House of Assembly: Vol29 - MONDAY 17 AUGUST 1970
Mr. Speaker, at the outset I should like to move the following amendment—
- (a) a long-term plan to combat rising living costs;
- (b) measures to ensure that with the cooperation of organized employers and employees, the human resources of South Africa are used more intelligently and productively, so that greater wealth will accrue to the population collectively and to each person individually, thus securing the stability and safety of the Republic;
- (c) adequate pensions for the aged and disabled; and
- (d) salaries for civil servants commensurate with their responsibility”.
In the relatively few years that I have been in this House, Ministers of Finance have assumed different guises—for instance, that of a doctor, a tailor, a chef, a fisherman, a gardener, a preacher and now a Solomon. But time has shown that the doctor found no cure; the tailor’s suit did not fit; the chefs cake was half baked; the fisherman netted no catch; the gardener’s garden never bloomed; and the preacher chose the wrong text. To-day, Mr. Speaker, we can say to the hon. the Minister who assumed the guise of a Solomon in this Budget: Alas, Oh Solomon! Where is thy wisdom!
Before going into the details of the Minister’s Budget, there is one issue on which I must join issue with him. In his speech he referred to the second report of the Franzsen Commission in the following words—
But the hon. the Minister’s decision to free interest rates, his decision to subsidize farm and housing loans and exports, and his concessions to encourage donations to universities all follow the recommendations made in part two of the Commission’s report. The report, although not officially submitted, is available to the hon. the Minister, but not to this House. We do not quarrel with the Minister’s decisions that are based on this report, because in the main they are in accord with United Party policy, and have been for years. However, we have no knowledge at all of what motivated the Franzsen Commission in making these recommendations, nor do we know whether the hon. the Minister has accepted these recommendations either in whole or in part. What is far more important is that we have no knowledge whatsoever of any recommendations that the Franzsen Commission might have made and which the hon. the Minister has not accepted. When the hon. the Minister formulates a policy on the basis of the findings of the Commission, the Opposition has the right to have full knowledge of such findings. It is the overall findings of a commission that are of importance however important individual parts may be. Mr. Speaker, we deem it necessary to say that this is really a completely unsatisfactory state of affairs.
In the speech I made in the debate on the motion of censure last month, I said—
I then dealt in economic terms with some of the reasons for this state of affairs. To-day i want to look at these aspects again but in more general terms.
The basic reason for our problem of course is the fundamental political philosophy of the Government. This philosophy has passed through the evolution of a change of name from “apartheid” to “separate development” to “separate nations”. In essence, however, it remains the same. What is more, Mr. Speaker, the philosophy has failed but the Government ostensibly anyway, does not accept this failure as an actuality. It makes all the motions of success. This, then, is what goes to the root of the problem and places the Government in a position where it cannot, or will not, accept the realities of the situation. The net result is that the Government is deterred from determining its objective and where they do set objectives, the Minister finds that he cannot sustain them through to completion. He finds himself a man in chains, and however hard he tries to bend the economy to achieve Government aims, the fact of the matter is that the economy will break the Government before the Government breaks the economy.
And the banks will close. [Interjections.]
Frankie, you can do better. The fundamental weakness of the Walter Mitty budgets of the past is that the objectives aimed at are not achieved and when we come to the next budget where will we be? We will be back at square one once again.
In his Budget the hon. the Minister spelt out his objectives for 1970. What are these? They are: To rectify the imbalance in fixed investments and particularly to encourage investment in private manufacturing industry; to encourage exports; to alleviate the strains on the capital market; to assist those sectors of the farming community which have been affected by drought and other adverse factors beyond their control; above all, to curb inflation by maintaining wherever necessary the restraints on excessive spending especially on consumption, by encouraging saving, by making adequate provision for the training of skilled manpower, and, finally, by financing State expenditure in a non-inflationary manner. But, Mr. Speaker, these were the objectives of the hon. the Minister in 1969; they were his objectives also in 1968 and in 1967; and these were the objectives of his predecessor in 1966 and in 1965; and unless we have a change in thinking by this Government, these will be their objectives again in 1971. The Budget this year is built around measures which the hon. the Minister considers necessary to achieve these objectives. But so were the budgets of all previous years. The public of South Africa knows these measures very well—high taxation, loan levies, the high rate and wide scope of the sales tax, enormous surpluses which have not been utilized in favour of the man in the street but which were sterilized or transferred to Loan Account; credit ceiling; the pegging and the unpegging of the interest rate; tax-free bonds, and a host of controls. These were the measures taken from time to time over the years to achieve the identical objectives that the hon. the Minister once again sets for himself. They have all failed pitifully. Measures of this nature are from time to time not unusual in the economic life of a country, but they are always short-term measures. They are expected to bring results over a limited period of time, but in South Africa these short-term measures have become a permanent fixture of our economic scene. The measures remain but the picture does not change. Objectives are not met and the same problems go on persisting. Nothing is accomplished except to extract from the public a high price for the doubtful privilege of Nationalist ideologies and weak and indecisive government. The business sector is obstructed by curbs and by controls and by permits and by officialdom and its functioning at best can be said to be in a state of frustrating uncertainty. The built-in momentum that exists in every business is arrested by the sacrifices it is forced to offer on the altar of ideologies which have already proved illusionary. The man in the street is grappling with an uninterrupted rise in the cost of living and in the lower income groups with a heavy burden of sales tax. He just cannot see the purpose of the burden he is being asked to carry. All he can see is bigger and bigger surpluses, with a constant demand made on him for more and more taxes. The pensioner is eking out a bare existence well below minimal standards and he looks in vain for a place in the sun.
Mr. Speaker, whatever our problems are, surely in an economy which is essentially sound and is showing remarkable vitality— and these are the words of the hon. the Minister—we can do something to improve the lot of these good people. The Minister may well say that “the hoary head is a crown of glory”, but it does not pay the rent or fill the stomach. The prices of land and building costs of housing are crippling the young married couple setting forth on their climb up the rainbow of hope, but the end of the rainbow remains elusive and the Minister’s subsidy on housing is not going to solve the problem because it goes far, far beyond interest rates. High housing costs are caused by problems of labour, labour in the raw material and labour in the finished product, and to succeed we have to tackle this problem at source. The Public Service is fighting a constant battle to retain reasonable standards, but the battle is a losing one, and what is the result? The public servant seeks new pastures elsewhere where he can find adequate rewards. Meanwhile the Government stabs feebly here and stabs feebly there because it will not face up to the realities of the situation.
Our problem is very simple; it is a problem of productivity. We will never halt inflation; we will never correct the imbalances in our economy; we will never reach our maximum inherent potential. We will never reach optimum productivity until we accept that the goal of achievement rests on the full use of all our human resources.
What doss Douglas Mitchell say?
Sir, I have said that the business sector is functioning as best it can in a state of frustrating uncertainty, and 1970 will bring no relief from that uncertainty because there is little in this Budget to indicate that the Government is going to move away from its ad hoc decisions to firm, long-term policies. The overall impression one gets from the Budget is that we are dealing with a Government which cannot make up its mind, and when it does, it is on issues that have clearly been in need of rectification which is long overdue. The hon. the Minister has now decided to free the banks and the building societies of their undertakings to maintain a maximum rate of deposits. This is what we find interesting, Sir. It has taken a Franzsen Commission to convince the hon. the Minister that controls, as he put it, on deposit rates prevent the demand for and the supply of loan funds from being brought into equilibrium and may add fuel to the fires of inflation. It took the Franzsen Commission to make the hon. the Minister see daylight, but every financier, every businessman, every industrialist, even the United Party, has been saying this year after year. We have always believed and we still believe in the discipline of the market place. Nevertheless we welcome this decision. We are doubtful whether the hon. the Minister has gone far enough. Surely the arguments which made the hon. the Minister change his mind on interest rates apply equally well to credit ceilings. It seems to me that the hon. the Minister has only taken one bite at the cherry, and if he wants to do this job properly and perhaps in this case meet his objective, he will have to take the second bite and remove the ceiling on credit.
The hon. the Minister’s decision to subsidize interest rates for farmers, householders and exporters is, as one paper called it, an interesting innovation. Farmers may well benefit from this subsidy, unless, of course, general interest rates rise too speedily. But for the house owners there is little comfort in this measure. What has the Minister done in effect he has simply pegged interest rates on houses up to a value of R16,000 at 8½ per cent provided the mortgage rates do not rise higher than 9½ per cent. This is all he has done. If interest rates do not go above 9½ per cent, he simply pegs them at what they are at the moment. There may be one benefit and that is that more money may be available for mortgages as a result of the hon. the Minister’s decision. Of course, in pitching the value of a house at R16,000 the hon. the Minister has pitched it far too low. You cannot buy very much these days for R16,000. What we would rather have seen is that bond interest payments on houses, perhaps for defined categories of taxpayers, should be deductable for fax purposes as they are in many other countries of the world. We believe that this would have been far more meaningful. So far as exporters are concerned, the hon. the Minister is still formulating a suitable scheme. It is becoming standard practice. Sir, for the hon. the Minister to announce measures and then to look for the formula with which to implement them. Action and decisiveness are hardly the forte of this Government.
On the question of public service salaries we are again to have an investigation—another decision still to be announced by the hon. the Minister, even though the position in the Public Service has been critical for years and, as the hon. the Minister well knows, is reaching crisis proportions. But I would say this to the hon. the Minister: I hope that on this committee that is doing the investigation he has the best brains in South Africa and that he is not limiting it to departmental heads or departmental officials, because what South Africa wants, in so far as its public service is concerned, is a completely new dynamic line of thinking and action. This is the only way in which we are going to break the bottleneck.
The 15-year-old problem of provincial subsidies is still subject to detailed study by the hon. the Minister in his efforts, as he calls it, to find1 a satisfactory solution, despite the fact, of course, that he has had the Borckenhagen report in his hands for a long time. We are beginning to wonder whether the hon. the Minister is ever going to make up his mind on this issue.
He is a leasurely student.
We are not surprised that the hon. the Minister has to report that his borrowing operations have met with little success. I warned the hon. the Minister when he reduced his rate on his savings bond that he was pitching his rate too low and that he was not going to be successful, and he has not been successful; he has run into trouble. Here we have another departmental inquiry. For a long time the hon. the Minister has not been getting the money he needs but now, at Budget time, he decides to have another inquiry. He says that he is going to institute it without delay to go into the matter of streamlining the various channels of savings available to the State. I only hope that as a result of this inquiry, Sir, we will have a more realistic fund-raising strategy.
Sir, when I look at these proposals of the hon. the Minister, each one awaiting the result of an inquiry or an investigation before finalization, I am constrained to quote the words of William Congreve from his Amendments of Mr. Collier’s False and Imperfect Citations; I believe they depict the Budget presented by the present Government. I quote:
Jeremiah 3, verse 12.
The transfer of the additional R12 million by the hon. the Minister to the Road Fund, we regard as a step in the right direction. Here again, he does not go far enough. He has completely neglected the problem of city and urban traffic. The hon. Minister knows full well that neither the local authorities nor the provinces can bear the burden of the cost of financing adequate road systems for our major cities and towns. They have to get Government help. Unless they do get help, complete chaos is going to develop. We can only hope that when at long last we get from the hon. the Minister a decision on the Borckenhagen and Schumann reports there will be some help forthcoming for the provinces and the local authorities in regard to roads.
We welcome the concessions for higher education, Bantu education, export allowances, investment allowances and the subsidies for farmers and farm products. I want to make an appeal to the hon. the Minister. When we on this side of the House make suggestions to the hon. the Minister that have validity, please do not wait for one, two or three years before implementing those suggestions. I want to give him these words: “He who giveth quickly, giveth twice over.” I hope that the hon. the Minister will remember that.
Now it is time to look at some of the other aspects of this Budget; it is time to look at the other side of the checker board. From 1969’70 the hon. the Minister’s estimate of his surplus has grown from R2.8 million to R113 million. Together with the accumulated surpluses of previous years the hon. the Minister had on the 31st March, 1970, some R233 million available in his Revenue Account. This was in addition to the millions he has in his Exchequer and Stabilization Account. As I said on Wednesday, this year will be known as the Budget of the Loan Account. Because the hon. the Minister could not fund his Loan Account this year, he is transferring from revenue to Loan Account an amount of R113 million to meet his Loan Account deficit. Because he has not curbed inflation, the hon. the Minister says he is loath to use his remaining surplus of R75 million or his reserve balances to fund this year’s Loan Account. So, he is forced to other measures. What are they? Firstly, he is doubling the loan levy from 5 per cent to 10 per cent. Secondly, he is imposing a loan levy of 2t per cent on companies. The hon. the Minister tells us that he is hesitant to impose this loan levy upon companies, because of the desirability of encouraging fixed investments especially in manufacturing industry. That is a fair statement. Nevertheless, he does so. He tells us he is forced to do so, because it is necessary in his fight against inflation. The hon. the Minister then tells us that in order to help his Loan Account he will have to look to foreign loans to an extent of R100 million. He acknowledges that in so doing he will be doing something that is inflationary. He is quite right. Suddenly, the hon. the Minister has decided that balancing his Loan Account is more important than the fight against inflation. Really, the hon. the Minister must make up his mind. He cannot say: “I do not want to impose a loan levy on companies to help my Loan Account, but I will impose one because it will be anti-inflationary,” and then go ort in the same breath and say: “I do not want to borrow R100 million abroad because it is inflationary, but I am going to do so because I have to help my Loan Account.” But this is what we are getting. The hon. the Minister must tell us what his objectives are. The country is paying a high enough price to meet these objectives and should at least know what they are.
We are hot finished with the story yet. The hon. the Minister is busy again with the sales tax. Firstly he tells us that his estimates of income to be received from this tax proved to be very close to the mark. Before I agree or disagree with the hon. the Minister, I want to ask him two questions. When he compares his original estimates of receipts from sales tax with actual receipts is he not comparing a 12-months’ estimate with nine months of receipts? If this is so, we have the following position. The hon. the Minister has postponed payment of the sales tax that was due to be paid on the 31st March until April so that the fourth quarter’s payment now falls in the fiscal year 1970-’71 instead of in the fiscal year 1969-’70. We would like to know from the hon. the Minister what has happened.
You said it would be R200 million, did you not?
That is not my question. The hon. the Minister says that his estimates and receipts balance and I would just like to know how he arrived at the balance. My other question is whether the sales tax on importations is shown under the headings of “sales” or under “customs duty”. If the hon. the Minister would give us the answers to these two questions we can decide whether we agree with him or not.
Then the hon. the Minister decided to impose a sales tax on a wide range of items and, finally, he increased the duty on items presently carrying 20 per cent, to 25 per cent. The hon. the Minister says that most of the articles affected are luxury items, but certainly many of them are not. Does the hon. the Minister consider that cosmetics are luxuries, or toys, radios, or dictating machines? Perhaps he will tell us. I think the hon. the Minister feels that by dropping the sales duty on matches from 20 per cent to 10 per cent he has solved all opposition to raising taxes on a host of other articles. When the sales tax was introduced we fought against the scope and the rate of the tax and we will continue to do so until the poorer sections of our people get a square deal.
Time does not permit me to deal with the many other features of the Budget, but other hon. members on this side will do so. There are, however, certain conclusions I want to draw. The hon. the Minister believes that all the signs point to a resumption of rapid growth, but the private sector does not appear to be of this opinion. This is apparent from (the lack of confidence that is currently present. Any up-trend that is taking place is due to spending by the public authorities, the public corporations and in the consumer sector. Private consumption and spending as a porportion of the gross domestic product has remained reasonably static over the past few years. The public sector’s spending has increased disproportionately. We are now faced with the position that the public sector is becoming the pace-maker of our economic expansion instead of the private sector where this rightly belongs. The overlag of our gold strategy has left us with excessive liquidity and accelerated inflation. We share the hon. the Minister’s concern that the inflation rate of 4 per cent is too high and that we are way beyond the accepted normal safety rate of 2 per cent. We believe, however, that cost inflation and not demand inflation poses the major problem. The magnitude of the changes the hon. the Minister proposes in this Budget is so minimal that they will have little effect on our present position except that the warnings that were given to the hon. the Minister on possible wage increases are already materializing. The hon. the Minister has no doubt read yesterday’s Sunday Tribune and the article with the heading “Unions’ tough message—we will demand more pay”, in which is said: “Diederichs battle plan falls flat as soon as cost of living rises.” With the labour position as it is to-day, the working man is concerned with what is in his paypacket, what my hon. friend, the member for Salt River, calls his “clean paypacket”. We can now expect a new round of wage demands that will follow a rise in the cost of living, which is going to be very difficult to avoid. The additional loan levy is likely to be passed on to the employer, and the whole wage-cost structure cycle will begin again.
I think it is fair to say that in the case of a continuation of present circumstances and policies, we might be able to achieve a growth rate of somewhere between five and six per cent per annum. I think there can be little doubt that it is going to be coupled with an inflation rate of four per cent or more. There is nothing in this Budget likely to cause the present rate of inflation to diminish, and a new period of growth will bring further inflation. You see, Sir, a general state of uncertainty still persists. As long as we have the Physical Planning Act, statements from the hon. the Deputy Minister of Bantu Administration on the control of non-White labour and vague statements by the hon. the Minister of Finance on possible departures from existing labour policies, uncertainty will persist.
We believe that the hon. the Minister of Finance has a special function. It is his function in declaring his fiscal policy to set the scene for other Ministers. It is just not good enough for the hon. the Minister to pose the problems of labour and of border industries and then to leave them dangling in mid air. He would do well to take cognizance of the words of wisdom of St. Paul: “If the trumpet gives an uncertain sound, who shall prepare himself to the battle?” This is South Africa to-day. If the trumpet gives an uncertain sound, who shall prepare himself to the battle? It has always been our belief that prosperity brought relief from existing burdens, certainly not the imposition of new ones. But this is not the case with the present Government. Every time the man in the street hears more about how prosperous South Africa is, how vital she is and how great we are going to be, he suddenly finds that he has a greater burden to carry. This is fundamentally what this Government is doing to the people of South Africa. There is no cognizance of the pensioner, no cognizance of the poor, only visions of expansion and greater burdens.
Our plea to the hon. the Minister to-day is this: Set the economy free from unreasonable restrictions; put the labour situation in order; get rid of the imbalances in our economy; because these are our only hopes. It is the only way that inflation, which disturbs the hon. the Minister so much, and quite rightly, with all its attendant evils can be cured.
Mr. Speaker, it is a privilege for me this afternoon to congratulate the hon. member for Parktown on his maiden speech as chief spokesman of the Opposition on finance. Since the end of the 1969 session it has been my privilege to serve with the hon. member on two parliamentary commissions of which I was chairman. The hon. member made very valuable contributions in regard to the matters with which these commissions were dealing. I want to place on record my appreciation for that here this afternoon. Having said that, I cannot help but express my extreme disappointment at the fact that this hon. member, with his undoubted ability, could do nothing more this afternoon than express a whole string of negative ideas here. The hon. member spoke of “objectives aimed at but not achieved”, and “they all failed miserably”. Then the hon. member spoke of the man in the street who with all his problems could get no further because he was having too hard a time, was being over-taxed, whose cost of living was too high, who could not pay for his house, etc. Then the hon. member went on to make a plea for the so-called poor man who would supposedly never receive his due. The hon. member perhaps put it more effectively in his introductory words last Wednesday when he said—
And then he used the following very striking words: “There is no joy for the poor man in this Budget.”
Yes, Mr. Speaker, hon. members are saying “Hear, hear!” This is once more the typical double-barrelled attack of the Opposition. On the one hand they are making pleas for the rich man, for after all it is the rich man who buys motorcars costing more than R3.000. It is after all the rich man who purchases the luxury articles on which the sales duty has now been increased. On the other hand, he poses as the champion of the poor man when he says: “There is no joy for the poor man in this Budget.” Surely that is not true. A taxpayer who pays less than R100 in tax to the Central Government does not pay this additional savings levy. The interest subsidy on houses is after all not applicable to the house of the rich man. It is in fact applicable to the house of the poor man.
At this stage I want, quite parenthetically, to point out to the hon. the Minister that his announcement on the interest subsidy on houses was not worded absolutely clearly in his speech. I take it that it will in fact be worded clearly in the tax proposals. The interest subsidies are in fact applicable to houses the value of which does not exceed R16,000, while the maximum loan may not be more than R12,000. There is a difference of R4,000 between the value of the house and the loan. It is in fact the poor man who cannot afford that R4,000 as deposit. If we were therefore to exclude him when his loan exceeds R12,000 it would mean that the poorest man would not come into consideration because he does not have the R4.000 as deposit. I take it that what is in fact meant and will be worded clearly in the tax proposals is that, just as in the case of farmers where loans can exceed R100,000 but subsidies are only received in respect of R100,000, the same will apply in the case of interest subsidies on house loans, i.e. that as long as the house is worth less than R16,000 the interest subsidy will be paid on the first R12,000 of the loan. But I am simply saying this parenthetically.
The hon. member maintains that nothing is being done for the poor man. No additional sales duty is in fact being imposed upon the motor-car of the poor man costing below R3.000. What is more. I want to say on the positive side that it is on the tyres of the poor man’s motor-car on which not the same sales duty is being levied, but in fact a decreased sales duty. Because the sales duty on tyres is being decreased from 20 to 10 per cent, the poor man’s motor-car will also cost less now.
What the hon. member forgot is that R2 per month which is payable to old age pensioners and which falls in this year. It was in fact announced in February and was introduced with effect from 1st April of this year. For that reason it forms part of this Budget, because it is in this tax year that the poor man will be able to benefit from this R2 per month. It is very easy for the hon. Opposition to go on making ever-increasing demands for the poor man and all the other indigent people because they are not responsible for obtaining the funds for that increased expenditure.
There is only one way to test what the hon. member for Parktown and the entire Opposition really feel in their hearts for the poor man. Most of us have forgotten by now what conditions were like under the United Party. régime. Let me remind those hon. members again of what they actually did, not what they advocated for the poor man when in 1948 they were in a position to do something for them. All the poor man received at the time was an old age pension of R10 per month. It is not what they felt for the poor man, but what they did for him. If we were to adjust that R10 per month to the increased cost of living we would find that that R10, at the present cost of living index, would increase to R19. It is not what they advocated for the poor man, but what they did for him. Now I shall tell hon. members what this Government is doing for the poor man. This Government is not giving him an old age pension of R19 per month. It is giving him an old age pension of R35 per month.
What is the value of that?
The value is almost twice as much as what you would have been giving them at this stage. This Government went further and laid down this further provision that if a man waited for five years and postponed his application for an old age pension for five years—i.e. if he only asked for it at the age of 70—then he received not only R35 per month, but R45 per month. Compare this to what the Opposition would have given the poor man if they had still been in power to-day, namely a paltry R19. Are they not ashamed of themselves? Then the hon. member for Parktown says with great emphasis “There is no joy for the poor man in this Budget”. That is not only untrue. It is also downright irresponsible. I shall have something to say about this later.
Let us now consider the second important statement made by the hon. member. After sketching all the problems of the economy of the country, he came forward with the one miraculous solution. There is only one miraculous solution to all our problems, and that is that we should immediately incorporate all the men in the country, regardless of their colour, in our economy. But surely that is being done. We do have problems in finding out precisely what the Opposition wants to do in this regard, for does not the hon. member for South Coast say that the Bantu are not responsible enough to do certain kinds of work? That is not all, however. The hon. member for Orange Grove refused to say to the hon. the Minister of Posts and Telegraphs that he should allow Bantu to be trained for more responsible positions in the Post Office. Where do we stand with the hon. Opposition?
I still remember only too well how during the recent election I arrived at numerous homes where (he people told me that my United Party opponent and his helpers had just been there and that they did not want to support the Government any more because, according to the United Party candidate, the Government wanted to give white peoples’ work to the Bantu and Coloureds. That United Party candidate did not even have the decency to refer to them as Bantu and Coloureds. He said that the Government wanted to give the white man’s work to kaffirs and Hottentots. Pardon the words, but these are the words which, according to my voters, were used by United Party members in my constituency.
The hon. member for Parktown said that if we incorporated them all into the country’s economy, we could also maintain a tremendously high growth rate. His hon. Leader recently waxed lyrical here in Cape Town about a growth rate of 10 per cent which we could maintain. According to him we could maintain an even higher growth rate than Japan if only we would incorporate all these people into our economy. That is of course a figment of his imagination. The English-speaking people have what I find is such a beautiful description of this figment of the imagination of the hon. Leader of the Opposition. They talk about a “pipe dream”. They call it a “pipe dream” because it is as illusionary as the wild flights of fancy of a man who has overindulged in a pipe of dagga.
Of course there are labour problems. These are, however, due to the fact that the country’s economy is growing so tremendously. We on this side of the House are in fact incorporating the Bantu into our economy. The hon. the Minister of Labour will have more to say about that. We are doing it, however, with very definite reservations, namely that the Bantu will never take the white man’s work out of his hand, and secondly that there should be no integration in the work. I do not intend elaborating further on how this should be done, because I believe the hon. the Minister of Labour will in fact do so.
In spite of all these problems our growth rate is still considerably higher than the growth rate of most other Western countries. Opposed to that, our inflation rate is considerably lower than that of most other Western countries. For that reason it is utter nonsense to allege that this so-called labour problem is the basis of all our problems. It is definitely not ideological considerations which prompt the Government to impose such qualifications as I have just mentioned. The hard facts of the South African situation demand that. The quickest way the Bantu can get to the top in industry is of course to make progress in their own avenues of employment, their own communities and their own areas. But, Mr. Speaker, the moment of truth has arrived for the Opposition as well. It is time now the Opposition told us very emphatically how they want to bring about this incorporation of the Bantu into our economy—not in accordance with any figments of the imagination or “pipe dreams”, but in accordance with the hard facts of our South African situation. That Is why I am now asking them to put a stop to their double-talk and to give us greater clarity on how this incorporation should be brought about.
But my time is limited, and I must make haste. Let us look at the practical implications of a 10 per cent growth rate. In the Economic Development Programme for the period 1968 to 1973, definite suggestions in this regard were put forward. The Programme deals with a 6 per cent growth rate and not a 10 per cent growth rate and states—
That is what the Programme states with reference to a 6 per cent growth rate; thus, not even a 10 per cent growth rate. As far as the labour problems which go hand in hand with a 6 per cent growth rate are concerned, the Programme states in paragraph 441—
Then the Programme comes to the conclusion that we will simply not be able to maintain a 6 per cent growth rate. That is as far as the white labour pattern is concerned. In regard to the non-White labour pattern, the Programme states in paragraph 442—
What utter nonsense it is therefore to say that we are being restricted by ideological considerations. Opposed to that, this is a purely economic view, a view we cannot get past.
I want to refer briefly now to the ratio between the growth rate of a country’s economy and the inflation rate of that country. The latest available figures over the five-year period indicate that in West Germany the growth rate was 4.3 per cent as against an inflation rate of 2.4 per cent. The growth rates of ten countries were opposed to their inflation rates. From that it appeared that there were only three countries in the Western world with a higher growth rate than South Africa, i.e. Japan, with 10.1 per cent, Holland with 6.9 per cent and Canada with 6 per cent. But at what price? In these three countries the inflation rate was much higher than here. If we contrast the inflation rate with growth rate we find that South Africa is the only country in the world where the growth rate was less than 50 per cent of the inflation rate. In the U.S.A. for example, it was 52 per cent; in Holland it was 66 per cent; in Canada 52 per cent and in the United Kingdom as much as 134 per cent. If we were therefore to measure the growth rate of the country and its growth against the ratio between its growth rate and inflation rate, then South Africa tops the list of countries in the Western economy.
The hon. the Minister put it so aptly that fiscal measures alone could not solve our problems. It is essential that we pay heed to the social situation. It is inevitably the case that if we want to maintain our high growth rate without an increased inflation rate, we will all have to work harder for the same income and we will all have to save more, and our entrepreneurs will have to plan with vision. Here I want to make an appeal to the Opposition: You have more than a negative role to play; you very definitely have a positive role to play as well. That is why I say to you: Put a stop to this continual emphasizing that the worker is not getting his full share; put a stop to continually bringing it to the people’s attention that they should demand higher wages and salaries; let us rather put our shoulders to the wheel and work a little harder for the same wage, for only then can we make the Republic of South Africa a great and powerful economic factor. Let each one of us examine our own conscience, work harder and save more, and plan with greater vision. Then we will be creating a very wonderful and great South Africa.
I listened with the greatest of interest to the Budget Speech of the hon. the Minister of Finance. It was a well presented speech and full of information both for hon. members in this House and for the country. I wish I could say the same of the speech of the hon. member for Paarl. He reiterated the hardy annual “work: and save”. Mr. Speaker, the Minister of Finance has made no mention in his speech of the drastic slump in the Stock Exchange which started in May last year and which to-day has reached historic lows. In any survey of our political economy, the sort of survey conducted by the hon. the Minister of Finance, one would expect some comment on this tremendous loss of investment capital, savings of many hundreds of thousands of South Africans who with the best intentions of the world, and well advised, sunk their savings into the Stock Exchange in the form of equities to promote the capital production necessary for our industries and in the unit trusts in which they have been given cause for confidence not only by the market but also by the Government. This slump has resulted in the average man, many average men who sit in this hon. House to-day and many of the lower income earners, having not only lost immediate savings but also their life savings. The trend that has resuled because of this tremendous catastrophe on the Stock Exchange has had one side effect, and that is to direct savings into the fixed market. Like houses and land. As a result of this an additional side effect which affects the man in the street has become apparent. The cost of land and the cost of houses have risen inordinately throughout South Africa, so that to-day the young married man, the working man, has little opportunity despite any concession that has been made by the Minister in his Budget speech, of ever owning his own home. The hon. the Minister of Finance has been fortunate in that he has introduced his Budget almost halfway through a tax year, so his estimating or his “guesstimating” need only be half correct, because he knows half the answers already. He has in particular concentrated on boosting private industrial investment and our investment in exports.
The hon. the Minister of Finance has not been able to help the man in the street with his housing problems, the high cost of labour and the high cost of materials. It is perhap stragic that the materials most concerned in housing costs, namely bricks and cement, are to-day controlled in price so that in these high capital investment industries there is little incentive for the entrepreneur to risk his money not knowing whether either labour or price control will be in his favour or that the necessary resources will be made available to him. We would have hoped that in considering ther equirements of the individual in this difficult economy of ours, thought would have been given to a reduction in the transfer duty on homes and land. This would have been a tangible concession which would have helped many of those of our people who are struggling most to-day.
We recognize that the hon. the Minister has a local problem of inflation in a world in which inflation is accepted almost as general, but in particular the Minister of Finance has to cope with inflation in our country because of its effects on our gold mines. We cannot afford galloping inflation and we have to find a solution to the problem, but there is considerable diversity of opinion in the business world as to whether We are moving forward in an upward surge of economic activity or whether in fact we are going to experience a difficult period in the immediate future. There is uncertainty in the manufacturing industry; there is uncertainty on the Stock Exchange, and here is uncertainty in business, and business uncertainty is bad for business.
All the farmers are going bankrupt.
It has been said that if you would invest in the immediate present you must plant wheat. If you want to invest in the short term, you must plant trees, and if you want to invest in the future, invest in men. Sir, it is the problem of men, the problem of manpower, which is today shackling our entire economy and rendering our horizon so much darker when we talk about having a Budget both to balance our books and also to ensure our success in future. If I may quote from the report of a business organization of the highest repute, Union Acceptances, it states categorically—
That is an economic fact, Sir, and not a political fact—
That is from economists. Sir, wherever one turns one finds that the main economic obstacle to the progress we all want our great country to make is the fact that development must be confined within the framework of Government policy and the fact of the retention of physical limitations on labour under the Physical Planning and Resources Act. The hon. the Minister of Finance has himself pinpointed the problems which lie ahead of us in an economy which in this decade we have to face with optimism and with enthusiasm. Whatever the real fiscal or monetary weapons he has extracted from his arsenal, the fact still remains that in our economic machine we are suffering as a result of the fact that private manufacturing industry is lagging behind. We are riot achieving our export programmes; our capital market is unhappy and our farming community is losing out both in the export field and because of the tragic drought that we are now experiencing, something we in this House cannot control.
Do you blame us for the drought too?
With the consumer price index having increased by 4 per cent during this year, there is every reason for concern, particularly on the part of the man in the street. Consumption has certainly been increasing faster than our productive resources and this is the key to our whole problem. As a result, savings are showing a downward trend. But, Sir, what have we been able to do in this Budget for the man in the street? It is he who has to bear the major portion of the burden of taxation in the indirect field. Not only is his loan levy being doubled from 5 per cent to 10 per cent of his taxable income but his burden of indirect taxation is being increased. Where one would have expected the Minister of Finance to have reviewed the sales tax and to have grasped the opportunity of removing from the tax schedules articles of an essential nature, all we find is that the tax on luxury items and on durable consumption goods has been increased, with the exception of the reduction in the tax on matches from 20 per cent to 10 per cent. Sir, the man in the street is further burdened by the incidence of the loan levy imposed at the rate of per cent on company tax, a tax which in effect will merely reduce the net increased profits available for dividends at the consumer end.
Are you against the loan levy?
Then, Sir, we come to interest rates. The freeing of interest rates, without the freeing of credit ceilings, in itself has been welcomed by the market but the indications are—the trend is already there—that interest rates will inevitably increase. The small concessions which the hon. the Minister of Finance has made to the farmer and to the lower-income house-owner will rapidly diminish and become hollow promises in the event of the interest rate rising, as it may well do. All that may happen is that the amount of money available for homes will increase. Mr Speaker, during the last session of Parliament this side of the House accused the Government, I believe quite rightly, of over-taxation, and again on this occasion we accuse the hon. the Minister of Finance of overtaxing the man in the street, the man who really is the backbone of this country.
I would like to refer, Sir, to the pensioner and to the civil servant. The hon. member for Paarl has told us what this Government has done to ensure a living for a pensioner who to-day, you may be assured, Sir, is really suffering. This fact would have been reported to every hon. member of this House during his canvassing campaign. The pensioner is getting R35 per month to-day. Sir, that figure, in terms of real purchasing power, is nothing; It is useless to say that the pensioner got R10 under the United Party Government many years ago. Sir, the pensioner, you and I Want to know what economic power we have left with the money in our pocket at the end of the week When we have spent what we had to spend. What the pensioner has left is nil and that also applies to the civil servant. Sir, we on this side of the House have always believed that the Civil Service should attract the highest skills and that civil servants should be paid salaries commensurate with the salaries paid for equal skills in commerce, on the simple law of supply and demand. If that is not so, then the Minister of Transport, the Minister of Posts and Telegraphs and all other Ministers will find that they will not retain the labour that they have, let alone replace the labour that they have lost. We believe we can afford to pay the skilled man in the Civil Service more by streamlining the service from what it is. It can be done by reducing unnecessary services, by investigating inevitable efficiencies which not only appear in the Civil Service, but in commerce and industry as well. That is no criticism on the Service individually.
Do you say they are inefficient?
If the hon. member listened to what I was saying, he would have heard that I said that in commerce and industry and in every sphere of economic life there are inefficiencies which an efficient industrialist endeavours to sort out and eliminate. [Interjections.]
At this stage may I put in one word for the lower-income group in the twilight section of our population. I refer to the Coloured population in the Western Cape and to the Bantu in the reserves, all of whom have to live off the same basic essentials as we Europeans when it comes to basic supplies of, food and basic essentials. Only last week it was stated by Mr. R. Martins of the Cape Chamber of Industries that research has revealed the stark facts quite clearly that more than half of the Coloured population of the Western Cape have not an income to supply the minimum human requirements. This is happening in our economy while we call ourselves the fortunate country and one of the greatest countries economy wise in the world. These are the facts that we as a House have the responsibility to learn, to accept and to acknowledge and where possible to eliminate. In the four per cent increase in consumer prices, the items which weigh most heavily are housing, related items, medical services, vegetables and fruits.
I now come to the whole question of inflation, the question which the hon. the Minister quite correctly has pinpointed as his major economic problem. The hon. the Minister has mentioned the strong upward movement of consumption expenditure which has risen by 22 per cent in two years and is still rising. I believe it is fair to say that the hon. the Minister has endeavoured to cope with the problem of demand inflation to the best of his ability. He has used his arsenal of weapons, his fiscal controls, monetary controls, import and foreign exchange controls as effectively as he could. It is a pity that at this juncture, the hon. the Minister of Finance did not state quite clearly that the powers which are his to control and influence the South African economy, the three prongs available to him, are rendered completely ineffectual with the impact of labour shortages on the inflationary trend, because as my hon. friend just said, he is shackled hand and foot by the Cabinet. For a number of years the argument would have stopped at this juncture. Commerce and industry in the early years had almost come to accept the fact that whatever the impact on the economy made by the Physical Planning Act and, the Border Industries Development Act might be, they were up against a political stone wall at any rate. Today the position is changing. The Afrikaner intellectual, the businessman, the economic academicist, whether he stems from Pretoria or from Stellenbosch is making his views clear. The businessman and in particular the new breed of industrialist in South Africa is becoming more sophisticated. In short the impact of the labour shortage on the industrial life of this country is becoming so serious that it is now recognized in every sphere and by every section of the community. Already during this short session of Parliament, the hon. the Minister of Transport and the Minister of Posts and Telegraphs have highlighted the crises which they are experiencing. We have not as yet heard from the other Ministers, whose Votes will follow, but there are new and growing manifestations that the position is reaching explosive proportions. We are as concerned that the Civil Service should continue to operate effectively as are the hon. members on the other side of the House. This country may well live or perish economically according to the recognition of the economic problem which is now threatening our present and our future welfare. I find it distressing in the extreme to note the attitude of the hon. the Minister of Finance who, with the greatest respect, only had a few words to say on this subject. I quote:
The hon. the Minister of Finance dismissed this problem with the comment “It is, in fact, a cause for satisfaction that jobs should be available for all who wish to work and that unemployment should be of negligible dimensions, as is now the case in South Africa”. These words were used by the hon. the Prime Minister before the last election on the election platforms. Do we really believe that our South Africa consists of Europeans only and that we only have the problem of supplying work of any sort for Europeans and that we do not have any other human problem?
One remark in the speech of the hon. the Minister of Finance has held the attention of the Opposition, of members of the financial Press and of the entire commercial community of this country more arrestingly than any other. It is the suggestion that an investigation is taking place as to how “more non-white labour can be made available to those industries which remain in the white areas.” This is what members of commerce and members of industry and we on this side of the House are paying particular interest and attention to. It is an answer to which we have a right and is possibly one which is long overdue. The results of the 1970 census will soon become available for publication. A clear indication of the shock which may be awaiting not only all South Africans, but more particularly hon. members of this House who sit on the Government benches, has been given only last Friday by Professor J. L. Sadie, Professor of Economics at the University of Stellenbosch, an economist of the highest repute. In his latest population projection Professor Sadie has stated that there will be 21 million Africans in South Africa by 1985, 15 years sooner than was anticipated by the Government and the Tomlinson report. This is an accepted reality.
Much more will be heard on this subject of the labour shortage and the effect it is having on the projection of our economic prosperity in the future, the subject given the major attention of the hon. the Minister of Finance. The point I want to make is the futility of the hon. the Minister and the Government stressing euphemistically the use of the Budget as an instrument for forging a greater South Africa, economically strong and resilient, and ready to meet the challenges of 1970 if they persist in this dangerous and ostrichlike practice of pretending that 3½ million Whites can provide both the administrative services and the infra-structure for the society in which we find ourselves. It is against this background of facts rather than illusion that I support so strongly the amendment which is now before the House.
Mr. Sneaker, with reference to the speech made by the hon. member who has just resumed his seat, I just want to say that nobody will deny that South Africa is a prosperous country. The hon. member will accept that there is no recipe in the economies of the world whereby one will be able in any country, no matter how prosperous it may be, to eliminate the less well-to-do and the lower income groups. For the sake of courtesy we all have sympathy and compassion for those people who are having a hard time of it. even under these conditions of prosperity in South Africa. However, I just want to say to the hon. member for Cape Town (Gardens) that after he has finished with the man in the street”, “the man in the street” will no longer recognize himself.
I want to continue by restricting myself to one subject. It is a subject to which the hon. the Minister made specific reference in his Budget speech. It is a subject which has up to now been raised by every hon. member, i.e. our manpower problem. In that process, I should also like to use the time at my disposal to give a little intensive consideration to the pattern as the Opposition apparently sees it now, according to the information we have at our disposal. I see in this question of our manpower potential and the problems which may accompany that, four considerations which go hand in hand. The first is the availability of that manpower. That is obvious. The second is labour peace in the ranks of that labour force. That is also obvious. The third consideration is that South Africa is a multinational country. In that multi-nationality labour peace must be maintained. The fourth consideration is that South Africa has a pattern of living which has developed over 300 years. A man can go to Japan, seek advice from them and learn the lessons to be learned there. That may be a very good thing. But if he, after he has sought advice from the Japanese, were to lose sight of the factual position in South Africa, namely these four aspects I mentioned which go hand in hand and which form the foundation of our finance and our economy, or only one of them, he is going to suffer future set-backs.
The National Party is committed to a few principles. One of those is that it should to the best of its ability try to promote the economic welfare of South Africa. Along with that the National Party is committed to a policy by means of which it wants to solve this multi-national problem of South Africa. I am mentioning these in the same context, because any rational person will realize that if we were to find ourselves heading for economic disaster, the prospects for the National Party solving its multi-national problems would be extremely scanty. That is simply how matters stand. But opposed to that we also realize that, if the solution to our multinational problem cannot be found on a satisfactory basis, we will very definitely find ourselves heading for future economic disaster and chaos. I do not think there is one member who will deny this. These two major policies to which my party is committed, are consequently of cardinal importance.
For us to be ultimately successful, I want to mention a few necessary aspects. Those four elements which I mentioned must continually be borne in mind. To lose sight of them, would be disastrous. But in the meanwhile a balance must be struck, a balance in finance and the economy must be found, and we all know how difficult this is to achieve. When one has achieved it to-day, it is equally difficult to maintain the day after, because one is continually dealing here with a human factor which one cannot calculate in advance, and which one cannot adjust to any mathematical formulae. If one were to look back over the years of National Party regime, I do not think that anyone could honestly say that the National Party did not, to the best of its ability, seek to achieve that balance. South Africa has behind it 22 years of prosperity, such as it has never known before in its history.
What is necessary in addition to that, is that when there are signs that matters are taking an unfavourable turn, whether elsewhere in the world or here among us—we axe after all not on an island or isolated somewhere in space—there must be no panic. What is the Opposition doing, now that an unfavourable tendency is appearing in the manufacturing industry, but to try to create a measure of panic among all concerned? And do they know how that panic can develop in the economic sense of the word? They know that, and why are they doing it then? Owing to this situation in regard to our multi-national problem, the National Party has in its policy built in safety valves by means of which it affords people, in the economic sphere as well, an opportunity of finding expression and has in so doing prevented frustrated, militant and embittered masses from being created. Those escape valves have been built into its policy pattern by the National Party.
The National Party is committed to this pattern, i.e. its policy of separate development and its economic policy, which are definitely interrelated. If the National Party were to deviate from this, the Opposition would be justified in saying that the National Party was committing a breach of faith against the people of South Africa. The people of South Africa have stated in six consecutive general elections that this is what they want. Surely hon. members must realize that when they argue as they have in fact been doing, they are beating their heads against a brick wall. They are going against the will of the people of South Africa. They are trying to bring about an economic disaster. So much in respect of the National Party in this matter.
I come now to the Opposition party. They have also made policy statements. I should now like to say something in regard to their policy statements, and this also applies to their labour pattern in so far as it has managed to glimmer through. This also applies to their reply to our multi-national situation in South Africa. It is as its best a cross between the policy of the National Party and the policy of the Progressive Party. We all know what the result is when species which are not identical are crossed with each other. That is what they are heading for. As far as the availability of manpower is concerned, they are to-day placing strong emphasis, and have for a long time now been placing strong emphasis on bringing in the black man to meet the demand for and needs of the Whites. I want to say this to them: “You cannot have your cake and eat it.” One cannot on the one hand adopt a standpoint and say: “Keep Sea Point white,” and on the other hand say: “Let them come in their masses, as many of them as anyone whatsoever wants.” What is more, they cannot when they have brought in those people, put a lid on them. In their policy as we know it, no escape valve has been created for them. I want to put a question to those hon. gentlemen. These people are developing, and they cannot arrest that development. They will not rise to their feet and admit that they want to keep them on a certain level, but they do want to bring those people in here. How far do those hon. members want to go with them in order to preserve labour peace?
But they are here.
Mr. Speaker, I do not have time to reply to interjections. I have already given the reply to that question. They want to bring this man here, and they do not have an escape valve for him. They want to build the white economy on those people without giving them an escape valve anywhere. They want them brought into the workshops and they must be subjected to a “crash programme”. Then they must begin to do skilled labour. Then there is the man who distinguishes himself. One day, when he feels in that workshop that he has distinguished himself sufficiently, and that he has exerted himself sufficiently …
Mr. Speaker, may I ask the hon. the Deputy Minister a question?
Mr. Speaker, my time is limited. The day will come when that man claims that he is a suitable candidate for the vacancy of foreman in that workshop and that he has qualified himself for that. What are they going to say to him then? The day will come when that man will say: “I have studied privately and I am academically equipped to be the chief official in this office. I am better equipped academically than the man you had in that position before me.” What are they going to say to him then? Are they going to say to him: “You cannot get the post because you have a black skin.” Are they going to say that to him? Are they going to preserve labour peace in that way?
Just look at what Uncle Ben is doing.
Uncle Ben has his escape valve for those people. I have already said this. He has his escape valve for them. What are they going to do with that man, for they do not have an escape valve for him? The day will then come when they will have to say to him: “You cannot progress any further. Here is your ceiling.”
What are you saying now to the Coloureds?
Mr. Speaker, coming from the hon. the Leader of the Opposition, I think that that is the most blatant admission of a deficiency in the policy of his party. When a man, because of defects in his own policy, wants to hide behind alleged defects in another man’s policy, then that is the most blatant admission of his own defects. I am saying “alleged defects in another man’s policy”. They cannot go on in that way. They cannot want to introduce a “crash programme” and train the people for skilled and semiskilled labour and then on the other hand attack the National Party, as they did during the recent election, on every school which it is building. I do not hear one hon. member on that side of the House denying this. They cannot deny this because it is true. They cannot conserve labour peace by setting limits. They cannot say to a man that he cannot occupy a position because his skin is black. They cannot, as they propose, conduct a corporation to a specific point and then want to stop there without knowing where they must go with those people. They will create a frustrated and militant black labour force with this pattern which they are proposing.
If they cannot avoid that, they will come into conflict with a way of life which has lasted for 300 years in this country of South Africa. Then they will be rejected. Strikes will follow; protest marches will follow; riots will follow; bloodshed will follow. What I am saying is not far-fetched. This has been proved throughout the world. Africa is proof of this. World history is proof of this. That is what they want to do to our economy. Hon. members on that side of the House are arguing as if they were dealing with the Bantu of 30 and 40 years ago. They are, however, no longer the Bantu of to-day. They are not taking into account the Bantu of ten or 20 years or more from to-day. If they were to come into power to-day and were to introduce that policy immediately and the Whites were to accept if, things may perhaps go very well for two or three years. But then they will experience the inevitable set-back because they do not want to take the unalterable fact of race into account. In this programme which that side of the House is advocating, they are not taking into account the pattern of Africa of ten or 20 years ago. They are not taking into account the lessons of world history over the centuries. They are proposing a “crash programme” to solve our labour situation. Did the hon. the Leader of the Opposition, when he announced this “crash programme”, think of what the at-tidue of the black man will be, and how he will accept it? Did the hon. member think of the elements which will be in operation? Did he think of the possibility of the “crash” which is going to follow upon the introduction of the “crash programme”?
We then come to the United Party and multi-nationality. Multi-nationality goes with this. I have indicated this clearly. We know from experience how delicate the situation is where one has to deal with groups, even language groups, alongside of each other. We all know how carefully that has to be handled. How much more carefully must we not act therefore when we are dealing with white and black elements that, for all practical purposes, are unassimilable. We all know how easy it is for those irresponsible persons who want to do so, to exploit race feelings. That is why, when one looks at this situation and one thinks of labour peace, then one’s endeavour must be to carry reasonableness into effect on both sides, and the man who must do that, is the man who has the authority of the State in his hands, i.e. us. We must therefore carry reasonableness into effect on both sides. But in addition to that we must bear in mind that we cannot carry reasonableness into effect to a point where it leads to one’s own self-destruction. It would be a fool who out of courtesy, out of humanity, would give his salary to his neighbour who was in difficulties while his own wife and children had to go to bed without food. That far one cannot carry reasonableness into effect. There is a law of nature which cannot be destroyed—the law of self-preservation. But even when you are striving for self-preservation, you must aim at reasonableness. I now want to subject the policy of the United Party to a test, and I shall subject the policy of the National Party to the same test. Suppose the roles of Whites and non-Whites in South Africa were reversed to-morrow and the authority of the State was no longer in the hands of the Whites, but in the hands of the non-Whites. That is not such a fantastic supposition, Mr. Speaker. After all, this has happened throughout the world—in fact, it has always happened where a more developed minority tried to govern over a less developed majority and thought that it was going to govern for all time. The supposition is therefore not so fantastic. Suppose, for argument’s sake, the black man were to come into power and said to the white man that he was going to measure him with the same yardstick with which the white man wanted to measure him. Suppose he says to the white man that he will give him, that is the white man, eight Bantu representatives in his Parliament—eight nominated Bantu. Will the Whites accept that? Will it be acceptable to the Opposition? And if it is not acceptable to them, their policy is immoral. They are the people who are declaring everywhere that the National Party has an immoral and unethical policy. But let us subject the policy of the National Party to the same test. Suppose the black man came to power and he came to me as a white man and said: “Look, what you tried to establish for me there, what you wanted to do with me, i.e. separate development with an historically traditional homeland, paying me out for any losses which I might have suffered, I grant you as well” then I would say: “Thank you very much; that policy is to my mind the right one”.
A what part of the national income …
What part of the country belongs to that hon. member if the black man is governing South Africa? It is of no avail his coming forward with such a futile question. What part of the country is his if the black man is governing the country and has the authority of the State, the military authority, the police and our administration of justice in his hands? I find moral justification for the standpoint of the National Party, and I see only immorality in the standpoint of the United Party. They can also carry it through to the Coloureds as well, our policy and their policy. In any case, with such an immoral policy they want to build a labour force in this country which must maintain the economy in South Africa. That is the “pipe dream” of which the hon. member for Paarl spoke.
The hon. the Minister of Finance made a very fine appeal here, an appeal which each one of us must wholeheartedly endorse, and that is that we can to a large extent alleviate our problem by everyone pulling his full weight. We know this, each one of us deep in our hearts, that this is true. But what did the hon. die Leader of the Opposition do when he had a golden opportunity to grip the imagination of the people by taking the call to action of the Minister of Finance further? He made a speech before the Cape Chamber of Commerce, from which I should have liked to have quoted longer sections. He complained about discrimination and restrictions in the present pattern. He complained about it in four different paragraphs in the report of his speech, about discriminating laws and restrictions. Then he went on to say—
This is how he wants to preserve labour peace. Then he goes on to say—
So he continued in the same vein. He wants us to stop thinking in terms of 3½ million people. The hon. member for Paarl referred to that, and I want to take it further. This entire speech by the hon. the Leader of the Opposition, as it was reported here, proves that his party is thinking in terms of 3½ million Whites with enough non-Whites at their disposal around every corner to develop peacefully, quietly and in a quite good-natured way an economy for those 3½ million Whites which will be one of the ten greatest in the world. That is as the hon. the Leader of the Opposition was reported, and if he was incorrectly reported, then I regret that I am interpreting him incorrectly. If we want to think on a big scale in this country, we as Whites must in the first place think of a white nation which has to decide: “I will make my country, through my own manpower, however humble or ex-halted. one of the ten greatest in the world.” And that is not a fantastic expectation. It is already being done elsewhere in the world; I can mention examples of where an inspired nation stated that it was through its own labour force going to save its people.
I am aware that during a Budget debate hon. members of this House stray away from the subject to be debated and a great deal of latitude is allowed in that respect. I am surprised, however, that the hon. the Deputy Minister of Finance and of Economic Affairs, whose duties are connected with budgetary subjects like finance and economic affairs, should have spent the whole of his time on a political diatribe in regard to the danger of introducing or increasing the part which non-Whites can play.
Are you afraid again?
I would have expected from an hon. Deputy Minister of Finance something more constructive. We on this side of the House have more confidence in the white population of this country so to manage their affairs that the resources of this country by way of non-white labour can be put to better use. Mr. Speaker, as a new member of this House one of the things which has struck me most forcibly during this Budget debate as far as the speeches made from the other side of the House are concerned, including the speech made by the hon. the Minister and of course the speech made by his Deputy, is the lack of clear definition of what the financial and economic Objectives of the Government are …
You formulate them.
… and how this Budget is designed to meet those so-called objectives which have not been defined! All we have had is an identification of six of the problem areas in our economy, five of which, I would say, are merely symptoms of other problems, but the sixth is a problem, namely the agricultural problem. I get the impression that we are still waiting for the report of the Franzsen Commission to finalize economic objectives in this country. I think that would be a great pity, because what we need above all is clear and positive leadership in financial and economic matters. To me there is one objective in financial and economic matters and one objective only, and that is to create a situation where you can have the highest possible standard of living for all of your population, a standard of living which can be enjoyed now and be sustained in the future; and to get to that position one must have economic growth at the highest possible rate. Any elements in the situation which inhibit economic growth—and we have had a very clear indication of some of the Government’s ideas of elements which will inhibit economic growth from the hon. the Deputy Minister of Finance —must be measured in terms of their economic cost. I consider that it is a prime function of this side of the House to examine all factors which retard the economic growth of our country and accordingly lower the potential standards of living of our people and lower our potential for gaining wealth. To me, Sir, this Budget is simply an exercise to raise the necessary funds to cover the country’s requirements as far as the Revenue and Loan Accounts are concerned. In the process the hon. the Minister of Finance has identified these six problem areas and is attempting to devise measures that will alleviate these problems. To me, Sir, this attempt is bound to fail because the forces that cause these problems are confiding forces and the measures that the hon. the Minister of Finance has devised to solve them are necessarily compromises, and compromises will not solve our present difficulties. What is required, as all speakers on this side of the House have already said, is a realistic approach to the labour problem so that we can effectively have sufficient labour for our economic needs.
I would like to deal with three of the problem areas that the hon. the Minister of Finance has identified, but I will deal with them in an inverted order to what he did in his Budget speech because I feel that the order that I have chosen is the order of priorities. The first problem is that of inflation, i.e. rising prices, prices which have been rising at an accelerated rate in the last few months and even in the last few weeks. The hon. the Minister, in his Budget speech, did recognize that one element which causes inflation is cost inflation, cost inflation caused primarily by a shortage of labour and the pressure of the shortage of labour on wages, but he tended to place emphasis on demand inflation, that is, an excessive demand in comparison with the available supply of goods and services, as being the main cause of our inflationary condition, and certainly all of his tax proposals in this Budget indicate that that is his thinking because there is no tax proposal in this Budget which deals with cost inflation. I concede that there is an element of demand inflation in this situation, but I maintain that that element is a minor compared to the strength of the cost inflation in our present situation. It is the shortage of labour that is pushing up wages; it is wages that are pushing up costs and it is costs that are pushing up prices. I think that even if measures to reduce demand are taken, they will have no effect on prices and inflation because that element of cost inflation is so strong. I would go so far as to say that if you are going to use a reduction in demand, which is the hon. the Minister’s thinking, as your means of fighting inflation, you would have to take such drastic steps that you would induce a position in your economy, that would be harmful to it and to its future prospects of growth and might even induce recessionary conditions. In these circumstances, Sir, I think that the proposals in regard to increased sales taxes and the increased loan levy are in themselves inflationary and not deflationary. Even if they were deflationary, which I do not admit, their deflationary effect would be nullified by the hon. the Minister’s foreign loan programme which is going to pump into the economy more cash than it would be taking out of it by way of increased sales tax and loan levy. In practice the loan levy, even though it does not apply to lower paid workers, is going to have the effect of making take-home incomes smaller and it will as such increase the pressure from salary receivers for higher wages. In the present climate of the labour market, employers will find this pressure very difficult to resist. Similarly, the increase in sales tax, even though it is primarily directed at less essential items, will increase the cost of living and add fuel to the pressure for higher wages. This is the Government’s dilemma. Until the labour problem is tackled and tackled effectively, the ordinary fiscal measures for controlling inflation simply do not work. I would even go so far as to say that in the prevailing circumstances a reduction in taxation, much rather than an increase, which will admittedly put more money into circulation for spending, would be a more effective step to combat inflation than the steps which have been taken. It would have the effect of relieving the pressure on incomes.
Finally, on the question of inflation, I would like to say that I feel the hon. the Minister’s proposal to put a sales tax on office machinery is a bad step in principle. It is a step which will have a direct influence on businessmen’s costs and as such it is directly inflationary. I find this step quite inexplicable, because on the one hand we have the hon. the Deputy Minister of Bantu Administration and Development proposing steps which are going to reduce the supply of office workers while, on the other hand, the other arm of the Government—which apparently does not know what the other arm is doing—is proposing to increase the costs for office machinery. This will make the means to be more efficient for the reduced number of workers more expensive. Each of these steps by itself, is a bad step, but the two steps put together make absolute nonsense.
The second problem area which I would like to speak about is the decline in the rate of expansion of investment in fixed capital by the private sector. This is a decline which has changed from being a decline in the rate of expansion to an absolute decline in the first quarter of 1970. I regard this position as being a very serious one, because it reflects the inability and/or the unwillingness of the private sector which after all, is the largest section of our economy to make provision for the future and for the future growth of the economy. How are we going to produce more goods to-morrow if we do not make the provision in the form of capacity to-day? A measure of the seriousness of this problem is that between 1966 and 1969 the gross domestic product at current prices rose by 44 per cent, but investment by the private sector, also at current prices, only rose by 23 per cent. In other words, the provision for an increased capacity was rising at half the pace that production itself was rising. Even more serious in this picture is the fact that the investment by one of the most important subsectors of the private sector, namely manufacturing and construction, a subsector which is so important that it is bigger than mining and agriculure put togethtr, during this same period actually showed a decline of 15 per cent. That is a serious position, particularly as this is a sector that we on this side of the House, and I am sure also hon. members on that side of the House, are looking to as being a prime means of developing our export trade in the future. How can you possibly develop that export trade through that sector if that sector is not equipping itself even to provide for the expanding domestic market? This state of affairs also makes nonsense of the export incentives in this Budget. What are the reasons for this position? One can advance any number of theoretical reasons about which one can argue ad infinitum, but we are fortunate in that there has been a recent survey by the Bureau of Economic Research of the University of Stellenbosch into the investment intentions of the private sector and their conclusions as to why manufacturers, or the private sector generally, was not investing, are contained in this summary. It is a fact that more than half of the collaborators indicated that they would like to increase their investment but that, and I quote, “mainly as a result of shortages of skilled and semi-skilled labour has not been able to do so. The Government’s labour policy and the provisions of the Physical Planning Act, which both have an effect on the availability of labour, are also indicated as restrictive factors, although the effects are clearly deemed to be considerably smaller. If the above-mentioned and other factors are considered in their true perspective it would appear to the authors that labour shortages are the largest single obstacle which will in all probability make it difficult for the private sector to achieve the proposed level of investment without causing other serious problems such as inflation”. The other factors mentioned in the report were the shortage of capital and high interest rate on capital.
I think that the provisions made in this Budget in regard to investments allowances will go a small way to helping manufacturers invest more in plant, etc., if those manufacturers were finding capital too expensive. They will go no part of the way if the reason for non-investment was that either the manufacturer could not find the capital or, more important, that the manufacturer could not find the labour to run the factory. This shortage of labour and the uncertainties with which manufacturers are faced on account of the various measures which they have to solve before they can expand, are working against their expanding their capacities. If we need any further evidence on this subject, it was provided by a recent survey undertaken by the Cape Chamber of Industries, into the employment position in the Western Cape. It was undertaken earlier this year. I think they reported in May. They reported that there was an actual shortage of labour in existing factories of over 9,000 people over all grades of work. Mr. Speaker, how can one possibly expect manufacturers to expand their capacity when they cannot even fulfil their existing capacity?
I think the one ray of hope that I found in the Budget was when the hon. the Minister of Finance used the double negative. He said—
I hope that is a meaningful phrase in his speech, but I must say that, having been connected for quite a long part of my life with company reports, whenever the double negative is used, I know that it is a means for keeping one’s lines of retreat wide open.
The third and final problem area to which the hon. the Minister referred in his Budget speech, and to which I want to refer, is the sluggishness of domestic savings, and particularly personal savings. This has happened at a time when real incomes have been rising and at a time when one would have expected the propensity and the ability to save also to rise. But what has in actual fact happened, is that between 1966 and 1969—I am referring to the same dates again—the proportion of current personal income which had been saved, has fallen from 10.3 per cent to 7.5 per cent In other words, more than a quarter of the amount of people’s incomes which they saved four years ago they are no longer saving. This again I regard as a very serious position. In looking for the reason for this, I think that it is no coincidence that over the same period, 1966-1969, the proportion of current personal incomes which was absorbed by direct and indirect taxation, rose from 15 per cent to 17½ per cent. In other words, more taxation nearly balanced less saving. I think that there is clear evidence that the decline of savings is caused, firstly, by the increase in the proportion of taxation, which clearly inhibits the ability to save; and, secondly, by the psychological reactions to saving which are induced by inflation. Inflation always makes people want to spend now rather than to-morrow, because prices are going up and discourages them from saving, because the value of then-savings is likely to fall with the depreciation of money.
This side of the House welcomes the hon. the Minister’s decision to free interest rates; not only will this have the effect of letting interest rates find their own level and therefore channelling capital into the uses where it is most productive, but it will also allow borrowers to compete for money, which I hope will mean that they will induce people to save more. Apart from that step taken by the hon. the Minister I find no other statement that is likely to improve the savings position. The fact that there has been no fax concession—in fact there have been tax increases—will not improve the public’s ability to save. The fact that inflation has not been properly tackled, and I regard the Budget as an inflationary Budget, certainly will not produce the psychological climate to encourage savings.
There is just one final point I should like to mention. I am surprised that the hon. the Minister or the Government for that matter, has not used its powers under the Hire-Purchase Act to divert money from being spent on durable goods to being saved. I would have thought that a measure to increase the amount of deposits paid, on a selective basis, for durable goods, would have had a double effect, both prongs of which would have been desirable. It would have had the effect of slowing down expenditure on durables with the possibility of that money being diverted into savings. It would also have had the effect of reducing the pressure on the capital market by the hire-purchase houses. I would commend the thought of using the Hire-Purchase Act to the Government and to the hon. the Minister in these circumstances.
Mr. Speaker, the Opposition has two difficulties, but basically they are the same. The difficulty is that they have no basic construction on which they can establish a sound financial policy. The hon. member who has just resumed his seat, asked this question, “What are the objectives of the Minister, his financial and economic objectives?” It did not astonish me to hear the hon. member asking that question. It must trouble them. I think he himself has investigated the position and asked himself this question: What are our financial and economic objectives?
To us this is an easy question to answer. I am going to do so straight away. Our financial and economic objectives are, in the first place, to build, by way of our financial mechanism in South Africa, the greatest measure of stability into our structure of government itself. In the second place, we are keeping an eye on certain decisive factors which are at work in our country and from which we cannot divorce our financial and economic policy. In listening to hon. members on the other side of the House when they are talking about growth and the fact that more and more labourers have to be brought into the country, I find that they are contradicting every economic philosopher in the world. There is not one single Western country in the world which permits unbridled and undisciplined growth. Not once did I hear any of those hon. members referring to disciplined growth. Do those hon. members want our country to develop further in an undisciplined way? I know maize. I know about maize stalks and maize plants which grow in an undisciplined manner and which do not produce maize cobs. It is a plant which has grown to a height of between 14 and 16 feet, and which has nothing but an ear at the top—no more. The major determinants which are fundamental to our whole economic policy, are that we in South Africa must have regard to the closely interwoven character of the political, economic and social facets of the present composition of our population. If we do not have regard to those facets, we cannot cause any financial policy or any financial mechanism in the Republic of South Africa to develop to the maximum benefit of our structure of government. This is basic. This is our objective, i.e. the greatest measure of stability. We do not only want the greatest measure of stability, but also a sustained growth rate, subject to sound and judicious disciplining, which includes justice to everybody who is economically active in south Africa. These are our objectives.
This Budget is, therefore, not a Bantu homeland development budget. This Budget is definitely not that. I do not read that into it. Those hon. members who are so fond of drawing our attention to the fact that our Budget is motivated ideologically and that our budgetary and our financial policies are founded on ideology, must prepare themselves. I may be wrong in this prediction, but I predict that if we were to appropriate, let us say, R50 million for Bantu homeland development next year, they would be the first people to attack us for doing so. I do not want to make wild predictions, but I say that although this Budget is not a Bantu homeland development budget, we shall be committed to the objectives of our financial policy and of our economic policy. As the. hon. gentleman wants js to put it, so we shall be committed in future to establish infrastructures away from our metropolitan areas, close to or inside our homelands. This is a necessity. Whereas this Budget did not make provision for that, as we expected it to do. this will in fact have to be done by our budgets in future.
All the Western countries are following this trend at present. It is a trend in America and in Europe to get away from major metropolitan infrastructures and to build them elsewhere, as it is a frightfully expensive operation to build infrastructures and constructions on an infrastructure which is overloaded already. It costs thousands of rands per labourer. I do not know whether those hon. members would regard this as Bantu homeland expenditure. I shall not regard any sums of money made available for this purpose in the future, as being sums of money made available for such Bantu homeland development. I shall regard it as forming an integral part of the sensible decentralization of infrastructures which would inevitably have had to take place, irrespective of whether we had Bantu homeland development or not. The hon. Opposition will therefore have to prepare themselves for the fact that, having regard to our ultimate objective of making provision for our policy of separate development —and I am stating this frankly—of making provision for the evolution of our pattern of separate development, we shall have to make provision in the future for increased expenditure.
It is therefore not a budget founded on ideology, as the hon. member for Parktown said at the beginning of his budget speech. Can hon. members mention to me any Western country in the world, except Japan, which has had such phenomenal economic growth over the past 10 years as South Africa has had? Except for Japan there is no other Western country which has had such a revolutionary development in the economic and industrial spheres as has been the case in South Africa. What is inherent in such a phenomenal development? Labour shortages and capital shortages are interwoven into such a phenomenal growth. These are concomitant factors in any country which has such a phenomenal growth. Hon. members on that side of the House have referred to growth, without specifying what they mean by it. Growth without any disciplinary measures for regulating and channelling that growth to the benefit and in the interests of a stable economic development, will lead to chaos. No responsible Government wants growth without taking the necessary measures for causing that growth to retain its necessary balance. Especially in our country a responsible Government has to have regard to the balance between the political and economic forces which may develop out of such growth.
It is very naive of the Opposition to concentrate on growth only. No financial mechanism can eventually cope with the economic tension which will result in the capital construction if that financial mechanism is not subject to disciplinary measures. From time to time it is necessary to amend those disciplinary measures. They have to be adapted to the circumstances as they change from time to time. Every responsible government selects its priorities in accordance with the decisive factors which are valid or carry weight during that period. As the Opposition are incapable of foreseeing decisive factors, and as they are not aware of the necessity of disciplinary measures in the financial mechanism, and as they are incapable of making provision for dealing distinctively with our distinctive problems in the Republic of South Africa, they have no priorities. However, this Government works with priorities. Our priorities are based on what we regard from time to time as being the most significant factors having a bearing on our economic growth.
What is our first priority in this regard? It is to counteract inflation. This inflationary condition causes concern. It has a rate of 4 per cent. What is also important, however, is that it is not merely an income inflation. It is a demand inflation, as the increase in expenditure is higher than the increase in the real national product. In this Budget measures are being taken against this demand inflation. Over and above the fact that it is a demand inflation, it is also an income inflation, because the active part of our population want to enforce such adjustments as far as their financial income is concerned, that the financial income of the economically active part of our population showed a more rapid per capita increase than did the per capita productivity. To my mind this is where one of our greatest dilemmas in the decade of 1970 is to be found. The effort that was made by the hon. the Minister by widening the channels for funds flowing to the university institutions, the concessions he made for the replacement and acquisition of equipment; and the fact that he paved the way for greater technological and scientific improvements in the production machine and the increased organizational efficiency which resulted from those improvements, are to my mind fundamental to the long-term objectives which have been built into this Budget. So far I have not heard one member of the Opposition trying to defend, or calling attention to the defects in, these basic points.
This inflationary condition also causes concern because it is to a large extent attributable to the tremendous confidence which prevails in South Africa. I want to remind hon. members of the fact that this country had high liquidity in 1961. Low rates of interest prevailed. However, the expenditure was not as high as it is to-day. Political events in the world gave rise to a measure of uncertainty and a lack of confidence in our country. However, great confidence prevails at the moment, and this confidence is based on stability. Our Government has built this stability into our whole mechanism of government. The people are now making use of and spending capital which is available. Therefore, this inflation has actually been fathered by the great confidence which this Government has created in South Africa. If only the U.P. came into power tomorrow, there would be no inflation; nobody would spend. But that we can never allow. I would rather eat a plateful of porridge every morning than put the U.P. in power. The fact simply remains that, potentially, high liquidity is always inflationary. Nobody can argue that away. Inflationary financing is a tremendous temptation in the form of the excessive creation of credit or activation of existing liquid means. And that is what happened here. This excessive confidence, this optimism in South Africa, created a temptation, a major temptation, for some of our people. Let me also rap the authorities over the knuckles at this stage. To my mind the R167 million which the authorities borrowed from banking institutions on a credit basis last year, was an inflationary step. The authorities should rather raise their money by way of long-term loans or by imposing taxes. But I forgive the authorities. Loans could not be obtained, as the scarcity of capital abroad is greater than the scarcity in our country. That is why I forgive them. But I do not see that written into this Budget either. The authorities did not make provision for that in this Budget. That is an anti-inflationary effort in itself. Nor would the period of inflation in which we find ourselves at present, have been as grave, if it had not been for high rates of interest, grey market activities and the velocity of circulation of money obtaining in the country at the moment. We were unable to obtain the necessary amount of money which should have been put into circulation as a counterbalance against those factors—such funds were not available. What did the Government do then? The Minister decided to link two things together; he took monetary measures and he took certain fiscal measures and linked the two together. The lifting of the controls on deposit rates and the subsidization of interest imply an attempt on the part of the Minister at removing one of the major causes of strains within our capital structure. And then the hon. member wants to know from me what the Government has done in this Budget towards relieving the strain. The third form of inflation, i.e. monetary inflation, lies at the root of this kind of strain to which I am referring now. This is caused by the excessive creation of credit and the excessive activation of our liquid assets based on sound financial considerations. The lifting of the controls on deposit rates, the subsidization of imports, house owners, the encouragement given to exporters, the whole process of capital modernization which has been built into our Budget, was a blast of buckshot fired by the Minister in order to discipline those who are the actual culprits and, at the same time, to protect those who would have been the actual victims of that process. The disciplinary measures for subjecting to self-discipline the grey market peddlars and the prestige-conscious and debt-ridden inhabitants of smart residential areas, are worthy of praise; they have been built into this Budget. The supporters of unsound financing methods have to pay for these things themselves. I notice that the Government has drawn up its programme in such a way that there will be a 14 per cent increase in Government expenditure. I hope and trust that the Government will succeed in implementing that programme. However, that will depend on whether the Government is going to succeed in obtaining the money on the local stock market and on whether it has sufficient labour available for that purpose. I do not wish to elaborate now on these short-term anti-inflationary measures. As far as this matter is concerned, the Press, the radio, economic philosophers and the politicians have already covered the field more than adequately and trampled it to dust.
Now I want to say a few words about our long-term measures. In regard to our long-term measures which must be built into this Budget for the future, for the sake of stability and relieving strain and for the sake of the greatest measure of justice, I want to state frankly that the Minister came forward with a dynamic leit-motiv. This is implied in the fact that the Minister has made provision for technological and educational improvement. As I have already said, he has widened the channels for the flow of funds, for economic growth does not only mean the number of labourers one brings into the country. I wish the hon. member for Parktown would learn this lesson now. What counts, is not the number of labourers. The point at issue here is, first and foremost, better instruments, better instruments of production in the hands of better labourers. Basically growth is bound by these things. [Interjection.] Does the hon. member for Parktown say that I am right? I am very glad. I see he is listening attentively. During recent years this investment in better human capital, in better labourers and in technological improvement has come strongly to the fore in the economic thinking. I want to quote here what Edward Dennison’s findings were in America. I am going to quote from an article by Dr. S. J. Terblanche, ‘The Relative Contribution of Tangible and Human Capital Formation.” What he has to say here, is illuminating. He says—
This is very important, and I think it may as well serve as a reply to the hon. member for Parktown and to that hon. member who spoke a moment ago and who referred to nothing but “bringing in labourers”. According to the same calculations the per capita increase in productivity over that period from 1927 to 1957 was only 2.3 per cent. It is important to note here that the increase in capital per worker was responsible for 13 per cent, educational improvement for 30 per cent, the effect of shorter working hours for 13 per cent and, as they phrase it, “the advance in knowledge” for 44 per cent. I cannot give the Opposition, with this slogan of theirs of labour shortages and more and more manpower, a better reply than this man did.
In this Budget the hon. the Minister placed a premium on human capital formation. I maintain that the fruits of educational and scientific advance are going to toe one of the primary determinants for our future economic growth. In this Budget the hon. the Minister encouraged all the entrepreneurs to conquer; he did not muzzle them. He encouraged the manufacturers and the exporters to manufacture and to exploit new markets. He protected producers against the disturbing strains on the capital market. The ordinary citizenry was given protection against the undisciplinedness of usurers and the usual concomitant phenomena of a growing economy such as we are experiencing in South Africa. The Minister did not muzzle the forces of creative destruction. Do away with what is old; do away with what is obsolete and technologically no longer fit for the task; the machine or instrument, the implement, the instrument of production; replace it! That is what the hon. the Minister built into this Budget.
Many powers vest in the hands of the Minister to-day; he can take various measures; he can apply debt control; he can introduce higher rates of interest; he can introduce higher liquidity requirements within the framework of restrictive credit provision by all banking institutions; he can introduce higher taxes and savings levies; he can curb State expenditure. The Minister can cause all these things to penetrate to inflation. But I want to say this: In spite of all these measures and all these powers which the Minister has, I did not discover anywhere in these Budget proposals that, in order to cope with temporary and exceptional circumstances, he had used supplementary measures as substitutes for his fiscal and his monetary measures.
Although this Budget is not a perfection of all the stabilization methods, it is not a Budget which is concentrated on saving an economy which is on the verge of ruin, either. It is an economy which, as far as its political leadership is concerned, is stronger and more stable than any other economy in the world. As regards is natural resources which are waiting to be exploited and as regards the built-in objectives of its political, social and economic future projection, it is in a stronger position than is the case with any other economy. Sir, nor did the Minister neglect our military-economic development and our social reinforcement. I do not know whether we shall manage next time to achieve what we want to achieve without making use of certain drastic technocratic measures within the framework of our Budget. In this Budget there is no reference to that; it is a Budget of equanimity. [Time expired.]
Sir, I have listened with great interest to the remarks of the hon. member for Carletonville. He has spoken a great deal about such filings as infrastructure and growth and priorities. I shall not follow him into the details of what he has said, because I myself shall be speaking about these things in a slightly different context. But, Sir, I cannot forbear to draw attention to a new concept in economics which he has introduced. I think I have it right; I wrote it down very carefully when he said it. He said: “Inflation in South Africa is a child of the growth of confidence in the Nationalist Party.” Sir, this phrase, inscribed in gold, I commend to the hon. the Minister and his advisers. I have not been able to figure it out myself, but I am quite sure that locked up in this sentence lies some very deep truth!
Sir, I wish to go on to deal with a problem which I consider to be a very grave one. I want to draw attention to the situation in our balance of trade. This is a problem which has hitherto been ignored by the outside critics of the Budget and to some extent in this House. It is certainly a matter which in his Budget speech the hon. the Minister treated with some equanimity. In fact, one was reminded of the attitude of Admiral Nelson in the face of danger when, as the rhyme went, “He clapped his glass to his sightless eye and I am damned if I see it’, he said.”
Sir, the balance of trade is a vital factor in the economy of this country. The hon. the Minister stated in his speech, and I quote:
He said that the current deficit for the year exceeded R460 million. The hon. the Minister seems to show no sense of urgency. He said, and I quote again:
Obviously it cannot; and his was the euphemism of the year. The calmness of the hon. the Minister is apparently based on the fact that our reserves dropped by only R160 million. This was somewhat fortuitous, because the reduction from R460 million to R160 million was very largely due to a capital inflow which was not directly connected with the trade balance: and partly by virtue of a fortuitous revaluation of the German mark. This again is not something that happens every year. The aotual position is that the balance of payment shows a deficit which is equal to nearly 50 per cent of our total reserves. Our total reserves in this country of gold and foreign currencies are of the order of R1,000 million. Nearly a half of this was lost by way of the balance of trade in the course of this year. This is most alarming. There were some mild references in the Budget speech to such consolations as the building up of inventories, the effect of climate on our agricultural exports and the pull of local demand.
What about the future? What fundamental change can we expect? Is there any reason to hope that the pull of local demand will decrease in the future years? The hon. the Minister said that export markets looked a little more promising than a few months ago. Surely, this is an ephemeral situation. We are very much aware, for example, that there is a possibility that Britain might join the Common Market, and that that will have a very severe impact upon our exports from the South Western Cape. He gives us very cold comfort in a critical situation.
Traditionally South Africa has always had an unfavourable trade balance. We have always had a shortfall of commodity exports as against imports of merchandise. Until 1963 the value of gold production not only bridged this gap year by year, but provided a steady surplus as well. What is important is that since 1964 this situation in South Africa has undergone a fundamental change. It is not that gold production has declined, a question to which I will refer in due course, but that the value of gold production in relation to imports has steadily decreased. Up to 1963 our gold production paid for well over half of our imports. Together with the exports of our produce and other merchandise it created a healthy surplus. But since 1967 gold has been paying less than 30 per cent of our import bill, of our visible imports plus our invisible imports, and the percentage is still descending.
Quite recently Dr. Rousseau, a distinguished economist and chairman of Sasol and of Federale Volksbeleggings, told the Afrikaanse Han-delsinstituut that in 1969 our trade deficit, excluding gold, was R7I0 million. He predicted a deficit of R1.000 million by 1975 and R1.300 million by the year 1980. In fact, the situation is much more alarming than that. Dr. Rousseau in his calculation did not take account of invisibles. If invisibles were added and gold excluded for the purpose of this argument, the deficit of R1,000 million was already reached in 1969. The deficit of R1,300 million which he predicted for 1980 was in fact reached in 1970.
What is the hon. the Minister doing about this trend? It has been running since 1964, but the hon. the Minister says that it causes no concern for the present. We on this side of the House are very concerned about this. Let us look at 1970. In the first five months of 1970 South African exports, at R651 million, increased by only 2 per cent over the same period of the previous year, while our imports in the first five months of this year,; at R992 million, showed an increase of 21 per cent. The gap is widening every day. We are offered a mild soporific in the comment about unfavourable weather conditions, but we are going to get unfavourable conditions every year and they are going to get worse. In fact a great gale is beginning to blow through this gap in our export/import balance.
Our traditional trading pattern has ended and we are now in a new era. We will soon be reaching a crossroads where our exports must be very substantially increased or our internal consumption must be cut down to drastic levels of austerity. This is the situation we now face. We are either going to make a very substantial and undreamt-of increase in our exports or we are going to cut our internal consumption to drastic levels of austerity. The Stock Exchange is not such a bad barometer. It has seen the approaching crisis and this is part of the explanation for its present decline.
Let us now consider the possibilities of gold as a cushion for the future. Gold is still undoubtedly the largest industry in South Africa and is easily the biggest earner of foreign currency. There are still substantial reserves of gold underground, but the threat of growing inflation on working costs has the effect that the lower grade mines are steadily becoming uneconomic and that some gold-bearing ores are increasingly being abandoned underground as permanently irrecoverable. The mines are now working the higher grade ores and are in fact not producing a great deal of the gold that is part of our natural reserves. Some mines will in fact continue beyond the year 2000, but with the 1969 production of: R847 million the industry has in fact reached its peak. This amount of R847 million includes the production of gold, uranium, as well as sulphuric acid from pyrites. The gold-mining industry is likely to remain at this level for another five to ten years. After this it is expected to decline fairly rapidly for a period of about 15 years, and thereafter to continue at a low level for a period extending beyond the year 2000. The fact is that the peak earnings for our balance of trade of R847 million cannot be counted on for more than another five to ten years.
It is often said that the situation may be changed by a rise in the price of gold, but we must be realistic about this. It is unlikely, if a rise in the price of gold takes place, that this rise will be so substantial as to make any major change in the pattern of production which I have indicated. It certainly is extremely unlikely that we will be able to increase the amount of gold produced annually. What it may well do is to make certain lower grades of gold more payable and in this way to extend the life of the gold-mining industry. The rate of earnings is, however, unlikely to be increased.
We must be realistic also about the other fact which I have mentioned, namely that the high production of gold will only continue for another five to ten years. At present values this production is still extremely important and makes a major contribution to our balance of payments, but it present growth and inflation rates its value in relation to our gross national product will steadily decrease and will by 1980 have dropped to only 3 per cent of our gross national product. This means that it will have a greatly reduced effect on our trade deficit and on our foreign currency earnings, even if it is maintained at the present level.
What are we to do, then? We have a steadily increasing import bill. Our exports are not rising as fast as they should. Our gold has reached peak level and can make no higher contribution; its relative importance is decreasing. So we seem to be in a serious dilemma.
Let us look at the possibilities of the manufacturing industry. Gold has certainly helped to create an infrastructure. It has helped us to produce electricity, engineering and many other supplementary skills as a basis for a manufacturing industry. But this White Paper which was issued with the Budget shows that our exports of manufactured articles were in 1963, seven years ago, R19.8 million. In 1969, six years later, they were R20.1 million. That is a change over six years from R19.8 million to R20.1 million.
In our industrial sector as a whole—I talk about the industrial manufacturing sector—the consumption of foreign exchange for the purposes of purchasing equipment and plant still exceeds the foreign exchange earnings for that sector by something like R500 million. There is no prospect that for the rest of this century, that is between 1970 and the year 2000, our manufacturing industry will take the place of gold as a means of closing our trade gap. It is completely and utterly out of the question.
Now, Sir, what is the solution? Well, there is a solution. As ever in South Africa, something always turns up. What has turned up is our base metals industry. We have here a combination of vast mineral resources, the skills of a well-developed mining industry and a ready market for trade. South Africa can, in fact, move into a commanding position as the supplier of the world’s rapidly increasing needs of strategic and industrial minerals.
I will mention just a few. Firstly, I want to mention platinum. We have reserves of over 60 million kilograms. At current prices, these are worth 60 per cent more than all our remaining gold reserves. Copper is our second most important export. It is at present earning R120 million a year. We have 80 per cent of the world’s chrome ore reserves. If refined to ferro-chrome, they would be worth R100,000 million. We are the world’s largest producer of manganese. We produced 60 million tons of coal in 1969 at a value of over R100 million. In 1969 we produced R104 million’s worth of diamonds. Nickel is capable of earnning R120 million a year when fully developed. We have fantastic mineral resources, Sir. Why then are we concerned about the balance of trade?
Well, South Africa is to maintain a growth rate of, shall we say, 6 per cent per annum, our mineral exports, including gold, must rise by at least 10 per cent per annum to cover our trade deficit. But since gold cannot rise, as I have shown, the burden rests purely on these base metals. At present, at to-day’s values, their production total is in value only 40 per cent of that of gold. If one relies on these base metals and accepts the fact that gold must be phased out of our economy, one must expect from the base metal industry a growth rate as high as 20 per cent per annum. This is certainly not being achieved. South Africa is not keeping pace in the rich minerals race which is taking place all over the world. Japanese imports of iron are increasing by 16 per cent each year, but South Africa’s share fell from R29.5 million in 1968 to R24.4 million in 1969. In the first three months of 1970 South Africa had a further drop of 18 per cent, compared with 1969. We have therefore heard with some gloom of the difficulties which were experienced during the recent negotiations with Japan.
There is a growing demand by the steel industry all over the world for coke. There is a severe long term shortage and coupled with this the pirces on the world markets are rising, but South Africa cannot supply those markets. We have the mineral resources, the necessary mining skills and there are rapidly growing markets. New exports are vitally necessary. Why then are we failing to expand?
Now we come to the nub, Sir. Our Railways, Harbours, and certain of our other public services—here I am thinking especially of telecommunications—are quite inadequate to deal with this new industry. Gold, a low volume export, must now be replaced by a high volume export. At present we cannot even get this year’s maize surplus to the coast. How then are we going to replace this high density export, gold, by the high volume exports which will now be produced by our mining industry? We need a complete reform. A fundamental change will have to take place in our future trading pattern and the whole infrastructure will have to be changed.
There is another point which is causing a great deal of concern in the base minerals industry. It is the question of concentration or refining. Refining is a process which is essential to enhance the value of our base metals, our ores. Refining serves two purposes. Firstly, it enhances the value of the product and, secondly it reduces the volume of the product. One therefore gains two advantages. The latter advantage is that if there is a shortage of railway and harbour facilities, refining decreases the volume of goods to be transported to the coast. The former is that this smaller volume can be sold at a higher price. One therefore gains both on volume and on foreign exchange. The problem is that rail tariffs are actively discouraging refining. The rail tariff structure in this country is such that the producers of base minerals are actively discouraged from incurring the high cost required to introduce refining into the industry. They are in fact being compelled to export those very crude ores which the Railways cannot carry because of their high bulk. This is why we are not exporting. This is why we are falling behind in the export race. This is why our trade gap is widening. We simply cannot transport these goods to the coast.
I shall mention two examples. The first is that of uranium. The transport cost of uranium concentrate, which is being refined, from Johannesburg to a ship in Durban harbour is at the moment higher than the cost of transporting the same load from Durban to the East Coast ports of America. This is what the rail tariffs do to us. There is another example, which is more serious. I refer now to our chrome reserves. We have 80 per cent of the world’s reserves here. In 1969 we exported 1,300,000 tons of chrome ore, to the value of R10 million. If this chrome had been exported as ferro-chrome, in other words, if it had been refined, it would have added a further R50 million’s worth to the income from those exports. Why was this not done? Apart from the greater earning in foreign currency of R60 million as against R10 million, it would have been possible to transport those goods to the coast far more easily, for the volume of the material would have been more than halved in the process.
What would have been the cost of refining it?
I am looking at the matter purely from the point of view of the foreign earnings. The cost of refining is high. If is in fact so high that unless rail tariffs are favourable, the whole operation becomes too marginal to be undertaken. The producers are willing to undertake the refining operations provided the rail tariffs are such that they can get this material to the coast. The rail tariffs are therefore costing South Africa many millions of rand in foreign exchange. They are in fact one of the main reasons why the base minerals industry is not more rapidly taking the place of the gold-mining industry as an earner of foreign exchange and as a means of closing this alarmingly widening trade gap.
To my mind the present situation simply makes no sense. We heard recently of a dispute over Saldanha and the harbour development at St. Croix. Iron exports are not the only mineral exports at stake. I have referred to some of the others which are clamouring for a means to get to the coast. We need both ports urgently. We need the port in Saldanha. We need the port in Port Elizabeth. We need the extended facilities. They will take some years to develop. I would say that if one looks at these figures and at the demand and if one talks to the producers who are willing to produce the goods and who would like to see their mineral exports earning money on foreign markets, there is a need to develop both harbours and to get both harbours ready as quickly as possible. Port Elizabeth could possibly be developed first as we can get it ready first. Thereafter we must get Saldanha Bay ready as quickly as possible, perhaps within the next five or six years. The demand and the need are urgent. Gold is declining. There is a large gap to be filled and this gap is getting wider all the time. In the present state of the South African economy it can only be filled by base minerals.
The hon. the Minister has said that his Budget is one of the factors that will shape the future of South Africa in the coming decade and that it will be an instrument for forging a greater South Africa, economically strong and resilient and ready to meet the challenge of the 1970s. It is doing nothing of the kind. In the vitally important context in which I have been speaking his Budget is completely overshadowed by some other Budgets, namely the Budget of the Minister of Transport and the Budget of the Minister of Posts and Telegraphs. These are the people who are creating the infrastructure, or rather failing to create the infrastructure, which is preventing South Africa from exporting its base minerals and thereby replacing gold by new commodities which are urgently needed if our economy is to survive as a viable international trading economy. We have heard from those hon. Ministers, who are not here now, that they are concerned with the annual profitability of the transport system and the profitability and the day to day running of the postal system These are important enough. Let us concede that. But there is something more important at stake now.
It is not the day to day profitability of the Post Office or of the Railways and Harbours that is alone at stake but the future prosperity of the whole South African economy. I say with the utmost urgency that our trade gap is widening. It will continue to widen as our economy grows. We are a country which still imports a great deal more than we export in the form of merchandise. We have been classically and traditionally fortunate in that we have had gold to fill this gap for us for many generations. This situation is now ending. It will not last for another ten years at the present level and it will certainly not last for another 20 years at half that level. It must be replaced because the gap is widening. As I have shown, the manufacturing industry cannot fill this gap. We do have another industry. We have the resources and the skills and there are the markets by means of which we can fill this gap.
We have the base minerals and we can produce them but we cannot get them to the coast. We cannot export them and get them abroad on competitive terms. It is essentially a question of infrastructure. I beg the hon. the Minister not to be complacent about his own Budget but to consider also the effect of the Budgets of his colleagues, which are in fact stopping South Africa from adjusting its economy in a way which is vital and urgent.
Mr. Speaker. I am pleased to see such a change in the wind on that side of the House this afternoon. I should like to congratulate the hon. member for Von Brandis on the good speech he made here this afternoon. We on this side of the House agree with a great deal that he said in connection with the refining of minerals and metals. We can discuss it, and I think the hon. the Minister will give it his attention. However his concern at the trade balance did not affect me greatly, as little as it will affect the hon. the Minister. An unfavourable trade balance cannot be corrected by increasing exports and curtailing local consumption. If one were now to judge this Budget before the House in an impartial manner, one would see that this has already been written into this Budget. That is the purpose of this Budget. The hon. member is also concerned about the vanishing gold assets. He also mentioned that there were many low-grade ores in the mines that could not be mined as a result of high production costs and the gold price. We have already discussed this on a previous occasion in this House and exchanged ideas about it. I should like to suggest to him that where he has the influence he should speak to the managements of the gold-mining companies and ask them not to take such considerable profits. He would do well to ask them to follow a “stretch-out” policy and to mix the low-grade ores with the high-grade ores, thereby extending the lives of the gold mines. This is something that is in the interests of the country. We should also like to see the Opposition co-operating in this connection. When speaking about this Budget there are certain facts we must acknowledge. I think the hon. Opposition agrees with us about the fact that the economy of our country has grown so rapidly in recent years that our sources of production have been totally engaged. We are actually shifting to over-engagement. Consequently inflation has once more raised its head. Both sides of the House admit that to-day inflation is a phenomenon in our country’s economy. It is an economic disease which, if it is not diagnosed and cured in time, could have serious economic consequences. The serious consequence of inflation is. of course, that the buying power of a monetary unit decreases. This entails that people with a fixed income can purchase less with their money. Because it is difficult to adjust to a lower standard of living there is less saving. In this White Paper we see that this year there was a R200 million decrease in personal saving on 1967. Another result of inflation is a manpower shortage. These are the two basic problems we are experiencing to-day. As a result of this manpower shortage excessive wages are sometimes demanded. The tendency is then to earn more money for less work. We must acknowledge that in certain occupations in our country wages are being paid that are out of all proportion to the work being done. It is a fact that the actual value of a monetary unit is not only measured against the gold coverage it has, but also against the work done in earning that monetary unit. The more work one does in earning a rand the more valuable the rand will be. It is an economic fact we must accept. Basically we are faced with the following problems in this country. On the one hand an attempt must be made to preserve the value of the rand. On the other hand it is only possible to preserve the value of the rand if no fewer than the following three steps are taken. The first is that spending should be restricted to necessities. Secondly, saving must be encouraged, and thirdly, sufficient manpower must be provided for. These are the three minimum requirements for combating inflation. This Budget must be seen against this background, and then we must determine whether the Minister has adopted the necessary fiscal and monetary measures to correct these deficiencies in our economy.
In the analysis of this Budget we notice immediately that when the Minister comes to the expenditure on the Revenue Account he tells us that the amount that is now being requested is the minimum for essential Government services. In other words, the budget is aimed at financing expenditure in a noninflationary way. By the way, one proof of this is that the tax increases in our budget amount to R95 million. But here there is the danger that if one is going to restrict a man’s buying power with taxation measures, with the full employment position we have in this country, this is going to give rise to demands for higher wages, which are again going to promote inflation. The Minister took very good account of this danger, because this Budget is particularly aimed at reaching the people in the higher-income groups. That is why a new and increased sales duty has been instituted on luxury goods and on the most expensive classes of motor-cars. It is perhaps of importance just to notice here that the amount spent on motor cars last year increased by 22 per cent, which in my opinion is altogether too high. In other words, the non-essential or the dolce vita goods are going to become considerably more expensive. Let us see what are the non-essential or dolce vita goods that are going to become more expensive. We see that the articles on which a purchase tax is going to be levied for the first time—and this at the high 25 per cent notch, include, inter alia, cameras, photographic equipment, projectors, outboard engines, telescopes, binoculars. watches and clocks. I personally cannot understand why these articles were not already included the previous year, because they are non-essential consumer goods. Articles on which a 10 per cent purchase tax is being levied include certain types of office equipment, motor cycles, mopeds and fire arms. These are goods that may be regarded as less essential. On other things the sales duty has been increased by five per cent, as we have already seen, and I cannot find fault with that. These measures have only one purpose and that is to restrict excessive spending on nonessential consumer goods, thereby bringing about saving.
But whereas demands have been made on the one hand, concessions have been made on the other, for which we are grateful and glad. Here we particularly have the following in mind: Firstly, that interest rates are now being allowed to find their own levels once more, which will result in larger interest being paid on deposits, and thereby we hope and believe that people will be encouraged to save more. But since certain groups in our society are vulnerable to the consequences of higher interest rates, for example farmers, home owners and exporters, it is gratifying to note that in this connection the Minister has accepted the principle of interest subsidies, which was also accepted by the Franzsen Commission. We welcome the subsidy of one per cent on house mortgage loans. For farmers there is a maximum subsidy of one per cent on mortgage bonds on farm property, which, I believe, is generally welcomed. But here I have a question I should like to put to the hon. the Minister for clarification. One type of farmer obtains his working capital with an ordinary overdraft because he is so solvent that a bank does not insist on a mortgage bond; another farmer also obtains his working capital with an overdraft, but the bank has placed a mortgage bond on his farm in order to guarantee the overdraft. There is not much difference between the solvency of those two farmers. I now want to ask the Minister whether the first farmer, who does not have a mortgage bond against his property, could also be entitled to that one per cent interest concession, or whether he would perhaps be given the opportunity of passing a mortgage bond against his property to cover that debt. The measures I have thus far mentioned could serve the purpose of restricting spending to essentials, of encouraging saving and of combating inflation. Inflation is our primary problem.
I should now like to say something in connection with our manpower shortage. It is perhaps the most ticklish or most difficult question we are faced with at present, but it must also be seen within the pattern of our race policy and our socio-economic problems which it can create. Here I want to say that the hon. member for Windhoek made a brilliant speech on this aspect of the matter this afternoon. I cannot improve on it; he placed it in such a true perspective that I think he even convinced the Opposition of this party’s true standpoint. The manpower shortage is a problem one simply cannot solve by just waving a magic wand. We welcome the Government’s efforts, not only in this Budget, where provision was made for improved facilities for higher education; we are also thinking of what the Government has done for vocational training and for apprentices. But we also want to sound the warning that it is no use having all the facilities in the world available, only to find that the manpower that is being trained is not being utilized properly. I read an interesting article that appeared in the Burger, “University training in South Africa carried to excess: Training poorly utilized”. In the article it was stated (translation) —
Mr. Speaker, it is a fact, and I think I am right in saying so, that in our country there is great deal of malutilization of our labour potential. Apart from the financial support given to the universities for the training of scientists and for the promotion of research, we must bear in mind that in other respects the Government has done a tremendous amount to solve the manpower problem. I just refer in passing to immigration, about which I do not want to say anything in this connection; other members will perhaps speak about this, but I should like to refer to the Government having considerably improved the system of apprentice training as a result of the amendments brought about in the 1963 Apprenticeship Act. Time does not allow me to do so, otherwise I could mention, Sir, what all those amendments embrace. But the Government also encouraged industries to revise training and apprenticeship periods with a view to keeping pace with modern requirements and techniques. As a result of this the period of apprenticeship in the building trades has already been decreased by a year, and apprentices in the engineering industry are paid an artisan’s wage in their 5th year. These figures are interesting: The number of individuals apprenticed annually has increased from 7,279 in 1964 to 9,473 in 1969. At the end of 1969 there were 35,961 registered apprentices as against 24,331 in 1964. This just shows what a tremendous amount has already been done in this connection. But I should also like to refer, in addition, to the improved facilities provided to our universities and technical colleges. The full-time and part-time white students at our universities increased from 31,500 in 1958 to 65,700 in 1968, while the full-time white students at the technical colleges and in the technical divisions of the vocational schools increased from 9,000 to 16,000. Sir, it is interesting to see how our university training compares with that of other countries. I have here a cutting from Tegrtiek, under the heading “New Productive Citizens”. It is Stated here (translation) —
This is what is being done by the Government to supplement the manpower shortage in our country. Opportunities are being created; facilities are being introduced, but for me the crux of the problem still remains the prevailing spirit in the country. Perhaps we also have to undergo a spiritual renewal, and here the Opposition could assist us by not just criticising all the time. There is no longer the desire to work, there is a spirit of recklessness and irresponsiblity in respect of work. It is to this that we may perhaps ascribe the large number of failures in the first year at university. Just think of the loss of manpower involved; or just think of the attitude of always wanting more money for less work, which is, when all is said and done, responsible for the five-day working week we are faced with to-day. Surely increased wages can only be justified if accompanied by increased production, and the more free time there is the greater is the opportunity for spending. I am told that the slogan of the German people after the Second World War was “We live in order to work”, in contrast to the other nations that said “We work in order to live”. There is a world of difference between these two approaches. The challenge of our time, the challenge of this decade in which we are living in the Republic, is that each person should work more and save more. That idea is inherent in the Budget which the hon. the Minister has put before us here.
The hon. member who has just sat down has made a contribution to this debate which is unusual from that quarter because obviously the hon. member studies the Budget speech before making his contribution. I disagree with one or two of his observations. In connection with his observations in regard to the gold mining industry, I think he loses sight of the fact that the biggest partner in the gold mining industry is the Government itself. The Government itself levies its first charge upon the sales of the gold mining industry by way of lease agreements, and after provision for amortization the Government takes its share of the profits of the gold mining industry; so the Government is, I would say, the biggest shareholder in the gold mining industry, and when that hon. member criticizes the gold mining industry he should remember that. Coming from a gold mining area himself he may be inclined to criticize the gold mining industry but that is harking back to the days when the shareholders got all the profit; today the Government gets the biggest share of those profits.
The hon. member went on to deal with a variety of subjects. He suggested that the sales duty was justifiable on the ground that it was a tax on luxuries. When we get down to a detailed discussion of the various items which fall under the sales tax, I think the hon. member will agree with me that there are many items on that list which are not luxuries, and if there is any doubt about them, I would suggest that he go to the women voters in his constituency and ask them whether they think that many of those items are luxuries. I think he will get another reply from them.
Sir, the patch-work Budget of 1970 has had a mixed reception in the country. A closer study of the speech shows a number of contradictions. Some queries have been posed by the Minister and remain unanswered. In his opening remarks the Minister referred to the second report of the commission of inquiry into fiscal and monetary policy in South Africa (known as the Franzsen Commission report). Apparently the Minister was in a better position that we were; he had an opportunity to peep at the report but has not had the opportunity of studying it in detail. However, he says that the commission supports the view that a budget must be looked upon as an instrument of economic policy. I submit, Sir, that this Budget is a very blunt instrument. It confirms our view that it will give very little if any, incentive, and it is incentive that we need. If, as the hon. member who has just sat down has suggested, we must work harder and save more, surely we need some incentive if this Budget is to be the instrument. The Minister appears to contradict himself when he goes on to say that it is primarily a programme for the Government’s revenue and expenditure for the year. The Minister says that it is the duty of the Government to provide protection against internal and external aggression. With that view I agree, Sir, but for a country to be militarily strong, it must first be economically strong. The economic strength of a country as a whole is the first requisite if military strength is to be maintained. Any defence expert will tell the Minister that hardware is not enough; you must have the morale of the people on your side. In economic terms, there must not be too many have-nots in comparison with the haves. If you allow that state of affairs to continue, you are asking for trouble. Sir, we require an explanation of the Minister’s remarks.
Dealing with the internal economic situation as dealt with by the Minister, he said that for the 12 months ended the 30th June, 1970, the real domestic product increased to an exceptionally high rate of almost double that of the preceding year. He went on to say this—
Sir, I want to ask the hon. the Minister why he excluded agriculture. Was it because it was a bad year for agriculture?
He said so.
Yes. but why exclude it? Let us have the agricultural figures so that we can get a proper perspective. Will the Minister tell us in reply what the effect would have been if agriculture was included? Agricultural shortages and surpluses are part of our South African life and the Minister should give us the whole picture.
Sir, the Minister in his survey of the economic situation, criticized the very high rate of consumption spending. It rose by 11 per cent in the private sector and current expenditure by public authorities rose by 14 per cent. How long does the hon. the Minister expect this rate to continue when the gross national product increases by six or seven per cent? What does he intend to do, apart from warning us, to curb inflation? Is that as far as he is prepared to go? I suggest that his proposals are not going to curb inflation. What he suggested in his Budget speech will not meet the problem.
In commenting on fixed investment the hon. the Minister said that private investments rose by seven per cent which is markedly higher than the preceding years. However, most of this was in buildings and construction, while investment in plants and machinery was relatively sluggish. Is the hon. the Minister surprised at this? Is there any encouragement to invest in the manufacturing industry? He said that investment in the private manufacturing industry showed little change; it was still in the neighbourhood of R350 million per annum. You could ask any industrialist who wants to expand. There is a number of departments to which he must go before he can get the answer and sometimes he does not even get a satisfactory answer. The incentives offered by the hon. the Minister are not sufficient to encourage the manufacturer to expand. He must go to the Planning Department, the Department of Labour, the Department of Bantu Administration, the Department of Economic Affairs and numerous other departments to get the final answer. The position to-day is that manufacturing to-day represents about 22 per cent of our gross domestic product, compared to 11 per cent from agriculture and 12 per cent from mining. The hon. member for Von Brandis has already shown us this afternoon what the position is with regard to the manufacturing industry and how it will still fall short of meeting the trade gap, no matter how you may try, no matter to what extent manufacturing industry is increased. Apart from the tax incentives for new plants and buildings and the export incentives, there are no inducements for the manufacturers. Has the hon. the Minister read the recent report of the SABRA conference? Professor Moolman, a member of the Tomlinson Commission, said that the present methods of establishing African towns in the homelands could lead to slum conditions which would not differ from the old locations. Professor M. J. Olivier made a dynamic plea for more money to be spent on development than on defence. Does the hon. the Minister agree with that? He urged that personnel and officials should be trained as developers and not merely as administrators. It is an interesting report and it will be interesting to see the hon. the Minister’s reaction with regard to that report.
We see no signs in the Budget of incentives to industrialists who sponsor immigrants from overseas, nor do we see any incentive in the Budget for training schemes or retraining schemes for employees. It is essential that we have a higher productivity and if we are to have higher productivity, we will need retraining methods for existing employees, whether they are white or coloured. This is necessary in order to get a higher output. In a country where we are desperately short of housing, how can we ever catch up or keep level with the present growth rate if we only draw on artisans from the white community? We must look to two sources for our shortfall of artisans, namely, immigration and training schemes for non-Whites. It will mean co-operation with the trade unions and similar workers’ associations and with the employers’ organizations. Other trades will also require to take a new look at our problems. For how long can we allow a Bantu to drive a bus or a taxi or even a car and deny him the right to learn to repair that vehicle or profit by that knowledge? Of course, in a clandestine way, the more enterprising Bantu is picking up that knowledge and applying it. You can go to any of the big locations and you will find a Bantu doing motor repairs, you will find him doing a building workers’ job and if you go to some of the country districts and our big towns, you will find the Bantu watchmen on top of the building keeping an eye open, for the inspector while the rest of his colleagues are doing the artisan work on the job. Then they revert to the ordinary labouring job as soon as the inspector comes around. This potential source of labour is there for anyone to see. The hon. the Minister surely realizes that the one way to fight inflation is to increase productivity. There is not full employment in this country. No figures are available for the number of Bantu in the townships and in the homelands who are unemployed and we can only judge by the amount of idleness we see. During his Budget speech the hon. the Minister made the point that there is no unemployment. The hon. the Minister cannot say that unless he can produce figures. There are no figures available on Bantu unemployment.
The hon. the Minister also regrets the relatively small increase in the rate of savings and he says that personal savings appear to have shown an actual decline. Thousands of persons who were encouraged by Government agencies to invest in mutual funds ask the hon. the Minister what is in this Budget for them. During the early part of this debate a previous speaker on this side suggested that the Government encouraged people to invest in mutual funds and was asked if the Government is responsible for this. In two previous years we have referred to the question of mutual funds and to the Governments’ interest in mutual funds through the I.D.C. Many people invested their life saving in these mutual funds and these life savings have now disappeared or virtually disappeared. Many people invested in mutual funds because they thought that, as the I.D.C. was interested, such investments were relatively safe. In this Budget they will look in vain to find relief or any help for them. When the hon. the Minister told people to invest and to increase their private savings, many accepted his advice, but burnt their fingers badly. They worked hard and placed their life savings in mutual funds, but there is nought for their comfort in this Budget.
In dealing with the balance of payments the hon. the Minister said that economic activity led to a substantial rise in merchandise imports, while exports and gold outputs showed little change. The exchange reserves gained iR8 million from the devaluation of the German mark and R24 million from the initial allocation of special drawing rights. Is this all the hon. the Minister can tell us or are the increase in the price of gold and the free market and other subjects still on the secret list? The hon. the Minister said nothing about gold. It is the first time, I think, since he has been Minister that he has said nothing about gold. He has nothing more to tell us.
I will tell you all you want to know.
Can the hon. the Minister tell us to what extent he has used our special drawing rights and to what extent he expects the price of gold to be increased. He cannot tell us to what extent he is using the free gold market. Perhaps it is not wise to ask that question.
Dealing with the monetary banking and financial situation there is obviously a difficulty in obtaining sufficient loan funds in the public sector. Yet the hon. the Minister maintains that the economic prospects are good. Surely, if he has difficulty in obtaining the necessary loan funds he cannot, in the same breath, say that the economic prospects are good. Does he expect to have no difficulties with loan funds or does he expect to be able to get these loan funds at a very much enhanced rate of interest? He admits there are strains in the monetary and banking system. He also says that inflation is a world-wide problem, that certain sectors of agriculture give cause for concern and that an increase in prices such as we have had in the past year is unsatisfactory, yet he does not say how he proposes to remedy the situation. He tells us his problems and difficulties, and yet he does not tell us how he proposes to remedy them.
There are four roads open to the Government. First, there is the road to run away with inflation, to do nothing about Government spending and rising prices, and to let the boom go on booming. This road the Minister wisely will not take. The second road is to bring on a major recession and to squeeze the economy as hard as possible to that end. That would stop inflation, but at a cost in human suffering which no responsible Government could take. The third choice is through wage and price controls, and while there has been a certain amount of tinkering in that direction, this choice, if applied, would lead to bureaucratic controls which in the end will never get at the real cause of inflation. There is the fourth choice, namely to cut down the sharp rise in Government expenditure, to restrain the economy firmly and steadily. The Minister needs to ask himself whether all the items of expenditure are really necessary. Prorata to the population there is a very high rate of employment in the Civil Service. We are spending more in the public sector than we are in the private sector. In practically every Government Department there is a shortage of staff. I would ask the Minister, has the time not arrived when the Government should take stock and ask itself whether some of the legislation is really necessary, whether it is really worth the price we have to pay, having regard to the shortage of trained staff in the Civil Service? The Minister says, that apart from the pressure for wages, consumption expenditure has increased by 22 per cent over two years. What is the figure for each year? The figure for the two years are lumped together. What is the figure for the two years separately? The hon. the Minister says—
That is not the case in South Africa. There is not full employment in South Africa. One can go to any of the labour bureaux in the towns and he will see a long queue of Bantu waiting for work. One can go to the offices of the Bantu Commissioners in the country districts of Natal and one will find hundreds of Bantu sitting in the queues, waiting for work. I believe the same position exists in the Transkei and the Ciskei. Over the 12 months ended May, 1970, the index of employment in private manufacturing had risen by 6 per cent and in private construction by over 12 per cent. I submit that, since natural increases are at best 3 per cent, the increase to which the Minister referred came from those who had formerly been unemployed. If the employment rose by 6 per cent in private manufacturing and by 12 per cent in private construction, and the normal increase is 3 per cent, surely the difference between 3 per cent and6 and 12 per cent must have come from people who: were unemployed. The only doubt about it I can illustrate by means of the following example. One only needs to go to Zululand. or Richard’s Bay, and one will find a number of Bantu employees who are now employed but were formerly unemployed. And yet, if one were to look at the Government figures for last year, one would not find any figures for unemployed Bantu, because no such figures are kept. The only figures which are kept, are of those who are registered for employment. If you are a Bantu and you have to travel eight; 15 or 20 miles to, register, and have to sit in the queue for four days and get no work, you will go back and stay in the homelands and live by your wits till you have the next opportunity of going to town and getting a job. Until such time as we have accurate figures, showing the number of Bantu unemployed, the Government are not entitled to say that there is a state of full employmen in this country. The Minister gives the Government away completely when he says—
The Minister is indeed a prisoner of the Government’s policy. They still frighten the people with the bogey man of the poor white, a question of 50 years ago. We have not gone much further away from the situation in those days, judging by the hon. the Deputy Minister of Finance this afternoon putting another spook story before us, suggesting that he was terrified of the future. I do not think the present Minister of Finance would do a thing like that. It is quite clear to us that the hon. the Deputy Minister of Finance is very much a prisoner of the Government’s policy, as is the Minister of Finance.
We must remember that we are now living in the seventies. We cannot educate people to read and write and then prohibit them from making use of their knowledge. The Government’s grants to the universities are welcome, but the more basic training for the Coloureds and the Bantu to raise their efficiency would enhance their earning power and therefore their contribution to the national wealth, which will also relieve their frustration. The Minister has posed us a question whether employers cannot make a greater contribution through efficient organization and methods to gain greater productivity. When they use their initiative and buy more modern office machinery, the Minister taxes them because it provides an additional sales tax. He asked us to work a little harder and a little longer. Does the Government intend to extend working hours? Is it the Government’s policy to extend office hours, factory hours arid working hours generally? That is what the Minister suggests. We are entitled to assume that that is what he implied. Has the struggle for a five-day week by labour over the years been all in vain? The solution does not lie in taking expensive automatic machinery to the bush and having a handful of Whites travelling long distances daily, while factories are well lit and guarded by night. It lies in training our non-white labour to achieve greater productivity, to enjoy pride of performance and loyalty to the firms for which they work and to the country, in whose future they have a part. We await with interest clarification by the Government of the vague sentence on page 27 of the Minister’s Budget speech where he says: “Itis not impossible that methods may be found where by the establishment of industries in these areas can be encouraged and at the same time more non-white labour can be made available for those industries which remain in the white areas”. The hon. member for Constantia has dealt very thoroughly with that aspect this afternoon. It will be very interesting to see what the Minister has to say in that regard. So far this afternoon no one on the Government’s side has enlightened us on this subject.
I now come to the Minister’s objectives. His first objective was to rectify the imbalance in fixed investments and to encourage investment in private manufacturing industry. I submit. Sir, that the export incentive and the machinery and building allowances are not enough. I was in Vienna last year, and there I made further contact with a person I had met on a; previous visit. I asked this person, who bad business contacts on the Continent, whether he was still interested in investing in South Africa. He had intimated to me previously by letter that he proposed investing approximately 24 million dollars in Canada and 24-million dollars in South Africa. When I asked this person what type of industry he was looking for, he said he wanted to invest in the chipboard industry. I got in touch with the Government Department concerned through the I.D.C., and sent all the necessary information to Vienna. By the time they had finished sorting out all the forms, and asking questions about how many Whites and non-Whites he intended employing this person said he felt the position was far too complicated. Instead of investing 24 million dollars in South Africa and 24 million dollars in Canada, he invested the whole 5 million dollars in Canada. I read in the paper the other day that the wattle i growers, who would have had this chip board available in South Africa, recently made an arrangement with Japanese interests. The raw material for chip board is now going to be imported by Japan. One wonders sometimes, when one tries to get investors interested in this country, when the Government is going to take up a reasonable attitude and stop spoiling things with their prohibitions, forms and red tape, which do nothing but discourage investments in this country.
Another of the Minister’s objectives is to encourage exports. While export incentives are welcome, the cost structure is too high. The Minister is going to find that these export incentives and other incentives, in the form of depreciation allowances, are going to be inadequate for the purpose.
I must protest again, Sir, against the over-taxation of the community. Revenue exceeded the estimate by R150 million and yet the Minister offers virtually no relief from sales tax. The concessions are crumbs when compared to the total revenue. Once again the Minister confirms that his problem of long-term loans remains unresolved. His recent visit abroad was fruitless and the local market looks equally unpromising.
Dealing with the expenditure side, we must express our disappointment that after so many years the Borokenhagen Commission report is still not available to us. The question of financing the provinces still remains unresolved. Reference has already been made to interest rates and the market will now determine the pattern. There is, however, one problem to which I wish to draw the hon. the Minister’s attention, namely the building societies. If the rates are to be increased, has the hon. the Minister considered the advisability of amending section 38 of the Building Societies Act, so as to allow societies to extend the repayment of bonds for those owing more than R15,000? At present the Act restricts the concessions to increase the period over 20 years in respect of mortgage bonds of R15.000 or less. There are a very large number of bonds over R15,000 owing by persons in the middle income group who will have to face an increase in monthly instalments if the present rate is raised. If they were permitted to extend the periods of repayment it would be possible to allow the present instalment to remain. I give the following example: A monthly instalment to pay a bond at 8½ per cent over 20 years is the same as the instalment for a bond at 9 per cent over 23 years or a bond of 9½ per cent over 26 years.
Then again there is the question of Public Service salaries. This matter has already been dealt with. In the words of Solomon I can only say: “Hope deferred maketh the heart sick”. I think civil servants are very sick as their hope has been deferred for a very long time.
Dealing with the question of export allowance, I should like to ask the hon. the Minister whether the concession does not conflict with the general agreement on trade and tariffs. Would the hon. the Minister tell us whether the extent to which allowances have been made to exporters is not in conflict with the Gatt Agreement.?
In conclusion I should like to mention that in ordinary circumstances this Budget would have been presented to the country late in February or early March. Due to the election it is presented half way through the financial year. Many problems are half answered. As a budget for the challenge of the seventies it is disappointing. It fails to come to grips with the problems of the next decade. We cannot afford to be distracted by bottlenecks and obstacles. We are the most advanced country industrially on the African continent. We see that on our borders sophisticated countries of the West and of the East are offering help to our neighbours. We are tied down to an ideology which in practice is unsound. We need a new vision and new and dynamic planning to raise the standard of living of all our people. We cannot be militarily strong unless we are economically strong. We have to-day a small sophisticated white community and, generally speaking, on the other side a large underdeveloped and poor community. The sooner we raise their standards, the sooner will we ensure our safety and theirs. As Solomon said: “A false balance is an abomination to the Lord, but a just weight is his delight”.
Mr. Speaker, the hon. member for Pinetown again made a speech here this evening that I want to label a speech of supply and demand. One could say that he made use of sayings and quotations with monotonous regularity. Then he asked a lot of never-ending questions. I do not believe there could ever be any inflation in his speech. His supply of demands is too great for that. I find it difficult to react to his speech, and I hope the hon. the Minister will be in a position to make more sense out of the questions he asked. The hon. member made a lot of non-related statements. The one had nothing to do with the other. Apparently certain of the statements also had nothing to do with the Budget. In economic terms the hon. member said very little about the Budget. However, in general terms he said a great deal. The hon. member again devoted a long time to the Bantu labour story. Inter alia I understood the hon. member to say that the increased Government expenditure, as reflected in the Budget, is inflationary and that the Budget will therefore not combat inflation. It would appear as if the increased Government expenditure will be inflationary. In truth, however, this is not the case. In the first place this expenditure is being incurred in order to establish an infra-structure and thereby to increase productivity. That, on the other hand, is anti-inflationary in nature. This entire State Budget is aimed at increasing production, i.e. not only at increasing productivity, but also at increasing the production capacity. This will also be anti-inflationary. I do not believe that the hon. member is altogether correct in this connection.
Then again the hon. member spoke of a rich man’s budget of “the have-nots” and “the haves”. Such a statement is very superficial. The Opposition members had a lot to say about the man in the street and about the poor man. Who are they? They did not give us a definition. I should prefer to speak of the salaried man, because our national revenue accounts indicate to us that 63 per cent of our population obtain their incomes by way of salaries. If we examine the position we find that they are the people who are very closely concerned with inflation. They cannot buy inflation, because they are not wealthy enough for that. If we examine the information we shall find that they spend 26 per cent of their incomes on food. That was not taxed in any way. If we take a closer look we shall see that, in addition, about 16 per cent is spent on housing and upkeep. This was not subject to the sales duty either. In other words, it is altogether untrue to say that there is nothing for the salaried man in this Budget. Who is hardest hit by a budget? It is the salaried man. Our inflation rate is 4 per cent a year. The whole Budget is aimed at fighting inflation and thereby protecting the salaried man. I do not want to elaborate on the other points the hon. member for Paarl mentioned here, i.e. the protection given to pensioners, etc. Here I just want to mention the facts.
Then the hon. member went further and spoke about gold. He said that the hon. the Minister had told him nothing more in connection with gold, but that hon. member is the last person who should speak about gold. I do not know whether the hon. member has forgotten the blunder he made in connection with gold during last year’s Budget debate. That goes for him and for the hon. member for Parktown. We shall take a brief look at that. Here we have the great prophets. In the March Budget last year these two hon. members took part in the Budget debate. These are now the great cart-horses of the United Party. As the one sneezes the other snorts. They are now the spokesmen of the United Party, but as far as I am concerned they are really two old mock prophets. During the March Budget last year they were the two people who attacked the hon. the Minister and said that the sales duty would bring in more than R200 million. They liked large figures. The poor hon. member for Durban (Point) was so misled by them that he himself challenged the hon. the Minister to resign if the sales duty brought in more than R200 million. But what happened? There was a difference of R4 million to R5 million between what was estimated and what was obtained. This is indicated iby the returns. But let us not dwell on that at any length.
Let us look at the second blunder they made. Let us look at what happened on the Stock Exchange. Mr. Speaker, can you remember how those two hon. members attacked us by saying that it was the hon. the Minister’s fault that the Stock Exchange had declined. The Stock Exchange supposedly declined as a result of a statement the Minister made. All the economic authorities in this country contradicted this. Anyone who at present knows anything about it will tell you that this is not the case. It had nothing to do with that. But now we come to the great blunder they made.
Business suspended at 6.30 p.m. and resumed at 8.05 p.m.
At the adjournment I was telling hon. members of the third great blunder they made. It was during the February Budget. The two hon. members made a great blunder. They came along in that Budget debate and told the hon. the Minister that the gold agreement he had made with America on behalf of South African was a total failure. I believe that the care, patience and insight which the hon. the Minister displayed in those negotiations, and the success he achieved there, will still go down in the Republic’s history as one of the great cornerstones or foundations on which the future economic growth of the country and its development will be built. [Interjections.] It was not only the salvation of, and a brilliant breakthrough for, South Africa, but also for gold itself as an international currency, as well as for international monetary stability. The hon. member for Parktown described the agreement as worthless, ineffectual and worthless, but what did the Chamber of Mines say? They were very satisfied and delighted with that agreement. What did the American Institute of Research say? They described the agreement as a victory for gold. Then on the 4th June the Star came along and emphasized it in a large headline, “South Africa wins a strong gold position”.
But now we come to the important people and we see what the report of the Joint Committee of the Congress of the United States said. It is a Committee consisting of representatives of the House of Representatives and the Sentate, and they gave the American Government a mandate not to conclude the agreement with South Africa along those lines. Let me quote what they said, this was their recommendation—
Let; us see how they motivated this, how they reached that conclusion. They motivated it as follows. They said—
And what was the position? With that agreement the hon. the Minister guaranteed South Africa a floor price for gold. That is what that committee said, but the American Government did hot implement that recommendation, and there was very strong criticism because they had to accept the agreement which the hon. the Minister made with them. But the hon. member for Parktown says that it was a worthless agreement. Sir, let me say that his name may be Samuel, but he is a very poor prophet.
I want to go further and test the Budget against the economic norms and criteria which one would accept as the ideal policy of the well organized economy of a modern and developed state.
In its execution such a policy will set itself certain principles and objectives which will be regarded as essential to maintain. Firstly, I want to lay down the objective of a high level of employment, secondly the objective of maintaining price stability; thirdly there is the object of maintaining a stable growth rate and fourthly there is the maintenance of a safe balance of payments, which maintains the foreign exchange reserve balance at such a level that the parity value of the domestic monetary unit is protected.
If we want to evaluate the Budget against these requirements, this must be done against the background of the present economic climate, as well as the tendencies that have manifested themselves, according to the latest figures. Since there was the upward swing in our economy in the early sixties, a cycle of processes has taken place as a result of the pressure of inflation. Although inflation was tamed and brought under control in later years, it has once more become a real danger and must, in fact, be regarded as enemy No. 1 that must be got the better of. Inflation is therefore one of the greatest stumbling blocks in the process of maintaining price stability. This Budget is therefore aimed primarily at maintaining price stability. It is therefore an anti-inflationary Budget. I do not want to recapitulate the measures that have been taken, but this Budget is indeed an extension and a continuation of last year’s structurally revolutionary Budget. I believe that this Budget has sharper teeth than the previous ones with which to combat the pressure of inflation, as a result of the greater elbow room the Minister will have in levying the sales duty, which, in my opinion, could restrict the excessive demand inflation over a wider field and with greater psychological efficiency. The Budget also acknowledges the fact that unbalanced growth took place in certain sectors of our economy, and it is therefore attempting to restore the balance.
I believe that here, the hon. the Minister really deserves a feather in his cap for the brave step he took, allowing interest rates to find their normal levels by allowing the market mechanism to go its way unhindered. This process will not be painless, but I believe that the long-term advantage that the elimination of the grey market will entail will exceed the short-term adjustment pains. The lower income groups and the farmers are being protected in particular. Therefore, in order to en sure a steady growth the necessary provision is also being made to encourage investments in the manufacturing industry. Efficient provision is being made, for the safety of our reserves and the balance of payments, with the incentive measures to encourage our exporters to conquer new markets abroad. Here we must not neglect either to bear in mind the marketing strategy of our gold, which comes directly under the hon. the Minister. We are therefore lucky that our economy is basically so sound that the Government does not have to deal with the object of full employment as a problem; on the contrary, this Budget had to concern itself with the opposite of unemployment, i.e. the problem of a shortage of skilled labour. Attempts are being made over a wide field to keep this problem within limits, for example by greater assistance to the immigration programme, greater assistance to the educational institutions, thereby improving productivity and expediting the training of skilled labour.
Are you satisfied with the step.
Yes, altogether. The hon. the Minister deserves great praise for this Budget which he has presented. It fits the requirements of our economy like a glove. It will do what is necessary to keep our economy within the safety and balance limits. I believe that here the hon. the Minister had to make some of the most difficult decisions of his career. The situation puts me in mind of a remark a certain West-German Minister of Economic Affairs once made. He said the following—
But the United Party seized upon this Budget in order to launch an attack against a certain aspect, full employment, which is not, in fact, a purely budgetary matter, as I have indicated. On the contrary, on purely economic grounds the United Party could make no dent in this Budget, but for months and months now they have been engaged in an organized attack, together with the liberal English-language Press, against the very essence of the National Party’s apartheid policy. Granted, they are using terms such as “growth rate” and “manpower shortage” to cover it up, and thereby they hope to create a psychosis and an impression crisis, by creating the idea that there is a tremendous crisis prevailing in the country and that industry will come to a standstill at any time. Sir, this is of course absolute nonsense. There was, it is true, a higher growth rate cycle which led, of course; in certain measure to an increased labour shortage. This situation will correct itself again when the decreased growth cycle takes root. In any case, Sir, in any growing economy, whatever its extent, there will be a chronic shortage of manpower as long as the growth rate exceeds the population growth rate. This is built into the system and is accepted by everyone as a scientific fact. The United Party claims that if job reservation were to be lifted and the maximum growth rate is reached, the manpower shortage would be solved. Sir, surely that is not true. There will surely always be a manpower shortage as long as the growth of the population is exceeded by the economic growth rate. West-Germany does not have job reservation, and at present it is experiencing one of the greatest and most tremendous manpower shortages in its history.
Who says so?
No, it is not what anyone has said; if the hon. member would do a bit of investigating he would find out what is happening there. America developed inflation problems as a result of a too high growth rate, and the prevalent condition in America to-day is a shrinking economy, and there is an increasing unemployment figure. There is no job reservation there either. These United Party arguments prove, on analysis, to be just that much nonsense. With all this crabbing by the United Party, and this attack they launched on us, they did manage to do one thing; they have at least revealed clearly now what their economic policy is. I want to refer here to the two policy principles laid down by the hon. the Leader of the Opposition last Thursday in his speech here in the Cape. He said, firstly, that the U.P. stands for a maximum growth rate and, secondly, that the United Party-judges and accepts South Africa from the economic standpoint of a 20 million homogeneous population figure, and that these people should all be incorporated in the economy, so that a maximum growth rate could be reached; this growth rate must then take place precisely in accordance with economic laws. Sir, this policy is surely exactly the same as the Progressive Party’s policy, with this difference: The Progressive Party accepts the full consequences of the policy, and accepts that it will not be able to apply a limiting and discriminatory labour policy. It acknowledges that in order to achieve the maximum growth rate it will have to bend before economic laws; in point of fact the economic laws will in any case have the upper hand. Sir, if that is not the United Party’s economic policy, what is it then? Then they are speaking with ten mouths. I say that the United Party is politically false and dishonest towards the people outside. How can they proclaim this kind of economic policy, and then still come along and claim that their labour policy will be able to hold back total integration? After all, they will not be able to protect the white worker against the onslaught of the non-white influx. With that policy the United Party would surely not be able to withhold full political rights from the non-Whites, as the hon. the Deputy Minister rightly said here this afternoon. Sir, the standpoint that the industrialists cannot obtain unskilled labour to-day is surely unfounded. It is not true. After all, the industrialist can obtain all the unskilled labour he wants, but then he must go to where the labour is available. He cannot expect the labour to be brought to him within the white heartland. After all, there is a well-known formula for that. Does the United Party not realize that on 22nd April the people gave the Government the mandate to carry out that policy? Sir, unlike the United Party the National Party does not think, economically or otherwise, of 20 million people in one economy. It thinks in terms of political national units, each with its own population that will obtain its own economic shape and substance as it grows politically—something every people will be entitled to. Every people will be entitled to its own economic development programme, with its own economic growth rate figure; it makes no difference bow low it is or what the figure is. Every people will have its own national economy. This economic evolution will, of course, eventually lead to the fragmentation of our own economic development programme; there will be a kind of secessional process, with our own programme as the centre from which these shoots will sprout. The road ahead is very clear. This decade of the seventies will bring the completeness of separate development. This U.P. campaign, Sir, is born of the anxiety that apartheid will, in fact, succeed, and that it will be realized. The United Party’s road is very hazy and obscure. It has revealed itself once more, not only as altogether ambiguous, but also as a real integration party. It will not be able to save itself from that. I want to say that the hon. the Minister of Community Development was quite right when he said that if that party were to come into power non-white Ministers would be sitting in its Cabinet within ten years. On the other hand, the National Party stands firm. The National Party stands purified, honest and sincere. The National Party holds the people’s mandate in its hand and the National Party will always be true.
Mr. Speaker, I feel we must congratulate the hon. Minister of Community Development in that he has succeeded in getting at least one member of the Nationalist Party to believe the unbelievable nonsense that he has been spreading around the country about our having black people in the Cabinet within 10 years’ of taking power. The hon. member for Pietersburg completely destroyed the good impression he has made. He was at least trying to discuss the financial affairs of the country before he wandered off into one of these typical political tirades which the Nationalist Party uses to cover up. They have no answers to the problems of South Africa.
The hon. member has mentioned the gold negotiations of the hon. the Minister of Finance during last year. Let us face one fact and that is that the hon. the Minister last year was engaged in a power play to force up the price of gold. That was what he was about. The whole of his policy was designed to force upon the member nations of the I.M.F., an increase in the price of gold. What has happened was that he very nearly brought the whole gold industry in South Africa to a very parlous position indeed. We will be discussing this matter later on with the hon. the Minister and we now ask this hon. member to support and to tell us exactly how he arrives at the fact that the hon. the Minister of Finance won a magnificent victory for South Africa when he had to retreat from point after point of the attitude he had taken up before the International Monetary Fund. If he can do that, I think we will have a very interesting debate with that hon. member and I am looking forward to it. He mentioned the fact that we have to have a stable growth rate and he even went further to say that when that growth rate slows down the labour shortage of this country will sort itself out. I want to ask the hon. member whether he is content that there should be a lower growth rate in South Africa.
Let me say one thing and that is if the growth rate of South Africa slows down it is going to put this country economically into such a position that the whole civilization of South Africa will be sucked into the vortex of the demand of a rising African population. In every single country in Africa, you find the total economic expectations being swallowed up to-day by the rising population. It is happening in every single country. The hon. member can say what he likes about the growth rate in South Africa, but if there is one thing we cannot afford to have it is to say that our economy shall slow down and that we shall fall back behond the rising pressure of the African population on the economic resources in South Africa.
Let us hear what is your economic policy.
The hon. the Minister has brought us a Budget which is basically a standstill Budget. He has tried to contain inflation. He has introduced certain inflationary elements into the Budget, but I believe that next year we are going to face a Budget in which the hon. the Minister will have to take steps to control the rising imports into this country. He is going to have to take drastic steps. The drastic steps he will take is in one sense to control imports and in the other sense to increase taxation on the white population and to map up the surplus in the liquidity which is building up here in South Africa. I believe after the election is safely behind the back of the Nationalist Party—I cannot actually say safely, but wishfully behind the backs of the Nationalist Party—we will see something when the next Budget comes up. I may say how pleased we are to see the hon. member for Carletonville, who is one of the members who was designated as a verkrampte, so happily rehabilitated in the Nationalist Party. He was one of those old roosters of the party which left the roosting tree and flew out making verkrampte sounds in the world and when he came back he found that the Nationalist Party had moved the tree. He is one of the few who has found it. He was talking about economic stability. Let me say I agree with him 100 per cent on one point, and that is that the economic stability of South Africa is the key to the future of white South Africa as well as black South Africa.
When he introduced his Budget the hon. the Minister took on himself the role of Solomon. The hon. the Minister, as Solomon, failed to impress me. I think he should have picked one of the minor prophets, like Jonah or one of those. He should choose someone his own size. The hon. the Minister comes here in the part of the wise man and introduces a Budget which he expects is going to solve the problems, but it fails entirely to meet the needs of the poor people, the pensioner and the man in the street. He quoted certain of the words of the Book. It is a habit anybody can contract and we on this side are also entitled to use certain words. I think the poor and the man in the street can well say, as the hon. the Minister would say: “I will also laugh at your calamity; I will mock when your fear cometh; then they will call upon me but I will not answer, they shall seek me early, but they shall not find me.” They cannot find this hon. Minister, because he is hidden away behind the spectre and bogey of inflation. He has put himself to the point where nobody can find him and where the rescue and redemption which the people are entitled to expect from the hon. the Minister cannot be forthcoming, because the hon. the Minister and his Government are to-day probably the most important factor in creating the inflationary pressure in South Africa of any of the factors in our economy. I believe it is time that we faced that fact. It is time that the hon. the Minister and his party faced that fact. One of the best methods of combating the inflation is obviously to increase the productivity of our working force. It comes down to a question of training and investment. When we on this side had a private Bill introduced by the hon. member for Hillbrow, namely the Manpower Training Bill, it was voted against by the party on the other side in a deliberate attempt to deny the people of South Africa that training, which is the only thing which is going to increase and improve productivity, one of the most potent factors of reducing inflation in this country. It all boils down to the fact that we have to ensure the maximum and most efficient utilization of our productive resources. Among these productive resources are labour, machinery, efficiency, marketing and the use of our mass market. All these aspects are means which we can use to improve our position to slow down the pressure of inflation on our economy, and at the same time allowing a satisfactory growth rate to continue. I want to say to the hon. the Minister, to the Government, and to the hon. the Minister of Bantu Administration and Development, that the metropolitan areas in this country are the heart of the white man’s economy, the fuel cell from which all the development in South Africa will stem. Without the growing strength of the economy, the white man’s economy, based on the metropolitan areas, there is no future for White or Black South Africa. To-day we have a Nationalist Party Government which is deliberately going out of its way to hold back and to slow down the development in the metropolitan areas. Solomon said: “The rich man’s wealth is his strong city, the destruction of the poor is their poverty.” The rich man’s wealth is his strong city. Surely it is now time for the Government to come clean with the people of South African and to tell them exactly where they are going.
Why do you not tell them where you are going?
We have come clean and we have told the people where we are going. This Government is hiding behind an ideology which is incapable of being realized. They persist in trying to carry it out and they are going to cause the death of the white man’s economy in South Africa if they continue in this way. This whole matter comes down to a question of investment. Capital should be invested to produce goods and wealth. It is all a question of priority of investments. Surely the economic advantages of the metropolitan areas are such that we cannot afford to fritter away our strength in dispersed development The economic strength of South Africa is the only protection that White South Africa has. The metropolitan markets have the advantages of the mass market, easy communication, an established infra-structure and the educational facilities. All our facilities are to-day concentrated in the metropolitan areas. What you find to-day is the rich city of White South Africa. It is in that city that Black South Africa is learning its trade. Black South Africa is learning its trade in the metropolitan areas. The Government especially the Minister of Bantu Administration, who dominates the whole of the Government and whose thinking is being forced upon department after department, who has enlisted in his aid the Department of Planning, is deliberately turning aside the pattern of investment in South Africa to the detriment of both Black and White South Africans. It is on the economic front that White South Africa will meet the challenge of communism in Africa. If we can so reach out to the minds and the imagination of Black South Africa by giving them work and by creating for them opportunities which exist nowhere else in Africa, if we can get the mind of Black South Africa so to support the attitude of the white man, we will never be in danger.
Do you want influx control or don’t you?
The hon. the Minister of Community Development can sit there interjecting in a flippant fashion, but he has no answers. It is on the economic front that we will meet the challenge of communism in South Africa and in Africa. The hon. the Minister has no answer at all. This country is the bastion of Western Christian civilization in Africa, we, the white people in South Africa.
The metropolitan areas and the economy of South Africa are our towers and our ramparts. What we have, is the hon. the Minister of Bantu Administration and Development undermining them deliberately, in pursuit of an ideology which we know to-day cannot be made to work. It is being engulfed in a rising tide of black population, to which the Minister shuts his eyes, turns his back, floats on his clouds, dreams his dreams and never looks at reality in South Africa at all.
Decentralization is all very well. It is fine as an economic ideal. It is perfectly correct. It is something which our party has advocated for many years, for economic reasons. But the Government is embarking on a policy of Bantu development. The hon. member for Pietersburg said that these areas would each have its own separate growth rate and economy, its own separate homeland, minister of economic affairs, separate markets, customs and excise. I want any hon. member to tell me where in any Bantu area in South Africa there is a market which is big enough to support even one industry in those Bantu areas. They are going to create an economy for those countries, for the Zulu people, the Xhosa people and all the different peoples of South Africa. Where in one of those countries is there a market which can sustain even one industry on an economic basis?
That is why we want them to be economically interdependent.
The hon. member for Pietersburg did not mention the words “economic interdependence”. He made it quite clear that the policy of the Government was to create separate economies, separate growth rates. These are words that he used himself. He used the word “fragmentation”. Mr. Speaker, I do not know now whether there is a split in the party again. We have two different people talking with two different voices. Then one finds, of course, this famous attitude of the Nationalist Party that they would prefer to be poor, but White. Solomon said: “The poor is hated even of his neighbour, but the rich man hath many friends”. Now, surely, this applies to White South Africa. If we are going deliberately to pauperise ourselves, if we are going deliberately to break down the economic structure of South Africa, if we are going to slow it down, diversify it, if we are going to force it out on side roads and side lines …
We have been in power for 22 years and you have never been more prosperous than you are now.
Precisely, we have never been more prosperous because the Government have never yet done it There is not one single instance the Minister can point to where the Government has made any serious attempt to develop any kind of a Bantu area at all. It is only in areas like Temba and Zinkwazi, inside the Bantu homelands, where they are pretending that they are going to establish industries inside the Bantu areas on an agency basis.
We now come to the question we must put to the Nationalist Party. It has to do with the economics of freedom. If we are going to create free Bantu societies in South Africa, how are we going to do it? This is a question to which we must have an answer. If the Nationalist Party can do it, they must tell us now in this debate how they are going to do it and when they are going to start. We have the Minister of Bantu Administration utilizing the Planning Act, the villain of the piece, which to-day is putting the cramps on the metropolitan areas. That is why company after company is seeking in the Minister’s Bantu areas a foothold for the future. It is the administration of this Act, the way in which it is implemented, which is forcing company after company to seek its future in the areas under the control of the hon. the Minister of Bantu Administration and Development. It is being done on an agency basis. I think the hon. the Minister owes it to this House and to the country to give us an explanation of what the agency basis is. We do not know what it is. We are told simply that companies are making inquiries, that they will go there on an agency basis. We have fair reason to say that what will happen is that white companies will invest their money there. They will create there the means of production. After a period of years that will be written off and the companies will have to withdraw. In other words, what the Minister is doing is to create a capital base inside the Bantu areas by writing off the tax capital of the white man. That is what he is doing. He is creating in those areas an industrial base, on a basis which we know nothing about as yet. We have been told that the Department’s agents will act on behalf of investors. Investments will be made by the relevant development corporations, not by the white companies. The buildings, the facilities and the infrastructure are provided and they are subsidized to go there. They are given tax concessions. They are given plant write off rights. All this is at the expense of the metropolitan areas, the existing white economy. This development will be subsidized by this Government, but at some stage or other they will have to withdraw the control of the white man. However long the period might be—it might be 25 years— this will happen.
What kind of a capital base are they going to leave in the Bantu homelands? They will write off the machinery in the books of the white company, or the I.D.C., or the Bantu Development Corporation, whoever it may be, and they will leave behind the obsolete machinery. I do not think that this is something which can benefit White South Africa or Black South Africa more than if we maintain the co-operation and the real inter-dependence of White and Black in the economic life of South Africa. I think one would put it quite fairly if one were to say that White South Africa and Black South Africa have embarked on the same craft. They have launched forth into stormy seas. If either of them jumps overboard the survivor cannot manage the boat. I want to say quite clearly that the danger to Black South Africa, because of the attitude of the Nationalist Party and of this Government, in the economic sphere is that they are going to force upon the governments of the Bantu areas a choice which is becoming the choice for every nation in Africa. There are two ways to develop a backward nation. We have seen them working in our world. We have seen the investment of capital creating economic conditions which have led to stability and democracy. We have seen the other side of the coin, namely the communist pattern which means the investment of the total population, their lives, everything they possess, their very individuality, their souls. All this is invested by a totalitarian party to force the creation of the means of production.
The hon. member for Newcastle says “nonsense”. Will he go and just study quietly for a little while the pattern of development in the Soviet Union? The Soviet Union was the first communist nation, which achieved the record of having been the most backward nation in Europe in 1917 but in 1957 became the first nation in the world to put the sputnik into orbit. This was done by the investment of the total lives of the people by fear and force. Let us not lose sight of the attraction that this pattern has got for country after country throughout the whole world which have nothing else to invest but the lives of the people. If you withdraw from the black people of South Africa in the countries which you are creating, by your rejection of the contribution they are making to South Africa, you are simply inviting into our country the claw of communism which has reached out to-day into Africa. This is something which we have got the only chance in this country of withstanding …
You did not help us.
How can we help the hon. member? He is inviting this menace to come into our country. If you are going to develop a country, how do you do it? I have asked the hon. member the question. I hope he will get the chance to speak. I look forward to the contribution the hon. member for Rustenburg can make to the debate.
They won’t let him speak.
Perhaps they know him better than I do. Whether they will allow him to speak, I do not know.
Mr. Speaker, it was not Barzillai, but Solomon who said: “A scorner loveth not one that reproveth him, neither will he go unto the wise”. I am quite sure we will have from that hon. Minister very, very little in the nature of a contribution to this debate. What I want to say to the Nationalist Party is something that Solomon did not say: That they have hewed them out cisterns, broken cisterns, which will hold no water. That is what this party are engaged upon. They are engaged upon a policy which can lead to no conclusion, because they have undertaken to develop in our country areas which are the most backward and the furthest from any kind of development at all. A start has to be made from square one because for 22 years they have been neglected.
You are being irresponsible now.
I am not irresponsible. I am bringing home to that hon. member and to his party their sins of omission which they have committed in South Africa for the past 22 years. They have talked about apartheid and built an elaborate paper tiger, a structure of laws to prove that these people no longer exist in our midst. The 600,000 people in Soweto do not really live there; they actually live in the Transkei. The Budget the hon. the Minister has presented to this House is the instrument of the policy of the Nationalist Party and the Minister himself is the prisoner of the policy of the Nationalist Party. I say again. Sir, that this is a system, a policy, which promises no good.
Mr. Speaker, the hon. member for Mooi River, who has just sat down, will understand that since this is my maiden speech, I cannot react to his statements. I just want to give him the assurance that I wish this were not the case. I should like to reply to them on a later occasion.
Mr. Speaker, you will pardon me if I start on a personal note by expressing my constituency’s thanks and appreciation towards my predecessor. I think my constituency is fortunate in now having two representatives in this Parliament, namely the hon. the Minister of Agriculture and myself.
I should also like to address myself to the hon. the Minister of Finance. Until recently, I was connected with the Cape Provincial Administration. In my particular capacity, I had to hold discussions (with the hon. the Minister of Finance from time to time about the financial position and needs of the Cape Province. I would be neglecting my duty if I did not express my thanks and appreciation to him for his deep insight into and sympathetic approach towards the problems of the Cape Province. This exceptional insight and sympathetic approach are also reflected in the large extra-statutory subsidy which is being granted to the Cape Province this year in order to meet its financial obligations. I want to express the hope that we will not have to wait long before the necessary revisionary formula is established in order to obtain a readjustment between the Central Government and the Provincial Administrations in our country.
In considering the Budget, I must naturally observe the traditional custom that newcomers should not make controversial statements. Those hon. members who served with me in the Provincial Council are aware that I am the last person who would ever want to make controversial statements. In fact, the hon. members will confirm that I continually avoid making controversial statements. In continuing the discussion on the Budget, I therefore want to point out that I think there are certain cardinal considerations which must apply when Budget proposals are judged. I do not think one could judge the Budget effectively unless you did so against the background of the prevailing economic and financial circumstances. I do not think one could do it effectively if one did not really understand the essence of the change which has taken place in the South African economy. It is true that the post-war world has undergone a period of storm and stress in the political, social, technological and economic fields. It is also true that these issues did not pass the South African economy by. But it is just as true that, in contrast with many other countries during the past decades, the South African economy has developed into one of the most virile in the Southern Hemisphere. It is also true that this was made possible by the contribution of the private sector to our economy and the establishment of a climate in which economic growth was possible. This fact is proved by the exceptional experience which is reflected in the gross domestic product. It is indeed an achievement that from 1962 to 1969 the gross domestic product was doubled. There are also indications that there will be continued growth in the present year as well.
The fact that the gross domestic product has grown at an average of 9 per cent per year during the past ten years, places South Africa among the major economic countries of the world with one of the highest growth rates. But arising from this, there is one important aspect which I believe to be of particular importance, namely the contribution which manufacturing industry is making towards the gross domestic product, namely 20.7 per cent. It is true that during the past decades the South African economy has undergone a fundamental change in its essence. We have developed from a country which had the accent on agriculture and mining in its economy, to an industrial country, and it is obvious that certain problems would have arisen during this process. This is in fact true of any other country where a similar process has taken place. But the fact remains that, for the purposes of future economic development in our country, it is essential that we should pay more attention to the contribution made by manufacturing industry to our country’s economy and that we foresee a greater process of industrialization than in the past.
The Government is responsible for the establishment of a policy framework within which the economy must function, and it is also responsible for introducing measures which can be either restrictive or stimulating under certain circumstances. Against the background of the relatively low investment in machinery, plant and equipment, it seems that if industry must play its particular part in our economy and make an increasing contribution in respect of our exports, this particular facet necessarily demands measures which will have a stimulating effect. Some of the measures announced in these Budget proposals, inter alia, the investment allowance, are stimulating measures which are being taken to enable manufacturing industry to fulfil its particular role in respect of our domestic production and to make a contribution in respect of our exports.
If we compare the statistics of imports for the first six months of the present calendar year with those of the corresponding period last year, it is clear that the value of machinery and of mechanical equipment and plant shows an increase; that a relatively larger percentage of these commodities are represented in our imports than in the previous year. The same is evident in respect of the importation of vehicles, aircraft and associated goods. It is important in this particular context that these particular imports are commodities which can promote increased production, as they represent capital purchases, which in turn can stimulate industry and create the machinery for increased production of consumer goods.
The factors which are necessary for economic growth are legion and include the availability of labour, power, water, raw materials and technical and managerial staff. It is an indisputable fact that not only has our economy undergone a metamorphosis, but that, precisely because of this, new demands are being made on the labour resources and the manpower potential of our country. It would be impossible to refer to all these aspeots in the time at my disposal, but I want to refer specially to one aspect, namely the particular facet of the developing economy and the demands which are being made on the educational institutions.
I think I would receive the general support of hon. members if I said that one of the special and one of the most effective ways in which the manpower shortage can be supplemented and productivity can be increased is in fact by means of education and the goals set for education. In respect of the economic function which education must fulfil, it appears that education actually has a dual role to fulfil in the execution of its task. The first and perhaps the most important is that the presentation by way of differentiated education must be such that it represents the same variety of training spheres as there are spheres of work in our economy. Secondly, education must in its physical planning and in its vocational guidance take into account the manpower needs existing from time to time. I have no doubt that in the South Africa of the future education will have a special task in regard to the diversification of training as well as the co-ordination of planning in view of our manpower position.
Besides the training of manpower, everybody will have to take into account—and this applies to all sectors—whether we are using the available manpower properly and in the most effective way. The question arises in my mind whether we do not have cause for concern that the correct relationship does not always exist between the functions of management and production. Obviously, both have an essential part to play, but nevertheless, and without generalizing, it is necessary that a watchful eye be kept to ensure that this balance will be maintained and that the natural desire to have more controlling posts and more people giving instructions and fewer and fewer people to carry them out is not put into effect.
According to the most recent survey, of April, 1969, in the 11 professions most intimately connected with education and with the economic development of our country, there were 31,100 posts which had to be filled by Whites, of which 28,100 were in fact filled. Obviously, the economic development, and especially the pattern which this development assumed, made exceptionally high demands on the trained manpower resources.
In this connection it is interesting to note that, as a result of the changes which took place in economic activity, the percentage of the economically active population sectors in the professional, clerical and skilled industrial sectors underwent a fundamental change, in that in these three sectors the economically active percentage increased steadily, while—again expressed in terms of percentage—the unskilled labour became less and less. It goes without saying that this tendency will continue in future development. It remains an essential truth that a sustained industrializing process and economic progress rests in the final instance on the education departments and the educational institutions. The heart of industrialization remains the progressive increase in the capacity of the economically active sector of the population to create riches by obtaining and applying specialized knowledge and specialized skills and by using specialized equipment.
Mr. Speaker, a budget is much more than an arithmetical exercise in which expenditure is approved and fiscal measures are taken in order to obtain the revenue to finance expenditure. The budget is and should always be the cardinal instrument of any government for ensuring economic prosperity within the framework of its formulated policy. But it goes without saying that, as prevailing circumstances demand, this policy will have to stimulate sectors which need stimulation and will have to restrict or repress sectors where it is necessary to do so. It is essential, therefore, that the circumstances of the particular time be taken into account and appreciated in analysing the budget proposals and that the economic policy be formulated accordingly. It is also essential that, in formulating these proposals and the policy, bottlenecks which have a restrictive effect on economic progress will be thoroughly taken into account in order to identify them and to eliminate or at least reduce them in the budget proposals. In the second place, it is essential that the budget for Government expenditure is not financed in an inflationary way.
Sir. when one considers these budget proposals, it is obvious that they very distinctly take into account these two basic requirements which are prerequisites for a healthy budget; and if I have analysed these budget proposals correctly, it is very clear that the pivot on which they hinge is the expenditure to be defrayed from Loan Funds. In this connection it is clear that this expenditure has been limited to what is essential and that due regard was had to the restrictive steps in respect of this particular expenditure in the budget proposals. By meeting the deficit from surpluses on the Revenue Account, the Budget has, apart from the other advantages to which I referred, another advantage, which is actually a by-product. This is that the State will not compete on an otherwise too high level with the private sector on the local capital market, and it has the further advantage that by making less use of foreign loans in a period of high interest rates. Government expenditure will be financed in a non-inflationary way. It is obvious that other bottlenecks are that although the net domestic saving was 23.45 per cent in 1969, personal saving is giving cause for concern, and in this respect, too, steps have been taken to deal with the situation. The fact that surpluses are being budgeted for and that this surplus is used on the Revenue Account for capital goods, actually means that it is sound planning in prevailing circumstances and that it also satisfied the demands of the community in regard to the provision of services.
Mr. Speaker, in conclusion I want to refer to one particular aspect, and this is that the balance of payment still remains the Achilles’ heel of the South African economy, and that this is mainly due to our tendency to import. It is true that our imports rose during the past two years and that the total imports for the present year represented approximately R2.200 million. Furthermore, it is true that in relation to our imports, our exports were low —i.e. a visible deficit of almost R750 million —and for this reason stimulating action has again been taken in respect of concessions, finance costs, the acquisition of foreign markets, etc. But I want to submit for consideration that attention should also be given to stimulating measures in respect of service sales. It is a fact that our economy can enjoy tremendous advantages in respect of these items. If you refer to the amounts which we pay in respect of freight and shipping charges, Sir, you will find that we pay considerably more than what we collect in this particular connection. The same applies to tourism expenditure. I think that if consideration can be given to service sales and the systematic promotion of foreign tourism, an exceptional contribution can be made in this particular connection in order to rectify to some extent the imbalance which exists between exports and imports.
In conclusion, Mr. Speaker, the fact remains that, apart from any other measures, a country can only be as prosperous as is made possible by the sum total of the total exertion of all its people. Therefore, where budget proposals must create the climate in which economic growth is possible and within which it can flourish, something else is necessary over and above all these measures, i.e. a certain mental attitude. It is necessary for us to change our basic approach to labour. Sir, I believe that the economic development of the country is in safe hands. I believe that we can ensure political stability by this means. I believe that we should all be grateful for the fact that we live in this beautiful country and can contribute towards its progress.
Mr. Speaker, it is my privilege to congratulate the hon. member for False Bay for his contribution to this debate in his maiden speech. It is quite clear that he has made a thorough study of his subject and he has certainly set an example with the delivery of his speech. We on this side can only wish him a long and profitable sojourn in this council and if we can take what he has said at the beginning seriously, namely that he avoids controversial matters, I am quite sure his stay will be a happy one.
Before dealing with the Budget, I want to say that for the umpteenth time we have a Budget which as has been said, complies with the ideologies of the Government. I am not using my own words when I say this, because the Minister of Finance on more than one occasion told us that if it was necessary he would bend the economy of the country to suit the ideology of the Government. In this particular case he has bent it again and he has almost broken it. Before getting to the Budget, I would like however to deal with matters raised by the Deputy Minister of Finance who unfortunately is not in the House at the moment. Subsequently the hon. member for Pietersburg, and I would like his attention, dealt with these matters. The hon. the Deputy Minister in addressing the House earlier on this afternoon had four specific facets or conditions which he had laid down for the economy of the country. The words he used were:
I would like to examine these words and subsequently the statements made by the hon. member for Pietersburg, in how far the policy of the United Party diverts from the pattern which has been followed in this country during at least the last two centuries, if it was not over the last three centuries. The consistent pattern which was followed in this country over a period of centuries was that those who are in the position to employ labour, the Whites who were in the position to employ labour, employed non-white labour at the best wages they could give them and that everybody in this country, Whites and non-Whites, jointly raised the economic standards to where we have them to-day. That was the existing pattern for centuries. Then, subsequently the Nationalist Party came along, more than a decade ago, and altered that pattern. They created the word apartheid and then they went from apartheid to the words they are using to-day to describe apartheid. They then spoke of a multi-national country instead of a multiracial country and this is the position in which we find ourselves at the moment. Now they start charging us, the members on this side, of disturbing the pattern which has existed in this country over a period of 200 years. We reject the accusations, completely. We reject the charge that we have departed from the way of living in South Africa or that our proposal that the economy should be boosted to the maximum by using all the manpower we have at our disposal, is departing from the historical pattern of life of this country.
Do you not believe in influx control?
We so often hear about this enormous prosperity after 22 years of Nationalist Government. What is so un usual about the prosperity of this country? When are we going to give the credit to the wealth the country has and to the labour we have and to the population of 20 million people who have brought this country prosperity? When will we acknowledge that that is the reason why we are so prosperous? Are we more prosperous than the countries which were beaten in the war and which were grovelling around in the dust trying to make an existence in the post-war period and who are now far more prosperous than we are?
We brought stability.
They have the same sort of stability that we have, they maintain a much higher growth rate than ours and they have a much more powerful economy than we have.
I cannot fathom why we consistently hear from hon. members on that side of the House that the Nationalist Party created the prosperity over a period of 22 years. This is not something which was created by the Government at all. It is the inherent wealth of the country and it is the enormous reservoir of manpower that we have been using profitably that have brought us prosperity. The wealth of the country is the hands which are producing it and not this Nationalist Government. We have had the hon. the Minister of Finance in all sorts of cloaks. Speeches in this debate have run from the kitchen to the doctor, and from the doctor to biblical quotations. I am not going to quote from the Bible; we have certainly had quite a number of them. I am going to look at this matter from another angle. The angle is what advice this hon. Minister and the Government are giving to the country as a whole. This hon. Minister’s predecessor’s advice to the country was “to spend for prosperity”. The people were told to bring their spendings into circulation and that they will then all be prosperous. Two years later, when it became apparent that too much was being spent on consumer goods and not sufficient money was being saved, this hon. Minister advised “save for prosperity”.
In the saving process building societies were shut up by fixed interest rates and home building was left far behind. In the meantime savings were going into every conceivable avenue. Investments in growth funds and stocks were strongly advised by this hon. Minister. As an hon. member on this side remarked earlier today, it is rather astonishing that in his Budget speech the hon. the Minister made so little mention, or no mention at all, of the very sharp decline of the stock market when he had so consistently advised investors in South Africa to invest their funds profitably. Thousands of rands were lost in this enormous and almost unprecedented collapse of the stock market. Make no mistake, the hon. the Minister of Finance was responsible for this collapse in no small degree. I make this charge advisedly. We have not forgotten how the hon. the Minister, after indicating that he would not release import control all in one go, made an announcement the very same day, or the next day, in the Other Place that he had already done so.
From that point onwards the slide commenced. It is a slide which, up to this point, has not ceased yet. One only wonders, when the turn eventually comes, how many thousands of millions will have been lost in the process. We now have a Minister so utterly chained by this ideology that he has presented a hotch-potch and potpourri Budget, a stop-go and yes-no Budget that still looks after the investor, but which throws the lender, the housebuilder and the flat dweller to the wolves. I am now referring to the total freeing of interest rates. It was the United Party in the first place who introduced, during the war period, financial relief and supply control. [Interjections.] Would the hon. the Minister like to put a question?
These measures were subsequently taken over by this Government. I have been informed that banking institutions advised the hon. the Minister against the step of simply letting interest rates free after years of rigid and semi-rigid control and that it should be regulated like a tap that is gradually turned off and on. I have been informed …
May I put a question to the hon. member? I just want to ask the hon. member whom he is quoting?
Mr. Speaker, in reply to the hon. member for Vanderbijlpark, I said that I have been informed by some of the members of the five banks.
I am not in a position to say. The Minister would not wish me to do it. If any step could be more calculated to slow down production of every description, I have yet to find it. This step must presumably be an endeavour to slow down inflation. No wonder Dr. Hupkes, addressing the Afrikaanse Sakekamer lunch at Stellenbosch recently found it regrettable “that the fight against inflation had become synonymous with restraint of the growth rate”. These are his words which I quote. Also the Reserve Bank report for the first quarter can almost be considered gloomy. It states:
Order! Will the hon. member please proceed?
Mr. Speaker, we now have innumerable businessmen of high standing coming out and saying how important it was to have a strong and virile economy, not only for the well-being of all our peoples, but in self-defence against the onslaught of Communism. People with homes and sufficient wholesome food and the wherewithal to clothe and educate their children constitute an unfertile field for Communism. Listen to Mr. Marais, chairman of the Handelsinstituut, saying:
What does one of our greatest economists say? I quote Dr. Jan Marais:
If there can be any better condemnation of the attitude the Minister is adopting in this matter than what Dr. Jan Marais said, I should like to know it. He is against every conceivable point made by the Minister in his Budget speech. So what do we have instead? We have a Minister of Finance who is vacillating between an ideology of apartheid, the creation of separate nationhoods and the well-being of its white inhabitants, and I say this with emphasis. We have a Bantustan policy that will not allow private white capital to go and develop the reserves other than on an agency basis, and these reserves are no better off economically than they were a decade ago. I should like to examine this situation. This is the hon. the Minister of Finance’s policy, shackled as he is by the ideology of the Nationalist Party. The development of the reserves is going to take place on an agency basis. The figures mentioned here this afternoon and the forecasts that were made for 1975 do not seem to worry hon. members on the other side. How are the 21 million people we shall have in another few years to exist without a viable economy inside their own reserves? I advisedly say “inside their own reserves” and not “inside their independent Bantustans”. How are these people to exist there without a viable economy inside their reserves and without the wherewithal to go out and find themselves a job in our industries, wherever we can use them profitably? This seems to have no real effect on this Government. [Interjections.]
Order! The hon. the Minister of Tourism and the hon. member for Transkei must contain themselves.
Mr. Speaker, I am questioning the policy of the Government, in terms of which white capital can go into the reserves on an agency basis only. I maintain that the reserves will never become sufficiently viable to carry the population they have to-day, let alone the natural population increase and the population increase this Government is endeavouring to effect by moving people back to their own areas. If this is an economic impossibility, why do we keep on going around in circles with arguments of this description? They say that there is no real need to employ the Bantu. He can be here on a temporary basis only. He can be a sojourner and an alien. As though we do not require the Bantu permanently in our economy! When will we acknowledge the fact that our own economy is dependent on the manpower we have, of all colours, and not just on the manpower of the Whites only? I have said times without number in this debate that there is no shortage of manpower in this country. There is only a shortage of white manpower. If we are not prepared to supplement it with non-white manpower …
What does Douglas Mitchell say?
If we are not prepared to supplement our white manpower with non-white manpower in areas where they can be accommodated, there is no means of maintaining a high economic standard. Industrialist after industrialist and economist after economist have told us time and again that this is so. Make no mistake, Mr. Speaker, our major economists and industrialists are certainly not siding with the Government and their views these days. The Government has these people against them this time. They are all coming out with the view that economic prosperity is priority No. 1.
May I ask the hon. member a question?
I am sorry, but I have already replied to one question. I want to get back to the point I was making. The hon. the Minister of Finance seems to have a perverse obsession in regard to inflation.
Whom are you quoting this time?
Mr. Speaker, could I please have an end to these interruptions? I am not quoting anybody.
Order! The hon. member for Vanderbijlpark must control himself.
Sir, I should like to ask: What economically strong country grew strong without inflation, a greater degree of inflation than we have in this country? Our most powerful defence, a dynamic and vastly immigration tempo, cannot take place without inflation. I should like to cite the instances of Australia and Canada. In the post-war period these countries suffered from enormous inflation problems by virtue of the fact that they had immigration to an extent that we never dreamed of. We on this side of the House dreamed of it, but when this Government came into power they virtually stopped the flow of immigration. Sir, Australia has more than doubled and almost trebled its population over the last 22 years. A very large percentage of that population increase was as a result of immigration. In one particular year they had just on 100,000 immigrants. This happened in a country with a population of then between 6 and 7 million people. These immigrants did not have houses. This is the charge that is made against us every time we talk about immigration. We are asked: Do we have sufficient houses? Do we have the houses to accommodate them? Do we have the jobs for them? Australia brought these immigrants in and their economy is as strong as ours, any day. They have a very high standard of living. There is no way in which one can have a virile immigration policy without having a certain amount of inflation with it. I shall deal with the question of inflation later on. America, Germany and Japan all have relatively high inflationary rates, ranging from 4 to 8 per cent annually, whereas the hon. the Minister endeavours to maintain a 1 per cent annual rate of inflation. How else can the South African economy become strong economically so that all its inhabitants, regardless of colour, can enjoy a higher standard of living unless we can substantially increase the growth rate even though we have to face a somewhat higher rate of inflation?
Our target must be maximum immigration, the use of all available manpower, including non-white labour and the use of more female labour. We should have a bold dynamic policy instead of the timid and vacillating policy of this Government. Dealing with this question of inflation I should like to put a question directly to the hon. the Minister of Finance. Instead of endeavouring to maintain inflation at an annual increase of more than 2 per cent, does he feel that it will so badly affect the economy if inflation had to go up to 3 per cent or even 4 per cent by virtue of the fact that we have the maximum number of immigrants in this country and that we employ the maximum number of people to help us maintain our high standard of living and our economy? If simply for the sake of inflation only we have to curb our economy to the extent that we maintain our economy at the rate of 5 per cent or 5.5 per cent instead of 8 per cent or 9 per cent we will never reach the stage where we will become economically so strong that we can pay for the services and the things that we want to do. We will never reach the stage when we can defend ourselves to the utmost and be able to arm ourselves to the teeth. We will also not be able to maintain our stability, our independence and “lebensraum”.
Mr. Speaker, the hon. member for East London (City) took a few wide turns through the whole of the Budget. I do not see my way clear to replying to all the general statements made by him. This shadow Minister of Tourism of the United Party ought to pack his bags and go on a few trips. I think he ought to visit a few of the black states in Africa, ones which may be compared to our own Bantu homelands an I in which there are no restrictions on free capital. Thereupon the hon. member should return to report to the House of Assembly whether, in his opinion, South Africa was really faring so badly in the development of its homelands. The hon. member may pay a quick visit to Japan, too, so as to acquaint himself with the problems prevailing in that country to-day, despite its rapid rate of growth. Perhaps the hon. member will be more satisfied after those visits that we have a Minister of Finance and a Government that have been succeeding for the past eight years in keeping the consumer price index from increasing more than 2.7 per cent per annum on an average as against an increase in Japan of 5.6 per cent per annum on an average. If he examines the problems of other countries more closely and properly, including the relatively high unemployment rate prevailing in America at present, I think this shadow Minister of Tourism will act with a more cheerful mien here in future.
Actually I want to confine myself to the speech made here this afternoon by the hon. member for Von Brandis. I think the lion, member painted an interesting picture. One can find very little fault with the analysis he made. Similarly, one can find very little fault with the conclusion to which he came, i.e. that if South Africa wanted to safeguard its balance of trade in future and wanted to increase its exports as against imports, which, according to expectations, would constantly be increasing in a rapidly-developing country such as South Africa, attention should possibly be paid to the further processing of our ores and minerals. I agree with that statement of the hon. member and I think both the Minister of Finance and the Government agree with that, i.e. that in future this should be seen more and more as a source of future foreign exchange earnings and increased exports for South Africa. But I do want to tell the hon. member that in my opinion he made a very harsh statement when he said that the Minister of Finance in his Budget speech had simply stated the bare fact that in the past year we had a relatively large discrepancy between exports and imports with an increase of approximately R15 million only on exports excluding gold, as against an increase of approximately R250 million in our import figure. He suggested that the Minister of Finance and the Government were accepting this situation as such with an attitude of resignation and were quite satisfied that South Africa would possibly experience problems in this field in the future. I think in this regard he went somewhat too far. I think no government can pride itself more on having taken all possible steps for making and keeping South Africa’s foreign exchange position as sound as possible. It is perfectly true that imports increased relatively sharply to R2,137 million in 1969, an increase of R250 million. It is also true that exports increased relatively slowly to a total figure of R1.402 million, excluding exports of gold, an increase of approximately R15 million only. I think regard should be had to the fact that the past year was a very poor one for the export of agricultural products. This may be a contributory factor to our relatively lower export figure.
When one has regard to the main features of the Budget, it is, in fact, so that one must admit that this Government is primarily engaged in tackling this problem of the future. In the first place there is the measure about which a great deal has already been said, i. e. the increase of exporters’ allowances announced by the Minister of Finance. The allowance is increased to 100 per cent in the case of export promotion costs incurred by undertakings if they are able to increase their export turnover by more than 25 per cent. The allowance is increased from 62i per cent to 75 per cent in those cases where they are able to show an increase of between 10 and 25 per cent. Even those who are able to show an increase of less than 10 per cent may still claim an allowance of 50 per cent. I think this step in itself shows that the Minister of Finance and this Government are aware that something has to be done to stimulate South Africa’s exports.
We now also have investment allowances. For many years investment allowances did not exist but now they are being re-introduced. I think this is not merely a step which is being taken to bring about in South Africa increased investment in capital goods, factory buildings, plant and other production factors, but also an indirect attempt to increase South Africa’s total production. I think we should see this picture in this light: In the past the South African industrialist was possibly too inclined to think, in the first place, in terms of import replacement. I think the whole trend of the past decades was actually aimed at bringing about import replacement and at obtaining a sound foreign exchange position in that way. I also believe that our industrialists in South Africa will become conscious of the necessity to export when we begin to reach surplus capacity. The mere fact that minerals are being exported on a large scale may be attributed to the absence of a domestic market for those minerals. The mere fact that agricultural products are being exported on a large scale, may be attributed to a surplus capacity of those products in this country, and if we can succeed in bringing about a larger capacity in all other industries, actually a surplus capacity, we shall succeed in creating a greater export consciousness amongst our industrialists. For that reason I want to make the statement that the hon. the Minister of Finance, by means of this measure, will possibly succeed in obtaining on the long run not only increased production but also, to a certain extent, a surplus capacity in certain industries. This will obviously serve as a strong incentive to seek foreign markets so as to keep those industries sound.
A third measure which was also announced in this Budget, is the financial assistance which will be given to the universities to the extent that this Budget gives our universities twice the financial assistance given to them two years ago, an increase of 100 per cent within two years, in addition to other measures announced by the Minister of Finance, i.e. that companies may deduct 5 per cent, and not only 2 per cent as in the past, from their taxable income and that private individuals may deduct an amount of up to R800 from their taxable income in respect of donations made by them to universities. These three measures, firstly the increased financial assistance to our universities, plus the further concession in respect of donations by companies and the new concept of deductions which the individual may make in respect of donations by him to a university, will ensure in future that our universities can truly come into their own. We shall not be able to obtain industrial growth in South Africa to the extent we should like to have if we cannot, in addition to the highly-skilled manpower produced by our universities, train also technologists and technicians on a larger scale. The people who are responsible in the first place for the training of technologists and technicians in industries or in hospitals or wheresoever are the very people who received their training at the universities. For that reason I say that the hon. the Minister of Finance has also taken a step, by means of this assistance he is giving to the universities, in the direction of eventually promoting exports in that South Africa will have to a larger extent, firstly, the trained manpower and, secondly, better facilities for raining technicians and technologists on a larger scale than in the past. Thirdly, exports will eventually be promoted also because he, by giving South Africa more trained manpower, will be able to provide assistance for more research to be done so as to make our products the best in the world, so that the image of the South African product will compare favourably at all times and will be an image which will shine throughout the world, particularly under these circumstances where more and more money has to be pumped into research. As I was saying this is the third measure announced by the hon. the Minister which will eventually make the very problem mentioned by the hon. member for Von Brandis a less serious one for South Africa. I also want to point out that we shall be able to succeed in promoting exports to a larger extent than in the past only if we are able to make proper studies of the markets of the world, including markets for refined minerals and unprocessed ores and minerals. We shall have to train market reresearchers for this task, people who can make a study of conditions in every country of the world, people who can make a study locally of every industry and its problems, but also of the possibilities the future holds for that industry. In this direction, too, I believe the hon. the Minister of Finance, by giving this assistance to the universities, has put his finger on the right method of solving this problem for South Africa.
I should like to mention here to-night another step that has been taken, the importance of which may no be realized at all times. A few years ago it was announced to the extreme joy of the whole of Natal that a new urban complex was to be developed on the North Coast of Natal at Richard’s Bay, a place which, according to estimates, will eventually be inhabited by one million people. A few weeks ago this same Government announced a new step forward in the same direction when it was announced that the development of Saldanha Bay as an ore export harbour, but also, we hope, as a new large growth point on the West Coast, had the Government’s blessings. These two new growth points, for the very reason that they are situated on our coast, fit in with our pattern of export promotion, because if we want to compete on the export markets of the world, in Africa as well as in overseas countries, on the most favourable conditions, we must create the places at which our industries may establish themselves so that they may compete in the best possible way. For that reason it probably is a source of joy to each industrialist in South Africa that apart from the existing metropolitan areas and the existing big harbours of South Africa, these additional industrial growth points will come into existence in the future, points at which the industrialists of South Africa may establish their industries and from where it will be possible for them to develop export industries in particular.
A fifth aspect which I want to mention in connection with the steps taken by the Government to combat this very problem, is the way in which this Minister of Finance is combating the cost of living in South Africa. I have mentioned that during the past eight years South Africa has succeeded in having the third lowest increase in consumer price indices in the world. After America and Germany, South Africa had an average annual increase in consumer prices of 2.7 per cent as compared to a country often presented to us here during the past few weeks as an example, i.e. Japan, which had an average increase of 5.6 per cent during the past eight years. We may rest assured that if a country had to concentrate only on trying to achieve a 10 per cent or 11 per cent growth rate and did not also succeed in keeping its domestic prices low and the cost of living index reasonably low, it would in the long run not be able to compete successfully on world markets. Consequently I am of the opinion that particularly this Minister of Finance with all his Budgets, as well as his predecessor, may say that in this regard they have laid also the true foundations for ensuring that South Africa will be more competitive on world markets in the future.
In conclusion I just want to point out that a strong feeling has developed amongst our industrialists in South Africa, particularly amongst the organized industrialists, that new tariff adjustments will have to come. I am aware of the fact that decisions have been taken by certain associations of the organized industries in South Africa that they themselves are prepared to bear the costs of paying economists to make a thorough study of virtually every industry in South Africa, of every industry’s particular problems, its growth possibilities and its potential on the world market. I want to trust that the Government in this regard, too, will give organized industry in South Africa the greatest possible measure of co-operation in the study which will be made, in which each industry will analyse his case in depth in order to ascertain what its problems are as compared to other countries exporting to South Africa, but also what its possibilities are and what it has to do to be able to make the best use in future of the export potential it has. In this regard I want to express the hope that in view of the fact that this study will be commenced within the next four or five years, the greatest possible co-operation will be given, not only by the Board of Trade and Industries, but also by all Government bodies concerned so that South Africa, after these analyses have been made, may be in the strongest possible negotiating position when it is fighting for a revision of the tariffs under the G.A.T.T.
Sir, I am sure that there is no member in this House who disagrees with the hon. member for Vasco in his emphasis on the necessity for export and the emphasis that he has laid on education and the advancement of facilities for university education. In that regard he has the full support of this side of the House. Similarly he has the full support of this side of the House when he talks about the two economic and industrial growth centres which have been established at Richard’s Bay and Saldanha Bay. Of course, Sir, those two growth centres have been established not to meet any ideological thinking of the Government’s but because of economic considerations., That is the value of these two growth points as against those labouring, unsuccessful growth points which are called ’’border areas” and “homelands” under this Government.
Whilst we agree with these expressions of opinion by the hon. member for Vasco, I think he and the hon. the Minister of Finance will agree with me that the successful development of our country and its continued growth will depend very largely and even more so in the future than at the present time upon an efficient and satisfied Civil Service. I want to deal with some aspects of the Civil Service and the treatment, or lack of treatment, of civil servants in the Budget presented by the hon. the Minister of Finance. Sir, under this Government we have had a succession of Ministers of the Interior—six of them—each one in turn having the responsibility to look after the civil servants and the responsibility, through the Public Service Commission, for the terms of employment, the remuneration and the general welfare of the civil servants of this country. Sir, with each move the problems of the Civil Service have been merely scratched; they have been looked at but they have mainly remained unsolved, and justifiably, as is apparent from the remarks of representatives of public servants’ associations and from other persons in the Civil Service, they are bitterly disappointed with the Budget presented by the hon. the Minister. There is certainly nothing in it for them. Sir, one asks why this has happened. I would like to remind you, Sir, that this is a matter which has been raised over and over again by this side of the House. During the 1969 session the then Minister of the Interior, the present Minister of Economic Affairs, said that the Cabinet had already appointed a committee in 1968 to investigate at Cabinet level to see to what extent efficiency in the Public Service could be improved. Sir, this was an investigation at Cabinet level to see what could be done so far as the Civil Service is concerned, and the efficiency, or the lack of efficiency, of hon. Ministers in the Cabinet in discharging this duty which they took upon themselves in 1968 was aptly exposed when the Prime Minister found it necessary after the election in April of this year to say publicly over the radio that he was going to call on his Ministers for a little “opknapping” in the administration of their Departments. Sir, what they have been doing for two years, I do not know. Perhaps the fact that the Civil Service has been left in the state in which it is is due to the frequent changes in Ministers of the Interior. Sir, nothing has been achieved. In fact, the position has deteriorated since the Cabinet committee was appointed. I will give an illustration. This committee was appointed in 1968. In the following year, from 1st April, 1969, to 31st March, 1970, there was a net loss in the clerical department of 5 per cent of the establishment. There were more resignations than recruits in the Civil Service. In the professional class there was a gain of 0.6 per cent over the previous year. In the technical class there was a gain of 2.4 per cent and in the general class 0.6 per cent. Sir, the fall in recruitment which continued and is continuing now in the clerical division is a cause of, what one might almost describe, alarm. Sir, without clerical recruits in the Service there can be no in-service training to equip staff for promotion. It is not necessary for me to elaborate further on the figures; hon. members are aware of them unless they do not wish to see them; the figures are there for everyone to see but I do think that it is necessary for me to elaborate on staff vacancies. I propose to give it in percentages of posts on the establishment which were not occupied by permanent appointees on 31st December, 1969—very recently. In the clerical division 33.96 per cent of the posts were not occupied; in the professional division 21.19 per cent; in the technical 18.16 per cent, and in the general division 35.94 per cent. Sir, what is the result of these unfilled posts? One finds now that public servants holding senior posts have an increased burden of responsibility on their shoulders due to the lack of experienced and trained lower graded staff to relieve them. I am sure that hon. Ministers who are present in the House at the moment are aware of this problem which exists in the Civil Service of the senior men having no immediate relief and assistance from qualified personnel directly under them. What is worse is that recruits brought into the Service are faced with a responsibility for which they have not yet had an opportunity of undergoing proper training. One is amazed that in these circumstances the machine does function as well as it does. I want to repeat, as I have said so often before, that the public servants who are fulfilling these duties deserve the gratitude of every South African for the burden which they are carrying. Government ideologies go on; Government legislation comes through the mill and through this House and is passed on for implementation and the civil servants constantly have these wider fields of responsibility cascading upon them as this Government creates department after department, but they nevertheless carry on in spite of staff shortages. Sir, when I say that there is this cascading of additional departments, I want to indicate to you another growth rate and that is the growth rate of the establishment of the Civil Service under this Government. With almost each piece of legislation that goes through this House another new department is created. In the first five years, from 1948 to 1953, the number of employees controlled by the Public Service Commission increased by 13 per cent; in the following five years, from 1953 to 1958, by 17 per cent; in the next five years by 20 per cent—and I might mention that these are compound increases—and from 1963 to 1968, when this Government really got busy with a vast number of laws requiring new departments, the increase in the establishment was 30 per cent. This is a growth rate which is quite phenomenal; in the respective five-year periods the increases were 13 per cent, 17 per cent, 20 per cent and 30 per cent of the establishment. We on this side of the House have from time to time advocated improvements which we believed were due to the members of the Civil Service, in their conditions of employment and their scales of pay. The public servants under this Government appear to have received Cinderella treatment from succeeding Ministers of the Interior. The hon. the Minister of Police, sitting opposite me now, has already reminded me that in 1968 a Cabinet committee was appointed by him. Since then he no longer handles that portfolio, but we are still waiting for the results of that Cabinet committee.
I am glad the hon. the Minister of Police is here this evening, because I want to indicate another matter which is annoying and irritating the members of his own Department. Why is the Police Force unable to fulfil some of its duties, namely that of street patrols, and instead have to visit bingo evenings at schools where people are playing a little “housey-housey”? Not one or two but dozens of policemen are utilized to do this sort of thing. What is more shameful is the number of men delegated to do the snooping work under the Immorality Act, which they all loathe and detest.
From time to time we on this side of the House have suggested improvements that we believe are due and which would help to deal with this problem. It is not an easy problem to solve, but let us for heaven’s sake make certain that those who are within the Service are getting a square deal from the country which they are serving.
I now want to mention a matter which has been discussed over and over again, namely the introduction of modern business methods and mechanization. I know that that is taking place, but it is taking place far too slowly in the Civil Service. The point that is missed is that mechanization may do away with some of the elementary clerical work that is done in the Service, but the individual that is still required to remain in the Service must be a higher qualified person to do more responsible work. It is the elementary work that is done by mechanized means. I would now like to refer to some of the matters which I believe the civil servants are entitled to know why they have not been adopted. The hon. member for Umbilo has for years suggested and has repeatedly advocated that public servants should have the benefit of a non-contributory pension scheme during the first 10 years of employment by the State. This has a double attraction, provided the State bears the cost of the contributions which normally would be paid by the employer and the employee. It has the first attraction that it gives recruits into the Civil Service relief from pension contributions during the first 10 years of employment. It has the added and other advantage to the State that it dissuades recruits from resigning from the Service merely for the sake of receiving a cash repayment of their pension contributions. I think the State has had the experience before that some young recruits into the Civil Service have been tempted to resign because they are able to get a cash payment which they need for some purpose or other and that they then re-enlist in the Civil Service again. With this scheme the hon. member for Umbilo has repeatedly suggested should be adopted, you would have a double benefit, first to the State and then to the individual.
A second point which I believe the hon. the Minister of Finance must really tackle as far as civil servants are concerned is one that I cannot for the life of me understand, namely why civil servants cannot be granted an automatic salary increase related to the rise in the cost of living index each year. It has been done before and we know that all the promises of 1948 and subsequent years, namely that the rise in the cost of living will be halted, and Louwcol has become an amusing story of the past. We know that the cost of living will continue to rise. If it goes on rising, the civil servant is entitled to have his salary adjusted more frequently than is being done at the present time, in order to meet the increased cost of living. I do not know why it is that the Government will not agree to this provision for the civil servants. If this is done, it will be a matter of having to review salaries every five years or so, and consolidating into the salaries, for pension purposes, that portion of the temporary allowance or cost of living allowance which appears to be a reasonable figure after the five year period has elapsed. Such a figure must be consolidated into the salary. We find, however, that the public servant’s salary scale lags behind the actual cost of living burden he has to bear. It is only when there is a gap and when the pinch is being felt by the civil servant that a review of salary scales takes place. Salary increments are then granted. One cannot deny that these increases have been grant ed by the State from time to time, but they are merely granted to close the gap between their living expenses and the income they receive. Then the gap opens again. The hardship grows. Then again we have an attempt to close the gap.
Something else which is causing a great deal of concern at the present time are the anomalies which have arisen as a result of the Minister of Posts and Telegraphs increasing the salaries of his staff out on a limb, and the Langlaagte increase which was given to the Railways. I hope that this is a matter which is going to be rectified very quickly indeed. The Minister of Police can confirm this or not, but I am informed that, as a result of the Langlaagte increases, a Railway constable now receives the same pay as a warrant officer in the Police Force. This position has arisen because an adjustment of police salaries has not taken place at the same time. This indicates the haphazard way in which the remuneration of civil servants is handled by this Government. The same dilatoriness goes on year after year in spite of representations by the Public Servants Association. We find the same dilatory approach in regard to subsistence allowances to officials who are away from their normal headquarters. The allowance was fixed on 1st April, 1968. The allowance was fixed, according to rank, at R8, R6.50 or R5.00 per day. Hotel charges have increased considerably since 1st April, 1968. The consumer price index has increased by 8.7 points, but the allowance remains unaltered. Officials must now suffer financial loss when they are on duty away from their normal headquarters. These things go on hiring at the will of the civil servant to go on serving a State which continues to ignore his interests in this way.
Let me refer to one other matter to indicate what type of treatment these people receive. This is a matter which I believe is the responsibility of every Minister of the Cabinet, because if the Department of the Interior is not adjusting salaries, the dissatisfaction spreads through all the Departments. The transfer allowance to a civil servant was fixed at R50. Civil servants have felt for a long time that this was inadequate and that it should be increased. It has now been increased. An announcement was made at the end of December last year, and the increases came into effect on 1st April of this year. But what was the increase? There was a 100 per cent increase! This in itself shows what disadvantages public servants have been suffering during all the time that this allowance was kept at R50 per transfer, without making increases from time to time. It emphasizes the point I am trying to make in regard to the adjustment of civil servants’ salaries. These adjustments should be done regularly and mechanically, year by year. An overall review should take place every five years. It is the years of neglect of public servants by this Government which has led to the present shortages in the Public Service. This patchwork is not wanted by the public servants. I want to quote from the comments made by the president of the Public Servants Association when he looked at the Budget which has been presented to this House. He had this to say:
That is in fact what has been happening. According to Dr. Enslin, the president of the Public Servants Association,—and I find no reason to disagree with him—although before the last increases the gap between the private sector and the Public Service was estimated at 33 per cent, it has now only been reduced to 26 per cent. There is a 26 per cent difference between salaries in the Public Service and the private sector to the detriment of the Public servant. Last year the then hon. the Minister of the Interior said in this House, “It will be my task to try to effect an efficient Public Service and at the same time a happy Public Service”. I say to him that it is an efficient Public Service with the restricted manpower but he has failed dismally in making it a happy Civil Service in the period that he was in office.
I want to deal with another matter in regard to civil servants and the shortage of staff in the Civil Service. I want to deal with the creation of more opportunities for the employment of non-Whites in the Civil Service. I want to say that our standpoint in regard to this matter has been stated quite clearly and categorically by the hon. member for Bezuidenhout. I want to read to the House the statement that the hon. member made in this House on 3rd June, 1969 (Hansard column 7179):
That is the line which we have adopted and which we have asked be adopted. I think that especially after the spine-chilling “swartge-vaar” speech we had from the hon. the Deputy Minister this afternoon, it would ibe correct to remind you, Sir, of what the hon. the Minister’s reply was to the speech of the hon. member for Bezuidenhout. The hon. the Minister’s reply to that suggestion (was certainly not spine-chilling because the hon. the Minister said that that was precisely what the Government wanted to do. I refer to the present Minister of Police. He replied to the hon. member for Bezuidenhout as follows (Hansard column 7233):
The hon. the Minister then went on to state how many were being employed. This is not a “swartgevaar” matter, as the hon. the Deputy Minister tries to make out when we talk about using the non-Whites that are available. They have a responsibility to work within the Civil Service. In his reply the hon. the Minister went further and said:
That is what the hon. the Minister had said. Whether it is a question of separate development or the provision of services, the hon. the Minister has made it clear that he accepts this need. He is a realist. He is almost like the Minister of Transport. He can almost claim to be a realist because the Minister of Transport says, “When I want labour, I employ it.” That is what is needed in the Civil Service. All I want to ask the hon. the Minister is: What is he doing about this and what is happening about filling this gap in the staff tables of the Civil Service by employing non-Whites, even on the basis on which he said it should be done? I ask this because I have already indicated the high percentages of vacant posts that exist in all divisions of the Public Service to-day.
In conclusion I want to say that no dynamic planning to meet the problems of the Civil Service is being undertaken by the Government at the present time. I know that they have just recently changed Ministers.
Mr. Speaker, may I ask the hon. member a question?
Mr. Speaker, I am afraid I only have about two minutes left. There is no dynamic planning to deal with this problem and I do not believe that this Government is capable of solving this problem, as it has neglected it for too long. I do not believe that it is capable of giving the civil servants the square deal which they are entitled to receive from the State and this country.
Mr. Speaker, apparently the debate has now swung away from the financial aspect. I must say that since the debate began this afternoon, the Opposition has contributed virtually nothing in the field of finance. They made no positive contribution which can give the Minister of Finance the opportunity to reply on Monday. When it was the main speaker of the Opposition’s turn to speak this afternoon, he started off with a negative attitude. This negative attitude was continued throughout the afternoon and this evening until now by hon. members on that side. There is no positive contribution at all for which the hon. the Minister can thank them when he delivers his reply next Monday. It will really be a difficult task for the hon. the Minister to reply to all the hon. members’ questions, because it is always difficult to reply to nothing. One can say practically nothing when you have to reply to nothing. The hon. member for Mooi River, for example, became tremendously eloquent and emotional here this afternoon. He quoted wonderful words, swung his arms and gesticulated, but when he sat down, he had said absolutely nothing and one did not know what to reply to. In actual fact there was only a cloud of dust and the hon. member for Mooi River emerged from the debate as the great joker on that side.
If there was a ray of light on the other side, I must say that perhaps it came from the hon. member for Von Brandis. This hon. member at least tried to adopt a positive attitude and to make a contribution to this debate. In my opinion, the hon. member for Vasco replied very effectively to his speech. Over against that, of course, many excellent contributions were made on this side of the House. I have in mind, for example, the speech made by the hon. the Deputy Minister of Finance. This was a speech which gave the Opposition such a fright that they actually became pale and could not make another positive contribution, so much so that the hon. member for Green Point again had to quote the hon. the Deputy Minister a little while ago and say that he had said nothing. But he did this merely to hide his own embarrassment because of this wonderful speech which the hon. the Deputy Minister of Finance had made.
This Budget which the hon. the Minister of Finance introduced is really one with vision. One can in fact call it a display window of our country’s economic policy. It lays the basis of a stable and dynamic economic development of South Africa, not only in certain fields, but in all fields. Also as far as our policy of separate development is concerned, this Budget is really encouraging and a display window for the taxpayers of South Africa. During this discussion, reference was made to the policy of separate development; later in the debate it will probably receive much more attention. At a later stage in my speech I shall again refer to what the hon. member for Green Point said in regard to the Public Service. This Budget does not make provision only for the immediate future of South Africa. No, as I have said, it is a Budget with vision. When this Budget was drawn up, the future was taken into account. Planning took place on a long-term basis. Planning on a long-term basis is a feature of a good budget. This Budget makes provision for increased growth in the future to the benefit of every citizen and every taxpayer as far as his prosperity in this country is concerned, as well as for his peace and safety. It is clear that the confusion prevailing in the rest of the world in the field of finance was in fact thoroughly taken into account in this Budget. Confusion and uncertainty are prevailing in the world. These things are taken into consideration in this Budget presented by the hon. the Minister of Finance. In the first place, attention was especially given to the scarcity of money. The hon. the Minister of Finance mentioned this. In the second place, the rising interest rates were taken into account. Interest rates abroad are rising phenomenally. Similarly, there are tremendously high interest rates in respect of loans to other states. In the third place, the inflationary conditions in the rest of the world, especially in Western Europe and America, were taken into account. It was very gratifying to be informed that these inflationary conditions in the rest of the world have not yet blown over to South Africa in all their consequences. This can be ascribed to the Budgets introduced in the past, especially that of last year. These conditions were recognized in time and a start was made to combat them. In the fourth place, the competition on world level was taken into account. I must admit that this was probably one of the most difficult Budgets in years which the hon. the Minister of Finance had to present here, especially if we take into account the era in which we are living. In spite of this, the hon. the Minister brilliantly succeeded in showing us what awaits us in the future. He laid down certain norms for us with which we can combat these dangerous financial practices in the world and even face up to them. Confidence in our economy, both domestically and abroad, has been restored. The outside world will give serious attention to the Budget which the Minister has presented here. This Budget will find its echo and come back to us again in a very good way. This Budget also brings great relief to the taxpayer. Now he can smile again and go to meet the future with confidence. It has given him confidence and set his mind at rest for a number of reasons. In the first place, I want to mention the fact that no additional taxes have been imposed. In the second place, concessions have been granted in regard to the taxation of pensioners. Many pensioners will welcome the fact that the minimum amount on which tax will be levied for pensioners, has been increased from R1,350 to R1,500.
Business interrupted in accordance with Standing Order No. 23 and debate adjourned.
The House adjourned at