Mr Speaker, I do not actually want to comment at this stage on the announcement the hon the Minister has just made, except perhaps to remark that as a body these regional services councils have probably experienced the worst birth pangs of any constitutional body in the history of our country. It is not always clear to us whether these bodies are ever going to be established.

I do not think the hon the Minister of Finance has any reason to expect me to congratulate him on the Budget. Consequently, I move as an amendment:

1. (1) it fails to combat inflation properly;
2. (2) the Government is unable to curb the increase in personal tax in real terms resulting from fiscal drag;
3. (3) the Government is unable to manage its affairs in a disciplined way within the limits of the budget;
4. (4) the Government is in increasing measure utilizing loan capital to cover current expenditure; and
5. (5) by pursuing the policy of increasing redistribution of wealth, the Government is promoting socialism.”.

If one has to look at the Budget as a whole in the short time at one’s disposal there are certain problem areas one would like to single out.

I should like to refer to some of them. In the first place we are of the opinion that the present growth rate of our economy is too low, not only at the present moment, but also in the recent past; that the inflation rate is unacceptably high; that Government expenditure is not under proper control; and furthermore that owing mainly to South Africa’s international debt position, everything possible must be done to protect our balance of payments position …

But that is not true.

I do not think the hon the Minister heard what I said.

I heard.

I said we must protect our balance of payments position at all costs to ensure that a favourable trade balance is maintained.

Not at all costs.

We also have an increasing unemployment problem.

When we consider the growth rate, the credibility of the hon the Minister’s predictions and the estimates he made in the past, I want to refer specifically to the predictions he made last year. One then sees that last year the hon the Minister said that compared with an increase of 5% in 1984, the real GDP for 1985 as a whole had dropped by approximately 1%. He went on to say:

That is what the hon the Minister predicted to us.

He went on to explain the objective of last year’s Budget to us as follows:

The hon the Minister therefore predicted a growth rate of 3%. He indicated that the Budget proposals he gave us last year, together with the monetary measures which were introduced, would be sufficient to achieve that target.

Now it is rather surprising that when we read this year’s Budget speech, we found that the hon the Minister, having referred to the prediction he made last year and after giving his new review for this year told us, in the first place:

What rather surprised me was that the hon the Minister said in the same Budget speech that last year’s growth rate was not 3%, as was expected, but 0,7%.

Now we find that this year the hon the Minister is again telling us that he is proposing a “moderately expansionary Budget”. He is again telling us that he expects a growth rate of more than 3%. I think it is not only the credibility of the predictions which is at stake but also the credibility of the hon the Minister. If we look at the objective the hon the Minister set last year, we find he told us that his objective in the Budget was to restrict the deficit before borrowing to less than 3% of the GDP. As a matter of fact, in last year’s Budget the hon the Minister budgeted for a deficit before borrowing of R3,944 billion, or approximately 2,7% of the GDP. Together with loan redemption he made provision in last year’s Budget for loan facilities of approximately R5,5 billion. What was the eventual position? The deficit before borrowing did not stop at R3,9 billion. It rose to R6,1 billion, and it was no longer 2,7% of the GDP, but rose to 4,1% of the GDP.

The hon the Minister is budgeting in the current Budget for next year for a deficit before borrowing of R8,4 billion, or 4,7% of the GDP, which in actual fact means an increase in the deficit of 36,1% in one year, as he himself indicated. This means that together with loan redemptions, finance must be found for R10,89 billion, or an increase of 22,1% on last year’s amount. Then one asks oneself how wide of the mark the hon the Minister is this time.

We are now dealing with the Budget and it has not yet been agreed to. Unfortunately.I could not get hold of Friday’s Gazette. They told me it had not yet arrived in Cape Town, but I do not know whether they told me the truth. Consequently I must unfortunately use the report which appeared in Sunday’s Sake-Rapport. I am not inclined to believe Rapport in every respect, but the best part of Rapport is Sake-Rapport. The headline of this report in Sake-Rapport was: “Styging in Staatsbesteding neem af”. What is, however, the actual position according to Sake-Rapport’s version of what appeared in the Gazette with regard to the expenditure and revenue for April and May? The report reads:

However, the report in Sake-Rapport goes on to say:

The problem is that no one in South Africa believes what appears in the Budget any longer, because for years now it has been proved year after year that the Ministers’ figures are incorrect. It is expected that this will again be the case this year. From the financial comments in a wide variety of financial publications it is clear that the most informed economists are of the opinion that the hon the Minister will again be wide of the mark as regards his projections, both in respect of revenue and expenditure. One commentator wrote:

If there is one matter which is causing me concern, it is the drastic decline in the expenditure on capital projects in our country, in contrast with Government spending on current expenditure. When one finds that capital expenditure by the State has declined from approximately 35% in 1980 to approximately 12% last year, if I have calculated correctly, and that we are experiencing a further decline this year, one becomes concerned. Whereas last year capital expenditure of approximately R5,086 billion was budgeted for, this has declined to R4,6 billion this year, and it has declined even more as a percentage of the total Budget.

What is also alarming is that the financial obligations incurred by the State are not in all respects reflected fully in the Budget in front of us. I want to refer specifically to the obligations we have incurred in respect of the TBVC countries. In the Foreign Affairs Vote certain amounts were announced as being budget aid to those four countries. There are, however, certain things which are not specified in the Budget. Perhaps we could have a short discussion on the way in which those four countries’ budgets are financed. In addition to the budget aid, which largely comes out of the South African taxpayers’ pockets, we also stand surety for loans incurred by the governments of those independent states. The magnitude of those loans—we stand surety for their payment, and it is not unlikely that we will end up paying them—are not reflected in the proposed amounts in our Budget. In view of the fact that the information given to us is that the loans of those four countries will total approximately R620 million in the current financial year, we are getting a different picture.

That is why it is alarming, apart from the fact that expenditure on capital projects as a percentage of the total Budget has declined dramatically, that we now also have the phenomenon that current expenditure by the State is being financed to an increasing extent by loan capital.

I listened to the arguments of the hon the Minister when he said that the classic definition of capital expenditure was not quite correct. He preferred to argue—I assume there are other hon members and parties in this House who would also like to adopt this line of argument—that to a certain extent expenditure on inter alia education should not be seen as current expenditure because it is ostensibly an investment in the future. To a certain extent one can agree with that argument. There is, however, one provision, namely that if one spends that money on education, in order to allow people to gain higher qualifications, this can only be seen as an investment for the future if at the end of the day there really are employment opportunities for those trained people, so that they will be able to make a contribution to the economy. We argue that it is senseless to provide training for people if in the long run there are no employment opportunities for them.

For that reason we are of the opinion that a proper balance must be maintained between the two aspects. The expenditure on the training of people—I am not only referring to school or university education, but also to technical education—must therefore go hand in hand with the creation of employment opportunities.

Allow me to refer briefly to another matter, namely the increasing portion of the State revenue which must be financed by personal tax. During the election we saw inter alia a pamphlet of the hon the Minister’s party in which the voters were told that things were not that bad; after all, the marginal level at which tax is paid, is adjusted from time to time and has been increased since 1973 from R28 000 to R60 000. But if one takes a closer look at that level, one notices that if it had kept pace with the rate of inflation, it should have risen from R28 000 in 1973 to R82 000 in 1982 and to R143 000 this year.

[Inaudible.]

I cannot hear what the hon the Minister is saying.

Are you advocating this?

Realistic adjustments must be made and our standpoint is that the present rate is not realistic. We find time and again— it has almost become one of the clichés—that so-called privatisation has now become one of the best solutions to our economic problems. It is a solution to many matters, but I believe that one of the most practical and effective solutions would be for a larger part of the economy’s actual revenue to be privatised again, and not taken up by the State and then spent by the State. We could argue about the best way of stimulating our economy because it is battling to get into its stride. Is it expenditure by the State with deficit financing, or must one leave more money in the hands of the individual taxpayer. Hand in hand with this there is an inflation rate which has almost become endemic and simply cannot be brought down. I am worried that the present level of the inflation rate, which is hovering between 15% and 20%, or even a little more, is beginning to be accepted as the normal standard by all interested parties in the South African economy—ie private enterprise, investors, entrepreneurs and speculators. One of the big problems in the economy is that the inflation rate has not only become customary, but in addition the fact that it simply cannot be brought down will cause any private investor and anyone who has anything to do with the business world of necessity to take this inflation rate into consideration and almost consider it as a given fact.

We therefore blame the State and in particular this Government for being unable or unwilling to do anything about this inflation rate. When one asks what the main reason is for South Africa’s high inflation rate one finds that the previous Minister of Finance gave us the answer years ago. He said in Canada that the main reason for South Africa’s present inflation rate was the so-called “narrowing of the wage gap” without a corresponding increase in productivity. In addition there is the Government’s new-found policy of redistributing the wealth of South Africa among the various population groups as quickly as possible. [Interjections.]

On Friday I listened attentively to the hon member for Yeoville. In their efforts to achieve parity between all the groups, the PFP is honest and they tell the voters of South Africa that this will of necessity result in the Whites of South Africa having to make certain sacrifices because in the medium term the South African economy will simply not be able to raise the standards of the Third World component, which is lagging behind, to the same level as that of the Whites. It will therefore obviously be necessary, if one wants parity, to lower the standards of the Whites so that they can meet each other somewhere along the way. We therefore want to ask the Government if it will not be honest with the voters of South Africa for a change. Will it not tell them precisely what it is contemplating as regards the so-called redistribution of wealth?

If I may be brief, what South Africa needs under the present circumstances is a really conservative fiscal and monetary policy which should be subject to strict discipline. I believe it has again become necessary for the Appropriation Bill to become a law of the land in every sense of the word, after it has been agreed to, without it being possible to exceed it at will by overspending and at the end of the day legalise this by means of an Additional Appropriation. We have become used to not attaching more importance to the Budget proposals and proposals in respect of expenditure of the hon the Minister of Finance than that of being general guidelines for what he is striving to achieve, but not actually achieving in the long run.

I want to refer to one small item. I did not intend to discuss farming today; we discussed it yesterday and I think we will discuss it further during the Agriculture Vote. The hon the Minister has seen fit to withdraw the rebate allocated to the farmers of South Africa in respect of the levies on diesel oil and in this way obliging them to pay that levy as well. They can claim it back later.

Are you opposed to that?

Yes, I am opposed to the method. In the present financial position of the farmers, most of those farmers must buy fuel on account from their co-operatives. A large amount of interest must be paid on that debt. As we know the State administration we wonder how long it is going to take before the farmer gets back that money from the State.

Surely, the co-operative can claim it back. The cooperative paid for it, after all.

Is the co-operative going to pay the levy and is the farmer not going to pay that levy to the co-operative?

Who is legally responsible?

Who is legally responsible? I would appreciate it if the hon the Minister could reply to this.

I am grateful that the hon the Minister of Constitutional Development and Planning is here. In the interests of my own constituency and its main town, I want, in conclusion, to touch on a matter which we will not have the opportunity to discuss again soon.

Last year I was informed that the Bantu Affairs Commission had completed its final report on the consolidation of KaNgwane. Time and again I made enquiries on the future of the main town in my constituency, viz Barberton. I could not get a reply. At the beginning of this year during the first session—I think it was during the No-Confidence Debate—I specifically asked the hon the Minister of Constitutional Development and Planning: What is the future of Barberton? The hon the Minister’s reply was that the recommendations had been referred back for further investigation. But the voters telephoned me from my constituency on Friday with the alarming news that the Swazis of KaNgwane maintain that Barberton has now finally been promised and allocated to them.

Cas, you are gaining independence!

I want to know from the Government whether there is any truth in those rumours. In February the hon the Minister told me that we must wait. But we want to know now, because it has tremendous personal and financial implications for the people of the town and its environs. Or must we now accept that we have reached the stage when the Whites are the last people to be consulted on their own future? [Interjections.] Are they the last people to be consulted and are they then simply notified?

They are not being consulted at all.

When I ask the hon the Minister whether Barberton is going to be incorporated in KaNgwane he need only answer yes or no.

You know that the proposals will be advertised and the process will then proceed. How can you tell such an untruth?

The hon the Minister must simply tell us what the recommendations are and what he is prepared to accept. Is he prepared to accept Barberton being incorporated in KaNgwane or not?

When the proposals are advertised you can find out for yourself.

I think they had better make Stoffel the Minister.

I want to give the hon the Minister the assurance that I can read and that I will read the proposals, but I just wish the proposals could be published now. I am accusing the hon the Minister of deliberately not publishing the proposals before the election, because it was not politically expedient for him to do so at that stage.

Are you opposed to partition?

No, I am not opposed to partition, but there are not two Swazi nations in Southern Africa; there is only one and their home is Swaziland.

He does not know that.

The hon member would not know that. The aim was to incorporate KaNgwane in Swaziland.

This Budget is unacceptable to us for the simple reason that it has not and will not come up to expectations. For that reason I had no choice but to move the amendment.

Mr Chairman, I rise in support of the Appropriation, but before I come to that, I just want two aspects placed on record. I want to thank all members of the Standing Committee on Finance, jointly and individually, for their participation in the discussion of the Appropriation.

†They were effective and positive in their discussions and deliberations and I thank them for their support. I also want to express my gratitude and appreciation to the hon the Minister of Finance and to other hon Ministers and Deputy Ministers who attended the discussions as well as to officials of the various departments.

*Yesterday evening the SABC reported, in its news broadcasts, that in its report to the House of Assembly the committee had, inter alia, said the following:

I just want to point out that that is not quite correct. The correct text in paragraph 6.2 reads as follows:

I hope that will be corrected.

I listened attentively to the hon member for Barberton.

It was a very good speech.

Yes, it was very good, but unfortunately the facts were incorrect. [Interjections.] Let us examine the facts mentioned by the hon member. He assessed the hon the Minister’s Budget in terms of his own background and history, and I shall be coming back to that aspect. At this stage, however, I just want to refer to what precisely the hon member said. He made a statement about credibility and said no one believed the Government any longer. He said that no one in South Africa attached any credibility to this Budget any longer. The hon member proposed that we take note of what the media, in general, had to say about this. Very well, Sir, let us then do so. I am referring to the Supplement of Die Burger of 4 June of this year. [Interjections.] No! Just wait a minute! Die Burger is not speaking for itself. Hon members must first listen to who is doing the talking. Mr Rob Lee, chief economist of Old Mutual, spoke to the economics staff of Die Burger about the significance and consequences of the Budget. This is his opinion:

That is the first aspect on which Mr Lee expressed his opinion. Let us, however, take the matter a little further. The hon member for Barberton advanced the argument that it was too heavy a tax-burden that the hon the Minister was now placing on the shoulders of the South African taxpayers, that it could not compare with that in other countries, etc. I should now like to quote from the first issue of Economic Impact of this year. In this report the marginal tax rates are indicated for income limits of $12 000 and $6 000 respectively. They are again subdivided into rates in regard to low-income economies, middleincome economies, upper middle-income economies and, last but not least, industrial market economies. For the purposes of the argument we can accept that we lie somewhere in the middle. I made the necessary comparisons. The following three are countries with an industrial market economy: Ireland, Japan and the USA. On an income of $12 000, the amount paid in tax is 35% in Ireland and 14,7% in South Africa. On an income of $6 000 the tax in Ireland amounts to 35% and in South Africa to 5%.

On an income of $ 12 000, the tax one pays in Japan amounts to 25%, as against 14,7% in South Africa. On an income of $6 000, in Japan one pays 4% as against the 5% in South Africa. On $12 000 one pays 12% in tax in the USA, as against 14,7% in South Africa. That, Sir, is not bad at all.

When one takes these figures into account, one finds that with the present circumstances in which the taxpayers in South Africa find themselves, this country is one of the most well-balanced of countries in the world as far as individual taxation is concerned.

Let us, however, look at one of the solutions the hon member for Barberton has proposed. He said we should privatise. Surely it is the policy of the NP Government to privatise That is, after all, something which we have been engaged in for a long time now and with which the hon member for Barberton and his party are not prepared to support us. Let us just put a question to him. If we were to privatise the beaches, would he agree to that? Would he then agree, and also support, the free-market system prescribing that the beaches should then be subject to free-market rules and regulations and be subject to open competition? He need only answer yes or no.

Go on with your speech!

Very well, Sir. I now ask the hon member whether he would agree with our privatising the Airways, which would then also operate in accordance with free-market mechanisms. Let me go even further. Would the hon member agree to having railway transport made subject to the rules and regulations of the free-market system and the mechanism of free competition? If he were to agree to that, we would do it. This Government has committed itself to doing so; to doing so in a fair and regulated manner. It would then be done accordingly.

Now we come to a further point raised by the hon member for Barberton. He said that the Government should tell the people what this was all about. He wanted to know what plans we had for the redistribution of wealth in South Africa. He wanted to know what plans the Government had for reaching parity as far as incomes are concerned. I categorically want to tell the hon member today that we on this side of the House have never said that parity should be achieved merely for the sake of parity. The NP has always been in favour of equal salaries while retaining equal productivity. That has always been the policy and the approach of those of us on this side of the House.

What is the situation in practice?

Yes, what are things like in practice? [Interjections.]

Sir, allow me to state here today, as an individual, that if the redistribution of wealth in this country were to mean that the White section of the population needed to work harder, I would have no problem with that. If it were to mean that my people would have to make a greater contribution, I would have no problem with that. Accepting parity, with the concomitant productivity as a condition, means that everyone will be compensated in accordance with the contribution he makes. I have no problem with that either.

I should like to come back to the Budget. I think that in all respects this Budget is one that is out of the ordinary and remarkable.

Firstly, it is out of the ordinary because it follows so closely on the heels of the mini-Budget, in which a large number of tax concessions were made.

Prior to the election.

Yes, well, we shall be coming back to that, particularly when I come to the hon member for Yeoville.

Secondly I want to state that it is remarkable because it is such a normal Budget in the midst of extremely difficult circumstances in this country, placing virtually no additional burden on the shoulders of the taxpayers. Let us just think, for a moment, of the abnormal circumstances in which this country finds itself at the moment. I want to mention the following relevant aspects which have made extraordinary demands on the country and on the hon the Minister of Finance. Firstly it is a fact that there is a state of emergency internally. As you have heard in the Budget debate, Sir, an additional amount of millions of rands has been appropriated for the security forces which have to protect the country’s people against revolutionary forces. Is the hon member for Barberton opposed to that? Are any of the hon members sitting there opposed to that? Surely we agree with that. That is not a point of dispute, is it. Secondly sanctions and boycotts are increasingly been applied against South Africa, creating problems for our imports and exports, problems we have to endure as one of the most important trading countries in the world. Let us examine the Budget again—one would say that sanctions and boycotts did not exist. Is that not a point in the hon the Minister’s favour? Do the hon member for Barberton and I not agree about this? Again let him just say yes or no, because surely we do agree about that.

Thirdly, owing to false impression of conditions in South Africa created in the outside world, a debt standstill had to be announced in regard to South Africa’s indebtedness to Western banks. The problem—I congratulate the hon the Minister on this—was dealt with so satisfactorily by South Africa, so much progress having been made in repaying the debt, that exceptionally favourable conditions for future repayments could be negotiated. In this case too one would never say, looking at this Budget, that there was any problem. I think we all still agree. Fourthly, in a large portion of South Africa agriculture was forced to its knees by severe droughts, requiring not only normal drought aid to farmers, but also a complete restructuring of agriculture in many parts of the country. For this the Government is making ample provision by granting farmers almost R1 billion in aid. Do we disagree about that, Sir? There is no reply to my question. I therefore take it that we are all still in agreement.

Those are four factors, but I want to add a fifth one. I want to mention the fundamental aspect of the Budget, which is truly remarkable in the prevailing circumstances, and that is that the Government has seen its way clear to budgeting, in such difficult circumstances, for a relatively large deficit before borrowing. Even if one were to disregard altogether the other four factors I have mentioned, this is still the one single factor that makes South Africa’s enemies green with envy. I think we also agree about this.

All these factors, jointly considered, make it clear that the Government has drawn up a Budget which attests to marked confidence in the inherent strength of the South African economy. This Budget shows the critical, prejudiced and poorly-informed outside world that South Africa and its economy are much stronger than they thought. What is more important, however, is that the outside world is also being told, as in the story of the three little pigs, that they can make all the noise they want to, but it will take someone doing to blow our house down. Having looked at the whole broad spectrum of the media, I could not really discern any criticism there. I did have some criticism from the hon member for Barberton, it is true, and also from the hon member for Yeoville. The hon member for Barberton said it was a bookkeeping exercise. Such a standpoint merely indicates that the hon member for Barberton was not listening carefully when the hon the Minister of Finance delivered his Budget speech. If he had listened, he would have heard the hon the Minister giving an explanation of the contributions made by the Economic Advisory Council of the State President. He would also have heard that the Budget as a whole was cast in the mould of a five-year strategy which has already been worked out, and he would not have made such a ridiculous statement. Nor would he have said it was a book-keeping exercise.

One should now see where the hon member obtained his facts. We must assess him on his history and on that of his party. In Kolskote of 6 May it is stated:

That is correct, is it not? Surely the hon member accepts that. He is the chief spokesman on finance, and he probably assisted in the drafting process, or did the hon member for Brakpan lend a helping hand?

I always lend a helping hand.

I know he does not know much about finance, but I was just asking.

What are the facts? If one looks at the facts, one sees that in that period—ie the first six months—over-expenditure totalled a mere R51 million. Here the figures do not tally, and their facts are therefore inaccurate. That hon member knows that when one goes to court one’s hands must be clean, or else one loses one’s case by default. So if he accepts these facts, he surely cannot level any accusations at the hon the Minister. He knows they are wrong.

If one goes further and examines the year as a whole—ie from April 1986 to March 1987— one sees that the overspending totalled an amount of R2 236 million. So their figure is still inaccurate. So what happens to the hon member’s credibility if one judges him on this? Surely he has no credibility left.

I now come to the hon member for Yeoville with whom I just want to have a brief discussion. In the second part of his criticism he says the Budget was a “non-event.”

†Of course it was a non-event, but for whom? Only for him. Why?

*Prior to the election he said: “Now we have had the sweets. The medicine will come later.” Then there was the election—the results gave us more “sweets” to eat—and then the hon the Minister introduced his Budget. The “non-event” was the fact that there was no increase in taxation. So there was no medicine. I sympathise with the hon member for Yeoville in its being a “non-event”, but it was only a “non-event” as far as he was concerned. [Interjections.]

If I read the Budget in conjunction with the hon the State President’s Opening Address, which forms an integral part of the Government’s economic policy for the year ahead, it confirms the following aspects for me: Firstly, that it introduces an unequivocal policy for the recovery and growth of our country’s economy; secondly, that law and order will be maintained; thirdly, that we shall plan in accordance with a long-term strategy—in fact, the five-year expenditure plan of action, launched in the Budget, is welcomed as a new strategy embodying exceptional benefits for the future; and fourthly, the attention to unemployment, the limiting of the money supply and the combating of inflation are positive factors in this Budget which enjoy top priority and cannot but bode well for the future.

I should like to dwell on one point for a moment, and that is the announcement of the now popular “granny bonds”, as they are called. They are welcomed and are generally accepted, and they have met with popular acclaim. The dangers inherent in this concept will, I believe, be tempered by the Government, and control will be exercised. For that reason I want to express my thanks and appreciation to the hon the Minister. I welcome that piece of good news he has announced for our senior citizens.

If one looks at the overall picture, it is no wonder that Prof Brian Kantor, even a month or two ago—ie prior to the election—gave a forecast in which he said he foresaw that before the end of the year the inflation rate would perhaps be less than 10%. I think there are few economists who would agree with him, but one should nevertheless accept that Prof Kantor is an economist of high standing, of high calibre. As far as I am concerned this confirms the important point that what he says as an economist reflects the confidence he has in both the Government of the day and the hon the Minister of Finance in particular. That is why he could make this prediction even before the Budget speech was delivered.

It is said that the importance of a budget lies not in the speech or announcements made by the Minister of Finance on budget-day, but in fact on the situation approximately six months later. This means that what is more important is whether the Government of the day has managed to implement the announcements which were made, the scenarios which it drew up and the possibilities and controls which it proposed. That is why it is important for us to regard the Budget of 1987 against the backdrop of what has happened in the past.

Over the past three years since the hon the Minister of Finance took over this portfolio, his record attests to success, and we are proud of him. In this short time he has already indicated that he holds to his predictions and to what he has budgeted for. I know that the hon member for Yeoville, like the hon member for Barberton, will say that he has exceeded the Budget, but let us look at the percentages, the perspectives, the controls, the circumstances and the limited freedom of movement. Having done so, one must congratulate him on the success he has achieved, and that is why we have sufficient confidence in the fact that this year we shall make further progress in regard to controls and financial discipline.

Since we are searching for political solutions for this country, let me make the following statement today: It is my considered belief that a successful political solution in the RSA will have to be preceded by a solution involving a monetary, fiscal and economic structure and a policy allowing everyone in this national economy to share in the prosperity of this country. Good fortune, money and prosperity are not colour-orientated. They are measured by happiness, and not by any other factors, such as colour. It is therefore very important for us to revert to the principle that one man, one meal should have priority over one man, one vote. Nowhere in Africa can we find an example of a political dispensation we can adopt as a model, but there is, in fact, one very good lesson that Africa teaches us day in and day out, and that is that where there is no prosperity, there can be no stable political dispensation.

It is with great expectation that we await the publication of the Margo report and the Government’s reaction to it. I believe that the other trend of thought, ie that the Margo report should first be published and then debated, is wrong and that certain basic guidelines should be laid down by the Government before we can participate in a further debate. Nor do I believe that this will be the end of it, because I believe that the Margo report will form the basis for a workable new fiscal system which we shall be able to refine and adapt even further over the years so that at some later stage it may form the basis of a new political system which would satisfy the entire heterogeneous population of our country. I therefore welcome the expenditure of 19,6% on the Education Budget and 22,4% for the Department of Planning. I welcome all these items as investments in the future of South Africa.

I should like to come back to the CP’s economic policy.

There is no such thing. [Interjections.]

They do have an economic policy. I want to know from the hon member for Barberton whether he accepts the erstwhile policy of Dr Malan and Dr Verwoerd. Surely that cannot be faulted, because it is correct, is it not. Do one of the hon members want to help me?

With adjustments! [Interjections.]

The hon member Mr Derby-Lewis says this should take place with adjustments. We shall probably be listening to the hon member’s speech in a short while and we shall probably also hear about the adjustments.

As far as the CP’s economic policy is concerned, in the second point in Kolskote, the CP’s April 1987 manifesto, I read the following:

When the hon the Minister of National Education said here yesterday that there was, in fact, a motion dealing with farmers, the hon member for Lichtenburg replied by saying that we had not mentioned the White farmers and that they were only speaking about the White farmers. On the strength of that I now want to ask why, in their manifesto, they say that the CP believes in the free-enterprise system. Does that apply to everyone or only the Whites?

Those in the White Republic of South Africa.

What is the CP going to do with those non-Whites remaining in the White Republic of South Africa?

We give them their rights in their own countries, as you know.

The hon member for Randfontein is on record as having said that 10 or 15 years after the CP came into power— may it be in the next century—approximately 70% of the non-Whites would be in the homelands. What is the CP going to do with the remaining 30%? Are they going to share in the system of free enterprise or not? Is that adjustment also going to be made at a later stage?

We shall talk about that later.

Very well, I now want to refer to point 3 of their manifesto:

Let me now ask that hon member again whether he has already made the adjustment. Is this open to everyone or merely to certain people? [Interjections.]

In connection with point 5 in their manifesto, I now want to seek some advice. It is stated, amongst other things:

I accept that. Would the hon member for Barberton, however, or any other hon member of the CP who is yet to speak, tell us what growth-rate percentage—as the ideal, steady growth rate—they will be pursuing? If they could give us that figure, we could debate further on its practicality or non-practicality. As the Official Opposition, which must form the alternative government in this country, they are bound and compelled to be specific. They cannot do what they have done in the past, ie confuse us with vague generalities. They will have to present a specific solution. That is why I am again asking them what their proposed growth rate is. [Interjections.]

Let us go further and quote point 7 of their manifesto:

I agree. Again there is something I want to know. In the Public Service there are people from various population groups and races. Does parity apply to all of them, or is the CP going to draw a distinction? When they reply, I should also like to hear whether they are going to accept an index-linked increase. The hon member Mr Derby-Lewis could probably answer that for us.

The last point in their manifesto reads:

In that regard we should also like to have certain particulars and explanations.

I think you should be coaching Province.

I am now going to coach Province, because there is a final question I should like to put to the hon member for Brakpan. The CP said the NP was the party that wanted to clash with everyone. Apparently we cannot get along with them and with a few other people, whilst they have never clashed with anyone. They did not leave of their own accord, but were kicked out of the NP. They did not clash with the HNP or with anyone else. I just want a little clarity, however, about the little article entitled HNP gebruik Indiërs teen KP which also appeared in Kolskote. I quote:

That sounds to me like a clash. Am I wrong?

I should like to make a final point. I should like to talk about farming, as seen from an urban-dweller’s point of view.

It is said that there are 60 890 farmers in South Africa. In contrast we have 25 980 000 urban-dwellers.

I now want to go along with what was said yesterday, what has been said today and what will be said about farming tomorrow. I am referring to the fact that it is essential that farming be examined and accorded certain benefits. On the other hand, from an urban-dweller’s point of view one must remember that food prices and the increase in food prices are going completely out of kilter. Urban-dwellers can no longer deal with, absorb or afford these increases.

Now the following point is made: 0,9% of the farmers in the RS A contribute 15,9% of the total gross revenue; 27,5% of the farmers are responsible for 73,8% of the gross farming revenue; 6%, in other words 3 650 farming units, contribute 40% of the total gross farming revenue.

In contrast we have the encouraging news that the Agricultural Credit Board has already assisted approximately 20 000 farmers in some way or another. We also find, on the other hand, that the debt of 25 major farmers is more than R44,5 million. What I want to tell the hon the Minister, with great respect, is that from the urban-dwellers’ point of view the rapid increases in food prices are getting out of hand.

I am very sympathetic when it comes to input costs. I am very sympathetic as far as that problem is concerned. I myself am a part-time farmer and I work my fingers to the bone in the city to keep the farm going. It is honestly beginning to have an influence on the overall political spectrum in the country, and we shall have to examine the question in depth.

Mr Chairman, I move the following further amendment, viz:

1. (1) the restoration of higher levels of confidence;
2. (2) the encouragement of sufficient economic growth effectively to combat poverty and unemployment; and
3. (3) the need to reduce the level of inflation.”.

We have seen two new faces as chief spokesmen in this debate today. I have already congratulated the hon member for Barberton upon his appointment and would also like to congratulate the hon member for Vasco on his appointment, not only as chief spokesman on finance for the NP but particularly as chairman of the Standing Committee on Finance. At the same time I would like to say to him that the experience we had during the seven days immediately after the Budget and his handling of the committee was extremely good. He should be complimented on that and I hope he will continue in the same fashion.

I will come back to the hon member for Vasco in a moment. I hope the hon member for Barberton will forgive me if I just refer briefly to some of the things he said, particularly near the end of his address.

There is no question that we are actually in a crisis situation in South Africa at this moment, one in which problems beset this country from every direction. The hon member for Vasco is right in saying that we are in fact receiving threats from outside South Africa; we have internal unrest and problems everywhere we look.

No doubt at this time this country needs—as I have indicated—great imagination. The reality of South Africa is, however, that economics and politics are inextricably entwined and one cannot solve the one without the other. Unless we solve the economic problems of South Africa, we are going to find that we cannot solve the political problems of South Africa.

Those of us who would like to see a Western style democratic system in South Africa in which nobody can be oppressed, need a sound economy in order to help to bring that about. There is no doubt that the more unemployment there is, the higher the inflation rate; and the more people are desperate in South Africa, the more difficult it will be to bring about peaceful change and an acceptable political dispensation where nobody is oppressed.

In the old days one used to hear the cry: Better poor and White than rich and Black. The hon member for Barberton will remember it. It came from the ranks of the party to which he then belonged. The question that I pose today is not a question of whether one has to be poor and White or whether one wants to maintain White supremacy. What I am looking for is a Western type democratic solution in which there is no oppression of minorities, and in which everyone exercises reasonable political rights.

I want to emphasise again, however, that one cannot have that in South Africa without making some sacrifices. The hon member issued the challenge to the NP as to whether they are prepared to make those sacrifices. I want to say to the hon member for Barberton that I issue the same challenge to him that I issue to the NP, and it is the identical challenge to everyone in this House, namely whether they are prepared to pay a premium for the safety of their children in future. In fact, I want to know whether they are prepared to accept that when it comes to the question of equating social services, there has to be some lowering of standards. Are they prepared to accept that? I must tell hon members I do not want standards to be lowered; I want standards to be maintained, and I want everyone to be brought up to the same standard, rather than to bring people down from a higher standard to a lower standard. However, I must tell hon members that in order to achieve political stability, if one has to make the sacrifice in South Africa of the lowering of standards rather than perish entirely, I would rather lower the standard than perish. That is the challenge we have to pose: Are hon members prepared to pay an insurance premium for the future of their children?

I would like to state that we are prepared to pay that premium. I believe that the Government should be prepared to pay it and, as an alternative Government, the CP now being the Official Opposition, I think also owe it to South Africa to tell the people whether they are prepared to make the sacrifices in order to ensure that our children and our grandchildren are safe in the future.

The hon member for Vasco tried to escape by doing a little tightrope-walking about parity. I want to tell him that when one talks about parity only being acceptable when productivity is equal, one must take into consideration that one cannot measure each individual’s job. One has to accept that there is equal pay for equal work. If the same people have the same jobs in the public service, one cannot assess them day by day to establish whether they are working harder or less. That seems to me to be an attempt at seeking a loophole. If one wants parity in the public service or in respect of the provision of social services, one should not spoil it by adding little tags on at the end. We should have the courage to stand up and say that we want parity and that that is what we are working towards. We should say that we want to do it within the limits of our resources and that we have reasonable timetables in order to achieve it. That is the way to do it. The way to do it is by taking people into one’s confidence. I will come back to the question of taking people into one’s confidence in a moment.

Let us take the Budget as a whole. Looking at the Budget as such I have tried to indicate that I believe we are in a time of crisis and that we have a problem. Let me read to hon members what the hon the Minister of Finance said in this regard. He said:

A showdown! That is the evidence he gave to the Select Committee on Finance when he came to give evidence about the Budget. He talked about a showdown. It is the showdown at the OK Corral. Here we see Cowboy Barend walking down the dusty street of the cowboy town with his hands on his guns. He is ready for the showdown, and he draws his guns—and the one is a waterpistol and the other a popgun! [Interjections.] That is what the Budget really is. It is a waterpistol and a popgun. It is not a real endeavour to get to grips with the problems that we face. He has produced absolutely nothing. That is the reality.

At a time when he talks about a showdown, about a crisis, he comes along with a budget that produces absolutely nothing in order to solve the problems.

Mr Chairman, may I raise a point of order?

Sir, I withdraw the words I used.

Sir, I want to know whether the hon member for Yeoville may refer to the hon the Minister of Finance as “Cowboy Barend”?

I have already withdrawn those words, Sir. [Interjections.] It was not intended to be insulting; I wanted to make a point. I withdrew it at an early stage because I thought somebody would raise this rather foolish point of order. [Interjections.]

[Inaudible.]

No, the hon the Minister of Manpower is not a cowboy, because he cries and cowboys don’t cry! [Interjections.]

Mr Chairman, what I would like to illustrate through you to the hon the Minister is that we actually have two elections. The one election has just taken place. That election went on the issue of security, and I concede to the hon the State President that he won that election. We lost. I accept the outcome of the election; that is the democratic process.

There is, however, another election. That election is going on all the time, and in fact we still have a chance in order to determine the outcome of that election because in that election it is not a political party that is going to win; it is actually South Africa that is going to win or lose. That election is when people vote with their money, their labour and their actions. At the present moment, insofar as this Government’s Budget is concerned, the people are voting with their money and they are voting against this Budget. By so doing they are actually voting against South Africa, because South Africa needs to win this election.

They are voting with their money by not spending it. That is why consumer expenditure is at a low level. They are not investing their money and that is why private fixed domestic investment is at a low level. If they do not in fact invest in order to create jobs, if they do not in fact vote with their money for South Africa to do so, one is going to find a situation developing where that election is not going to be lost by the NP but by South Africa. This is the tragedy. The tragedy is that as we sit here today there are fewer people working in South Africa than three years ago, despite the slight upswing in the economy. This is because we are not keeping up with population trends, and those people who want to bring about a revolutionary change in South Africa are only too happy that unemployment should be increasing. I, for example, am moved to sadness—and I am using relatively moderate language—when the hon the Minister reduces the amount which is available for employment creation and when he tells us in the committee that we have to create a norm in South Africa so that the people in South Africa do not in fact look upon this as a permanent feature. I would like to see that it is not a permanent feature in South Africa and that people have jobs. The reality is, however, that we have people living in poverty. The reality is that there is increasing unemployment. The reality is that those people are prone to turn to revolution in South Africa instead of towards peaceful change. That is why it is idle to talk about the fact that we do not want to create the kind of atmosphere where people look towards this kind of help. I believe that it is a grave mistake to have taken that approach. What I would like to see is the Government helping us in order to win the election and put South Africa back onto the right road.

The hon new chief spokesman on finance for the NP was very pleased to quote a certain gentleman as being in support of this Budget. One must always be very careful when one speaks in support of budgets.

This gentleman, in fact, said: “Ek wil verdere belastingtoegewings vir die individu hê; dit sal welkom wees.”

*Where are the tax concessions in this Budget? The decision was in fact made that this Budget would be stimulatory. I question whether it really is stimulatory or not. It can be stimulatory in two ways: Government expenditure will have to be increased— particularly in certain sectors—or the private sector must be given the opportunity to stimulate the economy by means of tax concessions. The hon the Minister made a choice. He decided to try and stimulate the economy by means of Government expenditure.

This is a tragedy, because it affects the whole business sector—the people who should be investing money—and I challenge the hon the Minister to name one person who said it was not really necessary to make further tax concessions in this Budget to stimulate the economy.

†It is clear that that was the choice which had to be made, and the hon the Minister took the wrong choice. He did not even do the things that were relatively simple and easy. I refer, for example, to the rebates for individual taxpayers, which have become eroded as a result of inflation and are, in fact, irrelevant. He could easily have increased the rebates. He could have increased them for the people who are over 60 and he could have taken dependants into account; he could also have permitted the amounts to be allowed for insurance to be dealt with. He could have helped to create a psychological climate in South Africa with a relatively small tax concession. The atmosphere should at least have been created where people would have had confidence and would have started investing and spending.

We can stimulate the economy in a number of ways. We could have an export-led revival of the economy—that is ideally always the best, as we know—but we have problems in regard to the balance of payments, and our exports have to be dealt with in a particular way. Alternatively, we could have a consumer-led revival of the economy, However, the most vital thing of all is actually to get the consumer to buy, so that the manufacturer will decide to employ people to increase his production. That is where this Budget has inherently failed.

I want to come to another aspect. This concerns a matter about which I am very disturbed. The hon member for Barberton also touched on this, and that is that insofar as the Budget is concerned, we do not actually include all that we really expend.

Let me take the TBVC issue up again, Sir, because it is a vital one. What has happened in this regard is that the budgets of the TBVC countries were short of money. In the Budget of this Parliament amounts which were inadequate were therefore allocated in order to finance those budgets, and this happened not only this year but also last year. Therefore, what happened was that we told them last year and this year, when they had a deficit on their own budgets, to go and borrow from banks. This Government then gave the guarantees for those loans.

Now, Sir, if that is a way of balancing budgets, it really is a crazy way, to put it mildly. Firstly, provision is not being made in our Budget for the finances of those independent homelands in the way that it should be done. Secondly, those independent homelands are financing their current expenditure from loans. Thirdly, their financial position is such that they really cannot afford to pay back this money…

You’re on thin ice!

… so that we are going to have to continue to give them money. The independent homelands do not have the money to repay those loans.

The hon member for Turffontein says I am on thin ice. I am going to quote what the hon the Minister has said in order to show that this hon member is the one who is going to fall on his face on that thin ice. This hon member who sits alongside me has the habit of making remarks such as these, and I should like to quote what the hon the Minister has said.

The hon the Minister of Foreign Affairs himself said that this was an extremely unfortunate situation. I should like to quote what he said. The following question was put to him:

*This is my question to him:

The hon the Minister answered this by saying:

In other words, the hon members of this House are expected not to look at our Budget, but to look at the budgets of the independent homelands to determine what is being done with our money. That is what we have to do now. I think a further important point when we look at this evidence—I want to recommend that each and every hon member in the House read this evidence—is that we are dealing with large figures; they are not small. The position for this year is as follows: We budgeted R505 488 000 for Transkei. That was not enough, however. We therefore told them to go and borrow R159 million, saying that we would stand surety for the loan. This was for current expenditure, Sir! The same applies to Bophuthatswana. In their case we budgeted R340 million and told them to borrow R179 million; we budgeted R225 million for Venda and told them to borrow R68 million; and we budgeted R302 million for Ciskei and told them to borrow R240 million to balance their budget.

†Sir, I have never heard of anything like this in all my life! A total of R620 million is not on this Budget, and these people need it for current expenditure. Now we are investigating how to deal with it. Let us be realistic, for when we query this in connection with the question of controls, of what goes on, the hon Minister admits quite frankly that there was expenditure and he goes on to say:

Skating on thin ice.

What is the situation and where is the thin ice? Who has gained? The hon Minister goes on to say:

That is the problem Sir. [Interjections.] I should like to read further, although I cannot read all of it and I should like to recommend that hon members read it. He says: “You’ve got this problem elsewhere in Africa.”

*He goes on to say:

In the end he says—I cannot read all of it:

Five per cent of the money has therefore been wasted, and apparently that is acceptable in these circumstances.

†When we look at the Budget and what is really being judged here we should try to get a realistic picture of what is taking place.

I want to deal with another aspect of the Budget which I think is equally important. To some extent this Budget is a budget of secrets. There are many secrets floating around of which I want to give some examples to the House. The five-year plan is such a secret. I will support such a five-year plan but I am not allowed to know what the details of the five-year plan are.

Not yet!

Not yet! [Interjections.] It is already in its second year but I am still not allowed to know about it! I am not allowed to know about the five-year plan. I am not allowed to know about the formulae in respect of the various own affairs’ administrations. It is a secret and I am not allowed to know about it. [Interjections.] I am also not allowed to know about the Margo Commission Report until such time as the Government has decided what its policy on the Margo Commission Report will be.

The difficulty that exists with the whole question of looking at life as though it is a matter of secrets is that it goes to the root of the nature of the Government. Is it not better to have an open government in order to determine what should take place, in order that the people can make an input and in order for us to debate and decide what is best for the future of South Africa?

I want to tackle the hon the Minister on a very simple issue, and I want the hon the Minister of Law and Order to listen very carefully as well. The past election was fought on the issue of security. I accept that we lost the election on the issue of security—the Government won it on that issue. [Interjections.] I happen to believe that we need more policemen. Does the hon the Minister agree with me?

Yes.

Right, he agrees with me. I happen to believe that we must fight crime. I believe that crime is increasing—and the statistics prove it—at a rate which is more than twice the increase in the population rate. I always thought that there was a shortage of people who wanted to join the Police Force but I was wrong. There is in fact a surplus of people who want to join the Police Force.

Yes.

Right. The following evidence was put before me:

*It seems the hon the Minister is very popular!

That is not true!

I am merely putting it to you in that vein. [Interjections.] There is a surplus of applicants therefore. Then why are those people not employed? [Interjections.] Now the hon Minister is quiet. What is happening? Why does he not employ all these people who want to join the Police Force? After all, there are not enough policemen in South Africa. The hon the Minister does not want to reply, so I shall tell him what the answer is: It is the hon the Minister of Finance; he is to blame. I quote from the evidence:

The person responsible for the hon the Minister of Law and Order’s not having enough policemen, the person responsible for South Africa’s not having enough policemen, is the hon the Minister of Finance.

And you are, because you do not want to pay more tax.

Do I not want to pay more tax? I am the one who spoke about sacrifices a moment ago and now this little… No, I shall restrain myself. [Interjections.]

†The five-year plan becomes important and I want to challenge the hon the Minister of National Health and Population Development who is sitting here. What does he say about the five-year plan? I cannot get its details from the hon the Minister of Finance but I want to challenge that hon the Minister to tell us whether he accepts the fact that the increase in health financing in the five-year plan is supposed to be 1,2% in real terms. Does the hon the Minister accept that? He is absolutely silent!

I will discuss it under my Vote.

He says that he will discuss it under his Vote! I am saying to you, Mr Speaker, that in the five-year plan there is only 1,2% increase for ordinary health services in real terms. I also say that it is utterly inadequate, utterly unacceptable and it cannot take place and should be the subject of a public debate. That is why the hon the Minister of Finance is keeping it a secret. He does not want it to come out. I challenge him to say that the figure of 1,2% is wrong.

That is a stupid challenge.

The hon the Minister says it is a stupid challenge because he knows that it is true.

Give us a stupid answer.

It is not only in regard to health matters that we need to have that debate. We need to have that debate in regard to the police. The evidence that I have and the evidence before us in the Scof is that the increase in the growth rate in real terms for the police is in fact insufficient. Again, it is the five-year plan that needs to be debated. It says here:

If the rate of real growth is not acceptable to the SA Police what is the hon the Minister of Law and Order doing about it? He sits here absolutely silent without saying a word and he has queues of people who want to join his Police Force. He cannot get the money to employ these people; there is a growth rate that it insufficient and we are told that the five-year plan has to be kept a secret. [Time expired.]

Mr Speaker, may I at the outset congratulate the hon member for Yeoville on his re-election as vice-chairman of the Standing Committee on Finance. I think it is a reflection of the high regard in which he is held by that committee, given the fact that he had fewer supporters on that committee and has fewer supporters in this Parliament. To some extent one must also recognise in that decision his own skill and the contribution he makes.

I also want to congratulate the hon member for Vasco, not only on his speech here today, but also on his elevation to the chairmanship of the Standing Committee on Finance. I agree that he has done the job with great skill in the first few weeks.

I have said the hon member for Yeoville is a man of great talent and he is. However, when I listened to him, he did not display that talent here this afternoon. He has kept that a secret. His big secret today is really what contribution he can make to this Budget. He comes along with all kinds of stories of which I shall give you one example. He makes a big story, saying “the hon the Minister of Law and Order sits here quietly and he knows that the problem is the hon the Minister of Finance”. However, the hon member for Yeoville knows that expenditure on the Police Vote is up 42,8% on that of last year.

I was talking about the five-year plan.

Well, I am talking about expenditure. The hon member made the statement that the reason for the problems with security and the policing of the country was the inability to spend. I ask him: How much more of an increase does he want? Will the hon member tell us? Is 42,8% increase on the previous year not an investment in security?

I was talking of the five-year plan.

That hon member comes to us with very clever omissions saying: “You won an election on security”. He knows that that is not true. Security was certainly a major platform but not the only platform.

You won the election on that.

We made a complex response to the great historical imperatives of our country, which we published in a manifesto. This encompassed all the fields of human endeavour and included security as a priority—which it must do if we want to reform and improve this country— which was also a major platform for reform. Therefore, to come along and to say that we sought and gained a mandate for security, is a half-truth. We did not seek a mandate on security only. We sought a mandate to deal comprehensively with the comprehensive challenges of this country.

You sure fooled the electorate.

The hon member talks about fooling the electorate but he knows why his party did badly in the election. He reminds me of Will Rogers who, in the ’twenties, was asked to what political party he belonged. He replied: I belong to no organised political party; I am a democrat. I think that hon member can say he belongs to no organized political party; he is a Prog. He made some good points today and I could have concurred with many of the opinions he expressed but they are not the opinions of the PFP. [Interjections.] The hon member for Sea Point wants to know why the electorate rejected them. It is because they bluffed the electorate. For years they told the electorate that they were not really so leftist but were merely change agents and that they took up a strong leftist position only to give the Government room to manoeuvre. [Interjections.] Then, however, the electorate found out that they were not pretending but that they really were leftist and so rejected them.

They are hard-core liberals.

Of course they are. [Interjections.]

*I shall come back later to the hon member for Yeoville.

I want to congratulate the hon member for Barberton on his appointment as chief spokesman of the Official Opposition on Finance. We welcome him to this post and are looking forward to good co-operation with him. In his amendment he mentions several things, but unfortunately he contradicts his own party’s standpoint. I do not want to defend the hon the Minister, because the hon the Minister can defend himself. Nor do I wish to react to all the statements the hon member made, but he said inter alia that the hon the Minister’s Budget lacked credibility. He contends that the hon the Minister’s projections are incorrect and then he says that he should predict more correctly. If he predicts correctly, he is a good Minister of Finance. Sir, this hon Minister of Finance is not Madame Rose. He is not a soothsayer or a clairvoyant. He is a Minister of Finance whose task it is to manage the economy of this country.

The fact is that circumstances change. The hon member knows full well how circumstances have changed since last year’s Budget, so that this year we have been able to come up with a stimulatory package. There was the debt standstill arrangement, the gold price rose, but there was insufficient confidence in the economy. We agree on that score. That is why we decided to utilise State expenditure as a stimulant, because that hon member knows full well that if there is insufficient confidence in the economy one can reduce tax until one is blue in the face without achieving any growth. One has to take all these facts into account.

†One cannot understand this Budget unless one looks at the whole background. One cannot talk about the Budget and the financial circumstances of this country as if times were normal; as if we had the same opportunities and challenges as all other countries; as if our place in history was not difficult; as if we were not fighting a low intensity war; as if there were not massive arms build-ups on our borders; as if an international propaganda war had not been unleashed against our country; as if a sanctions attack and a disinvestment attack had not been launched against us; as if we did not have to cope with all the financial problems of the de factor and later de jure sanction actions of the international banking community; as if we did not have to deal with a very severe drought; and as if we did not have to deal with major structural shifts in world trade where wealth not only left South Africa but left every primary producing country in the world, and even shifts within primary producing countries and a shift of wealth, for example from the East Coast to the West Coast of the USA and from the West Coast to the Pacific rim.

The hon the Deputy Minister of Finance Dr Marais recently gave a very good exposition of how 80% of the incomes of 80% of American families had in fact declined. We have also had to contend with major structural changes in our economy. These are changes which have to be identified and to which we must react. And we do react. That is why we have five-year plans. Five-year plans, however…

Are they secret?

We have plans, Sir. The hon member for Yeoville thinks that when he cannot see a plan there is no plan.

*The hon member for Barberton said that he was opposed to the introduction of the fuel levy. Is that correct?

The method.

Against the method used. Right. That is to say that the hon member does not want the farmers also to be able to claim back tax they have to pay in advance.

Leave it as it was, man!

Very well, now we know what the hon member wants. However, I want to put it to him that in my opinion the farmers of South Africa are more responsible than the hon member, as far as the statement he has just made is concerned. If the hon member had listened to the speech of the hon the Minister of Finance he would have found in it two things affecting the farmers. There were other things affecting the farmers as well, but I am referring to two in particular. One is that the State is going to spend hundreds of millions of rands to assist agriculture. However, the State must be in a position to do so. The fact is that had the hon member for Barberton listened to the hon the Minister of Finance, he would have known that owing to shortcomings in the existing system—shortcomings that still exist even though we have effected innumerable amendments, made regulations, appointed more staff and have even taken legal steps against people—losses are still running at approximately R300 million per annum. Some estimates even put it at R500 million. This is money which is being stolen, as it were. As a result the rest of the tax-paying public have to cough up.

What was the evidence?

I shall give the hon member a few examples, Sir. I can give him examples of farmers who are guilty of this. The vast majority of farmers are honest people. However, not all farmers are honest people. In the same way, the vast majority of people in the fishing industry are honest people—but not all. The vast majority of hauliers are honest and upright people—but not all. I could mention a few examples, Sir. I could of course add that we have discussed the matter with the farmers. I also discussed it with farmers’ associations. We shall discuss it with them again. We shall put into effect the most practical and simple system possible to make it easy for the people. If a person can claim from his medical fund every month then he can also claim that tax that he had to pay in advance. If he finds it inconvenient, then it will be inconvenient for one month or at the most six weeks. We have made it a matter of urgency and he will simply have to forfeit that bit of cash flow. He does not forfeit his privilege, and as a farmer he is in a privileged position in comparison with other members of the public. He is in no way forfeiting this. All that is happening is that the method is being changed to make it possible for the State to collect what people steal in one way or another. The State is now being placed in a better position to help the farmers in South Africa.

In one case alone, a farmer underpaid R98 987 in excise duty. That excludes his payment to the Road Fund, the Central Energy Fund, the MVA levies or even GST. That was in respect of excise only. One farmer alone was responsible for a loss in tax revenue of R0,5 million. I could give further examples of other farmers. There are amounts here of R288 232, another of R113 656, yet another of R74 103 and yet another of R1 236 487. If that hon member wishes to come to my office I shall show him these things.

Where does he farm?

I do not want to say who or where they are. If that hon member wants to approach us I shall ask the Commissioner to show him the evidence. I think that in the light of that evidence the hon member will agree that we cannot accept this. We have tried to bring some of these people to court and we are having difficulties with the courts because the courts adopt a different approach to the matter.

†It does not matter if one has not presented proof of sale. One also has to show that there was in fact malpractice. The absence of written proof alone is not enough to show that there is malpractice So we simply cannot allow the situation to continue and we are not going to allow it to continue. I am sure that the farmers will be with us in this. We have discussed it with them and we will continue to work with them to make it as simple, as painless and as efficient as possible. They will not lose any of the benefits that they currently have.

*It is precisely that point I want to clear up, when he asks who is going to be paying this. It is not the co-operative. In the nature of the matter the farmer will pay his account at the co-operative himself. Naturally the co-operative will pay the account to the oil company. The individual farmer will send in his claim based on what he can lawfully claim, to the Department of Customs and Excise, which has established a unit for that purpose. It is a very simple form that he will simply have to fill in, and he will receive his cheque by return of post.

Apparently that hon member does not understand how the economy works. He says that it is meaningless to give people training if there is no work. We must not train people if there is no work. It is of course true that we must train people for the purpose for which they are required, as far as one is able to determine that. That is true. It takes years to take people through the entire education process—ten years. One must not cease to perform that task; one has to persist. There is no point in saying: Here is work; now we must train someone for it. That is not how things work.

†That is not how economies work.

You completely misunderstood me.

Well, then the hon member should put it differently.

†The fact is that he says we must return more of the tax income to the private sector and then he fails to understand how the private sector operates. The private sector operates spontaneously. It is the policy of this Government to reduce the State’s share of the GDP as a percentage over the next few years.

Not this year?

The point is that one has a long-term view and a short-term view and in the short term, like we have done this year, one increases the deficit before borrowing. However, to do that in the long term would be disastrous. We do not intend to and we ourselves have pointed out the problems in doing that. In the short term, however, it was the right thing to do. In fact many of the finance houses have complimented us and told us that we could have gone further.

I think there was evidence before the Standing Committee on Finance when the FCI or somebody said we could, in fact, increase the deficit before borrowing further by 1%. So, we have a long-term and a short-term view.

*The hon member now says that the so-called bracket creep, ie fiscal drag is terrible. He provides figures covering a few years and says that since last year there has been an increase of 24% in bracket creep. Surely that is untrue. If he had studied these books very carefully and had spoken to the Commissioner—he had the opportunity to do so in Scof, the Standing Committee on Finance— then surely he would have known, if one takes into account that the Commissioner’s office was under-manned and that he was engaged in other matters that he had to finalise that year, that he is going to collect more over the next year than during the previous 12 months. The third payment will bring in a tremendous amount of money. I speak under correction, but I think it is something like R600 million. This is a one-off amount because the structure of repayment is changing. It represents almost 5% of the personal income.

†So, the hon member’s figures are wrong to start with, because he talks about 24% bracket creep, when the actual figure is less than 19%. One can also look at other factors such as the increase in the number of taxpayers etc.

*There are therefore many factors. I do not wish to say that we are not also concerned about bracket creep. The hon the Minister of Finance has also mentioned this in his speeches on various occasions. Nevertheless I want to say that that hon member is exaggerating the problem.

I want to congratulate the hon member for Vasco on his speech. I think that he replied very effectively to the speech of the hon member for Barberton.

†The hon member for Yeoville asked, “Are we prepared to pay a premium for the safety of our country?” I want to tel) this hon member that the whole stance of this Government is that we believe in law and order. We believe in security, because we know that there can be no social progress without law and order. We believe in constitutional change and in adopting policies through negotiation that will respond adequately to the real needs of all the people of this country. We also believe that the economic growth of this country is absolutely fundamental, not only for achieving those increased democratic norms and systems but also for sustaining them. The hon the State President has spelt out on numerous occasions that that is what we believe. When the hon member for Yeoville asks whether we are prepared to pay for security, I want to tell him that he really must not ask that question of this side of the House.

Are you prepared to accept the lowering of standards?

No. It depends on what the standards are that the hon member is talking about. [Interjections.] He must mention a particular standard the lowering of which we must accept.

Mr Speaker, may I ask the hon the Deputy Minister whether they are prepared to accept a lowering of standards in order to bring about equality, for example, and parity in pensions? Are they prepared to accept that in real terms there is a lower rate of increase for one population group in order to achieve parity? I am just taking this as one example.

The hon member for Barberton came with a different accusation, but it is the same story. He asked whether we believed in the redistribution of wealth. The answer is that we do not. We are not to be found for policies of the redistribution of wealth.

[Inaudible.]

The hon member must allow me to finish. He has asked me a question and now he must allow me to answer.

Order!

We do not believe in the redistribution of wealth, but we do believe in the redistribution of opportunity. We believe that we must move towards the highest possible measure of equality in our society in terms of equality of opportunity and that we must remove obstructions from people to allow them to do as much for themselves as possible. Our belief is that the private sector is the greatest engine of wealth production in our society and that we must give that the highest possible priority.

Answer the question.

The answer to the question whether we believe in reducing everybody to the lowest common denominator is no.

The hon member asks us whether we are prepared to pay for security, as if his party is prepared to do so. Let him ask his colleagues what they think of the End Conscription Campaign.

Ask me about the End Conscription Campaign.

No, I do not want to ask the hon member for Yeoville, because we know that he is stá generis. [Interjections.]

Order!

That hon member asks us whether we are prepared to pay for security, but is the hon member’s party to be found for it when we respond with regional services councils? I know it is a great experiment and they may not be perfect, but we are trying to meet the development needs by concentrating all the people in the regions who are most closely connected with those development needs. We are trying to apply the minds of those people and to provide a forum whereby they can contribute collectively to the developmental needs of their region. We charge an infinitesimal rate which is tax deductible so that much of it will be paid by the taxpayer anyway, but what is his party’s attitude to all this? They reject it!

This is an important element in building security, because if we do not build the infrastructure and happiness of our society, there will be no security. So that hon member must not ask these questions of us; I think he must turn around and ask these questions of his caucus. It might be good for his education to hear what they have to say to him. The hon member also used expressions like “showdown”; “gunfight at the OK Corral”; “the hon the Minister’s waterpistol and the popgun” and all that sort of nonsense.

The hon member talks about the West. In the old days they used to build railways to nowhere. Men would decide to build a railway to nowhere and sometimes they were lucky and development followed the railway. That hon member wants us to build railways to nowhere. We are not going to do that.

You are already on it!

The hon member for Yeoville says that people vote with their money. It is interesting to note that in the first quarter of this year there was a net inflow of some R500 million. That is a happy change and we hope that it will continue. As law and order returns to the country, as the economy goes into an upswing, as there is a more visible debate in our country—as there is now because it is possible now in terms of law and order for that debate to proceed more visibly—so confidence returns.

When all of these things are taken into account I think that confidence is certainly returning. One only has to look at the confidence of the Government demonstrated by the R4,5 billion investment in the Mossel Bay project and the Lesotho Highlands Water Scheme, a mammoth investment which will last well into the future. There are also big new private sector developments in Botswana and Synfuel developments in South Africa, to mention only a few big ones. There are thousands of decisions being taken throughout South Africa by individual entrepreneurs and this shows that confidence is justifiably returning. The indexes also show that.

The hon member for Yeoville attacked the TBVC countries. I want to say that I am not an expert on the TBVC countries.

I attacked your budgeting.

Yes, he attacked the budgeting. I think he must have a little more sympathy and humility. I know he has enough kindness because I know what kind of man he is. However, we must take into account what has happened in our country over the past five years. One thinks about the enormous and cataclysmic problems which existed in the townships because of unemployment and intimidation, which we have put a stop to largely. The unemployment caused problems in the schools and there was a flight of people to the sanctuary of the rural areas. Demands were made upon the rural areas which they had not anticipated and neither had we.

When society is under stress it is the poorer elements in society that feel the stress most. In our country it is the TBVC countries, our most intimate neighbours, that felt the stress most acutely. Because of the drought—they are largely agricultural people—the breakdown in law and order and unemployment they were enormously vulnerable. Their schools had to take a flight of children who could not be educated in the townships. [Interjections.] It is true; these were major factors. That is not an excuse or justification for bad budgeting. We have tried to institute the best possible means of budgeting and financial control with the co-operation of our partners. When one looks at the way the TBVC countries are run and compares them with other countries in Africa one should not be critical of them but salute them. They have come a long way and they are improving by leaps and bounds.

*Just before I resume my seat, I wish to make a very brief statement about something that the hon member for Yeoville will also be very pleased about. It concerns the extension of the machinery initial allowances.

†This is the extension of the machinery initial allowances and the building initial allowances. As you know, it was the Government’s intention in November 1986 to recommend to Parliament that the time limits during which the enhanced machinery initial allowance of 50% for new and unused machinery or plant; the 25% initial allowance for used machinery; and the 17,5% building initial allowance as well as a special initial allowance of 50% for storage and packaging machinery of cooperatives, be extended by one year to 31 December 1987.

The reason for this was that the presentation of the Margo Commission Report to the Government had been delayed. We have now received the report, but as hon members know, the recommendations are still under consideration. We do not want investment decisions to stop; we want people to make investment decisions. We do not want them not to make investment decisions because there is some uncertainty about their initial allowances. Therefore, having considered these matters, we have decided to extend the period now from the end of December of this year to the end of December of next year, that is for a full 18 months. I am sure that will be very well received by the business community.

*As regards the deduction of loans and repayments to co-operatives—I think hon members have mentioned this in the past in this House—co-operatives may, in terms of section 27 (2) (f) of the Income Tax Act, claim as a reduction the amount repaid in regard to a loan utilised for the construction or acquisition of storage depots. This deduction could be granted over 10 years from 1 April 1977 to 31 March 1987. Because it has now expired we intend extending it for a further 12 months up to April 1988.

The agricultural sector made a strong plea in this regard. In view of the Margo Report, on the other hand, we do not think it would be sensible to do anything else at this juncture. In view of our aim to uplift the agricultural sector we also consented to do this.

As far as the farmers are concerned we felt that it was right to accept their representations and grant them another two years deferment under paragraph 13 (a) of the first schedule to the Income Tax Act—it refers to the stock withdrawal scheme—since previously they had four years to purchase stock and also in view of the drought in those parts of the country. Therefore they are being afforded the opportunity to purchase stock when it is possible for them to keep stock.

†With these few words I support this Budget.

Mr Chairman, it is quite remarkable that at times certain remarks that one makes about someone else can equally be applied to oneself, probably because one sees in that person things which apply to oneself.

The hon the Deputy Minister said that the hon member for Yeoville did not belong to an organised political party, but was a Prog. I have here a recent copy of Sunday Times. It is difficult to read the date, but it looks like 1978, when the hon leader of the PFP announced his policy. The policy is depicted here. The hon leader is sitting on a horse and directly opposite him the then Prime Minister, the present State President, is also sitting on a horse. Here, next to the Leader of the Opposition at the time is written: Consensus politics. Next to the State President is written: Separate development.

Well I never!

Now the hon the Deputy Minister comes along and says that the leader of the PFP is saying to people: “Chaps, we are not really as liberal as we appear to be. We are far more conservative.” From that I deduce that when the Government fights elections, people must understand that they are not really all that conservative; they are merely afraid of the CP [Interjections.] They are only pretending to be conservative.

This Budget is in fact a travesty. The blunders made by the hon the Minister of Finance are now becoming grotesque. I do not think there has ever been, nor will there ever again be, a Minister who blunders the way this Minister does. It is rather interesting, because one does not realise it straight away, and one has to back-track a little and read what the hon the Minister said in last year’s Budget. Only then does one realise the extent to which he blunders. Last year he said in his Budget Speech, in the final paragraph under point 2.3 (Hansard, House of Assembly, 7 April 1986, col 2669):

I almost want to say, “famous last words”. What has now become of these things? He set himself the target of staying within his limits. He budgeted for an increase in government expenditure of 13,9%; he ended with an increase of 22,5%. This year he is kicking off again with an estimated increase of 15% on last year’s revised Budget.

What is in fact disquieting is that if one were to express the expenditure as a percentage of the revenue one would see that the hon Minister estimated in last year’s Budget that his expenditure would have to be 111,7% of his income. Eventually the percentage was 118%. Now he is beginning with 121,9%, almost 122%, of what his expenditure ought to be in proportion to his revenue.

Secondly the hon the Minister said that we should save: “Saving should be sufficient to finance our domestic development projects”. Savings declined to such an extent in 1986 and in the first quarter of 1987 that he had to finance his current expenditure by means of loans last year. Here, once again, the hon the Minister blundered completely. He knows the right thing to do, and he tries to imply that he wants to do the right thing, but the poor hon Minister simply does not succeed.

This year he is budgeting from the outset to finance his current expenditure by means of loans. In conjunction with my hon colleague I also want to say the following: Last year the hon the Minister said that the gross domestic product was expected to increase by 3% in 1986, but it then increased by only 0,7%. This year he again said he expected it to oncrease by 3%. I want to ask the hon member for Vasco, who tends to quote from newspapers, whether he has found a single economist who thinks that the hon Minister was correct in his prediction that we would have a growth rate of 3% this year. No one expects it; everyone knows that the hon the Minister is wrong. It is not going to happen.

In his speech last year the hon the Minister said in paragraph 3.3:

These figures were supposedly to serve as an early-warning system and were supposed to bring about discipline in every Government department, and furthermore they were to form the basis for determining the monthly Treasury deficit and for the scheduling of the State’s finance and loan programme. Now I ask the hon the Minister: He wanted to control the departments; what has become of this mechanism? Has it ever been implemented or what went wrong so that nothing came of it? What caused the State’s finances to escape his control?

In the Minister’s speech last year, in paragraph 5.7.5—which deals with loans—the hon the Minister said that he envisaged receiving only a “modest amount” from the issue of new Government stock. What happened then? The amount which the hon the Minister acquired by means of the issue of new stock was three times the amount which he originally envisaged. In the concluding paragraph of his speech—paragraph 7—the hon the Minister said the following concerning the deficit before borrowing which represented approximately 2,7% of the estimated gross domestic product:

At the end of the year the deficit before borrowing was not 2,7% but 4,1%. This year the hon the Minister started with 4,7%. The hon the Minister also set his own limit; he said 3% was well within the limit and that he was within the limit. It seems to me the hon the Minister is continually raising his limit!

In that Budget Speech the hon the Minister also said: “Unemployment increased noticeably in 1985 but it is expected that it will decline in 1986”. What happened then? It increased further in 1986. The hon the Minister blundered completely. He let the ball drop and did not even touch it. I want to tell the hon the Minister that the same thing is going to happen this year.

To top it all the following remarks were made by the hon the Minister:

That was the address made last year at the opening of Parliament, in which the hon the State President came closest to the Rubicon. The hon the Minister said that that speech had improved overseas perceptions of South Africa. What happened then? There were further sanctions after the so-called “improved perceptions”.

The hon the Minister is incapable of handling the State’s finances; what he predicts and perceives will not happen the way he would like them to. The hon the Minister reminds me of someone who sits and waits every morning to see whether the sun will not rise in the west, yet the sun persists in rising in the east every day. The reason for the hon the Minister’s failure is the constitutional policy of the Government, and the about-turn in his policy. The Government still does not realise that it has changed direction. The hon the Minister should look to the east if he wants to see the sun rise. He has turned around and is now facing the wrong direction.

A very interesting article appeared in the periodical Forbes of July 1986, written by one Norman Gall. The questions he asks is:

He says:

Then he says:

Those are the four main reasons why countries remain poor.

Surely it is an indisputable fact that three of these things are already a common occurence in South Africa today. Three of them are in full swing. Civil disorder is a common occurence in South Africa today and it is increasing. Surely the necklace murders are not an example of peacefulness and of a calm community life prevailing in South Africa. The “people’s courts” are replacing the legal system in South Africa. Strikes as well as the destruction of life and property are a common occurrence.

In most of the Black residential areas rents, water and electricity accounts are not being paid. The State is unable to collect that revenue which is due to it. The revolutionaries are collecting that money. They threaten the people, thus ensuring that they get hold of the money. The Government then went and paid the arrears. The Government is therefore subsidising the disorder and revolutionary climate in South Africa.

You are talking absolute nonsense! [Interjections.]

Yes, the Government is subsidising that climate. I ask the hon the Minister who will continue to pay their water and electricity accounts if they see that the Government is paying those outstanding amounts? [Interjections.] No one will do it of course. But if any one of us does not pay them our water and electricity are cut off. Surely there is no other way in which it can be brought home to people that they must pay those accounts. The hon the Minister, however, goes along and pays them and I say that he is financing the revolution. [Interjections.]

The Government is also promoting the revolution in that it is starting to negotiate with the revolutionaries.

The fact that the Government is now overtly beginning to involve the UDF in negotiations via the President’s Council means that it is furthering the revolution. Today I want to venture the prediction that before much water has flowed under the bridge, this Government will yet negotiate with the ANC without the latter having renounced violence. [Interjections.] This article says that civil disorder is one of the factors explaining why countries become poorer. I want to tell the Government that they are financing and promoting it. That is why South Africa is in this economic mess.

Order! I am not prepared to allow the hon member to proceed on that basis to accuse the Government or any hon member of furthering revolution in South Africa. Consequently the hon member must withdraw that implication.

I withdraw it, Mr Speaker.

Order! The hon member may proceed.

I come now to the second point. This article says socialism is one of the reasons why countries become impoverished. I want to say that the redistribution of income in South Africa has made a great deal of progress and it does not matter what that hon the Deputy Minister has to say about it. He says he does not believe in it, yet he does it. He does it on a very large scale. I know that the hon the Deputy Minister is now going to reply that it is normal for taxes to be paid and for the underprivileged to benefit from it. This is not yet a harmful redistribution Of income. It becomes a detrimental redistribution of income when the practice has been taken so far that it begins to exert pressure on the production factors. When it has progressed far enough it becomes socialism. That is what this Government of South Africa is engaged in doing.

I want to mention a small example of this. The hon the Minister maintains that he does not believe in a redistribution of income. What is this but a redistribution of income? I want to quote from a circular which originated from the office of the Post Office’s regional director for the Witwatersrand. It is a circular No 43/86, addressed to all postmasters and section heads:

Dit bring die bedrag op R31 320 te staan.

Die maandelikse paaiement op ’n departementele lening van R29 000 (plus verband-, oordragkoste, ens) oor ’n tydperk van 30 jaar is ongeveer R87 per maand.

It is R87 per month. Added to this the hon the Minister should remember that most of these people earn the same salaries as Whites. But when a White person goes to a building society and raises a R31 000 loan his monthly payment is R400. In this case it is R87 per month. No interest is charged. I say it is drastic. A White Public Servant cannot get a subsidy anywhere near this size. Apart from this he still has to pay tax on fringe benefits. That is R165. He has to pay far more, in addition to his subsidy he still has to pay R250. This man pays R87, yet a White person still has to pay tax on fringe benefits. I say it is a drastic redistribution of income. This is socialism which is being practised here. [Interjections.]

Personal income tax—I want to come back to what that hon the Deputy Minister said— increased by 24% between last year and the present moment. But now we find the hon the Deputy Minister saying that that is as a result of the arrears from the previous year.

The arrears! Do you not understand the third surcharge?

Sir, I understand it. I want to tell that hon Deputy Minister that if one takes it over a longer period, and when one takes into consideration the extent to which personal income has increased as a source of income for the State from 1980-81 to the present, one sees that it increased by 476%. I want to accuse the hon the Minister of adroitly recovering this redistribution of income from the Whites. The Whites are paying the lion’s share of this increase of 476% in personal tax between the period 1980-81 and 1987. They are paying more than 80%.

I am proud of it.

In contrast to this, taxes from the gold mines declined over the same period by 13,9%. The individual is paying 476% more while the gold mines are paying 13,9% less. I say the Government is overtaxing the Whites.

A very interesting article appeared in Business Day of 27 May 1987. They said the following about taxation:

The hon the Minister is taxing the Whites to such an extent that we are already falling into the category of countries with a low growth of 1% or less. That is where South Africa is. The Government’s redistribution of income, its socialism and its narrowing of the loan gap without linking this to productivity are further factors. The regional services councils, which are now going to be established are also an instrument for bringing about a redistribution of income.

My hon colleague referred to the expenditure on capital goods in South Africa, which is declining dramatically. In 1978 it was 35% as against a current expenditure of 65% of the total Budget. This year 10% was spent on capital goods as against a current expenditure of 90%. Whereas the expenditure on capital goods amounted to 35% in 1978, we now find the phenomenon that this has been superseded by expenditure on social services, and this is rising drastically.

Last year 32% was spent on social services and this year 37% is being spent. South Africa is becoming a welfare state. At present the situation is that the hon the Minister cannot tax people more than he has. He now borrows money in order to do all these things and to bring about this redistribution of income. He has already bowwowed to the hilt abroad. He cannot borrow any more money there. New loans as a percentage of net savings have increased as follows during the past two years. He budgeted for new loans on the domestic market constituting 42,8% of savings. He ended up with 60%, and is now budgeting for new loans constituting 71,2% of net savings. I ask this hon the Minister how he intends the private sector to participate if the State is going to take 71% of net savings.

That is the most incredible nonsense!

Therefore it is not strange that the public debt is now approaching the R50 million mark. They come along and say that we were not telling the truth in Kolskote. The hon the Minister said, however, that the public debt was $10 million. In the first place why did he not say that it was $10 million and not R20 million? Why did he also omit to say that it had increased drastically and that the figures which appeared there were correct?

The hon the Minister has to finance all these things. He is going to take money from the Central Energy Fund. He is even going so far as to borrow back his own foreign debt to finance these things. He is also selling the State’s assets to promote this redistribution of income and socialism. This article says it is not only civil disorder and socialism which impoverish the State but uncontrolled urbanisation as well. The tendencies in the world are clearly indicated, and it has been shown there that six of the ten largest cities in the world in 1950 were in rich countries. In 1986 eight of the ten largest cities in the world were in the poor countries. I want to quote this very interesting observation which was made:

The Government is allowing this phenomenon to occur in South Africa by means of its so-called urbanisation programme. There are no employment opportunities here in the urban areas, yet the Government allows people to come here and then still says that they are in control of the situation. What happened at Khayelitsha? What happened at Crossroads? There are now 800 000 or 900 000 people on the Cape Flats, and there are no employment opportunities for them. Where is the economy that has to support this?

Order! Some hon members should really lower their voices a little. The hon member may proceed.

South Africa is becoming a squatter camp. That is why South Africa is already showing the signs which accompany socialism. We are becoming impoverished. The retiring president of the Afrikaanse Handelsinstituut said at their last congress:

We are already showing the signs. Unemployment is increasing and inflation remains chronically high. Our economic growth is sluggish, sometimes 1% per year, after which we have a negative growth rate.

This all arises from the Government’s constitutional policy. These conditions began setting in the day the Government decided to accept power-sharing, political integration and consensus as its policy. From that day on the hon the Minister has been sitting in the wrong place waiting for the sun to rise. He still speaks in the way they used to speak in the old days when they still had the right policy, but everything has been overturned and that is why his statements are also incorrect.

The only policy which can remedy this situation is that of the CP. The hon member for Yeoville said that he required a Westerntype democracy for all the people in South Africa The hon member’s political premise is wrong, however. A Western democracy is what he desires but not so the Blacks. They desire an African system which can only be brought about by the CP’s policy of partition in which we can have a Western system and they can have a system which they themselves choose and devise.

The same applies to the economy. This Government now wants to reconcile two divergent systems, namely a capitalist system and a socialist system. In the meantime, however, the socialist system is gaining the upper hand. The CP policy is the only one that can bring about all those aims, aspirations and ideals of the various population groups in South Africa. On that basis we say that when we come to power we will be in a position to cut down on State expenditure and to curb inflation. We shall put a stop to the redistribution of income if it exceeds the limit at which detrimental pressure is exerted on production factors. We will apply a wage policy which will take productivity into account and there will be economic growth. We shall change our country’s priorities so that the necessary equilibrium and consideration can be given to the creation of job opportunities. One cannot, as the hon member for Barberton said, merely train people without ensuring that there are employment opportunities for them. Surely there must be an equilibrium between the two sides.

With the disorder and chaos which is prevalent in the Black residential areas of South Africa the CP will go about resolving it in a single-minded and effective way. As regards the strikes which occur, Black trade unions will not be allowed under a CP government in White South Africa. In that way right from the start the most important step will be taken in order to bring about productivity, peace and progress in South Africa. When each people knows where its fatherland is, when each people has its own fatherland the most beautiful, the purest and the noblest forces will be released in each of those peoples and will triumph again because people will be inspired. Each one will be inspired not only to protect its own land, its fatherland, but to develop and build it up and make it grow, and not, as is the case at present, raze South Africa to the ground.

Mr Speaker, allow me in the first place to convey the most sincere congratulations of this side of the House to the hon member for Vasco on his appointment as chairman of the Standing Committee on Finance as well as chairman of the Select Committee on Public Accounts. It is a fine position, albeit a demanding one, which justifies a special place in this House. The seven days after the Budget speech has been delivered normally make heavy demands on the members of the standing committee. The heaviest demands are made on the chairman of that committee, however. The hon member for Vasco conducted himself with distinction in this position. We look forward to performing this task under his leadership.

I want to refer next to the hon the Minister of Finance. Since he was appointed to this post, the economy has been in a deep hibernation. We are caught up in a deep economic slump, and I think the hon member for Lichtenburg must concede that.

The hon the Minister has not as yet been able to enjoy a really positive growth in the economy. He has had to take remedial action in every Budget, to treat a dormant economy. Yet the hon member for Lichtenburg criticised the hon the Minister for taking these steps. The question we must ask here is whether action of a different kind is going to help. The bit of kite-flying the hon member for Lichtenburg did here, involved mere statistics which do nothing to improve the economy.

We must accept that the economy has to be helped out of its present situation. In spite of that, the hon the Minister has been positive in dealing with the Budget every time, and he has performed this difficult task with the greatest distinction. We should like to thank him and his department for the neat way in which they have dealt with South Africa’s financial situation, and will do so in future.

There are indications that the South African economy is waking up out of its long hibernation. To begin with I want to give a few reasons for saying that, and then I want to come back to some of the reasons which need to be discussed in greater detail. In the first place there was an increase of 1,1% in the real gross domestic expenditure in 1986. Measures to encourage spending were successful, especially during the second half of the year when real private spending—consumer spending—increased by 3,5%. The balance on the current account of the balance of payments rose considerably.

There was a more rapid increase in the money supply, especially at the beginning of 1987 when the average increase in the M3 was closer to the target rate of 16% to 20%, which was higher than the 10% during 1986. This reflects a probable acceleration in the upswing in the economy.

There was a noticeable increase in profits during 1986. There was a 28% increase in the manufacturing industry, whereas dividends as a percentage of profits also increased. The profit as a percentage of applied funds increased as well. These are signs of positive growth in the economy and they should be exploited. Recently, interest rates have dropped dramatically.

The question is whether these and other factors or plus points are sufficient to get the economy going to a reasonable extent again. If one can succeed in getting the inflation rate to drop further—I believe it is possible with the co-operation of all the sectors—and if investment confidence can take root in South Africa and the consumer resistance can diminish, I believe one can succeed in getting the economy out of its state of hibernation.

South Africa is a beautiful country with all the potential to make it more beautiful and develop it into the wonderful country it deserves to be, but then everyone in South Africa must contribute to creating that kind of country. Unrest, anarchy, revolutionary activities, violence, intimidation, boycotts and stay-away campaigns make no contribution to that.

South Africa has to accommodate people of various groups, and not cage them into homelands as the CP wants to do with its partition policy. South Africa has the ability to provide a safe home for all its inhabitants, to ensure everyone of a reasonable job and a fair degree of stability, and to make a stand against foreign prescriptiveness and arrogant interference. This can happen in South Africa, but the first and most important prerequisite is co-operation and a patriotic attitude.

Mr Speaker, may I put a question to the hon member?

No, Sir, I do not have time for any questions now.

South Africa is definitely not being put first if unrest, stone-throwing, incitement, arson, murder and destruction are the norm in our country. The people who continue to intimidate workers and to use violence to keep them away from work, are not making any positive contribution to South Africa. Stay-away campaigs are beginning to take on an alarming pattern in South Africa. South Africa cannot become what we want it to be if its economic activities are restricted by irregular work patterns. Stay-away campaigns serve no purpose. They prove nothing; on the contrary, they only have the ability to foster antagonism. They pit group against group. They have the ability to destroy understanding and tolerance. Eventually they lead to conflict. We know that intimidation is the weapon of our enemy. We know that it can be applied successfully to paralyse South Africa. That is why we must guard, at all cost—I am including all inhabitants of South Africa—against becoming so weak-kneed that we are panic-stricken at the slightest sign of intimidation. In addition, in encouraging this process we may not do anything to prejudice the actions of our security forces. The state of emergency is part of the South African pattern at present, not because that is what we want, but because it is an important support in establishing a healthy climate.

We also want to pay tribute to our security forces who are not only playing a protective role in these times, but who also entered the unrest areas to perform miracles in socioeconomic spheres there. Their involvement in the AMS, the area management systems, has definitely produced fine dividends. We in Pretoria and the surrounding areas feel that good work was done in this connection. We should like to thank everyone who was involved.

If we can succeed in delivering South Africa from the jaws of anarchy and intimidation and we can succeed in getting all those involved, all the South Africans, to work productively once again, for a full day, a full week, a full month, yes, even a full year, we shall succeed in inspiring confidence in South Africa again, to such a degree that investment confidence will recover and growth will once again become part of the economic pattern in South Africa. If we can succeed in establishing a greater degree of consumer involvement in this way, the economy will get well into its stride again.

A few things must happen to make this possible, however. In the first place one must accept that a great degree of consumer resistance has built up for various reasons.

One of these reasons was the exchange rate situation. The second was the resulting more expensive import costs. The third was the excessively high interest rate at the beginning of the past financial year. The fourth was the unrealistically high prices of consumer items, something the hon member for Yeoville referred to as well. Positive steps have to be implemented to break down this resistance, for example a decrease in and phasing out of the surcharge on essential technological apparatus. One can merely hope that all the sectors will react positively and will relay the full benefit of that reduction to the consumer.

If we can succeed in getting the economy off the ground once again, it will also be possible to make more meaningful progress in other spheres, including the political sphere. Then we shall be able to reap the benefits of an economically sound and stable South Africa.

I want to refer briefly to the report of the Standing Committee on Finance, and more specifically to point 6.4 which reads as follows:

The recommendation continues:

Does point 8 not obviate that?

The Commissioner for Inland Revenue supplied the committee with important information in this connection. He pointed out inter alia that an additional R40 million in tax was levied in 98 investigations made in this way. This means that on average, an additional R400 000 per investigation could be collected in this way. It is alarming to think that tax evasion is assuming this tendency.

It remains essential, therefore, that the number of investigating staff and the number of inspectors be increased to curb this tendency. The taxpayer will have to take cognizance of this. He will do so only if he knows that in all probability his return will be subject to audit and investigation. This situation of tax evasion cannot be tolerated in South Africa any more. We shall have to take positive action to combat this situation. I want to advocate, therefore, that the potential of these investigating inspectors be developed to the utmost in doing this important work. In respect of tax obligations, it is necessary for everyone in South Africa to contribute to render what South Africa needs to live and to survive.

Mr Speaker, as is customary the hon the Minister’s Budget Speech has elicited a large number of comments from a wide range of sources—economists, academics, industry and commerce, trade unions and, not least of all, politicians. Generally this comment is focused on a relatively small number of issues. I should like to confine my own speech to a few items.

Before doing so I would first like to clear up a misunderstanding on the part of the hon the Deputy Minister of Finance, Mr K D S Durr, regarding the hon member for Yeoville’s comment relating to expenditure in the TBVC countries. What was at issue was not the sensitivity of the expenditure but the fact that money was borrowed to be spent which was not part of the budgetary process and was not therefore discernible when examining our Budget as opposed to these countries’ budgets.

In dealing with the Budget, I believe the general reaction has been that it was something of a non-event. This was due partly to the give-aways on the revenue side earlier in the year in the part appropriation prior to the election. Nevertheless, those who were looking for tax relief were disappointed and fears of bracket creep, with its effect on individual taxation, have not been allayed.

Secondly, it is being questioned whether or not the Budget is going to be significant enough as a stimulatory package to meet the requirements for a 3% growth rate. In evidence given before the Standing Committee on Finance this was one of the issues which received a great deal of attention, and much doubt was expressed as to whether this could, in fact, be achieved. It must also be noted that even if we achieved a 3% growth rate, it would not be sufficient to give employment to the estimated 300 000 people coming into the marketplace. Therefore, we are budgeting this year for an increase in unemployment.

This must be seen against the backdrop of political unrest, a state of emergency, sanctions, disinvestment and, regrettably, net emigration from our country. A very real fear exists that a lack of confidence will prevail, that the necessary investment will not take place and that the stimulatory objective will not be realised. This fear was expressed by organized commerce and industry, as well as by a number of individual commentators.

In regard to confidence and growth, which are so sorely needed in our country, the Government has relied on expenditure to heat up the economy, with no further relief in taxation. An examination of the expenditure side reveals that increases are budgeted for which are not necessarily stimulatory to the economy. I therefore believe that the Government will have to resort to additional stimulatory measures later in the year in order not to snuff out the already flickering candle of growth.

Thirdly, the question of a plan of priorities was discussed and it was acknowledged that this does exist, but it remains a well-guarded secret. At this point I wish to state that again the hon member for Yeoville did not suggest that there is no plan. We acknowledge that there is a plan, but our difficulty is that we have not seen it. It is therefore very difficult to evaluate one year’s budget when it is in fact the first of a five-year plan and therefore would be part of a trend. I believe the overall aspects of this plan should be disclosed so that we can comment more sensibly on this Budget and on where the Government is leading us. Questions such as parity between races for things like pensions, housing and education need to be evaluated. Key questions in this regard are by when, at what cost and to what standard. I believe the Government should have taken us into their confidence with the details of this plan.

I should like to quote the President of the Afrikaanse Handelsinstituut who said:

I share that view, and would have liked to have had access to that plan.

I should like to refer to another comment made by the hon the Deputy Minister of Finance regarding police expenditure when he questioned the hon member for Yeoville’s point that, in fact, the plan for real growth in police expenditure is only 7,5% for the next five-year period. We were, in fact, given evidence in the standing committee that the police themselves find this unacceptable. What was not at issue, was the increase in budgetary expenditure for the police in the coming year. We were looking at the plan, and my understanding, in any event, is that a large portion of the increase in the budgeted amount for the police this year is attributable to the fact that the SA Railway Police have been incorporated into the SA Police Force.

Fourthly, while funding the deficit for this year largely out of reserves seems reasonable under the circumstances, the question arises as to what will happen next year and the year thereafter when these specific funds which are being applied in this year will not be available. Nevertheless, we believe that by not going to the market, this method of funding will have a minimum impact on interest rates and it is therefore to be welcomed.

The question of Government credibility has been raised by a number of speakers with regard to relying upon the Government not to overspend. Indications have been given that in previous years expenditure has exceeded budget. This has happened virtually every year and on some occasions by as much as 20%. We believe it is imperative that once we have a budget, the necessary financial controls should be in place to avoid this happening again. If that is not done, a great deal of the debate that is taking place today will not be relevant in the sense that the actual expenditure will not bear any relation to the figures that we are looking at.

Increases in expenditure on education are welcomed. This House has debated the inequality of education and we welcome this as a step towards redressing the situation. However, I want to utter a word of caution in this regard. This point has also been mentioned by other hon members. Job creation remains a critical factor in order to meet the aspirations of people who will be better educated. In this regard the R100 million decrease in expenditure on job creation is extremely disappointing and I believe the Government should rearrange their priorities in this regard.

One class of citizens who have been neglected in the past are pensioners. The creation of special bonds is therefore to be welcomed although it still represents a negative rate at 15% when inflation is taken into account. These bonds have caused quite a flutter in the financial marketplace as they are seen to be competitive and, as such, will ultimately lead to an increase in interest rates, particularly the mortgage bond rate. I believe this will have to be carefully evaluated as will the amount made available to pensioners as it seems paltry in the light of the possible need and demand. Nevertheless, something has to be done for the aged and this innovation is therefore welcomed.

In summary there are grave doubts whether this Budget will represent a stimulatory package at all. We live in extremely difficult times calling for clarity of vision and a determination to get the economy going. This Budget does not measure up to what is required and hence has been described as a “non-event”.

Government priorities are not clear, and in the absence of this knowledge one is still left with a feeling of uncertainty. I say again that job creation is a fundamental requisite for South Africa. The facts that direct spending under this heading has been reduced and that questions about the ability of this Budget to stimulate the economy have been raised, do not inspire confidence. This Budget therefore fails to achieve what is necessary and there is a great likelihood that further stimulation will be required later in the year.

Mr Speaker, I now wish to deal with two specific issues. I see my time is running out, but if I may just proceed. There is concern in business circles resulting from the RSC levies and the distortion of property values resulting from the Group Areas Act. Both have a significant impact on growth potential and job creation. I think it is clear to most people that RSCs are having a difficult birth and that there is a view gaining popularity that they will be stillborn. I believe the need to postpone the collection of levies by one month is merely a further indication of problems that are being experienced in this regard. RSCs have been described as a costly method to share power without losing control. They have been greeted with a singular lack of enthusiasm and politically are regarded as a non-starter by many communities they purport to involve and assist. Let me state categorically that I am unaware of any argument against the principle of rationalising services or of assisting depressed communities.