as Chairman, presented the First Report of the Standing Select Committee on Security Services, dated 1 September 1987, as follows:

Your Committee wishes to express its concern at the working conditions of certain employees in the security industry and recommends that this matter receive the attention of the Minister of Manpower.

Security Officers Bill [B 118A and B—86 (GA)]—[B 102—87 (GA)] to be read a second time.

Mr Chairman, I request the privilege of the half-hour. Since the first portion of this financial year is already well advanced, it is perhaps necessary for one to refer to the overall position of the economy, but more about that in a moment.

Permit me, at the very outset, to refer to the important task and terms of reference of the office of the Auditor-General and his staff. In my opinion we are exceptionally fortunate, at present, to have an outstanding man such as Dr Joop de Loor occupying that position. I venture to say that I had a share in his education, because his father was our housemaster at university, and when I was a final-year student, it was my agreeable privilege to give him a really good initiation! [Interjections.]

The importance of the Auditor-General, as the watchdog of the legislative authority in this country, cannot be over-estimated, and that is why it is essential for us, in a democracy, which we still are at present—to take very careful note of and keep a watchful eye on the position of Auditor-General. He is, in effect, the only watchdog the legislative authority has to keep an eye on the way in which the executive authority spends the money allocated to it.

The importance of the Select Committee on Public Accounts cannot be over-estimated either. It is perhaps necessary for us to take a fresh look at the efficient operation of the select committee in this regard. It has perhaps become necessary to make more time available for that select committee to act, in co-operation with the Auditor-General, as the watchdog of this Parliament.

Something which I am particularly concerned about is that although the Auditor-General audits the expenditure of the self-governing national states, and submits reports to those governments, the matter simply ends there. The reports are submitted only to the governments and legislative authorities of those homelands and not to the select committee of this Parliament, which provides by far the major portion of the funds spent by those homeland governments. In my view it is time for an in-depth examination of this matter. What certainty do we have that those homeland governments employ the money we give them for the purposes for which it was envisaged. I should therefore like to hear the hon the Minister’s views on this. I do not want to place any obstacles in the way of the homeland governments developing towards independence, but until such time as those governments decide to accept independence, surely this Parliament still governs those areas. This Parliament should therefore also keep a watchful eye on the proper expenditure of money by those governments.

The importance of the Auditor-General and his office has been emphasized again by the latest events involving the State’s pension fund. In this regard I should like to distinguish between the position of the State’s civil pension fund and that of social pensioners. Since it has come to light, according to the actuary who investigated the State’s pension fund, that at the end of March 1984 that fund had an estimated deficit of R7,6 billion, it is simply not good enough to have the Government tell us that there is nothing to worry about because that fund’s present revenue exceeds the actual amounts paid out. The State’s civil pension fund must be run on an economic basis, because if that is not done and it is argued that the State cannot go bankrupt, the implication is that the State will employ taxpayers’ money to make good any possible future shortfalls.

I regard the funds in that pension fund as trust money. To argue that the present revenue of the fund exceeds the present expenditure can be compared to catching an attorney dipping into one of his trust accounts. If he were to tell one that there was nothing to worry about, because the money he paid out from his trust account each month was still less than the money coming in, it would not be good enough. [Interjections.] It is therefore essential for that situation to be rectified. We are dealing here with trust money, unless the hon the Minister is now telling us that use will be made of taxpayers’ money. We should also like to hear the hon the Minister’s views on this matter.

Let me just say that since there have been speculations in the Press about the problems involving the fund, it is simply not good enough for the Government to have thought fit to keep that report by Mr Malan in abeyance for a while and now to say, at this late stage, that it is prepared to make the actuary’s report public for the purposes of a proper debate. It is simply not good enough, because it creates the impression that if there are things which are embarrassing to the present Government, they are kept from public scrutiny.

We had the same strange phenomenon in regard to the Margo Report. I am referring to the indecisive attitude of the Minister in that connection. Initially we were told that the report could not be made public because it was still being translated into Afrikaans. Our standpoint was that even though we did want to keep a close eye on language rights in this country, some of us were nevertheless able to read English. So that really was no reason for withholding that report.

Subsequently the hon the Minister announced in his Budget speech, however, that he could not make the report public until the Government had adopted a final standpoint as far as the report was concerned. That was the hon the Minister’s standpoint. He said that if he were to make the report public before the Government had finally decided what it was going to do, it would encourage unhealthy speculation. One can understand the hon the Minister’s standpoint. Then the hon the State President suddenly announced that he was making the report available for public debate. We are therefore glad, if the news is correct, that the hon the Minister is now giving all interested parties an opportunity, until the end of September, to make representations in regard to the Margo Report.

We agree that the recommendations of that report should not be implemented in a piecemeal fashion. That report should be seen as a whole, because it would simply not be possible to implement the concessions, if I may call them that, recommended in that report if one did not also examine the sources of revenue suggested in the report to compensate for the concessions.

We therefore look forward with interest to what is going to happen. We do want to issue a warning, however, and that is that since the Margo Report has highlighted actual shortcomings and emphasised that as a result the distortions that took place in the past, there was real resistance on the part of the average taxpayer in South Africa to the payment of tax, the Government should not drag its feet and should implement the report as quickly as possible if it finds this to be so.

The first five months of the financial year have now come and gone. If we look at the hon the Minister’s projections and note that he expected a growth rate of 3%, basing his estimates on that, and that the Budget for the SA Transport Services has also been based on that, we again find things going wrong as far as that projection is concerned. We find that although the hon the Minister budgeted for a deficit before borrowing of R8 500 million, that deficit had already amounted to R5 389 million by the end of the first four months.

If we look at the annual report of the Governor of the Reserve Bank, who sketches a very favourable picture of the position of the South African economy, though telling us at the same time that the economy is not really getting off the ground properly, we see that he highlights one reason for this, and that is a lack of confidence amongst South African investors, a lack of confidence in the political and constitutional future of South Africa. One can understand such a lack of confidence, particularly if one looks at what happened last year. Last year the House adjourned in June with only a few minor Bills on the Order Paper, and we were then told that we were adjourning with a view to reconvening in August for the important legislation of the hon the Minister of Constitutional Development and Planning relating to the National Statutory Council. When we arrived here in August we were all on tenterhooks waiting for that hon Minister to bring his National Statutory Council into existence, but nothing happened, and we returned home without having achieved anything.

In the meantime we had an election, after which the Government claimed to have obtained a mandate from the electorate, a mandate which was to have been implemented this session with specific reference to the National Statutory Council, and that is the primary object for our presence here now, but the legislation on the National Statutory Council is not on the Order Paper yet.

It reminds me of the man who is trying to find the end of a rainbow. The nearer he get to the rainbow, the further it recedes. The Government is chasing a rainbow.

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

The lack of confidence in the economy of this country, as the Governor of the Reserve Bank pointed out, is the result of a lack of confidence in the constitutional future of South Africa.

Order! The hon member may proceed.

I want to advance reasons for the existence of that lack of confidence. We are being told that this new Constitution of ours is the ultimate answer as far as consensus is concerned. What it has demonstrably achieved is not consensus, but rather checkmate. This week Rev Hendrickse addressed a large meeting in Port Elizabeth, and he said:

What is more—we should like to hear what the hon the Minister of Finance’s answer is—Rev Hendrickse said there were members of the Cabinet who agreed with him in his attitude towards the hon the State President. [Interjections.] We should like to know whether the hon the Minister says Rev Hendrickse is not telling the truth when he says that.

Yes!

Then he should say it. [Interjections.] If Rev Hendrickse is telling the truth, we should like to know what Cabinet members agree with the standpoint he has adopted towards the hon the State President.

Why do you not ask him? [Interjections.]

Where are your Cabinet members? [Interjections.]

According to a report in The Star, Rev Hendrickse says he received a letter from an NP member of the House of Assembly, of which the following was said:

Order! I am really finding it difficult to understand the connection between the hon member for Barberton’s argument about the Rev Hendrickse and this Vote. I must again call upon the hon member to come back to the Vote under discussion.

He has nothing to say.

He is grazing like an old cow.

It is vital for those wanting to invest in this country to be reassured about where this Government is taking South Africa. Those people do not know where the Government is going today because the Government itself does not know. [Interjections.]

They want to know how much the chocolates cost.

I have to finish off now. [Interjections.] These days deregulation and privatisation are being advanced as the ultimate answer to our problems. I think we should be careful. Although our country has the monetary capacity to justify a further upswing in the economy, I do not think that the present-day Government dares to keep sitting on the sidelines if this does not happen. In recent times the private sector has not made the contribution it can rightly be expected to have made, and we should seriously consider State intervention to encourage and facilitate investment and development.

We are grateful for a project such as Mossel Bay. When, in the past, private bodies did not want to establish an Iscor, a Foskor or a Sasol, the Government of the day took the initiative, to the great benefit of South Africa. We must take a very close look at the circumstances prevailing in South Africa.

Mr Chairman, I should like to come round to the hon member for Barberton, but before doing so, I want to address the hon the Minister of Finance. Talking to the man in the street and picking up the “vibes”, as the kids say, one hears certain things being said.

Since we expect that the next round of sanctions and boycotts will commence with the new session of the American Congress in October, the truth of the matter is that if the five major companies in South Africa—we all know which companies I am referring to—were in any way inclined to do the patriotic thing by organising or orchestrating the purchase of the controlling interest in the bodies wishing to disinvest in South Africa, the withdrawal could entail tremendous benefits for our country.

Today I want to make an appeal to them and ask whether the hon the Minister sees his way clear to asking them to do so—I realise, of course, that he moves in different circles to those I move in. I think it would be a good thing if we could appeal to them, for once, to do the patriotic thing for this country by maintaining control over those who wish to withdraw so that they will know that they cannot simply withdraw in order to benefit themselves and so that what they would have to pay in order to do so, could benefit this country.

I now want to come to the hon member for Barberton. I have some problems as far as he is concerned, because he is one of the good and positive long-standing members of the Standing Committee on Public Accounts and the Standing Committee on Finance. He is well aware of the Speaker’s ruling that when the Standing Committee on Public Accounts is in the process of considering and deliberating on a matter, and hearing evidence, it is not desirable for the media or for this House to debate the subject before that report has been published.

Bearing in mind that that ruling is still applicable at this stage, let me now refer to the hon member’s first point in connection with the Auditor-General. Although I greatly sympathise with his standpoints, and agree with him about the Auditor-General in many respects, he is aware of the fact that at present the Loots Report is before the Standing Committee on Public Accounts and that we shall be commencing our deliberations next Wednesday. My problem is therefore that I cannot argue this matter with him now or comment on his speech.

There is a problem which he has and which I do not have. He has expressed his opinion here; what is he going to do next Wednesday?

Mr Chairman, may I ask the hon member whether he is aware of the fact that the hon the Minister of National Health and Population Development dealt with the question of the pension fund in this Committee yesterday?

That is in fact the next point I want to make, because I am now coming to the next point the hon member made. He adopted certain standpoints about the pension fund and made certain categoric statements here. He is aware of the fact that the Standing Committee on Public Accounts is investigating the Malan report. He is also aware of the fact that we shall be commencing our deliberations next Wednesday.

The Malan Report is not before the committee.

The Malan Report as such was not before the committee… [Interjections.] No, wait a moment, in terms of the best evidence rule, Mr Malan himself appeared before the committee, and the hon member could therefore not have obtained better evidence there. [Interjections.]

The report was not there.

Wait a moment. I admit that the report was not there, but the gentleman himself, who could give better evidence than is possible with any written evidence, was present. The hon member knows that, because he spoke about that, and he knows that next Wednesday he must make certain decisions about that.

[Inaudible.]

That hon member must stay out of the picture now; I shall be coming back to him. [Interjections.]

The hon member for Barberton, as he said, allowed himself to be led astray by the hon the Minister of National Health and Population Development. As far as that is concerned, I cannot grant him any immunity. If the hon the Minister of National Health and Population Development adopted certain standpoints in another debate yesterday, that still does not give the hon member for Barberton, who is a member of the standing committee, the right to say and do certain things here. [Interjections.] It cannot be allowed, and that hon member knows that as well as I do. He is a legal practitioner. I do not how good he still is… [Interjections.]… but when all is said and done, this hon member and that hon member who has just interjected, know that according to the Speaker’s ruling he has placed himself in a very difficult position.

No, no!

That is why I cannot react to that, and I should like to see what he is going to do next week. [Interjections.]

Let us examine the point he made about the Margo Report. The hon member said that he blamed the hon the Minister for not having tabled the Margo Report because, as the hon the Minister said, it had to be translated. Surely he is aware of the fact that at one stage I had the same problem with the Loots Report which dealt with the Auditor-General. He is aware of the fact that I approached him and the hon member for Yeoville and submitted it to the standing committee with their approval. He is aware of what happened there. The first to object when the committee convened that morning, was the hon member for Yeoville. [Interjections.]

That is the kind of thing a Minister and a government are faced with, and that is why I have great sympathy for the hon the Minister and do not think that he could have acted any differently. [Interjections.]

Let us be honest with one another. If we want to talk to one another about the lack of confidence, we must bear in mind the alternative, according to Assocom’s surveys, because according to those surveys confidence in the Government is steadily increasing. There is more confidence in the Government at present than there has been in a very long time.

If the hon member for Barberton is claiming that this situation is the result of a lack of confidence in the constitutional future of this country, he should indicate what the alternative is. [Interjections.] What is the alternative? Let us begin here on my right. Here is the hon member for Yeoville. I once gave him a warning and expressed my sympathy to him because they were stabbing him in the back. Today I want to congratulate him, because he has got rid of one of those elements. He is aware of the fact that there are three more of them. Only he and I are aware of the fact that there are actually three and a half, and I want to advise him to leave that half for last, because that is the most dangerous of them all. [Interjections.] They were rejected in the election.

What did the hon member for Barberton’s party get? According to them, that party obtained the full support of the AWB. Mr Eugene Terre’Blanche says he has 600 000 registered members, but the CP obtained only 550 000 votes. That means there are even more than 55 000 AWB members who did not even want to vote for them. [Interjections.] I want to congratulate the hon the Minister. He has been through a few very difficult years, which I think are now a thing of the past. Recently he has grown in stature and gained a greater measure of acceptance by the private sector. On that I want to congratulate him very sincerely.

Why are you defending him so vehemently?

I want to tell him that in the private sector I have encountered very positive acceptance. There is one thing in which he has recently had very great success, and that is the fact that people are trusting him. The hon the Minister has again proved this recently, particularly since the last Budget.

I should like to refer to the Granny Bonds. When the hon the Minister made those statements, he said that he wanted to take approximately R530 million and that he would not take more. There are few people who were inclined to accept his bona fides; not even the building societies. Where are we today? The hon the Minister has not deviated one iota from his word.

Order! I am sorry, but the hon member’s time has expired.

Mr Chairman, I merely rise to give the hon member an opportunity to complete his speech.

Mr Chairman, I thank the hon Whip. He is the only one with whom I am on friendly terms at the moment. [Interjections.]

The hon the Minister kept his word. As far as building societies are concerned, as he said in the discussion of his Budget, he immediately stopped those bonds. The building societies did not keep their word, however, because they undertook to keep faith with the Minister and to accept his bona fides. I think the building societies owe him an apology. [Interjections.]

As a result of the limited time at my disposal, let me raise two specific points with the hon the Minister. I am experiencing some difficulty with the question of privatisation, deregulation, free trade and so on, and that is that although the hon the Minister, in his capacity of Minister of Finance, endorses all these factors in conjunction with his colleague, the hon the Minister of Economic Affairs and Technology, and also propagates the implementation of all these facets, the truth of the matter is that we do not always find this reflected in what is said by the other departments, and they do not always have the same attitude towards their implementation.

Let me take the question of third party insurance as an example. At street level one hears that there is no longer going to be any free-market element in third party insurance. Surely that is completely at odds with privatisation and the free-market principle.

Mr Chairman, you are in a far more favourable position. Would you assist me once more? [Interjections.] Surely we cannot allow ourselves, on the one hand, to endorse the policy of the hon the Minister of Finance, the hon the Minister of Economic Affairs and Technology and the Government as a whole, and then have a bureaucratic faction which states that it is not going to allow private companies to obtain their market share of third party insurance or to increase or decrease their share of that market.

As a further example let us take a look at Soweto. It is said that if one wants to make an application in Soweto, there are 127 forms that have to be filled in. Surely that is not something that one can tolerate in this development of free trade and in the development of our informal sector.

Let us go further and look at the example of Blue Downs, which we would so much like to develop. Clients of mine have been struggling for four months now to obtain an infra-plan of that development centre in which they want to invest R200 million. Their last answer was that we could not be given that plan because it was going to be published; we should simply consult the newspapers.

I want to ask the hon the Minister of Finance to have this bureaucratic and wayward conduct on the part of other departments made subject to centralised and co-ordinated financial planning and discipline. That is why I foresee that he, as the Minister, should be able to deal with that overall co-ordination, and this does not mean interfering in the other Ministers’ departments, because I find no fault with the way in which the Ministers carry out their tasks; I simply think there should be co-ordination.

There is a second point I should like to make. The question of group areas is constantly in the picture these days and I want to tell the hon the Minister my people are getting a bit tired of this, because as far as I am concerned the question of group areas does not only embody the opening up of Constantia or Bellville or Woodstock so that some specific person, or anyone for that matter, can go and live there.

Every month I comment on the opening up of the central business district in my constituency, and I have no objection to the opening up of the business district to people of colour. My people are asking me, however, when the central business districts of those people are going to be opened up to Whites.

I therefore want to ask the hon the Minister today whether it is possible for him and/or the hon Chairman of the Ministers’ Council of the House of Representatives to issue a joint or separate statements in order to clarify the issue of the central business districts of other groups being opened up to the Whites. [Interjections.]

If we advocate the concept of free trade…

Mr Chairman, on a point of order: Do you think the hon member is raising a matter which falls within the ambit of the Vote?

I am speaking about free trade. [Interjections.]

Order! The hon member may proceed. [Interjections.]

I was trying to put the question of free trade into a financial context, Sir. It is a point that will fundamentally have to be addressed. We are engaged in large-scale developments, because this is a matter with tremendous scope. I think the time has come for those ideas to be spelt out to businessmen so that they can know what it is all about.

At the moment the NP—let us now be practical—is surely the only instrument, not only for building the future, but also for gaining it by purchase. I therefore want to ask the hon the Minister to use all possible means to enable us to gain it by purchase.

Mr Chairman, I request the privilege of the second half-hour.

Sir, this debate has so far ranged far and wide and has had very little to do with finance. I am not going to fall into the trap of the Group Areas Act or the AWB this morning, but am going to try to keep to finance. I shall respond to the hon member for Vasco during the course of what I say.

I should like to start off with the following matter. I understand that one of the Deputy Directors-General, Mr Wronsley, has been promoted to Director-General in the Administration: House of Delegates. I should like to congratulate him on his promotion and should also like to place on record the services Mr Wronsley has rendered both as Secretary to the Treasury and as Deputy Director-General. I think he is an outstanding man, and I, for one, think that the Administration: House of Delegates has benefited greatly by getting him, and we, to a large extent, will lose by having lost him. He has made a very real contribution and is a very loyal and able public servant in the best tradition of the service.

Hear, hear!

Secondly, I should like to deal with the question of the state of the economy. In this regard there are a few questions I should like to put to the hon the Minister.

To my mind there is inadequate fixed domestic investment, there is inadequate consumer spending, there is an inadequate demand for consumer credit, there is inadequate incentive to create capital and to save, there is inadequate job creation and there is inadequate attraction for foreign capital. I can quote statistics in respect of each one of these items in order to demonstrate that from the very low base from which we are progressing, we are progressing at an extremely slow pace.

We are not achieving the results we need. We can look for example at this one simple fact: In regard to the total production capacity in manufacturing in early 1987 it had shrunk to a level which was equivalent to that at the beginning of 1983. Insofar as jobs are concerned, despite the increase in population, in the formal sector of South Africa there are fewer people employed than there were five years ago. This is not the way in which we are going to solve South Africa’s problems.

The modest growth target of 3% which the hon the Minister set for himself and which this finance committee pointed out to him would not be achieved on the measures which were before us and which the FCI and others warned would not be achieved, now looks as though it will not be achieved. The reality is that in per capita terms this year it looks as though we will have virtually a nil growth. That means that despite all the talk and the fact that there is a growth in the financial economy and the financial sector, despite the boom on the stock exchange, despite all of that it looks as though there is likely to be a nil growth this year in per capita terms or, if anything, a minute point of a percentage. This is not the way in which we are going to solve South Africa’s problems. It is not the way in which we shall get stability in South Africa.

Certain questions have to be posed and the hon the Minister must answer them today, because he is being brought to account. As the hon member for Houghton pointed out the other day, this is the Committee in which the hon the Minister must justify his remaining in office. He must tell us what he is going to do in regard to this. This is the crucial question to the whole matter and therefore I have to ask specifically: What is this hon Minister and this Government going to do in order to increase the level of investor and consumer confidence? What is this hon Minister and this Government going to do in order to remove the uncertainty in regard to the social and political future of South Africa? These are the crucial questions. I want to say to the hon the Minister what is really needed in South Africa at this time is for the Government to take the people of South Africa into its confidence. There have been times in the history of this world when countries have been in difficulty and in trouble. The way in which to fight that trouble is to go to the people and tell them what the problem is and that they will have to make sacrifices and then appeal to them to get stuck in in order to solve those problems. The Government can only do that if they actually take the people into their confidence and give them the true facts.

Let me give hon members some of the true facts that the public want to know. We know there is a five year plan and we read that there is a five year plan—certainly in regard to expenditure guidelines—but then I ask the hon the Minister to tell the people of South Africa what his five year plan is. I am in favour of a five year plan. It is not a socialist doctrine even though it is true that in a country like Russia they have had five year plans. However, what they do is to tell the people what the objectives are and what it is hoped to achieve. They also tell the people how they are going to do it and ask them to make sacrifices. I make the appeal to the Government to take us into their confidence, to tell us what they are going to do and then to ask us to make the sacrifices which will be necessary for us in South Africa. The truth which has to be told in no uncertain terms is that for the White community in South Africa to survive they will have to make sacrifices. It is no use bluffing the people into thinking that they can survive in South Africa without making sacrifices. The hon the Minister needs to tell that to the people and to take them into his confidence and ask them to make these sacrifices.

We also know that there are priorities which have been determined by the State President’s committee. I am asking the hon the Minister to tell us what these priorities are so that we can get stuck in and help to build the South Africa that we want. It does not help to keep secrets. There are also secrets in regard to the formulae and the time spans for equalizing social services. I want to tell the hon the Minister that there are hardly any White South Africans who will believe that it is not necessary to equalize social services in South Africa. However, they want to know how to do it and they want to know over what time span it is going to be done. They are prepared to make the sacrifices to have it done because they want to have a secure future in South Africa.

In the same way, insofar as the Black community is concerned, they need to know within what time span they can expect to live in a non-discriminatory society. Other people are holding out expectations to them which they cannot fulfill. However, we want to be able to show that, through peaceful change, reasonableness and negotiation, there is a future for them, and that discrimination can be eliminated within reasonable time. One can only do that when one honestly says to people that one cannot give it all to them immediately. Some people in the radical movements say they want it all and they want it now, but the reasonable person knows that that is not possible. Therefore, one has to say to the person that it is not possible to do it immediately but that it can be done over a specific period of time and that it will be within the reasonable period of time which he asks. That is why I appeal to the Government to take the people into their confidence, so that we can make the sacrifices that are necessary for the survival of this country.

The hon member for Barberton referred to the independent homelands. I should like to touch on just one aspect to which he referred which I find terribly disturbing as a budgeting issue. I read in the Press that in regard to, for example, Venda—hon members can correct me if the Press report is wrong—almost half of the budget is being financed by means of a bank loan which has been guaranteed by this Government. This is in line with the history of how budgets have been balanced with bank loans which are guaranteed by this Government. I should like to know what the situation is in regard to each of the independent homelands. I should also like to know what percentage of the budgets is being guaranteed by bank loans by this Government, whether there is any prospect of the loans ever being repaid and whether this can possibly be regarded as sound budgeting. If it is true that half the budget of a country is provided by means of a guaranteed bank loan, then, to my mind, there is something wrong with their finances. It cannot be a sound budget in that form.

The second thing that I should like to touch on—one cannot get away from this—is the pension fund. The hon member for Vasco says that there is a Speaker’s ruling. There is no Speaker’s ruling…

Of course there is; I’ll show it to you!

No, Sir, there is a Standing Order, SO No 168—I suggest that the hon member reads it because it is very important and he should know it—which reads as follows:

That is how Standing Order No 168 reads.

I think it is a flagrant disregard, not of the Standing Order but of the reality of the situation, that while the Government knows that the Standing Committee on Public Accounts is hearing the evidence of Mr Malan, as the hon member for Vasco said, and of other people, the hon the Minister of National Health and Population Development makes statements not only in this House but also to the nation on television which are, in fact, completely and utterly misleading. [Interjections.]

The reality is that what he said in regard to the question of the present cash flow situation being what it is has absolutely no bearing on the solvency of this fund. This is borne out, not by any evidence to which I intend to refer, because I did not get this report in the committee—yesterday the hon the Minister said that the report was available in his office…

That is correct. [Interjections.]

The members of the committee do not have this report, Sir!

Mr Chairman, since the hon member is aware of the fact that that report was made available to the committee, may I point out to him that he could just have asked for it? [Interjections.]

That is not true, Sir.

What happened was that the evidence was given and we were told that we were going to get copies of the report. Up to this moment I have not yet received it. That is a factual situation. If the hon member wishes, we can have a committee of enquiry in order to investigate this matter. The reality is that the hon the Minister stood up and said that the report was available. When one looks at this report which was obtained not from the committee clerk, not from the chairman, but from the office of the hon the Minister, it makes some matters very clear. If these things had been said on television it would have been a completely different story. The reality is that the deficit is not R7 billion. If one makes provision, as one has to, for anticipated increases in pensions, the amount of the deficit is R16 billion, almost R17 billion, and that was in 1985! As anyone knows—I asked the question yesterday, which the hon the Minister evaded—the interest makes that amount increase so that by now the figure is not R16 billion but about R20 billion. When the hon the Minister talks about the cash flow he does not actually disclose that in this very report it states that insofar as the cash flow is concerned at the present moment there is likely to be a satisfactory position in regard to the pensions if the cut-off point is now. In other words, if one were to have a hypothetically new situation with contributions from now on, one would in fact have a surplus—as this report discloses—of R150 million a year. I want to read to hon members what this report discloses in this regard:

*Nobody will disagree with that. It goes on to say:

In other words even this R150 million is in reality not a surplus. However, if one takes R150 million—and for argument’s sake I am assuming that there would be a surplus of R150 million—how many years would it take to eliminate that deficit, which we accept is R7,6 billion? How many years is it going to take? Who is going to live that long? It will take an eternity at a rate of R150 million per year. I therefore say that it is misleading to say this to the public of South Africa. What happened on the television yesterday evening was totally misleading. I believe this is something which should not have happened, and to do something like that under those circumstances cannot simply be overlooked.

† Let us consider two fundamental things. A change was made in regard to the question of what the pensionable salary is, from averaging it over a period to what is now the final salary. That was the real burden. Secondly, the buy-back—and I give hon members the example that one can in fact join the Public Service today at the age of 54 and one can buy back to the age of 16. Have hon members ever heard of anything like that in their lives! It is absolute nonsense. Now the hon the Minister says—he said so yesterday—that they were looking into the matter and that in the near future they might make a change. If I were a public servant and I heard the hon the Minister say that, and I had not yet bought back, I would rush to buy back. I am telling this hon Minister—because he is responsible, because in the final analysis the taxpayer has to make good this deficit—that it should be announced today that there are no more buy-backs under the old system. The situation should be frozen so that we can try to get some sense into this matter.

It is the same thing all over again. The hon the Minister must take the people into his confidence and then we will all know where we are.

For the moment I want to deal very briefly—I hope to come back to it—with the question of the Margo Commission Report. We have 50 minutes in this debate to deal with everything concerning finance. We asked that this matter be referred to the Standing Committee on Finance so that evidence could be heard and so that Parliament could play a role in the Margo Commission Report. The matter stands at the end of the Order Paper and it is clear that it will never be discussed. It is also clear that it will never be referred to the Standing Committee on Finance. What is going to happen? This House will be honoured by being allowed to debate a new taxation Bill for two hours which will include recommendations in the Margo Commission Report. That is the sole input that this House will be allowed; otherwise, we will have to look for other debating opportunities. I think that is a scandal because we are here as the representatives of the ordinary people of South Africa and we are entitled to have an input into this report. To limit us to a two hour debate when a taxation measure comes up, and not to allow the Standing Committee on Finance to consider the report is I think outrageous. It is no use saying that there is a committee of officials. The responsibility for tax lies with the representatives of the people, Sir, and we are the representatives of the people—certainly, in this House, of the White people of South Africa. That is what we are entitled to do and that is the ancient right of elected representatives—to deal with taxation. In the old days one withheld it from the king when he did not do what one wanted him to do. Now, we do not have the power to withhold it from the hon the State President, because he and the Cabinet have greater power than the King of England ever had.

Hear, hear!

This is something… “Hear, hear”, says the hon member for Krugersdorp. [Interjections.] Well, Sir, I did not know that we had become a monarchy. I did not know it, but apparently the hon member for Krugersdorp prefers a monarchy and a king.

I like a president but not a king.

Mr Chairman, let me just touch on two things in one minute. The key to tax reform lies in one fundamental issue which we have not referred to yet: It does not help to have the most efficient form of taxation if the Government does not control its expenditure.

That is right.

Somewhere along the line the money has to be found in order to finance the hon the Minister’s expenditure. Unless this Government controls its expenditure, actually looks at the situation and identifies what our needs are, what is essential, what can be privatised and what we can in fact do, it does not matter how many forms of taxation one has. One can try to disguise it. One can make it look nicer and simpler and one can spread the tax base, but the reality is that the money has to come from somewhere, and it is going to come from the pockets of the people.

Mr Chairman, the hon member for Yeoville is a leading financial expert. I accept the fact that he is one of the most knowledgeable individuals in this House when it comes to finance. He is completely au fait with all facets of the economy. He has the ability, however, to refer solely to the negative points. He never comes forward with positive recommendations or suggestions. As a financial expert, however, he is in a position to make contributions about what should be done.

You show us.

It is very clear that there is, in the hon member for Yeoville, a real need to be part of the executive authority of the country. Whilst he remains the hon member for Yeoville, however, and is still a member of the PFP, he will never have that privilege.

Let us examine a few positive aspects of the economy. Our recent achievement in regard to the foreign debt ratio is surely an outstanding one. Why does the hon member for Yeoville not refer to that?

Surely there was positive growth in our export figures. In 1986 export prices increased by more than 14%. After all, the current account of the balance of payments improved dramatically in 1986, and at present there is still a very favourable balance. And surely the gold price has proved that as a money-earner gold is still firmly entrenched. And our gold exports have also increased. In spite of a long drawn-out miners’ strike, the level of the gold shares on the Johannesburg Stock Exchange has remained constant. These are all signs that the substructure of our economy is a very sound one. [Interjections.]

Order! Hon members really must lower their voices. We cannot carry on like this. The hon member for Gezina may proceed.

These are all signs, are they not, that our economy has a sound substructure?

It is true that the economy has not yet dramatically perked up, and that there are still factors inhibiting economic recovery. I am of the opinion that consumer confidence in South Africa has not been restored yet. We simply have to accept that during the past few years consumers have had some nasty shocks as a result of reckless price increases. Last year I issued the warning that this reckless game of price increases could have a serious effect on the pattern of consumer spending, particularly that of the private consumer, and that the manufacturing and business sectors would have to pay dearly, and were going to pay dearly, for this almost senseless, absurd and irresponsible increase in prices.

When we had the exchange rate crisis, everyone who had a hand in fixing prices specifically believed that that was a reason for increasing prices. Naturally the then weak rand had an effect on the prices of goods, particularly imported goods. Yet it seems to me as though manufacturers and distributors of locally manufactured goods also saw this as a chance to increase prices. In the meantime the exchange rate has shown a moderate improvement, but except for a few components, I have unfortunately seen no sign of this resulting in a decrease in prices.

It is also an acknowledged fact that this is the main reason for the high inflation rate. And this high inflation rate makes it impossible for the average consumer to spend more than he is at present. Ninety-seven percent of available income is being spent at present, and this leaves a very small percentage for savings, which in turn could lead to investment and ultimately stimulate growth.

The present situation is such that private consumer spending cannot escalate, even if there were a willingness on the part of the consumer to increase his expenditure. I am of the opinion that this is probably the factor that has the most inhibitive effect on economic recovery. Has the time not come for the manufacturing sector, the industrial sector, the commercial sector and the service sector to reflect on prices and their overall price policy? A positive gesture towards the consumer, by firstly pegging prices to a certain extent and, secondly, by decreasing them where possible, could perhaps restore consumer confidence to a certain extent. This could result in a renewed positive attitude on the part of consumers which could increase consumer spending and also stimulate the other sectors. It would be a question of give and take.

I therefore want to make a serious appeal to those sectors not to maintain their stranglehold, but to relax it ever so slightly so as to ensure that the consumer once more becomes an active partner in the economy.

In conclusion I want to refer to representations I made to the Commissioner for Inland Revenue about dealing with the allowances of public office-bearers, and specifically the allowances of mayors in Pretoria. Pretoria is a large city with a diversity of responsibilities, which therefore places a greater burden on its mayors. This means paying the office-bearers considerable allowances. Those are not allowances that the office-bearers can put in their pockets. They are paid in order to help cover the costs which the specific office entails so that the incumbent can be worthy of his office. My plea is that we take a kindlier look at the taxation of those allowances so that the mayors of Pretoria can more freely and confidently carry out the duties imposed by their office. I am sure that these representations will receive sympathetic consideration.

Mr Chairman, I should like to associate myself with the hon member for Gezina’s plea concerning the problem of the mayor of Pretoria. We would do well to give serious attention to that aspect.

Are you referring to the suburb of Verwoerdburg?

No, the country’s capital city, and of Johannesburg too. [Interjections.]

The hon member for Yeoville made quite a fuss about the target of 3% which they think we are not going to achieve. He almost gave me the impression that he wanted the hon the Minister of Finance to resign because we had not achieved that goal.

It would help.

So the impression is continually being created that the Government’s policy is responsible for the fact that in 1987—so it seems at the moment—we shall not be able to achieve a growth rate of 3%.

We warned you people.

I shall be replying to the hon member in greater detail. The hon member gets very worked up, but when facts are involved, they do not always accord with what he has said. [Interjections.]

When we look at our growth rate, we should not see it in isolation. We are too inclined to view the South African economy as the most important economy in the world. Our economy is not the most important, and in the present day and age there are very important structural changes taking place in international trade. If one looks at what has happened in the past few years, one sees that we have, perhaps for political reasons—sanctions and disinvestment—missed out on the upswing in the business cycle in First World countries.

That’s for sure!

Yes, but who made such negative propaganda for us abroad?

The hon member for Yeoville asked us to be honest with the public. If one looks at the upswing in First World countries, however, one sees that this took place mainly in the service industries. I think the hon member would agree with me. In the majority of those countries the birth rate has declined dramatically. That means that there is no longer any real need for housing and large-scale infrastructural projects. The result is that, as in the steel industry in the USA and Europe, everyone is ill. All these mineral processors get asthma. One must add to that that such industries are even more adversely affected by competition from the Far East. Those are the people who import our raw materials and have to create the boom conditions for us in South Africa.

The most interesting aspect of all is that we have found that the deficits in the current accounts of the balance of payments of Western countries are now being supplemented by capital flow, for example from Germany and Japan to the USA.

In the old days that money went for development in developing countries. What is also of interest is that there was not only a capital flow between developed countries, because developing countries—I include South Africa in this—also lost capital, and this capital flow went to help finance the deficit in the American trade balance and the deficit in their budget.

We know that that also happened for political reasons.

South America does not have the same problems that we do. According to The Economist, South America lost billions in capital flow to the USA and Europe.

Talk about South Africa.

Even though they do not have the apartheid we have, they also experienced a large-scale capital outflow. [Interjections.]

One can go further. At the same time these First World countries subsidised their food industries to such an extent that at present they are in a position to export food to developed countries. This means that the developed countries are in a position in which there are no real new possibilities for them, and that is why no one wants to invest there.

The most interesting aspect of all is that the new industrial countries have also structured their exports on the American and European market patterns, and not upon those of their own local markets, an example of this being Japan. The USA, and I think Europe too, are at present introducing protective measures against these new industrial countries. These same industrial countries are the ones which, in recent times, are importing increasingly more of our raw materials.

If the USA’s electronics industry continues along the path it has travelled up to now, a sword of recession is going to be dangling over the new industrial countries. If that were to happen, there would not be a blossoming future for everyone here, because to tell the honest truth, the Western countries perhaps have a low inflation rate and low gross investment, but they have increasing unemployment, because in Western countries there are very few new investments in their industries. This is what will, of necessity, influence us in the British and American markets.

We are, in fact, not only dealing here with a political disease when we speak of sanctions and disinvestment, but also with an economic disease which is rearing its head on the international front.

It will no longer be an easy matter for South Africa to obtain capital from the West. We get a little, but our problem is that we can no longer obtain a large amount, a large inflow of capital.

Our markets are shifting to the Far East. Not only does the Far East need minerals, but it also needs food. Nor is the Far East all that concerned about whether we want to process the minerals further.

What is also very interesting is that in countries in the Far East, for example Taiwan, there is a considerable amount of capital available, and we shall have to consider collaborating with these countries on new projects in South Africa. Sanctions and disinvestment will perhaps compel us to make adjustments which we would not normally make, and to look to the Far East and even the Middle East, once there is greater stability, for our future markets and trading partners.

I should like to refer to the hon member for Yeoville’s speech. He said that he would be absent for a short while, but I shall nevertheless begin. He complained about the figure of 3% which we are not achieving, but he did not check his statistics properly, because if we compare the first and second quarters of this year with the third quarter of last year, we find an interesting phenomenon. Private consumer spending increased from 1,6% in real terms—I am now comparing the third quarter of last year and the first quarter of this year—to 3,5%. In real terms consumer spending is therefore picking up.

Consumer spending by the authorities in general has decreased slightly from 6% to 5%. Gross fixed investment has increased from -0,4% to 2%. In other words, the total gross domestic spending increased from - 1,5% to 6,5%. That does not look bad at all.

So where was the problem? In that connection the hon member for Yeoville did not, to my way of thinking, do his homework. In real terms our export growth declined from 3,1% to -6,0%, whilst our imports increased from -8% to 4%. That gives us a growth rate of 2,75%.

What is more, if we compare the first six months of this year with the corresponding period last year, we see that we happened to achieve the 3% growth rate.

You are playing with figures. Mr Chairman, may I put a question to the hon the Deputy Minister?

My time is fairly limited. If I answered any questions, I would have difficulty in finishing my speech in time.

But it is not…

Order! The hon member for Yeoville may not ask a question if the hon the Deputy Minister does not indicate that he is prepared to take questions. The hon the Deputy Minister may continue.

Well, tell us…

Order! The hon member for Yeoville must contain himself.

That is very difficult.

I’m just interjecting, Sir, nicely and quietly.

We cannot argue away the effect these international economic conditions and sanctions have on our overseas markets. It is very interesting to see what is happening at present in the South African economy and in the financial sphere. Already there are an increasing number of mergers and take-overs. Let me tell the hon member for Yeoville that that is one of the aspects that absorb a great deal of our capital.

I am being very honest. I am a little concerned at what is happening on the stock exchange. Suddenly we have a great many new millionaires on paper. My problem is that soon we could perhaps have many more bankrupts on paper too. I am not opposed to judicious investment on the stock exchange. Nor am I opposed to an active and sound stock exchange, but we must be careful that our people do not, in their overeagerness, ultimately burn their fingers.

Another point mentioned by the hon members for Yeoville and Barberton was that of State expenditure. We have a tremendous struggle to keep State expenditure in check. Our problem at present is that we have to finance current expenditure from long-term capital. We have a problem with cut-backs, because at present we are cutting back on sound capital projects—I have in mind, for example, Eskom, the Post Office and the SATS—and that is having an effect on our engineering industry which was one of our most important growth industries from the seventies to the beginning of the eighties. Cutting back so severely on State expenditure is having an adverse effect on those industries.

I want to associate myself with something the hon member for Barberton said. In view of what is happening to the stock exchange and the amount of money that there is in the economy, it is very important to consider whether the State should not again play its role as entrepreneur, a role which it has played throughout the years in the history of South Africa. I am thinking of Mosgas, a project we are engaged on at present. I do not mean that the State should participate to an even greater extent, because this movement should go hand in hand with the State relinquishing certain other investments or activities. The policy of the Government is, of course, one of greater privatisation. We should therefore see our policy as a combination of privatisation and a movement towards new projects.

There is something I should like to tell hon members. Dr Wassenaar’s latest book is on the market again. One official told me that after his first book, which took up a great deal of his time, Dr Wassenaar walked into a meeting. The official said he could not see him very clearly because there were a great number of people present, but he heard him say that things could not go on in this fashion and that the Government should now step in to grant assistance because his industry was on the point of total collapse. It just happened to be Dr Wassenaar, who was making a very earnest plea for one of his investments. One would be inclined to say that they should be careful of criticising others while they have deficiencies of their own. We do not like that.

There is also another aspect of State expenditure I want to mention. We must remember that our State expenditure is not simply normal expenditure. We are also dealing with development expenditure which we cannot simply put a stop to. The more democratic a country becomes, the more its costs are definitely going to increase. I think the hon member for Yeoville would agree with me that the greater the number of people who are incorporated in the system, the greater will be the costs, because those people make demands.

The following point is perhaps more specifically addressed to the hon member for Barberton. The more one differentiates, the greater the costs involved in co-ordination, and that is also a problem we are experiencing at present. [Interjections.]

I know the hon member said that we should spell out the steps we are going to take against inflation in future. Inflation is a major problem as far as we are concerned. An investigation was conducted by the Economic Advisory Council and a report will be made available shortly. It worries me that inflation is making us increasingly less competitive in our new markets. Our possible markets are in the Far East, and what counts as far as those people are concerned are price and quality. I suspect that our trade unions do not always realise that if they push up wages to such a level that we cannot compete, their people are the ones who are going to be hurt.

Someone mentioned to me the interesting fact that a diamond cutter in India earns R80 at present, while requests have been made at one of our motor vehicle assembly plants for remuneration of R825 per month for an unskilled worker. We cannot develop our economy if our trade unions do not take productivity into consideration too. The existing cake cannot suddenly increase in size, and if we are going to apportion it so that the entrepreneurs and the professional men get less, this cannot but have a detrimental effect on our growth.

A very interesting study was conducted in Switzerland. They calculated our salaries and wages and our buying power in South Africa and found that the figures were 45 for Johannesburg, 100 for Zurich, 52 for London and 76 for Sydney. The best way of analysing this is to buy a basket of products in each country.

In which currency?

They convert it into dollars.

The interesting finding is that with an average salary in Johannesburg one can buy 54 items, but only 52 in London. One must be careful about statistics, because I listened to what the hon member for Yeoville did with statistics, but the people who are so quick to pack up and leave for London must realise that the position here is really not that bad.

I want to conclude. We have a country with a future. We have a country with a large Third-World component, which is not a disadvantage. It is a country in which the Third-World components of the population are moving into the industrial echelons of our economy. With our inward industrialisation this is our future market. We have a country with the First-World components of its population moving into the service industries. We therefore have the technical knowledge and we have the people who create the markets and can staff our factories.

We are a young country with all the possibilities open to us. The only problem is that we do not always realise this.

Mr Chairman, I would like to refer to something slightly different. I would also like to refer to the Margo Commission’s Report, but to a chapter that is rather close to my heart, namely the one on taxation of married working couples, and the commission’s recommendation that the unit of taxation should no longer be the married couple, but the component parts thereof, that is to say, the individuals concerned; in other words, their recommendation of separate taxation for married women.

I would like to pay tribute to Mr Justice Margo and his commissioners for their modern, rational and unprejudiced approach to the question of separate taxation for married women, and for their very sound conclusions which, if implemented, will at last liberate married women taxpayers and their husbands from the tax penalty to which they have been subjected.

During the past five years a great deal has been said in this Chamber on the subject of separate taxation of married women; so much so that during the past few finance debates it has come to be referred to by speakers on both sides of the House as “a hardy annual”. I have read through some of these debates, and have come to the conclusion that they usually boiled down to a slanging match over the following questions: How many women are kept out of the labour market because of the punitive effect of joint taxation for married couples? Does joint taxation indeed act as a disincentive to marriage, with the corresponding evil effects on the social mores of our country? How much extra tax could be collected if these women who are kept out of the job market because of joint taxation actually went to work?

These counter-questions are posed by the other side: How much would the fiscus lose if the joint taxation system were phased out and how much extra collection costs would be incurred if wives were to be taxed separately from their husbands?

No one seems to have accurate answers to all these questions, only guesstimates. The Margo Commission, on the other hand, says it does not matter that these points have thus far only been argued on anecdotal evidence. Even if the answer to all these questions is yes—yes, joint taxation does keep highly qualified married women at home and deprives the country of their skills; yes, it keeps single working women living in sin; and yes, it penalises men married to working wives; and conversely, yes, although separate taxation will result in a loss to the fiscus and in an increase in collection costs—this is not the main point.

The Margo Commission deals with the question of separate taxation on an entirely different and much sounder level of argument. It states that the choice of the appropriate tax unit must hinge upon questions of principle and not on the size of the tax yield.

I would like to congratulate Mr Justice Margo and his commissioners for at last tackling the question on the basis on which it ought to be tackled, namely principles of natural justice, fairness and taking into account the attitudes and the standards of the age. The Margo Commission states that the choice—ie between the couple as the unit of taxation and the individual—must surely rest on our social goals and values. What must be sought is the unit that, after taking into account administrative constraints, accords best with the current beliefs and mores of the tax-paying public.

The Margo Commission’s chapter on the status of married women taxpayers is a most eloquent piece of writing on behalf of married women who work, and the case for separate taxation for married women has never been argued better and more fully.

The report states a few hard facts, viz that marriage deprives the woman of her status as a taxpayer in terms of the law; and again, that in an era when the individual is extolled and regarded as the primary unit the law must take account that there is considerable force in the view that each earner of income should enjoy privacy and confidentiality in matters of taxation.

Of course, as matters stand now, this is certainly not the case. A married woman who earns income, does not have this privacy and confidentiality, as she has to disclose all details of her income to her husband, as the report of the Margo Commission points out. Unfortunate terminology and structure within the Income Tax Act leave one with the now unacceptable impression that a woman is a non-person. Mr Justice Margo rightly questions section 7 (2) of the Act, which states that a woman’s income is deemed to be the income of her husband. The fiscus is not greedy; they only include the wife of longest standing, therefore the second and third wives of bigamists have to be taxed separately. However, Mr Justice Margo points out that marriage has developed in our age into a partnership of equals in which the partners share property, power and responsibility. The Matrimonial Property Act of 1984, which abolished the marital power of the husband in marriages in community of property and which affirmed the equality of administration by both spouses of all jointly owned property, does reflect this change. If the law of property has taken account of changes in our social fabric, so should the tax system.

The present system of treating a married couple as a unit of taxation is based on the assumption that in general married men support dependent housewives. All evidence points to the fact that this assumption can no longer be made.

According to the report of the Margo Commission the single most outstanding social phenomenon of the 20th century in the Western World has been recognised to be the trend from the single earner family to the double breadwinner marriage. South Africa has been no exception. There has been an exponential growth of women in the job market. The HSRC research of 1984 indicates that in 1980 half of all White married women were working, and that another 28% were planning to work. Margo says that the real question is therefore whether married women are still working and earning and achieving; not for themselves, but merely in order to supplement the income of their husbands. The accompanying question is whether men, solely on account of marriage, should inexorably find their tax burdens increased when the income is generated, controlled and perhaps even exclusively enjoyed by another individual.

Mr Justice Margo’s answer to both these questions is a resounding “no”, and I am sure that he is speaking on behalf of the majority of husbands married to working wives, quite apart from the working wives themselves. As Judge Margo says, it is important that our tax system should not only be equitable, but should be seen to be equitable. It is enough, he says, that there is a widespread belief that it is not.

As I have said, he waves away the argument about the loss to the fiscus and the extra administration costs as unimportant. He points out that any small loss to the fiscus resulting from separate taxation can easily be compensated for by small changes to the rates and rebates and allowances. He says that these previous arguments that were offered overlooked the independent efforts of a separate individual who seeks recognition for her own achievement.

Mr Justice Margo feels that these changes in the assumptions underlying modern marriage, coupled with the progress that women have indeed made in professions previously reserved exclusively for men, render unacceptable any institutionalised subjugation of the one sex to the other. Clearly the Income Tax Act can be amended to equalise the status of married women, and I hope that it will be soon. However, this is only one aspect of the problem.

The other major aspect is the financial disadvantage inherent in joint taxation for so many married working couples. There is no gainsaying this financial disadvantage for the average couple whose joint income—of which the husband usually earns two thirds and the wife one third—is R12 000 per annum or more. Research shows that some 98% of White working couples are affected. I think it was estimated in 1983 by Mr Ron Miller, the then member for Durban North, in referring to the marriage tax, that some 650 000 married couples in South Africa were affected at the time. One wonders how many more there are today. Mr Justice Margo offers extensive data to prove the prejudice suffered by married couples.

In conclusion, the Margo Report challenges all the shibboleths that have been dished up by those who traditionally seek to justify the onerous treatment of a working wife’s income, from a tax point of view, on the basis that each couple’s taxable income must bear an equal proportion of tax, regardless of the source. [Interjections.]

Hopefully South Africa’s working married couples will be able to look forward to a more equitable attitude from the tax authorities in the not too distant future, with the change from the couple to the individual as the tax unit. In the face of Margo’s irresistible arguments it is hard to see how any argument for the status quo can be maintained.

Mr Chairman, I have much pleasure in following upon the hon member for Rosettenville. Certainly, as a man with a working wife I have much pleasure in supporting what she has had to say about individual taxation. Interestingly enough, this is a subject that has been pursued vigorously by hon members on this side for many years; and furthermore, I understand that last year the hon the Minister of Finance actually took a very contrary view to the one that the hon member for Rosettenville has taken today. [Interjections.] Nevertheless, it is gratifying to see that kind of progress made by hon members on that side of the Committee.

He is a misogynist! [Interjections.]

In the short time available to me today, I wish to concentrate on another aspect of the Margo Commission’s report.

At the outset, I believe it is right that the Government has not pre-empted public debate by publishing a White Paper on this subject as the commission covers wide ground and the subject matter is of vital importance to South Africa’s economic growth. It is also vital to the well-being of all South Africa’s citizens. It is regrettable, however, that the report has not been referred to the Standing Committee on Finance where we would have had the opportunity to deal with it in far greater depth as has been mentioned by the hon member for Yeoville.

Many lobby groups have and will continue to comment on and criticise the commission’s report. This is healthy in influencing Government policy, and today I wish to add my own comments and criticism to the melting pot.

The commissioner, Mr Justice Margo, and all those who served with him, are to be congratulated upon and thanked for a monumental task and a worthy contribution to the economic debate in this country. The report, numbering some 500 pages, contains a wealth of economic data, theory and discussion. It functions as an influential text on economic theory in general and tax systems in particular.

In commenting, however, one has to consider the background against which the commission has reported, viz the society into which the tax system as proposed is to be introduced. It is a society in which there is an enormous maldistribution of wealth; a society in which the overwhelming majority of people have no say over how much and in what manner taxes are to be raised and indeed how they are to be spent; a society in which a lack of social policies can impose and have imposed burdens upon the tax system; a society which has been divided under apartheid legislation and in which there is unequal education, unequal opportunity for self-development, and inequalities in many other aspects of daily life; and a society in which the tax rate is already too high, largely to finance ideological but wasteful Government expenditure.

At the time the commission was appointed, tax legislation had reached the ultimate in incomprehensibility and ineffectiveness. Ad hoc adjustments over the years to meet the requirements of particular pressure groups had resulted in a hotch-potch of legislation that only a fortunate few could understand—those fortunate few being tax consultants whose profession consequently became a fast growing one! In addition to that, personal and company tax rates were unacceptably high and GST, which had increased threefold since its inception, had become a major source of irritation and grievance.

Something had to be done to reduce the burden; but in terms of the commission’s brief, nothing could be done about Government expenditure which continued to forge ahead by leaps and bounds as the Government gravy-train grew longer and longer. Somehow changing the tax system came to be seen as the panacea to correct all evils.

It is the overall recommendations of the commission with which I have difficulty. Quite simply, as I understand it, the commission has recommended that the tax burden be shifted. Emphasis should move from an ability to pay in a progressive form of taxation to a benefit received or user-based form of taxation. Income tax and GST should be reduced and made more digestible, and a new tax, CBT, introduced to make up that shortfall.

I will not comment on the CBT today other than to say that although called a business tax it will in fact be borne by the public through pressure on salaries and wages and increased end prices. The principle here is that the community using goods and services will be responsible for their funding. I seriously question whether this is acceptable in our dual society of haves and have-nots which has largely arisen through social practices. I will give hon members a simple example. The people of District Six who have been forced to the outer reaches of the Cape Flats will be penalised by having to pay higher transport costs in order to get to work. This has been recognised by the commission in paragraph 3. 17 of the report which states that the problem of providing goods and services is exacerbated by the current unequal distribution of income according to population group and thus the inability of all such groups to pay the necessary taxes. I believe serious consideration has to be given to the shifting of the tax burden. The commission has been brutally frank and I would like to quote as follows from its report:

The commission’s aim of purifying the tax system by removing anomalies contained therein, specifically to meet the needs of certain groups, is to be supported. The removal of tax expenditures such as marketing allowances to promote exports and allowances to manufacturers to encourage decentralisation, will improve the tax system. Similarly, aspects of social policy which have been built into the tax system of the country and which it is now proposed should be removed, will also improve the tax system. However, such adjustments cannot be regarded in isolation. It is simply not possible to evaluate the commission’s findings in this regard without evaluating Government expenditure on the other side of the equation. A simple shifting of the tax burden which is perceived to be fair, but is actually being borne to a larger extent by the poorer community, will be totally unacceptable. The commission has recognised this and I quote from paragraph 4.55 of the report:

I note that the Government intends publishing a White Paper on the commission’s findings early in the new year. Recognising that the Margo Commission has recommended a shifting of the tax burden over a broader community base, it is imperative that Government should simultaneously deal with the expenditure side as far as this affects matters of social security and subsidies for the poor. Failure to do so will be insensitive in the extreme. Direct consequences will be general dissatisfaction, further polarisation of communities, an increase in the division between the haves and the have-nots, and the rejection of a system supposedly designed to reform our tax structure. I earnestly call on the hon the Minister to address the issues of social security and the alleviation of poverty simultaneously with that of tax reform.

Mr Chairman, the hon member for Pinelands advanced a fairly lengthy and in-depth argument on the Margo Report. I shall content myself with only one remark about it, and that is that the hon the Minister has indicated the programme which is going to be adopted by the Government in dealing with that report. At this stage I shall not comment any further because we shall be granted sufficient time, in the future, to debate that issue.

I want to associate myself with an aspect the hon member for Barberton raised when he commenced his speech with a reference to the Auditor-General and his office. On behalf of this side of the Committee I also want to express my gratitude and pay tribute to the professional manner in which Dr De Loor and his office produce work of a high calibre.

The fact of the matter is that one of the cornerstones of a democracy is public accountability for the expenditure of public funds. Government auditing is the basis for preserving this important cornerstone. That is why confirmation of this is found in the Constitution. In section 83 of the Constitution of the Republic of South Africa it is provided that the accounts of the State Revenue Fund shall be investigated, examined and audited in terms of the provisions of the Exchequer and Audit Act. Sections 41 to 51 of the Exchequer and Audit Act contain the provisions in regard to the appointment, conditions of service, duties and powers of the Auditor-General.

It is important to note that the Auditor-General and his office do not form part of the administration, acting as they do on behalf of Parliament. Therefore the Auditor-General and his office form a central link in the process of public representation, whilst the administration is accountable to Parliament. What this briefly amounts to is that it is the Auditor-General’s task to determine the regularity with which the monetary affairs of the public sector are conducted, to determine how effectively resources are employed and to report on this to Parliament or the relevant legislative body.

To give hon members an idea of the scope of this task, let me mention that no fewer than 51 reports on accounts for the 1985-86 financial year will be published by the Auditor-General. In the course of expenditure and audit investigations carried out during the 1985-86 financial year, more than 3 000 enquiries about accounting procedures and financial transactions were made to departments, statutory bodies and other institutions. These enquiries resulted in approximately R7 million being recovered. There are more than 1 800 offices and institutions on the audit inspection register, and over the same period inspections were carried out at more than 500 offices. This does not include the SA Transport Services, the Department of Posts and Telecommunications and the self-governing states.

Another important event during the past year was that the four former provincial audit components also linked up with the Auditor-General’s office during September and October of last year.

On numerous occasions, in this Committee and in this House, reference has been made to the fact that reform is not only taking place in the political and constitutional spheres. Reform is taking place in many spheres in South Africa. So it is also of importance that adjustments be made to the changing demands made upon Government auditors. Reform is also necessary in this sphere. Steps must therefore consistently be taken by the Auditor-General to increase the quality and the field covered by the auditing process.

A very important aspect that now presents itself is that as the role played by Government auditing is extended to include achievement auditing and to make provision for the changes in the security situation in our country, the requirement guaranteeing the independence of the Auditor-General and his office becomes increasingly important.

To an increasing extent there is then a need, not only in many countries of the world, but also here in South Africa, for more information to be obtained about Government programmes. Not only do taxpayers want to know whether the Government’s funds are being properly dealt with in terms of existing laws, but there is an increasing need to ascertain what is being achieved in terms of these programmes, in other words whether they are being implemented effectively and efficiently.

Another important aspect relates to the security situation in our country. As the onslaught on our country grows in magnitude and there is a greater need to develop a counter-strategy for the survival of our country, it is of increasing importance to obtain confirmation of the independence of the Auditor-General and his office. The public requires information about the expenditure of all public funds, and about the funds employed for these purposes.

It therefore goes without saying that the more independent the auditing or monitoring body is, the more acceptable it is to the public. The entrenchment of independent government auditing in legislation takes place in many ways in many countries. For example, in Belgium there is legal and even constitutional protection against injunctions from the administration. In France the independence of government auditing is also protected by way of legislation.

In regard to this requirement for independence in the RSA, I merely want to refer briefly to one particular change which has already been implemented. Up to and including 31 March 1987 the funding of the Auditor-General’s office took place in the same way as that of other Government departments. As far as the provision of funds was concerned, the office of the Auditor-General was therefore still subject to the supervision and control of the Treasury. From 1 April 1987 the provision of funds to the office of the Auditor-General has been regulated by way of an operating account.

Audit fees, calculated in accordance with tariffs approved by the Treasury, are now recovered from all departments and institutions for services rendered. And the introduction of the operating account serves as a useful administrative tool in the office of the Auditor-General. I have no doubt that this arrangement will have a positive effect in contributing to the independence of the Auditor-General’s office. I admit, however, that at the same time proper accounting and financial control of the Auditor-General’s office is essential. The introduction of the operating account in support of the governmental function is definitely a step towards promoting the greater independence of the office of the Auditor-General.

A debate on Government auditing, without any reference to the Standing Committee on Public Accounts, would most certainly be incomplete. Permit me, therefore, on behalf of this side of the Committee, briefly to express my thanks to the chairman of this standing committee, the hon member for Vasco. I want to give the Committee the assurance that under the competent control of the hon member the delegated powers of Parliament are in very good hands.

Mr Chairman, the hon member for Newcastle has quite rightly, I think, referred to the very important part played by the Auditor-General in the functioning of Parliament. I just want to express my agreement with the sentiments he expressed here today.

†I listened with great interest this morning to the hon member for Yeoville, the PFP’s chief spokesman on finance. He reminded me very much of the prophet Jeremiah. He told us everything that was wrong with the economy—inadequate investment, inadequate spending and inadequate use of credit. However, he had very little that was positive to say as to what could be done to correct the matter. The only point that he made was that the Government should take the public into its confidence and tell them that they have to suffer more.

I have great respect for the hon member for Yeoville, but I find it very difficult to determine exactly what his economic philosophy entails. I also find it difficult to determine whether he follows PFP economic policy or whether the PFP follows the hon member for Yeoville’s economic policy.

I would also like to refer to the Margo Commission’s report, and congratulate Mr Justice Margo and his fellow commissioners on the report on the tax structure of South Africa. I think they are to be commended on the elegance of the language in which the report is written, on the diligence with which they obviously approached their task and on the incisiveness which has accompanied their analysis. I think a special word of appreciation is due to the commission when it is remembered that the work was done without any monetary consideration being extended to them. I would like to propose to the hon the Minister that this matter be investigated further, especially with regard to future commissions. We should ask ourselves whether members of the public can rightfully be asked to serve on commissions of inquiry without remuneration. These members are usually highly qualified people and experts in their fields. The question thus arises whether they should be asked to serve the country for love and charity alone, very often forgoing income that might have been earned during the time spent serving on a commission.

Mr Chairman, it is not my intention to adumbrate the Government’s reaction to the findings of the commission. Very rightly, the report has been thrown open to public debate. However, I think to date the public response has been very disappointing. There have been positive attitudes, but there has been a disturbing lack of in-depth analysis and constructive criticism. It was therefore very refreshing to hear the hon member for Rosettenville arguing a case for a particular lobby in a most eloquent fashion. I also find it interesting that the hon member for Pine-lands agreed with her…

She was agreeing with us.

… but at the same time expressed grave misgivings as to the introduction of a CBT, because it is exactly that CBT which is going to replace the income lost by taxing man and wife as separate individuals.

The hon member for Pinelands also stated that we should look not only at increased taxation, but also at diminishing expenditure. I think he owes a duty to this House to tell us where he plans to make the cuts. All I heard him say was that he was pleading for greater and more extensive social security and subsidisation of the poor. [Interjections.] I think that we should look at where the money should be coming from.

*With regard to the Margo report I think the opposition parties have a very important function to perform. I also think they have a responsibility to the public to make suggestions, to criticise and to help achieve consensus in connection with this matter.

† Taxation is always an emotive issue. Everybody wants to pay less tax, and everybody wants more services and benefits. The problem has therefore to be approached with the greatest circumspection, responsibility and objectivity. The content of the report will continue to be debated in public. Further oral representations will be made, and there will be a continuous process of consultation between the authorities and the public before any of the recommendations in the report becomes legislation.

In the little time left to me, Sir, I want to talk about sanctions and the economic onslaught against South Africa. There was a Press report recently about the New Zealand Government refusing to accept a race-horse that had been bred in South Africa, exported to America and re-exported to New Zealand. This matter was approached with such seriousness that it was ultimately referred to the Prime Minister, and he discovered that there had been a precedent—that a flock of goats had been imported into New Zealand from South Africa and that that flock of goats had been allowed to enter New Zealand. [Interjections.] Now, Sir, I should like to suggest that the result of this transaction has increased the average IQ of the inhabitants of both New Zealand and South Africa! [Interjections.]

I do not want to talk at great length about the following matter, Mr Chairman. I merely want to point out that the whole strategy of disinvestment is also part of the sanctions campaign. I have here in front of me a letter written to the Financial Times of London by a certain gentleman who is the organiser of the Anti-Apartheid Movement and whose address is 13 Mandela Avenue, London, NW 1. In this letter he states:

I believe those firms on whom pressure is being brought to bear to disinvest from South Africa should be seen as being the tools of those who want a greater evil, viz sanctions against South Africa.

Mr Chairman, I do not intend to follow on the hon member for Wynberg, apart from saying that we in these benches totally share his sentiments regarding the horse incident in New Zealand. We agree that New Zealanders are also going to have their eyes opened as a result of this type of behaviour.

*Mr Chairman, the hon member for Vasco complained about the reference by the hon member for Barberton to the report of the Auditor-General. I hope the hon member has taken cognisance of the speech made by the hon member for Newcastle, who serves with him on the standing committee. May we expect, Sir, that the hon the Minister will address him on this?

† May I also add the congratulations of this side of the Committee to the tributes paid to Mr Wronsley on his promotion. We wish him every success in this regard.

I must say that it is very seldom that I find myself in agreement with the hon member for Yeoville, who is not in this House at present, but I could not agree with him more in his assessment of the sad state of affairs presently existing in the Republic of South Africa. In fact, I make so bold as to say that if the economy improves, it will be in spite of the NP Government and not because of their efforts.

The hon the Minister confirms the inability of the Government to handle the situation; he says that the Government can do no more to stimulate the economy. That is not quite correct; there is more that the Government can do, and that is in fact to resign and save us on this side of the Committee the frustration of waiting until 1989 before we can launch our salvage operation, not only to correct the economy but also to stop the transition to a Mandela-led Black dictatorship.

It is the responsibility of the hon the Minister to ensure that the fiscal policies are managed to the advantage of all in South Africa. It is his responsibility to conduct the overall management of the department; to establish and maintain overall public, economic and financial policy for the RSA; to regulate and control the finances of the State; to finance the Exchequer by the collection of revenue and raising of loans in terms of appropriate legislation; to control the financial institution structure of the RSA; to apply financial policy with regard to financial institutions; and generally to co-ordinate and monitor financial and economic policy in the interests of the RSA, as indicated in programmes 1 to 8 of the Finance Vote under discussion today.

I am afraid that the hon the Minister has failed dismally in this respect. I believe that we have reached the stage where drastic action is needed to remedy our financial and economic ills. What we need is a solemn undertaking from the hon the Minister that until the NP—or shall we call it the New Progressive Government—has managed to restore confidence in this country, all Cabinet salaries be frozen solid so that they themselves—the hon the Minister too—can feel the discomfort of the decaying rand that has plunged the working man into the stressladen position of being engaged in a struggle for survival, a struggle that becomes worse every month. Even hon members on that side of the Committee who still have contact with the working man will confirm this.

I am convinced that, faced with this situation themselves, the hon the Minister and his colleagues will very rapidly find a solution to our problems. If they cannot, they owe it to us to resign so that we in the CP can rectify the situation with a conservative fiscal policy, as opposed to the liberal socialist policy presently supported by the NP Government, which must bear the responsibility for our economic and financial ills. [Interjections.]

We on this side of the Committee did not need a Margo Commission to tell us that there was a serious imbalance existing in our tax system, one of the main problems in the country’s economy. [Interjections.]

Order! Hon members must afford the hon member an opportunity to make his speech.

Thank you, Mr Chairman. It is CP policy to see to it that taxation of the individual is reduced by ensuring that big business pay their rightful share. It is CP policy that married people should be taxed separately—the hon member for Rosettenville may like to take note of this.

I do not intend debating the Margo Commission report here today—I am sure there will be ample opportunity to do so in the future; but I agree with my colleague, the hon member for Barberton, that the Margo Commission was used as a delaying tactic by the NP Government—whilst they apply the tax income gains raked in from the taxation bite into salary increases…

[Inaudible.]

… earned through the hard labour of the productive sector of our taxpaying public—to correct their mistakes of the past and to finance their harebrained schemes.

The NP is killing the goose that lays the golden egg, and the South African economy has suffered immeasurable damage as a result of this folly-filled policy. The Central Economic Advisory Service agrees with this. In their recent annual report tabled in this House, they state in their analysis of fiscal drag, and I quote:

I want to mention an example of what we on this side of the House consider to be the unfair redistribution of wealth by the NP which contributes in a major way to the problems experienced and which build resentment towards our tax system in South Africa.

*The former member of the Cabinet, Rev Allan Hendrickse, recently referred in Port Elizabeth to the “chocolates” he wanted in return for further participation in the tricameral Parliament. Allow me to point out to hon members, however, the “chocolates” they are already receiving to an increasing extent. I am referring to the way the money spent on education is divided among the various groups in South Africa. In the 1986-87 financial year, the Whites contributed more than R9 billion in the form of personal income tax. The amount they got for education was R3 887 696, which represents 43% of the tax they paid. As against this, the Coloureds received more than 430% of their total tax contribution for their education. The Indians received 210% and the Blacks 1 660% of the tax they paid. I think hon members will agree with me that whatever the hon the Minister may say about which Whites pay the taxes, this is a totally unacceptable division of State revenue. [Interjections.]

Order!

Furthermore, I want to say that there is no reason to believe that this unfair distribution is not extended to all other Government departments. This problem can and must be addressed as a matter of urgent priority.

The time at my disposal does not permit of further comment. I should have liked to go into the question of inflation but I am sure my colleague, the hon member for Witbank, will deal more fully with that matter. I want to conclude by calling on the hon the Minister to address this distribution of wealth problem as a matter of urgent priority.

Mr Chairman, one can actually say the same about the hon member Comdt Derby-Lewis what was said about Louis XVIII of France, viz that he had seen everything and learnt nothing. With regard to who pays how much and who receives what benefits, there is one question I want to put to him. He is a working man…

A writer.

He is a writer and I assume he receives a reasonable income. There are hon members in this House, especially on the opposite side—I do not see them here now—who are very rich. He enjoys exactly the same benefits as they do, however. Is he prepared to pay the same taxes? It is quite simple. Does he want the poor people and the rich people to pay the same taxes? Surely that is what this argument is about. [Interjections.]

I want to put another question to the hon member. Has his party ever made a request for a Margo Commission to be appointed to enquire into the tax structure? Of course not. After all, the Margo report is not about the reduction of taxes. If, therefore, the Government changed its standpoint after studying the report, it would not be to collect more taxes. The hon member really reasons like a sophist.

When I woke up this morning I had a well-prepared speech, but after a voter from my constituency telephoned me this morning, I decided that that speech would have to wait for another day.

I want to talk about assistance to farmers, about the assistance the Government renders to our farmers, about the factors responsible for the farmers’ debt. The hon member for Lichtenburg mentioned the figures, and I actually mentioned those same figures before he did. I do not have the exact figures with me now, but it will be remembered that the State President’s Economic Advisory Council indicated that the farmers’ current debt could be ascribed to the following factors. I should like to know whether that is correct.

The debt is made up as follows: Inflation accounts for 46%, the increase in interest rates constitutes 31%, and a mere 22% of the debts arose as a result of the drought. I do not have the figures at hand right now, but that is more or less what they look like.

The simple question we have to ask ourselves in this Committee today is by what amount debts would have increased as a result of inflation if the Government had allowed the farmers, when they began to experience difficulties, to go under, as in 1933. It is a fact, after all, that the debt would have been liquidated. Is there anyone who will argue about that? Once debt has been liquidated or written off, interest has no effect on it at all. After all, if that farmer is declared bankrupt, there is no money on which interest can be charged.

Despite what the Economic Advisory Council says, it is a proven fact that matters would have followed a different course if the Government had not protected the farmers, including me and all the farmers sitting on the opposite side. Who among us did not share in the Government’s assistance? Who among us? [Interjections.] Did those hon members get nothing? Then those hon members are better farmers than I am! [Interjections.]

I want to tell hon members that if the Government had not protected us, if it had not assisted us, we would have shut down all the co-operatives. The first one that we would have shut down at that stage is that of the hon member for Lichtenburg, because the Government gave that co-operative R800 000 this year as a subsidy in respect of interest payments, over and above the subsidies which the members of that co-operative had received.

This brings me to a serious matter. The hon members on the opposite side of the Committee come here with a specific case and want to convey the impression that the Government does not want to allow people to be assisted under the Agricultural Credit Act. They say the Government can assist people in terms of the Agricultural Credit Act.

I have a copy of the Agricultural Credit Act with me. Section 10 defines the object of the Act, namely to enable farmers who want to farm or are farming, to do so.

Section 22 provides that if a farmer is experiencing problems and has received the protection that the court may not act against him in terms of section 21, the board may, in terms of what was prescribed by the Minister of Agriculture, call a meeting of that farmer’s creditors if that farmer has reasonable prospects of farming successfully again. Only in such a case may section 28 be applied so that that farmer cannot be sequestrated. I specifically went into this matter, because I want to say…

A lawyer.

I am not a lawyer.

He is doing a better job than those of you who are.

By no means. The difference between the two of us is that I am honest. [Interjections.] That is the difference.

I specifically went into this matter because I was afraid that sophistry could be used to discriminate, for the sake of politics, against people who deserve assistance, farmers who have been leaders in their communities and have devoted a lifetime to their communities. For that reason I examined every section of the Act in order to ascertain precisely what it entailed.

I now want to move away from this matter and say something about the man who telephoned me this morning. He owes the co-operative an amount of R500 000. He has land with an agricultural value of R300 000. If his assets are excused, he will receive R300 000 for his land, of which the first bondholder will receive R100 000 and the co-operative R200 000. He would still owe the co-operative an amount of R300 000. That R300 000 is guaranteed by none other than the Government.

The Government would then forfeit that R200 000 of its guarantee in terms of the new adjustment, viz the R400 million scheme, which could also be used to purchase land at production value so that the price of land does not drop too much. This could actually mean that the Government would have to pay R300 000 to acquire that land. In addition to that it still loses R200 000 of the Government guarantee, which means that the Government will have paid out R500 000 in respect of that single farmer. Why that particular farmer? Do you know what that man said to me, Sir? He said,“That aid scheme of yours seems to me to be merely an advertising campaign.” [Interjections.] I think he made a mistake this morning.

I should like to refer to what the hon member for Yeoville said in connection with the pension fund. I want to ask him two questions. First of all, can he tell me today whether he knows of a country in the world in which the pension fund is fully financed? Does he know of one?

Yes.

I shall be grateful if the hon member will say which one, because my knowledge does not extend that far. My information is that there is no such country.

Yes, we all know that.

Morgenzon! [Interjections.]

I want to put a second question to the hon member. In the current year, the year about which we are arguing, the assets of this fund increased by 24%.

Did you say that the assets had increased by 24%?

They increased by 24% in one year.

No, you are completely…

The only problem between me and the hon member is that he tries to look for mistakes, whereas I try to look up that kind of thing. It is in the statements so we will not argue about it.

Those are the facts; look at the facts.

The facts are in the statements. [Interjections.]

You should rather stick to farming.

Order! I cannot allow this dialogue to continue. The hon member for Heilbron must proceed with his speech. [Interjections.]

Ask him if he wants your glasses.

The hon member next to me says I must give him my glasses. Perhaps he would then read the same things.

There is a second question, however. Does this deficit to which we have been referring mean that it is estimated that with a growing number of officials in employment and increasing salaries, and with the normal retirement of officials and new appointments, we shall reach a stage at which it will no longer be possible to pay out any pensions? If that is so, when will this stage be reached? [Time expired.]

Mr Chairman, I should like to thank hon members who have participated in this debate so far. Before I react to them, I should very much like to say a few other things.

In the first place I want to thank hon members who said very favourable things about Mr Wronsley, and I should like to associate myself with that. Mr Wronsley is an excellent official, a person who displays a great sense of responsibility, who is absolutely reliable and together with whom one can really get things done. It is a great loss for us to have to let him go, but in the Department of Finance we are not inclined to stand in the way of an official who is eligible for promotion. On previous occasions in this House I have repeatedly stated that my two hon Deputy Minister colleagues and I are very proud of the officials who support us in the department. In a certain respect it is an unfortunate fact that when it comes to promotion possibilities, our people probably all qualify.

I should like to apologise for the absence of Dr Stals. He is at present attending the meeting of the Economic Advisory Council. He wanted to be here, but it was impossible for him, and we have therefore divided our forces. He is an ex officio member of the State President’s Advisory Committee, which is meeting at this moment.

I should very much like to thank my two colleagues, the hon Deputy Ministers. I am happy with the two people the hon the State President chose to support me. I can hardly imagine that there could be two people who complement each other better in order to form a team than the two hon Deputy Ministers whom I am privileged to have with me. I thank them for their contributions in this House and for the way in which they deal with so many completely delegated aspects of our Ministry and our department.

I should like to associate myself with the thanks conveyed to the chairman and other members of the Standing Committee on Finance. It is certainly one of the standing committees which makes a material contribution to the smooth functioning of Parliament.

On behalf of the Auditor-General, who has no voice in this House, and his staff, I say thank you very much for the kind words that were conveyed to them. Administratively-speaking they fall under the Minister of Finance, but they are in fact directly responsible to Parliament. However, they must fit in somewhere administratively.

When we appointed Dr de Loor as Auditor-General, we had very great expectations of him, and I should like to say that he has exceeded our wildest expectations. He is, in an imaginative way, causing the office of the Auditor-General to assume its rightful place in the overall system of government, and we are very indebted to him for that.

In the short time he had available to him the hon member for Barberton mentioned a few important matters. I want to begin to react to them by referring firstly to the question of the auditing of the books of the self-governing national states. The hon member is probably aware that this is in fact done by the Auditor-General and I accept that his problem is merely that those findings are not tabled or debated in this House. At this moment I am not prepared to give him an opinion in that regard. I should like to consult my colleagues who are involved in the procedure of dealing with the findings of the Auditor-General about this matter before I do perhaps make a statement about the hon member’s suggestion.

On the one hand he is correct in saying that it is after all money that is voted by this Parliament, but on the other hand we are also striving for increasing autonomy on the part of the self-governing national states. The establishment of financial expertise and the acceptance of accountability and responsibility is also part of that policy, and open debate in regard to taking those things back must be dealt with carefully. After procedures were followed in regard to the specific legislative assembly, one of my colleagues was involved in the matter, but I give the hon member for Barberton the undertaking that I shall go into the matter and in due course raise it with him personally, here in this House, or in whatever way is appropriate.

The member for Barberton and other hon members referred to the question of the pension fund. In reality the pension fund has a divided responsibility. As regards the department and the Ministry of Finance, we are involved in the investment of those funds via the Public Investment Commissioners, because all the pension fund contributions of both the members as well as the State are invested with the PIC. To the extent to which it is our responsibility, we directed some time ago now that an investigation be instituted into the application of the accrual of funds.

After the actuarial investigation of 1985 we gave specific attention to increasing the yield of the pension fund investments with the PIC. All those funds, as I said, come to the PIC. In the case of private pension funds, 53% of those funds go into government investments, and the pension fund is free to invest the remaining 47% in the private sector. Naturally they earn a considerably higher yield there than is possible with the PIC.

For the information of hon members I can say that whereas the average return in 1984, for example—I am referring to 31 March of each year—was 10,96%, 11,92% in 1985, 12,84% in 1986, and 13,33% in 1987, the average return on 30 June this year was 13,58%.

We are trying, within the framework of the present investment policy, to make the yield as high as possible. However we are on our part investigating this yield further, because that it as far as our responsibility extends. If it is necessary to subject certain of the other aspects of the pension fund to scrutiny, the responsibility of doing so lies with the ministries and departments concerned.

If it is true that the benefits in regard to the buying back of a pension are too generous, it is a condition of service which must be addressed by those concerned. I want to tell hon members, and in particular the hon member for Yeoville, that I do not think he can argue against the principle of transferability of accumulated pension benefits for an individual.

No!

If he were to argue against this in principle, he would also be making it difficult for us to appoint people of senior age from the private sector in the Public Service. Nevertheless, whether it is necessary to be able to buy back a pension to the age of 16 is certainly a matter which must be subjected to scrutiny. It is not our specific responsibility, but a collective responsibility.

As regards other aspects of these benefits, these are also matters for which other colleagues bear the responsibility.

I want to content myself by saying that the entire question of pension funds is at present receiving responsible attention. In due course it will probably be possible for greater clarity on this matter to be attained.

I must tell the hon member for Barberton, though, that he must not confuse caution with hesitance. When we act cautiously with an important matter such as the Margo Commission’s report, we are not hesitating. With the best insight that we had at that early stage and with the level of understanding which he had at that stage of the findings of the Margo Commission and its recommendations and the possible implications thereof, we were of the opinion that it would be preferable if we provided guidelines to accompany it. As we grew more conversant with the report, and when we realised that there were two aspects on which the commission would not be able to arrive at finality, it was clear to us that we could indeed venture to release the report, with the necessary warnings.

We did not hide behind the Afrikaans translation of the report. I want to tell the hon member—he is after all a person who will understand this—that what was virtually an entirely new Afrikaans terminology had to be created in order to get the report translated into Afrikaans; in fact, my information is that once the language people were finished with it, the tax people no longer understood it. Consequently they had to revise it again, because those on the other side had created terminology which those on this side did not understand. This interaction did in fact make a contribution to our language, yes, but it delayed us when it came to making the report available in public in Afrikaans.

Furthermore—I have previously stated this so clearly—this was not a situation in which the hon the State President became impatient with us, as one newspaper in its simplicity tried to imply—and that the hon the State President then decided that we, his colleagues, had been brooding over the matter too long and that he was now allegedly taking it away from us. When all is said and done, it was the hon the State President’s commission that undertook the investigation.

The hon the State President therefore received the report himself, and he must therefore release the report. I can tell you that a government proceeds in such a way that there is the closest liaison in that connection between the head of government and the executive Minister concerned. Consequently our handling of the matter is in fact the result of close consultation between ourselves and the hon the State President. Consequently I shall dismiss those remarks made by the hon member for Barberton as mischievous, because I do not think he was in earnest about them.

He issued a warning, to which we have already, in the meantime, given a clear reply. We do not intend to drag our feet, but surely it is clear that we cannot deal with any legislation which may flow from what is acceptable to the Government during the present session. The earliest we can deal with legislation to change our tax system is during next year’s session.

We are at present planning and processing these four sets of activities which are in progress at the moment to give us the necessary interaction between ourselves and the private sector, the people who are affected, and all other studies as quickly as possible into a set of recommendations which are going to be submitted to the Cabinet in November with a view to a firm decision before the end of the year, so that we can proceed with a White Paper and with draft legislation. A very important matter which one must take into account in regard to the implementation of whatever can be done next year, and of that which can only be done in the following year, is when the authorities themselves will be administratively able to deal with the matter. Secondly we must establish from the private sector when they will be administratively able to deal with specific changes, if we were to decide on them.

We are consulting as widely as possible and trying to deal with the matter in an extremely responsible way, but as quickly as possible.

I just want to make a few observations on the question of the 3% growth rate figure, to which the hon member and other hon members, including the hon member for Yeoville, referred and to which my colleague in my opinion replied very skilfully.

†In this respect I would like to ask the hon member for Yeoville to drop the word “target”. We are not a planned economy. We do not target for a growth rate. However, what we can do is to target for the share which we as fiscal and monetary authorities can contribute in making possible a growth rate of a certain percentage. However, there is no way that any authority can guarantee a certain growth rate. We can prepare the ground for growth as far as monetary policy is concerned by as far as is possible managing our money supply in such a way that the interest rate pattern is conducive to economic growth. That we can do.

As far as fiscal policy is concerned we may decide to spend the money ourselves in order to stimulate the economy, which we have been doing to a certain degree not only to get the economy going, but at the same time to address some of our most pressing problems on the social and infrastructural level. Alternatively we can opt for supply side measures by granting tax concessions thus putting money in the consumer’s pocket and allowing him to spend it, thereby effecting a stimulation of the economy.

At a certain stage—and I have said this before in this House—we had the choice with respect to concessions either to keep the money and spend it ourselves by way of this expenditure with a dual purpose, or to grant a reduction with respect to certain taxes. Our econometric models at that stage showed us that we would ultimately have achieved the same stimulatory effect in the economy, but not necessarily along the lines of the activity that we had wanted at that particular stage. Therefore we opted at that stage to do it ourselves.

*It is in fact a useful political argument to say that we slightly miscalculated the growth rate, but in our set-up it is not really a very clever economic argument. You know, Sir, the reaction of the hon member for Lichtenburg and his hon colleagues in this respect is of course predictable, because to them everything is possible. For them it is merely a question of making a law and then abracadabra! The economy is growing at a specific growth rate. If it was possible to guarantee a growth rate by means of government action alone, I doubt whether there would be a single government in the world that would not guarantee their highest growth rate for its country; and if that were possible, would not in fact achieve it. I think one of our neighbouring countries should try this, and get the hon member for Lichtenburg and his cohorts to tell them how to do this, and then we can see whether they succeed.

We shall do so right here.

It is an absurd argument to think that the government in a country such as ours can set a growth rate and achieve it without there being the necessary co-operation on the part of the part of the private sector as well, which controls such a vast proportion of the economic activity in this country.

The hon member for Barberton made a very valid point with regard to deregulation and privatisation. He said that the State must intervene if the private sector does not do its share. This is something which we in the Government also said in public in the past. We did say it, and we are pleased that we can be unanimous about this. It is no use our leaving scope for the private sector if they do not utilise it. It is not a course of development which we as Government would very much like to adopt, for then we could perhaps reach a stage at which we could be labelled “liberal-socialistic” to use that nonsensical term of the hon member Mr Derby-Lewis. [Interjections.] If we take over all the economic activity and eventually control the economy completely, as in a socialistic state, he would perhaps be closer to the truth.

I really feel sorry for the hon member. He is not even able to quote his main spokesmen on finance correctly in the same debate! [Interjections.] One can only shake one’s head in commiseration at the quality of that hon member’s insight and debating on this particular subject. Perhaps, with the passage of time, he will display the necessary modesty together with the necessary expertise in this House. [Interjections.]

I want to thank the hon member for Vasco most sincerely for the valuable contribution he made. The hon member discussed the disinvestment issue. It is a very thorny issue because the large companies and investors in South Africa have really been pulling their weight so far by taking over the shares of companies that have left the country. Every time that happens it is a traumatic experience for my hon colleagues, our advisers and me. It is quite tragic to see what the South African top management of such institutions goes through when such disinvestment occurs. Although we are “buying back the farm” in the process there are a few things we nevertheless lose, and we must approach any hard-nosed attitude to disinvestment with the necessary caution and suspicion. A hard-nosed attitude in regard to disinvestment is not a very clever attitude, because accompanying the loss of the involvement of that foreign investor in South Africa is his managerial expertise, his entrepreneurship, his technology and also his interest in South Africa. When a company that has an interest in South Africa is a major company abroad and people in its country are messing about with sanctions legislation etc that is going to hurt the country in which it has its interests, it is going to take action. However, if it no longer has an interest, it suffers with us but sits back with its arms folded, because it has nothing more to protect. That is why we must approach the whole issue of disinvestment with the necessary circumspection.

The hon member made a few points on deregulation and privatisation. I took cognisance of them. I have a forum to deal with these matters, and I give the hon member the undertaking that I shall do this. I thank the hon member sincerely for his kind words to me.

Mr Chairman, I should now like to use a few minutes to react further to hon members’ comments. Later this afternoon, at the end of the debate, I shall deal with the rest.

†I was referring to some of the remarks of the hon member for Yeoville and I said that I thought his terminology in using the word “target” for the 3% growth rate was unfair.

It is your terminology.

I want to refer to the hon member’s remarks with regard to the five-year expenditure plan and all the other factors relating to that unity of issues involved in planning our expenditure and involving formulae etc for the next five years.

I have said repeatedly in earlier debates this year that in principle we would like to make those figures known to the public as soon as we possibly can. However, I also said to the hon member that he and everybody else who is curious about or interested in it and who needs to know must allow us time to refine it a bit more. If, in these difficult economic times, we were at first trying to publish our best efforts and be proven substantially wrong in certain respects, we would in fact be morally accountable in the event of the public basing their planning on those particular variables. I also advanced this argument earlier this year. Therefore, with great respect, I urge the hon member to exercise some more patience. We shall go public as far as these issues are concerned and we shall have ample opportunity to discuss them, but we want the integrity of our planning and the integrity of our figures to be at a higher level than they are at the moment.

When will you be ready?

I do not know, but we will come to this House and to the necessary bodies when we are ready. We are working hard at it and having a complete review. There are many, many variables involved—as the hon member for Yeoville will certainly appreciate—in setting up a five-year expenditure plan and apportioning, on the basis of a new priority system, expenditure patterns generically to the various expenditure items. It is a complex situation. It is not an easy task and we would like to do a much better job before we bring it to the House.

When the hon member talked, inter alia, about consumer confidence it reminded me of a leading article that appeared this morning in a Johannesburg English language newspaper under the heading “Short on supply”. This leader infers that the Minister of Finance does not have supply-side economics in his head at all; in other words, that the Minister of Finance, his Ministry and his department have in the first instance no knowledge of supply-side economics and, secondly, that they have done nothing about it. The only thing that we have in our minds, according to this article, is to use fiscal measures, Government spending and so forth when we want to stimulate the economy. Obviously that is a basic untruth and I would like to relate the facts to the Committee.

Throughout the past two difficult years we have used a combination of supply-side measures and Government expenditure measures that suited the particular situation.

As far as the supply side is concerned, I should like to remind hon members and also that newspaper—I do not know where they get their facts from but their memory is obviously very poor or completely underdeveloped—that, to begin with, in the 1986-87 financial year we budgeted for only limited growth in Government expenditure. We also made appreciable tax concessions to the value of R800 million. Therefore, that provides the first bit of proof that supply-side economics, its advantages and its feasibility, has been featuring very prominently in our planning actions over the past two years.

Last year, when it became apparent that the recovery still lacked staying power, a stimulatory package of R1,2 billion was announced in June, of which tax concessions totalled R250 million. Therefore, in the previous financial year there was already more that R1 billion of supply side stimulation.

Still further stimulatory measures of some R1,5 billion, consisting mainly of tax concessions of some R1 billion, were announced in the part appropriation speech in February this year. These tax concessions, including the further exemptions from import surcharge to the value of another R100 million, were designed to counter, to some degree, fiscal drag and to serve as a stimulus for the economy as well. This tax relief package comprised a reduction in the maximum marginal tax rate applicable to individuals from 47,5% to 45%, and an increased rebate in respect of the income of working wives, while the exemption in respect of interest earnings was raised from R500 to R1 000. These concessions amounted to some R750 million. Furthermore, an early repayment of the 1983 loan levy was made, placing another R287 million in the pockets of the taxpayers.

The stimulatory effect of this substantial injection is being reinforced by the nature and magnitude of the budgeted expenditures for 1987-88 and by a much higher deficit before borrowing than in previous financial years.

So, Sir, where does all this nonsense come from? I find it terribly strange that figures which can easily be remembered or checked up on are, willfully, so easily forgotten when it comes to the writing of articles in certain newspapers. Our deficit before borrowing this year, equalling 4,7% of our GDP is further proof that what that newspaper said is totally untrue. I will leave the matter at that.

*I should very much like to say something about the issue which the hon member for Yeoville raised again—it was also discussed earlier this year—namely the way in which certain deficits in the self-governing and independent states was dealt with. I should not like to discuss the particulars in regard to the amounts; I think hon members who wish to discuss them, may do so under the Foreign Affairs Vote.

On the part of the Treasury I just want to say that we are not prepared merely to make Treasury appropriations when certain deficits arise. If it is really a crisis we are prepared to extend a helping hand, but on the basis that the national state concerned accepts responsibility for that debt, and that the servicing of that debt, as far as interest as well as capital obligations are concerned, becomes a part of their budgeting process. In other words, the necessary reductions must be introduced, wherever possible, in order to cope with the matter. We are not prepared to support the principle that any deficit can simply be made good by way of appropriation by the Treasury. We believe it must done on the basis that there is a liability and a responsibility to work off that debt.

The question which arises of course is whether at this stage it complies with the requirements for the best possible way of financing a budget. The answer to that is no. It is not the best way of financing a budget. It is however a way which includes the necessary liability and responsibility, and the obligation to begin to incorporate the necessary discipline. This is how we deal with a difficult situation, in the ad hoc way.

Going hand-in-hand with this, and this is very important—a time will probably come when more can be said about this in the right place—is a reconstruction programme of the financing of that specific self-governing country, whether it is independent or not.

I want to conclude this section of my comment by referring to the hon member for Yeoville’s request that the Margo Commission’s report be referred to the Standing Committee on Finance. I really cannot support this in principle, for quite a number of very practical reasons. The Margo Commission received over 900 representations. The commission processed those representations and integrated its own research into them and brought out a report containing specific proposals. Now we are engaged, on the part of the Government, with our advisers, in evaluating those proposals, and we are in the process of discussing them with interested parties. My reply to the hon member is this: If any party or individual in Parliament feels a need to make a further submission with reference to the report itself, we shall receive it with the greatest of pleasure. I cannot, in all fondness see what use it would be to set the standing committee in motion on this matter again, and call in a whole lot of witnesses.

There are interest groups that will give evidence to our task group, and my colleagues and I in the Executive will begin to process those proposals and transmit them to the Cabinet.

†I want to say with great respect that I do not think it is fair comment to say that Parliament will be “honoured” to discuss this report for two hours. I do not think that is the way it will be handled. We will have ample opportunity in budget debates etc next year to debate the content of the White Paper and the anticipated legislation. Therefore, I do not see my way clear to support setting up the Standing Committee on Finance again to call in people to come and testify and do a large slice of the work all over again.

May I ask a question?

The hon member must just let me complete what I want to say and I will give him an opportunity to put a question.

*In any case the hon member does not understand how the system works. The members of the majority party in this House now have representation on the standing committee. If they have to adopt a standpoint this year in their capacity as members of the standing committee, they will have to do so at a stage before they are able to discuss it with their colleagues in the Executive or before they can receive guidance from the Executive. That is how majority parties work.

I am afraid I have to tell the hon member for Yeoville: Sorry, colleague, but if you are not a member of the Executive there is a definite limit on your participation in the decisions that come in to existence. That is the simple fact. That is how the system works at the moment. In other words, on the grounds of the fact that we do not want any further delay, on the grounds of the fact that there is ample opportunity for the PFP or its study group on finance or for the hon member himself, or any other hon member, to make their representations and even conduct an interview in this regard, and because there are certain other caucus disciplines which apply in the case of a majority party, I do not see my way clear to supporting that proposal made by the hon member.

To conclude my comment, he may put his question, and I shall reply to it.

Mr Chairman, in view of what the hon the Minister has said, would he support one of the following two propositions: Firstly, that once the White Paper is published, we should have a special debate on the White Paper so as to give us every opportunity to debate it; or secondly, whether he would support the concept of the two-hour time limit for the Income Tax Bill being extended in view of the very serious nature of what is to come?

Mr Chairman, as far as the second option is concerned, I think it involves changing the rules and regulations of Parliament and I do not think it is appropriate to consider that option. Depending on our timing with regard to submitting the White Paper to Parliament—if it can be done timeously so as to allow for a debate during one of the major political debates or financial debates—I do not think a special debate will serve any purpose. I think that if the timing is such that that kind of ample opportunity will not naturally occur through the processes of Parliament, then it will be advantageous or appropriate at that stage to reconsider it, because I do think that there is merit in considering a special debate under those circumstances.

Mr Chairman, at the beginning of what I wish to say I should like to welcome the hon the Minister’s brief comments just before proceedings were interrupted when he responded to the issue of the pressures of sanctions and disinvestment which South Africa is experiencing at present.

* He condemned a hard-nosed attitude, Sir.

†He resisted the temptation to be hard-nosed. He recognised that the involvement of foreign companies in this country brings their expertise, investment and involvement. It is a pity that some of his colleagues, notably the hon the Minister of Foreign Affairs, would not take a leaf out of this hon Minister’s book in terms of his restraint on this matter. It is very easy to make political capital,…

You are twisting it now.

… as the hon the Minister of Foreign Affairs does, about the foreign pressures that are building up. This is an area in which one can consolidate White resistance to change. I am glad that the hon the Minister took a more responsible approach.

There is a great danger we face in this country of being complacent about the present economic upswing which we are experiencing, of thinking that because we are in a relatively upward-moving economic cycle at the moment, after the imposition of limited sanctions, that all is well and that there is nothing further to be concerned about. The example of Rhodesia, however, is instructive in this regard. I want to refer hon members to an interesting article written on this matter called “The Rise and Fall of Smith’s Rhodesia”, written by Tony Hawkins, Harare correspondent of The Financial Times. He points out exactly what happened to Rhodesia in economic terms when he says:

That was nine years after the imposition of sanctions—

He says:

He concludes by saying:

We must be cognisant, Mr Chairman, of that pattern because I believe we are going through the same pattern. We have been experiencing an upturn, but as another commentator, John Bloomfield, speaking to the London School of Economics in August last year, pointed out, in Rhodesia during the latter part of their travail defence spending was up 600%, police spending went up by 300%, GST tripled and income tax doubled. In the RSA we are experiencing a similar pattern. Defence spending has gone up by 250% in the past five years, spending on law and order by 320%, GST has indeed tripled, and in many respects personal income tax has virtually doubled.

To the extent to which this hon Minister may recognise the importance of our retaining our links with the world, and remaining on a sound political relationship with our trading partners, I welcome what he said earlier.

Mr Chairman, I should like to raise two other matters during this discussion. The one is the question of the deductibility of private-sector pension fund contributions and retirement annuity fund contributions. I start from the belief that people should be encouraged as far as possible to provide for their own old age by building up their estates…

Order! No, hon members must lower their voices! The hon member for Constantia may continue.

… and not becoming a burden on the State. The pension-fund burden on the State, if people were not to provide for their own old age, would be crippling in the next twenty to thirty years. We could not handle it in our economy, and some of the more advanced economies of the world are already experiencing this as a problem. In this instance I need only refer to Japan. One vital way in which to encourage such provision is by providing favourable tax treatment for contributions to pension and retirement annuity instruments.

I say the Government has its priorities wrong in this regard. Firstly, employee contributions to approved pension funds discriminate against the private-sector employee at the moment. In terms of section 11 of the Act, which provides that there is no limit to the deductibility of contributions to public-sector pension funds for State employees, private-sector employees are limited by a specific limitation. Private-sector pension funds are limited to R1 750 a year, or 7½% of the employee-related income, which is a ceiling operating against the private sector. It does not apply to the public sector. I want to know where is the equity in that. That should be remedied.

Secondly, Mr Chairman, contributions to a retirement annuity fund by a person in the private sector—this is referred to in recommendation 17. 20 of the Margo Commission report—amount to either 15% of taxable income less income earned from employment or R3 500 less pension-fund contributions or R1 750. There is serious criticism of this because the present provisions, although they are in order for professionals and self-employed people, operate very severely against the majority of retirement annuity contributors, viz private-sector people who want to augment their pensions for their old age. This is so because the limit of R3 500 is a financial limit set in March 1977—ten years ago. If one calculates that limit of R3 500 over a period of ten years, at an inflation rate of 15%, which is less than the actual inflation rate, it appears that that limit should have risen—that is over the period of ten years—from R3 500 to R14 160. At the actual rate of inflation it should be over R15 000 at the moment. I believe this matter should be put right as soon as possible.

I am delighted to see that Mr Justice Margo, in his recommendations 17. 48 and 17. 51, in fact recommends the deductibility of contributions to all retirement instruments, whether from employer or employee, should be on a percentage basis. That is an important principle—that a percentage basis should apply, and not a fixed financial limit, as is the case at present. The percentage that should be deductible, Mr Justice Margo recommends, should be 20% of earned income. In this regard, Sir, I heartily support the relevant recommendations, and hope that the hon the Minister will execute these as soon as possible.

I would also hope, Sir, that the Government will not hide behind the question of the CBT and the overall acceptability of the Margo report as a package deal in remedying this matter. I believe it can be done without having to put into operation the new tax, and regardless of what happens about the new tax.

In the little time that remains to me I want to remind the hon the Minister that we are still waiting for a serious, concerted attempt to bring down the inflation rate; a plan from the hon the Minister. He said when he first came into office—that is a number of years ago—that this would be one of his highest priorities. We are now, however, getting to the stage where we are becoming desensitised to the fact that we are living with an inflation rate well into double-digit figures, whereas our trading partners are operating well within single-digit figures. This augurs very badly for the South African economy in the future. We are going to be devaluing our currency continually, adjusting to the fact that our inflation is running at these levels. This hon Minister simply cannot seem to get the bull by the horns in this respect; the inflation rate stays high.

We are going to be running the danger, in the present economic upturn—as the Standard Bank, in its August 1987 Review says—of having a hand-to-mouth recovery which, because it is not export-led, runs the risk of degenerating into a new spiral of heavy inflation.

What is your suggestion?

[Time expired.]

Mr Chairman, as it is this Ministry and this department which deals in the main with our country’s international financial relations, I should like to take this opportunity to refer to what I regard as the very great importance of our relationship with the international banking community. I do so knowing full well that this is not a very exciting subject per se; nevertheless I believe it is a very important one.

I think it is fair to say, in the first instance, that developments over the past few years have created the impression that the international banking community has become aggressively hostile towards South Africa. Some people even believe that banks have accepted the responsibility of putting political pressure on this country with the objective of changing the existing political structures. I think that to be fair, though, one has to concede that while this may be true of a number of individual institutions that regard it as a part of their international activities to try and influence the domestic political developments in countries where they operate, fortunately for us they are in the minority. The majority of international bankers fortunately still hold the view that the business of banks is banking, and that they should stick to that.

I think that the wrong impression about the attitude of the world banking community to South Africa can be better understood against the background of certain developments in recent years, and I should like to refer to them very briefly.

It is well known that towards 1984, and in the early months of 1985, the total net outflow of short-term capital from South Africa amounted to the sum of R3 billion. Since then a further amount of R13½ billion has left the country, mainly for the repayment of debt. However, there were a variety of different reasons for this large outflow of capital from our country.

Firstly, during this period the international banking system went through a very difficult patch; there was large-scale defaulting on loans, especially in the Third World countries, and many banks suffered serious losses. This led to a nervousness in the international banking community which also had an effect on the situation in South Africa.

Secondly, as you will know, in the middle of 1984 South Africa also entered a downward phase in the business cycle, and there was in fact a low demand for funds in this country.

Thirdly, and very importantly, the world media conveyed such an adverse and often distorted image of the South African political and domestic social situation that one could hardly blame some of the more faint-hearted bankers for their decisions to withdraw their loans from South Africa.

Fourthly, the political pressure groups in some countries such as the United States tried to make it as difficult as possible for banks to continue to do business with us, and some banks were actually forced, I would say against their will and better judgment from a business point of view, to withdraw from South Africa.

The point I am making—I think this is in line with what the hon the Minister said when he referred to the sanctions situation—is that it would be simplistic and wrong to portray the large-scale withdrawal of bank funds during the past few years as an act of animosity in itself, by the banks against this country. It was rather a combination of international and domestic developments which had a negative effect on our situation.

As a matter of interest, as at the end of 1986 South Africa’s total repayable foreign debt amounted to R45 billion, and about R35 billion of this amount was due to foreign banking institutions. In terms of our interim debt arrangements with foreign creditors repayment of about 60% of the total debt is subject to the agreed repayment restrictions, while the other 40% is not.

The message that this has for us is that international banking institutions are going to be playing a major role in our country’s economic life for a very long time to come. The point I should just like to make in passing is that as far as the standstill is concerned it was in fact arranged to guarantee that we could pay, rather than that we could not pay. This has been demonstrated to be true because we have met our obligations and confidence is returning. The thrust of what I am saying is that we in this country must resist the temptation to move into an isolationist frame of mind when dealing with the international financial community. There can be no doubt that for South Africa the road back to normality as far as its international financial relations are concerned will be through the international banking community.

Especially in one area, the financing of trade, bankers are, of course, more willing than in other areas to assist us but, unfortunately, because of the depressed domestic demand in our country and the low level of our imports, they have little opportunity to do so. There is also the problem, of course, of the interest deferential between local and foreign borrowing which does not encourage foreign borrowing at the moment. Moreover, we have a surplus liquidity in South Africa at present.

I would contend that we must realize that we still have many good friends of South Africa amongst the bankers of the world and they are still, in many cases, prepared to make loans available to us, albeit of limited amounts and with various constraints. There is another point which we should bear in mind, viz that it is also logical that we shall need the banks and other foreign investors again as and when the economic growth in this country accelerates. Although our own domestic savings may be enough to finance a growth rate of 3% per annum—this subject has been bandied about here today—I think we would all like to see a much higher growth rate. Almost every international trade transaction, whether it is an import or export transaction, is executed with the involvement and assistance of international banking institutions somewhere in the world. It is a fact of life that without letters of credit, bankers’ acceptances and other similar trade financing devices, international trade becomes impossible. We must also remember—and I think sometimes we forget this—that, should the bankers of the world ever really unite and exclude South Africa from these international payment mechanisms, they will force us into a barter system much more effectively than negatively inclined governments can do with other legal restrictions on trade. The bankers of the world also run the international financial clearing system and the exclusion of South Africa from these facilities would complicate our international trade no end. We should understand that the bankers of the world are people with much influence in their own countries, and South Africa’s desire to retain good relations with the international community should not only be based on their capacity as providers of funds but also on the part they play in the handling of international finance and payments, and also—and this is important—on the influence they have in general.

These three aspects are all of great importance and for this reason I should like to pay tribute to our hon Minister of Finance, his hon Deputy Ministers, the Director-general of the Department of Finance, Dr Stals, and his staff and our very distinguished Governor of the Reserve Bank, Dr De Kock and his colleagues for what they are all doing to maintain what I would call a network of relationships right across the spectrum of the international financial community. They spend a great deal of time travelling abroad and receiving visitors in trying to ensure that these invaluable ties are maintained and expanded. I would say that we all owe them a debt of gratitude for that.

Finally I should like to extend a word of appreciation to the local representatives of foreign banks, of whom there are quite a substantial number in this country, operating mainly from Johannesburg, for the role they play in maintaining these links. By their objective and balanced reports on our situation, they have played an important part in ensuring that the international banking community has the true facts at its disposal when taking decisions on South Africa.

In conclusion, I hope every member of this House, and every businessman who is engaged in international business, will assist and support our Ministry of Finance in its efforts to maintain and expand South Africa’s links with the international financial community to the benefit of all.

Mr Chairman, it is truly a pleasure to follow on the hon member for Umhlanga who provided us with a well-informed, well-delivered and positive speech.

*Mr Chairman, the hon the Minister of Finance has perhaps the most difficult task in this Parliament. There are many businessmen in the American Congress and Senate. According to Clem Sunter’s book The World and South Africa in the 1990s, big business and the Japanese Government are virtually the same thing. They co-operate very closely. In Germany the position is almost the same. In this Parliament, however, the hon the Minister has only a small circle of businessmen around him. For the rest, we are almost lawyers, teachers, and politicians. There is no Harry Oppenheimer, Albert Wessels, Anton Rupert or Raymond Ackerman in this House. Business is not our top priority.

Most of the speeches by hon members that the various hon Ministers have had to listen to have been pleas for more money for the farmers, the aged, the _Police, the nurses and the underprivileged. In this session up to now there have been few ideas or legislative matters in terms of which money is to be spent on the development of shops, technology or factories. Approximately 700 farmers have been declared insolvent during the past four years. We as a House have provided for massive aid to be rendered to the farmers. During the same period there have been more than 20 000 insolvencies and liquidations in the private sector. So far I have heard hardly a word of sympathy and definitely no offer of State aid for them in this House. As a House, we are not sufficiently business orientated.

†Mr Chairman, if all of us in this Committee would pay more attention to commerce and business, I think the budget of the future would be very different indeed.

The hon member for Rosettenville has urged the implementation of action in respect of the Margo Report’s proposals on the taxation of married couples. It is an urgent matter, but I think the report’s proposals on GST are vital, if we are going to give our commercial and private sectors the support they need. The report reinforces the opinion of the business sector that GST is at an unacceptably high level, that it inhibits growth in the economy. It cuts down the actual disposable wealth in the hands of customers. When a customer goes to a shop and 12% of the money he can spend is taken away from him, that shop can sell less. If the shop sells less, it buys less from the factory. If the factory sells less, fewer people can be employed. The 12% is a little too high right down the line.

GST has another very big disadvantage as far as we are concerned in this country, namely its high visibility. Every time a customer goes to a place of business and spends his money, he is visibly aware of how much money is being taken away from him. I think that has very poor PR value for our Government and commerce. The man gets irritated.

Especially if one does not see it come back.

It comes back.

If he sees that money being taken away from him, he is not as morally indignant as he should be when he hears that people cheat with their taxes. Mr Chairman, cheat they do. I have read that 15% of the taxes collected last year through GST did not finally get into the coffers of the state.

That is a vast amount of money. I am not a mathematician, but I think that that represents an amount of well over R20 billion that did not reach the coffers of this Government, because people cheat. Because they are irritated by this tax, the customers do not mind if a businessman cheats. It is very easy for a small business with unsophisticated tills and business systems to cheat. It is just as easy for chains of shops which also wholesalers in their organisation to cheat. As a result, the State does not receive the money.

Another weakness, perhaps, as reported by the Margo Commission, is that banks and building societies, which handle huge amounts of retail money, are not affected by GST on sales at all.

GST taxes certain intermediate and capital goods, thus distorting the final price paid for them. As it is very visible, GST comes under pressure from many sectors of the economy which claim exemption from the tax because they can see it.

It has been computed that of the R1,8 billion that has been given away or conceded in the form of exemptions on foods, only R300 million goes to the poor, while the rich get R1,5 billion. It is designed for the poor, but it does not really help them.

Last year we collected about R80 billion in indirect and sales taxes, and the greatest effect of the sales tax is that it is broad-based. Through GST a man is taxed more or less according to his capabilities. If he can buy a very expensive German motor car, he will pay R16 000 in tax. That amount is almost enough money for a poor man to buy a motor car. Even at the very bottom of the scale, the man who is too poor to pay personal tax still has to pay about 5% of his income towards GST. In that respect, GST is at the moment a fair and a broad-based tax.

It is, however, also a regressive tax in respect of the fact that if one is rich and has to pay a certain lump of money away in sales tax, that lump of money does not hurt one as much as paying the same lumps of money hurts a man with a medium income. From that point of view, it is a regressive tax.

I believe the hon the Minister opened a cut-flower show yesterday, and on that occasion he said that a White Paper to be published in February next year would discuss the report of the Margo Commission in its entirety, and we will probably discuss GST then as well.

I see that report as probably the finest examination of our tax system that this country has ever had. One of its most important proposals is that GST has to be reduced ultimately to 4% if it is to exert a positive influence on our economy. It also very sensibly argues, however, that we cannot drop from 12% to 4% immediately. It says that in the meantime we can drop GST to 7,5% and then we can impose a comprehensive business tax to make up the amount of money we are going to lose.

The Margo Commission also suggests that at the same time we can start a value added tax instead of a straight general sales tax. One of the advantages of VAT over GST is that it leaves a far more visible auditor’s trail. We can check the cheaters if we go over to VAT. The second advantage is that it is an added-in tax. It is not an added-on tax which is highly visible and therefore objected to. People will not object as much because VAT is part of the price anyway. I think this will be a great advantage as far as our Black population is concerned. They notice the GST because they can see it immediately, and they feel they get no representation in return.

Whatever system the hon the Minister decides on—it is he and his department who initiated this study and have lived with it for the last few years—I feel that it must apply to all goods, and must not exclude food, provided of course that the tax does not stand at its present high level of 12%.

The second part of my plea to the hon the Minister today is the more important part. The commission states that it will take 18 months to effect this tax. My plea to the hon the Minister today is that we should not wait for the White Paper and then start to effect this tax in the middle of next year. I plead that we make some move now so that we can begin implementing the recommendations of the Margo Commission and bring this tax into effect at a lower level next year.

Everything is in place for the economy to move forward. All the factors are there except the final impetus to translate business confidence, as reported by Assocom, into practice. To broaden the base of GST, to include all foodstuffs and to reduce the level to 7,5% might just be the kick that the economy needs to send it on its way. The hon the Minister has set in motion research which has delivered brilliant results. He himself has a wonderfully incisive understanding of the South African economy. May I plead that he sets in motion an improvement to our GST system as soon as possible, and not in 1989.

Mr Chairman, I listened attentively to the hon member for Barberton this morning. He mentioned, inter alia, a magazine article in which he read that Rev Hendrickse would like to receive chocolates. I now want to tell the other side of the Committee that Rev Hendrickse is going to give them sticky toffees. [Interjections.] I am warning them that those sticky toffees are like the Northern Transvaal birdlime. It catches birds so that later they can no longer flutter, and eventually they will no longer be able to flutter either.

The hon member for Barberton went on to say that Rev Hendrickse mentioned an anonymous letter he had received. I want to tell Rev Hendrickse that he should be careful. Some doctors also sign their names so that one does not know whether a thing has been signed or not. One never knows whether it was not perhaps a medical doctor on the other side of the Committee. [Interjections.]

I should like to discuss inflation this afternoon and mention a few causes of this silent death that moves so stealthily and that is responsible for more than one casualty. The first cause of inflation that I want to mention is State expenditure, which for the past few years has exceeded the generally accepted 22% of the gross domestic product. State expenditure has increased so dramatically that it amounts to almost 34% of the gross domestic product. These deficits have to be made good by raising loans, and this has an adverse effect on interest rates.

A second factor is the devaluation of the rand by almost 250% against European currencies and 100% against the USA currency. The consequences of this devaluation were disturbing. The price of imported goods doubled. Interest and capital burdens increased markedly because the entrepreneurs had borrowed many billions abroad. These losses have to be made good with increased profits.

South Africa is also being colonised by approximately 2 800 foreign enterprises which have to compensate for the risk of a further devaluation of the rand and the need to maintain dividends by means of increased profits. The devaluation is further aggravated by the need to replace machinery and equipment on the basis of what inflation is expected to be. This is done by applying the inflation write-offs that require special reserves. [Interjections.]

The increased profits also lead to strikes for higher wages on the advice of the numerous foreign advisers of the non-White trade unions. Higher wages lead to inflation of the International Terms of Trade. Mines in particular are victims of this phenomenon because they operate in the export market and therefore receive the benefit of the higher prices in rands. The Government’s objective was to obtain higher tax revenue from the mining sector, but the only consequence was the wage demand, and there was little improvement in mining revenue or profits.

A further factor is that South Africa is in the hands of monopolies, and this kind of enterprise never experiences problems with regard to price adjustments. [Interjections.] Their main objective is profits, not the maximisation of production. Exactly how strong the monopolies in South African society are, is evident from the following figures. In the USA, 500 independent enterprises are responsible for 80% of the country’s output. Here in South Africa, fewer than 15 are responsible for 80%.

There are a considerable number of price agreements. Although price cartels in South African have now been banned and are prohibited, these price adjustments still do not take place according to supply and demand, but according to the profit motive. The profit ratios in the RSA are 50% higher than in Europe and America, if turnover is used as a basis for the comparison of net profits.

Wage demands and increases do not contribute to higher productivity, but they are an important inflationary factor. We think, for example, of the principle of parity which the Government has been harping on to such an extent, as though it were a law of the Medes and Persians. We hear about parity from dawn till dusk. The pressure is still being exerted because the Government wants reform to be seen as successful, at any price. These are the very problems that have caused the inflation rate to soar from 18% to 20% this year.

The policy of the Government leads to impoverishment and consequently there is talk of a drop in the unit sales in the country. As a result of this the volume of production has declined. The underutilisation of production capacity in the manufacturing sector amounts to 20%. This underproduction has to be compensated for by an increase in the selling price.

This is the problem with our economy. I have mentioned a few factors that have caused inflation to soar and that cause us actually to become poorer every day instead of richer.

I should also like to devote a few minutes to the financial rand. After it was abolished in 1983, it had to be hastily reinstituted in September 1985, together with the freezing of payments of certain foreign debts. The reason for this is that foreign investors have taken astronomical amounts of money out of the country. Why have they done this? Because they had a complete lack of confidence in the economy of the country.

The economy is of course closely linked to the policy of the Government in power, and therefore this move actually indicated a lack of confidence in the policy of the Government. The Government then had to say, with the hon the Minister of Finance as spokesman, that that way of siphoning money out of South Africa had been blocked.

I do not want to discuss the moratorium that was placed on the capital repayment of almost all foreign loans in 1985. The institution of the financial rand revealed the following.

Firstly, there is no confidence in the economy of the Republic. The Government therefore had to intervene in order to keep foreign currency here. Even economists of stature recognise that the greatest factor in our economy today is lack of confidence. As long as there is no confidence, our economy will not prosper.

Furthermore, foreign investors are making enormous profits as a result of the big difference between the financial rand-dollar exchange rate, and the commercial rand-dollar exchange rate. The difference between the return on capital investment received by the inhabitants of our Republic, and that received by foreigners who are able to invest here by means of the financial rand, can be as high as 10% after deductions for tax. A gold share that costs 440 cents, and that pays a dividend of 100 cents every 12 months, can easily realise a net income of 25%. Even farms can be sold in this way, where the foreigner invests 50% of the sum here in financial rands and 50% in commercial rands.

Perhaps we are being far too accommodating in regard to foreign countries now, simply to keep them here. In this way South Africa is becoming a colony of foreign countries. [Interjections.] There are already 2 800 foreign enterprises in operation here. This means that in this way foreign investors are prescribing to South Africa.

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

No, Mr Chairman. I still have a great deal to say.

Then there has been talk that entrepreneurs well endowed with capital are creating foreign companies in order to build up an advantage over the domestic investor via these companies.

I believe the time has now come for us in South Africa to be less dependent. I know the hon the Minister of Finance said we should obtain money from outside the country, too. I agree with him that we cannot write everything off overnight, but I should still just like to tell him that the more independent we become, the better things will be for us. We have the natural resources to become self-sufficient and the day we become self-sufficient we shall know that foreign countries will not be able to use the economy to force us in the direction they want us to go.

Mr Chairman, the hon member for Witbank devoted the first part of his speech to the effect of inflation on the economy of South Africa. He mentioned various factors responsible for the high rate of inflation being experienced in South Africa at the moment. He referred inter alia to the question of the depreciation of the rand. It is true that the depreciation of the rand has contributed to the increased expense of imports, as a result of the fall of the rand in relation to foreign currencies, and that this has contributed to our inflation rate.

However, I now want to ask the hon member for Witbank whether he is in favour of the rand regaining the value it had stood at before it was depreciated and before we experienced the withdrawal of foreign capital from South Africa, which was in fact the cause of the rand depreciating. Is he in favour of the rand returning to those levels?

How would he know? [Interjections.]

I am asking the question because it seemed to me… [Interjections.]

Mr Chairman, I am asking the hon member for Witbank this question because it was very clear to me, when he made his speech, that he was reading it out and that someone else may have helped him write it… [Interjections.]… that he was delivering it but had not prepared it himself. If I am wrong, I am sorry and I apologise. However, I must say he really read it out very clearly.

He also mentioned wage increases as one of the factors which…

Parity.

No, not only parity. I am referring to wage increases in general as one of the factors which have contributed to the higher cost of living index.

I want to ask him whether, if they come to power, his party will freeze wages, or what they will do.

They will reduce them.

They will freeze themselves.

One would like to look closely at all proposals of this kind, because I know the CP. I was confronted by them for the first time during the past election campaign. I know what methods they use. They take propaganda stories of this kind from one platform to another and tell the people how poor the economic management of this Government is; they will mention all these facts and not come forward with one solution. The hon member for Witbank is, after all, an elected CP candidate, and surely it is one of his duties to explain to the voters what they will do in the economic sphere when they come to power. That is why I am asking him whether they intend to freeze wages or allow them to rise. [Interjections.]

In a few years we will show you what we will do. [Interjections.]

I believe that! I will take the word of the hon member for Witbank for it. That is my experience of the CP. They suffer from delayed reaction. [Interjections.] They are always behind the times, and they only catch up a few years later.

He also referred to the financial rand and foreign capital, of which a developing country like South Africa should be completely independent. [Interjections.] We shall not be able to get by without foreign capital in either my lifetime or in his; and if that evil day does dawn, this economy will look like that of Rhodesia after they had had to withstand foreign boycotts. [Interjections.] This economy of ours would collapse completely.

I should also like to say something today about our cost of living, because much has been said today about the excessively high cost of living. No one tried to suggest a solution, but it was widely referred to as one of the factors limiting the economic progress of South Africa. In recent years, the Government of South Africa has had to deal with factors completely outside its control, which have increased the cost of living. I do not want to go back to the high oil or petrol prices, boycotts and things like that. I simply want to refer the hon member to one of the factors which he also mentioned, namely the fall in the value of the rand in relation to foreign currencies, which in effect imported inflation into this country. At this point our greatest contributory factor to the cost of living is high food prices. This has been referred to in various debates by the hon member for Yeoville among others.

Now I should like to address the hon member for Yeoville in particular.

I’m listening.

Food is presented to the consumer in two ways, processed and fresh. When one looks at the tables which appear in the Landbouweekblad, one sees that they indicate inter alia the prices received by the farmer as well as the amounts added by the processor and distributor. The table I have here refers inter alia to alcohol and tobacco. I know the hon member for Yeoville does not use alcohol, so I shall take it and he can have the tobacco. [Interjections.] We find, according to the tables, that the producer receives merely 34% of the final price of the processed food when it arrives on the shelves or is sold in the retail trade.

But what are you talking about? I did not discuss this matter at all.

The hon member referred to it previously and requested the Government kindly to do something about high food prices because they contributed to the high cost of living index.

22 June.

Now I want to show hon members another table. This one refers to a basket of food products which were taken into account for the purposes of the test. Here the producer price is only 47% of the 100%. In other words, the processor takes the other 53%.

What are you talking about?

I am talking about the price of food. In a previous debate the hon member for Yeoville referred to the price of food and asked what the Government was doing about the high price of food.

Order! The hon member for Yeoville must give the hon member for Kuruman an opportunity to deliver his speech.

But he is about five weeks behind…

Order! The hon member for Kuruman may continue.

All right, I may be behind, but the point is that I am trying to rectify something in connection with the high cost of living rate. I am trying to point out that this very factor is beyond the control of any government in any country, because this is all due to the drought that we are experiencing at the moment.

*It is one of the factors making the greatest contribution at the moment to the cost of living rate we are experiencing. What can a government do about drought? The Government can certainly supply more water to certain areas, for example the Vaalharts Scheme, where large quantities of potatoes are produced. When it does not rain, however, and the water resources available to the industries on the Witwatersrand run dry, what do we do? The Government can also peg certain prices, and I am sure no hon member on the other side of the House will go along with that.

†I am talking about price pegging. Is the hon member for Yeoville in favour of that?

I am in favour of voluntary price and wage control.

Order! I cannot allow a dialogue across the floor of the House.

How does one voluntarily control the price of any product which is sold under the hammer? [Time expired.]

Mr Chairman, I have neither the need nor the time to try to react in any depth to the speech by the hon member for Kuruman. He asked the hon member for Witbank a question because this hon member wanted the exchange rate to rise once again to the level it was at a while ago. My reply is an unequivocal yes. If this level can be attained, the economy will flourish once again. I do not quite understand what he meant by his question. [Interjections.] If we can bring the rand back to the exchange rate of a few months ago, all our problems will be solved. [Interjections.]

The second aspect to which I want to refer briefly, is the hon member’s statement that we cannot get by without foreign capital. The hon the Deputy Minister of Finance discussed this very problem of attracting foreign capital here, and concentrated on the structural problems of the world economy, and on America’s deficits in particular. However, when the hon member speaks of foreign capital that we are obtaining, what capital does he have in mind? The little we have is in any event the wrong kind. We are getting nothing in the way of fixed investment or development.

[Inaudible.]

Order!

I shall leave it at that, because I want to direct my attention to the hon the Minister.

Yes, you should rather not say anything further about that; you know nothing about it! [Interjections.]

I am sorry, I did not hear what the hon member said.

Order! The hon member was not supposed to say anything. The hon member for Randburg may continue.

I hope I shall have an opportunity to talk to the hon the Minister. For the past four fiscal years the estimates of expenditure have been exceeded by 12%, 11%, 8% and 9½%, respectively. If they are exceeded by even a small amount this year, it could easily come to more than 5% of the gross domestic product once again. The last time we were in this position—the hon the Minister was already a member of this House at that time—in about 1975, it took us several years to establish the kind of discipline which enabled us to achieve a degree of recovery and put the State’s finances into some kind of order once again. I am afraid that if we really do not go to great lengths to keep to the targeted expenditure, we are very soon going to be in exactly the same situation again.

Government consumption expenditure has also increased very rapidly over the past few years, relative to the size of the economy. In contrast, capital expenditure has been cut dramatically. The problem is the tendency over the past few years, especially from 1982 to 1985—1986 was an exception, and it seems as if things are going the same way this year—for parts of these deficits in current expenditure to be financed through loans. The problem then is that inroads are made on the total savings which we desperately need, in view of the lack of other capital as well, to get the economy moving. It is important that attention be given to budget deficits. I do not know what the hon the Minister is going to do in the next budget, or what the deficit before loans will be. I do not know whether it is going to be 9, 10, 11 or 12 billion rand, but it will be a considerable amount of money. I sympathise with the hon the Minister over the position he is going to be in within the next six months.

I want to plead that in view of the fact that so much upliftment and development work will have to be done in underdeveloped spheres, especially in the economic field—this will of course have to be financed, too—attention be given to ways of imposing real restrictions on State expenditure.

The White Paper that appeared recently does address this problem to some extent but, in my opinion, in a way that is not nearly enterprising enough. I think one thing that was clearly absent when this problem was dealt with was an awareness of the expense associated with implementing certain legislation. I am thinking specifically of apartheid legislation, but there are other restrictions on access to and participation in the economic process, too. These really should be investigated. I think a great deal of money could be saved in this area.

There is also the other side of the coin. The White Paper discusses privatisation. There are many opportunities for further stimulation through privatisation, but the examples quoted in the White Paper are really not convincing. There are several of these examples from years back, before there was even any talk of privatisation or deregulation. Furthermore, where privatisation does take place, one does not get the impression that the posts are also being privatised. Therefore, work is indeed privatised but it seems that the posts remain, and are still occupied by the same people. Other hon members of this Committee have also referred to this in the past.

The point I am actually trying to make—the hon the Minister, as political head of the department, is not to blame, but he must bear some of the responsibility because he is also a member of the Cabinet—is that we cannot consider our problems only from the point of view of the fiscus. We shall really have to look into the structural problems of the economy. One of the previous speakers remarked that he regarded South Africa as a colony of the world. The way the hon the Deputy Minister discussed the structural problems of the world economy, in comparison with our problems here, created this very impression that we were simply a colony of the world economy, as though we were unable to do anything here ourselves. After all, there is a great deal we can do to really open things up.

When discussing deregulation, we have to take into account the way we implement it. If we implement deregulation in such a way that people are given the impression that it is taking place purely for the sake of those that already have, for the sake of the wealthy and of those that are already part of the process as a whole, we are going to encounter considerable problems. Voices have already been heard from the ranks of the Black population in reaction to this potential method of deregulation. The National Committee Against Removals has warned that implementing the legislation on the temporary removal of restrictions on economic activities could lead to a repetition of the so-called “sweat shop conditions”—in other words, this will once again be purely for the sake of the privileged—and that they will be exploited.

There is so much that can be done in this area. If we do not address the political problems in order to make opportunities truly open—I am referring inter alia to such things as the Group Areas Act—we are not going to succeed. All of us in this Committee know that simply considering the opening of central municipal districts is not really addressing the problem. The cost of development and activities there is so high it is virtually impossible for those people to establish themselves there, and be of any significance on the other side of the economic spectrum.

There is one matter I want to deal with briefly here. In a previous debate the hon member for Stellenbosch selectively quoted one statement, which I did make, in respect of an approach to a broad economic or financial policy in South Africa. He stated that I had been a socialist for a long time. Allow me to explain. I said it on that occasion and it was reported. The hon member could have read the speech if he had wanted to. I reject the absolutist or ideological approach that either the free-market system or the socialist state offers any kind of answer. On that same occasion I said it was a spurious debate. It is as ideological as the apartheid debate we had 25 or 30 years ago, when we all said there were only two options, namely total apart-heid or total integration—biologically, too. Hon members will all remember this debate.

We are having that same debate in the economic sphere, and the hon the Minister has already raised the matter on several occasions. I therefore share the hon the Minister’s point of departure, and I have said so previously.

Secondly there is the point of departure—this is also the point of departure of the Independent movement—that in the first place there should be opportunity for individual responsibility and therefore private initiative, but at the same time this should take place in such a way that everyone is able to share in the processes, in the activities and also in the welfare of the country.

I do not believe there is any possibility that the so-called “invisible hand” of Adam Smith or Milton Friedman can play the part of an alternative god. We must accept that we have to act in a responsible manner and where this is not the case—where anything has a negative effect on any part or parts or individuals of the population—the authorities have an obligation to intervene in order to help and accommodate those people. This is the basic point of departure.

At the same time we believe we should strive, with everything in our power, to have all people actively employed, and employed for remuneration. If this is not the point of departure, we are not really achieving anything, either. We cannot afford to allow people to go to bed hungry. [Time expired.]

Mr Chairman, the hon member for Randburg has just referred to a statement he made on a previous occasion. He gave us an indication of the economic approach of the Independent movement. I want to say I still find it very vague. I find it very vague, as indeed most of the contributions by the hon member in this House are. Of course the entire strategy of the Independents, who describe themselves these days as a political and party-political movement—they want to be a little of everything—is aimed at keeping those it is addressing itself to as confused as possible for as long as possible, because once the people begin to understand what this political and party-political movement wants to do with the country, they will flee in terror.

The hon member said here that we should look into the structural problems of the economy. I now want us to take a brief look at the hon member’s record in this regard. What does he stand for? One thing is certain and that is that the future the hon member for Randburg envisages for us will not have a capitalist system. The hon member does not like capitalism.

On 26 November 1984 The Citizen reported him as saying:

The big businessmen who are so fond of him, and of whom he is also so fond as a result of the fruits of their greed and their lust for more, should take note of this.

In 1984 the hon member said:

I am quoting from Die Vaderland of 23 August 1984. Take note. He wants the Government to intervene in the economy. A month later he said:

This is a quote from Die Vaderland of 27 September 1984.

The hon member should come and explain to us one day how these standpoints of his on intervention are compatible with the contents of the Independents’ election manifesto, because in it they said:

Please not that he says all—

He may as well tell us also how this newlyacquired striving for deregulation and the eradication of all restrictive measures can be reconciled with what he said in Stellenbosch on 30 June. He said:

I simply cannot understand how one is going to have anything but a free-market economy if all restrictive measures are removed. I must add, though, that the hon member also said:

This is very interesting, for let us have a look at those with whom the hon member wants to negotiate. On 9 June this year the hon member said in this House (Hansard: Assembly, 9 June 1987, col 1119):

Now I do not have to explain that the Freedom Charter is not a capitalist document; it is a socialist document. After all, it does say:

I wonder what the hon member for Rand-burg, who harbours a contradiction within himself in that he is in favour of total deregulation on the one hand and a non-free-market economy on the other, wants to tell these nationalisation-oriented socialists. He will probably simply wear his genuine noncapitalist hat when he talks to them.

We should also have a look at those with whom the hon member wants to discuss the Freedom Charter. Whose document is it and what does he want to do with it? There is a publication called South African Communists speak 1915-1980, and I quote from it:

That is the Communist Party. The hon member therefore wants to talk to people who are being supported—this is his word—by the short-term programme of the SACP. Let us continue. The SACP document of May 1986, which was tabled in this House, says the following about the Freedom Charter:

This is socialism according to the Moscow model. I want to say here today that the path the hon member for Randburg wants to follow does not involve the reformation of South Africa, but its transformation; he wants it to undergo a metamorphosis. He wants to make a non-racial democracy of a multiracial country, and the South African economy will be converted from a capitalistic free-market-oriented system to a socialist system. Even though this is not the hon member’s direct objective, he will simply be unable to avert it.

In the very short time I still have at my disposal, I want to express my strong disapproval of the negative attitude one notices today on certain levels of the economy. I want to say that it is simplistic and unfair to blame the Government for everything that is wrong with the economy. There are many factors that have a structural impact on our economy, such as the consequences of the fact that we are part of Africa and that we are developing. All these situations would be on the agenda of any government that came into power here.

I do not have the time to deal with all the aspects today. In any event, it would bring me too close to the jeremiad approach of those with a grievance.

We have so much to be proud of in our country. For example, nine tenths of Africa’s population rely upon firewood as their most important source of energy for cooking food and for heating purposes. Using only two of our power stations, such as the one at Kendal, we could provide the whole of Africa with power. South Africa is a giant on this continent and has become so under the leadership of this and previous NP governments.

The fiscal and monetary steps taken in August 1984 have again been phenomenally successful recently. I do not have the time to mention them here, but I do want to say that what happened was a tour de force. There is nothing to compare with it in comparable circumstances anywhere in the world. We did this without any help in a hostile world. The time for pessimism is now past, and this applies to the South African business sector, too. It is practically only their negative attitude that is still delaying the upswing. I want to say that our future is not dark. There are several factors in our favour, for example, the possibilities inherent in the development of our Black communities. Where is there another country that has a market so ready to be developed as the one in South Africa? We also have great potential for industries that are dependent on a large semiskilled labour component, for example, the clothing and footwear industries. We have advanced engineering expertise at our disposal. We can tackle extensive projects single-handedly. Our financial markets are sophisticated, in comparison with world standards as well.

I could continue in this vein. I just want to conclude by saying that all that is necessary is to subordinate the inhibitive factors, which in any event are present in every society throughout the world, to our creative powers.

Mr Chairman, I take pleasure in speaking after the hon member for Stellenbosch. I think he made it very clear to us that something we are noticing more and more is that the world and our trading partners are increasingly beginning to realise, one hopes, that there is no such thing as a quick fix in South Africa’s case; that if we are to advance financially, economically and socially in South Africa, a difficult task awaits us—a task which will have to be performed in many spheres.

Furthermore, Mr Chairman, I wish to refer briefly to the speech made by the chief spokesman of the Official Opposition, the hon member for Barberton. I want to say in all kindness that he is a person who is very economical in his use of words. When he does not have much to say, he does not say much. He proved this once again this afternoon. I regard it as a compliment to the hon the Minister. The hon member complained about the fact that we were moving so slowly with regard to the recommendations of the Margo Commission. I must tell the hon member that if there is one complaint about the Margo Commission for which neither the Margo Commission nor the Government can be blamed, it is the one in connection with speed. When one takes cognisance of other tax commissions throughout the world and of the speed and quality of the work done by the Margo Commission—and when one considers how busy the members of this commission are in their own respective disciplines—one can have nothing but respect for the way in which this commission did its work. It is true, Mr Chairman…

[Inaudible.]

Yes, but the hon member complained that we were moving too slowly. At least, that was what I understood him to say. The hon member also said that we should have made the report available a few months ago, while it was still available only in English. The fact is that that hon member knows quite well that the reasons advanced by the hon the Minister were not the only ones, and that the eve of the election was certainly not the appropriate time for parties to give consideration to comprehensive tax proposals. We did not have time to do so at that stage, and in any event, the climate was not conducive to such a discussion. I believe that we shall have ample opportunity to test the Government’s standpoint relating to the recommendations of the Margo Commission, and to have its substance tested by the voters of South Africa. I believe that we should congratulate the Margo Commission. We should also congratulate the hon the Minister on his handling of the report. He has provided the public, the Press and the respective political parties with information on the report, and he has encouraged the Honourable Mr Justice Margo to inform the public all over the country. For this we thank the hon the Minister. We also thank him for having enabled the public to make written recommendations and to submit their comments, as well as to give verbal evidence in October, before we proceed to formulate our own final standpoints. I believe that this all demonstrates the hon the Minister’s credibility.

† The hon member for Vasco said we should encourage the big South African companies to “buy back the farm”. I must tell him we share the same sentiments. That is indeed what these companies are doing. A practical problem, however, is that South Africa is suffering from the problem of overconcentration in its economy. This is fundamental to our economy, and that is why we have a body such as the Competition Board. That is also why the Competition Board is functioning in the way in which it does. It functions very effectively, too, if I may say so, Sir.

One of the problems of disinvestment, and one of the problems involved in buying back the farm, has been that we are promoting concentration still further. The Old Mutual bought Colonial Mutual; Sage Life bought National Mutual; Anglo American bought Barclays Bank; and Liberty Life et cie bought Standard Bank.

*If the hon member believes, therefore, that we have a problem as far as concentration is concerned, and if the hon member for Witbank believes that it would now be a good thing for us to decolonise economically, allow me to tell him that we are creating tremendous structural problems which we shall eventually have to live with or rectify.

†However, these are problems that are a by-product of disinvestment. I am not arguing that there is anything we can do about this at the moment; I just want to say that that is a problem, and that it is one of the disadvantages of the whole sanctions environment.

The hon member for Yeoville said to us today that the Margo Commission was important, and then he passed it off by saying that it did not matter if one had a tax system which was more efficient, cleaner, neater and more neutral.

[Inaudible.]

Yes, the hon member did say that; he said the important thing was how the money was spent. He said that the expenditure side was what was important. In other words, he was saying that if one has a rapacious government, one does not want to give that government an efficient tax system.

That is not what I said.

Well, I shall quote the hon member’s exact words. He said that the Government should take the people into its confidence, that it should tell them how it is spending their money and that it is what it is going to do with their money that is important. I just want to say to that hon member, as far as the tax system is concerned, that he is not right in saying that we have a rapacious government. Moreover, as regards his contention that Government expenditure is too high, he does not have to tell us that; the hon the Minister of Finance himself admitted that in his speech last year, and gave the Government’s view on the subject—the Government has a number of programmes aimed at reducing the size of government in our country.

Therefore it is not a matter of his persuading the Government on the matter; it is a matter of Government policy. However, I want to tell the hon member that Government spending via the tax system is the most inefficient way governments can spend. If that hon member complains about democracy—he comes here and says that the Government is disregarding Parliament because it will not refer the Margo Commission’s report to the standing committee—I want to say to him that Government expenditure via the fiscus, via the tax base, is the most undemocratic way of spending. This is so because it is a secret between the individual taxpayer, who writes his own rebate cheque, and the Commissioner of Inland Revenue. Neither Parliament, nor the Minister, nor anyone else has insight into what the tax benefits actually are.

Therefore the best thing we can do—and that is why this Government is doing this as a matter of policy and why we are pleased to read in the commission’s report that it underscores what the Government has to say in this regard—is to put Government expenditure on the budget, and by so doing not only have a neater, cleaner, more neutral, less obstructive, less distorted and so on tax system, but also a more efficient, more modern tax system. We should then not be spending via the tax system.

The hon member for Pinelands did the same thing—he said that we were now simply shifting the tax from the private individual to businesses. If I am not mistaken, he was opposed to that. I do not know whether he was against the CBT, or whether he was merely expressing reservations about it, but the hon member will know that running right through the Margo Commission Report is this reality: Companies do not pay tax; neither do close corporations or insurance companies—people pay tax. If one wants tax spread, one does so via the CBT. It is a benefit, value-added tax; it is spread very widely. It goes on to the company, and the company then spreads it backwards across its suppliers of capital, and forward right across its consumer products range. In this way we get the best possible situation, that of a broadly based tax system.

The hon member, however, says that the key to tax reform lies in one fundamental.

Acceptance.

“Unless the Government can control expenditure, it does not matter”—those were the hon member’s exact words and he must not run away from them now.

Someone has to get the money!

No, Mr Chairman, the fact of the matter is that we are getting the structures—the fundamentals—right. That is why we reformed the building society movement and made them more effective; that is why we are at present dealing with our tax structure; that is why we are examining our company law: We came up with close corporations, and we are now going to tackle the Companies Act itself. Thus we are tackling the fundamentals.

*The hon member for Wynberg spoke about disinvestment and sanctions. He also mentioned the plans of the ANC, where the ANC says that disinvestment is simply a part of the sanctions strategy, because disinvestment is a prelude to sanctions. The idea is to get investors out of the way first so that they will not want to help protect our country.

†That is true, of course. The whole question of sanctions is very apposite at the moment because sanctions legislation is coming before the American Congress in October and the Commonwealth Conference is coming up in November. We are already hearing shots being fired in that regard; we hear about packages that are being prepared by certain governments on behalf of the so-called frontline states. This morning there was also an article in Business Day from Mike Robinson in London. In this article he speculates about what is likely to happen and what is not likely to happen, and it seems as if the whole sanctions environment has cooled down a little and one is glad about that.

To me one of the interesting points made in this article is that Joe Clarke, the Canadian Foreign Minister, has asked that a nonmember of the Commonwealth, Mozambique, should be present or near Vancouver at the time of the discussion. I think it is a very good idea of Mr Clarke to invite Mozambique to be present.

You see, Sir, Mozambique is the one country which, for better or for worse, has paid the price of sanctions. There is no country in the world that understands sanctions better than Mozambique. Soon after Mozambique became independent, they listened to that sanctions siren song and instituted sanctions against the then Rhodesia and they have not recovered from it to this day. It smashed their tourist industry, it smashed their railway lines, it smashed their agriculture, it gave birth to the MNR which they have not been able to put back into its cage. They have paid a price which put them back, not 10 years, but a 100 years. If that is what people want to happen in this region, if that is the desert they want us to inherit in sub-Saharan African, they had better look at Mozambique. I wish they would invite Mozambique to tell them what the economy of Mozambique looked like in 1974 and that in 1985 it was 50% of what it was 10 years before. Let them also go and have a look for themselves.

I see one of the plans of the Commonwealth is to pump more arms into the region. Sir, if there is one thing this part of the world does not need, it is more arms. What we need is more tractors. What we need is co-operative structures, not hostile posturing. They also want to reopen the harbours and the railway lines of Mozambique. There is no need to do that, because we have harbours and railway lines for Africa in this part of the world. What we need is peace and co-operation.

Those Commonwealth Conference members can do themselves a favour by listening to Mozambique and also asking some questions. Seven or eight years after independence Zimbabwe has still not been able to reconstruct that which she lost. Her most cost-effective trade route was destroyed. They should look at the difference which the co-operation between South Africa and Lesotho is bringing about. We see a tremendous hive of activity in Lesotho because of this co-operation. A great asset is being planned with the Lesotho Highlands Water Scheme which will have far-reaching benefits both in the short term as far as jobs are concerned and in the long term for Lesotho and the whole subcontinent. One can also look at the soda-ash project with Botswana in terms of which the South African soda-ash market is being reserved predominantly for Botswana which enables enormous development to take place there to the advantage of everybody in the region. The same can be said of Swaziland.

People are very simplistic in the way they look at our economy and judge this Government. It is very easy to say that the Government has not done this or that and therefore we are achieving only a 3% growth rate—what a terrible thing. They assume that we find ourselves in a normal situation. They should look at Zambia which is running out of food. That country is not a Third World country anymore, it is not even a Fourth World country anymore, it is on its way out. The Commonwealth could also ask Zambia about the consequences of sanctions because they could also give the Commonwealth some advice on sanctions. They also played the game of sanctions when Rhodesia declared UDI. Hon members will recall that they encouraged the building of the Tazara railway line to Dar es Salaam.

What happened? Their copper began to mount up at the port of Dar es Salaam, there was a 50% pilferage on the line, and their economy took a nose-dive from which it has never recovered. By 1980 their economy was the same as, and by 1985 half of that of Zimbabwe, and now the world wants to egg Zimbabwe on along the same path to regional doom for them, for us, and for everybody. I am glad a conventional wisdom is developing in the world. I am glad people are beginning to say sanctions do not work. Increasingly journalists are saying it to me—and I am sure to hon members also—congressmen, financial journalists, and world leaders are beginning to say it, to retreat from the precipice: They see that all the predictions we made that sanctions were a bad thing for our country, the Black people, and reform, were true.

There is the idea that it is the invisibility of reform that somehow causes a lack of confidence. I just want to say this one thing. Hon members will know that between 1980 and 1985 reform in our country was very visible. It was so visible that I could remember people saying to me they were sick of talking about reform.

*Those hon members told us that they were sick of it, that they did not want to talk or hear about it any more. We had five congresses in one year at which we discussed these matters. [Interjections.] Yes, we did, Sir. The newspapers were full of it.

Now you do not even talk about it any more.

Our President’s Council met to discuss it; our caucuses met; the whole country talked about it. And the newspapers were full of it.

†One could not have had more visible social advance, reform and discussion in a country reaching out for new standards than we had in South Africa. Of course, after 1984-85 it went underground. Why did it go underground?

Because of the Rubicon.

No, Sir, a whole lot of things happened at once. It went underground basically because the social fabric of this country fell apart. It fell apart for a variety of reasons, namely the recession, people moving to the cities because of the drought, the standstill, disinvestment, sanctions, long-term structural problems in our economy, the result of a falling gold price, the price of our major commodity, gold, falling back in value 100% over five years, with all the consequences of that. There were a variety of reasons, and I can be busy for an hour giving these reasons. The fact of the matter is that the social fabric of this country fell apart, and the constitutional debate could no longer proceed publicly. The debate did not stop, it simply went underground. The Government had to reassert law and order, which is its primary responsibility, and it was right that it did so. [Interjections.]

As law and order returns, and as stability has returned—we are grateful for that—so the existing debate, and the debate has continued, will begin to surface more. If that is what people want, that is what they will see.

The hon member Comdt Derby-Lewis comes here again in this debate with his hatred. He must learn one thing—I know of nothing that has been built on hate. The hon members of the CP are not filled with hate, they are just old-fashioned. They will catch up eventually. They are just a little behindhand. We have always had them, the world is full of them.

However, the hon member Comdt Derby-Lewis is the kind of man who has been with us for thousands of years. He is as old as time itself. Any society has people like him, people who are filled with hate, who want to destroy. Every time he speaks here it is with a beggar thy neighbour approach.

*Today he told us about the White money that had been spent on Coloureds, Blacks and Asians. We shall not get anywhere in this country with that line of reasoning.

†I have been director of many companies in my time, Sir, and I can take you into those companies. If there is a White manager and one or two White personnel, and a thousand people of colour working in that factory, does that company earn “Wit geld” and pay White taxes?

*Is it White money that is earned there? The economy of South Africa is neutral. Surely we cannot reason like that; it will get us nowhere.

†It does not help us to argue that way. A beggar-thy-neighbour approach is not going to get South Africa anywhere, and neither is arrogance and a confrontational style of politics. We have profound problems in South Africa, and we will have to address these problems lest our country suffer from our inability to do something positive.

Mr Chairman, there was much the hon the Deputy Minister said with which one could agree very readily, in particular his approach to sanctions and what the consequences thereof would be for Southern Africa. However, I must sound a note of caution. I wish I could share his optimism regarding the long-term prospects of further action against our country. I hope the hon the Deputy Minister is right in saying this will not take place, but I must tell him that, because reason does not always prevail, there are forces at work in the world which are unfortunately not going to allow that situation to develop in our favour. We would be in great danger if we did not prepare ourselves for the worst, because if we are prepared for the worst, we can deal with the best.

We will do that.

If, however, we are not prepared, we are trapped.

Secondly, I do not agree with the hon the Deputy Minister’s statement that the social fabric of South Africa fell apart. I think there were indeed problems and real issues and difficulties, but the social fabric of South Africa remained and remains essentially intact. It is damaged periodically, but the country continues to exist. To say that the social fabric of our country collapsed is harmful to us, and is not a statement of fact.

Thirdly, I was a little surprised at something he said. I thought that the Government was waiting to hear what the private sector had to say about the Margo Commission’s report, yet now we have had a statement from the hon the Deputy Minister that as far as he is concerned, CBT is on.

I never said that.

He has shown how marvellous and wonderful it is, and that it is there.

There is a difference between explaining something and accepting something.

I was amazed to hear his defence of CBT. The way in which he approached it was completely contrary to what we understand to be the position of the Government.

[Inaudible.]

This has been a crazy debate in many ways. I heard an hon member of the NP saying that GST was too high, and then the hon the Minister of Finance shouting, “Hear, hear!”

Hear, hear!

There he is again! Who introduced GST saying it was a low-level tax, and who increased it? [Interjections.] Those hon gentlemen in the Government benches did so. There is the very hon the Minister of Finance who did so. What he is saying is that when we told him he was wrong, he knew he was wrong. He now knows he was wrong, and he should listen to us. [Interjections.]

Then we have the hon member for Stellenbosch. He is quite something. He stated that as far as he was concerned, people who did not support capitalism were the most dreadful people one could find, and thus he amazingly forgot what is going on in South Africa. I want to ask a simple question. Do the hon member for Stellenbosch and the hon the Minister say that there should be no means of production in South Africa owned by the State?

There are several owned by the State. I have had to sit in this House and hear time and time again that Iscor was a creation of the State, that the “Sappe” were against it and did not allow it to be established, and how the NP eventually pushed it through. That was a means of production created by the State for the benefit of the State. I was not there to oppose it; in fact, I would have supported it at that time, so what are we talking about? [Interjections.]

There are such means of production all around us. Did the hon member for Stellenbosch mean that there should be no planning, no intervention, no control boards and no social services? What he was saying was absolute nonsense. The reality is that ours is a mixed economy. It has to be a mixed economy, and it is going to continue to be a mixed economy. It will have to become an even more socially-oriented economy if we in South Africa are going to survive.

With respect, we had another joker, the hon member for Germiston. He now has a new theory. He applies Huntington to economics. One now not only has political reform by stealth but taxation by stealth too. People must not know that they are paying tax, because it is bad to pay tax. So one must actually only have invisible taxes. In my opinion taxation by stealth is dishonest. The public have to know what they are paying and what they are involved in. We are living in a crazy world with all these ideas.

I want to come back to the hon the Minister of National Health and Population Development and his television interviews. We left here this afternoon at a quarter to one to have lunch. When I came back from lunch I, as a member of the Standing Select Committee on Public Accounts, miraculously found the report of the actuary in my cubby-hole. [Interjections.] I already had it this morning through the good offices of the hon the Minister.

What is so terrible about the hon the Minister—I want to say it to his face—is that if he has read that report—he must tell me whether he has read that report or not—he knows that what he said on television last night was not correct.

The reality is that although the actuarial report makes it clear that none of those figures has any bearing on the actuarial deficit, all the figures that he mentioned related to the position after the date of the report. According to the report there was not sufficient surplus in order to meet the actuarial deficit in 1985. The figures that he quoted about excess over income and other things have nothing whatsoever to do with the actuarial deficit.

If he says that he did not read the report I can forgive him, but if he read the report and then went on television and made the statement of which I have a copy here, there is a gross misleading of the public of South Africa.

The figures are true.

The figures are correct, but they have no bearing on the actuarial deficit at all. The report makes that clear. It says that insofar as the period after 31 March 1985 is concerned, we can just about break even and there is a possible surplus of R150 million. For the period before that date the actuarial surplus is in fact increasing, because they are notionally including interest.

That is how the public of South Africa have been misled by these figures and I can only be charitable and assume that as the hon the Minister is a very good gynaecologist, he is not a good actuary or a good mathematician and he does not read very well. He is very good with instruments, but perhaps not so good without his glasses. It is a tragedy that this should happen.

If I may, I want to come back to the report of the Margo Commission and the issue that the hon the Deputy Minister raised. The reality is that on its own showing the commission s report makes it very clear that without CBT its scope is very limited. That is why I understood the hon the Minister—I think everybody else understood it like that—in fact to support that concept.

What is also clear from the report is that the members of the commission said that there was inadequate time in order to investigate it fully. I understand that they have not only recommended that it should be investigated further, but that this has in fact been done—the hon the Deputy Minister nods his head—and there is now a report in that regard. I ask that that report should be made public now.

It should be made available, because this kind of tax exists in only one out of the 50 states in America. It produces only 15% of its revenue and has existed since 1976 and yet it has not been followed in any other country in the world. To my mind we have to establish whether it is sound in every respect, because South Africa cannot afford to experiment.

When it comes to GST and VAT we have the best example of that in the world. VAT works marvellously in the EEC and I have advocated VAT in this House from the day GST was introduced. Hon members will see from my Hansard that I suggested it then. We should be looking at a tax structure based on experience. [Time expired.]

Mr Chairman, as usual the hon member for Yeoville attacked almost everybody who had participated in this debate on almost every issue that had been raised. That is unfortunate because the hon member is particularly knowledgeable on this very subject of finance which we are dealing with. Personally I would like to give him a little bit of advice that he should stick more to positive contributions, because he is really able to make such contributions. He should stick to that rather than attack each and every hon member. He knows very well that in the limited time of 10 minutes it is impossible for any hon member of this Committee to elaborate fully on any specific argument. Therefore everybody is open to attack on any such issue.

*The hon member—I am not quite certain whether he is major or sergeant or what he is—Mr Derby-Lewis, again came to light with certain arguments today. I should like to react to them in more detail, and I hope the hon the Deputy Minister will reply to the ridiculous and inane argument that the money of so many millions of White taxpayers, R9 million paid by White taxpayers, is being used for the benefit of Black people. I wonder how one is going to bring it home to that hon member that with arguments such as those we are merely inciting racial emotions in this country. By doing so we are creating the impression, amongst our Whites, that they are the only ones who pay tax and that the money paid by them in taxation is being used to benefit other people, whilst they are going to be prejudiced.

There is one point I want to make here. The CP speaks about White rights as if the Whites still have to acquire certain rights. The CP does not tell the public at large that if one looks at the economy and the finances of the country, we as Whites, by virtue of our hard work and initiative, but also because of the very privileged position in which we find ourselves, are generally in an exceptionally good position from a financial and economic point of view. Those people who are in a privileged position, our people, my voters, the voters of all of us here, hear from the CP that they are living wretched lives and that the State is taking their money and, on a colossal scale, wasting it on Blacks and others.

Approximately two years ago I made an analysis. I am actually hesitant about saying this across the floor of the House. The total budget of the six self-governings states about three or four years ago was R1,8 billion. During that same financial year R300 million more was spent on White education alone. That covered all the facets.

I am not saying this because it is something one would like to advertise, but merely to point out to those hon members that we in South Africa are saddled with a developmental problem necessitating billions of rands from the Exchequer. In every single national state we are faced with a shortage of money. Hon members are free to ask the hon the Deputy Minister of Education about this. There is a shortage of money for education. In the self-governing states 80% of the schools are built with funds provided by the communities themselves. It is easy to say that it is their problem and that we do not have to trouble ourselves about it, but if there is a feeling of unrest in the world around one, whilst from one’s entrenched position of wealth one stirs up emotions of that kind, let me tell the CP that they are playing a foolish and dangerous game.

Let us put this to one another in simple terms. In taxation there is no colour orientation. It is merely a question of an individual’s or a company’s income.

Look at the individual taxpayers in South Africa. Look at the individual White taxpayers. Look at what a massive amount of that money is provided by the top group of money-earners. Eighty per cent of the individual taxation is paid by the top 20% of the people. Those are well-to-do people who all—if I may put it in these terms—earn a great deal of money from the interaction between White and Black labour, money on which they pay tax which eventually reaches the Exchequer so that the State can use it for everyone’s benefit.

I have frequently asked voters in my constituency how many children they had at school. I would then tell them that the State gave an average of R1 700 per child per year for the education of their children. Then I would ask them how much tax they paid. They do not even pay enough individual tax to keep four children at school, and then they come to light with that kind of argument.

It is tragic that we play such political games in the times in which we are living, and I want to tell them that this is the most unbridled form of politicking that we could use in South Africa to whip up emotions. I am saying this because, under this Vote of the hon the Minister of Finance, in terms of which the State has to plan for the economic and financial apportionment of funds, we should display the greatest possible sense of responsibility. The wealth-poverty dichotomy is potentially the most explosive of situations in South Africa. Poverty is a burden we have to bear in South Africa. I am almost inclined to say that poverty is much costlier than wealth, because each day poverty makes greater demands on the Exchequer, and if we are not fundamentally able to generate wealth by way of our financial and economic planning so as to help increasingly more people, by way of the infrastructure or whatever other structures we establish, to build up the economy, we in South Africa will be faced with tremendous socio-economic problems.

Hon members of the CP should merely examine the fact that almost 50% of the Black population in South Africa is under the age of 15 years. They should then calculate what this means in terms of infrastructure such as schools, hospitals, roads and so on. They would then realise the price one would ultimately pay if one did not provide that infrastructure, those schools and those hospitals. A country which must control disease because it cannot prevent it, pays a much heavier price than it would have paid if it uplifted people so that they could ultimately stand on their own two feet. A country in which the education of people falls short of the required standard must know that it will ultimately have to pay the price of the tremendous burden placed on the Exchequer because people have not, by a process of education and training, been placed in a position to fend for themselves and contribute to the economic development in the country. That is why I want to ask hon members of the CP, on this occasion, to stop this reckless political game of theirs.

In conclusion I just want to ask the hon the Minister one question about State expenditure. I placed a question on the Order Paper about the amounts spent on wages, bonuses, housing subsidies, contributions to medical aid funds, pension schemes and other forms of direct expenditure, for example expenditure on motor vehicles for which the Treasury is responsible. If one looks at State expenditure—the Government rightly states that it is its aim to limit that expenditure—the major item of expenditure for any Government department is that relating to its staff. That is also the case in the commercial sector. If one therefore speaks of limiting State expenditure, in the long term one must also see how one can reduce the contribution of the State and increase that of the private sector. That is why it is important for us to make these figures available to one another and for us, as Parliamentarians, to bear them in mind constantly, because everyone in this House, in the discussion of each and every Vote, argues for more money. It simply cannot work if everyone continues to ask for more from the Exchequer when increasing demands are being made on it. Then, when all is said and done, the opposition comes along with the criticism that State expenditure is too high. The Government itself states that it wants to limit State expenditure in the long term. [Time expired.]

Mr Chairman, I take pleasure in thanking hon members who participated in this debate. A few very interesting and constructive contributions were made and I assure hon members that in cases in which there is inadequate opportunity to react fully to speeches we have taken good note of them and they will receive the necessary attention—departmentally and in the Ministry. I should like to reply very briefly to a few hon members’ speeches and then devote a little time to some general comments.

I wonder whether the hon member for Gezina would have made his flattering remarks about the hon member for Yeoville’s figures if he had spoken after my colleague the hon the Deputy Minister of Finance (Dr Marais) because the hon the Deputy Minister dealt with some of the hon member for Yeoville’s figures which were not so accurate. Nevertheless I should like to thank the hon member for Gezina for another positive contribution.

He asked for discipline as regards price rises. That is the crucial point broached by the hon member because, if we can effect discipline in price rises with the watchword of “a fair profit” instead of the expression “what the traffic can bear”, I think we shall be able to contribute to the curbing of inflation in that particular sphere.

The hon member also requested the review of the taxability of allowances to holders of public office at city council level. I can assure the hon member that the matter is being considered thoroughly by the Commissioner for Inland Revenue at the moment after being dealt with by the Permanent Finance Liaison Committee. It is always difficult in such cases to distinguish between a remuneration and a mere allowance.

The hon the Deputy Minister of Finance (Dr G Marais) spoke on the flow of funds from the international banking system to developing countries. I furnished certain statistics in this House before. When the hon the Deputy Minister said it had been a world tendency at the stage when we were obliged to announce a standstill, the hon member for Yeoville said by way of an interjection that we ought to have known its motivation had been purely political in our case.

We could have borrowed money.

I want to tell the hon member that is really an irresponsible statement he has made. If the hon member were to analyse the statistics I received from the IMF and mentioned repeatedly in this House and if he were to examine what had happened to the flow of funds internationally—with a view to correcting the shortfall in the American balance of payments etc—he would realise it was irresponsible to say that in the case of South Africa it had been pure political motivation. In many cases that was the excuse…

But you also personally…

Yes, but not exclusively.

I repeat it formed part of a world pattern and the fact that South Africa had specific political problems at that stage was a useful smoke screen, as is the case today with disinvestment. Many companies are disinvesting because they are simply not being operated on a profit basis any longer because their profit has shrunk in comparison with other subsidiaries in the rest of the world.

†I now turn to the hon member for Roset-tenville. She actually opened the lobbies in response to the Margo Commission’s report today, and I should like to say to her that if she had not done so in so eloquent and skilful a manner, her hon colleagues would not have taken so kindly to her onesided plea for the rights of women. Humour aside, however, I should like to give the hon member the assurance that this particular issue is one that has been thoroughly investigated by the Margo Commission, and we certainly have the benefit of a scientific analysis based on the laws of the land and against the background of the rapid development of the rights of women under South African law over the past number of years.

It is possible to split husband and wife’s taxation completely, but at a price. In this particular case it is very much like chickens inside and outside a chicken run: Those who are outside want to get in and those who are inside want to get out. There is no clear solution worldwide to the vexed problem of how to tax spouses. There is the transferability of children, allowances and so forth which complicate the issue tremendously. Nevertheless, we have made great progress in having it analysed properly at this stage.

I am grateful that the hon member for Pinelands expressed thanks to the Margo Commission. He also referred to the fact that he thought Government expenditure should have been looked at by the commission. I want to give that hon member two reasons why we decided against it. The one reason is that it would have taken endlessly longer and we needed a review of our tax situation very promptly. The second reason is that right now we are in the process of designing and already using quite a number of management instruments in order to come to grips with our Government expenditure. I think we needed the benefit of a purely tax investigation much more than we needed a further analysis which we are in any event doing of the expenditure side.

The hon member also said that Government expenditure was too high, and many other hon members also referred to that. I want to remind hon members that Government expenditure is certainly quite high at the moment. However, if we had not over the past two years embarked upon additional expenditure via the Government, our economy would have been in a very bad state today. We used Government expenditure to address the question of stimulation in the economy, but in a specific manner which I referred to before, namely the dual purpose of achieving socioeconomic results at the same time.

*I thank the hon member for Newcastle for his speech. He raised a very important matter, which is the question of performance auditing. This is one of the instruments used by the Government to be able to reach a proper determination of priorities. Return on capital as far as capital expenditure in the broad Government sector is concerned is a different yardstick. We are in the process of introducing these matters in a meaningful and well-considered way in our Government Administration. Performance auditing is a technique which may possibly provide us with many exciting results in this respect.

†What the hon member for Wynberg said was absolutely true. At the moment there is a disturbing lack of in-depth analysis from the public at large with regard to the recommendations of the Margo Commission.

*Nevertheless I think this is the calm before the storm. There will be considerable reaction and we have in fact, as I said earlier, created the machinery for this and should like to have those reactions. As the hon member for Yeoville said, there are certain matters in regard to some of the proposals which have to be clarified.

†I just want to say to the hon member that my hon colleague the Deputy Minister definitely did not commit the Government in any way whatsoever with regard to Margo recommendations, and if he gained that impression from my colleague’s choice of words it was the wrong impression. The hon the Deputy Minister also rectified that matter by way of interjection and I trust that the hon member for Yeoville will accept that. We do not have a private or an official view as to the merits or demerits of any of the commission’s recommendations at the moment. The hon member found it remarkable that I agree that GST is too high seeing that I am the proposer of it. However, it is of course the responsibility of the Government to propose unpopular things in order to handle a particular situation. How else would we have been able to finance our State expenditure if we had not increased certain taxes over the past number of years?

*The other lesson to be learnt from the 12% GST and which, I hope, will be learnt by all our hon colleagues in this House and in Parliament is that, when one starts tampering with a tax by way of exemptions, one merely causes trouble for oneself. When one continues to reduce the base, one automatically forces the tariffs up. If we are now presented with an opportunity to turn over a new leaf as regards taxation, I hope we shall make a joint effort this time to withstand pressure to consider exemptions because this is something which spells sudden death to a tax system.

The hon member Comdt Derby-Lewis stated that the CP did not require a Margo Commission to tell it that taxation was too high. This is a remarkably bright statement, Sir, but I can well recall that one of the first points I made in public after the hon the State President had seen fit to appoint me to this post was that the tax burden of the individual was too high. That is a fact and we have repeated it frequently.

Hear, hear!

We then asked what the solution was. The solution is not to charge in like a…

Bull in a china shop…

… bull in a china shop—yes, thank you very much—and to start tampering here and there. [Interjections.] Once one starts changing a system of taxation, one has to do it within a specific context.

Let what arises from the Margo Report be a lesson to us all. The Margo Commission has offered us a package because, if one touches a system of taxation from one direction, there are reactions in many other places too. We saw that taxation was inequitably distributed and the burden rested very heavily on the individual. Consequently we decided to appoint an expert commission to investigate this for us. Those are the facts of the matter.

I wish to associate myself with my colleague the hon member for Innesdal as regards the hon member Comdt Derby-Lewis’s statement on White money, Coloured money, Indian money and Black money. [Interjections.] We have debated the folly of this… ad nauseam in this House. The simple truth, however, is that the Chief Whip of the CP, the hon member for Brakpan, turned around and—if I heard him correctly—told the hon member Comdt Derby-Lewis he had a good point when the latter spoke about the question of Whites who were supposedly financing Brown education.

He did not mean that!

He cannot deny it, Sir.

I told him it was a good speech. [Interjections.]

Sir, if that was what the hon member for Brakpan said, surely he was associating himself with that absurd comment. [Interjections.] What kind of answer is that! The plain truth is that money has no colour connotation once it arrives in the Treasury. If one wants to deal with money in a different way, one is a racist. It is on record that the hon the Leader of the Official Opposition said he was not a racist personally and I have to accept his word for that. [Interjections.] I wish to support my colleague the hon member for Innesdal because if there is one aspect which creates an explosive condition in circumstances of economic difficulty it is when one starts exploiting the question of relative contributions to the Treasury on a colour basis. This country can do without such opportunistic, dangerous politics. [Interjections.]

I thank the hon member for Heilbron for his contribution. He responded effectively to previous arguments. Sir, it is pleasant to have someone with a sharp intellect like the hon member for Heilbron on one’s side. [Interjections.]

†The hon member for Constantia twisted what I had said with regard to being hard-nosed about sanctions. Sir, when I say that we should not be hard-nosed about sanctions, I mean that we should not be hard-nosed vis-a-vis the outside world, the international world, and that we should not be provocative in challenging them to do more, implying that what is already being done is not hurting. [Interjections.] I wanted to say that we should not be hard-nosed to the extent that we imply that they can do what they like because they will not hurt us, and that we can survive all by ourselves.

But that was all I said!

No, Sir, the hon member gave a twist to my words which I do not think did justice to the truth.

I took note of the hon member’s plea with regard to the deductibility of pension fund contributions. We have had numerous representations in this regard, and will feed his views on the matter into the system.

I want to thank the hon member for Umhlanga for having dealt expertly with the subject of the flow of funds internationally. He is a man with intimate experience of dealings in the international world, having accompanied my distinguished predecessor on many excursions abroad. I want to thank him for his particular contribution in this regard. If there is one thing that will be devastating to this economy it will be our being cut off from the international financial network in that we are an open economy being dependent on imports and exports for more than 60% of our GDP.

I want to mention the contribution of an official of ours in Switzerland, Mr Chris van der Walt. I want to mention this member of our staff for the simple reason that in these difficult times when distorted information on South Africa is the order of the day in the international media, he has been responsible for getting the facts across to our banking associates all over the world—the bankers we have built up these precious relationships with over so many years. Today, if one walks into the office of one of those bankers and he pulls out his South African file, it is packed with the positive and factual information about the South African economy which we as the Department of Finance have distributed through the good offices of Mr Van der Walt in Europe. He is a tireless worker, flying from country to country in order to maintain our relationships with the banks and I wish to make special mention of him in this regard.

The hon member for Germiston argued some tax points—I think he argued them well—and I want to tell the hon member for Yeoville that his reference to the hon member for Germiston when he again entered the debate a short while ago about hidden taxation is an unfair one. The hon member for Germiston was in fact in agreement with one of the findings of the Margo Commission that certain taxes seem to cause a lot of distress and aggression among consumers. That hon member argued that if at all possible we should get our fairly distributed taxation loaded onto the shoulders of the consumers in such a way that it would not necessarily generate this kind of aggression. I think from that point of view I fully agree with the hon member.

The hon member for Germiston made a further most important point. He inferred that whatever we do by way of adjusting rates will be very dangerous if we do it by means of a rapid drop. That is absolutely true. If consumers should get the idea today that a 4% GST is just around the corner there will be no sales. That is why it is terribly important that our consumers should accept that whatever changes we decide upon will be phased in gradually and that the respreading of the load of taxation will therefore be a gradual process.

*The hon member for Witbank made the point that Government expenditure was increasing faster than our gross national product. I accept that he intended this as a point of criticism. He is nodding his head affirmatively to indicate that this was his intention. If one prunes Government expenditure at a time when the business cycle has reached a low, one not only lands in a recession but in an absolute depression so what is the hon member’s point of criticism? Is he criticising us because we have prevented a recession from developing into a depression? That is the implication of his criticism. I think he should question the advice he received in this respect a little. That is no fair comment; in fact, I think it is comment that is wide of the mark altogether.

The hon member then added an absurd statement that South Africa was now being colonised. Good gracious! What does that mean? He referred to the financial rand as one of the instruments by means of which South Africa was being colonised. The financial rand simply means that, if a foreigner has an asset in South Africa, he may sell the right of ownership to that asset—it has to be a defined asset and strictly controlled by Government—to another foreigner. Because the second person then buys an asset which he cannot convert into cash and withdraw all the money from South Africa, the buyer is not prepared to pay the full exchange rate of the commercial rand. That is why he pays at a lower rate which is called the financial rand rate; he pays at a discount but no outflow of assets whatsoever takes place. Consequently the financial rand may only be handled by foreigners and in South Africa an asset acquired by means of the financial rand may only be possessed by foreigners. Where does colonising come in if existing foreign capital cannot flow out and there is little or no new investment? I do not know. That is the quality of CP comment which they record in Hansard to quote with great fanfare in these propaganda leaflets of theirs. That is the use to which they put it. They do not quote facts which illustrate how asinine and stupid a comment such as that actually is. They bring the…

Mr Chairman, may I put a question to the hon the Minister?

He may put his question, Sir.

Mr Chairman, I wish to ask the hon the Minister how many farms have been bought in which 50% of the price was paid by means of the financial rand.

Mr Chairman, the hon member would do well to place that question on the Order Paper because I can furnish him with statistics; we have them all and the percentage is minimal. It presents me with no problem, however, when a foreigner has so much confidence in South Africa that he wishes to buy a farm here. The hon member still does not understand what I have said to him. All it means is the following. If for instance a foreigner possesses Eskom stocks in South Africa and that foreigners sells the right of ownership to his Eskom stocks to a second foreigner and that other foreigner uses the returns on these Eskom stocks in South Africa to buy a farm, he has merely changed the type of asset previously represented by the financial rand.

You owe the hon the Minister R100 for tuition fees. [Interjections.]

So what is the point of the hon member’s story about farms? I really do not know because new money has come in! The hon member said South Africa could be prescribed to in consequence of the financial rand system. Sir, the system of the financial rand has been designed specifically to allow us to prescribe to foreigners. [Interjections.] We tell a foreigner what he may do with his assets, in what he is permitted to invest them and how he may dispose of them. Nevertheless the hon member for Witbank says on behalf of the CP that foreign countries are prescribing to us in that way. This is yet another scrap of propaganda claiming that foreign countries are prescribing to South Africa. Oh no, Sir.

A last statement made by the hon member on behalf of his party was that we had the natural resources to become self-sufficient. Self-sufficiency means that in reality we could close our borders and manufacture everything ourselves; that is what being self-sufficient means. I want to ask the hon member to use an opportunity during this or the next session to explain his argument to us on cardinal items we have to import into this country by way of capital, intermediary goods and certain fundamental raw materials we do not possess. Look, we have a great deal but we do not have everything. I should like this hon member to rise and put his argument to us. He and the CP suffer from the following syndrome: To hell with the world, one closes one’s borders, one lives merrily within South Africa and creates a paradise for oneself.

They must first call up the AWB.

That is absolutely idiotic. Incidentally, during the time I have been replying to every member here, I have kept count of the number of CP members in the House. The maximum number of such members there has been since early this morning has been seven. [Interjections.]

Mr Chairman, may I put a question to the hon the Minister?

No, first sit down!

How many Ministers sit here day after day?

It is not customary for Ministers to be present at the discussion of each Vote. That is a stupid statement; surely the hon member knows better.

They are never in the House! [Interjections.]

But they are working!

Order!

Mr Chairman… [Interjections.]

You govern this country and you are never in the House.

Order! The hon the Chief Whip of the Official Opposition must control himself!

Mr Chairman, hon members of the CP have taken a long weekend; they are not in this House this afternoon. If anybody had made a continuous count of our people today, he would have seen that we had maintained a greater presence throughout than CP members. At times there were more than 80% of our people here but at no time was the CP represented in the House by more than seven members or 23%.

Where are your colleagues?

They are working!

Mr Chairman, I am not apologising for the fact that mu colleagues are not present at the discussion of my Vote because the task of governing this country is not located in this House throughout. Today they are at some place where they are doing their work; that is where they are. They cannot attend all the debates every day.

Then we do not need to be here either.

Mr Chairman, CP members have to be here because they are the Official Opposition; they are not governing this country.

They just run around gossiping! [Interjections.]

Mr Chairman, I want to thank the hon member for Kuruman. It is worthwhile to have someone with the acumen, the debating ability and political sensitivity of the hon member for Kuruman on one’s side. I thank him for his contribution but I cannot refer to it any further now. [Interjections.]

Mr Chairman, I noted the hon member for Randburg’s statements. I found only one of them rather amusing and I should like to ask him in all fairness to explain it to us at some time or other. He said the Independents had a specific feeling about the economy. [Interjections.] The Independent Movement had a definite economic policy. I now wish to ask the hon member how one remains individually independent while as a “movement” all have the same economic policy. Are their thoughts independent in certain spheres only or do they agree about the economy and about this and that as well? If that is the case, surely they are no longer “independent”. What does their independence mean in that respect? Does the hon member not wish to proceed with the establishment of his party so that we may be informed of their final policy on which they are all in agreement? [Interjections.] Surely every cardinal point of policy has to include the greatest common denominator. Do let us hear what it is now.

The hon member made a few statements which I really cannot distinguish from the policy he supported on this side of the House until a short while ago. What is the difference? The hon member should give us an explanation; I am referring to his statements of economic policy today. That is why I specifically agree with the hon member for Stellenbosch in his contention that the hon member for Randburg is vague. He is vague, especially as regards many of the differences between us. In some respects he differs drastically with us and we thank him for that. Nevertheless I think the time has come for him to draw the dividing line between us and the independents to enable us to judge how independent they really are and how close to some of the other political parties they are. We should like to hear this.

Mr Chairman, I see from my notes that at the time when the hon member for Randburg was speaking there were only five hon members of the CP present in the House.

That is 22%. [Interjections.]

I should like to make a few concluding remarks on privatisation. I think that a fundamental point to understand is that over the years, the State accumulated interests—fixed assets—in certain vital areas and sectors. It invested capital in Iscor and other corporations and institutions of that kind. At that particular time in our history it was of the utmost importance for the Government of the day to take public money and invest it in such a way in order to resolve a particular issue at that time. The purpose of privatisation in the case of South Africa, as I see it, is to dispose of those assets, if at all possible, within the guidelines that we published in our White Paper on privatisation, and then to use the capital thus generated to address the major issues that need capital investment today.

What we need today is investment in infrastructure, social upliftment and supporting services of this kind, apart from what we need in terms of projects to stimulate the creation of the necessary jobs. If I may suggest that we use that as a guideline in our discussion on privatisation, I think we shall achieve a much better understanding, since that is a point of principle which provides a good basis for debate.

*Mr Chairman, I want to add that we have had a considerable amount to say about Government expenditure and so on and I think we could pursue that debate with profit when we reach the Third Reading later in the session.

Votes agreed to.

Chairman directed to report progress and ask leave to sit again.

House Resumed:

Progress reported and leave granted to sit again.

Mr Chairman, I move:

Agreed to.