the Select Committee investigating the principle of third party insurance certain confidential information in regard to a particular insurance company. That was during the investigation made by the Select Committee, and I think that under the circumstances the Registrar was quite justified in not divulging to the Select Committee confidential information which he had obtained in his capacity as Registrar. I think the attack made by the hon. member on the Registrar was not only unfair, but also completely unjustified.

The hon. member for Pretoria (Central) (Mr. Van den Heever) also referred here to the rates of interest payable on some hire-purchase transaction and personal loans, and he insisted that steps be taken by way of regulation to determine what the effective interest should be. That is a very delicate matter. I mentioned it to my colleague, the Minister of Economic Affairs. I suppose the matter will be investigated further, but one of the difficulties is that so many terms are used to hide it. There is perhaps a commitment fee and other fees, all kinds of things which are not of interest. I do not know whether it will be very effective to take steps unless one is very sure of one’s ground. At the moment I cannot say anything further about it.

The hon. member for Karoo (Mr. Eden) made a plea for repayment, he called it, of what belongs to the taxpayers. I just want to tell him (that the main reason for the surplus of 1964-5 is not the system of P.A.Y.E., but the fact that there was such a tremendous increase in taxable incomes. The first year one could still to some extent have said that part of it was due to people who had now been caught up in the net, people who had not paid in the past. But I think under present circumstances it is more correct to say that it is only due to the tremendous increase in taxable income. Nor is it quite correct to say, as the hon. member did, that the taxpayer “is deprived of the surplus”, because if, for example, this year we were not able to use the surplus for the Loan Account, what would the position be then? If it is impossible to find all the money needed for the Loan Account on the open market, it will be necessary to impose a special tax for purposes of the Loan Account. The position, therefore, is not that the taxpayer now does not get the benefit of it, because if the money is needed it would, under other circumstances, have been necessary to levy a tax so as to be able to transfer this amount to the Loan Account.

The hon. member for Wolmaransstad (Mr. G. P. van den Berg) asked questions in regard to a monument of the State President. That is something which may be borne in mind. I want to point out that it is not the practice in republics to erect a monument of a president during his lifetime or during his term of office. I do not think that is the practice in republics, other than in the case of kingdoms, but I am quite prepared to devote attention to the point raised by the hon. member.

Vote put and agreed to.

On Revenue Vote No. 6.—“Public Debt”, R69,l 11,000,

With reference to the hon. the Minister’s statement that a large portion of the loan capital will have to be obtained from within the country this year, I also want to make representations to him in connection with rates of interest on Treasury bonds. The position is that in 1959 people were offered the opportunity to make investments for a five-year term. Those investments were at 5 per cent per annum, and at the end of that term, that is to say, in 1964, a further opportunity of investing money in bonds was offered. I just want to say here that the interest yielded by those investments was of course free of income tax, and that that was an incentive for people to make such investments. Upon the expiry of the term of the obligations people were offered the opportunity to reinvest in seven-year Treasury bonds. But in that instance the rate of interest was reduced to 44 per cent. Then it so happened that hardly a few months after the new seven-year investments in Treasury bonds had been made, there was a considerable increase in the general rate of interest in the country, and in some cases it increased to 6 per cent and more, as compared with the 44 per cent of the Treasury bonds.

My plea is whether the Minister will not consider increasing these rates of interest to at least 5 per cent as well, as was the case with the five-year Treasury bonds. That would also result in more capital being invested in these bonds. It would provide a stimulus for larger capital formation with the State itself. I want to ask whether it is not possible to pay attention to this matter.

I am afraid I cannot meet the hon. member. When it was 5 per cent originally and then became 4} per cent, we did not tell the holders of the 5 per cent bonds that we were now going to pay them only 44 per cent. There has to be some period or other. I do not know how far the hon. member wants me to go back, but one must have some period or other. We said that this series was not retrospective but was a new series. Where one invested in an old series one thought at the time that it was a very good thing to get this tax-free income; but since the general pattern of interest has changed, we cannot make all the existing 44 per cent bonds 5 per cent as well. If we adapted such a principle we would have to do so again next time. The people who have now taken out bonds at 5 per cent have entered into a contract with me. If they are entitled to 5 per cent I cannot change it to 44 per cent, and if I am entitled to 44 per cent they cannot expect me to make it 5 per cent.

Vote put and agreed to.

On Revenue Vote No. 8.—“South Africa House, London (Administrative Services)”, R869,000,

I will not detain the Committee, but I understand that under this Vote the hon. Minister’s Department is responsible for the maintenance of South Africa House. I should like to offer some constructive criticism. I am not criticizing the manner in which it is being maintained at present, but I think those of us who do visit South Africa House in London get the impression that there is not a warm atmosphere there. Compared with Australia House and New Zealand House, one does not get the atmosphere in South Africa House that it belongs to South Africa. In Australia House one gets the impression that it is Australia, New Zealand House is New Zealand. I think the reason is that in Australia House and New Zealand House they concentrate all that appertains to their own country. I would suggest, Sir, that the South African Tourist Corporation, which has its offices in Piccadilly, should be asked to transfer its offices to South Africa House. Our Department of Information is there at present and I think if the Tourist Corporation would come there as well, that would be another part of South Africa. Another one is the South African Airways Office. The Airways Office is in New Bond Street, another part of London, and one finds South Africans going along to the B.O.A.C. offices in Regent Street to book for South African Airways because of the co-operation between the B.O.A.C. and the South African Airways. Our banks as well could have their offices there. In Australia House and New Zealand House one finds representatives of their banking companies, all concentrated in their London Houses. I should like to feel that South Africa House is a rendezvous for South Africans in London, but to-day my impression is that there is a cold, unattractive atmosphere there that does not compare favourably with other countries.

I want to say to the hon. member that I appreciate his constructive suggestions that something should be done to give more personality, a more South African personality, to South Africa House. His other suggestion that this could partly be done by bringing the Tourist Corporation and the South African Airways Office there is unfortunately impracticable. The building is already too small. We have to rent nearby a part of another building to accommodate the over-flow from South Africa House. But I think it is a splendid idea that the hon. member has mentioned and an excellent opportunity for the rich corporations to try and create each in its own way an atmosphere that will make the South African visiting South Africa House feel that it is a warm place. We have just installed air-conditioning there and we have seen to it that the electric lighting system is also improved, but I think the hon. member is thinking more of the furnishing and the furniture and that that should not be of an impersonal character, but much more South African. If the hon. member can persuade some of his partners and friends to do something about it, I think it will be very much appreciated.

I agree entirely with the hon. member for Kensington. One feature which is striking about South Africa House is that all the officials there, or nearly all take lunch between one and two. It would not be a bad idea if a few of them would take lunch between twelve and one, so that there would always be someone there. If you go into South Africa House between one and two. you find that the only place you can go really is into the newspaper room. There you can sit and read if you like, but there are no officials about and you cannot get any information.

Why do you not have your lunch between one and two?

I often had no lunch at all, which is more than the hon. member can afford to do. I wish he would give a little thought to that. I feel that if I would have lunch as often as the hon. member my figure would get like his.

I will convey what the hon. member has said to the right quarters.

Vote put and agreed to.

On Vote No. 9.—“South African Mint”, R 1,130,000,

There is one figure here which seems rather big. It is under B: “Subsistence and Transport”. The general charge for transport has increased from R22,000 to R 139,000. It seems a very big increase and there must be a special reason for it.

As a result of the change-over to the new coins there will be a considerable increase in the transport costs in respect of both old and new coins, and that is why we anticipate that there will be a net increase of R116,450.

Vote put and agreed to.

On Revenue Vote No. 10.—“Inland Revenue”, R4,930,000,

Sir, this Department is responsible for collecting most of the country’s revenue. This year it will have to collect something like R724,000,000, and it is the Minister’s responsibility to see that the revenue is collected.

I want to talk about the fact that the Minister has neglected the staff position in the Department, which has fallen to a very low level through no fault of the officials. The hon. Minister gets up every year and suavely and smoothly tells us and submits to us that he is a very able Minister of Finance and then he produces enormous surpluses. But, Mr. Chairman, he cannot deny that he is aware of the staff shortages which are affecting the collection of the moneys due to the State, particularly those moneys to be collected under the income-tax laws. Knowing of these staff difficulties, one would think that the hon. Minister would get off his seat and give thought to methods of getting sufficient staff, and, as this presents certain difficulties at present, to give thought to the cutting down of the work that the staff available has to do. Any practical and sensible man responsible for a Department which has to collect an amount of R 724,000,000 would at all times be looking for ways to simplify the taxation measures in order to save work in the Department.

Let us have a look at what the Minister has done or not done in recent years. The Second Report of the Public Accounts Committee for 1963 shows that an inquiry into the extremely involved licensing laws in South Africa was started in November 1962. It is now April 1965. On page 29, paragraph 76 of this year’s Second Report of the Select Committee on Public Accounts, there is evidence that a report was submitted to the Minister in 1963. But as yet nothing has been done about it. I want to quote from the Second Report of 1964. Evidence was given in connection with licence moneys and the then Secretary for Inland Revenue (paragraph 303) said—

The Auditor-General referred to liquor licences. The Department has a handbook on licences which is issued to every office throughout the country. Every magisterial office has this handbook. The instructions in regard to the recovery of liquor licence fees for instance cover some 20 odd pages.

Then paragraph 319. He was asked: “How many different types of licences are there?”; the reply—

I do not want to dwell on this matter, except to say that in view of the staff shortage existing at the moment and the small amount of revenue involved (only R5,500,000), the hon. Minister has failed in his duties in regard to these licence difficulties. A tremendous lot of work has to be done there and a lot could perhaps be cut out. The hon. Minister should have acted and a large amount of work could have been taken off the Department’s shoulders. On the evidence given to us it looks as if it probably costs more to collect these licence moneys than what is brought in. The Minister should have forced the reports through and implemented it.

I want to turn to the more important subject of the collection of income-tax. In 1964, the then Commissioner told the Select Committee (paragraph 325)—

That was the 1964 report. In 1965, on page 39, the present Commissioner said—

One of the Secretary for Inland Revenue’s predecessors gave evidence before this Committee a few years ago in regard to the checking of assessments by his own staff. He told the Committee that they tried to issue assessments in the first place in order to bring in revenue. They realized that mistakes could have been made. Once the assessments had been issued, they would return to the checking of those assessments.

Then the Commissioner was asked whether the Department had a valley period. He replied—

The Minister should read the whole of this evidence to see in what an unfortunate position the Department finds itself. The evidence continues, for instance—

I could go on and on to read from these reports to show the difficulties that have arisen. There is no question about it that the position has arisen that staff shortages prohibit the checking of assessments, particularly those of provisional taxpayers who are, of course, the largest payers. I quoted the number of 311,000. The Minister cannot lay the blame for this on his officials. If anybody ever battled against impossible odds, it is these men. The hon. Minister has the power to help to alleviate the staff shortage. What has he done? Absolutely nothing! He has the power to simplify the taxes in order to reduce the amount of work. What has he done? Nothing!

Mr. Chairman, the present position is that many taxpayers are getting away with payments lower than they should make, and others are not getting refunds they should get. Every taxpayer is not an expert, and the Department has not got the manpower to check the assessments. Theoretically, of course, the more the Minister collects, the less the taxpayer has to pay, although it has not worked out like that in recent years. I want, to make a few suggestions to the hon. the Minister as to how to simplify and reduce the work of the Department. Why does he not repeal the undistributed profits tax? It only brings in R655,000, but it causes a lot of work. I know all about the tax loophole, but it must not be forgotten that this tax is intended to force companies to distribute profits, and that is against present policy. Why does the Minister not repeal the estate duty? It is estimated to bring in only £3,000,000, but it creates a tremendous amount of work. It is no good the Minister smiling. It causes much work, and the income-tax assessments are not being re-checked as they should be because of the shortage of staff. He would, too, be very popular with the farmers. He could also repeal the tax on the purchase and sale of marketable securities. It brings in R4,700,000, but again it will save a lot of work, and the Minister will probably get far more out of the re-checking of the old assessments of provisional taxpayers than he gets from this tax, because it must cost him nearly as much to get this money in as it brings in. This tax really hits the small man more than the man who goes in for big deals. I have already said that these taxes must cost almost as much as they bring in, and they would relieve the Department of a tremendous lot of work if they are repealed. If the Minister thinks he is going to fix up the staff shortage in a short time, he has another think coming. He must not wallow in his surpluses and just let things drift. The people who should pay should be made to pay. The streamlining of licences would save a lot of work, and I do not think that the Minister should take himself in hand. [Time limit.]

I appreciate the reply the Minister gave to my complaint about the unredeemed loan levy certificates. I was very interested in the comment the hon. member for Sunnyside made. He said the Government was like a father—“die Nasionale Party sorg vir sy kinders”. Well, I maintain that if that is true, then there are, so far as the unredeemed certificates are concerned, already 626,000 children born out of wedlock for whom this Minister is responsible—and they are increasing every year. Because, if you look at the figures, there has been a substantial proportionate increase every year in the proportion of the amount unclaimed to the total amount collected. In 1953 the proportion was under 4%, i.e. the unredeemed certificates, but in 1959 it rose to just under 50 %! Surely this shows the trend; it means in effect that if, during this current year, the amount of R13,000,000 is collected, the probability is that more than 50% of it will be unredeemed. The Minister said he was going to introduce a new method of dealing with this matter, but he qualified it by saying that it was not the duty of his Department to run after the taxpayer and to say: Here is your money back. I never suggested it was. We know it is not a legal obligation, but I maintain that in terms of normal business practice, as distinct from sharp practice, you do not let your client forget that he has a credit balance with you. I do not want to labour the point. Why is it that an ordinary trading concern which sends out, say, 20,000 statements a month, repetitively puts on the statement the amount representing the credit? I put it to you, Sir, that in this case, whether there is a legal obligation or not, the fiscus owes an obligation to the taxpayer, and the least obligation he owes him is to say: I hold R30.42 of your money which you have not claimed. The Minister knows it better than I do that in the case of the Guardians’ Fund (I am not very clear about the practice, but as far as I remember) every year a Gazette is published in which there are thousands of names of persons to whom money is owing which is awaiting collection; there are other cases like that. I maintain that whether or not it is a legal obligation, it is certainly a moral obligation of the Minister’s Department, since it has the right to spend some money, to make sure that everyone who is owed money should have a reminder from time to time, by advertisement, for example, or publication in the Gazette, or by the inclusion of the amount owing to the taxpayer on his assessment. Surely this is a moral obligation, which is observed by the most insignificant business concern, and certainly by all our financial institutions. They do it as a matter of course. It would be unthinkable for them not to do it. I sincerely hope that if I have made my point to the Minister, his colleagues will not diminish the value of it by saying he does not have to do it. The law is clear—he does not have to do it, but there is such a thing as a moral obligation. I want him to fork out that money as fast as possible. I think he is carrying far too heavy a burden as it is. He will not only shake one burden of some R20,000,000 off his shoulders, if he wants to make an effort, but the Minister will also ease his conscience, and then I hope that one day it will be possible for me to say of him what Carlyle says in “Sartor Resartus” about his character Teufelsdröckh—

I hope the Minister, too, can do that by getting rid of this burden of R20,000,00, as it will be this year (if not more) and pay it back to the taxpayers.

I will now deal with the reply the Minister gave me. If I understood him correctly, he said he would show a credit balance for the individual taxpayer to whom money was due on an unredeemed loan levy certificate. I hope I understood him correctly.

What I said was that instead of getting a certificate which entitles you to a certain amount, including interest, at the end of the period, they will now be credited in the accounts of the Department with the amount due to them.

Thank you, Sir. Now we have a very good start. They will be credited, as I am credited by my creditor. [Interjection.] I am shown this credit on my statement. If the Minister has started off by showing this credit somewhere in the departmental accounts, where is the difficulty in rendering that statement of account, reflecting that credit balance to the taxpayer? I hope that when the Minister replies he will indicate whether he intends taking the second step, which is the more important one when he has already shown the credit on the taxpayer’s account, whether he will take the next step, which is to render that account at some regular interval, say, every year, to the taxpayer when he assesses him, so that the taxpayer will know that if he owes the fiscus R130 for income-tax, he will be able to pay only the difference between R130 and the R30 which happens to be standing to his credit in unredeemed loan levy money.

That is an unnecessary amount of work.

The hon. member for Benoni explained that there was a great deal of work being done, apparently unnecessarily, in regard to far less important matters than this. I say again that I hope the Minister will say whether or not he intends to carry the matter to its logical conclusion, as far as the rendering of an account showing a credit to the taxpayer, is concerned.

My requests to the Minister will be far more modest than those of the hon. member for Benoni (Mr. Ross). All I want the Minister to do is to tell us something about P.A.Y.E. Two years ago I expressed some surprise, as it was the first year that P.A.Y.E. had been in existence, that he has not told the House something about how it was working and its implications. I was again surprised this year in the Budget to find that once more the Minister had remained silent about P.A.Y.E. except for one remark he made this afternoon, to say that a few people had been caught in the net of P.A.Y.E.; because there are some important matters that arise from it. P.A.Y.E. has now been in operation for two years, and I think we require a few explanations. I presume that after two years the machinery is now running smoothly. Last year the Minister told us that there were some R6,000,000 which would have to be refunded in respect of payments under P.A.Y.E. I should like to know from the Minister whether in fact that was the amount involved, or was the amount to be refunded more or less? Following from that, and to try to get a picture of what is actually happening to the taxpayer under P.A.Y.E., perhaps the Minister will also be able to tell us what he anticipates the position will be for the current year. Is the position changing so that the taxpayer will get more refunds in the future, or less?

In other words, is his return under P.A.Y.E. equating his tax, or is the difference on the minus side or on the plus side?

Something which concerns the public considerably is this question of refunds. I understood the position to be that in so far as the P.A.Y.E. payer was concerned, he would have a refund automatically. In other words, when his assessment is prepared at the end of the period, he would either be sent a debit for what he still owed the fiscus, or alternatively he would be refunded what he had overpaid.

I should like the Minister to clear up this point, because I have had a number of assessments brought to me which merely reflect a credit balance. The public wants to know that where they have overpaid under P.A.Y.E.— and I am talking particularly about salaried people—they will have a refund, and that the refund will be made expeditiously.

The other matter that is concerning the taxpayers is the question of married women. We know that there has to be a differentiation between the tables for married women and the male taxpayer because of the fact that she is really paying at the incremental rate, which is going to be alleviated somewhat by the legislation we will pass this year, but I would like to know from the Minister what is the percentage of refunds he has to make at the moment in regard to married women. Is he finding that the tables of the married men and the tables of the married women are such that in the ultimate the amount of tax paid by the husband and the wife is more or less equivalent to the total taxation for which they are liable, or is he having to make large refunds to the married women, or is he having to collect large additional sums from either the married man or the married woman?

The other matter we should like to have information about is the matter raised by the hon. member for Benoni. What has the experience been in regard to provisional taxation? Is the Minister finding that this is working smoothly and satisfactorily? Is he finding that the payments made—up to now the three payments and now the two—are equating to the amount of tax that should be paid, or are there large discrepancies between the amounts paid by way of provisional taxation and the ultimate taxation; and, if so, is he finding that there are over-payments or under-payments by the provisional taxpayer?

Then there is another question. I wonder whether the Minister will tell us, in the light of the experience gained, whether it will not be possible (and whether there is any reason why it should not be done) that the credit due to a provisional taxpayer should be paid to him. At present I understand that it merely stands as a credit to his account. I also understand— and I hope the Minister will correct me if I am wrong—that if there is a credit to your account, you can ask for a refund of that amount. But it seems to me that in the taxpayer’s relation with the fiscus, and provided that the system is now running smoothly and there are no administrative problems, it is only right that where there is a debit the taxpayer should pay it and where there is a credit he should be refunded his money. Perhaps the Minister will tell us whether the system is working well in regard to provisional taxpayers.

I know the Minister always says that I ask a lot of questions, but it is his own fault, because otherwise we cannot get any information. My last question is whether he is satisfied that the system of P.A.Y.E. and provisional taxation is running smoothly, or does it require further investigation and adjustment?

The other day, when the Minister was dealing with the loan levy, he said this—

I do not know whether the Minister has much knowledge of a computer or has seen one, because if he had I do not think he would have expected us to take that statement seriously. If his computer cannot take more than seven years, then I think the sooner he has an overhaul of the whole of his computer system the better.

You do not want more than seven years.

I give the Minister a good deal more than seven years. Surely the Minister knows that the whole basis is the system of programming. Those of us who served on the Select Committee which dealt with P.A.Y.E. know that the Commissioner of Inland Revenue indicated that he anticipated collecting a far greater number of people on to his register, and I am not blaming the officials if even their best estimates were exceeded. I submit that what has happened in the Department of Inland Revenue is that the original equipment they installed was inadequate for the purpose for which it was purchased, and there have been subsequent additions. Adjustments have been made from time to time. The hon. member for Parktown (Mr. Emdin) has already referred to the way in which they were dealing with credit balances, where in effect they were carrying forward the past tax and in addition to that taking into account the provisional payment made in respect of the following year. It necessitated re-designing of the forms. I submit that the time has come for the Minister to call for a complete investigation by outside experts as to the extent to which the present computer equipment is fulfilling the purpose for which it was acquired. The difficulty with the Department is, as the Commissioner quite correctly said, that there are no valley periods. They cannot let up. It seems to me that the Minister would be serving his Department best and would meet the staff difficulty best if he were to ask for an independent investigation, may be from another Government Department or from outside experts, to give him the best possible advice on computer equipment. The development and design of computers is not standing still. If the Minister inquires overseas, he will know that every computer which comes on the market to-day is out of date as soon as it comes on the market, because new ideas are already on the drawingboards. In my submission, the present computer equipment is inadequate. It has had to be added to from time to time, and it is desirable in the interests of the Department and of the State that the whole of the programming should be reconsidered and that the design of the equipment should be reconsidered so that not only will it meet the present demands but as far as possible, having regard to the experience of the past two years, it will also meet future demands, because the events of the past two years have shown beyond doubt that the present computer equipment was inadequate in the initial stages. Now that we have settled down and know the approximate number of cases there are on the register, it should be possible to have a reassessment of the whole position in the interests of the State and of the more efficient collection of taxation, and to free departmental officials of a lot of unnecessary work.

In reply to the hon. member for Pinetown (Mr. Hopewell), I can give him the assurance that if it found that the computer is not satisfactory we shall make evry endeavour to find a satisfactory machine.

The other questions that have been raised were the following. The hon. member for Benoni (Mr. Ross) has asked what the position is in regard to staff. I want to assure him that there is no so-called valley period, but although that is so the checking of assessments is still being carried out by the Department’s inspectors resulting in the collection of considerable amounts which have been under-assessed, and also the refund of amounts which have been over-collected. The cost of collecting the undistributed profits tax and the marketable securities tax, the repeal of which he suggested as a way of relieving the overwork, is comparatively low, and the repeal of these laws will not result in any appreciable saving in time. He has also suggested that we repeal the estate duty. He says it only brings in R3,000,000. That is R3,000,000 on Revenue Account, but if he looks at the Loan Account he will see that it brings in R12,000,000 there, according to the latest estimate. So I think the hon. member is about 500 per cent wrong. That is not really a constructive suggestion because even if those taxes were to be abolished, other taxes would have to be instituted to make up the deficiency. That is unfortunately the difficulty. It is easy to say that all taxes must be abolished, but then the hon. member will probably be one of the first to ask for new services, as he is now doing already. I am afraid that his suggestion of abolishing these taxes will not alleviate the staff position. That is an unfortunate position which is not confined only to Inland Revenue, but exists right throughout the service, and it is because we are in a state of over-employment at the moment. That is the main reason for it.

The hon. member for Parktown (Mr. Emdin) asked whether the P.A.Y.E. system was working satisfactorily. I think I can assure him that it is proving very satisfactory. The actual amount refundable, which he has asked me to state, can only be determined when all the assessments for 1964 have been issued. At the moment it is too early for that. The other question he asked in regard to husbands and wives who both work, there it is found that on the average deductions from their separate salaries are not sufficient to cover their tax liability. In the case of provisional taxpayers it is found that they are inclined to under-pay and that further amounts have to be collected on assessment.

The hon. member for Hospital (Mr. Gorshel) also came back to the point of the loan levies. Perhaps I should make it clear. The previous loan levies were redeemable only on production by the taxpayer of the certificate issued to him. Because of that, their individual loan levy accounts in the records of the Department were closed off upon the issue of the certificates. The new levy will be repayable automatically on expiry of the period as ultimately determined. The Department will therefore maintain an account for each taxpayer and will endeavour to keep that account up to date by recording changes in address, etc. This will enable it to repay the levy plus interest thereon as and when the time for redemption arrives.

Vote put and agreed to.

Revenue Vote No. 13.—“Transport”, R23,000,000 put.

Business interrupted to report progress.

House Resumed:

Progress reported.

I move pursuant to Standing Order No. 25:

That the House now adjourn.

I do so in order to discuss the question of unidentified submarines operating off the coasts of the Republic. Sir, for the past three to four months and even prior to that there has been a steadily increasing volume of reports of activity by unidentified submarines operating inside and outside the territorial waters of the Republic at various points along the whole perimeter of South Africa’s coastline from Angola in the West to the entrance of the Mozambique channel on the East Coast. Many of these reports are quite unofficial but in other cases they carry all the hallmarks of either inspired semi-official reports or some report which is based on official information but released unofficially, covering both the reported submarine activity as well as South African naval and defence action taken in connection with it. On the basis that there is no smoke without fire it must be accepted that some form of submarine activity is in fact proceeding along portions of our coastline. But in the absence of any proper official statement, the conflicting reports which are being circulated are not only confusing but are also creating a certain amount of justifiable anxiety amongst people of the Republic, especially those residing along the coastal belt. At this stage I want to quote very briefly one paragraph from the survival plan which has recently been circulated in the country, a survival plan with a foreword by the hon. the Minister of Justice, which says in the opening paragraphs—

I want to stress the point about information to the public. Sir, the situation regarding submarine activity is being made a little more confusing and difficult by the official barriers which prevent the newspapers of both language groups from dealing with this problem with the customary freedom with which they would normally act. Since this is a Defence matter they are subject to considerable restriction. The hon. the Minister of Justice in his foreword to this national survival plan booklet stated—

A little later on in his foreword he says—

I might say at the outset that I am in full agreement with the hon. the Minister’s statement. In fact, those are statements which we on this side of the House have been making over the past couple of years as a warning to the Government. But with the many reports of submarine activity which is significantly more concentrated along the Republic’s Eastern seaboard and the major strategic East Coast ports, particularly off the port of Durban and in the Mozambique Channel, and the detailed planning for National Survival as well as the recently publicized plans to mobilize the whole nation between 16 years and 70 years of age, it is natural that public anxiety is growing as to what is really happening. One of the latest and what appears one of the most authoritative reports on the activities of unidentified submarines was published in The Star on 10 April and was based on information obtained in Salisbury, Rhodesia. That report, although stated to be unofficial, stated in semi-official terms that submarines had been sighted and sometimes chased off Natal, Pondoland, East London and the Mozambique Channel, and that there had been more than 40 actual sightings of unidentified submarines off the South African and South West African coasts during the past four years as well as about 20 similar sightings off the coast of Mozambique. The report also said that most of the submarines seen off the coast of the Republic were the long-range Z-Class Russian submarines of about 2,000 tons displacement. Sir, it is an open secret that anti-submarine frigates of the South African Navy have on a number of occasions during the past six months been engaged on urgent anti-submarine patrols off the Natal Coast, in the southern approaches to the Mozambique Channel and along the coastline of the Transkei Bantustan as well as along the North-west Cape and the South West African coastline areas, from which these reports emanated. Reports have also been published of a submarine picked up by South African Naval frigates asdics off the Bantustan coast and making off to sea, outside our territorial waters, until contact was lost. Sir, all these reports add up to the fact that there is apparently some sub-strata of truth in the reports which have been received.

Sir. speaking for the official Opposition in what we believe to be the best interests of the Republic’s security we say that the onus to clarify this position by the issue of a responsible official statement rests squarely on the hon. the Minister of Defence. Such a statement, we believe, can be issued within the limits of the secrecy required for national security purposes. The Star report identifies the submarines off the Natal Coast as Russian-type-Z. If this is correct, I want very briefly to examine Communist Russia’s submarine strength as at the beginning of this year 1965. All told Russia possesses a fleet: of 30 of the latest nuclear type and 400 conventional type submarines, together with a fleet of plus-minus 50 repair and depot ships, repair ships which according to a report in The Star in some cases service submarines off our coast. The United Arabic Republic—no friends of ours—has 19 submarines, mainly of Russian origin, and is to a large extent assisted by Russian technicians in the manning and training of the crews. So Russia has 40 of the Z-type submarines which are stated to be operating off the Natal coast. They are among the most powerful long-range conventional type of submarines afloat to-day. They have a crusing range of between 20,000 and 26,000 miles. So it is well within their capability to spend some time off our coast, and go back home without ever having to put into a base. But they do have bases along the East Coast of Africa to-day. These submarines were completed between 1954 and 1960 so that they are by no means antiquated types of vessels. They have a surface speed of 22 knots and a submerged speed of approximately 18 knots.

The hon. the Minister of Justice in his statement warned South Africa of the risk of being subject to a missile attack. It is significant that since 1961 ten of these Z-type Russian submarines have been converted into ballistic missile carriers and are now armed with vertical launching tubes capable of being used for ballistic missiles, as well as eight of the conventional type torpedo tubes to take 21 inch torpedos. That is the type of armament one would expect raiders along the shipping routes of the world to use. When you examine the Z-type submarine you will find that they are actually a little larger in some respects than our own President-type frigates. The submarine has plus/minus a submerged displacement of 2,600 tons and is 295 feet in its overall length compared with a President-type frigate which has a deep-load displacement of 2,557 tons and an over-all length of 370 feet. But it has even gone further than the submarine only, Sir. In addition to submarine reports, reports are now also being received— one was contained in the same report which appeared in The Star from which I quoted— that buoys are now being anchored in deep water along various portions of the coast. It is a modern type of transistor buoy which is being developed by the navies of the world. It is a scientific weapon which one might possibly consider as the opposite number to the Telstar satellite from which information is derived from space. These buoys, anchored under sea, are able to transmit information back to vessels operating in their vicinity or at some distance away. It is quite within the bounds of possibility—they are being developed in that regard—that they can transmit back information with regard to the movements of ships and concentration of shipping in a particular area. Such information would be invaluable to any submarine under hostile conditions. They in turn make the task of our own navy just that much more difficult when it comes to fulfilling the job they have of keeping our coasts secure against any submarine interference.

The hon. the Minister of Justice, again in his statement—it appears that he has been in very close touch with the developments that have taken place—referred to the development in guided missiles. These transistor buoys are one of those technological advances which spring up almost overnight. They develop so rapidly that they can constitute a very serious danger.

I want to ask the hon. the Minister of Defence to take the country deeper into his confidence and to clarify the position regarding this statement of alleged submarine activities off the coast of the Republic. At the present moment it is anybody’s guess as to how true these reports are. But the statements are getting too frequent and too important to be ignored any longer. I ask the hon. Minister of Defence: Have submarines been sighted? Have they been detected underwater by our own vessels? If so under what circumstances and in what area of our coast? Is there any definite evidence regarding the reported laying of these transistor buoys or any other type of buoy which could be used for a similar purpose, to aid in any attack off our coasts? Will the Minister say whether in view of the joint commitments between ourselves and Britain under the Simonstown Agreement, has there been any consultation between this Government and the British Government or the British Admiralty in regard to this submarine activity off our coast? We are both concerned in the matter. During the last 10 years the South African taxpayer has spent something like approximately R 100,000,000 on the building up of anti-submarine defences under our joint Simonstown agreement, in the form of ships, aircraft and the training of personnel. We have the right and the taxpayer has the right to expect the Minister to keep them reliably informed as to whether the Republic is indeed getting full security value for this expenditure? Has the South African Navy been engaged in anti-submarine activity off the coast? And if so with what results? The responsibility rests squarely on the shoulders of the Minister of Defence to clarify the position. Any hostile power knows all there is to know at the present moment so that the Minister can tell this country quite a lot without divulging anything that those powers do not already know. The hon. the Minister of Defence is the Minister we look to and the country looks to for the information necessary to clarify the position, to set the country’s mind at rest and to clear up what is developing into quite a nightmare for quite a lot of people in this regard.

I agree with the hon. member for Simonstown (Mr. Gay) that all these rumours about submarines must have a disquieting effect on the general public.

I have on two occasions already made a full statement in reply to questions put to me in this House about submarine activities, but Sir, with your permission, I would like to read a statement I have prepared on the subject for the sake of record—

Ordinarily only the periscope and possibly a part of the conning tower of a submarine sailing close to the surface, will be visible. For this reason it would be difficult for a layman to distinguish between a submarine and other small objects on the surface.

From interrogations which have been carried out very systematically since 1961 it would appear that of all the reports up to the end of 1964, 34 were reasonably reliable reports of submarine sightings. This year, and more particularly during February, there were frequent reports about alleged submarine sightings, all of which, except one, came from our Eastern sea board. The exception being an alleged sighting West of the Cape Peninsula. In that month, 20 different reports were received of which some ten are considered to be reliable and positively indicated the presence of submarines. During March one positive report about a submarine was received and one less reliable.

Apart from the interrogation of eye-witnesses, the S.A. Defence Force normally follow up such reports by means of investigation from the sea and air by ships and maritime aircraft. On a few occasions radar and sonar contacts have been made. Owing to the time factor involved in moving equipment to the areas in which submarines were alleged to have been sighted, the problem of contacting a submarine with electronic equipment is indeed considerable, as the submarine, even when moving at slow speed, could be anywhere in an extended area. Furthermore submarines with their own devices can also receive timeous warning of approaching surface ships and submerge completely. In such circumstances, even if radar and sonar contacts are made, it is not possible to establish the nationality of the underwater craft.

The question arises as to what the purpose is of the submarine activity along our coasts. During the last war an enemy submarine did in fact land someone on our shores. With this in mind one may naturally fear that similar acts may now once again be committed against the R.S.A. As a matter of fact there is a rumour at present right here amongst honourable members that an unidentified submarine had landed some Bantu on the Transkei Coast recently and that the S.A. Police who investigated the case requested eye-witnesses to withhold this information from the Press. I can give you the assurance that the rumours about the alleged landing are completely unfounded. The Police who investigated the matter did, in fact, question the two Bantu who were alleged to have been landed by submarines. The two Bantu concerned were positively identified as two well-known Shangaans both herbalists, which effectively negated the rumour. The more likely purpose of submarine activities along our coast may be the development of a potential enemy submarine strategy. Intimate knowledge of the seas around our coast, its hazards and its currents as well as the topography of our coastline would, no doubt, materially aid efficient operations in time of war. One must bear in mind that sea communications are vital to the success of the conduct of a large scale war, hence the fact that potential enemies have already endeavoured to gain a foothold on vital lines of Western sea communications. For instance, the sea-route along the Northern seaboard of Africa has for years now been dominated by some countries closely linked with the Communist Bloc. Similarly Cuba is strategically well situated to influence maritime communications through the Panama Canal. The sea-route around South Africa is vital to the West and particularly so to the countries of the North Atlantic Treaty Organization, who all make extensive use of this route for trade. Effective disruption of the Cape sea-route in time of war must of necessity seriously impede NATO interests. Hence, I may say, that such submarine activities as we have established, although it may be directed against the R.S.A., they are obviously not solely for the purpose of neutralizing South African registered shipping, in time of war or for the landing of saboteurs, arms and equipment, etc., in peace or war.

The Government is fully alert to the position and patrols are carried out as far as it is within our power. If and when sufficient information is available, appropriate action will be considered in the light of international custom and international law.

I might mention that the Government is still endeavouring to equip our maritime forces more suitably in order to cope with the threat of potential enemy submarines.

Can the hon. the Minister tell us whether official communication or contact has been made over this matter with this Government?

I will come to that. The hon. member for Simonstown said that in Rhodesia there are certain rumours or reports about submarines along our coast.

No, I said that a newspaper report in The Star emanated from a report they had received from Salisbury in Rhodesia.

How they can know more about these things than we do, I do not know. I have given the full story of what we know about these submarines. As far as transistor buoys are concerned, I have no report to that effect. It has not been reported to me and I cannot tell the hon. member whether they are being laid or not.

Perhaps they did not want to worry you.

The hon. member for Simonstown also asked me whether there had been consultation between South Africa and the United Kingdom on this question of submarines. The hon. member knows that annually we have these Capex exercises.

That is something different.

No, those exercises are held to fight the submarine threat. We did not have them this year, but but we had them up to last year, and hon. members know why we did not have them this year. But this question of submarines is continually being discussed and that is why we have these exercises. [Interjections.] We do not contact them every time we hear about a submarine along our coast, but we are in continual contact with the United Kingdom about this question of combating the submarine threat. He asked whether the Navy had been engaged in anti-submarine activities. Of course, continually, as I have reported on previous occasions and again to-day. I want to state very categorically that the Government is well aware of the fact that there are submarines along our coast every now and again, but they are also along the coasts of all other countries in the world. We are no exception. I have had discussions on this question with men from all over. They just smile when I mention these things and assure me that there are submarines along the American coast and the coast of Europe. We are taking all possible precautions. I want to say that it is up to the West to support South Africa to keep the sea route in the Indian Ocean as clear as possible for the future, and we are trying to equip our maritime Air Force better and better for that specific purpose.

We are of course very glad to get this statement from the Minister to-day. We are only sorry that he has waited until now before making this statement.

That is not quite correct. I have spoken about it twice this year.

Those statements were very brief and incomplete. The complaint I have always had against the Minister is that, as far as defence matters are concerned, he tells us too little, and that when he does tell us, it is very often too late.

What happened because I gave information too late?

If he persists in that attitude I think he will be remembered in history as Jim the Silent. I want to join the hon. member for Simonstown (Mr. Gay) in pleading with the Minister to keep the public better informed and to take the public into his confidence more. It is very easy to do that in peace-time, when things are going well; in bad times it is absolutely essential for the Minister to do that, and it will pay him to do that. We saw what happened in the last war. When things were going badly with England, her Prime Minister never hesitated to give his people even the very worst tidings.

But things are not going badly with us.

We are constantly hearing about the cold war, which is a fact. This matter forms part of that cold war, and the public takes a particular interest in it, as does the Press. That is why one sometimes gets Press reports which bear no relation to the facts at all. It is because no official statement is issued. When there are such rumours going round, it will be a good thing if the Minister refutes them immediately. As far as this matter is concerned, it is good that the people know that we are exposed to threats, because many of our people think these things cannot happen to us. But they can happen, and it is just as well for the Department to keep the people informed. [Interjections.] In my opinion the public is not only entitled, but also expects, to get this information at all times. If they know what the true state of affairs is they will not become panicky in the event of trouble. Take the people into the Government’s confidence and they will assist the Government and not become panicky if trouble should arise.

Discussion having continued for half an hour.