Order! I have to announce that a vacancy has occurred in the representation in the House of Assembly in the seat of a member nominated in terms of section 41 (1) (b) of the Constitution, owing to the resignation of the Hon A L Schlebusch, DMS, with effect from 31 March 1988.

Mr Speaker, I move without notice:

Agreed to.

Mr Speaker, at the very outset please permit me, on behalf of the Official Opposition, to express a sincere welcome to the hon member for Randfontein. With his election the hon member has indeed made history. There have previously been two brothers in this House at the same time, but for years this has not been the case. Now history has repeated itself. [Interjections.] Oh yes, but they were not here at one and the same time.

It is interesting, however, to hold a post-mortem on the search—particularly in the National Press—for the reasons underlying what happened to the NP in the recent three by-elections. Although we have always been taken to task in this House for confusing and misleading the voters, it is illuminating to hear from the Press— which supports the Government—that the voters are indeed confused because they do not know where the NP is heading. The NP canvassers, particularly in Randfontein, were frankly told by the voters that they could not vote for them because they did not know where they were heading. Time permitting, I shall be coming back to this point at a later stage.

As far as the Budget is concerned, I should like to move the following amendment:

1. (1) the Government has not put forward any clear constitutional plan to protect the vested rights of the White population;
2. (2) the Government has failed to curb the increase in personal tax in real terms;
3. (3) inadequate provision is made for agriculture; and
4. (4) the extent of the redistribution of income is having an adverse effect on the economic growth of the Republic.”.

This is an exceptional Budget and a singular Budget debate. It would be extremely difficult, in fact impossible, to give a comprehensive reply to the expanded Budget Speech which the hon the Minister of Finance so graciously made available to all of us. I shall therefore only single out certain aspects and deal with them. I think it is only fair for us to judge the Budget from the point of view of the situation in which South Africa finds itself at present.

There are problems in regard to foreign debt and disinvestment, and there are the needs of our security forces, ie the Defence Force and the Police. South Africa is experiencing problems relating to the state of emergency, inflation, unemployment and, last but not least, problems unique to the agricultural industry. Hand in hand with this there are the recommendations of the Margo Commission and the Government’s announcement in regard to the privatisation of certain State assets. Because of the length of this list, it is very clearly impossible to give attention to all these aspects, particularly in the short time at my disposal.

If we look at the Budget within the context of the overall situation, let me say at the very outset that we want to express our gratitude to the hon the Minister of Finance for the fact that he has eventually made an effort to bring State expenditure to within affordable limits.

Let us look at the consequences of past action, consequences we are saddled with today. We, and in particular the taxpayers of South Africa, now have to pay the price for sins of the past. I should like to examine this aspect briefly. During the past six calendar years, ending on 31 December, the Government’s overall deficit before borrowing was consistently a little more than R30 billion. We are grateful to the hon the Minister for making an effort to curtail expenditure and to curb spending by his hon colleagues.

When, however, the hon the Minister boasts here of a budget which, in real terms, is negative because the overall amount is estimated to be only 12,6% higher than last year, I think we must place that figure in its proper perspective. The hon the Minister could manage to do so because the officials were not granted a salary adjustment. If one were to take the Public Service’s salary package out of this Budget and out of that of last year, and bring the balance of the Budget into perspective, one would find that although the hon the Minister effected a saving as far as the payroll was concerned, the rest of the Budget evidenced a 17% growth. In real terms that is not a decrease. I therefore reiterate that the hon the Minister could only succeed in achieving that 12,6% by expecting the vast majority of his officials to accept, in real terms, a reduction in salary.

We are told—I think it was mentioned in the Budget Speech—that last year’s payroll totalled R14,842 billion and that this year it is expected to be R15,492 billion. The hon the Minister virtually achieved the relative decrease in the Budget solely as a result of savings on the payroll. One immediately asks oneself what is going to happen next year. This year the hon the Minister could do this, but what is he going to do next year? Are we going to see a repetition of what happened in the past?

There is one matter I should like to raise. I am referring to the expanded Budget Speech of the hon the Minister in which, amongst other things, he referred to the saving and possible dissaving by the central government. He told us that a deficit before borrowing which was less than the capital expenditure would lead to a saving, whilst a deficit larger than the capital expenditure would result in dissaving by the central government. He went on to state:

Sir, here the hon the Minister himself is telling us that dissaving by the State, in that it borrows an amount greater than its capital expenditure, impacts on inflation, puts a damper on economic growth and has an influence on the balance of payments.

In this Budget, in which the hon the Minister told us that his chief objective was to curb inflation, that same hon Minister is specifically budgeting for further dissaving by the State. If we look at the latest quarterly bulletin of the Reserve Bank, we find that the net dissaving by the public sector was R3,58 billion for the 1987 calendar year. In the present Budget for the 1988-89 financial year the hon the Minister is budgeting for a deficit before borrowing of R9,6 billion, whilst budgeting a mere R4,45 billion for capital expenditure. This means that the pattern is repeating itself.

The Government is again guilty of governmental dissaving by using money from private initiative for current expenditure. In the past we have had many excuses about how the economy should be encouraged and about this being the reason why expenditure exceeded revenue, but during the past six years, regardless of what the circumstances were, the Government has consistently spent more money than it received on its current account.

Another matter which I briefly want to refer to— the Margo Commission also referred to it—and which we have repeatedly dealt with in the past, is the question of the customs union agreement between us and the TBVC and BLS countries. In the past—not only last year, but prior to that too—we objected to that situation. On the face of it it is clear that that agreement is not in the interests of the taxpayers of South Africa. In the past we obtained the assurance from the hon the Minister that the matter was being investigated, that it was receiving urgent attention and that negotiations were being conducted. The Margo Commission has again highlighted the unrealistic aspects of the existing arrangements for us, also pointing out that it was not in the interests of South Africa to proceed with this. For all that, in the hon the Minister’s reply—it is also in the White Paper—it was again stated that negotiations were being conducted. One asks oneself how long the process of negotiation is still going to carry on. If one looks at the Budget under discussion in the hon the Minister’s printed Estimates, one sees that he is budgeting for an increase of 14,8% in revenue from customs and excise. Our partners’, if I may call them that, share in the cake is increasing by 17,6%, whilst we allow ourselves an increase of a mere 13,2%.

There is also another matter that goes hand-in-hand with this. In one budget after another, and in particular in this Budget—I am not going to bore hon members with figures—South African taxpayers are providing the TBVC countries, and the self-governing states as well, with enormous amounts of money. In the past we have expressed concern about what becomes of that money and about whether, in fact, it is being spent correctly. I concede, however, as I did earlier this year, that we have little control over what happens in the TBVC countries, except for certain precautionary measures that can be taken or demands that can be imposed on those people and which, I take it, are being imposed upon them at present. I shall, however, leave the matter at that.

In regard to the self-governing national states which are not independent, no report is issued to this highest legislative authority in the country about whether the money voted for those states is, in fact, spent for the purposes for which the money is voted. Nor do we obtain any report from the Auditor-General about whether that money is being spent correctly.

If there are no problems as far as that is concerned—I would appreciate it if the hon the Minister of Finance could give me his word that that is the case—I am prepared to accept it. I have a problem, however, and that is that on a certain occasion the hon the Minister of Foreign Affairs told the standing committee that we were a part of Africa and that the misappropriation of 5% of that small sum of money was not abnormal for Africa. The hon the Minister is now shaking his head, but I myself heard him say it.

I did not put it in those terms. [Interjections.]

The hon the Minister may avail himself of the opportunity of putting the facts straight. [Interjections.]

I would, however, like to know from the hon the Minister of Finance whether he is satisfied that the money in all those self-governing states is, in fact, being spent on what it was voted for.

An interesting recent phenomenon, to my mind, is that although we are told in advertisements to tighten our belts and scale down our expectations, our present Government cheerfully uses taxpayers’ money to place full-page advertisements—even to advertise and try to justify this Budget, thereby apparently trying to persuade the voters to grant their approval. [Interjections.] Looking at the full-page advertisement I have here, I see:

What impression is being created by this advertisement? Surely it can only be interpreted as meaning that in the coming year the taxpayers of South Africa will be paying R1 200 million less in direct personal income tax than in the previous year. Surely one cannot draw any other conclusion, and that is the intention of this advertisement. Members of the public are being given the impression that they are, in fact, going to be paying R1 200 million less. [Interjections.] What are the facts? If one does one’s arithmetic on the basis of the hon the Minister’s printed version of the Budget, one sees that before having made certain tax-reduction concessions, the hon the Minister himself made provision for an increase of R2 750 million.

You are forgetting that new taxpayers are coming into the picture.

I know that, of course. The hon the Minister is saying, however, that the taxpayers of South Africa are going to pay R1200 million less. That is what the advertisement states. If one makes adjustments for the previous tax concessions which taxpayers received by way of medical and insurance rebates, and if one adds the estimated increase in the taxation on fringe benefits and the tax on insurance companies—I want to come back to that briefly—the truth is that, in spite of the hon the Minister’s so-called concessions, on estimate more than R2 billion in direct taxation is going to be collected from taxpayers in the coming year. [Interjections.] Those are the hon the Minister’s own figures, but the country is now being made to believe that there will be a reduction of R1 200 million in the taxation to be paid. Then we are accused of misleading the voters. If this is not misleading the voters of South Africa, what is it?

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

Rather not, Mr Speaker. My time is limited.

Since we are discussing that point: I want to lodge a plea on behalf of the life insurance companies of South Africa. Hon members will perhaps be surprised. I have a problem, however, with the abolition of the rebate on insurance premiums. I know what the arguments are, ie that the ultimate proceeds of the policy are tax-free and that one should therefore pay tax on the premiums. My plea, however, is on behalf of the young men and women who have not yet gone out into the world and have not yet reached the stage at which they have built up an estate for themselves.

We have all said—if I remember correctly—that we are quite satisfied to have up to R1 000 of a person’s income from interest earnings exempted from income tax. I ask myself what other method a young married man, who has virtually not built up an estate for himself at all, can employ to make provision for his next-of-kin. In the past the most popular method has always been to take out life-cover, not for oneself, but for one’s next-ofkin, in case something should happen to one. I remember that when I got married we owned nothing. All we had was a lot of study debt. The first thing I did was to take out life-cover for myself. That is why I am asking if it is fair on the one hand to exempt those who are already able to invest money and earn interest, from the payment of income tax—I am not opposed to tax rebates being granted to them—while on the other hand no tax concessions are made to young people who are just starting off in life and who, for the sake of families which might survive them, take out an insurance policy. I am merely asking.

I should like to refer briefly to the position of married women. We all know that the Margo Commission recommended that the tax unit should be the individual and not the marital unit. We realise the administrative problems that will arise from the introduction of the proposed recommendation of the Margo Commission, because one would have to make provision for special concessions to families with only a single breadwinner so that such families are not prejudiced. Therefore, although we regret the fact that the Government has not seen its way clear to accepting those proposals in toto, we regard the second option accepted by the Government, the pragmatic option of the first R20 000 being exempted, subject to the standard income tax for employees, as acceptable in the circumstances.

We have done a bit of arithmetic, because I was concerned. In our country we have such a strong tendency to accept the husband as the breadwinner, even though we know that in numerous cases the wife is largely the breadwinner. I examined an extreme case. On the basis of the new proposals, if we have interpreted them correctly, if a husband has a taxable income of R100 000 and his wife a taxable income of R20 000, together they would pay R38 885 in taxation. If the husband, however, earned R20 000 and his wife earned R100 000, they would jointly pay R41 710, in other words almost R3 000 more. We shall simply have to wait for the relevant legislation to see how things work out in practice.

I want to refer briefly to a new little exercise the hon the Minister and the department have, for practical reasons, seized upon. I am referring to MCT, the minimum company tax. There is no time to discuss this in detail at the moment. We shall probably have an opportunity to do so at a later stage when the legislation is discussed. This was a crisis decision, and after further consideration …

It is a Margo proposal.

Yes, but the hon the Minister has not implemented the Margo proposals in toto. This decision is going to create more problems for the Government than it solves, because the question that arises is whether we are dealing here with a new form of taxation in cases where a company will not have the opportunity, at a later stage, of being taxable, or whether we are dealing with a new kind of loan levy. It is very clear to us that as a result of the hon the Minister’s capitalflow problems, he has had to make a crisis decision in an attempt to obtain extra money.

The present Government’s major problem is that it is trying to create one South Africa, with its First-World component on the one hand and the Third-World component on the other. It is trying to maintain a capitalist system for the First-World component, and using that to carry the Third-World component. [Interjections.] That is one of the major problems facing South Africa today.

Where is there better proof of this than in the object of privatisation? We have been told that the object of privatisation is, among other things—let us forget about things like efficiency—firstly that of employing privatisation, to a certain extent, for the payment of debt— precisely how, or what percentage is involved, is not stated—and secondly for the development of so-called depressed areas and peoples. What is that if not a new form of African socialism for which the taxpayers of South Africa have to pay?

Are you opposed to the assistance granted to Whites in the designated areas in the North Western Transvaal and thereabouts?

No. [Interjections.]

Is that not socialism?

The Government’s moment of truth has arrived, however. [Interjections.] The voters of South Africa have not been misled by CP gossip-mongering. At present they are being guided by their day-to-day experiences which are the result of the present Government’s new policy of integration. That is why it was not even necessary for the CP, in the three recent byelections, to try to persuade the voters to vote for us. All we had to do was to go from door to door and ask the voters: “Will you be here on polling day? Must we fetch you? Are you going to vote for us?” [Interjections.]

There was no question of anything like a doubtful vote in those three by-elections. Those voters decided for themselves that the present Government did not know where it was heading with the voters of South Africa, or if it did know where it was heading, it was not revealing this in any shape or form. [Interjections.] That is why the White voters decided that they could no longer vote for the NP, because the NP was charting a course for them which was endangering their actual and fundamental future existence.

Mr Speaker, the hon member for Barberton referred to quite a few matters which I shall come back to in due course. Firstly I just wish to take this opportunity of extending a very sincere welcome to the hon member for Randfontein. Last year we had the privilege of campaigning against each other in Gezina during the elections. Both of us are glad that he did not make the grade at the time; I because I am still here today, and he probably because I had the opportunity to welcome him here today. [Interjections.] I should like to wish him everything of the best and a very pleasant and productive career in Parliament for the duration of his stay here.

Firstly I merely want to refer to a few of the hon member for Barberton’s remarks before giving more detailed attention to him in my speech. Firstly I want to refer to his remark about the reduction in the salary package. He specifically referred to a decrease, comparing last year with this year. He mentioned last year’s figure of R14 billion as against this year’s R15 billion. I now want to ask the hon member for Barberton whether 15 is less than 14.

In real terms?

Yes, even in real terms. Even in real terms the calculation is not that simple. The hon member simply stated that there was a decrease in the salary package. There is no truth in that whatsoever. There is still growth inherent in the salary package, something for which provision has had to be made in this budget too.

He also spoke about dissaving, as if this were some virulent element that could manifest itself in the economy. It is specifically necessary. I personally believe that to be the case. It is specifically necessary, in the present economic situation, for a degree of dissaving to take place. The economy is not, after all, something one can change overnight with a mere flick of the wrist. There are certain measures and principles that have to be built in to change the specific course adopted by the economy. Dissaving is specifically one of the steps that have to be taken.

He also referred to the advertisement that appeared in the daily newspapers in which the hon the State President made an appeal to combat inflation. Surely it is not solely incumbent upon the Government to take action to combat inflation. This is a campaign in which everyone should be involved. The advertisement is an appeal to everyone, including the CP. Everyone must assist in combating inflation. If that were to succeed, if that advertisement were to achieve its goal, as we on this side of the House believe and hope it will, we would all benefit from the appeal made in that advertisement, including the CP.

Before I say anything further about what the hon member for Barberton said, I want to express my personal thanks and appreciation, and that of this side of the House, to the hon member for Vasco, the chairman of the Standing Committee on Finance, for the leading role he played in the period after the Budget Speech—the seven days in which we examined the various facets of the Budget. He did so in a very systematic and competent manner, and I want to thank him for it.

We also want to thank the hon the Minister of Finance very sincerely for having made himself available, on two occasions when we asked him to do so, to appear before the committee, with officials of his department, to provide specific information. We appreciate the detailed and systematic way in which he did so.

To all the other departments and outside bodies which made a contribution, we want to say that all those contributions were of fundamental importance and of great value in the evaluation of the Budget.

With this Budget we have finally entered upon an overall financial reform programme. And this Budget must be seen as the first firm step—but a very decisive one too—towards ultimate tax reform. This is a new course which we have adopted and which it will probably not be possible to deviate from again.

The most important objectives of tax reform are summarised as follows by the Margo Commission, and I quote from the White Paper on page 3, point 3.1:

In reply to what the hon member for Barberton said, I want to dwell on a few of these objectives. Firstly I want to examine the attainment of satisfactory real per capita income. The hon member for Barberton also referred to that. No one, no group, is or can remain satisfied if there is not a specific increase in income for such a person or group. Everyone endeavours to improve his position. Purposeful efforts or criticism aimed at jeopardising that, or measures aimed at inhibiting such progress, are counter-productive. That is why the NP has long since adopted the principle of parity in salaries. Gone are the days of differences in remuneration solely on the basis of skin colour. Pain and sacrifice went into the introduction of this measure. It goes without saying that special demands have been made on the Treasury in this regard. One merely hopes that purposeful efforts will be made to increase productivity in line with increases in remuneration. Unfortunately that is not discernible in all quarters. Employers and employees will have to accept this responsibility. Trade unions will also have to display a special degree of responsibility in this regard.

In addition, the extension of the informal sector, and the increasing ease with which participation in this sector can take place, is starting to make a major contribution to the broadening of the personal income base, thereby diversifying income. I merely want to mention a single figure. In 1987 personal available income increased by more than 3% in real terms, something which in turn had an influence on personal savings which increased to 12,8% of the personal available income.

Another relevant indication which is gratifying is the fact that growth in expenditure on durable goods has increased by 15%. In conjunction with this we are grateful for the fact that there are signs of a significant decrease in unemployment in all groups. All this is an indication of a significant movement towards a reasonable growth in the future. If these trends continue, we can accept the fact that we shall succeed in also giving less privileged communities an opportunity to share in a reasonable portion of the available income. In other words, this means a clear move towards a reapportionment of available income. If this could be done, it would mean that everyone who shared in the process would potentially be a better contributor to tax revenue.

The NP therefore does not resort to the unintelligent view that income should be generated for one group only and that the other groups should get along without it. Each group is increasingly going to demand a specific income, more income, and, in consequence, will ultimately make a greater pro rata contribution to State revenue. That is a principle which was also laid down by the Margo report and adopted in the White Paper, ie that the emphasis should be shifted from direct taxation to indirect taxation, and this principle is naturally welcomed.

This links up with the following objective laid down by the Margo Commission, ie the acceptable distribution of personal income. Every inhabitant of South Africa has the right to a reasonable income. There are, however, a few prerequisites that have to be met. The most important prerequisite is probably that of a reasonable level of performance. No person is entitled to an income if he does not furnish a specific level of performance, the most important probably being the production factor of labour.

Hand in hand with that, of course, there is also a further prerequisite, ie that job opportunities should be readily available. If they are not readily available, this has an inhibiting effect on the generation of income. It has long since been agreed that the reservation of job opportunities is not the answer, because inherent in that is the possibility that certain people would be excluded from those opportunities.

In conjunction with that, education and training are still very important. The standing committee, in no uncertain terms, expressed itself in favour of the continued expansion of the educational budget. However, education as such is not the final answer either. Academic qualifications are essential, but training in a specific field, a specific discipline or specialised field is as much of a priority.

The relevant question we shall have to answer in future is whether we in South Africa can afford, for very much longer, to provide everyone with 12 years of academic education. Must specialist training in a specific field remain a prerequisite? Must matriculation remain a prerequisite for a policeman’s appointment and promotion, and should post-matric academic training—at present this involves extremely high tuition fees—be the only criterion for the appointment and promotion of policemen? In this regard I refer specifically to the resolution of the standing committee, Resolution 6,9, adopted by the SCOF in this regard.

The question is whether matric is always essential for specialist training. The technician or artisan with a specific aptitude does not necessarily need to obtain an academic matric in order to undergo technical training. The customary practise of obtaining a matriculation qualification and, without any specific career objectives, taking a degree course at university, is a costly and no longer an easily affordable practice. In this regard we shall have to re-evaluate our situation. A value judgement will have to be made in this regard.

The frantic quest for purely academic education results in too many pupils falling by the wayside or obtaining a virtually useless matriculation qualification or degree, without any prospect of necessarily being absorbed into the labour market.

This frustration is particularly prevalent amongst the Blacks and the Coloureds in their endeavours to obtain academic training. The earlier identification of a specific aptitude or field of interest and a more broadly differentiated education could solve this problem. I want to reiterate that we should investigate the possibility of a more broadly differentiated type of education in order to provide more subject-orientated training. It is therefore nothing short of gross irresponsibility to argue that too much is being done for Black education.

Education and training will have to remain a high priority in the Budget. A shift in emphasis to more practical training, however, can and must be considered.

I also briefly want to dwell on a third characteristic of tax reform, ie the maintenance of price stability. Growth has the ability to stabilise prices to a certain extent. Exceptionally high prices are very often the result of action motivated by panic. There are artificial price increases to compensate for a low turnover experienced when there is insufficient growth. With sound growth one is therefore justified in expecting greater price restraint.

Now, however, we are entering a transitional phase, that of a deliberate effort to curb inflation. That is why it is regrettable that the hon member for Barberton does not want to join with us in spending money on advertising this fact. I have the feeling that the private sector is not fully prepared to go along with us in heeding this call by the hon the State President either. In this regard I should like to refer to the standing committee’s Resolution 6,1, in which we make specific mention of this. However, the climate for combating inflation and therefore curbing prices has been created. Ultimately benefits will accrue, if everyone would just play his part.

In this regard we welcome the envisaged measures to lend more weight to the South African Co-ordinating Consumer Council. The Consumer Council is not simply another board. It must become part of the consumer’s way of life in the sense that the consumer must take note of its existence and participate in its functions.

The National Parks Board could only succeed in properly protecting parks when it appointed honorary members to help keep an eye on things and report any irregularities. The National Road Safety Council will only be really successful when there are honorary traffic inspectors on our roads to report road abuses immediately. Only then will it be possible to combat this unnecessary slaughter on our roads.

Similarly the consumers themselves must be roped in to assist in looking after the interests of the consumer, and this should be done by the appointment of honorary consumer council members at a local level with a view to having them assist the consumer council. It would also help if business undertakings were compelled to display the names and addresses of such local honorary members prominently so that consumers could see who was there to help them in such cases.

I want to thank the daily press for the important role it still plays in publicising consumer matters and reporting on matters of general concern. In this context the Press plays a very important role and we should like to see them continuing to do so.

I should like to come back to certain specific statements made by the hon member for Barberton, also specifically referring to his party’s economic policy. The CP says that the Whites are becoming impoverished, whilst people of colour benefit from the situation. That was stated in banner headlines in the Patriot of 25 March.

You also read the Patriot!

The headline reads: “Blankes verarm”. They draw this conclusion on the basis of concessions in personal taxation, an area in which according to them, the lower income groups are ostensibly being accommodated to a greater extent than the higher income groups. Their simplistic deduction, after having drawn their initial conclusion, is that people of colour, and specifically the Blacks, are deriving undue benefit. They also draw the simplistic conclusion that the Whites are the ones who are suffering.

That is the truth!

Firstly it is untrue to state that only the lower income groups are deriving undue benefit from the decreased scale. Where is it stated that the lower income groups are deriving any undue benefit from this lower scale? It suits them to say that only the lower income groups—their eventual conclusion is that this relates only to the Blacks—are deriving undue benefit. Surely that is not true.

The assessment rate of every group in the tax scale has been reduced. I merely want to mention one relative example. In 1987 the scale of a married person with a salary of between R50 000 and R60 000 per year was R16 120 plus 48% of the amount above R50 000, whilst in the coming year for the same income group it is R14 360 plus 42% of the amount above R50 000. Surely, in comparing the scales for the two years, there is a very real difference. This tax scale is applicable to one of the higher income groups. It is therefore misleading to allege that the tax scale only benefits the lower income groups, and then to draw the simplistic conclusion that only the Blacks are deriving any benefit. We should personally like to see the lower income groups placed in a better position. We should like to see it made even easier for them to make a living. There are also Whites in this group who are struggling. We should also like to afford them greater relief, but this applies to everyone, including Blacks, who fall into this lower income group. It suits the CP to make martyrs of the Whites. It earns them a few extra votes at the polls.

Call an election and you will see!

The reality is that we are all here in South Africa and have to live here. All are partners in the national economy and will have to make their humble contributions towards the smooth running of this economy. We all have a right of access to the Treasury. We must get away from the idea of differentiated State revenue. There is no such thing as White, Coloured and Black income tax; there is only one central Treasury to which everyone contributes—however humble the amount may be—and everyone must also be in a position to derive benefit from that.

I want to congratulate the hon the Minister on this Budget and express the hope that this will be first step towards greatly improved budgetary reform. We want to wish him everything of the best and we should all just like to help South Africa. Then, of course, we must be prepared to help ourselves too.

Mr Speaker, the hon member for Gezina covered a wide range of subjects. I should like to draw his attention to one aspect that he dealt with, namely the question of employment in South Africa. One of the most disturbing features which I shall deal with at some length is the fact that despite the tremendous growth in the population, we have been unable to provide the gainful activity which is required for that growing population.

I want to mention the simple statistic that excluding the population of the TBVC countries, there are some 30 million people in South Africa of whom fewer than 5 million are employed. That means that excluding the population of the TBVC countries but including them in the employment, some one sixth of the population is gainfully employed in South Africa. In those circumstances we are actually sitting on a population and employment time bomb.

At the outset I should like to join the hon member for Gezina in extending congratulations to the hon member for Vasco—unfortunately he is not here today—who is the chairman of the Standing Committee on Finance for his work in that capacity, and also to the other members of that committee. In due course I am going to deal with a number of the recommendations which have been made by that committee and draw attention to the fact that each one of those recommendations represents a consensus among three Houses and all the political parties represented in the whole of Parliament. To achieve that degree of consensus in respect of what are some important measures contained in that report is an achievement in itself and is something which one should not ignore because those recommendations are of considerable weight. I shall deal specifically with an attack which one of the financial publications made on one of those recommendations which, in my opinion, merits a comprehensive reply.

If I may, I would like to discuss a non-economic matter for a moment. I would like to extend my personal congratulations to the hon member for Randfontein and to his brother, the hon member for Schweizer-Reneke. It is not only a unique situation—I am not talking about politics—that two brothers should be in Parliament, but it is unique that they should come here within so short a time of each other. It is also unique that their father was also a member of this House. It is perhaps a matter of some regret that the presence of one of the brothers is due to the death of their father. I think he would have liked to see his two sons in the House of Assembly today. I remember him in that sense and I would like to express to the two boys—if I may use the term—not only my good wishes, but also my sympathies on the passing away of their father which created the situation. Sir, you will forgive me for calling them boys. They are hon members who are his sons. [Interjections.]

Right at the beginning I would also like to move a further amendment to that moved by the hon member for Barberton. I think that in moving the amendment the different approaches that we have to the problem will also become apparent. I move as a further amendment:

1. (1) to make adequate provision in respect of military and social pensioners and other aged and disadvantaged persons in receipt of social assistance;
2. (2) to take steps to remedy the serious situation developing in the health services of South Africa;
3. (3) to ensure that the quality of education of all South Africans is of an acceptable level;
4. (4) to take further measures to protect the public against crime; and
5. (5) to remove from the taxation proposals those which are ineffective and inequitable.”.

It was fascinating to listen this afternoon to the hon member for Barberton because I think it is now becoming apparent not only that there is a major economic conflict and debate taking place in South Africa as a whole between free enterprise on the one hand and socialism and communism on the other—a very important fight which is being waged in South Africa which not only affects us economically but also politically—but also that within the confines of this House there is now a very substantial difference developing in regard to economic approach. What is clear, is that if free enterprise is to succeed in South Africa, it has to be uncoupled from apartheid. It must not be synonymous with apartheid.

Secondly, if free enterprise is to succeed in South Africa and if it is to make a contribution towards the attaining of political stability, it must be free enterprise with a caring face, and caring actions and it must be free enterprise which is non-discriminatory on a racial basis. If that is not achieved in South Africa, Sir, then not only will there be a major economic conflict, but that same economic conflict will also flow over into the political sphere and will make solution-finding almost impossible.

I want to commend to the hon member for Barberton the following statements which I have obtained from a document which indicates the reasons for the rejection of free enterprise by Black South Africans. I want to read only a small portion of it, as they state it: “Free enterprise is perceived as being a preserve of the White population.” If free enterprise is perceived as a preserve of the White population, it has no prospects of succeeding in South Africa in the long term. None at all! If we talk about the fact that there can be intervention by the State designed to be of advantage to White persons in South Africa and call that free enterprise, but that there cannot be intervention by the State in order to help other South Africans and then regard that as socialism, then one cannot sell free enterprise. It is impossible. One cannot do it. Let me read another passage for the hon member for Barberton, viz:

The reality is that if capitalism is equated with apartheid, it is doomed. If it is in fact seen that only those who have white skins can have property, assets, prospects and can have work, then the White South African has no future. To safeguard the White South African’s future, the Black South African must also have the same opportunity. If one does not want to be purely selfish and considers the matter from a selfish point of view, if one wishes to be altruistic and humanistic, then the members of the CP should in fact wish to have a caring society and one which is non-discriminatory when it comes to intervention by the State in order to apportion opportunity to all in our society. Even if one is selfish, one should have that emotion.

Must nationalism be equated with selfishness?

If one is altruistic and humanistic, one will approach it differently, as I believe some of us in these benches approach the matter.

You have never understood us!

I hope I will never understand you! I hope I never will, because, I never understood Hitler either, and I am only referring to that hon member; not to the other hon members of the CP.

I think that right at the outset one should put some particular questions to the hon the Minister in order to deal with the broad outline of what the issues are which we are confronted with.

The first question I should like to put to the hon the Minister of Finance is the following. Is the package announced by the hon the State President in his opening address to Parliament in fact going to be carried through? Is there really the determination to see it through despite the sniping coming from all directions? Is it in fact intended that that package will be seen through to the end? I ask this, Sir, because if there is a weakening in relation to this, there was no point in introducing it in the first place.

The second question relates to his own determination as to whether he will adhere to this Budget. Will he keep to the cuts that have been announced? When we reach the end of the year, will we in fact have a set of accounts which will be similar to the Budget as presented?

The third question is whether we are actually going to have real tax reform in South Africa or whether there will merely be a redistribution in respect of those who pay the taxes without there being an actual reduction in relation to the taxation which will overall be drawn from the private sector.

Finally, Sir, the question is whether there will be real efforts to deal with what is the major problem to which I referred earlier, viz the question of gainful activity for South Africans who are capable of such activities and who are part of the economically active population.

If we look individually at the problems which confront us, I believe it is clear that the Budget was intended to be round two of the new economic package. I want to say at the outset that I accept completely the bona fides of the hon the Minister in presenting it as round two of the hon the State President’s economic package. The question is, of course, whether it achieves the purpose and whether it will be carried through. One of the things that happens when one has a budget debate so long after the presentation of a budget is that there has already been so much discussion on it that there is no longer any immediate subjectivity in respect of it, and one can therefore be a little more objective as a result of studying it and of seeing the reaction to it over a period of time. What worries me—I put this to the hon the Minister—is that whereas this Budget expresses long-term intentions in relation to putting the economy on a sounder footing once again, it does in fact contain and execute too many stop-gap measures which, I believe, do not seem like sound foundations for the long-term execution of meaningful fiscal discipline and economic reform.

It is not good enough to have good intentions, which I accept the hon the Minister has; it is the contents of the Budget which I believe are fundamental in determining whether we can see it through.

There are three major issues which are actually involved in this. The first is the question of economic growth. In relation to the projected population increases and the number of economically inactive out of the working population—I use the expression “economically inactive”, Sir—the aspirations of people becoming increasingly better educated and more politically sensitive is perhaps the number one problem in South Africa and the number one problem with which we have to deal in this Budget. A growth target of 3%, even if it is achieved, reduced to a per capita basis, is minimal and does very little to alleviate the situation. It does even less when one’s growth is based upon a very low base and when it follows on years of negative per capita growth. The problem is that every time we seek to accomplish greater growth than approximately 3%, we find ourselves in a situation in which we have problems with our balance of payments, in which interest rates begin to increase, in which inflation goes up and in which there is generally an overheating of the economy.

If that is the problem—and that is undoubtedly the problem which exists—then we have to deal with that problem, and it is that problem which I believe is not adequately addressed in this Budget. We actually accept these restraints and we seem to be unable to do anything about them. It is those restraints which have to be dealt with. We accept, for example, that we are prisoners of the balance of payments because we have that problem in relation to overseas finance.

The situation therefore is that if we accept that we have to grow at more than 3%—and there is no question that we have to grow at more than 3%—the answer to my mind lies in inward industrialisation. There is no doubt that if we accept the concept of inward industrialisation we can create a demand for locally produced goods. We will then be able to create more jobs to produce those goods and we will be able to create more spending power, thus getting a spiral of growth which will not result in an overheating of the economy.

I accept the fact that the help which has been given to unemployed people was necessary and desirable. We even supported it. Every one of these steps to deal with poverty and the relief of starvation deserves everyone’s support. The reality, however, is that we need to create longterm jobs. We can only do that with a policy of inward industrialisation. It is up to private enterprise to take the initiative. Either private enterprise takes the initiative, does the things and creates the jobs, or alternatively the State will have to take the lead. The choice lies with the champions of private enterprise. They must either take up the challenge or the State must take the lead. At the moment it seems as if private enterprise is not in adequate measure taking up the challenge and providing the jobs that are required. There are many examples where, in fact, we find that private enterprise seeks to employ its funds in activities which bring shortterm profits, but which do not look to the longterm needs and requirements of the country as a whole.

I do not deprecate the activities which are being undertaken by the Small Business Development Corporation, for example, and by other State institutions. However, the truth is that none of it is enough. To my mind, this is where the impact of the Budget on this major issue is inadequate. It is like a Canute seeking to stop the tide. It accept to some extent the barrier of 3%. It accepts the inevitable overheating of the economy. The reality is that we have to overcome it, because there is no solution on a 3% growth basis. There is only a solution if we create work for the people of South Africa.

The second issue which the hon the State President also addressed in his opening address is that of inflation. I think there needs to be a word of caution with the rate of inflation dropping at the present moment. We need to be careful not to deceive ourselves with the current drop which is taking place. There are latent forces which, if they are not controlled, are going to cause a major escalation in the South African inflation rate. If the value of our currency is destroyed, the fabric of our society will also perish. The problem which needs to be faced is that private consumption expenditure constitutes about half of the GDP. A substantial increase in such expenditure—as I have indicated—is constrained by balance of payments conditions and is discouraged by the authorities because of the inflationary dangers.

What we therefore need is a further reduction in Government consumption expenditure to promote relatively greater growth in the private sector which then would be more job creative, given the degree of incentive required. It would also be less inflationary, particularly if the consumption were directed to local production, absorbing surplus capacities and activities in which skilled labour shortages would not arise from increased demand.

The truth is that if one increases consumption and demand by the lower income earners in South Africa, they will spend their money on goods which are produced in this country. The ordinary poorer South African, or rather, the lower income group South African, spends his money on food which should be locally produced. The imports of food in many cases are completely and utterly unnecessary. When one travels SAA, one even gets cheese which was made in France. Do we not make cheese in South Africa? [Interjections.]

The reality is that when one is in the lower income group, one buys food and clothing which is produced here—or should be produced here. One of the things that I find remarkable, reading the quarterly report of the Reserve Bank, is that there is an increase in the import of textiles. We should be producing those goods here, Sir. One buys food, clothing, furniture and a home. The products used in building a home should come from South Africa. When one builds a house, one should use bricks and cement that are made here and wood that is grown here. It is these industries which we should encourage, Sir. All of these things would then not bring an overheated state of the economy and we would then not have a balance of payment problem. By doing this, jobs would be created. There would be money in people’s pockets which they would spend and this then would create more demand. We would then be on the way to solving the problems of South Africa in regard to this particular issue. I make this appeal because I believe that this is the one way in which we can overcome this major problem.

I think another major issue which we need to look at is the question of our own stability. Sir, without stability we are not going to have business confidence and, if we have no business confidence, we are going to continue along a road on which there is insufficient domestic fixed investment. Anyone who looks at the statistics will see that there is inadequate investment in order to create more employment and more economic activity in South Africa. This lack of stability is what causes one the most of worry.

In this regard I again refer to the fact that unemployment—particularly of better educated persons—is a destabilising factor. We educate people—here the hon member for Gezina and I are on exactly the same wavelength—but we do not train enough people. We have what is known elsewhere in Africa and in India as the syndrome of the failed BA. Fortunately, many of our people have obtained the BA degree, so perhaps we should give it a different name. However, we educate people in the arts; we educate them to learn Latin and to do all sorts of things, but we do not teach them how to use a drill or some other machine. We do not teach them what life is really about. We do not train them. Educated people who are unemployed are a political risk. There is no question about that. This does not mean that people should not have an education, but we are short of trained people in South Africa. I think the whole education system needs to be revised.

Secondly, we need to look at the whole situation in regard to industrial unrest. We are losing hours and hours in which people could have been engaged in work and we have the overflow of industrial unrest onto the political terrain. We need to try to divorce industrial activity from political activity. If one gives people channels for political activity separate from industrial activity, there is a greater chance of having industrial peace. However, the objective of those who want unrest in South Africa is to use the industrial activity in order to create political unrest. We need to look at divorcing these two facets.

The question of getting started with a process of negotiation with Black leadership has also become a vital issue. They must be able to participate in the central Government of the country. Unfortunately, there is little on the horizon that gives one hope that this is to take place and that there is any likelihood of a change of direction. Sir, events do not happen by accident. There has to be an effort in order to bring people together— people who reject violence, who are prepared to talk without precondition, to accept and respect the rights of others, and who are committed to Western-type democratic economic ideals. I accept that processes of change are not easy. At the present moment, in regard to our ideal of peaceful change, we find that one group of extremists is trying to pull us back in history while another is threatening to shove us forward into an abyss.

We need to resist both but if the centre of SA politics is to hold, it has to be determined, united and it must have a morally defensible cause. I believe there are enough people in SA to constitute a centre of this kind that will constitute a majority of the people of SA. Somebody has to be big enough to make the first move in order to get this real process going and to bring the centre together, because if the centre falls apart, we will have two extreme groups pulling in opposite directions. Maybe in the end those who say that it is a fight between the ANC and the AWB will be right and we will all find ourselves in a state of destruction.

I also want to refer to some other aspects of the Budget. While they are taxation proposals, they may not be seen in such a broad concept but I nevertheless think they are extremely important. I want to refer again to the minimum company tax. If I have enough time, I will analyse the fallacy and the foolishness of this tax. Take this simple example. In the taxation proposals it is stipulated that it applies to every company as defined in the Act. That means that it applies, for example, to a company incorporated overseas which merely has an office here and which derives some form of income here. It also applies to a company in which one person holds one share in SA in an overseas company and that overseas company then becomes liable for the tax. It is applied in those ludicrous circumstances but I say it is incapable of application, incapable of enforcement and it does not make sense in the taxation proposals as framed. It cannot make sense to apply this tax to where in fact there is to be a capital distribution, as opposed to an income distribution. The excuse given—and there are many excuses—in relation to this is that this is a method of raising money, a question of getting money in, a question of cash flow which has to take place and that it will be very difficult to draw up the legislation in the short time that is available. If it is difficult to draw up legislation to make it just legislation, then it should not be introduced, because the Government should not be introducing unjust taxation in this concept.

I also want to draw hon members’ attention to something I cannot resist and that is the report of the Standing Committee on Finance where it states the following, and I quote:

The question I pose is—and here I refer to an attack which was made in this regard by Financial Mail: Does the Financial Mail believe that taxation should be equitable? Is it logical that there should be tax shelters for the rich, while the wage earner and the salary earner pays his full share of the taxation? Does the Financial Mail believe that tax avoidance or evasion schemes should be kept secret or should be exposed? Do they believe that unacceptable and socially undesirable schemes should be legislated out of existence by specific legislation, or do they believe that there should be free rein to everybody to do what they like—to evade, to avoid, to do what they want do so as to have a maldistribution in regard to the tax function? Or, on the other hand, do they believe there should be wide powers for the hon the Minister to deal with this as he wants to retrospectively, as we do not want to happen? We want, when there are malpractices, to have them exposed if they are wrong and to have them dealt with effectively and expeditiously in this legislation. We say that tax evasion which is unacceptable and socially undesirable, even if legal, is the basis on which one decides to have legislation. They say it should not be a question of social acceptance, but taxation laws are based upon the social norms of the community of the time and that is why this sort of legislation is necessary and desirable so as to have an equitable distribution of the taxation burden in SA. [Time expired.]

Mr Speaker, it is an exceptional privilege to speak after the hon member for Yeoville. I should like to associate myself with him in his congratulations to the hon member for Randfontein. This is an exceptional day for that family, and I believe that he will make a very meaningful and good contribution in this House.

I also want to congratulate the hon member for Yeoville on obtaining the award of the Order for Meritorious Service. The hon member distinguished himself, and I believe every hon member of the House joins me in congratulating him. He is worthy of the award, and we look forward to his taking receipt of it so that we can share in the occasion with him.

The hon member made a substantial contribution; in fact, I want to say that almost 90% of the hon member’s speech could just as well have been held from these benches. In that respect we can merely thank him for his contribution. There are a few matters that I shall discuss with him during the course of my speech, however—we shall agree on some of them and differ drastically on others.

With regard to social pensions, the country cannot afford more than the one-off contribution of R60 at this stage. The hon member will realise that already it is going to cost the Treasury R120 million. Although we talked about a discount amount of R5 over a period of 12 months, we were not able to grant the available amount on a monthly basis and that is why we have the one-off grant of R60 which is now going to be paid out in May.

The hon member for Barberton had a great deal to say, especially about the question of insurance. He was concerned specifically about the difference he supposedly perceived, ie when investment interest is exempted from tax, people are encouraged to invest, whereas they are penalised because they cannot get any tax back on their insurance premiums. What the hon member was implying was that the profits and the growth contained in an insurance policy are taxable, because that is the equivalent of what interest on an investment would be. I think that unfortunately the hon member was making an error in his reasoning.

We on this side of the House are delighted with the way in which privatisation and deregulation are being launched. Privatisation and deregulation have come a long way in South Africa. This is not a magic formula dreamt up by the hon the State President and the hon the Minister of Finance overnight. It is the result of protracted consultation between the public and the private sectors. The conferences and summit conferences between the hon the State President and businessmen, beginning with the Carlton and Good Hope Conferences, attests to this. The inputs of the private sector, individually, in groups and collectively, have played a decisive part. In a spirit of co-operation similar to that in Japan, which was characterised by the support and co-operation of the state and the private sector—in the case of Japan it was the Saibatsu in particular—we have managed this in South Africa too. I am sincerely grateful for these inputs from the private sector. I hope this is merely the beginning of much greater co-operation in future.

As long ago as 1986 a joint memorandum was submitted to the Government by the Association of Chambers of Commerce, the Afrikaanse Handelsinstituut, the Chamber of Mines, the SA Agricultural Union, the Federated Chamber of Industries and others. This memorandum contains many of the matters that were included in the White Paper on privatisation. In my opinion it can be regarded as the joint commentary of the private sector.

†Coming back to the hon member for Yeoville, I must point out that this memorandum stressed the necessity for privatisation and deregulation, and it set out clearly the key objectives for privatisation. On the part of the Government, we are in agreement with most of these objectives. Let me mention but a few that I personally endorse:

• —To reduce and eventually reverse the upward trend in Government spending and public sector involvement in the economy to the extent of almost 20% by the year 2000.
• —To reduce the cost of services to the taxpayer and consequently to help reduce the tax burden, and especially the marginal rate of tax.
• —To broaden the tax base and to increase revenue collections as economic activity is consequently stimulated.
• —To boost the economy by increasing economic opportunities and individual entrepreneurship and to spread economic ownership.

The hon member for Yeoville implied that we equate a free enterprise system with apartheid. Let me assure him that the aim of the whole deregulation programme is to give equal opportunities to the various population groups and to develop the particular skills of our non-White population. We have already embarked on this deregulation aspect.

A free market is the first step to individual freedom. All races in South Africa share the profit motive and the tendency towards free enterprise. The growth of the Black taxi market and other markets has proved that Blacks are as committed to free enterprise as we are.. It is, however, essential that those Blacks still believing capitalism to be synonymous with exploitation be educated and convinced of the opposite. That we cannot do by mere words. That must be proven by our deeds. On that score I do agree with what the hon member had to say.

We are in agreement that privatisation and deregulation should improve market orientation, especially by encouraging small business and individual entrepreneurship. Privatisation and deregulation will bring more Blacks into the free market system. This will have the net effect of increasing employment opportunities. On the other hand I must stress that adequate safeguards should be implemented for public servants and officials. There should be sufficient re-employment guarantees or other mechanisms to ensure job security in order to avoid bureaucratic obstacles to the implementation of privatisation and deregulation. The hon the State President confirmed that the funds received from the sale of State assets will be used for the creation of a new infrastructure and the repayment of our international debt.

The priority programme of privatisation should reflect the following:

• — The overall pace of the privatisation and deregulation programme must be dictated by the ability of the economy to fund and absorb it.
• — A step-by-step approach of testing the water through pilot projects should be used to reduce risks and to avoid disruption.
• — A number of advisory bodies and subsidiary task groups need to be established to ensure adequate consultation, objectivity and impartiality in the implementation of the programme at all levels.
• — The concept of safeguards and checks and balances should be built in to ensure the maintenance of standards, the avoidance of price escalations and the loss of job security.

In sharp contrast to the negativism of the CP, the comments from the private sector with regard to the proposed economic reforms are generally favourable. Subsequent to the hon the State President’s address, Mr Raymond Parsons, chief executive of the Association of Chambers of Commerce and Industry, said that there can be no mistaking the earnest desire of the hon the State President to forge a new economic direction. The economic policy, with its emphasis on privatisation, deregulation and restraints on State spending seeks to underpin growth and to curb inflation.

According to Mr Parsons, the successful implementation of the new strategy, and in particular the reduction in the size and cost of Government, will depend on an integrated approach to the intended spending, taxing and borrowing capacities of the State.

*Although one has to move forward with great circumspection in implementing privatisation, one must note that not too much time elapses between the taking of a decision and its implementation. A realistic time schedule has to be established, therefore, in terms of which the programme of privatisation is tackled in accordance with the official guidelines.

We do not see a sudden revolution with reference to privatisation in South Africa, but rather the development of a secular trend. The well-known economist, Alfred Marshall, said many years ago that nature did not move in leaps and bounds. In the same way we shall have to ensure that there is a gradual transition period. This transition period is essential for the promotion of privatisation.

The hon the State President and the relevant hon Ministers have also indicated that they would welcome good advice concerning privatisation. It is important that debating and consultation take place between the private sector and the Government throughout.

The decisive factor for a successful economic future will be the cyclical and structural policy of the South African Government in the coming years. The cyclical policy must maintain strict monetary and fiscal measures throughout, and discipline must emanate from that, whereas the structural policy must increase the flexibility and adaptability of our economy. This policy formulation and this implementation is our greatest challenge, taking the internal as well as the external realities that affect South Africa into account.

In addition the monetary and fiscal policy has an important influence on the inflation rate. The successful implementation of the monetary and fiscal policy accompanied by a moderate stimulation of the economy, has already resulted in a moderate economic upswing. The recovery of economic confidence and the abatement in unrest and cases of violence is leading to greater economic activity.

South Africa has experienced a growth rate of 2,6% during the past year. Economists estimate that the country cannot afford a growth rate higher than 3% to 3,5% under present conditions. This is in accordance with what the hon the member of Yeoville said and I agree with it. I want to tell him, however, that certain symptoms of demand inflation can already be perceived, in contrast with the cost pressure inflation of the past few years.

Every form of double figure inflation, whether it is cost pressure inflation, or demand inflation is negative and extremely detrimental. Demand inflation is the lesser evil, however, because it can be dealt with in certain ways, especially in respect of the matter the hon member for Yeoville referred to. An elementary description of demand inflation is the well-known “too much money chasing too few goods”. It can be dealt with by reducing the money supply or increasing the stock of goods and services in production. The latter increase in productivity and the stock of goods is the appropriate course for South Africa to take, with its multi-ethnic composition and its Third World component which is caught up in a First World economy.

Consequently privatisation and deregulation, as well as the development of the infrastructure, can play an important part in the greater economic activity and the creation of more employment opportunities in South Africa. I would regard this more meaningful economic activity as a countermeasure to the somewhat negative noises we heard from the hon member for Yeoville in this connection.

In the past the financing of the deficit on the still increasing Government expenditure was characterised in general by inflationary financing, whereas we may be able to deal with the matter by means of deflationary financing in future. It is clear that this matter can now be dealt with directly by means of stricter control and monetary and fiscal discipline. The visible drop in the inflation rate during the past few months attests to this.

It is impossible, however, to cause a dramatic drop in the inflation rate without this being to the serious detriment of the South African economy. The inflation rate has to be reduced systematically by means of a long-term strategy which is based on a conservative monetary and fiscal policy. [Interjections.]

Absolute dedication is needed for this to succeed. One may find that interest groups will plead for privatisation and deregulation on the one hand, whereas on the other they will come out strongly against freer entry to certain markets when this may be to their personal disadvantage. When the private sector insists on a larger share in the economy and on less Government interference, their claims must be characterised by their deeds. We accept that free entry to economic opportunities will contribute to greater prosperity in South Africa. That is why it is necessary for us to break down restrictive measures and obstacles instead of pleading for protection and preferential treatment. By taking one another’s hands and supporting one another, the private sector and the Government can lead this country into a phase of prosperity in which there will be sufficient opportunities for all its inhabitants.

We wish the hon the Minister of Finance and his colleagues, and in particular the new hon Minister in the Office of the State President entrusted with Administration and Privatisation, everything of the best, they can be assured of our support.

Mr Speaker, I am privileged to speak after the hon member for Jeppe today. That hon member was one of the few members on that side of the House who had the courage to support the former hon member Dr Boy Geldenhuys in the defeat of the National Party in Randfontein. I commend him for having done so. [Interjections.]

†It is a great pleasure for me to speak in support of the amendment moved by the hon member for Nelspruit, I mean Barberton. Nelspruit will follow later! May I also add my congratulations to the hon member for Yeoville, who is not in the House at the moment, on his award. I would like to thank the hon members for Jeppe, Gezina and Yeoville for their kind words regarding the election to this House of the hon members for Schweizer-Reneke and Randfontein. I must say that the hon member for Yeoville and I do not often see eye to eye, but we are in full agreement regarding the election of these two hon members.

I would also like to agree with the hon member when he refers to the question of job creation as being an urgent problem. I am afraid that the only job creation that the hon members on that side of the House seem to be able to succeed with, is the creation of jobs for pals. [Interjections.] This is true to such an extent that even Beeld, their mouthpiece in the Transvaal, has the following to say about the burden placed on the shoulders of the taxpayer, and I quote:

… adviseurs ens ens. Met ander woorde: ’n topstruktuur waaronder die wêreld se grootste sakeondernemings eenvoudig sou meegee.

Onder dit alles kreun die gewone kiesertjie wat voel of hy alleen hierdie hele boel op sy rug moet dra.

I hope the hon members will take cognisance of this.

I also want to refer to the hon member for Yeoville—he is in the House now; I am very pleased that he is back. It is no wonder to us on this side of the House that the country’s finances are in such a sorry state at present.

†I would like to refer to an incident last year when the hon member for Yeoville almost implied that I was misleading the House when I criticised the fact that banks were permitted to charge a 32% overdraft rate. He actually challenged me to lay a charge against the bank concerned, because he said those people should be brought to justice. I want to quote to him from an answer I received recently from the hon the Minister of Finance with regard to a question I asked as to whether interest rates of between 28% and 38% were charged in the recent past by financial institutions in the Republic; if so, when, and in terms of what statutory provisions, and finally, on whose authority. I asked the hon the Minister whether he would make a statement. I got quite a lengthy reply, for which I am grateful. I think I will stick to the relevant section of the reply, but I am quite happy to give the hon member for Yeoville a photocopy of the full reply. The relevant section reads as follows:

[Interjections.] If the hon member for Yeoville does not even know what this House is approving …[Interjections.] … how can he be relied upon to monitor the affairs of the State on a financial basis and to protect the interests of the people who are in opposition to the Government, and even Government supporters, by highlighting this sort of thing? I am sure that every hon member will agree with me that to charge an interest rate of 32% on a bank overdraft is a criminal offence. It should certainly not be allowed in a country like the RSA. [Interjections.]

I must say it is quite pleasant to deal with people who have attacked me in the past on certain issues. One person it gives me great pleasure to deal with is the Potchefstroom University mathematician Prof Dirk Laurie. Shortly after 6 May last year when Prof Laurie said that the CP had reached a peak in winning 22 seats in Parliament, he provoked a reaction from me to the effect that I did not think that he really knew what he was talking about. I presented him with figures which cast a completely different light on the situation, and he accused me of conjuring with figures. I want to read from a report in Business Day of 31 March 1988 under the heading “Nats ‘face losses to the right’ ”. The report goes on to tell the truth—Business Day is a very reliable newspaper, I think:

I hope that that allows those hon members to sleep very restfully, because they are all starting to realise now that it is just a matter of time before we lift the whole lot of them out of their seats. [Interjections.]

In discussing this Budget, I must say that it is very difficult to find anything good to highlight from the Budget. It is a budget that we have become used to expecting from hon members on that side of the House, because they are actually frightened to do anything. They really are frightened; they have their backs to the wall and everything they do cost them a lot of votes. This present Budget is no exception. I want to quote some headlines: “Posisie van bejaardes nie verbeter”.

*I think that is disgraceful! It amounts to a tip of R5 per month for elderly people who are battling under the present inflationary conditions, for which the present Government is to blame. Then the hon member for Jeppe says there is no money. However, I shall come back to that a little later, and then we shall see how much money would be available for this purpose if the Government did not use the money for other unproductive purposes.

Another headline says: “’n Nee vir egpare”. It had been suggested that married couples be taxed quite separately. This is the policy of the CP, and I think that may be the main reason why the hon the Minister did not accept it.

We also read in the Business Times of the Sunday Times: “Barend bleeds life assurance policyholders ”.

†I have sympathy with the hon the Minister as far as the problem of insurance policies and taxation is concerned, but I also have sympathy with these companies in so far as they are at least achieving something we need in this country—they are encouraging savings, savings which are dwindling to an alarming degree in every other sector of the country. I think the hon the Minister might have been a little harsh on the insurance companies.

As far as the matter of State officials is concerned, I want to refer to a report in Finansies en Tegniek of 4 March 1988. The heading is: “ASP kritiseer geen salarisverhogings”.

*I wonder whether the Government will now maintain that the ASP is also mistaken in saying that there have been no salary increases. However, they qualify it by referring to general salary increases. There have been no general salary increases. The Pretoria Afrikaanse Sakekamer believes that Pretoria may be headed for a recession because of the fact that the hon the Minister has not granted any general salary increases.

†It is shocking to think that our capital city can be driven into a recession on this basis, particularly when the solution lies not in cutting officials’ salaries but in increasing productivity in other spheres.

Mr Speaker, I want to refer very briefly to the legacy we have received from the hon the State President who is celebrating ten years in office. When he came into office our foreign debt in 1980-81 amounted to R19,759 billion; today our foreign debt has reached the massive amount of R55,455 billion. [Interjections.]

Whose figures are those?

In other words, it represents an increase of 300% since 1980-81. [Interjections.] The crying shame about it all is: What have we got for it? What can the hon members on that side of the House show us for this massive debt?

Nothing!

There are only airports and glorious stadiums … [Interjections.] …. and lots of high positions to accommodate all the pals they need to accommodate. [Interjections.]

Order! Is the hon member prepared to answer a question?

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

†Mr Speaker, it is no wonder. I have here with me a pamphlet which was issued in 1979 by the once great NP. This pamphlet was actually compiled by Barend du Plessis, MP. The subject under discussion in this pamphlet is inflation. It states:

We agree with that. It goes on:

I think the hon the Minister will agree with me that the other governments have solved their problems of inflation and that this Government is one of the few governments that cannot.

One of the few?

I think the hon the Minister should admit his failure and surrender. [Interjections.]

*Even the accuracy of economic indicators is in doubt. I quote again from Finansies en Tegniek of 1 April, in which the following is said about the drop in the inflation rate:

They are referring to the new formula used for determining the inflation rate. They went on to say:

In other words, it seems to me that the hon members on that side of the House are conjuring with figures.

I also want to refer to the salary question and the fact that not all taxpayers have enjoyed a cut in their income tax. Would the hon the Minister confirm the following figures? It appears that a taxpayer who earns R14 400 a year is paying 15,8% more in tax. The tax paid by a taxpayer who earns R24 000 a year is going up by 20,4%, and the tax paid by a taxpayer who earns R48 000 a year is going up by 17,1%. I agree with the hon member for Barberton, therefore, that the present situation does not seem very favourable. †We are unfortunately sparing the people in the very low income brackets at the expense of the middle class, which is so essential to progress in this country.

Mr Chairman, it is really very difficult for me to follow that hon member. I do no know whether that hon member is aware that the by-elections are a thing of the past— including the one in Randfontein. [Interjections.] He indulged in a real hit and run exercise here, because his speech consisted of one newspaper report after another and one quote after another. However, when it comes to a real contribution to the debate we are involved in, we got nothing of the sort from that hon member. [Interjections.] To single out one aspect, I want to point out that the hon member made much of the fact that the NP and the Government was at present resorting to “jobs for pals”, because of all the constitutional structures being created. [Interjections.] What about the policy of partition of the hon member’s party, the Official Opposition? When they implement it, what is it going to cost them? If we simply consider those aspects, it is enough to make us decide to get back to the debate we are engaged in and consider what the actual financial implications will be of the Budget of the hon the Minister of Finance for the future of this country.

On the occasion of the opening of Parliament on 5 February of this year, and then in the Budget Speech on 16 March, both the hon the State President and the hon the Minister of Finance made momentous policy speeches. The hon the State President announced important watershed adjustments to the economic policy of our country, while the hon the Minister of Finance linked up with this and developed it further.

In both speeches one aspect emerged very clearly, namely that although constitutional development and renewal in South Africa are very important and must take place in an evolutionary manner, they can only take place within the limits set by South Africa’s economic and financial capabilities; in other words, constitutional development is dependent on the economic and financial capabilities of our country.

This remains one of the basic realities in South Africa. Every Government, whether it be the CP, the AWB, the NDM or the PFP or whoever, will be faced by this reality.

The hon the Minister of Finance quite rightly remarked in his Budget Speech that the solving of the problems in the social, constitutional, security and economic spheres of life makes almost unlimited demands on our country’s financial capabilities. The other reality which must be added to this is that our economy is being distorted by a whole range of politically motivated and internationally orchestrated restrictions. The effect of this is that for the sake of the selfpreservation of our country, expensive precautions must be taken in many spheres with means which could otherwise have been used for the general welfare of all its people.

In his Budget Speech the hon the Minister rightly pointed out that comprehensive tax reform was a rare occurrence. One of the most important occurrences in the financial sphere during the past year was, therefore, the publication of the Margo Report in August 1987. On 16 March of this year the Government tabled a White Paper on this report.

In the Margo Report the commission rightly mentioned that the Republic was not alone in its endeavour to bring about tax reform. A similar process is taking place, and has taken place recently, in countries like Australia, Canada, Indonesia, Ireland and many others. The US Treasury, for example, reported as follows in its report to the President, in November 1984, under the caption, “The need for Tax Reform: Back to Basics”:

To a great extent this view also applies to the tax structure of the Republic of South Africa. The present system is considered to be unfair and complex. The situation arose because over the years tax adjustments took place on an ad hoc basis. Particular problems have been caused in recent years by high inflation, which on the one hand complicated the measuring of income while on the other it gave rise to fiscal drag. The continuous adjustments and the necessity to plug loopholes, gave rise to a complex tax structure.

According to the commission, the technical requirements which a good tax system must comply with are, in the first place, neutrality, followed by equity, invisibility, certainty and simplicity and, lastly, low cost of collection. Based on these technical requirements the commission listed the objectives of tax reform in South Africa as follows. In the first place tax reform does not necessarily mean more or fewer taxes, but rather a change in the structure of the tax system. In South Africa, in particular, the tax burden rests too heavily on the personal sector, while the business sector contributes too little to total tax. The second aspect is that the present base of the tax system must be broadened. The third aspect is that the South Africa tax system should place more emphasis on indirect and less on direct tax. Finally the position of the Republic of South Africa in the context of the Southern African economic region also needs to be taken fully into account in the reform of the tax system.

I do not have the time to elaborate on specific recommendations in the Margo Report. A few general remarks will suffice. In the first place I want to refer to the special task group of the Department of Finance which, under the chairmanship of the Director-General of Finance, deserves recognition for their contribution. In the relatively short period since August 1987 this task group succeeded in submitting its findings to the Cabinet so that the White Paper could be tabled on 16 March together with the Budget. Not only the speed with which the task group completed their task, but also the thoroughness with which they did so, deserves the recognition of this House. In this period more than 280 submissions were worked through by the task group and discussions were held on the report with representatives of all sectors of the South African economy. This is indeed an outstanding achievement! It can quite rightly be said with great responsibility in the White Paper that in the cases where the commission’s proposals were rejected, this was chiefly on one or more of the following grounds:

• — overwhelming, persuasive and credible evidence that the private sector was firmly opposed to it;
• — qualifications indicated that all the proposed concessions would not be affordable, even if the Margo Commission were to accept an additional tax by way of a CBT;
• — further investigations undertaken since the completion of the Commission’s report by members of the departmental task group and by members of the Margo Commission itself, yielded other insights; and
• — while certain of the proposals were theoretically sound, for various reasons they would not be practicable.

On behalf of this side of the House I express my thanks to the task group for their share in the White Paper.

The second aspect of the Report of the Margo Commission to which I want to refer briefly, is the internal administration of the Department of Finance, with specific reference to Inland Revenue:

The commission then makes certain recommendation inter alia on the status of the Commissioner for Inland Revenue and the Customs and Excise, as well as the shortage of staff. Both these proposals were acceded to in principle in the White Paper. However, I want to make an appeal for the entire House to support the Government in general, and the hon the Minister in particular, in the implementation of these recommendations. The country cannot afford to allow the implementation of the commission’s proposals and the broadening of the revenue base obstructed by a serious shortage of properly qualified staff in the Department of Inland Revenue.

The Margo Commission recommendations for the reform of the tax system, as accepted by the Government in the White Paper, will have a great influence on the tax policy in South Africa during the next couple of years. It not only recommends certain important changes in the different taxes, but also lays down guidelines in accordance with which, and principles on which, decisions regarding tax should be taken.

It is not possible to implement all the Margo Commission recommendations which have been accepted to by the Government in the present fiscal year. It has, for example, already been indicated that the important Value-Added Tax can only be implemented in the 1989-90 fiscal year. Many of the other reform measures form part of this package which will have to eventually be introduced along with the VAT. However, the total implementation of the entire tax reform package can only be undertaken in the course of the next few years.

I am convinced that these recommendations can also make a positive contribution to constitutional reform in our country. On behalf of this side of the House I take pleasure in supporting the Second Reading of the Appropriation Bill.

Mr Chairman, I shall be dealing with many of the points raised by the hon member for Newcastle, so I shall not respond directly to them now.

In our view this Budget represents a fundamental change in Government economic thinking. Efforts to reduce State expenditure by reducing State involvement in the economy through privatisation and deregulation in our view all illustrate a desire on the part of the Government to restore the economy to good health. This party has called for many of these changes over many years and we now welcome them.

However, as always, there remains a considerable gap between stated intentions and planned actions. The key question remains whether this Government has the capacity and the will to carry out this policy to its logical conclusion. Many of the proposals included are once-off cashflow measures and unsustainable cost reductions. The nature of these proposals begs the following questions. What will replace the once-off measures such as a minimum company tax next year; and what is going to happen to public service salaries next year, particularly if that proves to be an election year? [Interjections.] In other words, is this a quick fix budget or is it the first stage of a longer term economic plan leading to sustained economic recovery?

A serious problem facing this country—this has been raised by the hon member for Yeoville and other hon members in this debate—is the lack of long-term development capital required to sustain long-term growth. At a growth rate of just over 3% and off an extremely low base we are already experiencing the consequences of an overheated economy. Yet we have to grow in order to provide the necessary jobs.

The Director-General and the Department of Finance are to be congratulated upon the manner in which they have dealt with the foreign debt standstill, but the fact is that we need loans from abroad. We cannot afford a strong balance sheet but experience economic decay. What we do need, is a capital inflow in order to finance growth. It may be appealing to say that this is not the case and that we are strong enough to go it alone, but current signs of overheating have clearly shown that this is not the case.

The underlying causes of our economic woes are political, and that has also been said today. The hon the Minister of Finance stated in his Budget Speech:

In effect the hon the Minister is saying that we have an unbalanced distribution of wealth and to resolve this is going to be painful.

I wish to contrast this statement with one by another Cabinet Minister. Addressing the NP Cape Congress last year, the hon the Minister of Education and Culture is quoted as having said:

An honest Nat!

That is a contradiction in terms!

Mr Chairman, I believe that that statement is an honest reflection of NP policy. It states quite simply that it is apartheid which restricts our economic growth, and it is with this enormous millstone around his neck that the hon the Minister of Finance has to produce magic solutions out of a hat. We therefore have to question whether this Budget can succeed. Can economic reality prevail against political ideology which is in fact pulling in the opposite direction? State expenditure is expected to rise by 12,6%. For the first time in years we recognise that this is a reduction in spending in real terms, but the hon the Minister of Finance has been allowed little room to manoeuvre, as is illustrated by the requirement of a 23% rise in individual taxation. There is clearly little scope for fundamental tax reform.

The effects of bracket creep and high personal tax rates are well-known to hon members of this House. We now pay high rates of personal tax, and this has been quoted as one of the main contributory causes of emigration by skilled workers.

South Africa cannot afford this. The Margo Commission recognised the fact that people who are only moderately well-off are paying rates of tax designed for the wealthy. Clearly it is desirable to reduce the tax rate and to change the tax rate structure, and it is therefore regrettable that the Government has to acknowledge that this can only be done gradually over the next few years, and then with the major proviso that growth in State expenditure can be firmly limited.

In simple terms the Government is saying that tax cannot be reduced unless State expenditure is reduced. I stress that we must reduce taxes and that the ball is in the Government’s court to proceed with reform.

One of the underlying principles of the Margo Commission Report was that an adequate tax structure should be based on certainty. Certainty enables a taxpayer to plan his affairs and, in particular, his cash flows. Some of the innovations included in this Budget create the opposite; they create uncertainty and I now wish to deal with them.

The first is the minimum tax on companies, about which the hon member for Yeoville has already had much to say, but I would like to support him in his plea to have this tax done away with. It has been suggested that the Government plumbed for this form of tax at the 11th hour, and it is interesting to note that there is a direct contradiction in the White Paper, a fact which supports this view. This form of tax has nevertheless been adopted, much to the dismay of many commentators in financial circles.

We question the wisdom of introducing it now. It is retrospective and may well create extreme cash difficulties for companies least able to afford it. It conflicts with undistributed profits tax, which is designed to encourage just the opposite. It will tax capital gains, and although for most companies it represents a tax-advance payment, for some it may never be recoverable. It is also highly selective and violates the principles of neutrality. Close corporations and sole proprietorships are not liable for a similar tax.

In the final instance it penalises companies which effectively use tax concessions by containing the doubtful principle that an entity should pay a minimum rate of tax regardless of how efficiently it utilises legitimate tax concessions.

What needs to be clarified is again whether this tax is a one-off device to swell the State coffers or whether it is a permanent innovation. I would question why the Margo Commission’s recommendation was not adhered to, viz that such a minimum tax is complex and therefore no firm recommendation was made other than that the matter be investigated further.

The second area of uncertainty involves the taxation of insurance companies. Clearly, this is an extremely complex matter on which I am not qualified to comment. The State and the insurance industry have been unable to reach agreement, but nevertheless the present proposals are arbitrary and appear to have no logical foundation.

We cannot afford uncertainty in an industry which has a specific role to play in collecting an mobilising long-term savings—savings which are crucial in the face of dwindling foreign sources of capital. Clearly, the finance authorities are aware of these anomalies and we urge them to reconcile their differences with the industry as soon as possible.

The final area of uncertainty on which I should like to touch is that relating to the film industry. This is a fledgling industry in our country, but one which appears to have enormous potential. Clearly, there have been abuses of the tax system, and equally clearly, the State has had to operate quickly in order to stop them. The danger now appears to be one of throwing the baby out with the bathwater. As a result of ministerial statements there is general confusion and uncertainty, and investors are turning away from viable schemes for finance since they do not wish to run the risk of facing unforeseen tax liabilities.

Nonsense! You are talking utter nonsense!

Much evidence was given on this very point in the Standing Committee on Finance—evidence which I can produce. [Interjections.] Nevertheless, Sir, it has been accepted and no one has argued with the fact that there clearly has been abuse. The only point I am making is that we have a viable industry which needs to be supported, and the difficulty at the moment is that because of uncertainty a lot of finance is being turned away and the industry is in fact at risk.

What kind of uncertainty?

Uncertainty in relation to retrospective legislation!

I am talking about retrospective legislation. [Interjections.]

If I may proceed, Sir, on the question of tax avoidance, I should like to state that I appreciate this is an extremely sensitive matter. The hon the Minister, in his Budget Speech, stated:

As has often been stated, however, there is a clear distinction between tax evasion and tax avoidance. Evasion is pure theft whereas avoiding tax is legal. Is a person who enters a perfectly legal avoidance scheme in terms of existing legislation any more guilty than one who invests in the Post Office or a building society in order to get tax-free income?

Clearly, certain schemes utilise provisions of the Act in a way not intended by the legislature, and we support the hon the Minister’s actions in this regard. We cannot now, however, with hindsight criticise the use of allowances which were created for the specific purpose of encouraging investment. The fact of the matter is that the tax system has been designed in many, many instances for this precise purpose, viz to encourage genuine enterprise. To name but a few, we have decentralisation allowances, exporters’ allowances, allowances to encourage investment in plant, and so on.

We believe we cannot now criticise and penalise those who legitimately use those allowances. Surely what we need is twofold. Firstly, we need to change the tax laws in order to dispense with those allowances which are no longer desirable. Secondly, we need to formulate the law so as to have redress against those who are guilty of abusing the allowances.

However, we cannot support retrospective legislation affecting legitimate avoidance schemes as this would place in question the morality of the tax gatherer.

I have dealt with some of the more contentious taxation issues, but there is much in the Budget which is to be welcomed. We believe that it may well represent the promised turning point and the commencement of a policy of reducing the State’s share in the economy. The hon member for Yeoville expressed it rather well when he said, “Perhaps if we swallow the medicine and show some confidence, we may yet get back on the right road”.

We welcome the concession granted to working wives, but would like to see equal treatment of both husbands and wives. We welcome the proposed introduction of an invoice-based VAT system at a standard rate. However, we also believe that a way will have to be found to assist the poor in food purchases. We welcome the scrapping of tax on interest to non-residents, but we would also like consideration to be given to dividends, bearing in mind that foreign investments remain a key determinant of our eventual economic success. Finally, we welcome Government’s acceptance of the Margo proposal to create a small committee, preferably chaired by someone from the private sector, to continue with the research and studies of that commission.

In concluding, we would all welcome a reduction in tax. Only modest tax concessions have been allowed for the individual. The main constraint is State expenditure and certain short-term actions and long-term plans have been devised to reduce this. However, we have to contend with the basic ideological constraint implicit in this Government’s policy. They are wedded to group structures which result in enormously wasteful expenditure.

I agree with the viewpoint of the hon the Minister of Education and Culture that Whites have to be prepared to pay the cost of apartheid. However, what of other race groups? What of other people who are totally opposed to apartheid? This Budget clearly illustrates that we cannot indefinitely continue to pay this cost. NP voters attending their Cape Congress indicated that they are prepared to pay such a price. However, they do not represent the majority of South Africans, and sooner or later pure economic pressure will force them to change. Apartheid is an ideology that we can no longer afford.

Mr Chairman, it has become something of a habit in this House that after the hon member for Pinelands has spoken, I have to follow him. Today he has followed the official spokesman on finance of his party, the hon member for Yeoville, who has possibly made one of the most positive speeches that has been heard from his party in a long time. It seems that the general principles of this Budget are broadly accepted.

I would just like to point out to the hon member for Pinelands that a lot of the existing allowances in the income tax law are the very allowances which create the loopholes that lead to abuses and to the various schemes that should not be allowed. I am sure all hon members will agree with me on that point.

It has been said before that this Budget is a watershed in the economic history of South Africa. It presents a direct follow-up of the hon the State President’s speech on 5 February.

The thrust of this Budget is to contain State spending, to curb inflation, to promote the private sector and to embark on the process of introducing the reforms recommended in the Margo Report. Here I would just like to say that the comment made by the hon member for Yeoville that the private sector is not taking the ball that has been passed to it with sufficient fervour is a very valid point.

It would be impossible, in the short time available to me, to comment on all those aspects which have been dealt with comprehensively in the hon the Minister’s Budget Speech. The hon the Minister and his officials are to be commended on the conciseness, elegance and clarity with which the speech was put together. In other words, the content and the packaging were superb. The content is something that will be reflected in the future prosperity of South Africa for a long time to come.

Enjoying the privilege of being a member of the Standing Committee on Finance, I found it most interesting to listen to evidence from the private sector that was heard by the committee. The reaction from the private sector was most positive. I should like to repeat a few of the statements made by people from the private sector.

They support the trend initiated towards fiscal discipline. The Government is to be commended on a well-balanced, principled and integrated Budget. It is regarded as a very sound package and a good economic strategy. They are pleased with the overall thrust of the Budget philosophy, with its firm commitment to a reduction in State spending and the acceleration of privatisation and deregulation. The focus to combat inflation is applauded and the principle of cost-related user charges is welcomed.

Furthermore, there was positive reaction to the tax concessions for the lower income groups. In this regard it is interesting to compare the results of the latest British budget, as introduced by the Chancellor of the Exchequer, Mr Nigel Lawson. The basic tax rate there was reduced to 25p in the pound and the maximum marginal rate was reduced from 60% to 40%. The leader of the opposition in Britain, Mr Neill Kinnock, had the following to say about this budget:

Sir, this Budget is very different, but is interesting to note that those whose socialist and socialdemocratic principles lie very close to those of Mr Kinnock are also agitating for the lowering of maximum marginal rates.

In essence this Budget has been welcomed by the private sector. It was reiterated by them that business confidence needs sustained growth and that we must tame the business cycle. Business confidence is a perception of what will happen and, as in politics, so in economies perceptions are reality. I have every confidence that the general thrust and focus of this Budget will be an ongoing one which will lead to continued high economic growth allied with optimal price stability. Only in this way will we able to sustain our direction towards higher investment and greater employment opportunities.

I should like to make two comments on the hon the Minister’s taxation proposals. The first concerns the increase in the duty on beer. I am sure that the hon members for Swellendam and Caledon will concur that this is prejudicial to the barley industry, which is largely situated in their constituencies.

However, on the other hand it can be said in cricketing metaphor that the hon the Minister has taken a catch off the breweries. There are some hon members in this House who might allege that he should have taken more catches off the breweries, and I am sure the hon the Deputy Minister of Education will agree with me in this regard. When one looks at it in its true perspective, I think it can be said with fairness that the hon the Minister has accumulated a fair number of runs at the expense of the breweries and the beer-drinkers.

The second matter deals with the recommendations of the Margo Commission regarding lower marginal income tax rates and a broadening of and reduction in the number of income brackets. We all know that bracket creep is the scourge of the middle-income group. The White Paper on the Margo Report has tried to quantify the impact of changes in the tax-rate structure on income tax revenue. It states on page 7 of the White Paper, and I quote:

It then concludes that any meaningful reduction in the number of brackets, and/or rates, would cost too much by way of loss of revenue. However, these two do not necessarily go together and I believe that separate calculations need to be made. The hon the Minister has stated that reform action on the Margo proposals will be continued over the following year or two. I am sure that further attention will be paid to this matter. It is also said in the White Paper that attention should rather be given to a revised scale in which all taxpayers will pay less, and the maximum marginal rate will be reached at a higher level of income than at present.

’On the other hand, Sir, it is only fair to consider the policy of the Official Opposition as well and to examine its financial implications.

†We heard today the expert of the Official Opposition giving us a lecture on the increase of foreign debt in SA since the hon the Sate President took over. He stated that this debt had increased from something like R19 billion to R55 billion, but what he failed to mention was how much of this debt was public debt and how much was private debt.

’From the jumble of sophisms and solecisms we have heard from hon members of the Official Opposition today it has become clear, I believe, that there are basically three policies within that party. On the one hand, there are the advocates of a Boerevolkstaat, a national state brought about by partition and secession, which will be much smaller than the RSA as we know it today. Only those areas in which there is a White majority at present will be taken into consideration.

Where are those?

There are a few, Sir. There is Marion Island, there is Walvis Bay, and there may be a few others. [Interjections.]

From an overall point of view, one must ask what the GDP of this state is going to be. What is its tax base going to be and what services will this state be able to render to its citizens? [Interjections.] This view of a smaller South Africa had its precursor in the previous century in Mr Gladstone’s concept of the so-called “little Englanders”, and I think we are justified in asking whether we may not call these people the “little South Africans”. [Interjections.]

On the other hand, this policy of a smaller South Africa has been supported by intellectually honest people such as the hon members for Bethal and Ermelo. The hon member for Bethal has been honest enough to admit in this House that he is a member of the AWB. The hon member for Ermelo has been honest enough to admit that he could not in all honesty admit to being a member of the AWB. Sir, I accept the honesty of both hon members. [Interjections.]

There is a second faction, a second school of thought, in that party. They believe that South Africa should retain its present territory, but that all or most people of colour should be removed from it—let us say approximately 15 million of them. [Interjections.] When this removal has taken place, the workers required by the White Boerestaat will have to commute from their homes to their places of work every day.

On bullet trains.

The question is how much the commuting is going to cost and who is going to pay for it. [Interjections.] We may call this policy the bullet brain policy.

Then there is a third element in that party. I call them the muddled thinkers. They believe in vague concepts such as partition. They talk about supremacy and about Coloured and Indian homelands and so on. Their inability to define these concepts proves that these concepts are not economically viable.

I am glad to come back to the realism of this Budget, therefore, and I take pleasure in supporting it.

Mr Chairman, in the best traditions of the NP propagandists the hon member for Wynberg once again made wild allegations about the policy of the CP and tried to present a caricature of our policy. Worst of all is that the hon member believes himself when he does this. There is a very good reason why the hon member believes himself when he tries to present this caricature of our policy. His voice is in fact that of the United Party of a quarter of a century ago. He knows the path of that party; indeed, his path has taken him via that failed party and another failed party to the latest failure in South African politics, the NP, merely in order to make the speeches of a quarter of a century ago against the CP. Some time ago he made the same speeches against the party he now represents.

Mr Chairman, I am not a financial expert … [Interjections.] … but I can speak about the economy as a large number of voters can, because they feel the immediate effect it has on them. One does not need the learned speeches of the hon the Minister of Finance to know that the economic policy of this Government is heading for a disaster, if we have not already experienced that disaster. We are living in a political state of emergency, but economically, too, we are for all practical purposes in a state of emergency. One does not need profound economic insight to see that. We are being impoverished and we are feeling it. We know it. We experience it every day. What we are experiencing at present is undermining our confidence in the future and our confidence in the country. The voters of the hon the Minister of Finance have themselves said as much by way of the hat trick that the CP has achieved in the by-elections. [Interjections.]

Nevertheless I should like to try to speak about the decline in the value of the rand, about inflation, and about what it is doing to our people; how we are suffering as a result of this. I would like to talk about an elderly woman whom I had to visit one afternoon and who told me that she was dependent on a social pension and that nowadays she ate and read her Bible by candlelight because with the social pension available to her she could no longer afford to pay a water and lights account.

I am discouraged from speaking about all these things owing to the extreme insensitivity we encounter on the part of the hon the Minister of Finance, his colleagues, the Government and the NP—an extreme insensitivity to the lot of our people, to the ordinary man, to people like me who lack financial skills and training. I wish to mention one example of this and then go on to something else. I wish to quote from Rapport what the hon the Minister of Transport said earlier this year in a debate in this House:

If that is not a typical example of the insensitivity of this Government to the lot of the White taxpayer and its obsession to continue with this liberal dogma of equality and distribute wealth, income, assets and resources within and outside regions, then I do not know what it is.

I also read in the weekend Press what was written in a Rapport editorial. I quote:

What an astonishing discovery! I quote further:

And that from a newspaper that supports the Government! I want to quote further:

I want to say with the greatest confidence that in its policy the CP has that something on the table. [Interjections.] That something is not what Rapport and the NP and its think-tanks are seeking in secret and in public. [Interjections.] It is a something that has been tested, weighed and proven in South African politics by the history of this country. [Interjections.] The policy of the separation of political power and subsequently the division of land in South Africa among the various population groups, has been weighed and not found wanting. It has brought this country peace. It has brought this country relative prosperity. It has brought this country Afrikaner unity in the greatest measure that we have ever experienced it in this country. [Interjections.] It has brought this country White unity in the greatest measure that we have ever experienced it in this country. It has brought the most unstrained relations among the various population groups—between the Whites and the other populations groups. It did not bring us political states of emergency. It did not bring us economic states of emergency. It did not undermine the safety and security and confidence of the Whites and all the other population groups in this country as the present Government is doing with the implementation of its policy. This “something” that the CP has on the table is not an experiment. It was not thought out by Huntington or any other import from overseas to help the NP out of its political bankruptcy. It is genuinely Afrikaans, genuinely South African, faithful to the soil into which our blood has soaked. [Interjections.] It has been found weighty enough to be trusted by the majority of voters in this country.

The vast majority of the NP’s political commentators admitted during the weekend after the by-elections that they could no longer rely on the overwhelming support of the Afrikaners in this country. They are grasping at the chimaera of greater support from the English-speaking people to help them out of their drastic decline and to keep them in power a little while longer.

By doing so they recognise that the CP has already managed, despite the degree of fragmentation and lack of unity caused by the NP’s acceptance of a policy of power sharing, to begin to build up a greater Afrikaner unity. By doing so they admit that the CP has already succeeded in consolidating Afrikaners in this country once again.

The path of Afrikaner unity—the maximum one can achieve; one will never achieve the idyllic 100%—that path of the restoration of Afrikaner unity, is the path of the CP. [Interjections.] The NP might as well persist with its pipedreams about greater English-speaking support. [Interjections.] Not necessarily following it chronologically, but perhaps simultaneously, the path of the restoration of White unity also runs through the CP. [Interjections.] The path of the restoration of sound relations among the various peoples in South Africa also runs through the CP and its policy, because the CP can establish a White Government that is strong enough, as Rapport wants, to place that “something” on the table. “Something is better than nothing”: Rapport pleads with the present Government. [Interjections.] The CP is strong enough to place that “something” on the table and get us out of the dilemma. [Interjections.]

But what I find very interesting is that all the political commentators and representatives of the NP admit that they have no plan. They admit that there is uncertainty about the future, that they do not know precisely what direction they are moving in, and they do that although the hon the Leader of the House, the hon the Minister of National Education and Leader of the NP in the Transvaal spoke as recently as last year, when he was helping conduct the NP’s election campaign in Nelspruit, about a ground plan. My goodness, Sir! In this short time the NP has moved from a point where its leaders make announcements, hold speeches and conduct election campaigns on the basis of a so-called ground plan, to the point where those same people, and the entire country’s commentators, now admit there is nothing. There is no plan, to say nothing of a ground plan. There is no plan at all.

The hon the Minister of National Education then said that the plan was the tricameral system, followed by negotiations to make the Black people part of an extended system. The NP asked the voters: “Trust us to negotiate with the Black people to extend their franchise in order to make them part of a new enlarged democratic system on the basis of universal franchise and equal rights of citizenship.” [Interjections.] Yes, and the reasons why the voters were to trust the NP on this road of negotiation consisted inter alia of a long list of concessions that the hon the Minister of Constitutional Development and Planning had distributed in his constituency and which were also disseminated in the NP’s propaganda journals. Concessions only! Does one ask one’s people to trust one on the path of negotiation if the reasons they offer as to why you should trust them consist merely of concessions to the demands of other people that are not one’s own people? [Interjections.] It is a list of up to thirty. [Interjections.] Each of those concessions takes away existing White rights. They undermine existing rights, they undermine security, they undermine safety, they make economic recovery more difficult and they promote political and economic states of emergency. Each of those reasons that were advanced as to why the NP should have been trusted on this road of negotiation were concessions to those who have traditionally been the enemies of the NP and have now become their friends. The question is: How is the NP, the Government, going to follow this path of negotiation in future? Last year we had an indication in the Annual Report of the Department of Development Planning, in which reference is briefly made to this on page 38:

In other words, the only indication we have is that there must be an open agenda and that everything under the sun will be negotiable for this Government—each of those existing White rights it still has. Where? Where? In the National Council, concerning which the same Government tells the world that in that National Council, where negotiations will take place, where everything that is at stake for the Whites may be discussed, the Whites will be a minority. They will form a minority in that body in which the negotiations must be conducted.

My time has expired. [Interjections.] The question is: How far will the NP go?

As far as the winning post. [Interjections.]

How far will it go if it already shares the points of departure of the PFP and the ANC? And these are one undivided South Africa with equal citizenship rights and a universal franchise for each inhabitant of the country irrespective of race, colour, creed, sex or ethnic ties. How far can the NP go on this path of surrender if in its basic departure it already shares that same point of departure, not only with the PFP—after all, they do not differ with the PFP on that formulation—but also with the ANC in the Freedom Charter. The same terminology is used. The NP is on a dangerous path, and the CP has that “something” to help South Africa out of the dilemma.

Mr Chairman, I have waited a long time, never dreaming that I would be following up on a speech made by the hon member for Potgietersrus so soon. At the outset he said that he was no financial expert, and I have known him long enough to have been aware of that. After this afternoon, however, I am convinced of the fact that he is no financial expert. [Interjections.]

In his speech the hon member spoke of Afrikaner unity. I want to tell you that I know him and I know there has never before been anyone in the cultural history of the Afrikaner who has made such a good job of destroying Afrikaner unity as the hon member has. The hon member knows what I am talking about. I want to issue a serious warning to the Official Opposition, and I do so with the necessary sense of humility towards their hon leader. I want to warn him against the bravado of the hon member for Potgietersrus. I want to tell him that as far as his own party is concerned, the time will come when this condescending, emotional bravado of the hon member for Potgietersrus will strike home at his own party. [Interjections.]

For just a moment I want to augment what the hon member for Wynberg said in connection with a certain component of the Official Opposition, the so-called “muddled thinkers”. He spoke about the Coloured homeland and I want to elaborate on that. In the right-wing radical opposition in particular the most unbelievable and conflicting standpoints were adopted about where the Coloured homeland would be situated in South Africa. There was, however, one thing that ran like a golden thread through all these views, and that was that it would be somewhere in the Southern Cape or in the Western Cape. [Interjections.] I should like to quote from statements made by a few of these right-wing radical groups.

On 30 March 1987 it was stated in Die Stem-.

Ons steun die Kleurlinge se stryd om oorlewing en gun hulle ook ’n staat vir die Kleurlingvolk, net soos ons vir onsself ’n Boerestaat eis. Deur die jare bewoon hulle die Wes-Kaap, en groei hul kultuur daar al sterker.

That was reported in Die Stem. On 27 June 1984 Die Burger quoted the hon the Leader of the Official Opposition, Dr Treurnicht. One of the things he said was:

He went on to state:

Hon members must listen to what I am saying. They merely have to remain there and the CP will not relocate them.

In contrast to this the late Dr Connie Mulder said at a public meeting in Paarl on 21 April 1987:

Die Kleurlinggroepsgebiede wat op die Kaapse Vlakte is, sal deel van die staat wees.

In contrast to what had been said by his leader, he said:

This is two million ha in that arid portion of the Cape. The “muddled thinkers” go further. At a meeting in Johannesburg in 1985 the hon member for Overvaal spoke of a new area and said the following:

He went on to state:

Please note, the small handful —

During the well-known Battle of the Bergs, when we held an election and won it, the former CP MP for Sunnyside, Mr Jan van Zyl, said the following about the CP’s Coloured homeland during a meeting at Koedoeskop:

With reference to that the hon the Leader of the Official Opposition had an excellent opportunity to rectify matters. On 27 March of last year he addressed a public meeting in Swellendam. We have a tape recording of that speech and I shall quote verbatim what he said in reply to Mr Jan van Zyl:

[Interjections.] Had he but stopped there, but he went on to say:

Well, what of it?

I shall come to that in a moment. At that stage the Chairman of the meeting, Mr P A S Le Roux, pushed his leader away from the microphone and said the following—it is on tape:

He went on to state:

On that occasion the hon the Leader of the Official Opposition had every opportunity to clarify the Coloured homeland issue, but he did not do so. What did he do? On the tape-recording he said the following to Mr P A S Le Roux who had just said “Dit kom van my af; die SWD is Bruintuisland”:

On that occasion he did not repudiate the Chairman of his meeting.

Oh, no!

Hon members must bear in mind—I shall come to the “oh, no” of the hon member for Bethal in a moment—that the hon the leader of the Official Opposition said that this would link up with the rural and group areas. Where are the most densely populated Coloured rural areas. They are in the SWD area. They comprise areas such as Suurbraak, Zoar and Amalienstein and towns such as Elim, Genadendal and Greyton. That is where the hon the Leader of the Official Opposition wants the Coloured homeland. We therefore accept the fact that Jan van Zyl was correct when he said that the SWD was the area for the Coloured homeland.

What was said above endorses the fact that the Coloured homeland is an integral part of the CP’s ideology. That is why we, as inhabitants of the Cape, will not stop putting this question to the CP.

In CP circles the homeland already has a name. Inhabitants of the Cape will not swallow the fanciful concept of Hexania. This vision of the so-called Republic of Hexania causes one to shudder at the increasing references, in no uncertain terms, to a programme for Coloureds and Asians being instituted without their support once the CP comes to power. It will be part of the master plan aimed at destroying the present Parliamentary system.

Mr Speaker, the cries of coercion from the right wing opposition—and the hon member for Potgietersrus has thus far been the prime example of this—are in glaring contrast to the negotiational style of the late Dr Connie Mulder.

This right-wing opposition wants to establish a Coloured homeland. Let me state clearly here today that as disinclined as the Coloureds are to have a homeland in the Cape Province, as disinclined are we White people to have such a homeland here. Like the rest of South Africa, we in the Cape Province believe in peaceful coexistence for the benefit of South Africa. We do not believe in Hexanian visions, we do not believe in visions of a “Boerestaat”—ours is a vision of a new South Africa far greater than the CP’s convulsive flights of fancy.

Mr Speaker, it was interesting to listen to the hon member for Swellendam because, in the first place, the NP seems unable to sustain a debate on economic matters— even through the first day of the Budget debate. Secondly, it was interesting because the hon member attacked the CP—he spent his whole speech doing that—about having a separate apartheid state for the Coloureds.

It was interesting listening to him from the point of view that we have sat and watched this happening over the years and being carried out by the very party the hon member represents. To us it is just as silly to see the separate states created for the Black people of South Africa, and the independence given to them, as it is for him to think of the Coloured people being given a separate state by the CP.

Before I get on to the main subject I want to discuss, I want to mention the speech made by the hon member for Pinelands concerning the film industry. There is no doubt about the fact that the film industry in South Africa has been under a great deal of tension as a result of uncertainty as to what is in the hon Minister’s mind for that industry regarding the tax concessions that the industry has received in terms of section 24(f).

The hon the Minister has published certain suggested amendments. I would like him to state in his House, before this debate ends, whether they are the sum total of the amendments to section 24(f) he intends to effect. If they are, that is fine and there is no problem. I would, however, like the hon the Minister to put his intentions on record in this House.

The second thing is that the hon the Minister is quite patently intending to hammer en commandite partnerships. I believe that the hon the Minister should also tell us in this debate what is on his mind in relation to those en commandite partnerships, because the danger of retrospective legislation is that one cannot place one’s feet firmly on legislation and say that this is the law, and as long as I conform to that law, I should not encounter any problems. Such a situation is fine, but the minute we start talking about retrospective legislation, particularly as far as tax is concerned, the ground under our feet starts to tremble. We are unsure of ourselves, and to be able to make investments and to plan for the future, the possibility of retrospective legislation being brought in is very undesirable. It is because of that very danger that we in these benches have always been opposed to retrospective legislation. I should like the hon the Minister to clarify the situation and tell us what is on his mind on those two issues.

I must confess that I feel a great deal of sympathy for the hon the Minister of Finance. The question he has to try to answer is: How do I reduce taxation when my colleagues spend the money faster than I can bring it in? We know that the levels of taxation that have been reached in this country have been counter-productive.

We must ask where the blame really lies. In my view it lies firstly with the Ministers, past and present, who have been, or are, incompetent and know nothing about the area they control. This is not necessarily the fault of the Minister himself. Who, after all, will turn down the offer of a ministerial portfolio? I believe the buck actually stops with the present hon State President and with past Prime Ministers, including the present hon State President.

As anyone who has watched Yes, Minister will know, the influence of the senior public servants is enormous. They are, in my view, to blame for not providing proper guidance. This is not peculiar to South Africa; it is the way of the Western World as a whole. It is unfortunately part of the vested interest habit, which is a human failing. Who knows how safe his own job is if the Public Service is reduced in number? That reduction is what we are going to have to have if we are ever going to succeed in relieving the taxpayer of his overload.

It is proven that countries’ economies improve in inverse proportion to the size of the Public Service. The more control, the worse the economic performance. The higher the percentage of public sector employees, the smaller the growth of the economy concerned. South Africa is a bad offender in this regard, and frankly speaking, the position is worsening and not improving.

As at 30 September 1987 the increase in personnel in central Government had been no less than 68 227 people, all of whom have to be paid by the taxpayer. This was a 10,5% increase over the previous year. If one deducts those assimilated from the Railways Police and the development boards, one still finds that there was an increase of 46 775 people, or 7,2%. This is an appalling increase, particularly when one realises that in education the increase was only 3 993, or 2,4%. We cannot therefore blame it on that aspect.

The increase in monetary terms is even more frightening. The hon the Minister himself gave the figures in his Budget Speech: There was a 20,2% increase in 1986-87, to R11 billion, and a 31,1% increase in 1987-88, to R14,842 billion. The increase over the two years was no less than 57,69%. That hurts, and it hurts the taxpayer in particular. When one compares the figure for 1987-88 of R14,842 billion with the estimate of income from GST of R11,630 billion, one realises that all the GST collected in South Africa only meets two thirds of this wage bill.

Every South African must think to himself when he has to pay that 12% over the counter on a motorcar, on food products or on any product that one can name, that that money does not even cover the cost of the salaries and wages of the public sector. In addition, there are all sorts of other benefits such as pensions, medical aid, housing etc. The hon the Minister knows that we are not able to afford this load any longer. It will either have to be controlled or South Africa will go broke. The only positive steps that have so far been taken are the freezing of posts from 30 November 1987 and the fact that there is to be no general increase for public servants this year.

However, I want to consider the steps taken by the hon the Minister to save expenditure in this Budget which are short-term and certainly will not be repeatable next year. In the first place there has been no general increase in salaries. If there had been the cost would have been R1 500 million for a 10% increase. In the second place there has been no social pension increase. In the third place there has been no civil pension increase, but despite all of these factors the Budget has risen by 12,9% over last year’s Budget in respect of expenditure. The frightening thought is what is going to happen next year. Surely with double-digit inflation all of these people must get increases next year.

Let us look at where increases have or have not been made this year: Agriculture, —55,4%; National Education, —7,4%; National Health— which is most important 4+ 2,9%; and Education and Training, + 10%. The increases in all of these, Agriculture, National Education, National Health and Education and Training are all below the average increase of 12,9%. Yet, when we look at other areas, the money to be voted for Police has been increased by 17,3%, that of Defence has been increased by 22,6% and that of Prisons has gone up by 28,8%. These are all well above the average. Therefore this Budget has to be looked at as a “more guns and less butter” budget. Food, health and education are all declining in real terms. The result of this has to be declining standards in health and education. Above all, this Budget will have an appalling effect on pensioners. Next year the hon the Minister will have to come to the help of these people, and give a general salary increase.

Unless a plan is implemented now next year’s Budget will create an absolutely appalling situation, because when one gets to next year’s Budget those increases will have to be made. Unless the Public Service is reduced and the amount of money it actually takes from the Exchequer is reduced, we are going to have a situation where the hon the Minister will have to increase taxes by an enormous amount. I hope he will tell us something of his intentions. We saw that in Britain over the past few years Maggie Thatcher has been able to bring down the number of people involved in the civil service. She has been called “The Iron Lady”. I think what we need in South Africa is a “Bionic Man” and I do not think we have it in the present hon State President.

I support the amendment of the hon member for Yeoville.

Mr Speaker, this is only the second debate that I have taken part in when it comes to the Budget, but I must say that today I have been most confused. [Interjections.] On the one hand I hear from the PFP ranks, in the person of the hon member for Pinelands, that we are already facing the consequences of an overheated economy. Perhaps I have a very short memory, but I remember being laughed to scorn here not a very long time ago when I had the temerity to say that we were perhaps experiencing a boom. The very same party that now says we are facing the consequences of an overheated economy was saying: Nonsense! A boom? We are in a depression. We have a terrible economy. What can you be talking about? This is sheer, utter nonsense!

Who said that?

That hon member’s own party said it a few months ago and I will show it to him in Hansard. I was upset about it at the time.

Please do. [Interjections.]

Right.

Now we are facing an overheated economy with which we cannot cope. Almost in the same breath I hear from the other side of the House that we are facing an abyss; that we are about to give up; that the economy is in such bad shape that this country will never recover; that the economy is so bad that the poor White people of this country are becoming poorer by the day—I think the word was “verarm”—and that this country is going backwards by the day. I am only a new member, but I would be very pleased to find my way out between the two.

I listened to one of the frontbenchers of this House today and for a long time thought that I was listening to an hon member of the NP. The PFP chief spokesman on finance today explained NP policy with regard to economics better than I have heard any other of his benchmates discuss the policy. He said that we had to draw up our budgets in a centralised way. He also said that there would be an abyss to the right of us and chaos to the left of us if we did not follow the middle path.

I think the middle path is what my party is all about. It is extremely easy to appeal to the blood cells as the hon member for Potgietersrus did. It was very interesting listening to him today, because of all his remarks about these three wonderful seats that they had won a year ago, lost and then took a whole year to win back again, and this great triumph they had had in winning back their own seats, there were many that I would like to quote from Hansard and to use during the next election in my constituency. The reason for this is that the hon member for Potgietersrus ran away from that constituency in the last election. He did not stand and oppose the NP in a constituency where there were many English-speaking voters. He moved from there and stood in Potgietersrus.

There are many things that he had to say about his racial policies that I would very gladly bring to the attention of the voters in my constituency in the next election. I am going to tell the voters in my constituency that the main object of his party is to combine the Afrikaner vote. I am very glad to hear that he regards this land, where my forefathers have been for ten generations, as a place where only Afrikaners shed their blood. According to him they are going to build on the “bodem” on which Afrikaner blood was shed. [Interjections.] He told us that the NP is going to build its election hopes on the “droombeelde van die Engelssprekendes.” I think he is going to find out that it is not the English-speaking voters alone who are going to count in the future.

We have a party where not only the Afrikaner, but also the Englishman, the Greek, the Jew and the Portuguese are welcome, and together we shall be a party which will be here in 30 years’ time whilst the CP will only be a very bad joke or at best a bad smell from the past!

The best thing about any party that builds itself on sheer racialism, that will not give a Black man any hope at all, that will not give a Coloured person a fair deal and is not prepared to deal with other people, is that such a party will become increasingly smaller. [Interjections.] I sincerely hope that we are now seeing that party at its strongest. I do not think they have had one thing to say over the past year that Hitler did not say long before them, and Hitler was a very intelligent man. [Interjections.] I do not think that one can appeal to racialism and blood cells to build a party sentiment upon.

Today we should not actually be dealing with politics, but with money, which is something which the CP in particular mentions very seldom.

*There has been a tremendous amount of criticism in the Press and by opposition parties of the decision by the Cabinet that there will be no general increase in the salaries of public servants.

This criticism is certainly based on the political capital which the opponents of the Government can make out of it, and not on economic facts. If the Government had granted the 17% increase to State officials and the 37% increase to the teaching profession, all the benefits emanating from the State’s expected higher income this year would have been wiped out immediately in favour of a higher standard of living for State officials.

†Very few State officials receive less than a 10% salary increase per year. Promotions and other notch increases will be gained by approximately one out of three State employees this year, which means that one third of the employees of the State can expect an increase of 20% this year. If the State had granted an extra 16%, those employees would have received an increase of more than a third of their salaries.

I telephoned Assocom in Cape Town and they put me through to a Mr Verberg who is a chief statistician of Assocom. He made a study over five years of the average income of State employees measured against living costs, and came to the conclusion that such an employee had improved his living standard over the past five years by 5% per year. It was a pretty comprehensive study.

Last year the Sunday Times claimed that executives in the private sector had actually lost about 5% of their living standard over the past five years.

There must be over a million variables when we get down to comparing the public sector and the private sector with regard to the emoluments of employees, and then the variables also change daily so that anyone making statistical comparisons is on very shaky ground indeed. It never fails to amaze me when some or other trade union decides that they are exactly 16,7% down on the private sector. So many assumptions have to be made in such statistical sums that one has to agree with Bernard Shaw when he said there are two kinds of lies—lies and statistics.

To illustrate the difference or similarity between the public and private sectors, we could take the case of a man of 27—I believe that that is the mean age of all human beings in South Africa— who has a B Com degree and four years’ service. In the Public Service he would earn somewhere around R25 000 per year, with a housing subsidy of R5 000 and a Government contribution of R5 000 towards his pension. He receives a thirteenth cheque of R2 000 and he can look forward to a 10% rise in his income this year, which will put him on a minimum of R40 000 by the end of the year. I also telephoned Pretoria today, and these figures gell more or less with the figures they got from—I think—PE Advisers or Accountants or something like that. They made a similar study for the public sector.

I have a list of jobs here which I took from the Cape Times of 8 April—this month. In the private sector this same young man of about 27 years old with a B Com and four years’ service would earn from R24 000 to R36 000 per year.

The young man in the public sector will be paid in full for his two years’ military service, less what the army gives him. The man in the private sector will probably not be paid out by his firm at all and will have a hard time getting a job until he has finished his army training.

The man in the public sector will pay 8% towards his pension and the State will pay R2,40 for every rand paid in by him. In the private sector it is the practice for the employer to pay rand for rand, sometimes less.

For his first 10 years in the service the man working for the State gets 30 days leave per year, and 36 thereafter. The ordinary working man gets 14 days by law and 20 days if he has a co-operative employer.

With his workers’ association using its negotiating might, the State employee enjoys fine medical schemes, canteens, insurance schemes and benefits that an ordinary accountant in a small company cannot get for himself.

Above all, the State official has security of tenure in his job. He has to do something dreadfully wrong to be fired. Fewer than 1% of State employees were fired in the terrible recession between 1983 and 1986.

Up to 33,3% of the rest of the work force was estimated to have no work at some time during this period. Twenty thousand private companies collapsed, and hundreds of thousands of workers were made redundant. Another advantage that a worker in the public sector has over a man in the private sector is that he is not normally held accountable for the decisions he makes. Hundreds of millions are lost by State officials because of mistakes they make. Even the directors-general of the departments are not held responsible for those errors.

In the world of commerce and industry, the employee’s main task is to be personally responsible for what he does. If he costs his company money, he is out on his neck. [Interjections.]

Order! Hon members must give the hon member a chance to deliver his speech.

If he is a Japanese, he might even commit suicide. A man enters the Public Service, conscious that he will be rendering the public a service and that he will enjoy a far more secure, orderly and unstressful life than he would have to face in the private sector. The risks that he takes are far, far fewer than those of his counterpart. The man in the private sector takes the risks so that he can make more money than he could have earned in a more secure job.

By the nature of their work, State officials are not nearly as cost-efficient as their counterparts in trade and industry. As Prof William Baumol of Princeton University writes in the third edition of his book, Economics: Principles and Policy, page 7:

Prof Baumol shows that with cost efficiency in the private sector there was an accompanying high rise in salaries and living standards. He says that nowhere in the world was there a comparable rise in the public sector’s productivity. He goes on to state:

These are American statistics. I think they apply very closely to us, because America has the same problems that we have. It is strange to hear them talk about those problems in almost the same terms.

The fact that a man in the private sector is cost effective and the State official is not, is not the fault of the employee. It is the nature of the work. The solution to this has been worked out by the more successful states in the world today. Privatise those parts of the government where private enterprise could do better and is not subject to the system that a government is forced to follow if it is going to treat its employees uniformly.

In the private sector, one can take one’s better employees and pay them more. One can take one’s lazy employees and ignore them. However, if one is running a government, one has to follow the rules set down by those employees’ unions. One cannot pay one man one salary if he has a BA, and another man another salary.

A government is forced to orient its salary and work structures to suit its employees. Its labour associations refuse to pay clerks half of what they get now, because there is a glut of clerks on the labour market. Teachers’ unions refuse to accept the principle that a physical training teacher with a six year qualification who chooses to teach Standard II pupils, should receive less money than a matric physical science or maths teacher who has a four year qualification. In reality, the physical training teacher receives more money. This morning I spoke to the Chairman of the Teaching Federation in the Transvaal, and he confirmed what I have just said. He says that if a man teaches Standard II children, gets to school at eight o’clock and leaves at two o’clock and has no homework to mark and no preparations to make, he will get more pay if he is a category F or category G teacher than a category D teacher who is teaching matrics and has to mark a lot of examinations and take a lot of responsibility. He says that he cannot see his teaching federation coming off that standard. I do not think it is a productive standard. I think something should be done about it.

In those areas where the demand for specialist services is high and where commerce and industry can use its track record of productivity, the State can privatise its services.

The public can enjoy the result at a lower cost and State employees who go over to the private sector can receive more money and exercise a more satisfying level of decision-making.

In education, for instance, maths and science schools, technical colleges and technikons could be run at a profit. Already there are many private schools, créches and cram colleges rendering a fine service in this direction at an acceptable cost to the pupil and a higher salary to the teacher.

Privatisation could solve the confrontation that we have between the Government and some of the tertiary education institutions that are so obsessed with the teachings of Karl Marx and his theories of life and love. I am an English-speaking parent; I have had four children at university and, Sir, I am sick and tired of listening to comparisons in English teaching between preMarxist and post-Marxist novels. Even in accounting one has to do with pre-Marxist and post-Marxist eras. With regard to politics, I am tired of hearing that Marx was the greatest politician who ever existed. I would love to see those institutions getting their funds from the bourgeois capitalist trade and industry around them instead of digging into the taxpayer’s pocket. I really and truly would love to see the tertiary institutions privatised and going to their own people around them—the bourgeoisie whom they despise but from whom they will have to get their funds.

In the areas of transport, health and others, privatisation will be dealt with by the specialists in those fields.

I would like only to appeal to those State officials who feel that they should get a blanket rise and not a specific one to regard the additional R291 million which is going to go to them this year as enough to satisfy their needs. No matter how much socialism or special group interests can distort the distribution of wealth, the economic truths of supply and demand will, in the end, prevail. Those of us who work for the Government—I include all of us, the parliamentarians, who are here today and who will not receive a rise this year …

Speak for yourself! [Interjections.]

We live well, and I think we find ourselves in a situation where we get job satisfaction. If we bring down inflation this year, that will be just as good as having more inflation money in our pockets.

Mr Speaker, opposition parties have torn this budget apart from various angles. That was the Official Opposition’s aim, in particular. When one looks at this budget from only one specific point of view it is not difficult to tear it apart. I think that the test for a present-day budget, however, is to determine whether it keeps abreast of the times in which one is living. Measuring the budget by this criterion I think we must acknowledge—and congratulate the hon the Minister and his team on the fact—that it is a budget which, in every respect, keeps abreast of present-day developments in South Africa.

At present we have a revolutionary onslaught in South Africa—one of communist origin—that is unparallelled in our history. [Interjections.] If one bears this in mind, and does a bit of research on similar circumstances which have prevailed in other countries of the world, one can form some idea of what has to be done to counter a revolution and one can see what measures have been unsuccessful. If we look at revolutions in other parts of the world, we see that in certain areas they have succeeded. I am referring to Vietnam, Nicaragua, Cuba and even Rhodesia. The revolutions there succeeded in spite of the fact that in the majority of cases the military struggle was won by those in power. If we look at examples such as Malaya, for instance, and also at the Irish Republican Army in Northern Ireland and the Bader-Meinhoff gang in West Germany, and at their counterparts in France and Italy, we see that those countries have succeeded in effectively countering revolutions.

In such a situation their recipe has been, on the one hand, to put down any form of violence as quickly and efficiently as possible. At present, with the assistance of the state of emergency, our Defence Force and the Police are very successfully doing so. On the other hand one should, in as quick and impressive a manner as possible, eliminate justified grievances which have given rise to the revolution and which are being exploited by the communists to incite a revolution. This brings me back to the Budget being discussed here today.

If we look at what has to be done on the one hand, virtually R8,561 billion, or 16% of the budget, is being voted for defence, whilst approximately R2,116 billion, or 4% of the budget, is being voted for the Police. This indicates that the budget is keeping abreast of the times and is also withstanding the test of the times. We must also look at the elimination of justified grievances in order to give our people, particularly those of the other population groups, the opportunity we have had for some time now. Approximately R9,9 billion, or 18,7% of the budget, is being voted for education. For health services approximately R5 billion, or 9,4% of the budget, is being voted, whilst welfare services get approximately R3 billion, or 5,5% of the budget. For development aid, R7,7 billion, or 14,5% of the budget, is being voted. Bearing these figures in mind, we see that the Government is definitely adapting the economy to present-day circumstances. Listening to the objections of the Official Opposition, however, one doubts whether they really are keeping pace with present-day realities. If the Official Opposition is at all aware of the present situation in South Africa, it certainly must understand why the economy is being administered in this way by the hon the State President and the hon the Minister.

The CP cannot even administer dog-tax.

Mr Speaker, it is astounding that the hon member for Potgietersrus can say the things he has said, for example about a certain lady who has to read her Bible with the aid of a candle. We do not want anyone in South Africa to live in circumstances such as those, but how many people of colour in this country do not even have a Bible or a candle? For this reason I think we should see matters in perspective. It irritates me, and I think all hon members on this side of the House, that the Official Opposition can carry on about these three by-elections, in which they only retained the relevant seats in any event, like an ostrich that has laid three bantam eggs. I believe that the NP will be returned in the next general election and that we shall not be coming back with simply any policy, but with a policy in terms of which South Africa really can make progress. The electorate is restless—about the economy too—there are complaints about salary increases, pensions, agriculture and whatever else one would like to mention. Nevertheless I again want to compare the complaints of our voters to gnats buzzing around their heads, because if they were to give the Official Opposition the opportunity to govern, they would be exchanging those gnats, buzzing around their heads, for wasps the size of Alouette helicopters.

Mr Speaker, I now move:

Agreed to.

Mr Speaker, I move:

Agreed to.