House of Assembly: Vol3 - FRIDAY 23 MARCH 1962

FRIDAY, 23 MARCH 1962 Mr. SPEAKER took the Chair at 10.5 a.m. QUESTIONS

For oral reply:

Collections and Expenditure Under Native Services Levy Act *I. Mrs. SUZMAN

asked the Minister of Bantu Administration and Development:

  1. (1) What have been the (a) total collections, (b) administrative costs and (c) expenditure on projects and services for the Bantu people under the Native Services Levy Act, 1952; and
  2. (2) what is the estimated cost of projects and services pending under the Act.
  1. (1)
    1. (a) R49,409,682.
    2. (b) R1,810,035.
    3. (c) R30,037,733. This amount includes expenditure of R2,960,921 on transport prior to the coming into operation of the Native Transport Services Act, 1957 (Act No. 53 of 1957).
  2. (2) An amount of R15,396,247 has been approved and further projects totalling approximately R2,000,000 have been received and are still being considered.
Black Spots in Natal *II. Mr. CADMAN

asked the Minister of Bantu Administration and Development:

  1. (1) What is the situation and description of the black spots in Natal in respect of which, as stated by him on 13 February 1962, 73,383 morgen is required as compensating land by the South African Native Trust;
  2. (2) whether it is the intention to remove the Bantu at present residing in these black spots; and, if so,
  3. (3) how will the land be dealt with when these Bantu residents have been removed.
  1. (1) To furnish details of each black spot in Natal as required by the hon. member would require a large amount of paper work which does not justify the time and labour involved. The number and extent in morgenage of black spots in each district is therefore given.






1,774 morgen



5,589 morgen



1,667 morgen



7,147 morgen



4,109 morgen



1,915 morgen



625 morgen



557 morgen



8,403 morgen



12,523 morgen

Lower Tugela


3,431 morgen



14,789 morgen

New Hanover


549 morgen



3,463 morgen



156 morgen



139 morgen



2,462 morgen

Port Shepstone


684 morgen



198 morgen



1,699 morgen



961 morgen



343 morgen



200 morgen

  1. (2) Yes.
  2. (3) Land vacated by the Bantu through the removal of black spots becomes State-owned land and is disposed of by the Department of Lands.
Elimination of White Spots *III. Mr. CADMAN

asked the Minister of Bantu Administration and Development:

  1. (1) Whether there are any so-called White spots in Natal which it is intended to acquire for Bantu occupation; if so, (a) what is their situation and description, (b) in what manner and (c) when will the White residents be removed; and
  2. (2) whether White landowners in these spots will be offered alternative land; if so, (a) what land and (b) where will it be situated.
  1. (1) It is the policy of the Government to consolidate the Bantu areas as far as possible. In this process White spots will also be eliminated. It is impossible, at this stage, to give details.
  2. (2) Falls away.
Daily Trunk Calls from Johannesburg to Cape Town *IV. Mr. EMDIN

asked the Minister of Posts and Telegraphs:

What was the average number of trunk calls from Johannesburg to Cape Town between 6 a.m. and midnight (a) on a weekday, (b) on a Saturday and (c) on a Sunday during 1961.


The average number was approximately (a) 464, (b) 232 and (c) 135.


—Reply standing over.

Length and Value of Films Imported *VI. Mr. HOPEWELL (for Mrs. S. M. van Niekerk)

asked the Minister of Finance:

  1. (1) (a) What length of (i) educational and cultural films and (ii) films for children of school-going age was imported duty free into the Republic during 1961 and (b) what was the value of these films;
  2. (2) what was (a) the total value, (b) the countries of origin and (c) the footage from each country, of entertainment films imported during 1961; and
  3. (3) what was the total amount of duty collected on imported films during the same year.
  1. (1) (a) and (b) Separate particulars in respect of educational and cultural films and films for children are not available.
  2. (2) Separate particulars in respect of entertainment films are not available. The total value, the countries of origin and the length of all cinematograph sound films imported during 1961 is, however, reflected in the attached schedule.
  3. (3) Cinematograph films are free of customs duty.


Country of Origin

Length (in feet)

Value (in Rand)

United Kingdom



Hong Kong






Rhodesia and Nyasaland















Republic of South Africa






New Zealand





















The Federal Republic of Germany












The Netherlands



























United Arab Republic



United States of America






Titles of Films Banned *VII. Mr. HOPEWELL (for Mrs. S. M. van Niekerk)

asked the Minister of the Interior:

What were the titles of the films banned in 1961.


Night Heat; Shadows; Youthful Sinners; Cold Wind in August; Too Hot to Handle; I Passed for White; Night and Fog; During One Night; Portrait of a Mobster; Private Lives of Adam and Eve; The Explosive Generation; Ma Barker’s Killer Brood; Jungle Street; The Fruit is Ripe; La Verite; All the Young Men; Anatomy of a Psycho; Victim; Breathless; Taste of Honey; Paris Blues; Cool and Crazy.

Combating of Juvenile Crime in Durban *VIII. Mr. OLDFIELD

asked the Minister of Justice:

  1. (1) Whether the special detachment of the Police Force dealing with the prevention and detection of juvenile crime in Durban, and known as the “Ghost Squad”, is still in operation; if not, why not; if so, (a) for how long has it been in operation and (b) how many members of the force have been allocated to it; and
  2. (2) whether any steps have been taken or are contemplated to combat hooliganism in the Durban area; if so, what steps; if not, why not.
  1. (1) No. The so-called “Ghost Squad” was disbanded on 20 October 1960 in order to release more members of the force for street duty and direct prevention of crime, including juvenile crime.
  2. (2) Yes. A Special Patrol comprising four European members operates in the beach area of Durban to combat juvenile crime. A Crime Patrol operates in Durban Central which combats especially vagrancy, smuggling, liquor, dagga and hooliganism.

—Reply standing over.


—Reply standing over.

Higher Salaries for Bantu Teachers *XI. Mr. WOOD

asked the Minister of Bantu Education:

  1. (1) Whether a resolution passed by the Executive Committee of the Transvaal Teachers’ Association on 12 August 1961 in regard to the salaries of Bantu teachers, has been brought to his notice; and
  2. (2) whether his Department has taken or contemplates taking any steps to increase the salaries of Bantu teachers; if so, what steps.
  1. (1) Yes;
  2. (2) Yes. The salaries for Bantu teachers in Bantu farm schools were increased as from 1 January 1962. My Department has also framed new improved salary scales for Bantu teachers in Government and State-aided Bantu schools, but, as it will cause a considerable increase in the expenditure, and due to the fact that the Bantu Education Account cannot afford it at present, mainly as a result of the disappointing measure in which the Bantu population pays its taxes, consideration of these proposals will have to stand over until such time as the arrear taxes have been collected.
Disturbances in Langa *XII. Mrs. SUZMAN

asked the Minister of Justice:

  1. (1) What was the nature of the duty on which members of the South African Police were engaged in Langa on 16 March 1962, when, according to Press reports, they were attacked;
  2. (2) whether any civilians were (a) killed or (b) injured in the course of the disturbance; if so, how many;
  3. (3) whether any arrests have been made following the disturbance; and
  4. (4) whether he is in a position to make a statement in regard to the matter.
  1. (1) The police were on ordinary patrol duties.
  2. (2) (a) and (b) Unknown.
  3. (3) Yes.
  4. (4) No, it is not considered expedient to make a statement at this stage.
No Proceedings Against Chinese Person Classified as White *XIII. Mr. HOPEWELL

asked the Minister of Justice:

Whether his Department has instituted or contemplates instituting proceedings against the Chinese person who, according to a statement by the Minister of the Interior on 16 March 1962, has been classified as a member of the White group.




—Reply standing over.

No Request by Foreign Government for Services of Prisons’ Official *XV. Mr. M. L. MITCHELL

asked the Minister of Justice:

  1. (1) Whether any approach has been made to the Government by a foreign government for the services of an official employed by the Department of Prisons; if so, (a) by which government and (b) in what capacity is the official employed; and
  2. (2) whether he will make a statement in regard to the matter.
  1. (1) No. The rest of the question falls away.
Ban on A.N.C. and P.A.C. to be Renewed *XVI. Mrs. SUZMAN

asked the Minister of Justice:

Whether it is his intention to renew the ban on (a) the African National Congress and (b) the Pan African Congress when the present ban on these organizations expires.

  1. (a) and (b) Yes.
Cost of Training Scheme for Artisans *XVII. Mr. HOPEWELL (for Mr. Dodds)

asked the Minister of Labour:

What was the total cost of the training scheme for artisans, referred to by the Controller and Auditor-General on page 217 of his Report for 1960-1 on Appropriation Accounts, etc., since the inception of the scheme up to 31 August 1961.


The total cost to the Department of Labour was R946,661.15.

Loans Granted by Bantu Investment Corporation

The MINISTER OF BANTU ADMINISTRATION AND DEVELOPMENT replied to Question No. *XI by Mrs. Suzman, standing over from 20 March:

  1. (a) What was the nature of the business undertakings for which loans were granted by the Bantu Investment Corporation during 1961 and (b) what was (i) the number and (ii) the amount of the loans granted for each purpose.

(a) and (b) (i) and (ii)

The relative information is given in tabulated form hereunder:

Type of business


Total amount of loans granted

General Dealers



Boarding Houses






Building Contractor



Cafe/Eating Houses









Bus Service









For written reply:

Extent and Value of Land Allocated Under Group Areas Act Mrs. SUZMAN

asked the Minister of Community Development:

What is (a) the extent and (b) the approximate value of land allocated to date under the Group Areas Act for ownership by (i) the White, (ii) the Coloured, (iii) the Asian and (iv) the Bantu group.


The collection of these details will require that information in connection with, inter alia individual properties will have to be obtained and correlated and this will entail so much work and time not only for the Department of Community Development but also for various other departments, that the information asked for by the hon. member can unfortunately not be furnished.


I move—

That in the opinion of this House Cabinet Ministers and Deputy Ministers of the Republic should not hold directorships of companies, public or private, with the exception of directorships of philanthropic undertakings, or directorships of private companies established for the maintenance of private family estates.

I need not explain that the subject of the motion has been debated on previous occasions in the House. This subject has been debated in every reputable democratic country in the world. As our capitalistic system has developed, especially in South Africa with our expansion into an industrialized capitalist state, it is inevitable that this problem will emerge of a possible conflict between Minister’s private interests and his duty as a member of the Cabinet. This has arisen in every country. This problem is confused because in the minds of some people there is a fundamental distinction between the nature of a public company and a private company. That confuses the problem. There should to-day be no such confusion if one considers the system of taxation of the hon. the Minister of Finance.

In introducing the motion I should like to anticipate an obvious criticism. I have not covered the whole field of this investigation. I have made no reference to a Minister’s participation in a partnership or a syndicate; I have made no reference to a Minister’s shareholdings. I have confined myself to a directorship, of a Minister holding directorship. When a Minister’s private interests clashes with his public duty, the problem is not nearly as serious as the question of holding a directorship. When the Minister’s private interest clashes with his public duty as a Minister, as a member of the Executive, his course is a comparatively simple one: He lays aside his private interest and considers only his public duty and I assume that Ministers do that. But when a Minister is a director of a company a moral issue is involved. The Minister as a director of a company acts as the trustee for the shareholders and where there is a difference of opinion between the company and the State or between the company and any other company which may have an interest in the State, the Minister has this conflict of loyalties: his public duty as a Minister and his duty to the shareholders who have elected him as their trustee. I have made up my mind in this discussion to confine myself to directorships, although it is quite possible that hon. members taking part in this debate will widen the scope of the discussion. A private member cannot possibly cover the whole field of the discussion. I said that this subject had been debated on previous occasions in this House. It was raised in 1944 by the hon. Minister of Finance who at that time was the member for Fauresmith. He raised it in a debate on the Prime Minister’s Vote. The Prime Minister of those days was, of course, General Smuts. I will not quote the whole speech although I must say that it is worthy of quotation because the tone and the tenor of the Minister’s speech on that occasion was very worthy indeed. He did not attack Ministers in the Cabinet who were possibly holding directorships, but he did mention them by way of illustration and I intend to do the same thing to-day, Sir. I intend to follow his very good example. This is what the hon. the Minister of Finance had to say on that occasion (Hansard Vol. 48 col. 3637)—

The position of a Minister in many cases like that of a Judge…. He must never be placed in a position where there may be a clash between his duties as a Minister and his interests as an individual…. We consider it is not fair to place any individual in the position where there is a possibility of a conflict between him as a Minister and his interests as a private individual. It is in the interest of the prestige and the dignity of the Cabinet that there should be no suspicion on the part of the public of anything of this kind taking place—in this case it is even more important to avoid the suspicion than the actuality.

I think that is very important. It must be apparent to any person, to the most suspicious person, that there is no possibility of a conflict of duties. The Minister of Finance did make a suggestion at that time to the Prime Minister. I will deal with that suggestion at a later stage when I will give my own suggestions as well.

I raised the matter later in 1958. Before dealing with that I should like to say what General Smuts had to say in reply. Hon. members will notice that the position then was not clearly defined, although General Smuts put the position and, of course, commended the hon. the Minister of Finance on the manner in which he had presented his case. General Smuts said this (col. 3647)—

There is a great deal to be said for the hon. member’s view. The position, however, is that while in England there is a fairly definite policy—that policy has not always been the same—but while nonetheless there is a policy against members of the Cabinet holding directorships, no such ruling has ever been laid down here. It would be an entirely new precedent and of course it would mean making a change. It has never been the practice here in South Africa to compel members of the Cabinet to resign their directorships. It would be a new development in our existing policy if we were to take such a step. Personally I am strongly in favour of it. I am strongly in favour of our doing all we possibly can to keep our public honour clean.

Well, I need not add, Mr. Speaker, that whatever I have to say or what hon. members may have to say, there will be no suggestion of impugning the honour and integrity of any Minister or imputing unworthy motives to any Minister. I am discussing the system as it exists today. When we debated this matter in 1958 I raised it because there had been a good deal of public criticism of the actions of Ministers. On that occasion the hon. the Minister of Lands replied on behalf of the Cabinet and in his reply he stated unequivocally what the position was in the Cabinet then, in the days of Mr. Strydom’s Government. The Minister of Lands said this—

The Government has laid down the policy that Cabinet Ministers had every right to become directors of mutual companies and newspapers but that they should not be directors of other public companies.

I can expand that if necessary. The hon. Minister did. He referred to the historical background from the days of Mr. Merriman, and Mr. Sauer who were directors of companies. However, I do not think it is necessary for me to do that. What I am concerned with here is to state what the policy was four years ago. I assume that the policy is the same to-day although cases have been brought to my notice where that policy does not seem to be followed. I do not intend quoting those cases.

My argument is this, Sir, that the time has come for a clear statement of policy and the time has come for a change in policy. In order to illustrate what I have to say I am going to consider the operation of two newspaper companies and two mutual companies. They would, of course, fall under this rule of four years ago. The first of these companies I wish to discuss is Die Voortrekker Pers Bpk. As far as I am aware this company is not listed on the Johannesburg Stock Exchange. I cannot find any information about this company in the National Financial Year Book of South Africa and I had to depend upon the Annual Report of the chairman who is the hon. the Prime Minister. One can congratulate Die Voortrekker Pers on the great progress it has made. I am not going to discuss whether Die Voortrekker Pers has been successful or not. I am very glad it has been successful. But what I am discussing is whether it is desirable that the Prime Minister should be Chairman, whether it is apparent, as the hon. Minister of Finance said in 1944, that it is exactly what we want. Here are one or two extracts from that report. Die Voortrekker Pers is a large publishing and printing firm. It is not just a newspaper company. It has extended and expanded its activities and the business will be further expanded this year. It publishes school books. It has contractual relations with the Government and I will mention two of them. The first is the printing of the defence publication called Commando. The cost of printing the Commando was R23,400 last year. That was paid to Die Voortrekker Pers. In addition to that Die Voortrekker Pers printed Panorama at a cost of R151,000. Together these amounted to R175,000. This was paid by Government institutions—the Department of Information and the Department of Defence. Die Voortrekker Pers publishes books for schools used in Government schools; it has a very important printing section. In other words, it has expanded to-day into a publishing and printing firm far beyond the ordinary newspaper company. That is my first point.

Mr. G. F. H. BEKKER:

Tell us something about the Cape Times.


As far as I know, none of the Ministers is a director of the Cape Times. [Interjections.]

The next company I wish to deal with is the Dagbreek group of companies. I am again depending on the annual report of the chairman of the group at the annual general meeting— not the newspaper company this time, but the chairman of the group, and the chairman of this group again is the hon. the Prime Minister. [Interjections.] I am not discussing the merits of Dagbreek-pers. I am depending on what I get from the annual speech of the chairman of the company at the annual meeting of the Dagbreek group of companies. I want to say a word about this company, because this company has many contractual relations with the Government. I want to mention some of them. It prints for us the Bantu Educational Journal. I should explain that it does not do so directly as Dagbreek-pers but through its subsidiaries. It has several subsidiary companies. There is Dagbreek-pers Bpk., T. W. Hayne Bpk., Dagbreek Boekhandel, Bona-pers Bpk., and then the new one created last year, Lex-Patria-uitgewers (Edms.) Bpk. So here we have a group of companies. I am not speaking now of a simple newspaper company, but of a financial group, a publishing and printing group. Here are some of the contractual relations with this Government. It printed the Bantu Education Journal, at a cost of R26,000. It prints the South African Railway News, again through Hayne & Gibson. There the cost was R9,350. It prints Farming in both languages, at a cost of R52,000 for the 224,000 copies printed. It prints the Digest of South African Affairs—that information publication which appears regularly every fortnight —and the fact papers. These are again printed by the Dagbreek subsidiary Hayne & Gibson. The printing of the Digest and the fact paper together was R29,000. In addition to that, the Bona-pers, a subsidiary, publishes a paper—I think it is monthly—in Xhosa, Zulu and Sesuto, and this paper is brought for our Native schools. [Interjection.] It is paid for out of the Bantu Education Account. I want to tell the House how many copies were bought last year. There is no secret about these things. Everybody knows it. In 1961 242,000 copies were bought and there was paid for it R14,500. So the printing by Dagbreek for Government institutions was R117,000, and of course bona was sold for R14,500. That gives a sketch in brief of the story of Dagbreek.

But there is another feature which appears from the annual meeting of Dagbreek, and I want to quote this extract from the Chairman’s speech, from the speech of the hon. the Prime Minister on that occasion. He was discussing the publication of a new Sunday newspaper and he had this to say. At the previous annual meeting he had discussed a new English language Sunday newspaper, but this time he discussed an Afrikaans Sunday newspaper, Sondagblad. This is what the Prime Minister had to say—

Dit is nogtans met ernstige bedenkinge dat ons die stigting bejeën, sedert die afsluiting van ons boekjaar, van ’n verdere Afrikaanse Sondagkoerant deur een van ons Afrikaanse uitgewersmaatskappye. Hierdie optrede kan slegs lei tot onnodige duplikasie en meewerk tot die verkwisting van kapitaal in dieselfde sektor van ons bevolking.

Here we have the situation that the hon. the Prime Minister in his capacity as chairman of Dagbreek is criticizing the establishment of a newspaper of which the hon. the Minister of Posts and Telegraphs is a director.


Is that not democracy?


Oh, I see, it is democracy. Now this speech was published and of course there was a reaction in the Press. There was. bound to be a reaction to it. We have this reaction from a fellow Sunday newspaper, in banner headlines. It said—

Dr. Verwoerd attacks Hertzog’s paper. Sondagblad will harm Afrikaans firms Premier’s fears. New venture viewed with misgivings.

Order! Is that not going: beyond the scope of the motion?


My point in raising this is that it is not apparent, as the hon. the Minister of Finance said in 1944, that this is being carried out.


I am afraid the hon. member is going beyond his own motion.


I am trying to point out the reaction of the public, through the Press. Then the newspaper took the opportunity to discuss the situation that occurred some years ago, when the same Afrikaans publishing company wished to produce a newspaper and the Prime Minister of the day, Mr. Strydom, brought pressure to bear on them not to do so. I will quote now from a paper of some standing, the Financial Mail. I think the Financial Mail is a client of Dagbreek-pers, because according to a statement I saw in the Press recently, the Financial Mail is published by one of the Dagbreek-pers companies. This is the comment from a financial paper—

Ministers as business men: Dr. Verwoerd on competition: Company chairman H. F. Verwoerd does not like competition—not when it affects his business interests. Dr. Verwoerd’s strictures on the publication of the new Sunday paper Sondagblad—he is chairman of Dagbreek Trust, publishing the rival Dagbreek en Sondagnuus are directed at, among others, his Cabinet colleague, Dr. Albert Hertzog, M.P., who is a director of the offending group, Die Afrikaanse Pers. Dr. Verwoerd told Dagbreek Trust shareholders that with three Afrikaans and three English Sunday papers, the newcomer will make it that much harder for Afrikaans language papers to capture English-speaking readers (and advertisers) from long-established papers. Afrikaans Sunday papers will, he complains, have first to compete with one another before they can compete with the English Press and capture the industrialist and businessman advertising in the week-end papers. This is an extraordinary attitude for the Prime Minister to adopt in a country which he and other Government colleagues proudly claim to be one of the chief bastions of private enterprise. Perhaps Dr. Verwoerd has forgotten that the purpose of his Government’s Regulation of Monopolistic Conditions Act is precisely to encourage the unrestricted entry of newcomers into an industry, while the Board of Trade and Industries has consistently rejected the claim of offending business men that competition was wasteful and should therefore be regulated.
It would be in the public interest, it seems, for Ministers to resign from directorships in publishing companies as well as from insurance.

I propose now to deal with the two mutual insurance companies, and that will give me very great pleasure indeed.

I come first to the company that has had a remarkable record and which has now become a mutual company. I am going to speak about Sanlam, a company that every South African should be proud of. We should think of the great record of Sanlam. I was able to assist in a very modest capacity when Sanlam became a mutual company a few years ago.


Now for the poison. Go on.


About Sanlam? No, there is no poison about Sanlam. It is a magnificent company and it gives me the greatest pleasure to speak about Sanlam. My purpose in referring to Sanlam is to show that Sanlam over the years, after becoming an insurance company, has developed in a magnificent manner to become a great finance company, and they advertise it. There is no secret about it. It is advertised in a supplement to the Financial Mail. Sanlam and 11 other companies are associated in this. It is a great investment company for which the Minister of Finance should be very grateful after his experiences in June last year, because Sanlam played a magnificent part on that occasion. Sanlam has companies that do underwriting; there are investment companies; and I will say this for Sanlam, that when they have established a company they immediately have it listed on the stock exchange. The record of Sanlam is one of the finest this country has known. Referring to its most recent company, Samkor, Sanlam explains their method of operation, which is to encourage the public to invest in these companies and then float them off as independent, exactly as a mining group does. It is a great group of companies. I would like to be a director of it. I think it would be a very great honour indeed. I want to say how Sanlam invests its money through its associated companies and I want to give an example which was printed in the Press. Everything is printed in the Press and anyone who wants to read it may do so. They have invested money in the following companies: Bonusbeleggingskorporasie van Suid-Afrika Bpk.—and they give the amounts; I will not quote all the amounts. In this case it is R937,000. Then there are Federale Volksbeleggings Bpk., Federale Beleggingskorporasie Bpk., De Beers Consolidated Mines, Anglo American Corporation of South Africa, General Mining & Finance Corporation, Rand Mines Ltd. The spread is so great that in this chart, which hon. members will find on page 22 of this supplement to the Financial Mail, they give the whole framework of their company. They finish up with this sentence—

Individual members of the group, Sanlam, Federale Volksbeleggings and Bonuskor in particular have investments in dozens of other concerns. Collectively the total is in the region of several hundred companies.

Well, no one can say that is a mutual company in the old sense of 50 years ago. As far as I am aware, no Minister has ever been a director of the company. Well, that is the record of Sanlam and a magnificent record it is.

I come now to the second of these companies, and of course it is the South African Mutual. Well, there is a great company! What a pair of twins they are in the financial development of South Africa. Where would South Africa have been in June last year if there two great institutions had not shown complete confidence in the future of South Africa? I want to say a word about the South African Mutual, because it also has a magnificent record. I quote again from the Financial Mail. It praises the chairman of the company for giving such a great deal of information. Mr. Speaker, the Stock Exchange Committee of Johannesburg is always urging upon chairmen of companies to give more information to the public. The South African Mutual puts all the cards on the table, and I have the greatest confidence in a company of that nature. This is their short comment on the annual speech at the annual general meeting of the company—

With commendable candour Mr. R. H. Parker, Chairman both of the Mutual itself and of Mutual Finance, tells the public much more than he need. In a period of barely three years Mutual Finance Company has built up a portfolio with a book value of R47.2 million. It is a horrifying thought how far the market would have fallen in the latest two bad years if the Mutual’s buying had not been there to under-pin it.

How true that is, and how much we owe to these two great companies!

Now I want to give some idea of the scope of the Old Mutual Company and I quote now from the annual report of the chairman—

The Society, as one of the major life offices in the Federation and as a large institutional investor, has a vital interest in the future growth of the Federation… It is desirable to have a representative from those territories on the Head Office Board.

Then he refers to taxation and says this. The chairman was discussing the taxation imposed last year by the Minister of Finance and he said this—

This change is in my opinion wholly unjustifiable in view of the already heavy tax burden borne by life offices, which are taxed much more heavily than many other investment institutions such as building societies. Moreover, the tax on dividends is in my opinion wrong in principle. Life offices are also investment institutions, and we feel they should not be discriminated against by having to pay tax again on their dividend income. Representations to this effect have been made to the Minister by the Life Offices Association of Southern Africa, of which Association your Society is a member.

There is a conflict of loyalties. Should a Minister, a member of the Executive, be a director of that company, on which side would he be in making representations to the Minister? On which side is he when objections are made to taxation?

I now want to mention the associate companies. These are some of their subsidiary companies and associate companies: South African Mutual Fire and General Insurance Company Ltd., Old Mutual Fire and General Insurance Company of Rhodesia (Pty.) Ltd., South African Mutual Finance Corporation (Pty.) Ltd., The Old Mutual Investment Corporation of Rhodesia (Pty.) Ltd., The Old Mutual Building Societies in the Federation. Nothing pleases me more than to think that we are not only asking for foreign capital to come to us, but we are capitalizing new enterprises in Africa. It is a company of which we should be very proud.

Now that is the record I have. The question that arises is: What is the remedy? I want to quote, first of all, a statement which was made by the hon. the Leader of the Opposition, which is really my theme. It is a statement he made some years ago—I do not think it was in this House—giving what he considered was the right approach. He said this—

Cabinet Ministers should not be company directors. The practice in the United States of America and in Britain, where Cabinet Ministers are compelled to give up their company directorships, is clearly the one to be adopted in South Africa, too. This practice is desirable because it is unwise for a Cabinet Minister to be placed in a position where there could be even a suspicion that he might be caught up in a conflict between duty and interest. In the old days when a newspaper served as the voice of a politician, the matter might have been different. But in modern times newspapers are big publishing and printing firms. No member of the Cabinet should be associated as a director with such enterprises. Cabinet Ministers are public servants. It is not sufficient that they should be above matters like private business; they should be seen to be above it.

I now come to the recommendation made to the Prime Minister, General Smuts, when the subject was introduced by the present Minister of Finance, and this was his suggestion to General Smuts—

I want to impress upon him (General Smuts) the necessity of laying down a policy in harmony with the policy followed in England since 1906.

He took the British Government system as his model. He also gave us the background, the manner in which they arrived at their system in Britain. They did not arrive at it overnight; it was built up over the years. In the days of Palmerston a member of the Cabinet could do whatever he wished, but then there came Prime Ministers of the calibre of Disraeli and Rosebery and Gladstone, who tried to evolve a system whereby Cabinet Ministers could be bound. Then again we had those dark ten years of British Government, disastrous not only for Britain but for South Africa, from 1895 to 1905, when the Liberal Party persisted every day in pressing the Balfour Government and the Salisbury Government to give them a system similar to what they were working towards. Then with the change of government in 1906 Campbell-Bannerman took steps to define the duty of a Cabinet Minister, and from then they went on improving. I want to give their final decision and I am now quoting from the House of Commons Hansard, Vol. 496, page 702, in which Mr. Churchill, the Prime Minister of the day, laid down instructions and a new rule of conduct for Cabinet Ministers. Mr. Churchill covered the whole ground, shareholders, shareholdings, partnerships, etc. I am going to quote only his rule for directorships—

Ministers must on assuming office resign any directorships which they may hold, whether in public or in private companies and whether the directorship carries remuneration or is honorary. The only exception to this rule is that directorships in private companies established for the maintenance of private family estates and only incidentally concerned in trading, may be retained subject to this reservation that if at any time the Minister feels that conflict is likely to arise between this private interest and his public duty, he should even in these cases divest himself of his directorship. Directorships or offices held in connection with philanthropic undertakings should also be reresigned if there is any risk of conflict arising between the interests of the undertakings and the Government.

I think I should like to recommend to the hon. the Prime Minister that this system should be introduced into South Africa. I move.


I second. Mr. Speaker, I do not think there can be much difference with regard to the principles on which this motion is based. I think we can at least start by agreeing on both sides of the House as to the principles which ought to govern this matter, and I cannot do better than to quote the principles laid down by Sir Winston Churchill in 1952. He laid down the basic principles as follows—

It is a principle of public life that Ministers should so order their affairs that no conflict arises or appears to arise between their private interests and their public duties.

You will notice, Sir, that it is not only a question of a clash of interests; there must also be no semblance of a clash of interests. I am sure that everybody in this House will agree with that basic principle which ought to govern public life in all democratic countries. The difficulty arises, of course, with the application of that principle. That is where there might possibly be a difference of opinion. I may say that in 1944 when he also raised this matter, as I shall show later on, the hon. the Minister of Finance also accepted this principle which is set out very clearly here by Sir Winston Churchill. The question is how this principle should be applied; how it affects the position as it obtains in South Africa to-day. There again Sir Winston Churchill tried to define the practical results of the application of such a general principle, and I can do no better than to quote this to the House. He gave specific examples as to when such a clash may arise between the public duties of a Minister and his private interests. In paragraph 2 of his statement he goes on to say—

Such a conflict may arise if the Minister takes an active part in any undertaking which may have contractual or other relations with a Government Department, more particularly with his own Department.

There we have one specific case where there may be a clash between one’s public duties and one’s private interests, if one actively takes part in any undertaking which may involve contractual relationships with the Government and particularly with one’s own Department. He goes on to say—

It may arise not only when the Minister has financial interests in such an undertaking, but also if he is actively associated with any body, even of a philanthropic character, which might have negotiations or dealings with the Government or be involved in disputes with it.

So the rule in England goes much further than this motion. It also includes philanthropic institutions. Then he goes on to say—

Furthermore, Ministers should be free to give full attention to their official duties and they should not engage in other activities which might be thought to distract their attention from those duties.

The rules laid down by Sir Winston Churchill are, of course, general hints as to conduct, and I think very few of us would differ from those principles. When it comes to the question of directorships, as the hon. member for Kensington (Mr. Moore) has already pointed out, directorship of any company which may possibly have contractual relations with the Government, at least in the opinion of the British Government, is covered by this general rule, because directorships are specifically singled out as the type of thing that may lead to a clash of interests or an apparent clash. And no wonder, because I think it is probably generally accepted that when one is a director of a company, one is supposed to take an active part in the activities of that company.


Are you speaking from experience?


I cannot speak from personal experience but I speak from the experience of other directors whom I know. I think we must assume that it automatically follows that a director takes an active part in the activities of his company, and that is why it was specifically laid down in England that is one of the activities in which a Minister may not take part. Apparently there is no exception to this rule there, and indeed that was also accepted by the present Minister of Finance in 1944 when he raised this matter. As I understand the position, the present practice—I am not sure of this but it looks as though that is the position judging by what was said in this House previously—is that only two types of directorships are excluded from this general rule that Ministers may not hold directorships, and those two cases are newspaper companies and mutual assurance companies. But I should like to hear from the Minister whether the rule is limited to those two types of companies, because it appears from the report of the committee which went into the remuneration of Members of Parliament that they are of the opinion that the scope of this rule has now been extended and that there is no longer a limitation to-day. It appears from this report, from which I propose to quote in a moment, that this rule that only newspaper and mutual assurance companies are excluded is no longer being observed strictly, but I take it that in that connection the Minister will give us an assurance. I want to confine my remarks to these two cases of newspaper companies and mutual companies.

These exceptions can only be reconciled with the rule if we accept that these two types of companies never have contractual relations with the Government or with Government Departments and that their interests never clash with those of the Government or with those of Government Departments. I do not know what the position was when this rule originated, but I think that the activities of these two types of companies have expanded so much over the past 40 or 50 years that there can be no doubt to-day that sooner or later cases must occur where their interests clash with the public interest or where they have contractual relations with the Government. The hon. member for Kensington has already pointed out that to-day these mutual companies are huge investors, that their investments extend over the entire economic life of South Africa, and that there is hardly any Government measure which does not affect the interests of these companies in some way or another. It almost looks as though the converse may also be true, and that is that some of these companies have developed to such an extent that their activities may have an effect on public life. The hon. member for Kensington has already given examples to show what a great role these insurance companies played last year in bolstering up share prices on the Exchange when there was a great danger of a collapse of share prices. I think that goes to show to what extent circumstances have changed; it goes to show that whereas perhaps 50 or 60 years ago mutual companies did not play a big role in the economic and national life and that perhaps there was no great possibility of a clash between their interests and the public interest, that state of affairs no longer exists to-day. Originally, to give just one example, mutual companies were not taxed, on the principle, of course, that the income and the assets of mutual companies belong to all the members; there was no reason therefore to subject them to taxation. But the State itself accepts that is no longer the position to-day, and at the present time mutual companies are subject to a certain amount of taxation. There again, when it comes to the question of taxing such a mutual company, the interests of the directors of that company must clash immediately with the interests of the State, or there is at least a possibility of a clash between private interests and the public interest.

Then I come to the question of newspapers. Many years ago newspaper companies may have confined their activities to the issuing of newspapers but, as the hon. member for Kensington has already indicated, they have considerably extended their economic activities; to-day they are big printing concerns which enter into contractual relations with the Government on a large scale. But it is not that development only which places newspaper companies in an entirely different position today from that occupied by them 50 years ago; there have also been other developments in the world as far as newspapers are concerned. Take the question of television. In England and in America and in Australia experience has shown that the advent of television has had far-reaching effects upon newspapers and magazines. In England the newspapers have found that the tremendous development of television has had a very detrimental effect upon the income that they derive from advertisements. In England and also in other countries the advent of television resulted in many magazines, some of which had been in existence for 50 years or longer, being ruined financially as the result of competition from television. In South Africa the decision as to whether or not we are going to have television rests entirely with the Cabinet and with certain Cabinet Ministers. How can they argue then that their private interests as directors of newspapers do not clash with the public interest when it comes to this question as to whether or not we should have television in South Africa? How can they possibly argue that they are able to give a completely independent decision in that regard? Humanly speaking it would be almost impossible for them to do so. But even if members of the Cabinet are so far above ordinary human beings that they are able to separate their private interests entirely from the public interests, there still remains the second part of this rule. The rule is not only that one’s private interests must not clash with the public interest, but that there must not even be a semblance of a clash of interests because, like Caesar’s wife, Cabinet Ministers must be above suspicion; that is obviously the rule and it is also a rule which the present Minister of Finance, as I shall indicate later on, himself affirmed and accepted in his speech in 1944. Here we have a blatant case of a possible clash between the interests of Ministers, if they are directors of newspaper companies, and the public interest, namely in connection with this question as to whether this country and the public should be allowed to have the benefits or the disadvantages of television.

I am trying to approach this matter as objectively as possible, but it may be said perhaps that we want to make political capital out of this matter.


Hear, hear! You are quite right there.


I have tried to confine myself to principles, and if the hon. member for Mossel Bay (Dr. van Nierop) does not agree with any of the principles that I have set out, then he can tell us so in a moment. I have confined myself so far entirely to principles.


The trouble is that you are hinting without making a direct attack.


He lacks the courage to make a direct attack.


Mr. Speaker, I expected that interjection because hon. members on that side have no other argument; all they are able to do is to make personal attacks upon me; in principle they cannot oppose this motion; that is the simple reason. The Minister will find it impossible to oppose this motion in principle.


All you do is to hint.


Let us assume then that I am hinting: I am going to quote now from a certain report and then I should like the hon. member to tell me whether these persons were also hinting. The hon. member for Standerton (Dr. Coertze) has no doubt heard of the committee which went into the question of the remuneration of Members of Parliament; I think he is aware of the finding of that committee that generally speaking Members of Parliament are not adequately remunerated and that their remuneration should be increased. As far as I know the hon. member also agreed with the recommendation of the committee; as a matter of fact, as far as I know the whole of the House agreed with the committee’s recommendation. What were the terms of reference of that committee? The committee’s terms of reference were—

To inquire into and report on the emoluments, allowances, etc., of Cabinet Ministers, Deputy Ministers, office-bearers and Members of Parliament in view of their work and responsibilities, the conditions which apply to their service and generally any other related matter which has come to the notice of the committee in the course of its inquiry which it considers necessary to report upon.

As I have already said, we unanimously accepted the recommendation with regard to higher remuneration. Although there was no specific reference to the question of directorships, we nevertheless find this very interesting paragraph in the report, and I should like the hon. the Minister and the hon. member for Standerton to tell me now whether these hon. persons, Mr. Justice Ogilvie Thompson and Mr. Louw and Mr. Clive Corder were also reflecting upon the Cabinet—

It is stated that a Cabinet Minister is even busier during the recess than he is during the session. However that may be, it is clear that being a Cabinet Minister is in a literal sense a full-time occupation which should be remunerated with due regard to that fact.

The same principle was announced by Mr. Churchill in the British House of Commons namely, that in modern times a Cabinet post is such a full-time post that Cabinet Ministers ought not to take part in any other activities. Here we have a statement on the same lines. The committee goes on to say—

In this connection we would point out that the traditional exceptions to the general rule prohibiting Cabinet Ministers from serving on the directorate of companies, made in favour of directorships on the boards of mutual insurance companies and of newspaper companies, would not appear to rest on any secure logical foundation.

I should like the hon. the Minister and the hon. member for Standerton to tell me now whether the committee was hinting when it made that statement. Were they also casting reflections when they said just what I have said here—

… that the general rule prohibiting Cabinet Ministers from serving on the directorate of companies, made in favour of directorships on the boards of mutual insurance companies and of newspaper companies, would not appear to rest on any secure logical foundation and that moreover there appears to be some tendency to enlarge the scope of exceptions. We are of the opinion that this whole question merits revision and that in any event it would be a salutary practice if the rule in question was always strictly interpreted.

It would appear from this that this rule is not being strictly observed at the present time. When we look at the composition of this committee we find that at least two of the members of the committee are persons who have an intimate and personal knowledge of the activities of newspapers and of insurance companies, and obviously they arrived at the same conclusion as that contained in this motion. I know, of course, that there is one argument which can be used by members who wish to oppose this motion. As I have already said, on the general principle as to what is sound in public life, this motion cannot be opposed; it can only be opposed on two grounds. The first ground we have already heard from hon. members on the other side and that is that we are making covert references to members of the Cabinet. Do hon. members not realize that if we reflect by innuendo on members of this Cabinet—and that is the last thing that I wanted to do—then we also reflect on every Cabinet that South Africa has had in the past, including our own United Party Cabinets of the past? Even though directorships of newspaper and mutual companies were the exceptions to the rule in the past, it might have been unsound even in those days, but in any event the position has changed such a great deal that to-day it is much more undesirable than it was in the past. That is the simple position. There is only one argument which can possibly be used and that is that this is a sort of vested right which members of the Cabinet always enjoyed in the past. But I think we have taken away so many vested rights in this House over the past ten years that here we have a case where we can accept that this is not a sacred, sacrosanct vested right, for the reason which I have already mentioned, and that is that the circumstances surrounding these two exceptions have changed to a very great extent in the past 50 years. On the other hand, surely nobody would deny that the duties of a Cabinet Minister to-day are much more onerous than they were in the past. A Cabinet post to-day is much more in the nature of a full-time post. That is why the remuneration of members of the Cabinet and Members of Parliament was increased considerably on the recommendation of this committee. New circumstances have come into the picture in the meantime.

The integrity of Cabinet Ministers and of Prime Ministers in South Africa has never been queried hitherto by anybody in the whole world. That has been one of the main factors which has inspired confidence in the Union of South Africa. In this regard I can testify from personal experience; overseas investors have said to me time and again that South Africa is almost unique amongst the young developing countries from the point of view of the absolute integrity of our Government and of our Public Service. If the hon. the Minister will look at this motion in the right spirit, instead of accusing this side of seeking to make covert references to Cabinet Ministers, and of seeking to make political capital out of this matter, then he ought to welcome this motion, because this is the trend of development in all democratic countries in the world to-day. The hon. member for Kensington has indicated how this principle has been extended in England, so much so that to-day Cabinet Ministers in England may no longer hold directorships. Other democratic countries have gone even further and said that Cabinet Ministers may not hold directorships and that they may not hold shares in companies which may have contractual relations with the Government. In England the rule even goes so far as to say that if you have a majority shareholding in a company, or a shareholding which gives you control of that company, you ought to resign as director of the company. This motion is simply designed to ensure the maintenance of this high level of integrity which all Prime Ministers and all members of the Cabinet have maintained up to the present time in South Africa. I can do no better than to quote what the hon. the Minister of Finance said in 1944. I hope that the hon. the Minister and the hon. member for Standerton are not going to tell me now that the Minister of Finance was also hinting in 1944, but the remarkable thing is that in 1944 the present Minister of Finance adopted the same attitude that we are adopting to-day.


That was because the then Government had no policy.


If the hon. the Minister reads the whole debate he will find that the traditional exceptions were those two cases.


The Minister of Finance simply wanted the then Government to lay down a firm policy.


I should like to try to convince the hon. the Minister by quoting from the speech of the present Minister of Finance. It was not a question of his wanting the Government to lay down a policy; his attitude was that no Minister ought to hold directorships.


No, his main object was to get the Government to declare its policy.


Let me quote what the present Minister of Finance said and then the hon. the Minister can judge for himself whether he is right or whether I am right. It will serve no purpose to argue as to what interpretation should be placed on the words of the Minister of Finance. Perhaps I should start by quoting the summing up which was given by the hon. the Minister of Finance at that time. He said—

We consider it is not fair to place any individual in the position where there is the possibility of a conflict between his duty as a Minister and his interest as a private individual. It is in the interest of the prestige and the dignity of the Cabinet that there should be no suspicion on the part of the public of anything of this kind taking place— in this case it is even more important to avoid the suspicion than the actuality. As I have said the position of a Minister is very much like that of a Judge, and he should not be subjected to the temptation of placing his interest as an individual above his duties as Minister. (Hansard, Vol. 48, col. 3639.)

That is our whole attitude. The hon. the Minister says that a definite policy has now been laid down; he must tell us what that policy is, because if one accepts what was written by the committee which went into the remuneration of Members of Parliament, then it would seem that this rule is no longer being observed, because the committee says—

In this connection we would point out that the traditional exceptions … would not appear to rest on any secure logical foundation and that moreover there appears to be some tendency to enlarge the scope of the exceptions.

Can the Minister tell us whether the rule that directorships of mutual companies and of newspaper companies are the only two exceptions is definitely being observed at the present time?


Yes, that is the rule.


The question is whether this rule is being observed, because apparently that was not the opinion of this committee.


If you agree with that view, mention the exceptions then.


There are certain insurance companies, of which Ministers were directors in the past and which are certainly not mutual companies.


There is not a single Minister who is a director of any insurance company which is not a mutual company.


Yes, at the present time, but are there no Ministers who a year or two ago were directors of insurance companies which are not mutual companies?


You are talking now about what happened under United Party rule.


No, I am talking about the Union Guarantee and Insurance Company. Is that a mutual company? Can the Minister give me a definite reply? I do not think that there was ever a Minister, while the United Party was in power, who was a director of a company which was not a mutual company. We do not say that the practice in the past was correct, and in any event circumstances have greatly altered. But the Minister of Finance even went so far that he was obviously not prepared to accept that newspaper companies and mutual companies should be excluded from this rule. That is clear from his speech because he makes no reference to these exceptions in the course of his speech. This is what the present Minister of Finance said in connection with the then Minister of Finance—

I believe the Minister of Finance is the chairman of a private company which controls a journal. The Minister of Finance: Unpaid. (Vol. 48. col. 3637.)

The hon. the Minister of Finance also mentioned the question of insurance companies here.

*Dr. DE WET:

No, I do not think that is stated there.


I just want to find the reference.


I shall give you the reference when I reply.


There is no doubt that in his speech in 1944 the Minister of Finance had no intention of excluding newspaper and insurance companies.


But why did you refuse it then?


Perhaps that was a mistake, and as a matter of fact General Smuts did not refuse. It seems to me that whenever the United Party did something in the past which suits hon. members on that side, then it must have been a good thing; if it suits the present Government then everything that the United Party did in the past was good and proper, but if it does not suit them then it was a bad thing.


Heads I win, tails you lose.


I say again that this is a matter which the Minister should not tackle in the petty spirit which he revealed here a moment ago. This is an honest attempt to place the integrity of our public life on a higher level, and I hope that the Minister will accept this motion in that spirit and reply in that spirit.


I think it is just as well that I reply immediately to this debate otherwise it may develop into a totally unnecessary one. I want to start immediately with the hon. member for Jeppes (Dr. Cronje) who has just sat down. By way of interjection, I told him that the real and practically only reason why the Minister of Finance raised this matter in this House at that time, was because the then Government had no policy whatsoever in respect of this matter. One should perhaps not hold that against them because the then Government suffered from a lack of policy in respect of other matters as well. As far as this matter was concerned the then Government had no policy whatsoever, and all the hon. the Minister of Finance wanted at that time was that the Government should state its policy as to what it envisaged in this respect as far as members of the Cabinet were concerned. Hon. members denied it when I said by way of interjection that was the attitude which the hon. Minister had adopted at that time. I wish to refer the hon. member to the speech made by Dr. Dönges, the present Minister of Finance, in col. 3637 of Hansard. The hon. Minister said this—

I want to say a few words about Cabinet Ministers being directors of companies. It is difficult to find out whether in regard to this matter the Government has any definite policy.

A little further down he said this—

It appears to me that the Government has no definite policy in regard to these matters, and I just want to point out how important it is that a policy should be laid down.

That was the whole basis of the attitude which the Minister adopted at the time. It is true that as far as this matter was concerned he did give certain policy directives but the main object of his speech was to get the Government to state its policy in respect of something where they did not have a policy at that time.


Nor do they have one to-day.


This becomes very clear later on from the reply given by General Smuts at the time; he said that he could not accede to the request of the present Minister of Finance and said this in col. 3647—

It would be an outright new precedent and, of course, it would mean making a change. It has never been the practice here in South Africa to compel members of the Cabinet to resign their directorships.

In other words, the then Government had no policy whatsoever—exactly what Dr. Dönges had said in his speech.


But Dr. Dönges went much further.


Yes, he did give certain policy directives in an attempt to get a Government which did not have a policy to formulate one in respect of such a subordinate matter as this.


You are now dragging in politics.


No, the hon. member should not accuse me of dragging in politics. I wish to say this to the hon. member and to the hon. member for Kensington (Mr. Moore)—and I wish to repeat what I said by way of interjection—that we have had nothing else than insinuations from them. There is a very apt expression in the English language which I want to remind the hon. member for Kensington of and it is this “Ever ready to hurt but afraid to strike”. That was the trend of the hon. member’s speech: “Ever ready to hurt but afraid to strike.” Hon. members did not have the courage to make any direct accusations or anything like that. Hence the attack we have just had on the hon. the Prime Minister, to which I shall return in a moment. It is very clear from General Smuts’ own words that the United Party had no policy. He goes on and says this—

It would be a new development in our existing policy if we were to take such a step.

That, of course, was a euphemism, because I never knew that if you did not have a policy, it was fixed policy not to have a policy! He goes on and says this—

Personally I am strongly in favour of our doing all we possibly can to keep our public honour clean. And it can be said in honour of South Africa that our parliamentary and our public life are clean. I think our country is an outstanding country amongst other countries in that our public life is clean and that very little ever takes place on which any reflection can be cast.

It is very clear, therefore, that what Dr. Dönges wanted when he spoke—and it was well and good that he did so—was that the Government should adopt a stand and that they should for mulate a definite policy in that respect. General Smuts was not prepared to lay down a policy in this connection. But this Government has been prepared, however, to lay down a policy and there is not a single hon. member in this House or outside who does not know that the Government’s attitude has always been—and it is there for everybody to see clearly—that a Minister, in spite of the sacrifices which he may make otherwise to get into the Cabinet, should relinquish all directorships and that there are only two kinds of directorships which he may accept or retain if he has them, and those are in respect of mutual companies and newspaper companies. That is the traditional policy which has always been followed in South Africa, except, as I have said. in respect of the previous Government who did not have a definite policy in this regard. But as far as newspaper companies are concerned, the position has always been that Ministers could be directors of those companies and I think it is right and proper that Ministers should serve as directors on newspaper companies. To be honest, I want to go so far as to express the hope that members of the Opposition will be invited to service as directors on the English language Press. That may bring about a change in the attitude of that Press. I am very serious when I say that I am definitely in favour of it that members of Parliament and Ministers should be directors of newspaper companies. In my humble opinion it can have nothing but a beneficial effect on those newspaper companies.

As far as mutual insurance companies are concerned the position has always been, not only during the regime of the National Party Government, but also during the regime of the United Party Government, that Ministers have served as directors of mutual companies. Hon. members are aware of the fact that the Minister of Lands is serving on such a company just as the hon. member for Green Point (Maj. van der Byl) served on such a directorate during his time. I find nothing wrong with that at all. To be honest I think it was one of the wisest steps which the hon. member for Green Point took when he remained a director on becoming Minister at that time.

The hon. member for Kensington (Mr. Moore) tried in the first instance to drive in a wedge between the Dagbreek Press on the one hand and the Vaderland on the other hand. Let me tell the hon. member that better men than we have already tried to do so without success. Nor will the hon. member succeed in driving in that wedge the way he tried this morning. In the second instance I accuse the hon. member and say that the attack which he has launched on Dagbreek and on the Transvaler, that is the Voortrekker Press, has to some extent been inspired by jealousy, jealousy of the good progress which these newspaper companies are making under the ministerial directors which they have, because the hon. member remembers, of course, that during their regime there was also a newspaper company of which Ministers were directors. I refer to the Suiderstem. It went insolvent thanks to the two United Party Ministers who served on its board of directors. But what I resent particularly in the speech of the hon. member for Jeppes (Dr. Cronje) is that he went out of his way, very far out of his way in his characteristic manner, to tell us which contracts had been given to Dagbreek and the Voortrekker Press in respect of certain Government publications. Not only did he mention the names of the publications, but you will remember, Sir, that he also gave us the amounts connected with those contracts and that he eventually shouted out in this House what the various amounts were which were concerned. If the hon. member wishes to deny that my charge is correct that this is a question of “ever ready to hurt, but afraid to strike” why did the hon. member not tell the House that he wanted to state it quite clearly that those contracts were not given to them as a favour—because he knows it—but that they had obtained them by tender? The hon. member knows that, doesn’t he? Nor does he deny that is the position. He accepts that the position is that they went to those companies by way of tender. Am I correct?


I shall have an opportunity of replying.


Surely the hon. member can just tell me whether or not he denies my statement? But the whole argument of the hon. member—what I have against him is not so much what he said but what he did not say—in mentioning the publications was to mention the amounts which were paid for those publications, and then he simply left it in the air. What conclusions must you draw from that, Sir? The only conclusion you can come to is that a favour was done to those companies when they were asked to do the printing because the hon. the Prime Minister is the chairman of the board of directors. That was the only impression he wished to create. I lay this charge against him that was the only impression he wanted to create with his speech. While I agree wholeheartedly with General Smuts that our public life has always been beyond reproach, that it has been beyond reproach in the past and still is to-day, this is a mean insinuation to make by leaving it in the air like that. I make bold to say. and one is very grateful for it, Sir, that there have never been any complaints, not in the past nor to-day, that Ministers have in any way abused the positions they have occupied in respect of mutual companies or newspaper companies. Seeing that hon. members know that, seeing that hon. members have never yet levelled a definite accusation for the simple reason that no accusations can be levelled. why do they lower the standard of this debate, why do they make these insinuations, why do they leave things in the air as they have indeed done?


Why not treat all directorships alike as far as Ministers are concerned?


Surely it is obvious why all directorships cannot be made available to them, the reason being that other directorships have to do with the commercial world and other spheres in general and because Ministers may become involved. Surely the hon. member understands why we have had this development. The reason is that our newspaper industry is intimately concerned with politics and political developments. That is, the reason why a Minister may serve on the board of directors of a newspaper company. That was the position during the time of the United Party and that is the position in our time. They are flourishing during our time but they went insolvent during your time. That is not the fault of the system. You must seek the fault elsewhere.

The position in respect of mutual companies is also not something which has developed yesterday or the day before, but it has developed over the years. I listened attentively to the hon. member and he did not advance a single argument why it was necessary at this stage to depart from the policy as far as mutual companies were concerned.


Does the hon. the Minister not think there may be a clash between television and newspapers in future? That is something which we have never had in the past.


For the moment I definitely agree that there may be a clash. But I do not know what the future of television is going to be. But surely the time to consider that will be if and when television is introduced. Surely the hon. member does not expect me to believe that they are holding that up as the reason for their motion, namely that they are worried about television in the future? No, that is nothing but an ad hoc idea which has suddenly occurred to the hon. member, because they really had no other reason for introducing their motion. I want to call the hon. member for Green Point as witness. He was a director of a newspaper company and he will admit that a director of a newspaper company does not interfere with the administrative side of the newspaper as such. That is the position in respect of all newspaper matters and that is also the position in respect of the newspaper on which Ministers serve at the moment. The hon. member knows, because he has also been concerned with such a newspaper, that the Suiderstem had Government contracts at the time and that those contracts were not given to it as a favour or whatever the case may have been, but it got those contracts because the Tender Board had awarded the contract to it.

Reference has been made to the remarks made by the hon. the Prime Minister in respect of Sondagblad. Surely it is obvious from the whole speech of the Prime Minister that what he had in mind was not the business side of the matter. The hon. the Prime Minister said, and that was how it was understood, that what he had in mind was the political aspect, that it was a pity that two Afrikaans newspapers serving the same political cause appeared on the same day. Surely the hon. member knows that was why the hon. the Prime Minister made those remarks and that it had nothing whatsoever to do with the business aspect.

I think it is a good thing for Ministers to retain their directorships in respect of newspaper companies. To use the words of the hon. member for Jeppes, I believe that Ministers have acquired a vested right to be directors of mutual companies down the years, that has been the practice not only under this Government but under all previous governments which we have had in South Africa and that no case has been made out by the Opposition either in this debate or in a previous debate why we should change the position which has always existed. In the circumstances I am sorry in the first place that we have had this debate to-day and in the second place I am sorry that those insinuations have been made and left in mid-air. I am particularly sorry that we have ever had this whole discussion. This is not the type of discussion, no matter from what angle you view it, which benefits our public life in any respect.


What did the Minister of Finance say in 1944?


The hon. member simply cannot understand what I have stated very clearly. I have also read out to him that what the Minister of Finance had in mind at that time was to get a Government which did not have a policy, to lay down a policy in respect of this matter. I have gone out of my way to explain to the hon. member that we have laid down a policy in respect of this matter and I have told the hon. member what that policy was. However, I cannot hold it against the hon. member if he does not know what a policy is. For how many years has the hon. member been seeking a policy? If you will allow me, Mr. Speaker, the hon. member reminds me of a woman neighbour of ours some time ago who, in a perturbed state of mind, visited her neighbour and said to her “You know I am getting very worried about my old man; he is over 60 and he is still looking at young girls when they pass.” Her neighbour said: “Aunty, you should not worry about that, all men do that. They remind me of my dog. For years he has been running after every motor-car which he sees, and the day he catches one he will not know what to do with it.” That is the position with the hon. member. He has been looking for a policy for years, and one day when he catches one, he will not know what to do with it.

I have stated quite clearly—and we are not running away from it—that we raised the matter when we were in the Opposition for the simple reason that we wanted to get the Government to lay down a policy in regard to it, and I wish hon. members to realize that where we have laid down a policy, that policy is not only practicable but also reasonable. Why should we tamper with it? Why should we have this discussion on the subject? If they know of cases or if they feel that Ministers have gone beyond their powers in that respect, that they have abused their positions, I do not wish to deprive hon. members of their right to raise it. In that case hon. members will have the right to raise it and you would hold it against them, Sir, if they did not make use of that right. They will then be entitled to come to this House and criticize the Minister concerned. But where that is not the attitude which they adopt, where they do not have any such information at their disposal, where they know that nothing improper has happened or will happen, you ask yourself the question why this discussion has been started? In those circumstances I do not hesitate for a moment to say that this motion will not be accepted by the Government.


I am extremely sorry that the hon. the Minister has found it necessary to bring this debate down to the purely party political level. He dragged in party politics, which was completely unnecessary. It was obvious from the speech by the hon. member for Kensington (Mr. Moore) that he had no intention whatsoever to cast suspicion on anybody, and the hon. the Minister got down to even telling what might be after dinner speech jokes. Surely all of us who have read “Dear Abby” and her advice to young women, know the story of the dog chasing motor cars, and if the hon. the Minister has to tell a joke, he should tell us something new.

Then he went on to cast unwarranted suspicion against the hon. members for Kensington and Jeppes (Dr. Cronje), two hon. members who above all have in their speeches throughout their careers here shown themselves to be men right above any question of party spite or trying to besmirch another’s reputation or to do anything not in conformity with the highest dignity of the House. I think it was most unfortunate that he should have suggested that the hon. member for Kensington was, in an indirect way, trying to attack the honour of hon. Ministers. The hon. member for Kensington made it quite clear that was not at all his intention. I do not propose to bring this debate down to the same level as the hon. the Minister did and making this a party wrangle. I therefore need not deal further with the Minister’s speech, except in respect with certain other points I am coming to in a moment.

I first of all want to deal with the motion on its merits, except to say of the Minister’s speech that he never replied to the hon. member for Jeppes’ quotation from the Ogilvie Thompson Report on parliamentary emoluments. Surely the reason given there for raising the emoluments indicated this very thing, that was one of the points brought out in that report, but I noticed that the hon. the Minister never attempted to reply to that.


Because it was not relevant.


It was very relevant, but I do not propose to deal with interjections, because I do not want to bring this thing down to a party wrangle. There is one thing which all sides of this House I think will agree upon, and that is that South Africa has been extremely fortunate that she has never had any scandal or a suspicion of corruption in connection with any of our parliamentary leaders, right through from the start of Parliament in this country until to-day. That is a record which I think this honourable House can be justly proud of. The fact is, and I mention this in passing, that some of our leading men died comparatively poor men. In fact, I can think of one Prime Minister who for many years, with the wink of an eye, could have made a fortune, who had to be given a pension, or his widow had to be given a pension, when he died. I think that is something which this honourable House can be proud of.

I wish to say at the outset that I do not wish anything I say to be misconstrued into suggesting that the purpose of this motion is to create new safeguards to meet a new situation. The standard remains high as it always has been; but the conditions, as I will show later, have changed. My view is that the standard of financial integrity is as high to-day as it ever was, but the conditions have changed. In view of the quotation made by the hon. member for Kensington about General Smuts’ reply to the present Minister of Finance’s motion in those days that he did not compel hon. members to resign their directorships, and in view also of the Minister’s remarks that government had no policy and that the present Government now has set a policy, it might interest hon. members to know what the then Prime Minister’s policy in 1939 was. Sir, when I had the honour to be asked to join the Government, the Prime Minister asked me: What directorships have you got? I said that I was a director of a mutual insurance company, that I was a local director of one of the two main banks, that I was chairman of the then only South African hire-purchase organization from its inception, and of several other companies. He said to me: You must resign all your directorships, except the one of the mutual insurance company. The hon. Minister drew my name into this debate and referred to my directorship of a newspaper company. Let me tell him that I had resigned as a director of that newspaper company.


I only mentioned your directorship when I discussed the fact that Ministers as directors would not interfere with the ordinary administration of such newspaper companies.


He told me that I should hand in my resignation as a director of those companies bar the insurance society that same day, although I was Minister without portfolio and for 3½ years drew no ministerial salary, or allowances, although I had the same expenses as any other Minister, having to maintain residences in Pretoria and Cape Town as well as my own home.


Mr. Conroy remained a director.


I don’t know. I have not got the facts before me, but that is beside the point. I am sorry to bore the House giving these details but as my name has been dragged in I must state the facts. Because the Prime Minister in those days went on to say this, and I mention it because it has a bearing on what I am going to say later, he said a precedent had been created for Ministers to serve on mutual institutions, because in the first instance the Prime Minister of the old Cape Parliament had been a director the whole time he was Prime Minister, and another very highly respected Minister of his government was also a director of the same company at that time. He said that was a precedent that had been created, and further he went on to say: The fact is that those organizations are national institutions and you have no financial interest of a personal nature in that concern, and therefore any information you could give to such an organization could never be an advantage to it. But I must agree with the hon. member for Kensington that the position to-day has completely changed. To-day the mutual insurance societies—(a mutual society does not come under the Companies Act, but its wholly owned subsidiaries do come under the Companies Act)—differ largely from what they were in the old days. In the past they were merely straightforward life offices and any income they got was invested either in Government stocks, or in other preferred stocks, or in mortgages. Now the situation has changed, and I agree with the hon. member for Kensington that the mutual societies to-day have a very large number of subsidiaries. He mentioned some of them, and I need not go into that to-day. But some of those subsidiaries are purely investment institutions with a share and equity portfolio running in some cases into many tens of millions of rand. I can think of one which has a financial subsidiary wholly owned by the insurance company, and does come under the Companies Act, which has just increased its capital to R100,000.000. Now this is the point: The public can be misled into thinking that such an institution might get advance information from directors being Cabinet Ministers. That of course is not true. but using the Minister of Finance’s words when he was in the Opposition “to avoid the suspicion more than the actuality”, that is not desirable and he went on to say that they therefore should follow the British system. That is the point that I am anxious to make: To avoid suspicion. Of course there is no question of information leaking out from a Minister. I know of no case where information ever leaked out. I know for instance that in my days Cabinet colleagues would never attend a board meeting from the moment that the Cabinet started to discuss taxation proposals before the Budget. In fact, they went as far as this (and I am certain the same thing applies to-day) that they would not even allow their bankers or their stockbrokers to get into touch with them about their own personal affairs, during that period. They gave instructions to their private secretaries: If my stockbroker or my banker rings up from the moment the taxation proposals come before the Cabinet, you must not put them through to me. That was often for a period of three or four weeks before the Budget. That was the standard, and I am certain the same standard is maintained to-day. Nor would they buy or sell shares at any time during that period. A misunderstanding might so easily arise where the individual is completely innocent. Say for instance the Minister of Finance himself to-day were a director of an investment institution (and there is no reason why he should not be if his colleagues can, because, once taxation proposals are before the Cabinet, his colleagues know as much as he does) he would never, I am sure, attend board meetings during the period when such taxation proposals were being discussed by the Government. It may very easily happen however that during that same period the board found itself with a considerable sum of money for investment and entirely on its own initiative buys a large parcel of shares. Let us face the fact: Big national institutions to-day are not gambling concerns. They cannot play the market to see whether the market will fall or rise. It is their duty to meet the market day to day and invest money which is lying idle otherwise they would be gambling. It may be that the directors, on their own judgment or in intelligent anticipation, invest the money which their company has in, say, gold or brewery shares. I am using these two as an example. Say, shortly after that taxation is lowered on those two industries. That of course would “bull” the market. In that case would certain dirty-minded people not say: “Oh. of course, they must have known that there would be a lowering in taxation.” I am trying to put the case fairly as I see it. There is no question of us suspecting or trying to discredit anybody. You can have the position in the reverse. That same concern may shortly before (again in intelligent anticipation) sell a big parcel of, say, brewery shares and the taxation may be raised, which would “bear” the market and those shares will drop. The suspicion might arise in people’s minds that they must have had inside information. I again come back to the words of the present Minister of Finance to Gen. Smuts in those days—and I am sorry for the repetition—“avoid the suspicion rather than the actuality”. In such a case the public might not believe that it was a mere coincidence or intelligent anticipation. They would put it down to advance information. That is the danger. Such an event can unjustly strike a blow—I say unjustly and I mean just that—at the integrity of a completely innocent Cabinet Minister who happens to be a member of that board, although during the whole period when the taxation proposals were before the Cabinet he never attended a board meeting or gave a hint to any of the other members of the board.

Hon. members will remember that only a few years ago something like that happened in Britain, when by sheer coincidence an extraordinary situation arose. A director of the Bank of England (and as we all know the Bank of England set the bank rate) was also a director of a very big investment institution. He never attended the meeting of his investment institution when the decision was made to sell a large parcel of Government stock. The next day the bank rate rose by ½ or by 1 per cent. The result was, of course, that those stocks fell sharply to a point where they gave the same yield on the new interest rate pattern as created by the rise in the bank rate. He was party to the decision to increase the bank rate, but he had no idea that his investment company was going to sell that big parcel of Government stock. The fact is that it was nothing but intelligent anticipation on their part. They realized that if inflation goes on it is often necessary to raise the bank rate to try to curb speculation or over-expansion due to too much cheap money being available but that a rise in the bank rate would immediately “bear” Government stocks; so they sold a very big block. But what happened? There was a most frightly scandal in the city. Mud was flung at him. He was pilloried in many financial journals and in other newspapers with the result that a judicial commision was appointed, with a Judge in the chair. After careful investigation of all the records, it was found that gentleman was completely innocent, that he had not in any way given the slightest indication as to what was going to happen. But the mud stuck. It was not his fault at all. He had nothing to do with it. The question arose whether men who had any interest in any institution should sit on the Board of the Bank of England.

To show how coincidences such as this can affect completely innocent men may I just tell the House something which came to my own notice. It might interest them; it might even amuse them if they have a morbid sense of humour. I will call this financier Sir X Y and he told me this himself. He said that he was sitting next to a lady at dinner one evening whom he did not know. She inopportuned him by saying “Tell me, Sir X, in what should I invest my money?” At that time he thought diamonds were on the up so he said: “Madam, I should think you could not do better than buy De Beers ordinary shares.” He had misjudged the market, as he discovered two months later when De Beers shares to his horror started to drop and they steadily declined for the next few years. He told me that he avoided her like the plague after that whenever they happen to be at the same function. Then, he said, in the end she approached him at a cocktail party and said: “Sir X, why are you avoiding me? I have been trying to get hold of you to thank you for the wonderful information you gave me. You told me to buy beers and I put all my money into brewery shares and I have nearly doubled my capital.” Had she not misunderstood him and taken his advice he might have been blamed for something of which he was completely innocent.


I think the hon. member is getting very far from the motion.


Sir, with respect, I am coming to investment companies and Ministers serving on their boards as directors and I am trying to illustrate how, due to a coincidence or a misunderstanding, a Minister, without having in any way divulged any information, could be blamed for something with which he had nothing to do. That was what I was trying to show but I will drop the subject.

The hon. member for Kensington spoke about Ministers being directors of newspapers or newspaper companies. I have not the slightest doubt that such directors would not use their position as Minister to get the Government to place its advertising with those companies. I have not the slightest doubt that they never use their position in that way. But human nature being what it is, members of the public may try to curry favour by buying large blocks of advertising space in those newspapers out of all proportion to the value they will get for it.


Minister Stuttaford was a director of the Cape Times.


That was probably why the Minister of Finance, Dr. Dönges, asked that it should be done away with at the time. Anyhow, the position is this that circumstances have changed greatly since then. I am arguing the case on its merits to-day, I do not want to draw politics into this; I want to deal with the matter entirely on its merits. Human nature being what it is, as I have said, an advertising agent or an employee of a company might use his position (or in order to get the commission) suggest to a prospective client that he should advertise heavily in this newspaper because that would have a pull with the Government. In that way we reduce confidence in our public men. I started off by saying that South Africa was fortunate that the integrity of our public men has never been questioned. I know that hon. members opposite are as anxious as I am to see that standing is maintained. Therefore, in the interests of all concerned and on its merits, in the light of changed conditions, since the precedent was created by allowing Ministers to sit on investment institutions which were originally simply straightforward life insurance companies, the positions should be reconsidered. And again I come back to Dr. Dönges’ statement of avoiding the suspicion rather than the actuality.

In conclusion, Sir, let me say this. This was raised by the hon. member for Jeppes (Dr. Cronje) so I will not go into it at any length. In America, of course, they are very much more strict. I think they are going too far there. Not only have they to resign from all their directorships but they have to sell all their interests in any particular company. I think that would be wrong because to start with, if a man is dishonest he can quite easily get around it by hiding his holding in a nominee. So that would not help.


Can he sell to his wife?


His wife might bolt; you never know, so that might be dangerous! I do not think the law allows that. Anyhow, he can quite easily get around it. He can sell to his son, yes, so it does not help. On the other hand the man who is honest and refuses to do that might feel that it is not worth while, for the sake of being a Minister for four years, to sell all his interests in a big organization. After all he has a responsibility towards the shareholders; if another chairman had served on the board the shares may not have been of their present value. He may well say “Well, I cannot take on the job” and the country would then lose the benefit of a first-class financial brain. Therefore I think that is taking it too far. The position may then well arise, as you find in some places in America, where you get professional or hack politicians, or men who have no other interests, governing the affairs of the country, which may not be in the interests of the country itself. Coming back to the motion. Sir, I do hope that we will consider it entirely on its merits. This motion is not trying to throw mud at any Minister or anybody else. That is not the slightest intention. I think I have showed that in my speech.


You have not dealt with mutual insurance companies.


I have, Sir.


The Minister was not here.


I will just put It in a nutshell again. Mutual companies were originally purely life offices, doing no other business but life insurance. They consequently had no investments except gilt-edge or approved stocks or first mortgages. To-day, every one of those mutual organizations has got large subsidiaries, subsidiaries running into tens of millions of rand. As I said: I know of one subsidiary which raised its capital to R100,000,000 a short while ago. They are investing tens of millions of rand in equities, stocks and shares. It would be of the utmost importance to them if they could get inside information. Inside information could make them decide to sell or to buy a big parcel of shares. The whole position has therefore changed. Every one of these institutions which was formerly purely a life office, is to-day through its subsidiary an investment company, which is something totally different. I do not want to go further into that.

I merely want to say that I support this motion entirely on its merits. In the past the public have had respect for our public men. There has never been a charge for corruption or a breath of suspicion in respect of any of them, either in the past or to-day. I support the motion entirely for the reason that conditions have changed to-day, not the situation.


I want to express surprise at the hon. the Minister’s reply to the debate which had taken place up to that time. He must surely admit, as has been stressed by every speaker on this side, that conditions have changed and that they have changed a great deal. In addition he has not answered the question asked by the hon. member for Jeppe (Dr. Cronje) as to whether or not he agreed with what was said in paragraph 46 of the report of the committee on the emoluments of Members of Parliament. In fact, by way of an interjection he said it was irrelevant. I do not think he meant that. In order to refresh his memory—I do not think he has this in front of him—I want to read out what that report said in regard to Cabinet Ministers—

In this connection we would point out that the traditional exception to the general rule prohibiting Cabinet Ministers from serving on the directorates of companies made in favour of directorships on the boards of mutual insurance companies and of newspaper companies, would not appear to rest upon any secure logical foundation and that there moreover appears to be some tendency to enlarge the scope of the exception. We are of opinion that the whole question merits revision, and that, in any event, it would be a salutary practice if the rule in question was always strictly interpreted.

The members of that committee, as we all know, were Justice Ogilvie Thompson, Mr. M. S. Louw and Mr. C. S. Corder. We could not have had a more eminent committee. They have quite definitely in those words expressed what I am sure is the view of the public outside. I cannot even gather from the Minister’s reply so far whether he accepts that it is essential to remove from the public mind the possibility of a suspicion that a conflict of interests can arise between a Minister’s duty as a Cabinet Minister and his interests as a director of a company. That suspicion must be removed as far as possible. Nor has he accepted in his reply that what was considered to be a Press company in the old days was a company publishing a newspaper whereas today the activities of certain of these companies have spread far and wide, in the same way as the mutual companies have developed. I propose to devote much of what I have to say really to the position of mutual companies.

Mr. Speaker, directors often, I can almost say usually, are not appointed on account of their business capabilities or their business acumen or for their general usefulness, but because they are well known and are expected to use all their power and influence to turn business to the companies which they are serving. One could in many instances say that the use of this influence is the prime consideration in their being appointed to these boards. What has happened in the last few years? The powers of members of the Cabinet are getting greater and greater all the time. Their word carries more and more weight in wider and wider spheres of business. There is no argument about that. In every activity, as has been pointed out before, in this country and all over the world, Government interference or influence, call it what you will, plays a more and more prominent part in our lives. It is essential that the Government take every possible step to remove the possibility of a finger of suspicion being pointed at them. Obviously in this instance the normal rules of conduct apply, but they are not nearly sufficient. It is not enough for a Cabinet Minister to disclose any private interests which he may have or not to take part in the discussion which deals with such an interest. He must be placed above suspicion. As everybody has said so far we have a record second to none in regard to public probity in this country. But the fact remains that this danger has been recognized all over the world. They ruled in 1906 in Britain—

That all directorships must be resigned except honorary directorships in public undertakings and private companies which in turn were limited to such a one in which the Minister’s interest was substantially the same as the interests of a partner in a business firm.

That, of course, as has been said before, has since been extended and extended to a very great degree. I believe in 1931 the Nationalist Government relaxed the rule to an extent which allows retention of directorships provided no fees were paid. They themselves realized that was probably an unsound policy and it was changed to the present position.

As the present Minister of Finance said—I know this has been read before, Sir, but this is the essence of the matter—

We consider it is not fair to place any individual in the position where there is a possibility of a conflict between his duty as a Minister and his interests as a private individual. It is in the interests of the prestige and the dignity of the Cabinet that there should be no suspicion on the part of the public of this taking place.

He said that in 1944 and could not agree more. I suggest that the doctrine of uberrimae fides applies to the greatest degree in regard to any Cabinet position. The public honour, the honour of the whole of South Africa rests in the hands of the Cabinet and no stone must be left unturned to help them to uphold that honour. Mr. Speaker, since the Minister of Finance brought this matter up in 1944 there has been a tremendous change in the whole position. As I have said before, the Government’s influence has spread wider and wider in finance and industry, in fact, in every walk of life. Throughout the whole country you find Government influence getting deeper and deeper and wider and wider. One has only got to look at the Budget figures given to us on Wednesday together with the Railway figures to realize the enormous amount of expenditure which is controlled by this Government and its influence on the daily lives of the people. That influence is obviously regarded every day of greater and greater importance by business men. I accept completely that our protections in regard to this matter are as good as they are anywhere in the world. I think that the protection of the Tender Board is something of which we can be very proud, very proud indeed. That is all right, but the question of the influence of Cabinet Ministers is something which is on a different basis entirely. They must be helped to remain above reproach as they are now. As has been said before, human nature being what it is, a Cabinet Minister does not have to do much, as my hon. friend the member for Green Point (Maj. van der Byl) has said, to find himself in very hot water.

I want to get back to the mutual life insurance companies and point out how positions have changed in that direction. I think the reason behind the acceptance of the fact that directorships of mutual life insurance companies should be exempted was the thought that apart from the fees for services rendered they were rendering no additional service bringing any benefit to themselves. A distinction was drawn between that and the position of a director of a public trading company. Quite frankly I think that was a distinction that was wrongly drawn. In our Companies Act, under Table A, which is a pro forma set of articles which applies to every company unless they are specifically exempted, there is a clause setting out the qualifications of a director. And the qualification of a director is to hold one share. Now if he holds one share in the capital of a public company I cannot agree that his interests in that public company are any greater than the interests of a director of a mutual insurance company in the general running of that business. Particularly since the activities of mutual companies have extended to the degree that they have, it is essential. I think, that they should be removed from the exemption that is at present in existence.

I want to give you an instance, Mr. Speaker. It is a bit of imagination and after having read something in the Financial Mail. This is just to indicate how conditions have changed. Last year new financial restrictions were introduced in regard to oversea holdings. Our big mutual companies, of course, were affected by it. The Treasury in turn obviously had to make arrangements or agreements in certain instances that big insurance companies could retain assets outside the country because they in turn had liabilities outside the country. But it is not a blanket exemption, according to the article which I read, but they can apply and in certain circumstances get relief. I can imagine this happening at a board meeting where the chairman says: “I have explained the difficulties to you, gentlemen. We cannot get any further with the officials; they won’t see the justice of our cause. Cannot you, Mr. So and So (who happens to be a Cabinet Minister), do something about this?” You cannot hold that against the chairman of a public company, Sir. He is there to serve the interests of his shareholders or his policyholders. I do not think the Cabinet Minister should be put in such a position. I think it is absolutely incorrect. One could go on giving instances. The hon. member for Green Point gave many other instances in which Cabinet Ministers were put in invidious positions because of their interests in mutual companies.

Mr. Speaker, I do not think there is any difference between the position of a Cabinet Minister holding a seat on a board of a mutual insurance company and a Cabinet Minister holding a seat on a board of an ordinary public trading company. None whatsoever. He is sitting on the two boards as a private individual and as a Cabinet Minister his duty is to hold the scales equally for all. Surely it is not—I am using the words of the hon. the Minister of Finance now—in the interest of the prestige and dignity of the Cabinet that he should even be allowed to be put into that position.

There is no room for any exceptions in this matter, when you realize that in America the President himself disposed of his family holdings in his companies when he was elected President. I personally would go as far as that in this country. I have heard the arguments against it but I personally would go as far as that. I think it is becoming more and more difficult to maintain the prestige and dignity of the men who are leading us. Tongues are not getting any shorter. They are just as malignant as ever. The more the Government interferes with ordinary activities the more malignant tongues become. I think this motion must have the support of all right-minded men. Our Cabinet Ministers must be protected to the greatest possible degree from the tongues which I mentioned just now. It is the easiest thing in the world to spread slander and suspicion, but the unfortunate part is that whether it is justified or not, it reflects on the country as a whole and we want to maintain the proud position we hold in regard to this matter at present.

In conclusion I want to say that our Cabinet Ministers should have the fullest possible protection. Unless this motion is accepted they have not got it. They cannot be fully protected. Their own protection lies in their own own consciences and nowhere else, but at least, Mr. Speaker, if this motion is accepted it will be an additional shield and safeguard for their good name and incidentally the good name of our country.


It will not take me long to reply to this debate because there is very little to reply to. The Minister of Justice entered the debate as an apologist for the hon. the Prime Minister, but his colleagues, the men who have an interest in the government of this country, have not responded. They are told what they have to do, as they are told in their caucus. They have no opportunity of coming out with an independent view. We on this side have an opportunity of taking part in a private members’ debate as private members.

The hon. the Minister of Justice does not think that any change is necessary in the position of directors of mutual companies and of newspaper companies. Is it necessary for me to explain again that the newspaper companies have ceased to be newspaper companies in the sense that they were when that rule was accepted as the general rule? They have to-day become big publishing companies. I will mention another subsidiary of the Voortrekker Pers. Here is another extract that brings out the point I wanted to make. The Prime Minister, as chairman of the company, said this. He is speaking now of the new company—

Ook wat die audio-visuele onderwys betref, begin die maatskappy meer en meer om aan die behoeftes daarvan te voorsien deur middel van ’n filiaal, Sono.

They have a subsidiary company that is providing audio-visual education. They are providing books for the schools. They have ceased to be what they were in years gone by, newspaper companies.


The Nasionale Pers has been printing books since 1920.


The hon. the Minister does not think it necessary to make a change, but in what way do they differ from any other big publishing companies? I can see no difference.

Mutual companies the hon. the Minister studiously avoided—he did not make any mention of mutual companies. After I had mentioned the ramifications of Dagbreek, I took Sanlam as a perfect example, because there is no Minister who is a director. Therefore I quoted it as a perfect example of a company where a Minister could not be a director without being the director of a big finance company, a holding company. Dagbreek is a large holding company to-day. It is not an ordinary newspaper company, but the Minister of Justice does not seem to see any difference. He makes a big fuss in his speech about the fact that I left the contracts in the air because I did not say they were obtained by tender. I do not know how they were obtained. I presume they were obtained by tender. It would be monstrous if they had that work given to them without a tender. A contract must be entered into in that way because it is a Government contract. Surely that is the manner in which Government contracts are entered into and it is not necessary to labour that point. But that is beside the point. The point is this: Here we have the Prime Minister as chairman of a company which is in a contractual relationship with the Government, and that is undesirable.

Now, I did not attack Dagbreek and Voortrekker Pers any more than the Minister of Finance did in 1944. The Minister of Finance did not just introduce this motion, as the Minister of Justice has said to-day, to obtain a policy from General Smuts. He introduced his motion pleading with General Smuts to adopt the British system.


It was not a motion. He raised it under the Prime Minister’s Vote, in passing.


Quite, and he pleaded with him to introduce the British system introduced in 1906. Of course the hon. the Minister of Finance didn’t know about the British system introduced later, in 1952. It is quite clear that it was a constructive suggestion to General Smuts, whose reply was that he was going to carry on with the position as it was. He agreed with the Minister of Finance that something of the sort should be done and he said he would discuss it again with his colleagues. This has been a burning question for at least 20 years.

Now I want to say this in conclusion. No one has been accused. I am not accusing the Prime Minister or any other Ministers. There are other Ministers who are probably directors of these companies, but I am not mentioning their names. No one has made any accusation to-day, but what I am asking is that we should have a new rule of conduct in South Africa which would protect Ministers and make it impossible for them to be associated with companies in the capacity of director.

Motion put and the House divided:

AYES—33: Barnett, C.; Basson, J. A. L.; Bowker, T. B.; Cadman, R. M.; Cronje, F. J. C.; Dodds, P. R.; Durrant, R. B.; Field, A. N.; Fisher, E. L.; Gorshel, A.; Graaff, de V.; Henwood, B. H.; Higgerty, J. W.; Lewis, H.; Malan, E. G.; Mitchell, M. L.; Moore, P. A.; Plewman, R. P.; Radford, A.; Raw, W. V.; Ross, D. G.; Russell, J. H.; Steenkamp, L. S.; Steyn, S. J. M.; Swart, H. G.; Taurog, L. B.; Thompson, J. O. N.; Timoney, H. M.; Tucker, H.; van der Byl, P.; Weiss, U. M.

Tellers: H. C. de Kock and A. Hopewell.

NOES—69: Badenhorst, F. H.; Bekker, G. F. H.; Bekker, H. T. van G.; Bezuidenhout, G. P. C.; Bootha, L. J. C.; Botha, H. J.; Botha, P. W.; Botha, S. P.; Cloete, J. H.; Coertze, L. I.; Cruywagen, W. A.; de Villiers, J. D.; de Wet, C.; Dönges, T. E.; Fouché, J. J. (Jr.); Frank, S.; Greyling, J. C; Grobler, M. S. F.; Haak, J. F. W.; Hertzog, A.; Heystek, J.; Jonker, A. H.; Jurgens, J. C.; Knobel, G. J.; Kotze, G. P.; Kotzé, S. F.; Loots, J. J.; Luttig, H. G.; Malan, A. I.; Malan, W. C.; Marais, J. A.; Maree, G. de K.; Martins, H. E.; Meyer, T.; Mostert, D. J. J.; Mulder, C. P.; Nel, J. A. F.; Niemand, F. J.; Otto, J. C.; Pelser, P. C.; Potgieter, J. E.; Rall, J. J.; Sadie, N. C. van R.; Smit, H. H.; Steyn, J. H.; van den Berg, G. P.; van den Berg, M. J.; van den Heever, D. J. G.; van der Merwe, J. A.; van der Spuy, J. P.; van der Walt, B. J.; van der Wath, J. G. H.; van Eeden, F. J.; van Niekerk, G. L. H.; van Rensburg, M. C. G. J.; van Staden, J. W.; van Wyk, H. J.; van Zyl, J. J. B.; Venter, M. J. de la R.; Verwoerd, H. F.; Viljoen, M.; Visse, J. H.; von Moltke, J. von S.; Vorster, B. J.; Vosloo, A. H.; Webster, A.; Wentzel, J. J.

Tellers: D. J. Potgieter and P. S. van der Merwe.

Motion accordingly negatived.

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

Afternoon Sitting


Mr. Speaker communicated the following Message from the hon. the Senate:

The Senate transmits to the hon. the House of Assembly the Extradition Bill passed by the Senate and in which the Senate desires the concurrence of the hon. the House of Assembly.
The Senate begs to draw the attention of the hon. the House of Assembly to the following provision, namely, sub-clause (2) of Clause 22, which has been struck out of the Bill and placed between brackets, with a footnote stating that it does not form part of the Bill.

By direction of Mr. Speaker, the Extradition Bill was read a first time.


I move—

That this House is of the opinion that the establishment and working of tribunals, other than ordinary courts of law, set up under powers conferred by Act of Parliament upon Ministers and other subordinate authorities, should be examined by the Government with a view to introducing legislation to bring about uniformity in procedure and to safeguard the rights of citizens under a system of administrative law which has grown, is still growing and ought to be controlled by Parliament.

Let me say at the outset that my motion is the logical corolary to the motion moved in this House on 1 August 1958 by the hon. member for Wynberg (Mr. Russell). That motion reads as follows—

That this House if of the opinion that arbitrary powers of Ministers of the Crown, and other subordinate authorities, have grown, are still growing and ought to be diminished and controlled by Parliament.

The 1958 motion was concerned with preserving the legislative sovereignty of Parliament. It was designed to draw attention to the growing inroads being made on the authority of Parliament, as the legislative limb of the constitution, by granting delegated law-making powers to executive government and to other subordinate bodies such as local authorities, boards and councils of various kinds. My motion to-day is concerned with preserving what is known as the rule of law. It is designed to highlight the growing extent to which delegated judicial powers are being conferred on executive government, i.e. on Ministers and public officials, and also on subordinate authorities and even, in some cases, on the officials of subordinate authorities. My motion accordingly excludes those tribunals which are established and known as the ordinary courts of law, but it includes all special statutory tribunals which are part of the machinery of executive government and from which no right of recourse to the ordinary courts is granted or recognized by law.

Now, the rule of law is a convenient term for expressing that great principle of democratic government that no one is above the law and that everyone is subject to the ordinary laws of the land and to the jurisdiction of the ordinary courts of law. Expressed slightly differently, the rule of law means, in simple terms, that no one shall be deprived of his rights or his liberty without the opportunity of a fair hearing before a court presided over by skilled, independent and impartial judges. Just as the 1958 motion was not designed to bring to an end or to do away with the system of law-making known as delegated legislation or subordinate legislation, but rather with keeping it under control, so my motion to-day does not aim at ending or doing away with what has become known as the process of administrative justice, but rather with keeping it in check and under the control of Parliament in its capacity as the ultimate arbiter in all matters of government.

As regards the authority of Parliament in that connection, I wish to state two propositions. I think they are both self-evident and need no argument in support of them. My first proposition is this: It is a prime duty of Parliament to ensure that the exercise of governmental powers it grants must not be arbitrary, capricious or unrestricted, whether the powers that are granted be legislative, executive or judicial powers. If that is to happen, there is a duty on Parliament to remain master of the situation of its own creation.

My second proposition is equally wide in application, but I will narrow it down to the subject of delegated powers to special tribunals. So narrowed down, the second proposition is this: The potential danger of our system of administrative justice of administrative law arises from the failure of Parliament in having designed effective machinery of its own to control the system it has created. Because what is happening now is that once Parliament has created such a special tribunal, it loses all authority to exercise control over the actions of such a body. I submit that both these propositions are valid in principle. The problem is to translate principle into practice. That therefore is the reason why it has become necessary, as my motion says, (a) that the establishment and working of all these specially established tribunals which are part of the machinery of executive government should be examined, and (b) that the system of administrative law which has come into operation in South Africa should be subject to the ultimate control of Parliament.

There is really no need to quote examples of statutory tribunals of that kind in this country. In any case they are far too numerous and too varied to try to tabulate. In fact, it can fairly be said that the vesting of arbitrary powers in boards and bodies to give decisions has now become a “legislative habit”. One of the legal draughtsmen a few years ago expressed that same view to me in these words. He said—

Sodra die Regering nie meer raad het nie, stig hulle ’n nuwe raad.

I think that states the position very accurately. If we look through the Statute Book we will find many examples of what I am talking about but I think it will suffice for purposes of my argument to refer to just one statute. The Group Areas Act, about which this House has heard so much in recent weeks, established the Group Areas Board and that is a good example of a statutory body empowered by Act of Parliament to inquire into matters of fact, or matters of fact and law, and then to make decisions which affect the rights of individuals, or which involve civil consequences affecting the rights of the citizen. Prior to the coming into existence of the system of administrative justice, the ordinary courts were available to protect the individual against arbitrary action by the executive. That is one of the prime functions of a court of law. The courts of law therefore provided an effective restraint upon the exercise of executive powers. But it needs no demonstration by me that in legislation of this kind it has also now become legislative habit to exclude the jurisdiction of courts when tribunals of this nature are set up. But where, however, recourse to the courts is subject to no restraint, either expressly or by implication, in the law setting-up a statutory body clothed with powers of decision, no further remedy is called for. In those cases the traditional trinity of powers of democratic government then operates and the separation of the powers amongst the legislature, the executive and the judiciary is an adequate and effective protection against the invasion of the rights and liberties of the subject. That is why I also exclude tribunals which are established and known to be courts of law. But it is specifically to those instances where judicial review of administrative action is ruled out by the operation of the law that my motion applies.

Sir, one often reads in the Press about cases of hardship caused to the individual where arbitrary powers are misused by statutory bodies or authorities. Those cases usually arise where arbitrary power really becomes “arbitrary officialism”, and sometimes it also arises in a manner that was never intended by Parliament when it conferred delegated powers of administrative adjudication on bodies of that kind. As I say, there are many instances reported in the Press of cases of hardship, but I would prefer quoting from the judgments in two fairly recent cases to demonstrate what does arise in practice. I do so because, firstly, it obviates any dispute about the facts and, secondly, I think it also obviates any dispute about what had happened in those cases to the individuals concerned. I would like to stress at this stage however that for every one case that reaches the courts it is fair to say that there must be literally hundreds of cases that never come to court where the individual has to suffer in silence because he or she has neither the means or the courage to take the matter further nor the opportunity to protest effectively against any administrative injustice. It is therefore really a small number of cases which come to the courts; the bulk of administrative law affects the masses.


But they have the right to go to court.


No, they have no right to go to court. They are excluded from the right to go to court, except on a question of review, because so many of these tribunals are set up where there is a restraint on recourse to the court either impliedly or expressly in the statute itself.


You have it all wrong. They can always go to court.


My first reference is to a decision of the Appellate Division of the Supreme Court in the case of Welkom Village Management Board vs. Letema, 1958, (1) S.A. 490. In that case the individual had sought to protect his right to a trading stand which he had acquired by inheritance from a deceased brother in November 1954. The date, November 1954, has some significance. His applications to the Village Management Board for the grant of a trading permit were repeatedly and persistently refused. Action was ultimately taken against him and the matter ultimately reached the court in the case that I am now going to refer to. The history of that case is one which makes shocking reading. It is a bad case of “arbitrary officialism”. The applicant’s rights were finally protected by the Court of Appeal in December 1957, that is to say, after three long years of struggling against officialism and what I can only call bureaucratic tyranny.

The judgment is a long one and I do not intend to read it in full. I shall merely quote two salient portions of it. The first portion is on page 499 where the judge said this on behalf of the Appellate Division—

From the foregoing melancholy chronicle of the treatment accorded to respondent, the following essential features clearly emerge. Respondent was initially granted a site permit authorizing him to reside at stand 582. In terms of regs. 6 and 9 that authority carried with it the recognition, inter alia, that respondent was a fit and proper person to reside in the location and that he was engaged in a lawful occupation within the area of the Council’s jurisdiction. Respondent’s only occupation was that of conducting the business he had inherited from his deceased brother at stand A.5. It is abundantly clear that stand A.5 was by conduct allotted to respondent by the Council and that he at all material dates remained in possession of both stands. During the whole period the Council received from respondent the correct rentals for both stands. Throughout the thwartings, threats and prosecutions to which he was subjected, respondent was, despite repeated requests in that behalf, never given any valid reason why the Council should seek to terminate his possession of the sites. Even when respondent placed before the Court on oath his above detailed specified allegations of fraud and gross abuse of petty power on the part of named employees of the Council, the latter did not even take the trouble either to deny a single one of those allegations or in any manner to dissociate itself from the conduct of its officials. In the circumstances, there would prima facie appear to be every reason for the learned Judge a quo to have made the order which he did, and for him to have added the observation that “The Court trusts that the unfortunate applicant who has suffered great hardship, and encountered continuous opposition, at the hand of respondent over a long period of time, will henceforth receive from it the co-operation to which he is entitled.”

The Judge then goes on to say—

Instead, the Council appealed to this Court.

I will just quote one other short extract from page 505 where the Judge concludes his judgment and says—

I have, in the course of this judgment, set out the remarks made, both by the magistrate who heard the ejectment proceedings and by the learned Judge a quo, regarding the treatment which the respondent has received. To the views thus expressed, and with which it is in full agreement, this Court would add that it trusts, first, that in future respondent will be accorded his lawful dues and, secondly, that— if, indeed, not already done—respondent’s allegations against the location officials named by him in his petition will be the subject of appropriate investigation by the Council.

Here we have a case which obviously could not easily reach the courts, and when it did reach the court, it reached the court because action was taken against the respondent to eject him from the two stands to which he claimed, and had a right to claim, according to the Appeal Court, a right.


He could have initiated proceedings himself, there was nothing against it.


I submit that the hon. the Minister is trifling with the situation, because the judges would have made a statement to that effect if it had been as easy as that.


Surely it is trite law that he could have gone to the court.


May I ask in what form.


He could have asked for a declaration of rights, for instance.


Very well, I will accept that is the position, that he could have asked for a declaration of rights after three years.


Surely he could have gone long before that. The courts are always open.


Yes, the courts are always open. I have indicated to the Minister and to this House that cases of this nature affect the masses and that only in relatively few cases has the individual concerned either the courage or the means to go to court.


Then you must have a Government attorney for the masses.


It does not affect the principle.


That might partially be a remedy, but do not let us anticipate my argument. Let me first proceed with my argument and let the Minister listen to my representations before making conjectures as to some aspect which I think might have some bearing, but very little bearing, on the subject of my motion.

The second case to which I wish to refer is the case of Sundarjee Investments v. De Vos Hugo, N.O. and Another, 1959, S.A. (2), page 367. In that case the respondents were, firstly, the chairman of the committee of the Group Areas Board and, secondly, the Minister of the Interior. In that case too the judgment is a lengthy one and I do not propose to quote it in full, but the headnote says this—

Applicant, an Asiatic company, was the registered owner of premises consisting inter alia of certain rooms which since 1946 had been let out to Indians, Coloured persons and also Europeans. Since January, 1956, the rooms have stood vacant. The applicant now desired to alter the rooms and to let them to permanent Indian occupiers. The area in which the premises were situated had been declared a proclaimed area by proclamation 74 of 1951. Applicant had made written application to first respondent, the chairman of the committee of the Group Areas Board, for a permit granting him permission to make the premises available for occupation by Indians. The application was refused without the furnishing of any reasons and a hearing was applied for and granted and a committee of the Group Areas Board has heard depositions and evidence on behalf of the applicant. The committee of the Group Areas Board had not questioned any of the important facts which had been submitted to it and had made no comment unfavourable to the granting of the application. Thereafter the first respondent had again refused a permit, again without furnishing any reasons for such refusal. The applicant had then noted an appeal to the second respondent, the Minister of Interior, but his appeal had also failed. An application to both respondents to furnish their reasons for their decisions was refused. The applicant now applied for a mandamus compelling the first respondent to issue the permit sought, or otherwise for an order that the application should be considered afresh and properly and that the respondent should pay the costs of the application.
Held, that the first respondent should on the noting of the appeal have given his ground for his decision plainly.
Held, further, that the application for a permit was of a quasi-judicial nature, that the audi alteram partem rule should have been applied and consequently that the applicant should have been informed of those grounds on which the ultimate refusal had been based, so that he would have been able to rebutt them.

Here too a subject of dispute which had arisen in January 1956 reached the court, the Transvaal Provincial Division, in May 1958; judgment was given in March 1959, and as the matter was then referred back to the Group Areas Board, the applicant had to set in motion the proceedings all over again. So much for the Minister’s interjection that you have recourse to the courts. That is not the only remedy. Here the applicant had recourse to the court but because of the nature of the subject it had to go right back again to the very tribunal which was set up originally, and against which the applicant had to struggle from 1956 to 1959. The aim of my motion is to investigate this problem and to see whether we can provide a better remedy. It is not good enough for the hon. the Minister simply to retort that the applicant can go to court. I think I have made it abundantly clear that to go to court in any circumstances such as these is a difficult and a protracted matter; it is a matter in which a very heavy onus rests upon an applicant who wishes to preserve and to protect his rights.

Throughout this whole process of the establishment of administrative law, attempts have been made from time to time to try to distinguish between what are known as judicial, quasi-judicial, or administrative functions, but it has now become trite law that distinction is not valid. The court in the case of Hoek v. Venterspost Municipality, 1950 (1), S.A. 190, set out the law very clearly; it said—

As a general rule a tribunal or body, even if administrative, must exercise its functions in a judicial or quasi-judicial way whenever it is empowered to make decisions, not in its own arbitrary discretion, but as a result of inquiry into matters of fact, or of fact and law, and these dicisions may affect the rights of individuals.

I come back then to this question: What are the remedies? I want to make it quite clear that the problem is not one which is confined to South Africa alone. I think a striking feature of public law in most Western countries during the 20th century has been this development of administrative adjudication to give it its high-sounding name, or arbitrary officialism, to be a little bit more colloquial. But what is unique to South Africa is that this type of administrative justice usually affects the masses. What is unique in our case therefore is that the masses will invariably consist of those persons who have no representation in this House and who, I think, can therefore be described as the unenfranchised. I mention this not to make a political issue of the matter but merely to stress this important fact that it behoves Parliament in those circumstances to be extremely cautious in ensuring that justice can really prevail, that the Rule of Law can be preserved in the best possible way. As I have indicated, my motion is designed to achieve that because it is concerned primarily with preserving what is known as the Rule of Law.

Suggestions or remedies will arise in the minds of different people in different ways. One has been the suggestion that there should be created a special Administrative Division of the Supreme Court to which there can be recourse from these special tribunals on administrative action.


Is it a sort of equity court that you are visualizing?


No, I am not visualizing it myself; I am just indicating that is a suggestion which has been made both in this country and in the United Kingdom that there should be an administrative division. It is, of course, a suggestion which is based very much on the French law because the French law has dealt with this problem better and longer than any other country as far as I am aware. There it has built up a specific system of administrative justice and has provided a whole range of tribunals which can settle the issue certainly more expeditiously and presumably at less cost than in the two cases to which I have referred here. The Scandinavian Countries have dealt with the matter in their own particular way. The Scandinavian countries —Sweden in about 1909, Finland in about 1919 and Denmark in 1954—set up what they call an Ombudesmand. The 1953 revision of the Danish Constitution which came into effect in 1954 makes special provision for the institution of what they call the Folketingets Ombudesmand, which may be translated as “State Controller” or “parliamentary commissioner for civil administration”. The reason for setting it up there, which is also the problem which I pose to this House, was this—

Underlying this measure was a widespread opinion that in these times of a constantly growing Government administration the usual guarantees against mistakes, negligence or direct abuse of power by public authorities were not sufficient.

This official, this Ombudesmand, has been given very wide powers of investigation. He is entitled on the receipt of a complaint or on his own initiative to examine any civil or State activity that may have emanated from any body of this type. Let me quote from a Hansard Society report on “Parliamentary affairs”, No. 2 of 1959, at page 201—

If the Commissioner finds that a cabinet minister or a former minister should be called on to account for his conduct of office, he submits a recommendation to that effect to Parliament.

Then at page 203—

As already mentioned the Commissioner may on his own initiative take up a matter for investigation, but in practice the great majority of cases arise out of complaints.

The Scandinavian countries, as I say, have set about dealing with the matter in their own particular way, and the system there is one which, from my slight knowledge of Denmark, works. That is the most important factor— the fact that it works. Serious consideration has been given to the question as to whether a similar sort of system should not be adopted in Great Britain. Great Britain, on the other hand, has dealt with the matter in its own particular way. I think that for the purpose of the record I should say that there was the “Donoughmore Commission on Ministerial Powers” in the United Kingdom which sat from 1929 to 1932 and then reported. Following on that there was what is known as the “Frank Commission of Inquiry on Administrative Tribunals”, which covered the period 1955 to 1957. Let me again quote from Hansard Society “Parliamentary Affairs”, vol. 12, Nos. 3 and 4, at page 323—

The Report went on to make a number of detailed recommendations designed to give effect to these basic principles and to enhance public confidence in the existing procedures. Thus, the chairmen of tribunals should be appointed by the Lord Chancellor instead of by a departmental Minister; the chairmen of appellate tribunals should have legal qualifications; responsibility for removal of members of tribunals should rest with the Lord Chancellor; save in exceptional circumstances, hearings should be in public and legal representation should be permitted; decisions should be fully reasoned; rights of appeal on points of law to the High Court should be extended. The procedure at statutory inquiries should be altered to give all interested parties adequate prior notice and a fuller indication of the case they had to meet; inspectors’ reports should be published. And the Committee recommended the establishment of two standing Councils on Tribunals (one for England and Wales and one for Scotland) to keep the constitution and working of tribunals under continuous review and to exercise certain specified functions in relation to statutory inquiries.

I have read this to indicate that this is precisely what I am asking in my motion should happen here. The Frank Commission did firstly inquire into a prevailing system of administrative law, and it carried out that inquiry with a view to bringing about uniformity of procedure and to safeguard the rights of citizens. In consequence of that Commission of Inquiry legislation was passed in the United Kingdom, known as the “Tribunals and Inquiry Act of 1958”, which incorporates provision for this sort of appeal tribunal, but it was particularly designed to keep the constitution and the working of tribunals under continuous review and to exercise certain specific functions in relation to statutory enquiries.

Sir, the problem that I have posed is, I think, a serious one. I think it is serious in any circumstances but it is made more serious for the reasons given by me, namely that in a country such as ours where the masses who are affected by tribunals of this nature have no representation in Parliament, a very special duty is cast upon this House to ensure that administrative justice does not develope into arbitrary officialism or, worse still, into administrative injustice. I therefore commend to the hon. the Minister the various suggestions that I have made, or that emanate from the documents which I have quoted. I hope the hon. the Minister and the Government will agree the time has come when there should be an examination into the establishment and working of tribunals with a view to introducing legislation to bring about uniformity in procedure and to safeguard the rights of citizens under a system of administrative law which I say has grown, is still growing and ought to be controlled by Parliament as the ultimate arbiter in all matters of government. I move.


I second the motion. In deaing with this motion, I hope that I will be forgiven if I start with certain basic principles which are known to certain hon. members and perhaps not known to others. I think one must bear in mind in considering the merits of the motion moved by the hon. member for Port Elizabeth (South) (Mr. Plewman) that traditionally and basically our Constitution is modelled on the thought that there is a separation of powers between the Legislature, the Judiciary and the Executive. I think it is fundamental to our Constitution …


This is not America.


That is so, but I would remind the hon. member for Standerton (Dr. Coertze) that the American constitution has more defined units of Executive, Legislature and Judiciary than any other country in the world, because at that time their appreciation of the English Constitution was that it was in fact so defined. But it is basic to the Constitution of England, upon which our Constitution is based. It is basic to our Constitution. The Legislature’s function is to legislate, to make laws; the Executive’s function is to administer the laws, and the Judiciary’s function is to construe the laws and to determine the rights and duties of individuals and of the state under the law. That is the principle, one of the principles which is involved in the motion now before the House. There are exceptions of course. The Legislature does have judicial powers under the Powers and Privileges of Parliament Act of 1912; Parliament may sit as a court, may hear evidence and generally behave as a court in respect of offences under that Act. Likewise courts have a legislative function when the Judges of the court make rules of court. But it is when one considers the branches of the Executive having judicial functions that one has cause to have a certain amount of alarm. It is this category which has got out of hand, this category of directed, delegated, diverted authority to make legal decisions and to put them into effect.

Now I don’t think there is one individual in South Africa who is not at one stage of his life or another, or perhaps all the time, governed by decisions which are made by members of the Executive staff, if I may call it that, members of the Civil Service. And one appreciates that it is necessary that this should be the position, one appreciates that the complexities of modern life, of a modern state, necessitates a certain amount of authority being delegated to officials; one appreciates that there must be a measure of control in all the activities of the State, of the Commonwealth for the common good. But Sir, the issue which is raised in this motion is not whether that should be or should not be. I accept that it is so and that it must be so, and that in any event, whether it must or must not be so, it is here and there is no way of getting rid of it. The issue is whether or not some sort of control, some sort of inquiry should not be made into the exercise by the Executive of judicial functions. Sir, on speaks of judicial, quasi judicial, administrative, executive, and so on. I think one should bear in mind what the distinction is between these expressions, and I think one should appreciate that the decisions which are made by these officials or by the Ministers of the State, are in fact decisions of a judicial nature. Now a true judicial decision contemplates five things, I think. It contemplates a lish or an issue, it contemplates a hearing afforded to the parties, in order that they may put forward the facts relating to the issue to be decided, and the right of course to debate the law relating to those facts, the right to contravert the facts, and so on; thirdly, I think, a decision involved is based upon leading principles, involving argument on the law, which principle is so strong that if the decision is wrong in law, there must be a right of appeal; fourthly, that reasons must be given for the decision which is given, and fifthly there must be some sort of finality, subject to an appeal.

As important as that is the fact that the persons who exercise judicial authority are completely independent of the State and completely independent of the Executive, and they therefore can afford to as they always have done, and no doubt always will do, exercise their functions completely impartially. The decisions which are made, Sir, by Ministers and their staff (if I may use that category of persons) are either quasi-judicial or they are administrative. A quasi judicial decision is one in which the elements of a hearing are present, in which a lish or issue is present, but which otherwise bears no relation necessarily to a judicial decision. In other words, what it never includes is an obligation to give reasons, an obligation to give a decision based upon judicial grounds, but rather a decision which is based upon discretion; not upon truth necessarily which can be contraverted by an examination as to whether the decision arrived at was correct or not correct. In other words, Sir, although there are the outwards trappings of a judicial decision, the essence of a judicial decision is missing, and there is nothing that the individual can do who is adversely affected by such a decision so far as his normal right to relief from the ordinary courts of the land is concerned. Nothing he can do about it except to say that the decision was not in accordance with the principles of natural justice. So long as it can be shown that the official who made the decision, who weighted up the facts, presumably, who weighed all the evidence, and who makes a decision which perhaps affects one’s livelihood, exercised his discretion, there is nothing that can be done. The courts will not interfere, unless of course the statute provides that there is a right of appeal. But in the nature of things in fact that never happens. Now, Sir, there are of course other decisions which are made, decisions have been defined in May’s “South African Constitution”, page 320—

On the other hand administrative decisions are by their nature discretionary. There is no legal obligation upon the person charged with the duty of reaching an administrative decision to consider and weigh any evidence, or solve any issue. The grounds upon which he acts, the means which he takes to inform himself of the position, are left to his absolute discretion.

Then he gives an example—

For example if the Governor-General-in-Council in using his discretion when an Act of Parliament is to be proclaimed before it can come into force, decides not to proclaim it, or if the Minister of the Interior in deciding whether or not to grant a certificate of naturalization decides not to do so, both have an absolute discretion, and they can act, if they wish, on whatever grounds they please, and need not take into consideration principles of natural justice.

We are not concerned with purely administrative acts. We are concerned with these quasi-judicial acts, acts and powers. I must say, which are becoming alarmingly on the increase. Sir, I draw the distinction between quasi-judicial and administrative acts for the reason that you can invoke the court’s protection if the decision is a quasi-judicial one; you cannot invoke the court’s protection if the decision is a purely administrative one. And of course it is in the field of discretion that one has all the difficulties.


The powers are granted by Parliament.


That is true, but what Parliament does is in fact to give to officials, or give to the Minister a quasi-judicial power.


That is your safeguard.


No, here I can’t agree with the hon. the Minister that it is any safeguard that Parliament has given the power and that all those people are in theory responsible to Parliament, for the same reason (as I shall indicate) that administrative law as such was rejected by Dicey in 1870 or whenever it was, when he said that it was against the principle of the rule of law. Now in theory he is quite right, in practice I doubt very much if one can defend the attitude of Dicey in respect of administrative law of the droit administrative which existed in France. Sir, Parliament in fact has no control at all over these decisions. They are ad hoc decisions made in respect of each individual case, they are decisions of which there is no notice to the public; there is no publication of their decisions, although there is publication of course of their auxiliary powers to make regulations. I shall deal with those. But in the field of discretions one has one’s difficulties, and one appreciates that even in a quasi-judicial decision there is a discretion vested in the official or in the Minister himself. Sir, “discretion” has been defined by our courts, as an adaptation of a judgment of an English court—

“Discretion” means when it is said that something is to be done within the discretion of the authority, that something is to be done according to the rules of reason— in justice, not according to private opinion —according to law and not humour; it is not to be arbitrary, vague and fanciful, but legal and regular, and it must be exercised within the limit to which an honest man is competent to discharge his office or to confine himself.
Mr. J. A. F. NEL:

Why complain about it?


What I am complaining about is that is the definition, but there is no guarantee, or any provision whatsoever that definition will in fact be adhered to. It may be a very good definition and if the discretions are all exercised in this way, one would have no cause for complaint. Sir, this is not a political motion and I am not intending to cast any sort of slur on anyone at all, but with every good intention in the world, no official, no Minister can give a decision in his discretion in accordance with that definition if he has not had the opportunity to be properly appraised of the facts, and fi he has not been given the opportunity that a normal judicial officer would be given of all the machinery which a normal judicial officer has for having the facts put before him, and of having the benefit of argument on those facts and on the law.


But that would be impossible to carry out.


I shall suggest to the hon. the Minister that it is possible and that these difficulties can be met. But that is the point of this motion that the difficulties cannot be met by the law. The law has found itself to be incapable of dealing with the complex development of myriad departments, of myriad controls, and so on, which are the scourge but nevertheless the trade mark of every society in the world to-day. And the law, the common law, is incapable of dealing with the situation, and it is now necessary for the Government, it is necessary for Parliament to do something about it; it is necessary for Parliament to set into operation machinery to deal with the situation which has now arisen because of the Act of Parliament, because Parliament has given to these people the powers which they have, and Parliament has not provided machinery within which decisions, discretions of a judicial nature, or be it quasi-judicial, can properly be exercised. That is our problem in South Africa, and it is the problem in England and in all Western countries, and as I shall indicate this problem has been solved to a large extent in America, where they have taken a realistic approach to the subject; they have appreciated the dangers and have taken the bold step of dealing through Congress with the difficulties which Congress itself has created.

Sir, the extent of the bodies, or people, officials, or Ministers who have these powers to make quasi-judicial decisions to-day are numerous. The list of those bodies is inexhaustible. I suppose that if I started now and reeled off the many boards that there are in South Africa to-day, I don’t think I could finish without drawing breath again. One would start with the Banana Board, the Mealie Board, the Wheat Board, the Citrus Board, the Transportation Board, the Rent Board …

Mr. J. A. F. NEL:

That is democracy.


Yes, perhaps this is a necessary adjunct of parliamentary government, but I would not say that it necessarily means democracy, as I hope I shall indicate to the hon. member. As these boards operate without any sort of guidance, without any instruction from Parliament they are in fact not very democratic. Inasmuch as democracy means that there shall be a sovereign independent Parliament, which will make the laws and that there shall be an independent judiciary which shall interpret those laws, and decide for each individual what his rights are under the law, and also so far as the rule of law is concerned, I would say to the hon. member that they are very, very undemocratic, not intentionally, but because they have so developed.


What is the rule of law?


I remember spending almost three mornings a week telling students what the rule of law was and I am sure at the end of it they still did not know. I don’t intend to give this House this afternoon a lecture, however edifying, instructive and satisfying it might be to the hon. member.


A handy political argument.


Yes. I do not want to call it the rule of law necessarily, but the hon. Minister knows what I mean and I know the hon. the Minister appreciates that those three things are important: Supremacy of the Legislature, that the courts should decide what the individual’s rights are under the law and no one else, and the Executive, so far as possible, should be confined to its executive functions. There are a lot of advantages, as I have said, in these various boards and bodies: An inexpensive procedure, expedition of hearing, experts with local knowledge of the subject, with some knowledge of the technicalities of the subject, etc. It is not certain whether these qualities really endure, as I think is the experience of everyone. One mistake made by one of these boards as to procedure or whatever it may be (they may be all laymen) can result in very lengthy and very expensive litigation, as is very often the case. There is another aspect of this power, and that is the tendency to-day to give to the Minister, and not to the State President (the Governor-General as it was), the power to deal with various aspects of the general administrative law.


There is no difference whatever.


The hon. member for Standerton himself is a constitutional lawyer, and I think he will appreciate that a decision by the State President would mean in fact a decision for which the whole Cabinet would be responsible.


There is always Cabinet responsibility, whether it is one Minister or all the Ministers together.


Of course there is, but a decision made by the State President is a decision taken by the Cabinet in law and a decision made by the Minister is a decision made by the Minister in law, for which the Cabinet may be collectively responsible. But they are two different things.


De jure, yes, but not de facto.


In law there certainly is a difference and in practice there could be a difference. But no Minister can ever escape his responsibilities and no Government can escape its responsibilities by saying that this was a decision taken by the Minister in terms of powers which you, Parliament, granted to him, that is the point. The whole tendency has been towards departmentalization of all state activities, and one finds that Ministers and department officials become not only the makers of laws, but they also become the administrators of those laws and the judges of the rights of the persons who are affected by those laws, as to what their rights are under those laws. The unfortunate thing is that it is necessary in these modern days to exercise these discretions, to give these powers to various officials, and it affects every person and it affects very important rights. The decisions which are being made are being made by these persons and they are of a quasi-judicial nature. They are required to look at certain facts and to decide upon them what an individual’s rights are under the law which their department is controlling.

But one of the most important principles which is involved in the motion which has been moved is the question of justice so far as the public is concerned. If there is one principle, which is as important as the principle that justice shall be done, it is the principle that justice shall be seen to be done, and one of the most unfortunate characteristics of these quasi-judicial decisions is that they are made in private, anonymously. Although in fact like the State President’s decision in law, it might be the Minister’s decision, the fact is that in most cases it is a decision of a senior official applying his mind properly. But nevertheless the public does not know with whom it is dealing, it does not see justice done, it does not have the opportunity itself to see its case or its rights being determined by the person concerned.


The safeguard is that it can be ripped wide open in Parliament.


It can be ripped wide open in Parliament if every case is brought to the attention of every Member of Parliament.


It depends on a wide-wake Opposition.


The hon. Minister forgets that for the same reason that he himself cannot make all those decisions, the members of the Opposition also cannot deal with every single case which falls to be determined by a quasi-judicial decision of one of the authorities. That is important, it is one of the things that affects the public as far as these tribunals are concerned, and I want to say at once that I accept that these bodies are necessary. I accept that it is necessary that these powers should be extended to members of the Executive and members of the Civil Service. But what this motion says is that something must be done about it. You have to try to find a way in which these powers can be exercised in a more democratic way. We know, and the hon. the member for Standerton will correct me if I am wrong, our history books have told us that the Court of Star Chamber was a court of politicians enforcing a policy—it was not a court of Judges enforcing the law. I do not want to draw any analysis between what the history books tell us about the institution of the Star Chamber and the present system of executive government. But one must not forget that in its day even the Court of Star Chamber was a very good court, for the reason that no other court, in view of the peculiar circumstances which existed, could be found to enforce the law in those days. And when one looks at what happened in England in those days, when the Star Chamber was abolished by the Star Chamber Abolition Act, and we went back to Magna Charta and all that sort of thing, back to “the due process of law”, one wonders what would have happened if in fact Star Chamber had remained. I do believe that we would have had in England, and in South Africa in the result, a system of administrative law and not the system that we have to-day of ministerial responsibility to Parliament. I do believe that would have happened, just as it happened in France. I believe, Sir, that in the result it would probably have been a very good thing because the system which the hon. the Minister is apparently defending, that of responsibility to Parliament, or that every individual has his remedy because the Executive is responsible to Parliament, means no more to-day, I think, than the sort of responsibility that executive committees have in provincial councils. In law they are different things but in fact they come to precisely the same thing.

I believe that the common law of to-day has found—and I think the courts have admitted as much—that it is unable from its own resources to meet the requirements of the modern bureaucratic age. And it is a bureaucratic age, Sir, for better or for worse. I believe that we can make it for the better. I would like to make some suggestions to the Minister. I would like to suggest certain things which I believe should be done and which I believe, at least merit an inquiry by the Government.

I believe in the first place that all boards and tribunals should be made to give the reasons for their decisions. That has three or four very good effects. In the first place it provides an encouragement to those boards, those institutions, to reason out their decisions. Secondly, it makes known in general the policy of such a tribunal; and thirdly it will create far less divergence in the type of decision that is given by different tribunals in respect of the same subject. I might say, Sir, that in England there are examples in legislation where boards—one is in respect of the Road Ribbon Development Act, a similar Act to the one which we have—have to give their reasons and publish all the facts which it had before it when it considered what its recommendations ought to be.

Another suggestion is that representation of the parties concerned by counsel, legal advisers or by any other agent ought also to be allowed, particularly in the case of officials who have to make quasi-judicial decisions. Amongst other things it is said that the proceedings are very informal and it is not necessary for legal or other representatives to appear. I think the experience of all legal practitioners is that they feel less at home before informal boards than they do in formal courts. Another factor is the question of evidence. This is a very important matter. Another very good reason why representation should be allowed because the decision has to be made upon facts. Those facts have to be presented and legal representatives are able to sift out the evidence, are able to guide the tribunal as to what sort of evidence they should allow and should not allow, what sort of evidence is admissible and not admissible. I think this is important, Sir, because the whole of our system of evidence, all our rules of evidence, have been developed over the centuries in relation to jury trials. In other words, they have all been crystallized, especially as far as the exclusionary rules are concerned, with a view to not letting the jury, lay people, hear things which are not in fact facts, or things which might be more prejudicial than probative, and which might influence them unnecessarily. One must remember that all members of these lay tribunals are laymen. Another factor is that if there is argument then no prima facie view is reached. I want to draw the hon. the Minister’s attention to Section 16 of the Rents Act. Sub-section (1) says—

No party interested in any matter under review shall be entitled to appear before the control board either personally or by a representative.

It is that sort of thing which makes it very difficult for these tribunals themselves to give a proper verdict, no matter how well-intentioned they may be. In this regard in England, in the Rushcliffe Report in 1934, it was recommended that legal assistance provided by the State should be provided in respect of administrative tribunals. Although when the Act was passed in England, the Legal Aid and Advice Act of 1949, it was not provided that this should be done provision was made there for representation to be allowed.

I have very little time left. This is a very complicated subject and I shall endeavour to be very brief with the last two or three most important matters. The most important matter perhaps is the right of appeal. The conservatism of the English and South African lawyers has always precluded such an appeal. It has even precluded it in criminal law until about 1947. You could not appeal on the facts in a criminal case. In the very first case, the case of Carr, which came before the courts—this is now an appeal from a judicial tribunal—the Appellate Division found that on the facts there was no evidence upon which this man could have been convicted.


He was a lucky man.


He might have been a lucky man. But the Judges of the Anneal Court decided that in law that man should not have been convicted. But for that provision of appeal that man would have been hanged. He had been sentenced to death. I think the right of appeal is a necessity especially from a lay tribunal which decides, without any direction as a jury would have from a Judge, without any legal directive at all, the facts: a lay tribunal which decides upon the facts whether an individual has certain rights or has not got certain rights. I believe that there should always be an appeal from such a tribunal to another tribunal which has legal people on it, either to the court or to another legal tribunal. After much pressure on the part of the American Bar Association they passed in America the Federal Administrative Procedure Act which provided for appeals from judicial tribunals in circumstances where it was not expressly forbidden by the statute in question. In South Africa, certainly as far as our Native population are concerned where they are ruled from the cradle to the grave, where their liberty, their livelihood, everything that concerns them, is determined by officials, they especially should have the right of appeal in the case of a deportment or banishment order or something of that sort, which is not of a criminal nature. [Time limit.]


Mr. Speaker, we again have here to-day the old bogy which the United Party has now been trying for seven years already to frighten us with, viz. the grievance they have against the powers entrusted by Parliament to an official or to a board or to a Minister. But we are making progress. I want to congratulate the hon. members for Port Elizabeth (South) (Mr. Plewman) and Durban (North) (Mr. M. L. Mitchell)—they are evidently poles apart as far as this is concerned—on having narrowed down the point of difference somewhat so that we can at least discuss it with each other. You will remember, Mr. Speaker, that when the hon. member for Wynberg (Mr. Russell) moved this motion a few years ago—and I think the hon. member for Port Elizabeth (South), at that time the hon. member for Johannesburg (North), still seconded him—they objected to any delegation of legislative power by Parliament to an official. We convinced them that was the correct thing to do in the government of a state.


We are not convinced.


Perhaps the hon. member does not remember so well any more, but that was the great argument between me and the hon. member for Wynberg on that occasion. with reference to delegated legislation. Now they have accepted that it is an essential method of government at least to have delegated powers. Well, I am glad of it. To-day their grievance is simply against a judicial or quasi-judicial exercise of powers by an official or by the Minister or a board, and they consider that those powers are not being properly exercised and that their exercise leads to injustice in administration. Let us regard that as being the point of difference.

Before I do so, I first want to direct the attention of the hon. member for Port Elizabeth (South) to this, that if he thinks that an injustice is suffered because the people have no means of redress to the place where they should have it, or if they have not the courage, or if there is a reason subjective to themselves, he must not ask that the system be changed, but then he should remedy the incapacity of those people.

The hon. member for Durban (North) has already said that there should be a process of legal aid. I agree with him. If that is the defect he should ask. in his motion that the State should provide legal aid in order that these people may obtain legal opinion, and remedy the injustice in that way. He should not try to amend the system, which in my opinion is inherently sound.

Let me add that the continual reference to the French system and to the Scandinavian system gets us nowhere. Because the French system did not develop from this problem we have. It emanated from the fact that when any person felt aggrieved by the actions of an official of the State, he could not sue the official, because the executive authority was not subject to the administration of justice. They established a council which they called the Council of State which had to settle the dispute a plaintiff had with an official qua official or when the plaintiff had a dispute with him in regard to a matter affecting private law. The rules developed there are known as the Droit Administrative. But that has nothing to do with this case.


That is the problem.


Mr. Speaker, the best of all is that we are the only country in the world which has developed a system of administrative law which is a very useful system; our system is better than the one they have in England, and I reproach hon. members opposite for the fact that, because the system in England is not as good as ours and because they read only English literature on the subject, therefore they do not know about the system of administrative law and the system of administrative judicial functions which exist in this country. I see the hon. member for Durban (North) looking at me as if he is hearing something he has never heard before. I am sure he has never heard it before.


Yes, I have heard it.


But then he should not say that there is something wrong with us. There is something wrong with him and with his studies. I want to tell him that our Supreme Court is in fact a court of administrative instance.




The hon. member for Port Elizabeth (South) may sneer, but the facts remain as they are, and the hon. member for Durban (North) may think that he is now listening to the greatest nonsense, but he is hearing something which he should consider and which might be of great advantage in his practice.


Where can I read it?


I will tell you where you can read it. The joke is that it is all available to the hon. member, and this is the position. Our writers and our courts have developed a large number of rules as the result of legal interpretation and the principles of agency, i.e. the contract of agency, as to how a body or a Minister or an official exercising a judicial or quasi-judicial function has to apply that discretion.


Why did they not give reasons for the cases I mentioned?


If the hon. member looks carefully he will see that in every one of those cases the applicant won his case, or at least the person who felt that an injustice had been done to him, even though it was the defendant in the one case and the plaintiff in the other case. The point is that in the final result he ended up in the Supreme Court. But it is not Parliament’s fault or that of the hon. member for Port Elizabeth (South), or mine or yours, Sir, that person did not go to court when he should have gone. The hon. member for Port Elizabeth (South) now asks the Minister of Justice what the aggrieved person should have done. There were all kinds of legal remedies available to him. He could have asked for a declaration of rights; he could have applied for a mandamus; he could have sued them in the ordinary way to give him his rights, the two interdicta mentioned. But I am busy telling the hon. member for Durban (North) what the rules of administrative law are which the courts have applied here. Now I must say this, Mr. Speaker: If we do not have a separate administrative court that does not mean that we do not have separate rules of administrative law. It is a question of functions. And there are two things we should keep separate, namely the function of the Supreme Court and the function of the administrator. The function of the administrator is to apply the law, but the function of the Supreme Court is to settle a dispute. But it is not the function of the Supreme Court to substitute its judgment for the judgment of the administrator. These are two quite separate functions. But what the Supreme Court can in fact do is that it can tell the administrator, i.e. the administrative authority: You did not do your work as you should have done it; go and do it over again. And all the decisions in our administrative law, apart from particular legal provisions, end on that note. Now the hon. member asks me where he can read it. He will not find it in a separate brochure, but he will find it in a place where he probably will not expect to find it because he does not read his literature with the analytical eye that is necessary. He will find it, peculiarly enough, in the book by Dr. L. C. Steyn, now Chief Justice, called “Die Uitleg van Wette”, in Chapter VII, under the heading of legal interpretation. I will read it to him.


That is not necessary; I have read it.


I will point out two things to him on every point he raised. The one is how they adapted the rules of agency, the rules of our common law, and how our courts gave effect to it. The first rule is—and I read from page 214 of the second edition of Dr. Steyn’s book—

When exercising a quasi-judicial discretion, i.e. the function of deciding after investigation and consideration of pro and contra to grant or to deprive someone of a right, or to take a decision which will impose an obligation on him, or which will deleteriously affect an individual or his group the elementary principle of justice should be taken into account.

That is the elementary rule of administrative law. Now the question arises: When are these rules violated? I may say this—I shall not have time to tell the hon. members for Port Elizabeth (South) and Durban (North) everything—that there is only one rule of administrative law which is derived from French and Scandinavian law, which is not included here, and if next year they move a motion I would like them to consider this. It is, namely, the rule that the State is an honest man; it does not deceive and it does not allow itself to be deceived. The Frenchman says “1’état c’est un homme honeste”. The State is an honest man. In other words, it does not make misuse of the process or of the law of procedure. In all the cases where people have grievances, they are cases where the State did not act as an honest man. But whilst I am now continuing with my lecture I come to this question: When is the elementary principle of justice derogated from? The first is when the person who has to take the decision does not give the parties concerned the opportunity to submit their case. And that was one of the hon. member’s main points, that the case is not submitted. But that is one of the elementary rules of administrative law, namely that the person concerned, the person whose rights are affected, should state his case. If the hon. member looks at page 216, he will find a multitude of decisions of the Appeal Court to support this argument or point I have made.

But the hon. member’s difficulty is that he wants the Appeal Court to give the decision which the administrative official should have given. That is where he makes a mistake. If he wants the Appeal Court to be used as part of the administrative machinery, he should move a motion to that effect. I go on to the next rule: The person entrusted with the task of exercising a discretion must inform the persons in regard to whom he is giving judgment, or whose rights will be affected, of all the objections advanced against them, so that they may have the opportunity of controverting those facts and those objections and to show that they are unfounded. In other words, the administrative officer or the Minister or the board must inform the party concerned of all the facts it has to consider. If the hon. member in his practice did not know this and if he has already sent a large number of opinions back to the attorneys saying that he does not think that they can continue with those cases, he should go and read this chapter with a different eye, even from the one with which the Chief Justice wrote it. One has the feeling that the Chief Justice, with all due respect to him, himself did not realize that he was dealing here with a part of the positive common law in a form different from what is customary. He viewed it from the angle of legal interpretation. He had to do so. Because he had to find authority for these rules. Nowhere in the common law is it stated that this will be so in the case of an administrative officer. He must also have a foundation on which to base these adapted rules, and his foundation is the rules of legal interpretation. That is why we see it in this chapter.

Then I come to the next rule when the elementary rules of justice are violated, namely that the person authorized must be free from prejudice. He is a selectus persona. It is the same rule as the rule of agency. When I have selected a particular person to carry out a mandate or instruction, whatever his mandate might be, then I have selected him and nobody else. To me he is a selected person. He must do it. Therefore we have the rule that when you have a mandate you must execute that mandate yourself. Therefore we have the rule that when the administrative officer or the Minister or a quasi judicial body is entrusted with a duty, then none of them may delegate it—delegatus non delegare. That is the rule of agency and that is the rule of constitutional law introduced by our courts, acting in their capacity as an administrative judicial entity.

At 3.55 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with Standing Order No. 41 (3) and the debate was adjourned until Friday, 13 April.

The House proceeded to the consideration of Orders of the Day.


First Order read: Adjourned debate on motion for Second Reading.—Immorality Amendment Bill, to be resumed.

[Debate on motion by Mrs. Suzman, upon which an amendment had been moved by Mr. D. E. Mitchell, adjourned on 23 February, resumed.]

*Mr. J. D. DU P. BASSON:

Mr. Speaker, when the House convened for the first time on 19 January, I had a motion ready which read as follows—

The House is of opinion that penal provisions are not an effective method of combating immorality between Whites and non-Whites, because such provisions have more harmful than beneficial results, and that the existing legal provisions dealing with the subject, Section 16 of the Immorality Act, and all that goes with it, ought therefore to be repealed.

The hon. member for Houghton (Mrs. Suzman), however, gave notice immediately before me of her intention to introduce a Bill with precisely the same tendency, namely the Bill now before us. Consequently I withheld my motion. But it is therefore obvious that I fully support the crux of this Bill, which seeks to repeal Section 16 of the Immorality Act.

My attitude is the same in respect of the amendment moved by the hon. member for South Coast (Mr. D. E. Mitchell). The hon. member moved that the Bill should first be referred to a Select Committee for investigation. His motion is, in my opinion, aimed at opening the way for the Government to escape without loss of face from the ugly consequences of its own legislation. In other words, to make it easier for the Government to make the necessary amendment which it surely knows must be made sooner or later. I shall therefore support the amendment and, if it is rejected, I shall vote in favour of the second reading of the Bill.

When Section 16 of the Immorality Act as it stands now was piloted through Parliament in 1950, shortly after the present Government came into power, I was not yet a member of this House. I became a member of the House only in August of that year. It is, however, common knowledge that the debates were then mainly concerned with the Government’s motivation of this step.

We are now faced with a completely different situation. Since then we have had a long period of years in which we have seen how harmful the effect of the racial provisions of the Act are. I believe that if, out of all the racial laws of the Government, there is one which in its effect has contributed nothing to the social prestige of our country, and has not solved a single problem but on the contrary has created a whole series of new ones, and which has been a source of unprecedented humiliation for thousands of men, women and children, it is the racial provisions of the Immorality Act. Whatever good intentions some of the Government members might have had in the beginning, after the experience we have now gained of the effects of the relative section of the Act, I can think of no single good reason why this Act should not be amended, and amended soon, in the way suggested by the hon. member for Houghton (Mrs. Suzman). In fact, the agitation to have the Immorality Act amended did not start with the hon. member for Houghton or with the United Party or with me. It came in the first place from high officers in the Department of the Minister of Justice himself; it came from lawyers; it came from judges and magistrates, from people who were the innocent victims of the Act; and it comes from leading organs of the National Party itself. The Burger, the chief mouthpiece of the Government party, has for the last three years regularly expressed its dissatisfaction with the Act as it now stands, and pleaded in the most candid language for a drastic modification of it. The Sunday newspaper of the Vaderland, which is the organ of a staunch party man like the hon. the Minister of Posts and Telegraphs, is waging a crusade against the dangers and the terrible consequences of the Act, and in a leading article frankly stated that “the Immorality Act, as it stands at present, is not quite right, and we would like to do our share to prevent the unnecessary human suffering”. It emphasizes the unnecessary human suffering. (Sondagblad, 19 November 1961.)

Of all newspapers, the shining light in this case, however, is the Transvaler, the organ of the hon. the Prime Minister himself. In a leading article “The Problem of Immorality” on 21 October 1959 the Transvaler said that we should be prepared “to view the problem in its full scope, namely that it is a biological problem in which human nature comes to the fore”. And further—

The solution of the problem … therefore does not lie in the passing of Acts with heavy penalties.

Mr. Speaker, it is a memorable occasion to see the Transvaler so fully in harmony with the attitude of the Opposition, and so directly opposed to the spirit revealed by the Minister of Justice. But it shows how leading circles in the Government party are beginning to realize the blunders of the Government, and how the Minister of Justice, when he replied to the first part of the debate, had to pretend to be callous in order to conceal it. Finally, the Transvaler referred to—

… the naive belief that everything could be remedied by means of legislation … Human nature cannot be remedied by means of legislation. Since the days of Hammurabi … no single law has ever succeeded in improving human nature in any way.

This is clear and definite language which is not susceptible to two interpretations.

The evidence of growing repugnance to the Act on the part of the Government itself can be stacked up, and in my opinion it would be a serious accusation against the Government if it were to allow another session to pass without amending this measure, which it must know is wrong, which its own public organs tell it is wrong, and which in the words of its own party organs causes “unnecessary human suffering”—I am quoting directly from its own organs—“has already created so much unhappiness”; “causes tension and suspicion in ordinary human relations between the races”; “has not redounded to the honour of our public life and South Africa’s good name”; “causes continual unrest and consternation on the part of the public”; and “causes indescribable misery to innocent women and children”;

I do not believe there is an Act on our Statute Book against which so many well-founded objections can be raised as against this Act. Where I refer in general terms to “the Immorality Act”, I obviously mean that section of the Act which imposes heavy compulsory sentences of imprisonment on intimacy, or even the semblance of intimacy, between White and non-White. I want to mention as briefly as I can a few of the main objections, and I want to base every one of those objections on statements and reports and arguments which have recently appeared in the Government Press itself.

In the first place we must admit that there are certain problems which are of such a nature that their solution does not lie simply in the passing of Acts imposing heavy penalties. The biological phenomenon of sexual intimacy in which innate human nature comes to the fore, is one of them. Members on the Government side have always known and realized this, and that is why, during all the years of their regime, they have never yet passed an Act against immorality as such and against immorality in its whole scope. The Government is and was evidently not prepared to make immorality as such, and therefore also as between White and White, a criminal act. Therefore we have the position that to-day there is not a single Act on our Statute Book against immorality in its full scope. Right from the beginning it was not immorality which motivated the Government; it was the aspect of colour which interested it. It wanted to make use of every possible and impossible means to foster an emotional state of mind in regard to matters of colour on the part of the electorate, and to-day we know that it went much too far when it dragged the courts and the police and criminal sanctions into the impossible sphere covered by the present debate. Politically it is perhaps forgivable, but what is unforgivable is that the face of all its evil consequences the Government carries on with it and neglects to amend the Act.

The extent to which the Government made a mistake when it originally introduced a measure like this can perhaps best be measured by the fact that ours is the only country in the world which has a racial law of this kind. The old excuses that our circumstances are different and that our problems are unique are totally unfounded. Most countries in the world are to a greater or lesser extent multi-racial countries. Multiracialism is not a characteristic of South Africa only. Most countries in the world are multi-racial. In many of them the problem of race relations was and is even more acute and intense than it is here. What is more, everywhere in the world the more developed races and nations are concerned with preserving their identity as far as possible. But nowhere in the world is it deemed prudent that the law and the authority of the State should interfere with people in the way the Immorality Act does here. The only Government, apart from ours, which did so in recent years was the Government of Adolf Hitler, who with his Aryan Laws did so much harm to his country that it will never fully be able to recover from it. Indeed, it is this very fact which makes the Immorality Act, its very existence as well as its effect in this country, so obnoxious to the whole of the Western world. I do not think one can ever measure in terms of money the harm and the humiliation which the practical working of the Immorality Act has caused and is still causing to South Africa in the eyes of the world. Just recently a number of incidents have taken place which have aroused the most bitter feelings against South Africa. I am thinking, e.g., of the Swedish sailors who received corporal punishment, of the case of the German sailors in Cape Town, and the hundred and one other international incidents which will continue to take place and perhaps even become worse as long as the world is becoming smaller and the scope of the racial obsessions of the Government is expanding, or even remains what it is. The effect of the Singh case, where a married couple were brought to court on a charge of immorality, has already been mentioned in the debate and I do not want to discuss it again, except to quote what the Department of Information had to say about it. In its Overseas Press Comment of 19 February 1962 the Department of Information reports that—

This story was, as oft before, the most damaging to South Africa’s image.

That is the conclusion drawn by a Government Department itself. In the same circular the Department of Information further reports that—

Just when the month looked to be a good one (for South Africa), came the case of Mr. Singh …

It completely overshadowed the statement in regard to the Transkei overseas; and that is easily understandable, because nothing arouses as much interest on the part of newspaper readers as what is called, in Press language, “a human interest story”. I think we must face the position that as long as this Act remains as it is, there will simply be no end to the ridiculous situations which will arise. We have already had one case after another of mixed couples who have been living together as man and wife for half a lifetime and have large families, and who have had to appear in court on a charge of immorality. According to the Press there was recently a case in Cape Town where a mother and her daughter both appeared on a charge under the Immorality Act. The mother was acquitted because it was not proved that she was Coloured. The daughter was convicted after her identity card had been produced, on which she was classed as a Coloured. One wonders what will happen to the poor Mr. Song of Durban if somebody has a grievance against him and lays a charge against him of being married to a Chinese woman. And the whole country is holding its breath and hoping that a visiting Japanese iron magnate will not dare to be too attentive to one of our South African Chinese ladies. The fact is that news about immorality cases is to-day one of the greatest journalistic export products from South Africa, and it is things like these which make our country, which politically is really much more stable than most other countries in the world, appear in the eyes of the world as the political madhouse of the world.

The Burger recently, on 22 February last, reduced it to pecuniary damage and said the following—

We can be very certain that if we could calculate in terms of money the harm we suffer abroad as the result of immorality cases, it would far exceed the figure of our trade with Japan.

To me it is inexplicable how any Government which has a love for its country and wants South Africa to be respected can remain so completely indifferent to such a state of affairs.

But there are many more serious objections to the Act than those I have mentioned so far. There is the utter uselessness of the Act. If the will of the White man is not strong enough to ensure his own future, we are already far past the stage where an Act like the Immorality Act can make any useful contribution. An Act like the Immorality Act is simply not a means which a mature nation with confidence in itself ought to use for any purpose. The future of a proud nation in any case does not lie in the hands of its relatively small number of deviates.

Furthermore, there is the tension and the suspicion in ordinary human relations which the Act causes between the different races in South Africa. We have case after case where motor cars are stopped by the police, in which people of different colour find themselves for some reason or other, with extremely inconvenient consequences to all of them. It is a fact that no White man in these times dares to take home a servant who has been looking after his children. A man who until recently was a Member of Parliament and who sat on the Government side, and who stayed in the same hotel as I did, told me frankly that he was too afraid to take his servant to the station at the end of the session if his wife could not be present. The effect of the Act is a completely unnatural relationship between the races, and a very unhappy spirit of fear on the part of the White man.

There is another objection, and that is the unfair burden which the application of this Act lays on the police. At a time when serious crime is increasing and the Government needs the police increasingly in the security services of the country, the police must surely have spent tens of thousands of hours already hiding in wardrobes and behind bushes, climbing up pipes, peering into motor cars and rooms, watching the private movements of people, listening to malicious gossip, investigating cases, charging people and attending court cases—and all because of a measure like the Immorality Act, which does not solve a single problem. Small wonder that high police officers have on many occasions already expressed themselves as being against the Act in its present form. The Minister of Justice should really pay a little more attention to what his police chiefs think of the Act in the light of their experience.


I have discussed the matter with them more often than you have discussed it with your voters.

*Mr. J. D. DU P. BASSON:

In May last year the Burger of 21 May reported the following from Johannesburg—

Immorality Act weapon in hand of Black women: Police officers and legal men in Johannesburg yesterday asked in Press interviews that the Immorality Act be amended, because it can so easily be abused and has become a strong weapon in the hands of non-White women … One officer said that the Immorality Act in its present form is a strong weapon in the hands of non-White women. It surprises him that more non-White women do not make use of it in order to harm Whites to whom they are not well-disposed. Non-White women can easily blackmail White men with the Act or fabricate cases to their hearts’ content.

Sondagblad had a precisely similar report—

Police officers on the Rand strongly feel that the Immorality Act in its present form should be amended, because it has become such a mighty weapon in the hands of non-White women, even stronger than witchcraft.

It is the high officers of the hon. the Minister himself, who deal with the practical effects of the Act, who adopt this attitude. The report says, further—

A further complaint by the police against the Act in its present form is that it has reached the stage where the police methods of investigation are depicted in an unjust light. Comment on police methods which has already been made in cases of this nature by magistrates and Judges may easily give the public the impression that the police do not investigate such cases in an unprejudiced, efficient manner before taking action. (Sondagblad, 22/10/1961.)

The Minister, in his speech in reply to the debate tried to belittle the wide field which the Act lays open for blackmail and initmidation and the prosecution of innocent people.

But let us briefly look at the type of thing which has recently come to light in court cases and in Press interviews. I shall read only a few. I want to read from the Government Press. (Sondagblad, 16/10/1961)—

A stratagem to “trap” White men and non-White women together and then to demand money from the White man so that he will not be charged in terms of the Immorality Act, has come to light this week at Queenstown. This trick almost led to a respected man in the community, a detective-sergeant in the Railway Police and a deacon of his church, serving six months’ imprisonment, and his name being dragged through the mud.

Another report—

A group of persons who were responsible for the breadwinner of the family of seven members being falsely arrested on 3 March last year on nine charges of immorality, are at present still at large. And that is in spite of the fact that the magistrate at the time of acquitting the accused said that these incidents had never taken place and that some of the witnesses for the State had been conspiring.

What are you reading from?

*Mr. J. D. DU P. BASSON:

I am reading from the newspaper of the hon. the Prime Minister, Dagbreek of 15 October 1961.

*Mr. S. F. KOTZÉ:

Where did you quote the first extract from?

*Mr. J. D. DU P. BASSON:

That was from Sondagblad of 15 October 1961. Then there is the Vaderland’s Sondagblad of 4 March this year—

Bantu exploiters have discovered a new way of making use of the Immorality Act to blackmail innocent White men in an unscrupulous manner, by pretending that they are detectives. Shocking cases of barefaced blackmail have come to Sondagblad’s attention during the past week, of White men who helplessly complied with the demands of the blackmailers in order to escape the humiliation of an immorality charge.

Let the Minister get up and tell us that his own newspapers are not reporting the truth. One Government newspaper gave the following summary of all the different ways in which the Act is being abused to-day (Sondagblad, 22 October 1961)—

  1. (1) Scandalous trick of catching White and non-White together and then to demand money;
  2. (2) Conspiring to take revenge on an innocent victim;
  3. (3) The use of a Bantu woman as a trap;
  4. (4) Servant with a grievance who wants to revenge herself on her employer;
  5. (5) The danger of political abuse by certain non-White organizations is increasing.

It is precisely for those reasons that so many magistrates and Judges are so very critical of this Act.

There are further serious evils which result from the Act. There is the effect of all this newspaper publicity in regard to immorality cases on the young newspaper readers. Even the more conservative South African newspapers are forced to give a sufficient measure of publicity to cases of this nature. That is due to the nature of the Act. An important Government newspaper expressed its fears in regard to this aspect of the matter in the following terms (The Burger, 22 February 1962)—

There is the danger that continuous public obsession with the Immorality Act, the municipality of prosecutions and sympathy at least with the innocent members of the families of people who are prosecuted, can have an undermining effect on the whole conception which the Immorality Act sought to stress. The strange perversity of human nature, particularly in such highly emotional cases and especially on the part of our youth, should not be under-estimated.

In addition to all the objections I have mentioned, there is still a further one, namely that this Act has caused a significant joy on the part of many non-Whites. In the consequences of this Act they see a trap which was set by the White man in which some of the best members of the White community are trapped time and again. Therefore we find that Bantu newspapers make heroes of well-known people who are concerned in immorality cases, and the concern which these cases cause the White people is increasingly becoming one of the main themes of non-White journalism.

Finally, I come to what is perhaps the most devastating effect of the Act in its present form. It is the indescribable consequences it has for the wives and children of affected families. I often wonder to what extent the effect of the Immorality Act is responsible for the fact that the figure of broken families in South Africa is one of the highest in the world. The Act has definitely resulted in a few thousand broken families in South Africa. But what is worse, thousands more children all over the country will have to go through the world for the rest of their lives with an inferiority complex of a special kind. Last time he spoke the Minister said in his speech that applied also in respect of crimes like theft and murder, but in practice that simply is not true. To be arrested under the Immorality Act results in a special form of humiliation. It is not so much because the colour line has been broken. The Minister is quite wrong when he says that the shame attached to it by the community in fact illustrates the enormity of the colour contravention. It is not in the first place the colour aspect which results in this public reaction. It lies herein: The process of intimacy between people has always been a matter of the most private nature, and from the very nature of the matter any revelation of it is bound to be accompanied by shame and humiliation. I do not believe that anything else we can imagine can be compared with the shock it is to children and to wives and to a family when this intimate aspect of perhaps a single indiscretion in the private life of the breadwinner is publicly divulged by the State in a manner which would perhaps have been more suited to the Middle Ages. I repeat, it is not in the first place the colour aspect, but because sex is concerned. It is the way and the circumstances under which people are usually caught, and all the intimate details which are then divulged at the trail, which drives otherwise normal people to committing suicide and buries whole families alive in the community.

Therefore I think the Government has a duty towards the country, and that is to put a stop to this devastation as soon as possible, or at least to allow the matter to be investigated on a high level, as was suggested by the hon. member for South Coast. This is the type of Act which cannot stand the test of sound commonsense or of time. Personally, I do not believe that any of our extreme racial laws will remain standing for very long, at all events, not the Immorality Act. Laws against real crime, theft, assault and murder, will always remain in force all over the world. Our Immorality Act, however, falls into a different category. As a Judge expressed it, “Nobody suffers any particular harm in the ordinary sense”. Therefore on the basis of all these well-founded objections against the maintenance of the Act in its present form, I hope that the Government will reconsider its attitude. Human life is brief, and is it really worth while retaining a measure which results in so much misery for innocent people, and does not really attain any object or solve any problem; to retain a measure which destroys so many lives but which obviously has no future as a law?


I have never before heard the hon. member for Bezuidenhout (Mr. J. D. du P. Basson) produce such futile arguments as he did to-day. I had thought that the hon. member for Houghton (Mrs. Suzman) who sits next to him may perhaps have exercised the necessary influence over him to inspire him in this debate but even in that respect my hopes have been shattered.

The hon. members said that the Immorality Act was only being used to get the electorate to vote on an emotional basis. I want to know from the hon. member since when has he been against the Immorality Act? He is one of the members who is always using the Immorality Act and the Prohibition of Mixed Marriages Act at political meetings in an attempt to rouse the emotions of the electorate. I want to know from the hon. member on what date has he turned against those Acts?

The hon. member contends that no single law has succeeded in changing the nature of mankind and he uses that as an argument why this Act should be removed from the Statute Book. If that is his argument what other Acts should be removed from the Statute Book? We have a law in respect of theft. Does the hon. member contend that because thefts still take place that Act should be deleted and that we should allow people to commit theft at will? What about murder and rape and the other crimes? He has argued along lines of which he himself knows the ordinary person will not take any notice. He is one of the members who still voted for this Act in 1957. I just want to say this that the Immorality Act deals with one of the laws which dates back to the earliest stages of history, namely to a period when one of the most mediaeval civilizations on this earth was still in its initial stages. We still see the result to-day in a country like India, for example, where the caste system is still observed so rigidly that no marriages take place between two different castes. The original reason for this marked division between castes was that the Bantu group which originally lived in an area between Persia and China moved across India in the direction of Australia, and that division into castes developed because some of those Bantu remained behind in India, and that is still the position to-day. The position to-day is simply that members of the one caste do not inter-marry with members of another caste. The hon. member for Bezuidenhout is the person—and I can quote his own speeches to prove this— who has repeatedly advanced this sort of argument at more than one political meeting to rouse the emotion of the voters.

*Mr. J. D. du P. BASSON:

Give one example.


I move—

That the debate be now adjourned.
Mr. M. J. de la R.VENTER:

I second.

Agreed to; debate adjourned until 9 April.

The House adjourned at 4.31 p.m.


First Order read: Adjourned debate on motion for House to go into Committee of Supply and into Committee of Ways and Means, to be resumed.

[Debate on motion by the Minister of Finance, adjourned on 21 March, resumed.]


I wish to move the following amendment—

To omit all the words after “That” and to substitute “this House declines to go into Committee of Supply and into Committee of Ways and Means unless the Government, inter alia

  1. (1) takes active steps to create a climate which will encourage and stimulate a much quicker rate of economic development, having regard especially to the growing need every year for providing employment for the rising generation;
  2. (2) adopts a more generous attitude to the needs of handicapped persons and social pensioners;
  3. (3) undertakes to avert the increased dangers to national security arising from the Government’s policies; and
  4. (4) undertakes to re-establish the friendship and co-operation of the Western world which we have enjoyed in the past and which offers the best guarantee of national security ”.

The hon. the Minister of Finance emphasized that this was a national security Budget. “If you wish for peace,” he said, “prepare for war.” If he will allow me I would like just to address a few words to his colleague, the Minister of Defence, in order to try to clarify the attitude of this side of the House to his Department. Sir, we have supported the hon. the Minister of Defence in his efforts to improve and enlarge the Defence Force, and we shall continue to do so, not blindly, but on a rational basis. We shall not oppose the increase of R48,000,000 in the Defence Vote, although, of course, we shall exercise our right to discuss it. But what we do object to is the crude attempt made by him and some of his colleagues to frighten people by emotional, almost hysterical speeches sometimes, into blindly rallying to take part in the defence of the country against unnamed invaders, and attacking this party in the process.


What did you say two months ago?


I want the hon. the Minister of Defence to understand that we are ordinary loyal citizens of our country and that there is no need to try to stampede us into doing our duty. That is no way to achieve national unity. I do not want to be controversial but I may remind the hon. the Minister that it is not this side of the House which has ever shown itself reluctant or unwilling to do its duty to the country in time of war or threats of war.

Mr. G. F. H. BEKKER:

More than 20 years ago!


We do not need convincing of the dangers which beset us. We have been warning the Government for years of the perilous paths upon which it was leading the country and, believe me, Sir, we deplore most deeply the fact that our warnings were consistently ignored and laughed at, and that our warnings proved to be only too true. In these speeches that are made the Government is in effect telling the people that the Opposition has been right all along and that they have only just woken up to the fact. However that may be—whoever was right and whoever was wrong—we have to deal with the situation as it exists to-day, bad though it may be and bad though I think it is, and we shall act on that basis. In the discussions which will follow in the course of this debate, if the hon. the Minister will accept our intention to act in that way, and will deal with facts and not with fancies, he will find us ready to respond in a responsible way in this matter. We feel that is the level on which these grave matters ought to be discussed.

The hon. the Minister of Finance in introducing his Budget, based it on a three-legged platform, three main elements by which his proposals should be judged. Firstly, national security, internal and external; secondly, economic progress and stability, within the context of general Government policy—a most significant phrase, Sir. to which I shall refer later; and thirdly, social services. We have to judge in how far his Budget proposals are likely to attain his aim.

I will take them in reverse if I may, Sir. The hon. the Minister referred to alleviating the lot of handicapped and less fortunate members of the community, to the extent that our resources permit. It is apparent that the hon. the Minister, for reasons which he regards adequate, has felt that our resources permitted him to do very little indeed in that respect— something under R4,000,000; R1.50 per month for social pensioners, an increase in their pension of some five cents per day. In other words, that element has been practically neglected and the hon. the Minister has not been able to do more than make what is scarcely a token gesture of his sympathy with these people, and that leg of his tripod collapses as soon as you look at it.

The next leg is the question of economic progress and stability. Here, Sir, for the last five years emphasis has been laid, year after year, by this Minister and his predecessors, on the need for stimulating the growth, the rate of growth of economic expansion, for providing the spark to restore the rate of development to what prevailed in the earlier years, and which is so necessary if we are to match our needs with our opportunities. After five years, the Minister had to tell us of the slow rate of growth of the economy. He had to tell us that things have taken a less favourable turn in the last quarter of 1961; he had to refer to the unemployment, and a reference to the White Paper shows that as far as unemployment is concerned, the Minister was quite right to refer to the subject, because apart from mining, in the manufacturing industry for the last seven years there has been no increase in the index of employment at all, whilst in the construction sector there has been a sharp drop, particularly during the last year or so.

I must congratulate the hon. the Minister and his Department on the White Paper which they have produced, which I think is most valuable to all members of this House, but in it we see that the net national income increased by some 4 per cent last year as compared with about 9 per cent in the previous year. We see that the real income per capita of the population has increased since 1956 (the last six years) by some R5 per annum, and we see that the growth of capital investment in the private sector during last year showed a decline of some R100,000,000. I am going to follow the Minister’s very good example and not weary the House with numerous figures, but the figures do show quite clearly that after five years of effort, this Government in its attempts to expand the economy more rapidly, has failed, and all the proddings and exhortations have availed little or nothing, and I think the lesson that we have got to learn, and I hope the Government will learn it too, is that we cannot hope for rapid expansion of our economy within what the Minister calls the general context of his Government’s policies. You remember, Sir, the Viljoen Commission on Industrial Development; you remember that they recommended that the Government should shape its policies with an eye to their effect on the industrial and general economy of the country, and the position with which we are faced now shows how right they were. The Government ignored that advice and they expected the economy to shape itself in line with the Government’s policy. That is where, as a result, we find ourselves to-day. The hon. the Minister talked about liquidity. He seems to derive some comfort from the fact that in the private sector liquid resources increased last year by some R140,000,000 to the figure of R1,600.000,000. I can’t see any comfort in those figures. Because what do they mean? Surely they mean that there is at this moment in the hands of the private investor lying idle R1,600,000,000, enough money to pay nearly four times over for the large proposed Orange River Development Scheme.

Mr. G. F. H. BEKKER:

What a wonderful scheme!


I am glad the hon. member is in agreement with this side of the House for once. Sir, it means this, that there is all this money lying idle. Why? I suggest it is because of the reluctance on the part of the private investor to tie up his money in longterm investments and in lack of confidence in the future of the country within the orbit of what the hon. the Minister calls “the general orbit of the Government’s policies”.

Bearing in mind what the Minister calls the shock attacks of last year, plus the restrictions which he had to take last year, import control and currency restrictions, and so on, plus the present war scare, surely it is clear that stimulants and incentives to the economy are more necessary than ever, even to maintain, let alone increase, the present restricted rate of development. The hon. the Minister in his speech dismissed boycotts with a wave of the hand. They mean nothing to him. It means nothing to him that outside the Federation, the whole Continent of Africa is closed to our exports, our trade. I must say that I think the growing reluctance of the world, or very large parts of the world, to trade with us is a most sinister symptom, and I think it is a grim threat to the expansion of our industrial economy, which according to the hon. the Minister of Commerce and Industries, has to depend on a vast extension of our export markets within a reasonable time if it is going to develop to its full capacity. When you think that this admirable White Paper shows clearly that of all our exports under 4 per cent goes to the Continent of Africa and that our imports from the Continent of Africa are also about 4 per cent, one realizes what we are missing in respect of what should be the most promising, the most quickly growing and the most rapidly expanding market for our export goods in the whole world.


Who is to blame for that?


Of course the hon. member’s Government is to blame for that.


Would your policy suit Nkrumah’s wishes?


I am trying to discuss the merits of this subject. Apparently the hon. member for Vereeniging has not even begun to study the implications of the White Paper. If he just keeps quiet for a moment he may get a better grasp of the subject.

Apparently the hon. the Minister under the plea which he put forward very eloquently of national security, has abandoned any idea this year of stimulating the economy and he has concentrated on national defence. I think it is a very dangerous attitude to adopt, Sir, as the hon. Minister will surely agree with me that in the long run national security depends upon the national economy. If you allow the national economy to wilt in any way, you are endangering national security. The hon. the Minister tells us that 55 per cent of the increased defence expenditure is going to be spent in the country, and that may put more money into the pockets of the people and create some employment. That may be so to a limited degree. But the fact remains that at best that is unproductive activity and unproductive expenditure. It may be necessary. But it certainly does not strengthen the economy of the country and the argument does not hold water that it does strengthen the economy. Sir, I can find nothing in this Budget, beyond pious words, which is calculated to encourage the economic development of the country or to restore confidence, beyond one or two minor concessions in the way of investment allowances and of course the long-term Orange River Development Scheme. Therefore in my opinion, the second leg of the hon. Minister's tripod also collapses. I can see nothing to encourage economic progress or to restore confidence. On the other hand, I can well see deterrents to economic development. Take the great increase in the amount of money which is being taken from the private sector! Quite apart from the extra taxes, the hon. the Minister told us that he expected on the present basis of taxation an increase of revenue of some R27,000,000 and if you add to that the proposed R36,000,000 of new taxes, you will see that he proposes to take from the private sector some R63,000,000 during the current year, an increase of nearly 9 per cent. The hon. Minister may say that he has no alternative, but I think he must agree with me that to take that large sum of money from the private sector at this stage, is bound to depress an already very quiet retail trade and to contract the whole market for local industries.

Mr. F. S. STEYN:

What about the present liquidity?


What about it? The present liquidity represents people’s savings, not intended to be spent on current expenditure.


But that is the private sector.


The hon. Minister of Information is telling us something! Sir, the question arises whether this is necessary. Bearing in mind the paramount importance in the interest of national security itself of sparing as far as it is humanly possible to do a somewhat bruised national economy from further shocks at this time, one is bound to ask oneself: Has the Minister really fully explored the possibilities of financing his requirements without imposing this heavy fresh taxation? I think for instance of the Bantu Development Fund. The hon. the Minister has accepted in principle the financing from Loan Account to the tune of R10,000,00 of the Native Trust, leaving R9.7 million to be found out of revenue for the Native Trust. Is there any reason under present conditions, and bearing in mind the importance of not attacking the economy if it can possibly be avoided, is there any reason why the whole amount should not be taken from Loan Funds this year? The Loan Funds are not causing the hon. the Minister any trouble this year, they are in a sound position. All the money that is required is for capital purposes, and we have to bear in mind that last year out of R17,500,000 which we voted for the Native Trust, nearly a third of that amount was not spent at all. Therefore by voting this large sum again this year, we run the very real risk that we are actually taking out the taxpayer’s pocket more money than is actually required during the next 12 months, which is the last thing we should want to do at the present time. If the Minister would take the full amount out of Loan Funds, he would save the taxpayer this year approximately R9.7 million. I also wonder in respect of the Defence Account. We are told that nearly R22,000,000 is to be spent on purchases overseas, abroad. Now the hon. the Minister knows not yet what he is going to buy, where he is going to get it, and still less does he know how he is going to get delivery. It has always been right through the years a most chancy business obtaining deliveries of defence equipment. We remember in the days of Mr. Havenga, how he told this House that his Government had agreed to equip two armoured divisions for the Middle East at a cost of R80,000,000. He asked the House to approve of that in principle and from time to time to vote sums which would be required for the purpose. I wonder whether in this case, having regard to the circumstances, we would not be justified in doing the same thing. Suppose we agree to the whole R22,000,000 as we are prepared to do, and suppose we only actually voted R15,000,000 for the current year, the Minister would thereby save an extra R6,000,000 to R7,000,000 in taxation for the current year. Of course there is a third factor: If the Minister persists in turning the Reserve Bank into a stock-jobber, which I hope he won’t, there is also the possibility, I suppose, of anything from R1,000,000 to R2,000,000 profits coming out of those transactions and going into the Defence Account. If all this did result, supposing the Minister took our advice, in a small deficit next year, what of it? Is it not more important at this juncture to spare the economy any more shocks than it is to run the risk of a comparatively small deficit? I think it is. I believe that if the Minister were ready to apply his massive mind to this question, he would find that it would be quite feasible to provide the money he requires, including the money for defence, without increasing the income tax or the company’s tax this year.

The one bright spot of course is the announcement of the Minister that the Government has adopted the Orange River Development Scheme. We laughed when he said it of course. We laughed, Sir, at the spectacle of the Minister after 13 years of urging on our part, solemnly telling us of the importance of conserving the waters of the Orange River! Is it any wonder we laughed? Of course we are supporting this. We only feel that if the Government had taken our advice 12 years ago, they would have been able to save the country many millions of rand.


Why did you not do it 15 years ago?


We were preparing to do so. But we accept the death-bed repentance of the Government in this matter: Better late than never. When we become the Government of this country, we shall certainly pursue this project with energy.

The third leg of the hon. Minister’s tripod, the one remaining leg, is this question of national security. He said that was the overriding factor and he said that we would be threatened very soon if we were not strong enough to deter a potential aggressor, and in defence it was necessary not only to ward off attackers but also to strike back at the aggressors. He made a semi-military appreciation of the financial and economic field. He rightly said that it is advisable to begin with a systematic appreciation of the situation. I fully agree with him. I only hope that his colleagues in the Cabinet will agree with him as well. Will the hon. Minister of Defence follow suit and favour this House with a systematic appreciation of the military situation as he sees it?


Are you serious?


I think that is a very offensive remark to make. Of course I am serious. Has the Minister of Finance never heard of a Minister of Defence giving an appreciation of the military position as he sees it? What nonsense! I wonder whether the hon. the Prime Minister will also follow suit and give us an appreciation of the political field. Because they are all part and parcel of the same thing. Peace or war often depends on the political aspects, and they are all part and parcel of the same thing, namely the country’s security. Without a broad picture, the whole position is quite impossible to judge and no one in this House can come to a firm conclusion as to what really the position is. I hope very much that the hon. the Prime Minister will see the force of that and that he will in the course of this debate give us political appreciation of the position as he sees it, which is making it necessary for us to embark on a large, full-scale defence expenditure. It is much better for the people to know where they stand, much better to know the best or the worst, as the case may be. I think the right thing to do is to have these appreciations from the responsible Ministers, objective. calm and clear. Meanwhile the question with which we are concerning ourselves, is what the Minister of Finance is doing to contribute to national security. As far as internal defence is concerned, we are voting some R120,000,000 to which we have to add some R41,000,000 for the police, because the police are our first line of defence in maintaining internal security, and I am sure we all hope that it will be the only line we shall ever need to maintain internal security. But I would say that with the expenditure we are indulging in, we are probably well on the way to being able to maintain internal law and order, and I would also say that is probably about as far as we have got at the present time, and that, according to the White Paper, is taking some 20 per cent of our total expenditure.

The other aspect of course is external defence, and here immediately the question arises: Whence comes this aggression which constitutes the external danger? Sir, if it is a question of combined operation by Black states or communist inspired forces, there can be no question whatever that the whole country, irrespective of political views, will stand four-square behind the government of the day in the defence of the country. Naturally we hope that it won’t be this Government, but if it were this Government it would make no difference to our attitude, and we would stand four-square behind them in such circumstances. Of course if it is an East-West war, a war between the East and the West, we shall not be without friends and allies, and then the position may be simpler. As far as we can see, the contingency at present is not urgent, but I do not suggest that it should be ignored, simply because it may not be urgent at this stage. But of course there is a third alternative and that is the possibility of international intervention under the pretext of enforcing international law, and of course if that were to happen, we should be up against quite a different proposition because we would have the whole world against us, and in that case R120,000,000, spent mostly in this country on training and producing small arms and ammunition, is a mere flea-bite. Beyond internal defence, I fail to see that this Budget does very much to prepare for war. On what scale we should prepare for war, I cannot say. Before expressing an opinion, I am entitled to have a political appreciation from the Prime Minister and an objective military appreciation from the Minister of Defence. But on whatever scale it is to be, the country should be told, and what is required is some kind of a blue-print, an objective towards which the country will be required to work and for which it will have to be prepared to pay. To equip the country fully with modern arms and equipment to fight a full-scale war might well cost not R120,000,000 but R1,200,000,000 or a good deal more. Without a clear indication of what is envisaged by the Government the country’s economy is going to wait every year in uncertainty and apprehension as to what fresh burdens are to be laid upon it or as to what fresh obstacles are to be placed in its way. On his own three elements, therefore, Sir, the Minister seems to me to have contributed very little, either to the national welfare or to the economy or to national security further than internal security. As far social security is concerned there is nothing to be said. As far as economic progress is concerned the Budget is very cold comfort indeed. It is quite clear that the phrase used by the hon. the Minister namely “the greatest possible measure of economic progress within the context of general Government policy” is a contradiction in terms. The last five years have proved conclusively that in that context no general progress is either likely or even possible. Lack of confidence, uncertainty as to the future, and the prospect of heavy increases in taxation are fatal barriers to economic expansion. This Budget certainly foreshadows very heavy increased taxation. It proposes, as a start, the development of the Orange River Development Scheme which will have to be paid for. Even if we borrow the money it has still got to be paid for. It envisages an accelerated development of the Bantustans. So far there has been a great deal of talk and waving of arms by the hon. the Minister of Bantu Administration and Development about the progress in the reserves, but the fact remains that as far as developing them into an economic viable unit is concerned, the whole task has not been scratched yet. Again the taxpayer of this country will have to find the money. Then we have this rearmament plan, a plan which is undisclosed, nobody knows what is envisaged or what is involved or what we are going to be asked to find in the way of money. If those three things between them are to be carried on in the way in which the Government says they are to be carried on, with vigour and decision and all the rest of it, I can only say that they are going to place a burden upon a sluggish almost stagnant economy compared with which the present rate of taxation is a mere bagatelle.

As far as national security, the third leg, is concerned, without more information and a much clearer picture of what it is all about, one cannot say more, Sir, than that on the face of it, the money we are asked to provide this year can do little more than provide for internal security. It does not begin to prepare the country for an external war.

In conclusion, Sir. may I just sum up in a few words our attitude towards this Budget for national defence. We believe first of all that if this Government proposes to defy the world this Budget is totally and utterly inadequate. We believe further that no country can stand alone against an organized and combined attack on a full-blown scale. We believe that our present position of isolation and friendlessness is due to the obstinacy of this Government in persisting in race policies which are not only anathema to the rest of the world but are rejected by the great majority of the people in this country. Thirdly, Sir, we believe that if the Republic blindly pursues its present course outside intervention in some form or other is a possibility that cannot and should not be ignored. In short. Mr. Speaker, as far as we are concerned this Budget contains nothing to alter our beliefs or to alleviate our apprehensions in the economic and the political and the military fields, all of which appear to us to-day uncertain and threatening to the country.


I second.


Never in the history of South Africa has there been a single Budget which by itself has conjured up so many distant visions as this one—great visions. When we think of this scheme, the Orange River scheme which the Government has announced and in respect of which the hon. member for Constantia (Mr. Waterson) has just claimed paternity for his party, we realize what a big scheme it is. I just want to say this to the hon. member for Constantia that little scheme which they submitted was child’s play compared to the one announced. They wanted to deviate a little water at Norval’s Point or Bethulie and let it run to the Fish River, and that was the end of their scheme. But in this case we have a grand scheme which will change the surface of a large portion of the Karoo, the southern Free State and the north-western Cape Province. It is something which will eventually offer refuge to millions of people by way of the agricultural activities together with the industries which will develop in the big cities and smaller towns. Mr. Speaker, I grew up in that part of the country. The little town where I grew up. namely Venterstad, and the old family farm are unfortunately situated in such a position that we shall be looking down upon those waters. However, water does not flow uphill. Nonetheless we wish to congratulate the people down below heartily on what is in store for them under this scheme. Like a Moses of days gone by we shall just have to gaze on the promised land without being able to enter it.

I want to associate myself with the remarks of the hon. member and congratulate the Minister on the White Paper he has tabled. The illustrations in it particularly are very revealing and they ought to make it very much easier for hon. members to form an idea of what the economic position of the country is than they have been able to do in the past. The Minister has stated his three objectives. The first is security against attacks from outside and against internal disturbances in respect of all races: the greatest degree of economic progress and stability within the context of general Government policy; and the alleviation of the lot of the handicapped and other less fortunate members of the community to the extent to which the means at our disposal justify it. Mr. Speaker, this is a realistic Budget in that it does what is humanly possible to do in respect of all these three, it gives us a balanced picture so that we may enter the year which lies ahead confidently in anticipation of the developments which lie ahead. Some of these essential new services, such as the increased amount for Defence and the increase in respect of Bantu development, will demand a great deal of money and in these circumstances I feel that on behalf of the aged, the social pensioners, we should direct a special word of thanks to the Government for the relief which this Budget is affording them. The hon. member for Constantia said it was a drop in the ocean—it was too little. However, I just wish to point out to him that the people are getting much more in the form of social pensions than people in other countries where they have a contributory scheme, and our people receive it without a contributory scheme. I am not saying they are getting enough. Their income is still very meagre, but I can give you this assurance, Mr. Speaker, that R18 per annum will relieve the lot of these aged people considerably. We thank the Government for that. I hope that when the pensions are again reviewed attention will be given to those people whose income is just too high to enable them to qualify for the old age pension. I want to point out to the Minister—and I have already done so on previous occasions in this House—that there is a fairly substantial gap between the income of those people who receive a pension and those who do not, in favour of those who do get it. As a result of this Budget the position to-day is that a person who has an income of R312 per annum is not eligible for the old age pension. But the person who does draw the old age pension, may have a total income of R474 per annum. I think this gap should be made smaller, and it possibly should eventually be closed altogether. This bonus on pensions is equivalent to the cost-of-living allowances which were formerly paid to civil servants, something which has now disappeared. I feel we should let these bonuses disappear eventually.

Before I deal further with the United Party, I notice that the hon. member for Houghton (Mrs. Suzman) is here. She too has issued a statement in connection with the Budget in which she said the following amongst others—

Since the Government was not prepared to change the social and political atmosphere in South Africa, taxpayers could expect increased duties from now on to pay for ideological expenditure on defence.

Mr. Speaker, what does that mean? She wishes us to accept her “integrated society”. That is what she wants this country to have—an “integrated society”. She has often said that. In that case, according to her. we shall be paying lower taxes. I can assure her that before South Africa accepts that “integrated society” she will rather pay three times the amount in taxes which she is paying to-day. Because her “integrated society” means the death of the White man in South Africa. I wish to ask her a question which neither she nor any member of her party has ever answered. Where she wishes to have this integrated society, does that mean that she ultimately wishes to have a homogeneous society, because they have to integrate in such a way that the integration is complete? This is the question I wish to ask her: Who must integrate with whom? Should the non-Whites integrate with the Whites or should the Whites integrate with the non-Whites? Does she wish to recognize those of a different race as being of her race, as happened in the case of a certain Mr. Song in Natal? What will the ultimate end of that policy be? If her policy is pursued to its logical conclusion, then at the outset when the Whites are in the majority, the Bantu will go about in conformity with White civilization. I am. of course, talking about the cultured Bantu. But thereafter when they are in the majority—she must remember that the Bantu is as attached to his culture as she is to hers —the Bantu will say that the Bantu culture should now apply in South Africa. She will then have to integrate with the Bantu. She will no longer be able to walk about dressed as a Westerner. No, all her curves will be richly decorated with Czechoslovakian beads. She will no longer be able to walk next to her husband, she will have to walk behind him. She will have to walk bare-footed through the thorns with her baggage on her head.


And a child on her back.


Mr. Speaker, that is the culture of the tiger skin and the red blanket. If she wants that, it is her business. But she wants to apply that to the hon. member for Johannesburg (North) (Mrs. Weiss) and she will certainly not accept it. If the hon. member for Houghton couples finances to integration she must take her medicine. I want to tell her that all this integration will not assist her in the least as far as the Budget is concerned; it will push the country economically and racially over the precipice.

I now come to the United Party and the speech made by the hon. member for Constantia. The amendment moved by the hon. member is so wide that you can turn in it with a wagon and 16 oxen. I shall have more to say at a later stage about a few aspects of it. The hon. member says we should conquer the African market and that the Government was to blame for the fact that we did not have it. Does the hon. member wish us to sacrifice our whole apartheid policy for the sake of trade with the rest of Africa? I should like to know whether that is what the United Party want. I do not think they really want it. They may say it but I do not believe that they really want it. The hon. member complained and said we had too many taxes; they say we are being taxed too heavily. But I wish to remind him that when the Minister of Finance introduced the bloc system that in itself was a lowering of the scale of taxation. Since then he has granted a 10 per cent discount and in present circumstances everybody in the country expected him at least to take this 10 per cent away. I do not know why the hon. member is so concerned about that in particular. The hon. member said the other day, not to-day, that the worst fears of the taxpayer had materialized. The impression I have gained from comments on the Budget has been that the opposite is the case. People expected to be worse hit than they have been. You can look at all the comments, Sir, and you will find that is the position. I think the remarks made by the hon. member have been nothing more than simply unjustified remarks. Nothing has motivated him in making them and I do not think we should pay much attention to them. It is clear from the amendment of the United Party that they are like a herd of Springbok running around in a frenzy—particularly after the recent elections. They can find no direction. That is why not even this amendment of theirs can find direction. And having listened to the speech of the Leader of the United Party last Saturday, we are convinced that the firing to which he has been subjected has rendered him completely frenzied.

The hon. member for Constantia said something else namely that we were dividing the country. He referred to the “colonial venture in the Transkei”. The hon. member said that our expenditure in that respect was too high. But they ask for increased expenditure every year, amongst others that the recommendations in the Tomlinson report should be implemented. I want to ask the hon. member this: When he talks about the “colonial venture in the Transkei” what about ex Judge Fagan who said that the United Party should accept the Transkei policy as far as it went because it fitted in with their policy of a race federation? Are they repudiating him to-day while electing him as Senator at the same time, or what is happening?

Mr. Speaker, I wish to state that everything is very sound as far as our finances are concerned. When we remember the irresponsible statements which we had from the United Party last year in June, it is surprising that everything is as sound as it is, if you have to listen to them as to what is happening in South Africa. Last year, on 20 June and on the few subsequent days we had a debate on the financial position. They painted the picture so black and raised so many bogies that I had thought that when we met this year there would be a number of United Party motions on the Order Paper condemning our financial policy. We have had 25 Opposition motions on the Order Paper but not one in respect of finance. Shortly after the commencement of this Session we had the no confidence debate. They did not utter a word about the financial position of the country. We then had the smaller Budget and not a word was said about finances. To-day, more than nine months after that last debate, is the first occasion that they are talking about finances and I think they are only doing so because they are getting ashamed of the fact that they have never raised it. I do not hold it too much against the United Party that they do not want to discuss finances—for two reasons. The first is because the financial position of the country is as sound as it is. The second is that they raised such bogies last year that they are afraid we may call them to account. But it will not avail them to try to run away from it, because I think we should in any event call them to account.

The debate we had last year took place during the week when our foreign exchange position was a its worst, just immediately after the Minister of Finance had announced measures to control the position strictly. Our reserves stood at only R142,000,000. The United Party predicted fairly maliciously that there would be devaluation. Mr. Speaker, at a time such as that, which was practically a semi-critical period, one would not have expected bogies to be raised to frighten the world; no, you should have created confidence and tried to explain to the world that our economy was inherently very sound and that we would be able to withstand all shocks. But we had the exact opposite from the United Party. The hon. member for Pinetown (Mr. Hopewell) made a speech on the subject which we find in col. 8525 of Hansard of last year. He said this, inter alia

Then the Minister will go on to tell us that the South African rand is now equal in value to the currency of that other great republic, the United States of America, the rand being equal to the dollar. But in other language it will be that the South African currency has been devalued.

He even went further and said we would also have a great short-fall, and then he asked—

Is he (the Minister) going to insist on higher taxation in order to make up his shortfall?

The hon. member for Benoni (Mr. Ross) also stated that it appeared as though the next step would be devaluation.


He knows nothing about it.


That is precisely the trouble; people talk about things that they know nothing about. But then the Leader of the Opposition came forward and said this—

No matter how strict these measures are, I am afraid they will not succeed.

Namely, the control measures of the Minister’s—

I think he will find that this trading in blocked capital will decrease our currency in value.

And the hon. member for Constantia who is unfortunately not here at the moment …

*Mr. RAW:

He will return.


… raised the same subject. In that same debate he said that he was moving an amendment because of the Government’s total inability to handle the situation. He went on to say this—

It may be that the Minister’s steps he has taken to stop the outflow of capital will be effective…. I do not think he has gone far enough yet…. There is talk of a possible debasement of our currency, devaluation. It is true that the hon. the Minister issued an emphatic denial that such a thing is contemplated … but he will permit us to say that we doubt what value can be attached to his statement.

Where they made those pessimistic predictions at the time—devaluation, deficits, higher taxation—and where our position has subsequently improved as remarkably as it has, we can understand why they do not wish to talk about financial matters. When I stated in that debate that there was always a decline in the reserves at the beginning of a year, they asked where we were going to start this year. Mr. Speaker, we have started this year stronger to the tune of R100,000,000 than we started 1961. At the moment our reserves stand at a record figure since the war, in spite of the predictions of the Opposition—those dark prophecies of the prophets of doom on the Opposition side!

They call the Minister’s policy of pegging the foreign capital which is invested in shares in this country a kraal economy. But nothing scares away the flow of capital to South Africa more than the type of story we had from the United Party last year …


But the money has gone already.


Mr. Speaker, there is one thing which has struck me this Session. There are a few new United Party members who are far too big for their boots, and there sits one of them. He should rather confine himself to matters which he knows something about. If he concentrates on the law he may perhaps get somewhere some day.


Was it wrong what I said?


The member should rather leave financial matters alone. I say nothing frightens people more effectively than the stories about devaluation which we had from the United Party last year. Do they expect money to return to South Africa once it has left, or is on the point of leaving, if people take them seriously? Surely people were entitled to say that it was the official Opposition, the alternative Government some day perhaps in the future. There must have been people who believed them. I say that they were sabotaging the country economically in that way and they did so during a time of an economic crisis. That was an unforgivable sin.

I said something here last year which was completely misunderstood by the hon. member for Pinetown. I said that we would not change our non-White policy for the sake of economic progress. The hon. member subsequently said in his speech that I had said that our political policy had nothing to do with the country’s economy. That was not what I had said. I want to say this again very clearly to the hon. member: It will not avail the United Party to come and tell us to change our policy, as they are again asking in this amendment of theirs, so as to enable the country to flourish economically. Our apartheid policy is Government policy and we will not depart from it; we have been sent to Parliament to implement it. That is the “given” factor as he would have learnt in mathematics—if he does not understand what I said last year. He should fit his economic policy into that pattern. That was what I meant. Mr. Speaker, we can say this to the United Party: As far as that is concerned, they will not persuade us to depart from our policy.

*Mr. RAW:

Was that the reason why you declared Japanese White?


The hon. member should raise that matter with another Minister, but his information is quite wrong. The hon. member for Constantia went further and said he thought we were over-taxed and that more funds should have been taken from Loan Account. That would have stimulated the economy so much more. Particularly in respect of Defence and Bantu Affairs he wished more money to have been taken from Loan Account. I want to say this to the hon. member in the first instance that story about money being drawn from the private sector to the public sector and what a detrimental effect it has on the purchasing power of the country, is wholly exaggerated. The position is not as bad as people make it out to be, that money returns to a great extent to the private sector via the public sector. It is an exaggeration. The National Party adopts a very firm attitude in this respect. I notice that Prof. Lombard of Pretoria has also stated that we should have borrowed more money. We have had the story in the past that our budgets should show deficits instead of surpluses then it would fare better with the country, but our economy is based to such an extent on a wasting asset, our gold mines, that we can never risk that. We should remember that some time or other our gold mines will come to an end and on what will you base your economy if you have not in the meantime developed a very strong economy in the country without having incurred too heavy a loan debt which has to be repaid the day when they are no longer there? I can understand it this year because this year our greatest requirements are from current account and not from loan account. I can understand why nothing is being transferred this year from current account to loan account, but why the reverse is the position. But if that were to become general policy in future, I would be very disappointed. Thousands of millions of rand are needed to develop the Orange River Scheme alone with everything that goes with it, and to develop other industries to take the place of the gold mines one day. However, we should be careful that we do not saddle posterity with too heavy a debt and too little revenue to pay that debt. That is why we should continue to transfer a considerable amount from revenue account to loan account whenever possible. I think in time to come, as our economy grows stronger the Minister should consistently transfer a definite amount annually from the gold mines to loan account for development purposes. Recently the Government Mining Engineer made a statement on this subject. It was reported in the Cape Argus of 6 February. He said this—

“An expansion in South Africa’s secondary industries was needed to replace the gold mining industry when its present economic importance declined,” the Government Mining Engineer, Mr. T. L. Gibbs, said when he opened the fifth annual congress of the Geological Society of South Africa at the University of Cape Town yesterday. Mr. Gibbs said that the Witwatersrand gold mining industry which occupied a predominant position in the national economy would continue to produce an increasing supply of gold at least to 1970. But it must be remembered that in spite of the discovery of new fields, we are dealing with a wasting asset which cannot be replaced and that some time in the future it will gradually cease to be the important factor in the country’s economy we know to-day.

He supports the idea that there should be large-scale development and by implication the idea that money should be obtained from this wasting asset. I wish to bring it to the notice of the Government that when it can again be done adequate provision should be made for that in the Budget.

I now wish to deal with the other remark of the hon. member and that is that our economic development was too slow. The Minister said the same and I am in complete agreement with him. The hon. member for Constantia says that the Government has failed to stimulate the economy and that it cannot happen within the framework of National Party policy. Well, I wish to give him the assurance that we shall not change our policy for the sake of stimulating our economy. He made great play of the Minister’s statement the other day in respect of stimulating the economy, that it was developing too slowly and inter alia that progress should be faster with a view to our strong reserves. I agree with that, within the frame-work of National Party policy of apartheid, but what have we had in the past? On every occasion when the Government has injected the economy the Opposition has approached it from the other side and given it an anaesthetic. They are for ever playing the role of prophets of doom telling South Africa and the world how bad things are here and how we are heading for disaster. They have been doing that for 14 years, but we have continued to progress. They have been spinning the wildest of wild stories about South Africa. I want to ask you, Mr. Speaker, how can you expect a foreign investor in these circumstances to invest his money in this country when he is always being frightened away, how can you even expect South Africans to make any fixed or long-term investments in South Africa, without some proviso? They are averse to that because they are continually being frightened away. But in spite of this laxity the real net income per capita has increased during the past 12 years from R213 to R261 per person according to the White Paper issued by the Minister, that is to say 23 per cent. According to the latest figures of the Department of Census and Statistics the standard of living, the real income, has increased during the year 1960-1 by 1.6 per cent. In the circumstances and with a view to the tremendous outflow of capital in 1960 and portion of 1961, I think it is quite a satisfactory achievement that there has been a per capita increase of 1.6 per cent.

I wish to say something about banking and other deposit-receiving institutions which are not always willing to follow the lead given by the Reserve Bank and by Treasury. On 7 December last year the Government and the Reserve Bank lowered the bank rate with ½ per cent to 4½ per cent. On that occasion Dr. de Kock, the Governor of the Reserve Bank, issued the following statement—

… the Reserve Bank has lowered the bank rate not only as a sign to the business world and the general public that the authorities were reasonably satisfied with the results of their financial and other measures and with the noteworthy improvement in both the balance of payments position and monetary and banking conditions over recent months, but also, in so far as it could be done by decreasing the costs of short-term financing, to stimulate economic activities.

This is a very definite appeal that the banks should follow suit and make more money available to commerce. But what happened? The commercial banks reacted, perhaps with reluctance, but they did in case react. There is no legal power to force them to do so, although the Reserve Bank can force them to some extent by way of its policy in respect of deposits, etc. It can bring pressure to bear on them. Strong pressure was brought to bear on building societies but they refused to lower their interest rate. A great deal was written about this in the newspapers at the time and ultimately only in March, more than three months after the Governor of the Reserve Bank had made his appeal, the building societies reacted and then only partially. They only lowered the interest rate on deposits but not on the loans which they were granting. In other words, they have consistently refused to give the stimulant which they have been asked to give. Other deposit-receiving institutions, such as finance houses and trust banks, are simply turning a deaf ear to the appeal. They are charging very high interest rates and they pay high interest rates with the result that they attract the money away from the banks as well as from the building societies. They do not in the least fall in with any plan which may be introduced. The banks are beginning to lose the keen competition with these bodies. I just wish to point out that these deposit-receiving institutions, with the high interest they pay, where they lend out money particularly for hire purchase transactions, get 20 per cent and more back. It is practically a contravention of the Usury Act de facto, if not de jure. These people pay a high rate of interest and receive a high rate of interest and they simply ignore what the Reserve Bank or the Minister of Finance regard as being in the interest of the country. They continue with their policy. Their position over the last couple of years has been as follows: In 1948 their deposits amounted to R38.7 million, in 1956 they amounted to R86.5 million, in June 1961 they amounted to R220,000,000, nearly 600 per cent more than in 1948 and nearly 160 per cent more than in 1956, over a period of 4½ years. During the same period there was a decline in the Post Office Savings deposits. There was a decrease from R163,600,000 in 1956 to R144,600,000 in June 1961, a decrease of R19,000,000 or approximately 13 per cent. Take the building societies. In 1956 deposits amounted to R842,900,000, that includes their so-called shares, because building society shares are not real shares; they are deposits. It amounted to R1,223,900,000 in June 1961, an increase of R381,000,000 or something over 40 per cent. Take the commercial banks. Towards the end of December 1956 their deposits amounted to R1,020,600,000, and towards the end of June 1962 they amounted to R1,100,700,000, an increase of only R80,000,000, or 7 per cent. It is very clear from these figures that the banks are losing ground on account of this sharp competition. The building societies are afraid to reduce their rate of interest, because if they do the money will go to the deposit-receiving institutions. The banks are afraid to do so because if they do the other two will take the money away from them. In 1956 the commercial banks still had R1,020,600,000 in deposits and the building societies and other institutions together had R929,400,000, but in June 1961 the commercial banks only had R1,100,000,000 and the other two together had R1,443,000,000. In 1956, therefore, the commercial banks still had nearly R100,000,000 more in deposits than the other two together, whereas in June 1961 the building societies alone had R123,000,000 more than the commercial banks, and together with the deposit-receiving institutions they had over R340,000,000 more than the commercial banks.

That shows that there has been a terrific change in our investment pattern over the past ten to fifteen years and the danger exists that eventually the banks will no longer be able to afford to listen to the Treasury and the Reserve Bank to make credit facilities more readily or less readily available. Furthermore, if the banks are the only ones to react and not the other institutions, it will be less effective, because the banks handle a much lower percentage of our deposits. I wish to ask the Minister to regard this matter as something demanding speedy attention. I know his Department is dealing with it, but I wish to ask him to try to introduce legislation still during this Session so that for those purposes these institutions will fall under the same law, namely the commercial banks, the building societies and the deposit-receiving institutions, and so that, in the first place, the Reserve Bank or Treasury or both will have a say over rates of interest, and secondly, that all the provisions of the Banking Act which ought to apply to these institutions such as building societies and deposit-receiving institutions, will indeed apply to them as well.


The speech of the hon. member who has just sat down lacked that usual enthusiasm of his in support of the Budget proposals of the Government. I think the reason is quite obvious; he himself has really no enthusiasm for the Budget proposals. After having tried to give high praise to a Budget proposal which will put into the pocket of the pensioner not even 6d., as was suggested by way of interjection during his speech, but only 5 cents, it is quite obvious that he was trying to do some whistling in the dark to cheer himself up. He went about dragging red herrings into the debate by criticizing what hon. members had said about last year’s Budget and by trying to anticipate what they are going to say on this occasion. Only then did he come round to deal in any way with the remarks of the hon. member for Constantia (Mr. Waterson). The only real fault he found with the remarks of the hon. member for Constantia was that the latter did not seem to see great virtue in the gold reserves being as high as they are to-day. The hon. member for Pretoria (Central) (Mr. van den Heever) will know that low blood pressure, and also high blood pressure, are symptoms of human ill-health. As a parallel, excessive liquidity is not necessarily a sign of good health; it is sometimes a sign of economic ill-health, because it means that there is stagnation and an insufficient outlet for the profitable investment of money.


The point is that you stated that there would be no reserves at all by this time.


That was before the door was slammed on the transfer by foreign investors of their money and before South Africa broke faith in the outside financial world by the slamming of that door. But the hon. member forgets, as I say, that excessive liquidity can be, and is in the present circumstances, a sign of economic ill-health because it shows that there is insufficient outlet for capital investment, not because the money is not there, but because the confidence is not there.

I come back to the Budget. Let me commence by saying that the hon. the Minister appears to have come to the beginning of a new era in budgeting. Although the 1961-2 surplus will most likely exceed the Minister’s R5,000,000 mark, I believe we are now seeing the end of what has become popularly known as the Government’s traditional game of budget-bluff, the magic of the game being of course the surprisingly big surplus on revenue account produced at the end of each year. The bigger the surplus, the better the magic, but in reality of course it was no more than a game of blind-man’s buff as far as the taxpayer was concerned. But as I say, a new era in budgeting is seemingly now being unfolded.

The Budget for 1962-3 has been described as one which gives great care to detail but which misses the chance to inspire confidence. That, I think, is an apt assessment of the situation and I agree with it. So far as the concessions to pensioners are concerned, I commend the hon. the Minister for doing what he has done. But I consider that he could have done better, for the real benefit which goes to the pensioner is relatively small: in fact it is very small indeed. The claims of the pensioner for consideration will therefore generally still remain, and I need hardly emphasize that those claims are genuine and deserving. I regret, therefore, that no more could have been done for the pensioner in the present circumstances. Those concessions, moreover, will do little or nothing towards increasing domestic purchasing power in the coming year. My main criticism of the Budget proposals is that the Budget tends to weaken the country’s purchasing power at the very time when buyer spending should be increased in order to stimulate industrial output, or in other words, in order to get the wheels of industry turning faster. The Minister seems to have been content with trying to encourage the export of manufactured goods, but what is needed most at present is a boost to the buying power in the country in order to stimulate local demand for goods and services. With this Minister’s long record of surpluses, and with the hon. the Minister of Transport’s recent railway surpluses, the Government could have, and I believe should have, given the country a lead by raising the level of wages for the non-Whites and so simultaneously raising local demand for goods and services. That is a step which the chairman of the Board of Trade also recommends. He knows better than most what a stage of stagnation industry has reached and how depressed the whole market is, and that is one of the remedies which he sees for it. That would also have been a step which might have inspired confidence in the country’s economic future, but the opportunity has been missed. It is just another of the hon. Minister’s failures to inspire confidence; to obviate the building up of agricultural surpluses; to meet in some measure the distressing problem of poverty among the African community, and especially among the urban Africans; and to restore some new vigour into the present debilitated state of the home market. That is therefore what is meant when the critics say that the Budget is one which gives care to detail but misses the chance of inspiring confidence.

Sir, contrary to the views expressed by the Minister, the recent study by doctors Hopkins and van den Berg of Stellenbosch University, reveal, firstly, that South Africa’s economic growth has not been moving fast enough to meet the wishes of all its people and their needs and, secondly, that personal consumption spending has been falling off in recent years. As the hon. member for Constantia has pointed out, even the Minister’s own figures in his White Paper give the same indication. Taking into account the fall in the value of money and the rate of population increase, the Minister’s own figures show that the average income per capita is actually falling and not rising. That is an indication that the standard of living of the masses, if not of everyone, is also falling and not rising. That is starkly revealing confirmation of what I have said more than once in this House and which I repeat, namely, that the policies of this Government can be pursued only at the cost of rising levels of taxation and of falling standards of living for all. In this Budget and the White Paper presented to us, that situation is tragically demonstrated. We are very near the situation which I have indicated, where there are rising levels of taxation and falling standards of living.

If we turn aside from the figure aspects of this Budget for a moment, what do we find? We find that for the third year in succession the Minister has presented his Budget in an atmosphere of crisis. In 1960 we had Sharpeville, with the “winds of change” and the flight of capital it engendered. Last year we had the break-away from the Commonwealth, with the economic uncertainties it engendered and the slamming of the door against the transfer of capital by foreign investors. This year, as has already been pointed out, we have the rattling of the sabre. Both the domestic and the foreign investors are being told: “We must look to our defences”, because as the Minister added, “The Republic is under fire on various fronts; more, it is under crossfire”. He then went on to emphasize “South Africa is under fire, under threat of violence and disruption”. Let me remind hon. members that last year the Minister said this—

More than ever before we are now prepared to deal with unrest and disturbance, and day by day we are becoming better prepared.

This year we find that he places first on his priority list “security against external attack, as well as against internal disorder”. This atmosphere of crises is a reflection on only one thing, and that is the mishandling of the situation by this Government. It reflects the dangers inherent in the Government’s policy of “apartheid” and it reflects that the Prime Minister’s granite-like racial policy is not all it is cracked up to be—for crack it must and crack it will. The spending of greater sums of public money on the security of the State will not prevent that crack, nor will it restore investor confidence. The wonder is that South Africa’s economy has stood up to so many shocks as it already has had from this Government.


Notwithstanding the United Party.


If the United Party had been in power, what a boom there would have been. There would not then have been the rattling of sabres and there would not have been three Budgets presented in an atmosphere of crisis. [Interjections.] I say the wonder of it all is that the resilience of South Africa’s economy has stood up to the shocks it has received at the hands of this Government.

Let us consider the gold mining industry. That industry is in stronger and better shape now than at any time in the past. That is so. not because the Police Force and the Defence Force are better equipped; it is so because of the sound planning and wise capital development which was commenced immediately after the last war, at a time when investor confidence in South Africa stood very high. [Interjections.] The hon. member for Vanderbijl Park (Dr. de Wet) can only think in terms of politics, but I am trying to think in terms of economics now. Let me explain. It was the injection of vast sums by private investors, mostly from abroad, into this industry over the post-war years that has been the prime stimulus of the country’s economic growth up to the present. That also accounts for the resilience of the economy that still exists in spite of this atmosphere of crisis which once again surrounds the Budget this year. Last year I said this—

Neither force nor the use of force is the key to future economic and political stability in this country.

I said that when the hon. the Minister of Finance had donned the garb of the great physician and before he had changed into the uniform of a Field-Marshal this year. But even without that change of dress it is already obvious that regimentation by force still lingers on in the minds of this Minister and the Cabinet as the cure-all for South Africa’s political and economic problems.

Writing in a recent issue of the S.A. Journal of Economics (December 1961) about the danger of the Government’s border development scheme having to be financed at the expense of the expansion of basic industries under private enterprise, the contributor expresses an additional fear: His fear is that “capital investment, the essential key to all activities in a modern society, will become more and more subject to authoritarian control and direction”. I think it is obvious to most business interests that regimentation or. to use the better term “authoritarian control and direction”, is already the key to the Government’s financial and fiscal policies. Sir, what has been developing over the past decade in that regard is now quite clearly discernible. This Government has slowly, but deliberately, been creating what might perhaps best be described as an economic infra-structure of control governing all business enterprise— private enterprise as well as institutional enterprise. But make no mistake about it, this economic infra-structure of control is there for political rather than for economic ends.

I say quite categorically that economic enterprise is being regimented more and more rigidly by this infra-structure of control in order to suit the political ends of this Government, or, put in other words, that this Minister and the Cabinet are steadily contriving to make the economy of the country completely dependent on the dictates of Government. That basically is the fear that is expressed by the writer of the article that I have quoted. But before I substantiate my assertion in that regard let me add this: I hope that no one will try to argue that what the Government is doing is no more than to adapt legislative and fiscal devices to much the same purpose as is being done by other Governments in order to co-ordinate and foster economic enterprise in their own countries. Everyone knows that following the economic disruptions brought about by two world wars, fiscal policies in a number of free countries have had to be used and applied to aid in the maintenance of financial and economic stability. But everyone knows equally well that fiscal aids to that end, in countries such as Great Britain. Canada or France for instance, are not designed to keep a racially dominated party in power or to make the economy of those countries wholly dependent on the dictates of minority rule. I mention this, Sir. because that, by the way, is the sort of argument which this Minister adopted in the dying days of last session to counter Opposition criticism about his failure to cure the economic ills that are facing the country. He used it towards the end of the debate on the 1961-2 Appropriation Bill when it was no longer possible to refute that sort of debating point. To discredit Opposition criticism he tried to stand logic on its head in this way: Admitting the dangerously low level to which our gold and foreign exchange reserves had tumbled by June 1961, he then rather piously asserted— and I quote from Hansard of 23 June 1961—

But it is not only in this country that they are low. In the U.S.A., the U.K., New Zealand and Australia—countries where there is no “apartheid”—they are low as well.

The implication, of course, was that apartheid and its consequences—Sharpeville, for instance, and our leaving the Commonwealth—had nothing at all to do with the drying-up in South Africa of private investment capital from abroad. What a spurious type of argument for a Minister of Finance to use. It is a complete non sequitor and a fallacious bit of logic which is to be found in the old latin tag: Post hoc, ergo propter hoc. I repeat therefore: I hope no one on this occasion will try to emulate the Minister’s efforts in trying to stand logic on its head!


Now substantiate your claim.


I will. Let the hon. member for Standerton also not try to stand logic on its head, for nowhere in the free world will he find a parallel to the conglomerate type of regimented infra-structure which this Government is creating to control economic enterprise in South Africa. I need do no more than make passing reference to some of the arbitrary restraints on free economic enterprise about which much has already been said in this House in the past. I refer to the many shackles to free private enterprise which have been forged in recent years mainly in an effort to give effect to the Government’s racial ideologies, shackles which have been forged against free private enterprise. Import control has been operating so long and so persistently that I need say no more about it. But we also have job reservation, influx control, arrests without trial and such-like strangleholds on employer and employee relations. In addition we now have the group areas concept with the uncertainties and the disruptions it creates for all town dwellers; we also have the new Bantustan concept with the insecurity it brings to the urban African. That was the commencement of what I call the economic infra-structural control. But this “authoritarian control and direction” goes even further than that. Let me explain briefly what is happening.

I come to the financial system at the hub of which stands the S.A. Reserve Bank. I speak with some reluctance about an institution of such high standing and of such high repute in the international financial world, but the circumstances are unusual and I think they must be ventilated. Twice during 1961 the Reserve Bank was obliged to alter its discount and interest rates in order to suit the needs of the Treasury. On both occasions there was consultation subsequently but there was no prior consultation with the commercial banks and other financial institutions. That, I believe, was a clear departure from both a customary and a salutary banking practice, for after all the commercial banks are the institutions mainly responsible for carrying out the country’s exchange control regulations and also its monetary and banking systems. I would not have mentioned the matter in this debate but for two reasons. The first is this that the Governor of the Reserve Bank himself mentioned the matter in his annual address delivered on 9 August 1961. He used in respect of the raising of the bank rate the rather cryptic phrase, “It was more a case of following or acquiescing in the current trend than giving a lead”. My fear and I am sure the fear of many others is that this is evidence of financial regimentation at the behest of the Government. The Financial Mail, for example, very fairly in my opinion and naturally with due respect to the individual concerned, says this of the Reserve Bank’s current role as depicted in that address—

It sought to convey the impression that although he (i.e. the Governor) was at the helm … he was doing no steering.

In this Budget again we have the position where the Reserve Bank is to be used as a stock-jobber on a non-profit basis in order to repatriate South African scrip from abroad at the discretion or the dictates of the Treasury. I ask, Sir. whether anyone can be blamed therefore for feeling disturbed about the development which seemingly has taken place, which seemingly has brought about a situation in which control is being exercised through the Treasury. I said at the commencement that I spoke about this with reluctance. If I am wrong the hon. the Minister will be able to put me right. But those two instances which I have quoted make it necessary that the matter should be ventilated. As I see the position, my fear is that this also is part of the infra-structure of control over economic enterprise.

I come next to exchange control about which one can speak more freely. Last year, for the first time in the history of this form of arbitrary control, powers were taken to regiment the way in which private investment capital from abroad could be used or invested in South Africa. I have mentioned this “closed door” restraint which was announced on 16 June last year. In terms of that announcement certain foreign investors’ funds are blocked in non-transferable accounts held in South Africa. The position has admittedly now been eased to a degree in the Minister’s recent Budget speech. But the fact that the owners of blocked funds will now be allowed to participate in a type of forced external loan, i.e. in a five-year non-negotiable bond issue bearing interest at 5 per cent and redeemable without transfer restriction in five annual installments, rather indicates that the “closed door” restraint will continue to operate for at least five years longer. The second form of relief which the hon. the Minister announced is no more really than a relaxation which will still be subject to rigid exchange control. Let me say at once that exchange control, with or without these relaxations, is no substitute for investor confidence.

Finally, it seems to be quite inevitable that the newly planned capital expansion programme in respect of certain State-controlled undertakings will strengthen the hold of the Government over the economy as a whole—over the private sector no less than over the State-controlled sector of the economy. Sir, the blueprint in preparation for these expansion projects will provide for a capital outlay of some R2,000,000,000 over a period of 12 years. It is to all intents and purposes a State-sponsored and State-controlled scheme. No wonder then that business interests generally are disturbed, not by the expansion of State enterprise as such but by the powers this expansion scheme will place in the hands of the Government. The Johannesburg Chamber of Commerce in particular has felt compelled to take a more careful look at this whole scheme. I myself feel that this is a case in which Parkinson’s Law may well find a place and become securely entrenched. The Law which Parkinson discovered and which is named after him is, as hon. members may know, a law of growth. So applied to this scheme it will remain a law of growth: Ostensibly a growth of output but essentially a growth of power in the hands of those who control the scheme. To put it in another way, Parkinson’s Law can be expressed in more simple terms as follows: Ministers and their powers to regiment economic enterprise generally are bound to multiply.

The effect of all this may be summarized as follows. The South African economy has not only become entangled in a network of arbitrary controls—controls on the free flow of capital; on the acquisition of land and the siting of industrial enterprise; on the use and the movement of labour; on the free choice of occupation, and on the right to buy or sell on the markets of the world. But it is quite obvious to me that the private sector of economy has to a marked degree already lost its character as free private enterprise and has assumed a new role of controlled private enterprise. Viewed in that way I say that this conglomerate of control over economic enterprise has no parallel elsewhere in the free world and I challenge the hon. member for Standerton to prove the contrary. Sir, that is basically the reason why we have now had Budget speeches delivered in three successive years in an atmosphere of crisis. That is the position which the policies of this Government have brought about; that is the reason why, as the hon. member for Constantia has indicated, there is a stagnation of progress in our industrial development and a growing form of unemployment arising.


Have you not got a crisis in Rhodesia with a completely different policy?


In the circumstances that I have outlined the economy of this country as a whole is hardly likely to be able to face up to still another year of crisis by the time the next Budget is due.


I listened attentively to the first two Opposition main speakers on the Budget and I could not help coming to the conclusion that these two hon. members were competing strenuously to see who could be the best prophet of doom. It seems to me that promotion in the ranks of the United Party is made according to the yardstick of who is the best prophet of doom. I have never before listened to such unrealistic criticism as that to which we had to listen here to-day. The hon. member who has just sat down says that on one point he agrees with the hon. the Minister and that is on the question of pensions but, of course, he says that he himself would have been able to do much better and would have been able to grant much bigger amounts. However, he does not tell us how he would have done it. Whenever proposals are put forward by the United Party we find that they do not tell us what positive steps they themselves would have taken. When they do venture an opinion as to what they would have done, we find that the effect of their proposal, if implemented, would have been absolutely disastrous for the country as a whole. The hon. member for Port Elizabeth (South) (Mr. Plewman), for example, says that what this country needs at the present time is purchasing power. We could very easily retain import control and build up the purchasing power in this country even further, but what would be the logical consequence of such a step? Inflation on a large scale. But that is the proposal put forward by the hon. member. He talks about poverty amongst the non-Whites. Surely he should have acquainted himself with the poverty that prevails in other African states, where there is much greater poverty than there is in South Africa. I shall come back to this point in the course of my speech to show that per person we in South Africa are contributing more to the development of our underdeveloped non-White population than any country in the Western world in respect of its underdeveloped peoples. I shall prove that to the hon. member by means of statistics. One moment he says, “If the United Party had been in power”, we would have had a Utopia. May I remind the hon. member that during the last year of their regime they did not even have the courage of their convictions to submit a Budget to the public.




It is not nonsense, it is the truth.

I shall deal in the course of my speech with the hon. member’s concern over the new role which the Reserve Bank is going to play. The rest of his speech was tendentious and designed to create a climate or, as they say in their motion, to create the atmosphere that we are living in a totalitarian State, that we are heading for a dictatorship. That was the whole idea underlying the hon. member’s speech. Mr. Speaker, I want to say that very few Budgets have been preceded by as much speculation as the speculation which preceded this Budget. The public was aware of the essential requirements in respect of defence, in respect of the development of Bantu homelands, in respect of public utility industries and in respect of irrigation, and this gave rise to enormous speculation. There were rumours about a possible increase in direct taxation; there were even rumours about a possible increase of 60 cents per bottle in the price of brandy; there were rumours about an increase in the duty on motor-cars and tyres, and the possibility was even mentioned of the introduction of a sales tax. The result was that when the Budget speech was eventually delivered and when it was realized in what an extraordinarily ingenious way the various requirements had been met without disturbing the balance of the economy, there was a general feeling of relief. Indeed one can say that both in this House and outside there was a feeling that the Minister had actually made tax concessions. More than ever before in the past enormous pressure was brought to bear on the hon. the Minister in the framing of this Budget as the result, as the Minister himself put it, of the prevailing socio-political atmosphere. Indeed we can say that he was subjected to the very strongest pressure, but as the result of his thorough planning and the fact that he deliberately set out to achieve three objects, which I do not wish to repeat here and to which reference has already been made a number of times, he immediately placed himself in this position that in the process of achieving these objects he also revealed a measure of originality which was lauded even in the overseas Press.

In my opinion there are two outstanding characteristics of this Budget. In the first place it testifies to thorough planning, and that is made abundantly clear by the fact that although in this Budget nearly R120,000,000, that is to say 67.3 per cent more than last year, is set aside for defence, the taxpayer only pays an additional R21.5 million in indirect taxation and R14.2 million in direct taxation, that is to say, only a total of R35.7 million. And the taxpayers’ obligations are being lightened even further if one bears in mind that this year the savings levy of R18.6 million is being repaid to them. Actually therefore the taxpayer only pays R17.1 million, which is indeed a very small premium to pay for a peace policy of this magnitude. Thorough planning therefore is the first feature of this Budget.

Its second feature is the ingenuity that it reveals. This ingenuity is revealed in the two measures of relaxation of exchange control in respect of the transfer of the proceeds of South African securities held by non-residents.

We were all sorry that it became necessary to block that capital, but the way in which the Minister set about granting relaxation has met with general approval. As a matter of fact the United Party was so disconcerted by the hon. the Minister’s method that in their first criticism they did not have a single word to say about this ingenious method, and even this afternoon there was only a passsing reference by the hon. member for Port Elizabeth (South) to the so-called rather unpleasant task which the Reserve Bank is now called upon to fulfil.

They were the people who accused us in the first instance of a breach of faith towards the foreign investor when we had to introduce this measure last year. Naturally, as I have already said, we were all sorry that we had to do this, but eventually those same critics of this step expressed their appreciation of this measure, and in this Budget—and in this regard the United Party is as silent as a grave— the Minister makes use of the very first opportunity that he has to come to the assistance of the non-resident and he does it in such an ingenious way that partially they will again be able to repatriate their funds at the official rates of exchange; moreover, he does it in such a way that our own position is not endangered. One can get no better proof of our bona fides towards the non-resident while at the same time protecting our own interests. But in the first statement issued by them the United Party makes no reference to this matter at all.

I should like to proceed now to deal with the United Party’s criticism in their first statement after the Budget speech—criticism which they shouted from the housetops and which serves as a basis for the amendment that they moved here this afternoon. In broad outline it amounts to three charges. The first is that the tempo of our development is too slow; secondly that the hon. the Minister of Finance has not succeeded in stimulating our economy; as a matter of fact, that his efforts have failed, and in the third instance that this Government is leading the country to a dangerous position of isolation. That is contained particularly in the fourth paragraph of their amendment.

As far as the first criticism is concerned, namely the so-called slow tempo of economic development, of which we have heard so much from both speakers of the United Party this afternoon, a particular feature of this Budget is the very fact that in its diagnosis it not only reveals the strength of our economy but also the weaknesses which have to receive proper attention. That is why the Minister was able to admit candidly that the rate of growth of our economy has slowed down to such an extent that it gives one cause for concern because if we take into account our wealth of natural resources, it should definitely have been possible to make more rapid progress. The hon. the Minister did not try to conceal that fact. But this is not the first time that this important statement has been made in South Africa; it was made as far back as 23 September of last year by the hon. the Prime Minister when he stated on behalf of the Economic Advisory Council that it was generally realized that the present rate of expansion and development was not sufficient to absorb the growth of the population. The fact that this statement was made as far back as 23 September of last year proves that the Planning Council had been investigating this problem for some considerable time. The difference between ourselves and the United Party is that we see these problems in advance and then take the necessary steps, but that planning is lacking in their programme, and that is precisely why, in pursuance of the statement made by the hon. the Prime Minister, the Advisory Council recommended that the measures announced in the past three years to stimulate industrial investment should be further supplemented by concentrating more positively in our taxation policy on the encouragement of investment and development. And that is precisely what is being done in this Budget. Let us look at it for a moment. The hon. member for Constantia (Mr. Waterson) says, “I can find nothing in this Budget which is calculated to stimulate development.” I sat here for a long time this afternoon waiting to hear whether the hon. member would again use those words, “I can find nothing in this Budget …” That is a classic expression that he uses in every criticism of the Budget. I have heard him use that expression at least 14 times, and this afternoon he again came along with the statement, “I can find nothing in this Budget which is calculated to stimulate development.” Although the hon. member belittled it, the amount set aside for defence is not to be used entirely for purchases; all that money is not being withdrawn from circulation. On the contrary, 55 per cent of the increased Defence Vote will be spent in South Africa, and it goes without saying that it will have a very important stimulating effect on certain branches of the engineering industry. Fifty-five per cent will be invested in South Africa, but the hon. member for Constantia belittles it.

However, that is not the only stimulant contained in this Budget. Obviously the R25.2 million set aside for the purchase of land and for the development of the Bantu homelands will promote investment.

In the third place, the development of this majestic Orange River scheme, which has gripped the imagination of the entire population and where so much of our own material and our own labour will be used, will provide an enormous stimulant, the scope of which one cannot even determine at this stage.

Then we come to the fourth point, and that is the direct effort to stimulate export trade, in the first instance by means of a contribution of R500,000 and in the second instance by means of the special income tax concession to exporters who increase their export turnover, and in the third instance by extending the investment allowances in respect of equipment, machinery and buildings.

Then I come to the fifth point, the concession of R3,800,000 to pensioners which will, of course, stimulate consumption. It can have no other effect. All that is being done by the State in this Budget, and yet the hon. member for Constantia comes along and says, “I can find nothing in this Budget that is calculated to stimulate development.” The whole of this Budget is based on two fundamental cornerstones; it seeks to maintain a balance between the security of the country on the one hand and economic stability on the other. Here again the Government is implementing what the Planning Council announced as far back as 23 September, but nevertheless this effort is treated with scorn. No, it is supposedly not big enough! But the hon. member for Constantia has failed to tell us what they would do. I shall deal in a moment with his proposal that we should have budgeted for a deficit.

The basic reason for the slowing down in the whole rate of growth of our economy is attributed by the United Party to our policy of apartheid. But let us look at other countries for a moment in this respect. During the period 1952-60 South Africa’s average real national income per head rose by 1.4 per cent; in Australia it rose by 1.4 per cent; in New Zealand by 0.9 per cent and in Canada by 0.9 per cent. I use these figures because they are the latest comparative figures at my disposal. I concede that the rise in countries like West Germany. Italy, the Netherlands and England has been considerably higher than in South Africa, but after all in this respect we do not compare unfavourably with countries like Australia, Canada and New Zealand, and those countries have no colour problems to which the situation there can be attributed. In the second instance we must remember that during that period from 1952 to 1960 imports became much more expensive for South Africa, Australia. New Zealand and Canada, while exports of raw materials yielded much less. In the case of the older countries imported goods were cheaper and exports yielded more, or let me put it differently; the terms of trade of the raw material-producing countries weakened vis-à-vis the industrial countries, and this naturally had an enormous effect on our figures and those of Australia and New Zealand. What also affected us and Australia and New Zealand very detrimentally is the fact that 1952 was a particularly favourable year in respect of wool, for example. In 1952-3, for example, our geographic income rose by R300,000,000, and this had a very adverse effect on the comparative period 1952-60. It is therefore quite unrealistic to attribute the slowing down in our rate of growth exclusively to the Government’s colour policy. It is a statement which is devoid of all truth. What is of much greater importance is that we fully realize the weaknesses and that in this Budget we are again doing everything in our power to apply the necessary remedies.

That brings me to the second aspect of the criticism of the United Party, and that is that the Minister’s efforts in the past two Budgets to stimulate our economy have failed. In the first place we must remember that our economy is based on private initiative. We are continually reminded by the United Party—even the hon. member for Port Elizabeth (South) again did so this afternoon—that the State must limit its role and that it must not enter the sphere of private initiative. If they want the State to ment. then it presupposes that the State itself take active steps to promote industrial develop-must become an entrepreneur. How does the United Party reconcile these two conflicting approaches? It is time they told this House precisely what they wanted. They themselves suggest no positive remedy; one cannot infer from a single sentence that the Opposition suggests a specific remedy, except for the proposal that we must budget for a deficit, a proposal with which I shall deal in a moment. If on the other hand they want the State to make more concessions, then it can only mean one of two things. It either means increased taxation—and that they do not want either, and indeed that would result in the withdrawal of a great deal of purchasing power—or it means that the Government must budget for a deficit. We have had the valuable contribution in this debate this afternoon from the hon. member for Constantia. on behalf of the official Opposition, that we should budget for a deficit! In this connection I do not want to repeat the argument in respect of the gold mines; that has already been mentioned by the hon. member for Pretoria (Central) (Mr. van den Heever). But now the Opposition comes forward with a terrific plan, and that is that we must budget for a deficit! That is the only positive idea that originated from the fertile brain of the United Party. Mr. Speaker, we have always prided ourselves on our stability. What would be the effect on our stability if we were to budget for a deficit? What would the effect of it be on the outside world and in what light would that step be viewed in this country?

*Mr. G. F. H. BEKKER:

They are just stupid.


The result of it would be enormous inflation which would hamper the whole of our economy but, what is even worse, a large section of our population would be robbed of the provision that they made for the future. Here I am thinking of pensioners and other persons. Does the hon. member want to suggest that the official policy of the United Party is that we should rob that section of the population of the small savings that they put aside? Is that the official policy of the United Party? Because that is the logical consequence of the hon. member’s proposal that the Government should budget for a deficit.


He did not say that; you were not listening.


The only course that can be followed in these circumstances is the path indicated by this Government, and in this connection. apart from what I have already mentioned as stimulants which are being used by the Government, let me just mention a few others. There is the 12-year programme of Iscor that will cost R560,000,000; there is the Escom expansion programme (1961-70) which will cost R400,000,000, and there is the doubling of Sasol’s capacity programme which will cost R59,000,000, and a further R16,000,000 over a period of three years for the supply of raw materials for synthetic rubber. And yet in spite of this it is alleged that our efforts have failed. The hon. the Minister, as I have said, has candidly admitted what our problem is. Indeed it is the Minister’s duty in his Budget to reveal our strength and our weaknesses to the public in a realistic way. But there have been other factors which have had a retarding effect. In the first instance there was the enormous outflow of capital that we experienced last year and which counteracted the stimulants provided by the hon. the Minister. Generally speaking there was this chaos that was created by the turbulent events that took place in Africa, and which had the effect of hampering these remedies. Sir, these remedies, as the result of circumstances beyond our control, have not yet gone through a proper trial period, but nevertheless the United Party comes along and says that these efforts have proved a failure. Sir, industry in particular and our economy in general appreciate these repeated efforts in this Budget, and the fact that this Budget has made an impression is proved by the comment made by the Evening News of London on this Budget when it stated that the British Chancellor of the Exchequer would be well advised to pay attention to these measures introduced by the hon. the Minister. They take notice of these measures but hon. members of the Opposition belittle them.

Another aspect that we have to take into consideration in this connection is the reduction in capital formation, to which the hon. member for Constantia also referred. Superficially viewed this may be described as a very unfavourable trend. The capital formation in 1960 was R1,159,000.000; in 1961 it was R1,075,000,000. a reduction therefore of R72,000,000. However, there is an explanation for that. Over the past year there has been a reduction of R73,000,000 in the stock-in-trade of manufacturing industries and commerce, and this reduction is attributable entirely to the fact that businessmen had excessive supplies on hand and reduced their stock-in-trade. Another important point that should be mentioned in connection with the accusation that our efforts have failed is the fact which comes to light when one analyses the statistics contained in the quarterly bulletin of the Reserve Bank, the December 961 issue. The facts which I now propose to mention also prove that overseas confidence in our economy is returning. This analysis shows that the nominal value of ordinary shares, as well as the undistributed profits of foreign-controlled companies, has increased by a total of R46,000,000. This is extremely important if we remember that this happened at a time when there was a net outflow of private capital to the tune of R152,000,000—more than in any post-war year —and this increase must be attributed to the favourable climate created by the hon. the Minister in his previous two Budgets. And yet the United Party says that the Government’s efforts have proved a failure.

*Mr. G. F. H. BEKKER:

They are bankrupt.


I come now to the third and the last point of the United Party’s criticism, which practically amounts to this that the Government is heading for isolation and leaving us without a single friend in the world. Briefly that is the content of the fourth paragraph of their amendment. Mr. Speaker, here the basic difference between ourselves and the United Party comes to the fore. While the United Party still looks to assistance from abroad—there was even a time when they measured our economic progress by the amount of money that entered this country from abroad—we on this side of the House believe that the first requirement for good friendship is to ensure that our own country’s economy is powerful and strong; that in that way we will command the respect of the world. Furthermore, we believe that the bonds of friendship must be strengthened and cemented by means of trade and an interchange of economic activities. World trade plays the greatest role in South Africa—a much greater role than in many other countries. We import more than most big countries purchase from us, and these imports will grow together with our economic growth but not at the expense of our economic growth. In spite of this, however, we are accused of heading for isolation, and the implication is that we have been heading for isolation particularly since the establishment of the Republic. Let us review the facts for a moment.

What has happened in respect of our foreign relations in the financial and economic spheres since the establishment of the Republic in this short period of one year? In the first instance, towards the end of last year it was announced that we had borrowed R14,000,000 from Western Germany and Italy, two countries which serve as new monetary sources for this newly established Republic. Previously we had never borrowed from these sources. Does that look like isolation? At the beginning of this year a new market for our sugar was established in Japan. We have also established a new market for our sugar in America. In Japan we have obtained a new market for our pig iron at a value of R180,000,000.

*Mr. S. J. M. STEYN:

And 50 new Whites.


Go on sneering.


On 20 October last year it was announced that the Industrial Development Corporation had concluded an agreement with the First National City Bank of New York for unsecured revolving credit facilities not exceeding R3,500,000. Does that look like isolation? Towards the end of September 1961, a private mining company in South Africa obtained a loan of $30,000,000, the biggest loan ever obtained by a private company in South Africa. Recently we have had the announcement that a R22,000,000 refinery is to be established here by a foreign company. A week or two ago we learned of the establishment of a R9,000,000 synthetic rubber factory in co-operation with a group of foreign companies. And above all, within the short space of one year since the establishment of the Republic, our exports of goods have reached a record figure of R926,000,000, in the first year of the Republic’s existence. Does that look like isolation? Recently the hon. the Minister of Economic Affairs announced that 160 persons had applied for permission to start industrial developmental projects in South Africa. Is that isolation? And then the Opposition actually come along with the accusation, an accusation which they shout from the house tops, that this Government is heading for isolation. If ever a crime was committed against South Africa, the Opposition did so in shouting those words from the house tops. Do they believe that they can promote the South African economy by doing that sort of thing? No, since the establishment of the Republic, there has been the greatest interchange between South Africa and the outside world in the financial and economic sphere, a fact which must necessarily give rise to stronger bonds of friendship. Our aim to strengthen our economy is not based on self-conceit or selfishness: we do this because we know that we also have obligations to fulfil in respect of the non-Whites—and this brings me to an important point that I want to make in connection with our obligations towards the non-Whites. Per person we in South Africa are making a greater contribution to the development of our underdeveloped non-White population than any other Western country does in respect of the development of underdeveloped peoples. According to the official figures of direct State contributions in the form of foreign grants and loans to underdeveloped countries, the contributions of the various countries are as follows: France contributes a little more than R12 per person per annum; America R9.7. Britain R3.8. the Netherlands R3.22, Western Germany R3.10, Canada R2.13, Belgium R1.98. Italy 74 cents, but South Africa contributes R22 per annum per person, and in our case there is no question of loans. Here we have the best evidence that in our progress and in building up a strong economy, we constantly realize that we also have obligations towards our non-White population.

*Mr. RAW:

What is the total expenditure on non-Whites?


Before I conclude I want to come to another point made by the hon. member for Constantia. He says that we must not overlook the possibility of foreign intervention. He accused the hon. the Minister of Defence of making reckless emotional speeches, and he draws the attention of the outside world to the possibility of intervention. I think it was extremely irresponsible to make that statement in this House.

Let me say in conclusion that this Budget was born out of the needs of the moment. That is why it is a realistic Budget. On the one hand it reveals the outcome of 14 years of effort to build up a powerful and dynamic national economy. The success that we have achieved must be attributed to the deliberate efforts of the whole of the nation itself, a nation which has been blessed with enormous powers of perseverance. On the other hand such a dynamic economy, just as in many other countries of the world, brings about certain problems, and the remedies to be applied to solve these problems are revealed most clearly in this Budget. It is up to the entrepreneur now to follow; the time is past for the entrepreneur to sit back and to think that he is investing his money safely if he puts it into his own coffers. The best security for the entrepreneur’s money in South Africa to-day is to make his investments to-day and not to wait until to-morrow. This Budget meets the immediate requirements of this country in every respect because it succeeds admirably in maintaining the balance between the present two essential and fundamental requirements of national security and financial stability.


The two speakers on the Government side have both made rather peculiar speeches. First of all, the hon. member for Pretoria (Central) (Mr. van den Heever) spent a good deal of his time criticizing speeches made last session by hon. members on this side, and now the hon. member for Mayfair (Dr. Luttig) has spent quite a lot of his time suggesting arguments which the hon. member for Constantia (Mr. Waterson) did not use. In his opening remarks he complained that the first two speakers on this side were prophets of doom. Surely he should read his own Minister’s Budget speech. There he will see that in the second paragraph of his Budget speech the Minister said this—

It is obvious that the Republic is under fire on various fronts—more, it is under crossfire. We draw fire from one quarter by reason of the fact that South Africa is the chief obstacle in the way of the attainment of Communism’s desire of Africa. We are the main bastion of the West in this troubled Continent guarding the sea-route to the East. Therefore our people and our peace must be disrupted and our existence shattered to pave the way for final communist conquest of Africa. From another direction also and from different motives South Africa is under fire and threats of violence and disruption.

Yet the hon. member expects us to dismiss that and to say that all is well and to believe the propaganda of the Minister of Information. The hon. member then suggested that the hon. member for Constantia had criticized the economic strength of this country. The hon. member for Constantia did not criticize our economic strength. He admitted that our economy was sound. But our complaint is the way in which this Government is misusing our economic strength. Finally, the hon. member for Mayfair referred to the Orange River scheme and suggested that was a very important factor. But we are now dealing with this Budget and in this Budget only R2,000,000 is being provided. Credit is being taken on the Government side for the Orange River scheme, and yet three years ago the Minister of Water Affairs at Cradock said that the Orange and Fish River scheme could be forgotten; that he would never give his support to the scheme. That was on 12 May 1959.

Mr. G. F. H. BEKKER:

We wanted the bigger one.


Year after year, over the past 14 years, members on the Government side have laughed at the hon. member for Albany (Mr. Bowker), and yet the schemes which were envisaged by the late Mr. Conroy are now being adopted by this Government, and we find that they are trying to claim the credit for it.


You did not do anything about it.


They are trying to claim the credit in this year 1961 for hundreds of millions of expenditure, and yet only an amount of R2,000,000 is to be spent this year. Sir, this Budget is a laager Budget—and you can spell “laager” either way. Criticism of this Budget is fully justified. The Minister of Finance sketched the background of the financial picture, and some glaring omissions are apparent at this stage. I do not believe that the Minister would try to suggest to us that this Budget is popular. I am quite sure that he realizes that in many quarters his Budget is not popular at all. But I go further and say that the fundamental principles of taxation have been abandoned. The load has not been distributed evenly according to the capacity of the people who bear it. It is only right that there should be fair distribution of the tax burden. But before dealing with the tax burden I want to deal briefly with the country’s financial position. The Minister in his Budget speech said this—

The comparatively slow rate of growth of our economy, as measured by real income per head, and the sluggishness of net private fixed investment remain a source of concern.

That was part of the chief criticism of the hon. member for Constantia. One of the most serious factors giving evidence of the slow growth of our economy is the growing figure of unemployment. Only the other day the Department of Labour in a statement said that there were 33,682 South African jobless at the end of January—2.3 per cent of the country’s manpower. There were 2,513 more unemployed at the end of January than at the end of December. The Department says that the increase is experienced every year during January and is due to the large number of juveniles who enter the labour market for the first time. The Department goes on to say that the increase in unemployment gives no cause for anxiety. Certainly it gives no cause for anxiety in Government circles. But let the Government go to the unemployed people and ask them if there is any cause for anxiety. Let the Government look at the unemployment queues in our big towns. They are young people with no employment looking for work, frustrated in their efforts. Then we have those in the middle-age group of 50 to 55 looking for work. There are hundreds of them. Some of them have got tired of even registering. Yet hon. members on the Government side say everything augurs well for the economy. Are they really serious when they say that?


What percentage is unemployed?


The hon. Chief Whip is only interested in percentages. I should like him to see some of those percentages as they stand in the queue; I should like him to hear what their difficulties and troubles are.


That is not the point.


That is not the point as far as that hon. member is concerned. That is why he nearly lost the nomination.


He nearly missed his place in the queue.


Yes, not only would he have been unemployed but I think he is unemployable. [Laughter.]




It is just as well that the hon. member was asked to keep quiet. Another figure which is causing concern is that in respect of building plans passed. The value of the building plans passed fell by 28 per cent in 1961 and the number of building plans passed is a significant and sensitive indicator of economic change. One is inclined to suggest that had the R10,000,000 which the Railways applied for and failed to use, been used for necessary housing during the past year this might have given a stimulus to the economy. An examination of the White Paper shows that the standard of living is not increasing at a satisfactory rate. The gross national production, that is the gross aggregate value of national production, increased by only about 3 per cent in 1961 over 1960. After allowing for the fall in the value of money in this period this means that the gross national production rose by only 1.5 per cent in 1961, which is a quite negligible increase. When one takes into account that the population is increasing by at least 2 per cent per annum one can see that on this basis the average per capita is falling. In other words, based on the latest official statistics, the standard of living is actually falling. When we examine the figures recently submitted by the Reserve Bank in its last quarterly return we see that the position shows no material improvement. Even on the basis of the figures quoted in the White Paper, the Minister will see that there has scarcely been any improvement since 1956-7. In other words the standard of living is virtually no better than it was five years ago. This gives cause for far more concern than members of the Government are prepared to admit. When one realizes the substantial increases in living standards throughout Europe, Britain, America, Canada and also to a somewhat lesser extent in Australia and New Zealand, increases which are considerably higher than those in South Africa, one cannot be complacent, Sir, and say that all is well.


Are you quite sure of your facts?


I am quite sure of my facts. I am quite sure that as far as America. Canada and Britain are concerned the standard of living has increased. In the case of New Zealand and Australia it is about the same. But I go further than that: Would hon. members opposite not like to see the standard of their own country better? Hon. members opposite always look for the lowest figure and say “Well, we are doing better”. Hon. members opposite have no ambition at all, Sir. They take the lowest figure and then they say: “We are better than that.” They ignore the fact that there are other countries with better figures; they are satisfied with the lowest. The lowest is good enough for South Africa according to them.

Mr. Speaker, the Minister said this: “The gross fixed investment increased moderately in both the public and the private sectors but the net private investment showed little change.” That was what the Minister said. That is not what we are saying. It is not we who are running the country down as Government members are so fond of saying, but that is the Minister’s own statement. In another portion of his speech he said: “The sluggishness of net private fixed investment remains a source of concern.” Here the Minister has not only glossed over the position but has, in fact, grossly understated the seriousness of the capital position. The White Paper, on page 3, shows that the gross capital formation, i.e. investment, on all counts has fallen by R70,000,0000 in 1961. For the private sector the fall is nearly R100,000,000, i.e. from R727,000,000 to R630,000,000. When depreciation is deducted, and the depreciation allowance, I submit, will be greater for 1961 than for 1960, the net investment by private enterprise will be found to be well over R100,000,000 less in 1961 than the year before. As fixed investment is the most important part of total investment it is not clear how the Minister can say that net private fixed investment shows little change. What is more, private investment is, in fact, lower than in any other year since 1954, with the single exception of 1960. Closely allied to the investment decline is the question of liquidity in the economic system, to which reference has already been made by the hon. member for Port Elizabeth (South) (Mr. Plewman). Slackness of the economic activity indicates an unwillingness on the part of the public to invest. Obviously the Minister expects overseas investors in the main to disinvest over the next five years. His scheme for blocked rands is spread over a period of five years. Surely the Minister is making very heavy weather with something that could be accomplished much more simply by making the blocked rands transferable to non-residents only and only for security dealings. In that case the Reserve Bank could buy the blocked rands where reserves permitted it. I suggest that this would be a much more convenient way of dealing with this problem because the effect of the Minister’s scheme in dealing with blocked rands is a cumbersome one. Then the Minister has suggested something new in dealing with investments in this country, namely, to allow the Reserve Bank to become a buyer of shares on the London money market. I suggest that the effect of that will be to increase the shares on the London market and decrease the shares on the South African market.


Then we do not buy.


Mr. Speaker, I suggest that the hon. member confines his interests to open-air cinemas. He has not been too successful in that field either. When there are liquid funds lying idle and we have the Government dealing in securities as well through the Reserve Bank it suggests that the Government is trying to inject confidence in the country which basically the investing public do not have.


You indulge in personalities every time you have to answer.


Mr. Speaker, I said that hon. member would probably be unemployable and his interjection has confirmed that. The Minister has given us a threefold aim of Budget policy in South Africa, namely national security, the greatest degree of economic progress and stability within the context of general Government policy and thirdly to alleviate the lot of the handicapped and other less fortunate members of the community. The highlight of the Minister’s Budget is the amount spent on defence. As the hon. member for Constantia (Mr. Waterson) has said no one objects to adequate steps being taken to defend the country, but no Government has done more to destroy the esprit de corps of the Defence Department than this Government. The present Minister of Defence has had his hands full in endeavouring to undo the damage caused by his predecessor. The Government’s earlier neglect of the real needs of the Defence Department have resulted in the present necessity to spend. If external danger is as real as threatened by ministerial statements, the economic recovery will be slow if, indeed, it does not decline. The investing financier does not only want a satisfactory return on his investment but he also wants to be sure that his capital is safe. That is possibly one of the many reasons for the present liquid position and is the result of the scare talk of this Government. It is no good the Minister of Defence coming on the one hand with scare talk and the Minister of Finance telling us that grave dangers are upon us and the Minister of Information trying to tell us that all is well. Whom must the investor believe? The investor wants to take the least risk and to keep his capital liquid rather than get it tied up. The Government side must not blame this side of the House they must look to the statements by their own Ministers and their own actions.


Can I ask a question?


I will answer an intelligent question. When one examines the Defence expenditure in detail though, one cannot but come to the conclusion that the Defence Vote is principally to keep the Bantu in his place. If we examine the Defence Vote briefly we will see that the Vote is to be increased by some R48,000,000. The increases can be summarized briefly as follows; Salaries, wages and allowances, R7,394,000; Non-White labour, R1,827,000; Payments to A.C.F., R1,176,000; Armaments, R1,467,000; Radio and radar, R2,347,000; Mechanical transport, R2,383,000; Aircraft and air fuel the small amount of R1,056,000; and Special equipment and reserve stocks, R14,410,000. If we examine the amount to be spent on permanent works on the Loan Account we find it is mainly for bungalows, officers’ messes, compounds, etc. Nowhere in the analysis of this Budget expenditure do we find figures which suggest that an outside attack is imminent or that it is necessary at the present moment to detect and repulse hostile forces, because nowhere in this Budget is there an indication that the equipment is to be purchased for that purpose. Instead the provision for mechanical transport stands at R5,075,000—an increase of R2,383,000 over the previous year. Mechanized transport is necessary for the rapid movement of forces within South Africa, and one cannot but think that what the Minister of Defence said a year ago still holds good, namely, that the Defence Force is maintained for the internal defence of this country for which purpose the citizen force and police commands have been coordinated with the Army, or in brief “bombs for Bantustans”.

The second claim of the Minister is that there is the greatest possible degree of progress and stability within the general context of Government policy. Before I touch briefly on border industries I would like the hon. the Minister of Economic Affairs during the course of this debate to give us some information with regards to his export drive, some indication about these deputations which went overseas. The hon. member for Mayfair (Dr. Luttig) spoke with pride about the amount of export business which we have got with Japan. While I do not for one minute decry that business, Mr. Speaker, I would draw the Minister’s attention to the White Paper and the amount of export business which we do with Africa. I would like to know from the Minister of Economic Affairs whether his Government has abandoned the African market, whether they see any prospect of retaining the market we have or whether we will eventually lose it, whether there is any prospect of increasing that market and what steps he is taking to develop it. While one realizes that there is a resistance to South African exports when it comes to certain branded goods, there are many products made in this country which are not branded and there is a possibility that a market could develop in respect of those goods. We know very little from the Government about the advance of the export market other than ministerial statements made during the recess. The Minister has had the opportunity of sending three deputations overseas and I think the time has arrived when we should have a lengthy statement from the Minister indicating the results of those visits and what will accrue to South Africa as a result or rather whether the amount that will acrue to South Africa will be in excess of the market we have lost in the rest of Africa. As the hon. member for Constantia has suggested, perhaps the Minister could make it much more simple than that and table a report. Because I think the country is very anxious indeed to know what the real prospects for an export market are. While many industrialists have sent representatives overseas and while there is reference in the Budget speech to the encouragement of exports, that reference is far too vague for us to criticize at this stage—and I am not merely saying this in the sense of carping criticism. The Minister said in his Budget speech that the details would be worked out later. But such details as were given were of such a general nature that it is not possible for us to criticize them in detail. On the basis of the Minister’s statements in his Budget speech one could see various means of getting over some of the tax difficulties. But the remarks were so general that it is not possible to criticize them at this stage. I am quite certain that by the time we get the necessary legislation before us you will find that many of the apparent loopholes have been taken care of by the Minister’s Department. But at the present moment it is not possible to criticize those in detail except to say that they are far too general and I would suggest, on the first reading of the Budget speech, that they allow many opportunities for evasion. But as I have said it is not fair to criticize them just on the basis of the Budget statement. I hope that the Minister of Economic Affairs will tell us how this market is to be developed because we will have to look for an external market. According to the Government’s plan the internal market is to be looked after by border industries. Here I want to touch briefly on border industries to illustrate the effect they can have on the economy of the country. No one can object to decentralization of industry if it is for the economic good of the country. The economy of the country is essentially a unity and the chief concern should be for the increasing number of unemployed and the lack of employment opportunities for the growing population. The danger is that the Government’s policy of separate development will lead to fragmentation of the economy. The policy of artificially fostering industry in the border areas will result in the maintenance of industrial colour bars and the restrictions on the mobility of the latter which would retard economic progress. The Minister of Bantu Administration and Development said only last year that to maintain our present state of full employment now jobs would have to be created annually for 8,000 Whites, 5,000 Coloureds and 18,000 Africans. But one of the immediate effects of the establishment of border industries is shown by the reaction of the clothing industry in Natal which employes some 10,000 workers, which regards the establishment of clothing factories at Hammersdale as a move which has had an unsettling effect on the industry. Here I want to re-emphasize what I said earlier. No one objects to decentralization when it is in the economic interests of the country. But in the case of the Hammersdale factories which purport to be employing 1,000 Africans from the Umlaas Reserve, I would like to be satisfied that the factories there are employing only people from that reserve. Because I think if the Minister will go to that area he will see Cato Manor slums—for want of a better name—which are growing on the fringe of that area, slums which are likely to cause a considerable headache in that area if the present condition is allowed to continue. This area is producing a wide range of clothing at greatly reduced costs compared to similar garments manufactured in Durban. And Hammersdale is only 40 miles from Durban. Slum conditions are already developing round this area and they are eloquent testimony of the potential Cato Manor slums and all its concomitant evils. Shirts from these border industries are being sold at R1 each wholesale, but the production of a comparable article in Durban costs R1.65. This has had a considerable impact on the manufacturing and retail trade. When money is tight the tendency is, when conditions such as those obtain, for people to buy on price and price only and not branded names. The appeals to the Government by organizations representing the industry have been brushed aside. The industries concerned have been told that it was a matter of Government policy. Yet the weekly wage paid at Hammersdale is considerably less than that paid in Durban. And at Hammersdale you have people living in sub-economic conditions, getting a sub-economic wage, competing with factory employees in Durban who get an economic wage. No wonder, Mr. Speaker, that the resultant product is produced at a price which is sufficiently keen to push the other out of the market. If the Minister tries to tell us that the liquid position of the country is such as to encourage future investment is it surprising that the tendency on the part of industrialists is to keep their capital liquid until they see how the picture is going to develop? They are anxious to invest but they would like to make sure that the economy is not going to be undermined. An industrialist having an industry in one area is faced with this position: He knows the quality of his goods and he knows that the nature of his product is such that he can compete under normal conditions but he also knows that if he does not move to the border area and pay border areas rates he may lose the whole of the business which he enjoys at present. He has the choice of keeping a few selected personnel and keeping his factory near a well-populated White area, transporting them as he does to-day 25 and 30 miles by car in order to keep his business goodwill and turnover, or moving to the border area. The result is that the economy is disrupted, in that the danger exists of an existing business closing down and a new business being started on the border of the reserves. That is causing a considerable amount of concern and I suggest that the Government’s actions so far in an attempt to decentralize as illustrated by the examples I have given, show beyond doubt that insufficient care is being given to its decentralization policy. This border industry scheme is undermining existing industries, as has been illustrated by the representations which industries in large towns have been making to the Government when they found that sub-economic wages were being paid in these border areas.

I come now to the final leg of the Minister’s proposals, that is to alleviate the lot of the handicapped and the less privileged members of the community, and his efforts at alleviation is cynicism at its worst, I suggest. The Minister’s proposals show additional taxes to the extent of R35.7 million but the effect of this is that indirect taxes, i.e. customs and excise duties, will amount to nearly 40 per cent of the total taxation, which I submit, Sir, is an exceptionally high proportion, especially in a country with such a large number of poor people. Indirect taxes have in fact more than doubled over the last ten years from R113,000,000—that is 29 per cent of the total taxation in 1952-3 …


More than doubled in the total amount?


I will give the Minister the figures. Indirect taxes have, in fact, more than doubled in amount over the last ten years from R113,000,000, i.e. 29 per cent of the total taxation 1952-3, to R232,000,000, i.e. 38 per cent of the total taxation, in 1962-3. I am dealing with the question of the uneven spread of the burden of taxation. When you have a higher percentage of indirect taxation I submit that you are spreading the burden unevenly. The concession to pensioners appears very small especially when you realize that these people will have to pay more for liquor, petrol, gramophone records and paperback fiction. Surely it is not unreasonable to suggest that these are tax burdens which are felt by these people. The Minister by his own Budget proposals has shown that he will not create the impetus to engender new virility into the economy. National security is not ensured by guns and bullets alone. It demands first the loyalty and goodwill of every section of the community, and the winning of friends overseas. This Government has estranged the loyalty of virtually the whole of the non-White population inside South Africa and has lost many friends overseas. It has failed to maintain economic progress at a rate consistent with the increase of the population and the reasonable rate of economic development of all its people. It has failed to alleviate the lot of the handicapped and less fortunate members of the community. I therefore have much pleasure in supporting the amendment moved by the hon. member for Constantia.


I should like to reply to the allegations of the hon. member for Pinetown (Mr. Hopewell) that there is so much unemployment in the country, but I just want to do it ad hoc. He was generalizing and he knows as well as I do that all generalizations are false. If he analyses the unemployment figure he will see that it is not as catastrophic as he depicted it. I have before me the statistic quarterly of the Reserve Bank for December 1961. I have compared it with the data of the Department of Census and Statistics contained in their monthly bulletin. If we look at manufacturing industry, the employment figures are precisely the same as for last year, and stand at 120, with 1953 as the basis. If we look at construction works, it is also precisely the same. Both are 105—last year and this year. Therefore there is unemployment and we will not deny it. We regret it, but it is not of such national scope that we can regard it as a catastrophe. I can understand that the hon. member wants to exaggerate it because he is always one of those hon. members who succeed in making much out of little. There is 2 per cent—that is what we read in the paper this morning. Now he says the hon. the Minister must go and see what that 2 per cent looks like. He says they are queueing up. Let me assure him that those unemployed have a Department of Labour which is much more concerned with their welfare than the Opposition is. The first consideration of that Department is to try to find employment for those people. But if he analyses that figure of 2 per cent he will find that a large number of them are married women. Although they have no work, they are not exactly unemployed, although they increase the figure.

I want to reply to what was said by the hon. member for Constantia (Mr. Waterson) in respect of the Reserve Bank. It would be a pity if he leaves the Chamber now. I regret having to call him back, but if he has to go he must. Mr. Speaker, I concede that there is unemployment in the building industry, because building decreased from 102 to 89. Those are the figures up to December 1961. The Government, the Minister of Labour, the Minister of Finance and the Minister of Economic Affairs are at pains to see whether they cannot do something for the building industry. The reason for it is that the building societies did not have the funds to make loans. We know now that the deposits of the building societies have increased and that before long that matter will be in order.

Then the hon. member for Constantia belittled the suggestion of the Government to make the Reserve Bank what he called a “stock-jobber”. He calls it by that name because it has a derogatory meaning in the stockbroker’s business. The hon. member for Port Elizabeth (South) (Mr. Plewman) had a different approach, namely that the whole financial policy of the Government was subject to control measures which are again conditioned by the ideological approach of the Government. The hon. member for Pinetown (Mr. Hopewell) frankly objected to the Reserve Bank doing this work. I want to reply to all these three points. All three hon. members object to the bank doing this.

What do we find if we analyse the matter? We know that high prices obtain on the London Stock Exchange, whilst for the same shares there is a higher price in Johannesburg. We also have another problem, viz. that there is not scrip available on the Johannesburg Stock Exchange. The hon. member says that these measures we are adopting will make prices rise more in London than in Johannesburg, but then I say he should not buy. But he evidently wants to buy in a higher market and sell in a lower one. Then no profit can be made, and nobody will buy shares in London if they are higher there than here and he can obtain them here. Only a fool would do that. Perhaps the hon. member for Pinetown would do it, but not I.

The hon. members for Constantia, Port Elizabeth (South) and Pinetown would surely not object to shares being bought in London, irrespective of who buys them. Then at least we have common ground there. Do they object to the Reserve Bank buying them? It seems to me the hon. members for Constantia and Pinetown object to it. I am not sure that the hon. member for Port Elizabeth (South) really objects to that. He objects on other grounds. But let us take the first objection, that the Reserve Bank buys them. If the Reserve Bank buys shares and sells them here at a profit, do hon. members object to its making a profit? The whole measure is being applied to ensure that capital does not leave the country unnecessarily. Do hon. members perhaps want the control measures over the movement of capital to be abolished, or do they object because these profits do not go into the pockets of their stockbroker friends? If that is the case, it is the most unpatriotic thing I have heard from the United Party for years.


There he goes!


Of course the hon. member for Constantia will now go because he does not like me to chide him for being unpatriotic, because he knows it is true. I say the hon. members are unpatriotic if they object to the Reserve Bank making this profit, and I shall say why.




The reason is that the Republic is in an embarrassing position, and if a profit has to be made out of this embarrassment they want it to go into private pockets, but we say that should not be the case, but that it should go into the pockets of the State itself, because it is the State which is embarrassed and if a profit is made in this way it should go to the State and to nobody else.


And if there is a loss?


I shall reply to the hon. member for Port Elizabeth (South) because he has a bee in his bonnet in regard to control measures and the discretionary exercise of powers. I shall come to that, but I first want to conclude on this point. I say that if the Republic is embarrassed, it is wrong for any private individual to want that profit, and it is wrong for a political party to plead that a private individual should get it; and if they do not agree with me I quite understand it and I expect nothing else from them, because if they have any approach at all it is one which is absolutely unpatriotic, as they have always been.

Then I come to the next point. We have at least agreed that if there is too little scrip we must buy it in London and bring it here. We are agreed, at least amongst ourselves, that the Reserve Bank ought to do so because it is the body which controls the outflow of capital. We say the Reserve Bank must make the profit because it is patriotic to allow the State itself to make a profit out of its own embarrassment. I have said further that this mode of action is one of the cleverest things I have ever seen in a budget, and therefore I describe this as being a clever budget.

That brings me to the point raised by the hon. member for Port Elizabeth (South). He made a number of wild statements here. He says that the whole financial policy, the whole fiscal and monetary policy of the Government, are calculated to be linked to some ideological standpoint the Government is supposed to have and which he does not support. When I asked him to explain and to substantiate this, he said that there was job reservation—which I will not discuss now because we have heard so much of it already—and there is influx control, but he did not say that these should be abolished. He simply used words with some psychological association or other in order to be derogatory. Then he said there is import control. The import control is effected along a variety of fronts. Does he perhaps want us to use only one traditional front, namely that we should make money scarce so that there will be fewer applications for and grants of loans and fewer jobs and less money in circulation? I can imagine that is what he wants because they have a depression mentality. The United Party wants this country to have a malaise, to deteriorate, to have a depression, and they want everything that is bad, because if the country is prosperous things go badly with them.

I ask whether he wants the old orthodox measure? That is the depression approach, it is a well-known approach. When the State wants to protect its foreign currency, it applies those measures, but we did not do so. We did apply monetary measures, as he wanted us to do, but very few of them. At the end of the year when the State takes a large share of earnings for itself and there is a deficit and rates of interest have risen, then they say there is a credit squeeze, but there was not really one; it was only temporary. Furthermore, we restricted hire-purchase agreements. I do not know whether he has forgotten, but the motor trade absorbed one of the greatest shocks in order to protect our currency. Originally the motor trade took 10 per cent as a deposit when selling a motor car with payments spread over 30 months. That was later increased to 50 per cent, and the instalment period was 18 months, but that was prolonged to 24 months, and to-day the deposit is 33⅓ per cent. That was one of the measures adopted by the Government to protect its currency, to restrict imports. Then, of course, we applied fiscal measures. We levied customs duties and taxes on luxury goods, and in addition we have import control. I think it is presumptuous of the hon. member to say that our whole fiscal, monetary and economic policy are being regimented. What proof does he advance? That the Reserve Bank is now going to do the work of a stockbroker and that the Government will block the rands if certain shares are sold here, and he admits that the Government in fact affords the opportunity to invest that money, but he objects to the five-year basis; i.e. he deprecates that the Government is perhaps going to continue blocking rands for five years.

But may I ask the hon. member this: Can he suggest another measure which is more effective than this? If he is honest in his criticism, he must say: Apply this measure. Or else he must say: This is no longer necessary. Then we can at least argue about something and know what we are talking about. But simply to make wild accusations is wrong. He himself has concepts which no modem economist supports any longer. He is an old Victorian. He dates back to the days of Marshall. I am surprised at the hon. member. Usually we can find each other, but when we discuss these discretionary matters, whether in regard to economics or law, we do not see eye to eye.

The hon. member and the hon. members for Constantia and Pinetown all made great play of saying that too little is done for the underprivileged. But did they not read the White Paper? I really want to congratulate the Minister and his Department on this White Paper. It is more detailed than any we have had before, and I hope this is a precedent which will be followed in future.

But to continue with my argument, if hon. members look at the White Paper they will see that under (B), Social Services, 40 per cent of the expenditure of our country is in regard to social services. Last year it was 44 per cent. It constitutes a great proportion of our expenditure. [Interjection.] The hon. member for Drakensberg (Mrs. S. M. van Niekerk) should rather not discuss finance, but Danskraal, because her trouble is that she does not realize that when one is working with percentages and the ratio different it may be that the percentage diminishes, but the amount one spends increases. My point is that social services constitute a large proportion of our expenditure. What is more, if we look at the index figure for cost of living, we will be surprised to see that the adaptations made by the Minister in respect of the increase in the cost of living must be made sporadically because there is always a certain increase in the cost of living. An increase of 2 per cent is regarded as normal, and that is what happened over the past nine years. Here is the table of cost of living. In 1953 the basis was 100. These figures are taken from a UN publication. I have a whole series of them here. I shall not bore the House, but I will just take our own figures from our Department of Census and Statistics. In 1954 there was an increase of 4 per cent over 1953. In 1955 there was an increase of 3 per cent. In 1956 there was an increase of 2 per cent over the previous year, which is normal. In 1957 there was an increase of 3 per cent, which is also normal. In 1958 there was an increase of 4 per cent. That was above normal. In that year we made adaptations for the pensioners. In 1959 it was an increase of 1 per cent, which is less than normal. In 1960 there was an increase of 2 per cent, which is normal, and according to this year’s figures which have just been published, the increase in 1961 is 1 per cent, which is also normal. In fact, it is less than normal. When we look at the food figures, the index figure for food is lower than the general index figure. When the Minister grants an increase of R18 a year, it seems small, but it is in line with the index, and why should we make it more? We should all like to give these people R600 or R800 a year, but it simply cannot be done. If the expenditure under (B) had increased above 44 per cent, those hon. members would either have said no, or else they would have been the first to criticize.


What does it include?


I should like to reply to another point raised by the hon. member for Port Elizabeth (South).


First reply to my other question. What are the social services? What do they include?


If the hon. member does not know what social services are and what they include, I could easily tell him, but he is wasting my time. He knows as well as I do what they are. The whole thing includes pensions and other matters, and it is usually these under-privileged people who make most use of it, and the hon. member knows that as well as I do.

The other point raised by the hon. member is that as the result of increased taxation we are busy doing two things. On the one hand— I do not know whether he really meant it that way, because the point is a little above his head—but he said we are endangering our own currency, and on the other hand we are endangering the standard of living because of the increased taxation. I have already replied to the second point, that if we have regard to the standard of living it cannot be said that by increased taxation or even by the economic policy, or even the fact that our national income is not increasing as fast as we would like, we are endangering the standard of living. I have already replied to the point that it is taxation which acts as a brake on our national income. Let me reply to the other point, that increased taxation will endanger our currency.

All economists in the world will agree with me that when the level of taxation is under 25 per cent, calculated in terms of expenditure as compared with national income, one is not yet endangering one’s currency, the measurement of values. I do not know whether I am making myself clear to the hon. member, but I want to say that when the burden of taxation is less than 25 per cent it cannot be said that the currency is being endangered. I may perhaps tell the hon. member why that is so. As soon as taxation becomes too high, entrepreneurs spend money on all kinds of unnecessary changes and improvements, because their approach is this: I must in any case give it to the Receiver of Revenue and therefore I might as well spend it on myself. That means that they buy unnecessary goods and so push up prices, and that they use labour which can be used more economically elsewhere and that pushes up wages, and in that way they push up prices and endanger the currency. The hon. member intimated that we have reached that dangerous point. But I say that when you are below 20 per cent the currency is still safe. What is the position here? I again refer to page 17 of the White Paper, and I take total taxation as a percentage of net national income: In 1942-3, 14 per cent, in 1959-60, 14.2 per cent—that is still far from 20 per cent. In 1960-1 it was 13.9 per cent. It was even reduced. Therefore what he regards as a danger is actually a safeguard, and when we come to this year, to the Estimate, the figure will not be above 13.9 per cent. I have made my own calculation, but I do not really trust it because I do not have all the data. [Interjections.] Is there any hon. member who has all the figures for 1962-3? According to my estimate, that percentage is lower this year than last year. It is not a case of when the Nationalist Government was in power and when the Minister of Finance was here; it is because the National Party is in power and because we have this Minister that we are in this fortunate position; because over the years we adopted measures intended to put us in this sound position. Hon. members opposite think it is their criticism which saved us. But if we were to have listened to their criticism I do not know where we would have landed.

Mr. Speaker, you will forgive me if I revert to why I think this is a good Budget. I have already said that it is an astute Budget. I can understand hon. members opposite sneering at this, because they do not want to believe it. But it is also a fair budget. We have not heard the slightest objection from them to the 10 per cent increase in income tax or the 2½c excise per bottle of natural wine. The hon. member for Kensington (Mr. Moore) always talks about petrol. Perhaps he will do so again, but hitherto I have not heard a word of objection to the 1c increase per gallon of fuel. I can imagine somebody objecting to it, because when raw material in the process of production is taxed right in the beginning, it has a cumulative effect on the cost of the final product, and there they have a point, but it is so small that we need not even mention it. If we consider that if a vehicle which uses 20 gallons of petrol has travelled 1,000 miles, it is only 20c more due to taxation, and if it is a transport contractor he will still make a profit without even having to pass on the extra cost to his customer. If it is a stationary engine, a large unit of 100 horsepower, and if it runs for eight hours, the cost of its fuel will be 1,280c and the increase will be only 40c. [Interjections.] Yes, that is correct, calculated according to prices at the coast.

That brings me to the 2½c tax on unfortified wine. I am at liberty to discuss it because I am not a wine farmer. I can understand the wine farmers perhaps feeling unhappy about it, but I am a consumer and perhaps that gives me the right to discuss it. Has the liquor trade which complains about this borne in mind that we have taken steps to make wine available to our Native population in the near future? They should consider that there are more than 12,000,000 Natives, and let us take it that there are 4,000,000 of them who will be able to buy liquor, and if the liquor trade succeeds in selling four bottles of wine a year to 3,000,000 Natives they have an increased consumption of 12,000,000 bottles, or one-sixth more than their present consumption. That is a 17 per cent increase, and I think that the slight criticism we have had in regard to the budget, and which comes from fairly high liquor trade circles, is absolutely unjustified, with all respect to them. I am glad, and I want to congratulate the United Party on not having objected to the Defence expenditure, although they made other suggestions which I do not want to discuss now. But there are people in the country who object to it and I think they deserve a reply. That is the criticism of the Chambers of Commerce, of Assocom. These people are traders. What I am about to say does not apply to the Afrikaans Sakekamers, because they welcome this budget. I am directing my remarks to Assocom, and to one of their spokesmen who objected to the increased taxation to be devoted to Defence. What I find strange is that these businessmen are always the first to feel the effects of riots and of threats from abroad. Now I find it strange that they are the first to complain about the premium they have to pay to safeguard them from those shocks. That criticism is certainly not motivated by considerations of self-interest. I think that criticism is motivated and conditioned by considerations other than their own interests. I find it surprising that these people should criticize the extra taxation. This group is the one which has the least right to complain about this matter, and I will say why. The contributions of this group towards the formation of capital shows the least progression. I again refer to the White Paper. If one looks at the schedule dealing with capital formation, one will see that the contribution by commerce to capital formation deteriorated from 159 to 72. I do not think they have played their part in regard to capital formation as a whole, and I think that this group really has no right to talk. If we look at page 1, at the contributions made by commerce to our national income, we find that their contributions have diminished. According to page 1 of this schedule their contributions amounted to 15 per cent in 1949-50. That is appreciable, but it was reduced to 14.2 per cent in 1954-5 and they did not have the courage to stop the deterioration, with the result that it was further reduced to 12.6 per cent. They should first put their own house in order before trying to tell the Minister of Finance how to frame his budget.

I say this is a clever budget, a fair budget and one which is not being criticized anywhere except by people who have ulterior motives. I want to state that the Minister is indeed fortunate, but he is not “lucky Theophilus”; he is fortunate in the sense that he is the Minister of Finance who can to-day pluck the fruits of his actions in the immediate past, and those of his predecessors. He is fortunate in being a member of a Government which, in regard to finances, is a Government which has the courage of its convictions and does not mind even doing something unorthodox. Therefore I want to congratulate the Minister and the Government heartily on this Budget.


There are so many flaws in the arguments of the hon. member who has just sat down that I could keep the House occupied for the next 40 minutes in analysing them, but I think that would be very unproductive an effort in this House. I would just point out a few of the mistakes one does not expect an economist to make. For instance he attacked the commercial people, private transport and other people for their lack of capital formation, and he pointed out how the capital formation has fallen. If he had taken the trouble to read the footnote to the figures he quoted, he would have found that in the capital formation of commercial undertakings are including the trading stocks of the country, and they ran down tremendously in 1961, not because these people were unpatriotic, as the hon. member suggested more or less, but for the simple reason of import control. They came down by R60,000,000. So if anybody was unpatriotic in regard to the drop in capital formation, it was the Government’s policy, and he cannot blame the commercial people. If one wants to use these figures presented in the White Paper, one should at least know what they mean. I will give another example. The hon. member says that the economists have laid down the criteria that once taxation goes over 20 per cent or 25 per cent, as the case may be, it is a sign that a country is overtaxed and that then it starts killing incentives. And then the hon. member quoted the figures from the White Paper to show that taxation according to the White Paper is only 13.9 per cent. Mr. Speaker, when economists talk about taxation, they do not only include central Government taxation, but also provincial taxation and municipal taxation, etc.


That does not make such a difference.


How does the hon. member know? Because I have seen the estimate that total taxation, if you include all these things together, is very nearly 20 per cent in this country. So there again the hon. member made a very elementary mistake. And then just a third point: This hon. member and so many members on the other side when they try and point out how good the employment position really is in South Africa, say: Look at our employment position, our unemployment figures represent only 2.3 per cent of the working population. That is the type of argument we get over and over again. Well, Mr. Speaker, one must first see what an unemployment figure means. The hon. Minister also quoted this 2.3 per cent, and then they go on and say that by international standards this is not bad. But if one wants to make international comparisons, one must see to it that your unemployment figures are calculated the same way as other countries calculate their figures. To give you one example: It is accepted commonly that the way the English calculate their unemployment is such that if they show 3 per cent unemployment, calculated the American way it would show 5 per cent.


I did not mention a single overseas figure.


I am talking about the Minister of Finance and other speakers who mentioned the 2.3 per cent as not really bad. Let me just for the edification of the hon. member read what Hupkes and van den Berg say in an objective assessment of our unemployment figures—

Statistics regarding registered unemployment in South Africa normally only refer to Whites, Asiatics and Coloureds. Although official statistic regarding registered unemployed Bantu male adults and juveniles are also published, these figures are not nearly comprehensive. The reason for this is that, inter alia, most Bantu workers do not qualify for unemployment insurance benefits and hence there is little stimulus for them to register if they become unemployed. Unfortunately, the position in the Republic is such that any general deterioration in the economic situation resulting in unemployment is likely to affect Bantu workers prior to, and to a quantitatively greater extent than, the workers of other races. From the foregoing it follows that statistics regarding unemployment in South Africa should be interpreted with caution when attempting to deduce therefrom any changes in the tempo of economic activity.

There is not the slightest doubt that our official statistics, even in respect of Indians and Whites, completely understate the real unemployment position.

But I want to come back to the Budget. This Budget is a mile-stone in the economic history of South Africa. For the first time in our history the Government is going to spend R1,000,000,000 on Loan and Revenue Accounts. The billion rand mark has been passed. But let me first also associate myself with other hon. members who have referred to the White Paper. I pleaded a couple of years ago that we should have a White Paper which would give one a more complete economic background to the Budget that one is about to debate, and I am very pleased to see a tremendous improvement in this White Paper. I only hope that the hon. the Minister will not be satisfied with this and that as more statistics become available, he will constantly expand on it. One cannot really interpret the Budget in isolation properly; one needs this type of document that gives a wider national account if one wants to make a reasonable assessment of any particular Budget. But I must also warn the Minister that by giving us so much information, as in this White Paper, one finds that it is really quite an indictment of Nationalist Party economic policy. In fact if one had the ingenuity, one could criticize the Government only on the basis of the White Paper and one need not go to any other source at all for criticism.

The over-riding factor in this Budget is the greatly increased military expenditure, an increase of R48,000,000, bringing the total figure of military expenditure to R120,000,000. This might seem a very large figure standing by itself, but again I think one must judge this figure relative to national income, and we find that relative to national income it does not even represent 3 per cent of the total national income of this country, and by most international standards that certainly cannot be regarded as excessive military expenditure. If it appears to some people that this is a big figure, then it really only appears so because we spent so little in the past on defence. If wisely financed it should have no adverse effect on our economic development or on the welfare of the people.

The hon. Minister of Finance will certainly agree with me that national security does not rest only on military expenditure and the amount of resources of the country and the efforts you apply to defence. Just as his Budget rests on three feet, I would suggest that the country’s national security also rests on three legs. The first one is undoubtedly military preparedness, the second (even more important for a small country) is to have powerful friends and allies in the world, and the third leg on which the national security of any country, particularly a country in our circumstances, should rest is a rapidly developing economy, a dynamic economy, with rapidly rising standards of living for all the people. Surely from the point of view of internal tension and dissatisfaction, there is no better cure than a rapidly rising standard of living for all the peoples, and ultimately of course, one’s military strength depends on one’s economic strength. The modern sinews of war are economic.

I intend confining myself very largely to the third leg, our economic development and the pace at which it has developed in the past. In passing, however, I would just like to refer to the second leg, the question of having powerful allies and friends, which will be dealt with more fully by other speakers on this side of the House. I would just like to ask the hon. the Minister how he thinks the policy that has lost us so many friends and alienated so many of our Western allies in times past, in the past 14 years, is likely to gain us friends in future if the Government’s policy is persisted with? Surely that in itself is one of the most cogent arguments for national security, that we must change our policy. The hon. the Minister only has to study the sorry record of the voting at the United Nations to see how the Western world has turned against us.

I should like to turn to the third leg, so to speak the economic leg of national security. The hon. Minister has stated as his aims: (1) Security; (2) the greatest possible degree of economic progress and stability, within the context of general Government policy. Of course the Minister immediately is severely handicapped by this qualification. I think he realizes that himself because if one reads through the speech, it appears again and again. The hon. Minister seems to be fully aware that he cannot really do his job as well as he would like to do it because of the limitations imposed upon him by the Government’s general policy. Most objective observers surely must admit that it is the racial policies of this Government for the last 14 years, that has so largely destroyed the confidence of the overseas world in South Africa, and to some extent has destroyed confidence in South Africa itself, because unfortunately for the Minister he will still find that the people who make this country grow and who make this country hum. very largely belong to the Opposition, people who don’t really believe in his policies. The generators of income, the generators of new enterprise and all that, by and large in this country simply do not accept that the Government’s policies are practicable or that they can ever be carried out. I think the hon. the Minister will agree that this confidence is crucial to South Africa at the present moment. So many important people have said before that every other ingredient for rapid economic progress is present in the South African scene except confidence. It seems to me the one ingredient that is retarding our economic growth and how it has retarded our economic growth I will show statistically in a moment or two. It is this lack of confidence that has cut off the flow of overseas capital which despite what the hon. member for Mayfair has said, is essential. If you analyse the economic history of South Africa, you will find that the most rapid economic growth coincided with large inflows of overseas capital, and it is very largely the stoppage of the inflow of overseas capital, and in fact the outflow of capital, that has resulted in South Africa’s economic growth slowing down. If we look at the last 17 years and analyse our economic growth during those 17 years, we find a great slowing-down. Optima of December 1961 has made certain calculations on page 201, where it is shown that the growth of the real income per capita over certain periods has declined. It points out that from 1945 to 1948 (when the Smuts Government was in power) the increase per capita income was 3.5 per cent; between 1948 and 1954 it was 2.8 per cent—and in that period we had the windfall of an increase in the gold price, which made an appreciable difference, and we had the inflation of the Korean War which also tended to step up the increase in national income; in the last period, from 1954 to 1960, the increase was only 1.4 per cent. In the long run a slow-down in the rate of our economic growth is as great a threat to the national security (for the reasons that I have already given) than military unpreparedness.

This slowing down of the economic growth in South Africa is undoubtedly due to the severe drop in the net investments expressed as a percentage of our net national income. If the hon. Minister will turn again to “A Survey of Contemporary Economic Conditions and Prospects” by Hupkes and van den Berg, on page 18, he will find a table there which shows “net fixed capital formation as a percentage of net national income at factor cost, 1950 to 1960”, and we find there an alarming drop. We find that between 1950 and 1952 the rate of investment increased from 17.3 per cent to 21.6 per cent, but since then it has slowly dropped and in the last year for which figures are available, 1960, it was only 13.2 per cent. But what is even more alarming is the even greater drop in private investments. Whereas in the peak year of 1952, it was nearly twice as high as Government investments, viz. 14.3 per cent, it has steadily dropped until it was only 6.4 per cent in 1960. Now I don’t have to tell the Minister of Finance that your rate of economic growth depends entirely on the rate of investment, and with the productivity of capital in this country, we simply cannot have rapid economic growth with the rate of private investment (the most productive part) being as low as 6.4 per cent. It is simply not possible. If we want rapid growth in this country, the growth that I think is within the reach of this country, we should invest at least 20 per cent of our national income, and at least two-thirds should be private investment, as was the case in the past. Therefore the result of this slowing-down in investments has meant that we have performed, internationally speaking, very poorly, despite the fact that we hear from all sorts of important people that South Africa has one of the most rapidly growing economies in the world. The facts speak otherwise, because again this publication of Messrs. Hupkes and van den Berg gives a table on page 7 where they compare our per capita income with that of other countries in the world. We find that the Western European countries all have considerably higher rates of growth than we have. West Germany leads with 6.9 per cent, the United Kingdom, the lowest in Europe, 3.4 per cent, and you will recollect how the whole world has the impression that the United Kingdom’s per capita income is not growing rapidly enough in the times in which we live. Yet our growth is considerably below that of the United Kingdom, namely 1.4 per cent, compared with 3.4 per cent for the United Kingdom. The only countries that are on a par with us or below us are the United States of America with 1.4 per cent and Australia, New Zealand and Canada. It was one of the main issues in America during the last presidential election, this slow growth, because Americans are well aware that in the communistic world the growth is at a rate of about 5 per cent per annum, and it was one of the promises of the Kennedy Administration that it would try and lift the American rate of growth to nearer that figure of 5 per cent. Even the great powers like the United States of America realize that you endanger your national security in the modern world if you grow at such a slow rate. Yet that rate is comparable to our rate. The only ones that were lower were New Zealand and Canada.

Now I know the hon. the Minister in a speech compared South Africa with Australia and Canada, and suggested that the probable reason why they did not grow so fast was because the terms of trade changed against them, and became more adverse, and I take it the implication was that the same applies to South Africa. It is true that our terms of trade have become more adverse, but not to the same degree as in these countries. But what the hon. Minister overlooks completely is that we have something that neither of these countries have the good fortune to have, namely, the tremendous increase in gold production, an automatic stimulator to any economy in the world. The hon. the Minister must be aware from his White Paper that from 1955 up to 1961, gold production steadily increased from R365,000,000 to R576,000,000. Very few countries in the world are in that fortunate position of having an almost automatic regulator of economic growth, and this Government has governed South Africa in one of the most fortuitous periods in our history when we have had this very great expansion of gold production, allied to our other national resources. Had the national administration of this country been better, we would not have ranked amongst the countries with the lowest growth of the rate of income in the world. We would have been amongst the fastest growers in the world. I think the Minister realizes that too, because he complains about the rate of growth. Now funnily enough when I made this point in the past, I got very little agreement from the other side, but I am pleased to see that this year the hon. Minister of Finance himself agrees, that our rate of growth is much too slow, taking into consideration our potentialities, and of course much too slow taking into account the national security of the country. The alarming thing is that despite the slow rate of growth which we see in South Africa, there nevertheless seems to be a substantial over-capacity in industry and agriculture. Surpluses in agriculture are rising, and as far as industry is concerned, if one looks at the information given in the “Survey of Contemporary Conditions and Prospects”, one sees that there are various estimates of over-capacity in industry in this country. Apparently this is not a very accurate figure, but it is put as high as 23 per cent by the Chamber of Industries. According to the survey made by the Bureau of Economic Research itself, after receiving answers from 380 manufacturers in regard to their returns, indicates an average increase of 17 per cent was possible at that stage with the existing equipment, without any extension to the works. They also quote an opinion that an excess capacity of 15 per cent in industry is probably available. Whatever that figure is, everyone seems to be certain that there is a considerable excess capacity in industry, and there is certainly an excess capacity in agriculture in this country. The other alarming thing, apart from this excess capacity, is of course the trend of employment rates in South Africa. If you look at this valuable White Paper once again, at the graph on page 7, which gives employment figures from manufacturing industries, construction industries and mines, one finds that since 1957 there has been no increase in employment in the manufacturing industry at all. Mr. Speaker, all authorities are agreed that we must primarily in the future look to our manufacturing industry to create the extra jobs that are required for our rapidly growing population and we must primarily look to our manufacturing industries for an advance in our standard of living in future. But here we see that in the last four years there has been no increase in employment in the manufacturing industry at all, and as far as construction is concerned, there has been a drop. The only increase was in respect of mines. There is little doubt therefore that if we take into account these figures together with the unemployment figures to which I have already referred, our economy in the last four or five years has simply not generated enough jobs for the new young people that come onto the labour market each year. Our unemployment figures do not measure the extent of that shortage of jobs at the moment.

Unless this position is corrected, how are we going to attract large numbers of immigrants from overseas? The danger to South Africa, if we do not develop rapidly economically, if our standards of living do not rise rapidly, is we will in ten years’ time not be able to attract any immigrants from Europe. I have already indicated how rapidly the real income has risen in the Western European countries compared with South Africa, and those are the Western countries from where we have to draw our immigrants. In a country like Germany wages have increased during the past three years by 20 per cent.


What about Australia and Canada? Did they not draw immigrants, although their rate of growth was the lowest in the world?


The same thing will happen to them in ten years’ time if they do not speed up their rate of growth. That is the one point. The other point is that they already enjoy a very high standard of living, in Canada in particular.


The income per capita is one of the highest, but not the standard of living, because you can buy so much less for the higher wage you receive.


Surely it is a simple arithmetical proposition that the Minister should be able to understand: If our standard of living remains static or increases only very slowly, and standards of living are rising rapidly in Western Europe from where we have to draw our immigrants, it is only a question of time. People don’t emigrate from one country to another to draw lower salaries and wages and to live on a lower standard of living. They emigrate primarily to improve their standard of living. At present our wages of skilled workers are still considerably higher than in Europe, but if the hon. the Minister has any experience of industry, he will realize how the gap between our skilled wages in this county and skilled wages in countries like Germany, Holland and the United Kingdom has closed during the last ten years. He will realize how hard it is already for industry to draw skilled workers, because they do not regard the difference sufficient to emigrate to this country. I do not think the hon. the Minister must dismiss this lightly. The rapidly rising standards of living in Europe from where we must draw our immigrants and our slowly rising standards of living, will have that result. The hon. the Minister himself has pointed out that our national income only increased by 2 per cent in 1961 compared with 1960, and if you take into account the population growth and the increase in retail prices, it amounts to this that the standard of living remained virtually constant in the last year or two.

Business suspended at 6.30 p.m. and resumed at 8.5 p.m.

Evening Sitting


I have just sketched the economic background against which we must judge the Budget. I think the hon. Minister will agree that it is a background of a great slowing-down in the rate of our economic growth, which has resulted in South Africa presently having one of the slowest growing economies in the Western world, it is a background in which we see growing unemployment, and a large over-capacity in industry and agriculture. In those circumstances, I think the hon. the Minister will agree that his aim with this Budget should have been firstly to follow measures that will catch up the slack in our economy, the slack of over-capacity in industry and agriculture and the slack of unemployment in our industry by placing more purchasing power in the hands of the consuming public, and secondly, he should have framed a Budget that at all cost would attempt to increase our very low rate of private net investment. The hon. the Minister could have used the increased military expenditure to this end, very successfully I think. I am sorry that the hon. the Minister has lost a golden opportunity in not increasing purchasing power to take up that slack, as the Minister himself seems to admit when he says “I feel that this Budget need not exert any undue retarding effect on the economy”. I suggest that in the present context that should not have been the psychological attitude of the hon. the Minister. He should have ended up by saying “I don’t think this will cause too much expansion”. He should not end his Budget speech by saying “I don’t think it will cause too much retardation”, because what we need now is not retardation but expansion.


I don’t brag when it is not necessary.


I suggest that the hon. the Minister based his whole Budget on the wrong psychological spirit. We need expansion and not retardation. The hon. the Minister will surely admit that with the present overcapacity in agriculture and in industry, and with the present unemployment, an increase in the national income over next year in the order of 10 per cent would have been desirable, and it could have been achieved without any danger of inflation, because we have the idle resources, human resources, industrial resources and agricultural resources and an increase even of the order of 10 per cent would not bring in its wake inflationary consequences.


What does your friend, Mr. Hupkes, say?


Yes, but he did not know what the Budget was going to be. From his knowledge during the last few years, Mr. Hupkes knows that this is a very cautious Minister and he was not going to introduce an expansionary budget, because the hon. the Minister must remember that in controlling R1,000,000,000 worth of expenditure in this country, he can exert a great expansionary influence on the economy. Apparently the hon. the Minister is not aware of that, but that is in fact so. If this were to happen, assuming that we had a 10 per cent increase, which I say can take place without any dangerous inflationary consequences at all in view of our idle capacity in this country, I suggest the Minister could then have financed increased military expenditure and could have alleviated the lot of the handicapped and less fortunate people in this country to a very much greater extent than he has.


On spec?


I will come to that in a minute. On the existing basis of taxation, with a 10 per cent increase, he could have achieved that. The hon. the Minister must know the old adage that if you don’t speculate you don’t accumulate. The hon. the Minister says that this would have been a speculation, a gamble. I ask “What if it had not come off?” What would the consequences have been? The only consequence of such a gamble could possibly have been that he would have a deficit at the end of the year, and I say that under present circumstances a bit of deficit budgeting would not do the economy any harm at all, because what we require is an increase in purchasing power. There is nothing sacrosanct about balancing a budget. If the Minister in the past realized that a surplus from time to time if you have a too rapid expansion and inflationary phases, is desirable, so if you are not developing fast enough, and you have idle resources, the Minister should not be afraid of deficit budgeting. Because under present circumstances deficit budgeting of the possible order that might occur, would not be inflationary at all. That is the point that I want to make. It would really be quite a safe speculation on the part of the Minister. I think the hon. the Minister is estimating his revenue on a very conservative basis. The hon. the Minister estimates that on the present basis of taxation he would get R38,000,000 extra over the next year. Now of that R38,000,000 extra R16,000,000 alone represents taxation of gold-mines, which almost automatically increases, as the Minister will admit. So only R22,000,000 is left. If you look at that R22,000,000 which the Minister expects on the existing basis of taxation, it only represents an increase of per cent in taxes over the previous year. Now it seems to me that the hon. Minister is speculating far too conservatively if he thinks that is the only growth that he can possibly have. It seems to me very much in fact that this Government’s policy has shaken the Minister’s confidence in the economic future of our country, because it should be possible to grow far faster than that. Because if the hon. the Minister has under-estimated the possible taxation that he may gain in the next year, and on the other hand over-estimated the expenditure which after all he has done regularly for the last three years, then it is going to have a most depressive effect on the economy. That is why I say he should have gambled a bit, he should have seen that 10 per cent increase in the national income is possible, and he should have tried to use the budget as the instrument to achieve that. Had he done that, there would have been no need to increase taxation. And I say again that even if the speculation had not come off, even if the gamble had not come off, a bit of deficit financing at this stage, where we have unemployment and a surplus capacity in industry and agriculture, would not be inflationary.

We now come to the far more difficult question of how to increase the rate of investment, particularly private investment, which I think the Minister will agree is running at much too low a level. Let me start by admitting right at the beginning, to use the Minister’s words, that under the socio-political system of apartheid that we have had, that is a very difficult problem, because we have already seen how it slows down the rate of investment. From 20 per cent it has come down to 13.2 per cent in the last eight years. Here again the Minister could, even in this context, even although his hands are tied to some extent as a result of apartheid, have done much more than he has done. There is no better way of stimulating investment than to increase purchasing power, and he could have injected more purchasing power into the country through his budget. Then he would have stimulated investment far more. Because what the hon. Minister has done to stimulate investment is simply to extend measures that he has taken last year and the year before for another five years, like investment allowances.


Is that all?


And the Minister has at last not carried over the surplus from Revenue to Loan Account, which is also a stimulatory measure.


Is that all?


If you look at the budget as a whole, there is very little. My time is limited, otherwise I could give the whole picture to the Minister. On balance the budget may at best be slightly stimulating, put slightly more purchasing power into the hands of the public. The Minister will of course refer to military expenditure, but he himself has admitted that only 55 per cent of that will be spent locally; in other words, 45 per cent will be spent overseas, and that is most deflationary, that is money that is going out of circulation in our country. On balance this budget is at best only mildly stimulating, only mildly inflationary.


You want it to be stronger inflationary?


No, I am sorry I have not more time to work out a table for the hon. the Minister to point out how much he has taken away with one hand by extra taxation and how much he has given with his other hand. You will find that if you strike the balance, this budget at best is only mildly stimulating. The Minister himself admits that when he says that it won’t be too retarding.

I will give another idea the hon. the Minister could have used to stimulate things a bit more. His scheme to repatriate capital over the next five years through the use of loan bonds and so on to England, shows that he has not got very much confidence that there will be an inflow of capital again. I suggest to the hon. the Minister that if he had rather used the blocked rands to allow overseas investors who want to start new industries here to use that money, it would have been far more stimulating than his present method of repatriation. He could at least have used that in addition. Had he allowed owners of blocked rands to sell such blocked rands to people who want to start new industries in this country, it would have been a very stimulating measure. I am just throwing that out as an idea to the hon. the Minister. But of course the real thing is that if the hon. the Minister wants to increase the rate of private investment, he must restore the flow of capital from overseas. Evidence has shown that in those periods when we have had a rapid inflow of capital from overseas, our economic growth has been at its highest. But I am afraid he will only be able to do that if he reverses so many of the racial policies that this Government is carrying out here. [Time limit.]

*Mr. S. P. BOTHA:

We have had very few arguments worth replying to from the other side this afternoon and this evening. Actually we have had very little that is original and very little that is new. However, the hon. member for Port Elizabeth (South) (Mr. Plewman) made an observation here to-day which I feel I cannot allow to pass without replying to it. The hon. member talked about the defence expenditure and described it as the “creation of crises”. In these times in which we are living, we do not expect to find persons in this House still talking about the creation of crises when we try to promote the defences of the country. As far as increased expenditure is concerned, I would remind the hon. member that whereas only 16 per cent of our revenue is being devoted to defence this year, other countries are spending considerably more. If this expenditure creates crises in South Africa, then I do not know how one would describe defence expenditure in other countries. This year the United Kingdom is spending not 16 per cent but 24 per cent; Australia is spending a comparable figure, namely 15 per cent; Canada is spending 28 per cent; the United States of America is spending 56 per cent. The hon. member has the bravado (not to use the word audacity) to talk here about the creation of crises when we vote money for internal security. But the hon. member for Constantia (Mr. Waterson) and the hon. member for Port Elizabeth (South) also talked about the accumulation of liquid assets and referred to it as “a stagnation of the economy”. When my hon. friends mentioned an increase of R140,000,000 which is supposed to be an indication that we have liquid assets that we do not know what to do with, they did not tell the House at the same time that as against that we must take into account the very favourable balance of payments which increased during this period and which is partly due to the holding back of liquid assets in South Africa. Nor did they take into account the fact that in the previous year commerce carried very large supplies, and that it is a normal phenomenon that when these supplies are exhausted normal spending takes place again. But the hon. member ought to be pleased that he is able to talk about liquid assets to-day, because with the great economic growth which awaits the Republic it is perfectly clear then that we have the capital available in South Africa for that growth.

The hon. member for Port Elizabeth (South) dealt at length with an infra-structure and he tried to indicate that the Government should not take part at all in the economic activities of this country because this infra-structure is supposed to conflict with private interests. The hon. member did not tell us very clearly what he meant by an infra-structure. If he meant that the Government should not spend money on an item such as the Orange River scheme and on the development of Sasol and that the Government should not have spent money on the development of Iscor and assets of that kind, I want to ask the hon. member whether any other authority has been prepared or in a position in the past to undertake these great developments. Apart from that, our attitude is that we must create permanent assets. But the hon. member indicated, although he did not put it that way, that he meant that the development of the Transkeian Territory amounts to the creation of an infra-structure in which the State is taking part. Let me put this to the hon. member: Who is to do it then? Is private enterprise in South Africa willing to tackle this development? I think his observations were misplaced.

But I want to come to the hon. member for Jeppes (Dr. Cronje). The hon. member was very quick this afternoon to make an accusation against the hon. member for Standerton (Dr. Coertze) and to say that the hon. member should compare comparable things and that he must be careful how he uses his figures. Shortly afterwards the hon. member for Jeppes came along and alleged that the rate of growth in the Republic had slowed down very much and he compared us with the United States of America. He went on to say that at this stage we really had a retarded rate of growth and that was an indication that things were not going well with the South African economy. I want to tell the hon. member for Jeppes now that if he uses figures then he too should compare comparable things. If he compares the United States of America or any other country with the Republic of South Africa and then goes on to ask what our position would have been but for the fact that we have gold, I want to say to the hon. member at once that he too must compare comparable things and that it is only reasonable to compare comparable national groups. Because in not one of these countries do we find that there is a small group of Whites having to carry a large non-White population. Would it be a fair comparison to take the United States together with 800,000,000 non-Whites dependent on it and enjoying the standard of living which obtains in the Republic and to compare it on that basis with other countries? Where would the U.S.A. have stood then? I say that if the hon. member wants to be fair and if we compare population groups, then it is clear that the rate of economic growth of the population group which has to carry the economic burden in this country, is the most rapid in the world.

But I do not want to dwell too long on the remarks of these hon. members. Like the hon. member for Jeppes I should also like to talk about “confidence I want to say that the hon. the Minister of Finance described one of the legs on which he based this Budget as “economic progress and stability”, and when we talk about economic progress and stability, it is very closely linked with the monetary policy of the country, with the question as to how and where we raise money, what money we get and for what period we get it. I should prefer therefore to talk about the public sector rather than the private sector, with which the hon. member dealt, and I contend that this Budget gives expression to the policy of the Government and more particularly to the two strong pillars on which Government policy is based in our country and on which it should continue to be based for the future. These two pillars are monetary independence and industrial productive power. You will permit me, Mr. Speaker, to say this, not only in the light of what has been said on the other side to-day but also in pursuance of what has been said to us continually in the past few years, namely that we are borrowing money on short-term and investing it on long-term and that the fact that we do so is an indication, as the hon. member for Port Elizabeth (South) said, that we have to raise emergency loans. The hon. member called them emergency loans. They concentrated their whole attack over the past few years on this matter. Hon. members on the other side also say that we are unable to get money abroad and that is why we are forced to borrow money in the Republic because nobody is prepared to lend money to us. The hon. member for Port Elizabeth (South) went further and came forward with the stock accusation that public monetary sources have dried up to some extent. He did not tell us what those public monetary sources were; whether he was referring to monetary sources abroad from which we can borrow or whether he was referring to the accumulated internal resources. I want to say, however, in contradistinction to what the hon. member alleges, that the truth of the matter is that the loan pattern over the whole world has undergone a change, and it is for that reason that we are borrowing as we do. International risks have become greater and greater and it is because of that fact that not only the Republic but other countries as well are not able to borrow as hon. members say we should borrow. I want to tell hon. members that England herself, the conservative England which set the investment pattern for the Commonwealth and other Western countries, can only borrow money in the way that we are borrowing it to-day, because as far as she is concerned the investment pattern has also changed. I want to substantiate that statement by referring to the International Finance Statistics, the latest edition of February. Here we see that England borrows only 8 per cent of all the money that the State is able to borrow for a period of longer than 15 years; that England borrows 14 per cent of the capital that she borrows for periods varying from 10 to 15 years. In other words, only 22 per cent in England is so-called safe capital which hon. members on the other side want us to borrow. England can only borrow 22 per cent, and I want to point out too that 38 per cent of the capital which Britain borrows is on short-term. But what is the position in this country?


Tell us why.

*Mr. S. P. BOTHA:

I shall come to that in a moment. As against this 22 per cent which England borrows on long-term, South Africa still borrows 89 per cent on long-term. It has only been necessary for us to borrow 11.2 per cent in the short-term market. If there is any question of emergency loans, therefore, then England is in much greater distress that the Republic of South Africa. The tendency to-day is more to borrow in the international market on short-term, and there is a reason for that. The reason is that international risks have become greater and greater, not only as far as the Republic is concerned but in the whole of the world. I go further and say that in the second place long-term overseas loans are too expensive. Hon. members say that we are unable to get them. For my part I say that we can get them, but we do not always want them because they are too expensive. I will prove that too. I notice here that England borrows in the following way: Her “Treasury Bill rate ”, a very short-term, is 5.4 per cent; her “yield on war loan” is 6.4 per cent; and then there is what is called the “yield on conversion, 1964”, that is to say, a loan which is to run for a long period, of which two years are still left, and for that she has to pay 5.65 per cent if she can get it. What is the position in the Republic? Our present tender rate is only 3.76 per cent as against England’s 5.4 per cent. Why then should we borrow in another market? Furthermore, while there is no indication that England is able to raise a long-term loan, what is the position here? We are borrowing on a 20-year term at 5⅞ per cent. Hon. members must bear in mind what I said a moment ago as to the interest rate that England has to pay on shorter term loans. The Pretoria Municipality raised a 20-year loan at 6¼ per cent. Escom raised a 25-year loan at 6⅛ per cent. There is no longer such a thing in England as a 25-year loan because I contend that she cannot raise such a loan. We are able to get money in the Republic more cheaply therefore, and I shall deal in a moment with the availability of money. I say that these attacks are misplaced when hon. members say that we have to borrow in this way because we are in difficulties.

I want to come to another portion of the money market, and here I want to say that it is not true that we are unable to borrow money in other ways as well. We can get money in ways other than in the traditional money market, namely in the form of bank loans. As the Minister has also indicated, we do borrow money from time to time from private banks, from bankers who are conservative people. In recent years bankers have got so much confidence in us that we now find bankers clubbing together and making available investment money to the Republic of South Africa. Not only are we getting this money to an increasing degree but we are getting it from various countries. The hon. the Minister has told us that we are borrowing in Italy and Germany, and it will probably not be held against me if I say at this stage that there is available from other private sources $100,000,000 of which we are not making use, and on Saturday I had the privilege of seeing such an offer of $60,000,000. Money is available therefore. It is not always necessary for us to make use of offers because in most cases we are able to get the money internally.

But I want to proceed to the next point and express my conviction that it is in the best interests of this country to borrow as little as possible from abroad. We must reach the stage of financial maturity and it is essential that we reach that stage as soon as possible. On 31 March 1962 our foreign debt will be 7 per cent of the total debt, and I see from the White Paper that last year we had to redeem R77,280,000, which we had to pay back to countries abroad, and we were able to do this by borrowing only R48,000,000. In other words, increasingly the tendency is that where we redeem loans we do not have to borrow further money to the same extent. In other words, financially we are becoming more independent and I want to express the conviction that the sooner we can become financially independent, the better. I want to point out that independence from the outside world in the financial sphere means greater stability for our State. In this connection I want to mention a few arguments. In the first place the foreign market is risky. Just as in the case of an ordinary bank, it is not always available when we want to make use of it. When you need money nobody wants to give it to you but when money is plentiful you can get sufficient. I want to put it this way, that it is risky to rely too much on a flow of capital from abroad. Britain’s own funds are no longer of such a nature that she can borrow as she pleases, and Britain is struggling to-day to meet her obligations towards Commonwealth countries as well as other countries. Furthermore, there is also another important argument and that is that greater financial independence saves us foreign exchange. We must remember that if we borrow from the outside world, it means that we continually have to send back interest payments as well as capital repayments, and sometimes repayment has to take place at a time when it may not suit us very well. That is why it is sensible to keep as much capital as possible internally, with the further object also of saving interest. Taking the present outstanding foreign debt, I have worked out that if we took a rate of 6 per cent, which I believe is conservative and realistic at this stage (I am thinking particularly of long-term debt) then this year we would have to send overseas R11,207,000 just in interest payments. But there is a further argument and that is that short-term loans raised internally do not bind us to the same degree as long-term loans from overseas investors. It may be argued that it is better to get long-term loans and that it is dangerous to raise short-term loans because repayment also has to be made within a shorter period and that we may be caught on the wrong foot. My reply to that is that with the improvement of our internal money market this danger is becoming less and less. I therefore dismiss the argument that there is that danger as an argument which is no longer valid.

But the important argument is the following: By becoming more independent we also have a duty towards our own capital resources. Our own money market is increasing and we have a responsibility towards it; we have a duty towards our own people, towards our own investors within the Republic. Here I want to mention the emergence of a new institution in the shape of the acceptance and discount houses. The headway made by discount and acceptance houses—a new institution in the Republic—has been astounding according to the quarterly bulletin of statistics. From 1956 to 1961 their available funds increased from R3,900,000 to R126,000,000, and I make bold to say that if this tempo continues we shall have an enormous amount of capital available for loans from this source alone within five or ten years. There is also a further increase in assets. I do not want to weary the House with a whole series of figures, but I should like to mention just one and say that from 1949 up to 1960 the total savings with our commercial banks increased from R529,000,000 to R1,150,000,000. The figure more than doubled. The indications therefore are that funds in the money market are accumulating and are available for investment. I say therefore that we need not be afraid that we will not be able to get funds to make us financially independent. On this occasion I also want to say to the hon. member for Constantia that capital formation is increasing more rapidly in the private sector than in the public sector. I say that because the statement has been made on the other side that we are draining the private sector. They say that when the private sector gets money we drain it to such an extent that nothing remains for the public sector. By implication that means that we are taking up all their available money. But what is the truth? On the basis of statistics contained in the Quarterly Journal of Statistics I am able to say that capital formation in the public sector, or, as it says here, the gross capital formation of public authorities, increased from 1949 to 1960 at a rate of approximately 110 per cent.

What is the increase in the private sector which hon. members suggest is being drained to such an extent? If what they say is true then the increase in the private sector should be smaller. But that is not the position. The increase there is not 110 per cent but 125 per cent. We are therefore taking capital from the private sector at a slower rate. As a matter of fact, we are taking it at such a rate that there is always a balance left that is available for internal use.

I say therefore that there is no reason for fear as suggested by hon. members on the other side. I want to refer now to developments in the local money market, and I do so on the basis of what was said on 19 March by Mr. Spiro, chairman of Union Acceptances Limited. I want to quote what he said in substantiation of the statement that I made a moment ago. And hon. members must remember that Mr. Spiro is not a politician. He said—

The past year has been one of impressive progress in the development of the local money market.

That is precisely what I tried to prove. Mr. Spiro went on to say—

The emergence of a truly viable money market as a distinct entity only came about recently and the progress that has been made is attributable in no small measure to the assistance and encouragement of the authorities in the Reserve Bank and in the Treasury.

I want to come now to the observation made earlier in this debate by the hon. member for Jeppes in connection with the rate of growth. I have already pointed out that the hon. member’s figures are not comparable. However, I want to read out to him what Dr. van Eck said, as reported in the Transvaler of the 20th under the heading “Van Eck praises South African economy”, followed by the subheading “Tempo of growth much faster than world average”. Then he says the following—

South Africa has reached a rate of economic growth which is considerably faster than the world average.

He said this at a Rotarian lunch. According to the report he went on to say—

Dr. van Eck stated that there was a limit to the speed at which a country can develop economically because it is dependent on investment. Investments have to come out of savings and expansion consequently takes place at the expense of consumption. He stated that the cost of South Africa’s growth would encourage investments from overseas. The South African economy can face the future with confidence.

Here I want to pause for a moment and say one or two words with regard to something which is sadly lacking in the capital market. We are rapidly moving towards the state where we are becoming an export country, and at the moment there are no facilities for the financing of these services and goods to overseas buyers on a long-term basis. It seems to me that this is a defect which should be remedied. In Britain the position is that banks and insurance companies finance contracts, which have to be carried out by British industrialists for a period of five years. That makes it possible and easy for them to raise the necessary capital for the carrying out of longterm contracts. This is a facility which is sadly lacking in South Africa, but at the same time there are indications that the necessary steps are being taken to meet this need. As a positive contribution in this connection I want to express the hope that ways and means will be found, with the co-operation of the hon. the Minister of Finance and his Department, to meet this need.

Mr. Speaker, hon. members on the other side must not say that we want to be isolated. Here I want to associate myself with the observation made by the hon. member for Mayfair (Dr. Luttig) that we must think positively and that we must think big. Like all countries with a great future, our country also has three stages of financial development to go through, the first stage being that of money-borrower. We are going through this stage and we have really progressed beyond it. The second stage is to become self-sufficient. I want to give hon. members the assurance that if they do not have the confidence, we certainly are confident that the stage will be reached when we shall become money-lenders. That would be the third stage. At the moment we are borrowing money abroad not so much because we cannot get the money here but because we have to bear in mind our balance of payments position. As long as that is necessary we shall have to raise overseas loans in order to get exchange so as to be able to balance, but as we become self-sufficient, the need to borrow overseas becomes less and less, and the day is rapidly approaching when we shall be able to rely on exports to fill the gap and no longer on foreign loans.

I also want to say that I am grateful that the hon. the Minister has held out the prospect that an amount will be made available for market research and market development, because it is only by stimulating our exports as a raw material-producing country that we shall be able to reach the stage were we can safeguard our balance of payments by means of exports. Here too it is a wise policy on the part of the State to encourage in South Africa the establishment of industries which will replace imports and build up our exports.

Before I conclude I want to make one further observation in connection with the blocked rand. We have many foreign friends who have confidence in the Republic, just as we have confidence in it. Hon. members on the other side apparently have no confidence in the Republic. Just as funk capital may find its way into a country, so too a country may attract unreliable foreign investors, and I want to congratulate the hon. the Minister on the fact that he has succeeded in granting a privilege to those investors who want to liquidate their investments here and then transfer the money, namely the privilege of first lending the money to the State before transferring it. When we look at the past and when we look into the future and see all the signs of economic growth—the creation of greater assets by the State, greater opportunities for our people to save, more exports, etc.—then we cannot help feeling confident. As a matter of fact, we do feel confident and when hon. members on the other side talk as they do about confidence in the future, their arguments are misplaced, because a great future awaits us and as far as the borrowing of money is concerned we shall be able to find all the money internally to do what ever this country finds necessary to do.


Mr. Speaker, at the outset I should like to say a word or two about a point which was raised by the hon. member for Standerton (Dr. Coertze) in his speech with regard to the price of petrol. I do not want to discuss the price of petrol now, because the case I have already made out in this connection, is as strong to-day as it has ever been. I have asked on many occasions that the railway rates on petrol to the interior should be adjusted. The pipeline commission told us that petrol could be piped from Durban to the Witwatersrand at a cost of less than 1d. per gallon whilst the South African Railways charge us 7d. per gallon. I think, therefore, that the hon. member for Standerton should use his influence with the Minister of Transport and the other members of the Cabinet, to see to it that we get a fair deal in the interior. This is all I want to say about this subject.

The hon. member for Soutpansberg (Mr. S. P. Botha) admitted, I think, that gold was our sheet anchor and that without gold we in South Africa could not introduce any of the schemes which have been put forward by the hon. the Minister of Finance. On this, I think, we all agree. Great assistance is, of course, also to be obtained from wool. But if the hon. member for Soutpansberg knows of any sources from which the Minister can borrow money, he should tell him, because I am sure the hon. the Minister is anxious to borrow money at low rates—he is very keen indeed. When comparisons are made with Britain in regard to rates of interest, it should always be remembered that the scale of income tax in Britain is so high that it influences every operation. It is a factor which often decides investments. I gathered from the remarks made by the hon. member that he considered it would be a good thing if we did not borrow abroad and if we were self-contained if we could rely upon our own resources not only for defence, but for finance as well. That seemed to me to be his main theme. He said we should think big. But, Mr. Speaker, in defence we should not think too big for our boots, although that is what we have been doing. We should rather remember that South Africa is a small country. The hon. member also said that the economy of the country was being carried by a small section of our population—chiefly our White section. However, Sir, they are not doing too badly out of it despite the sacrifices they are making! We of the White community are doing very well in this country. In fact, I think we are flourishing compared with the other sections of our population.

I do not wish to cover the whole field of the budget, Mr. Speaker, but if I were to do so, I would say that this budget was a pedestrian affair—a little off here and a little added there, a few more taxes and a little extra given to old age pensioners. It is a small affair, while we need something with vision. That we did not get. However, I wish to confine myself to two aspects where I think I can be of assistance to the hon. the Minister, and these aspects relate to the relaxation of exchange control. I know only a little of this, but this little might perhaps be of assistance to the hon. the Minister. In the debate on the Part Appropriation Bill, I put forward a suggestion to the hon. the Minister to the effect that he should as a first step make blocked rands negotiable amongst non-residents; in other words, if a resident of London holds rands deposited in Johannesburg, he should have the right to transfer them to another resident of London. The hon. the Minister did not, however, comment upon my suggestion when he replied to the debate. I do not take that amiss, because he had to cover a wide field. Although he did devote a great deal of time to me, he did not reply to this specific suggestion. I should like him to do this in his reply to the present debate, because I think that whatever scheme is introduced in connection with blocked rands, these should be made transferable as between non-residents. This is my first point. When the hon. member for Soutpansberg spoke about our being self-contained in so far as the raising of our capital requirements were concerned, I thought of the policies which had been adopted by all Parties in the past. In this connection, I should like to refresh the memories of hon. members in regard to the period during which the Nationalist Party has been in office. Here I come back to that first budget which was in reality a United Party budget but which was introduced by Mr. Havenga as the first budget of his second series. Here is a short extract of his speech on that occasion—

Overseas capital is, of course, at liberty voluntarily to migrate to the Union and to seek a resting place either in gilt-edged or in equities. We have drawn a large amount of capital in this way and we are continuing to draw it. The Union has latterly been a strong magnet for capital.

But now, Sir, it is a magnet for repelling capital. In another part of his speech he said—

There is, as there has always been in the past, a readiness on the part of foreign capital to seek investment here. The main traditional source of this capital has been the United Kingdom and that country, despite its present difficulties, is still the source of a heavy volume of investments in the Union.

That was the policy of Mr. Havenga as it was the policy of his predecessor, namely to attract foreign capital, and not to repel it. Then, the following year, we had the following opinion from the Governor of the Reserve Bank, Dr. de Kock, who said this in July, 1949—

In my statement to the Press last December, on the financial situation in the Union, I took the opportunity to stress the need for supplementing our resources with capital from hard-currency countries, and for exerting ourselves in various ways to get it.

He went on to describe how we might be able to get capital from the United States and from Switzerland. He said an American company had offered to participate in the exploitation of mines in the Free State and the Government fully recognized the importance of this promising arrangement to obtain a considerable participation of American capital in the development of the new gold mines—

by agreeing to a special reduction in the lease formula under which the mining company concerned will operate.

That is to say, that if they could get foreign capital from the United States of America, they would be prepared to change the lease formula in their favour. Surely, Sir, that is making South Africa the magnet for foreign capital? Dr. de Kock then made the following appeal to South African shareholders—

That the shareholders of vendor companies will be prepared to sacrifice such part of their subscription rights as may be necessary to secure substantial amounts of American or other foreign capital for mining purposes, in their own long-run interests as well as in that of the country in general.

In other words, we should give away our mining rights in order to attract American capital. That was bending over backwards in order to please America! But more recently, the present Minister’s predecessor, Mr. Naude, told us of a new plan he had introduced with the approval of his party and the Government. He said—

The proposal to exempt such companies…

(i.e. companies from America)

from taxation when all their shareholders are resident overseas, is designed to attract foreign and, more particularly, American capital to the Union. While the United Kingdom will continue to play an important part as a source of capital, we are compelled to cultivate new sources if we wish to maintain a satisfactory rate of development of our national resources and the United States is to-day by far the most important potential provider of capital.

He went so far as to say that this new company which he had in mind—the American-South African Investment Trust Company— would not be taxed on its share operations, but they would be permitted to withdraw their shares and their capital too after five years if they so wished. What was the condition attached to this? This, namely, that no South African should be allowed to be a shareholder in the company. The other day the hon. member for Port Elizabeth (South) (Mr. Plewman) asked to what extent this had been extended. Was it only Mr. Engelhard who was to be the beneficiary under this system? At any rate, this is what this Government has done in recent years to obtain capital from abroad. But what are the Minister’s proposals to-day? We were trying, as I have proved, to attract capital in the past, but the present proposal of the hon. the Minister is a strong inducement to overseas people to take their money out of South Africa! Yesterday I wrote a letter to an investor overseas about the Minister’s first proposal and I advised him to get in and fill his boots. It is a wonderful proposition for a man overseas. Let us have a closer look at this proposal. In terms thereof, we are going to assist overseas investors to take their money out of South Africa and to sell their South African investments. Now, Sir, there are two kinds of overseas investors in South African securities: firstly, the investor who has no confidence in South Africa, whose policy is to flee from the wrath to come and who see the future as being dark and dismal; and secondly, that kind of investor who believes in South Africa. In terms of this scheme of the hon. the Minister, he asks for this faith in South Africa for only five years. I want to take the case of an investor in the second class to demonstrate how the Minister’s plan will work out. I find it very interesting and I am sure that the overseas investor will find it interesting as well. I am wondering what the British Government is going to do about it! I want to demonstrate what will happen to an investor falling in the second class who wants to take advantage of the Minister’s plan. Say, for instance, this investor has shares which he can sell on the London market for £1,000; but now there is a disparity in prices of 20 per cent as a result of which the shares are selling on the Johannesburg Stock Exchange for 24s. There might be a company who sells at a little less or at a little more, but all this is adjusted by switched arbitrage which is permitted by the Government. 20 per cent is, therefore, the general overall difference in prices. Now this investor sends out his shares to the Johannesburg market under the Minister’s scheme, because the Minister is very clear in regard to his scheme when he says that an investor can either be a owner of South African shares or he can buy them on the London market. He can, therefore, buy shares in the London market now for £1,000, send them to South Africa and sell them for £1,200. What happens now? He says he is sending them for conversion under the Minister’s scheme, i.e. a five-year loan at 20 per cent repayable every year with interest. So let us see how it will work out, and let us take the first year for this purpose. We must remember that the London investor is thinking in terms of £1,000 although out here it is £1,200 or R2,400. During the first year he will then receive £200 back as a return on his capital. In addition he receives £60 interest because it will be interest on £1,200 at 5 per cent and, in addition, a bonus of £40. So he sees that he is doing well because he gets £200 of his capital back plus £100 besides. But that is not all. In London he is not going to pay income tax on the bonus but on the £60 only. During the second year, he will get 11 per cent; 12.6 per cent during the third year; and 16 per cent the fourth year. For the last year he will still have his £200 invested. Out here, however, he will have £240. What does he get back? He receives back £200 in capital, plus £12 interest and £40 bonus, i.e. £52 which gives him a 26 per cent return. This is a very good investment and the hon. the Minister will understand why I advised the overseas investor I wrote to to get in quickly. I should like to put this to the hon. Minister, namely that when this investor has bought the hon. the Minister’s bonds, why should they not be negotiable? Why cannot they be sold in London? The hon. the Minister will then have his loan and the investor can sell in London.

I now want to come to the blocked Rand scheme. The Reserve Bank will go into the market as a stock jobber and arbitragist. I hope the Reserve Bank is not going to be used for that purpose. Under the second scheme of the hon. the Minister, the position is that not only is the Government, and the Reserve Bank, going to induce people to take their money out of the country, but they are also going to arbitrage to provide shares for all institutions in South Africa. And the reason for that? A scarcity of scrip! But there never is a scarcity of scrip in South Africa! There is a scarcity of blue chips— good investments which can be handed over to trusts, etc. But, here again, South Africa does not want more blue chips! What we want is risk capital. We want venture capital; and there is no such capital forthcoming because there is no confidence in the Government. That is the story. The hon. the Minister said that prices were high in Johannesburg. But, Sir, they are not. The prices of these blue chips are lower than what they were quite recently—about two years ago at the time of Sharpeville. If institutions buy these now on the free market in Johannesburg, they will be getting first-class investments. So let us have a look at it again and see how this scheme of the hon. the Minister is going to operate. How many institutions buy shares to-day? The fact is that they have been buying shares in a big way! I want to compare what they do with what the ordinary investor does—the man who goes along to his broker and says that he wants 100 of these shares or 500 of those. If he buys on the open market he pays the Minister market securities’ tax of ½ per cent on those shares. Finance companies do not do that, Mr. Speaker; they can sell shares to each other and pay no market securities’ tax. Just think what revenue the hon. the Minister is losing in this way. If a man has a property and sells it, he has to pay the ordinary transfer duties, and if the ordinary investor buys shares on the open market, he has to pay market securities’ tax of ½ per cent. In addition to that he has to pay his broker. I should like to know how the hon. the Minister is going to let the Reserve Bank buy in London. Is it going to buy through the London jobber? What a time they are going to have when the hon. the Minister comes into the Kaffir market and says “the Reserve Bank is coming into the market, boys. Get ready”. But let us assume that the Reserve Bank buys shares. How then is it going to sell them to these institutions, these open end trusts? Is the Reserve Bank going to sell without having to pay market securities’ tax? Is that the intention? Or is the hon. the Minister going to say to it that in addition to the rake-off in profit, it must pay taxation in the same way as every other investor in the country does? This is something I should like to know.

In this connection, Sir, I should like to make the following suggestion to the hon. the Minister: If he is going to carry out his plan, do not let the Reserve Bank come into the market, but let the Bank issue permits to other people to go into the market with the Reserve Bank only controlling operations. If that is, in fact, the hon. the Minister’s plan, i.e. that the Reserve Bank should enter the market, I suggest that the Reserve Bank should instruct its broker who arbitrages in London to buy shares for it. This can be done by telephone as they do every day from the Johannesburg Stock Exchange. They just telephone and make deals while on the telephone. In the same way, the Reserve Bank can deal with its arbitragist in London. I suggest to the hon. the Minister that he should do that, rather than let the Reserve Bank chase these stocks. For this opinion I have a very interesting associate. I should now like to quote from the report I referred to briefly on Friday, namely from the annual general meeting of Sankor, one of the associate companies of Sanlam. Sankor is a very good company and has been floated as an investment company. The chairman of that company made an excellent speech at the annual general meeting of this company which was held on 31 January 1962, in respect of the year which ended on 30 September the previous year. From this speech I want to quote the following extract. The Chairman said this—

Investors generally are experiencing a scarcity of ordinary shares on offer in the Republic. Insurance companies and pension funds have been absorbing most of the available scrip, while the expected formation of Unit Trust Companies, as soon as the required legislation becomes effective, can be expected to cause a further demand. The position can be relieved by new issues and offers of shares by semi-State corporations and by big companies in the Republic which are controlled from overseas. Unfortunately, there is little indication at this stage of a movement in this direction.

What is this Chairman suggesting? He has two constructive ideas. The second one I have argued for years. He says that if we have State corporations—the question is whether you can get buyers for some of them. But let us take a real blue chip like Iscor. The suggestion is that Iscor should issue shares to these trusts. Iscor can pay a dividend, and then the Minister will get the money because they are all his shares at present. The hon. the Minister, on behalf of the Government, can get this money and invest it in the Orange River Scheme or any other scheme. Mr. Speaker, I think this is a first-class constructive suggestion.

I am not going to labour the other suggestion, but it is this. We know that in South Africa it has been the custom of overseas companies to float subsidiaries here, and when they float subsidiaries the usual capital framework is, that they will give South Africa a fine block of preference shares but the equity they hold for themselves. The equity is held by the parent company overseas. Now, the Australians have queried this practice. I am not suggesting that it should be done for the companies already in existence here, but when a company comes to South Africa and the Registrar of Companies has to consider their capital framework, he should give consideration to that.

Sir, those are my suggestions to the hon. the Minister, and I want to make it perfectly clear that I have had no correspondence with or suggestions from the Johannesburg Stock Exchange—none at all. They would not do that. As a matter of fact, if there is any doubt in the mind of any hon. member, I want to say that when I came to Parliament, although the Minister of Finance of the day thought it would be a good thing if I remained on the Stock Exchange Committee to preserve a liaison, the members of the Stock Exchange Committee felt they did not wish to be associated with any political group. The suggestions I have made are suggestions I have made in the interest of South Africa.


The hon. member for Kensington (Mr. Moore) has in general made certain positive suggestions which are mainly of a technical nature. I shall therefore express no opinion, because those are suggestions he made to the Minister of Finance. But what surprises me a little are his representations in regard to Iscor. When Iscor was established that side of the House did not want it to be a State undertaking, but now that Iscor is a success they advocate the issuing of shares to the public. Mr. Speaker, the facts are these. Iscor stands there as a monument to show what can be achieved, and the fact is that to-day we have the best and the cheapest steel in the world. If we are to distribute Iscor shares to the public, as is now suggested, there will be pressure for the price of steel to be increased because they want larger profits. What assurance have we that when there are large numbers of private people who hold shares, there will be the same amount of ploughing back of profits into Iscor, as is the case at present? The fact is that Iscor is planning great expansions, which will chiefly be financed from its own resources. It will not be possible to carry on with those expansions out of profits if a large number of Iscor shares are in private hands. They would insist on dividends. In the past it was the policy of the State that those shares should remain there for the sake of having cheaper steel for the use of all the associated industries which were built up around Iscor. I think there is little justification for making a change in that policy now.

The hon. member also referred to the currency control we have. Surely it is a fact that as long as there is this difference between the prices of shares on the London Stock Exchange and the Johannesburg Exchange, that control must remain, and we can only refer to the experience Britain had, and tell the Minister of Finance that he has our support in adopting this cautious policy. Britain also applied this control at one time, currency control outside the Commonwealth, just after the Second World War. They had control for seven years and then, as the result of pressure from the U.S.A.. it was relaxed to some extent, and in 1946 it suddenly was dispensed with, with the result that within five weeks Britain lost over $1,000,000 of capital which went abroad, and for 11 years thereafter she again had to apply currency control. I think we can learn a lesson from that, and that we should not be in too much of a hurry to dispense with currency control as long as conditions remain as they are.

But I would like to deal with the hon. member for Jeppes (Dr. Cronje), who is not here now. He referred this afternoon to confidence. He said there was a lack of confidence here, but we know this old story of theirs. During the past 13 years, at election after election and year after year, we have heard these depression stories. The last election again produced its quota of these stories. The Opposition used every opportunity to try to derive political gain from the prevailing economic position. They tried to create unrest and confusion. It is the old pattern. The hon. member for Jeppes said that we must change our policy. He said—

Our racial problems are responsible and we must reverse our policies.

I see that just after the hon. member returned from his visit to America towards the end of last year, he also stated in a Press interview: “Americans confident in South Africa’s stability if policy changes.” But how is this policy to be changed in order to create that confidence? The hon. member went further and said—

Dr. Cronje feels that the present Government’s policies are completely impracticable and that we will have to make experiments with extending political rights to all races.

Now I want to ask the hon. member this: How far are they prepared to go to regain this confidence? He said this afternoon: “We must reverse our racial policies,” but if we do so we must accept the policy of the hon. member for Houghton (Mrs. Suzman), because surely that is the opposite of our policy. But how far does he want to go? Mr. Speaker, we are aware that there is pressure exerted in the United Party to go further. Last year that party held a congress in Bloemfontein. They had a secret agenda and, inter alia, there were resolutions from quite a number of branches that they should go so far even as to allow the Bantu to sit in this House. Does he want to go as far as that? No, the fact remains that going further in the direction of political integration will not necessarily instil confidence in our economy. We can just look at Africa. The fact that the Federation adopted a policy of partnership did not lead to greater investment there. On the contrary, the Federation applied currency control before we did. The policy of partnership engendered no greater confidence there than our own policy. They also suffered shocks and capital flowed out. But even in Kenya we see that the Cape Times Financial Correspondent writes about the “serious flight of capital”. Even there the policy followed did not instil confidence. That is so even in Ghana— “Ghana tightens its belt again”. During the past week we saw that industrialists there are not even at liberty to take their full dividend abroad. It is said that 60 per cent of it has to be invested there. No, a change of policy per se will not create confidence abroad.

But the hon. member for Jeppes also said that we should have confidence; confidence is what we lack here. But I want to ask the hon. member this. He himself has no confidence in South Africa. He admitted it in the latest annual report of the Nederlandse Bank—

Last year we were in doubt to which extent the adverse influence on the balance of payments would affect our position.

He then expected it to have a very bad effect on his bank, but now he says this—

Imports continue on at least the same level as last year and our activities in the export field remain quite satisfactory. The effect on our international business did not confirm our uneasiness, as expected in our last report.

They were uneasy, but nothing happened. He goes further and says he is gratified by last year’s report, because things went well with the bank. He says—

We are also pleased to report a continued considerable increase in the revenue from commission which is indicative of a large volume of business.

He is satisfied with the commission they earned. He says, further—

Other sources of revenue remained at a satisfactory level. Notwithstanding panic in regard to increased competition from other sources for credit moneys, we are pleased to state that last year’s levels could be increased.

They therefore made greater profits.


A good bank, is it not?


Yes, but it is also a good Republic and a good Government. He is not only the shareholder of a bank but also of the Republic of South Africa, and why must he always paint such a gloomy picture of the Republic as he did to-day? There is no necessity for it. And it is not only this bank which showed the results. A summary of the profits of our undertakings shows that throughout there was an average increase in the profits of all institutions of 9 per cent above those of the previous year, when it was 13 per cent. There is therefore a general improvement in business conditions. It is always being said that we must change our policy and that it is the Government which is responsible for all these things. The hon. member for Jeppes also said that other countries like Australia and Canada received capital and therefore they had a greater increase in business. But the hon. member himself has referred to the report of Hupkus and van den Berg. He referred to the fact that in South Africa during the past ten years there was an average increase of only 1.4 per cent in our net per capita income. But in the same report we see that in spite of the larger capital sums which went to Australia their increase was also only 1.4 per cent, and in spite of the large amounts which went to Canada their increase was only .9 per cent.

But I want to go further. I notice from a report by the National Bank of Australia that in spite of the large influx of capital there was a decrease in Australia. According to the White paper, it seems that in the last few years we had an increase in the per capita income. For the past three years it was R341, R353, and now it is R361, an increase, but in Australia, which is held up as the example and which obtained all the capital, we see according to the report of the National Bank of Australia that for the past three years it was £A263 and that it then fell to £A255, which therefore indicates a falling tendency in the national income. I notice that there was a tremendous increase in unemployment. In September 1958 there were 60,000 unemployed, in 1959 52,000, in 1960 53,000, but last year there were 109,000, in spite of all the capital Australia received. In regard to Canada, the net income fell from $1,181 to $1,139 and then to $1,127. In Canada there is also a falling tendency. The mere fact that capital flowed in does not in itself prove that it resulted in economic development.

It is said every time that it is our policy which resulted in this outflow of capital, but I want to ask what about the statement of the hon. member for South Coast (Mr. D. E. Mitchell) when he said, “We will march”? What was the effect of that statement overseas? Did it not frighten away capital? We saw that when the hon. the Minister of Transport introduced his budget he pointed out that at the time we became a Republic ships which had regularly touched at our ports avoided them for an appreciable period because they were afraid of trouble. Did that not cause capital to flee? And what about the hon. member for Wynberg (Mr. Russell)? I read in The Times of 18 August 1960—

Mr. Hamilton Russell, M.P., warned last night that the establishment of the Verwoerd Republic would inevitably lead to tumult and disorder on an unprecedented scale and that this would set the country back economically as well as morally for many generations.

Surely it must have had an effect. And we know what happened, the Republic was established and there was no trouble, and at the last Congress of the United Party they adopted a resolution that if they come into power again they will lead the Republic back into the Commonwealth only if it is in the interest of South Africa to do so. But listen to this. The hon. member for Wynberg was not satisfied with that. In the Cape Times of 18 August 1960, he referred to this resolution and said—

Mr. Russell said that he was sure that at the sitting there were more people generally opposed to Mr. Mitchell’s argument than voted against it.

Mr. Mitchell moved the motion “only if it is in the interest of South Africa”—

There were more people genuinely opposed to Mr. Mitchell’s argument than voted against it. It all happened so quickly that many delegates did not realize what they were voting for.

[Laughter.] Now Mr. Russell does not agree with Mr. Mitchell and he says—

We shall run the risk of being faced with awkward questions from people who will feel that Mr. Mitchell’s speech was too much like the one Dr. Verwoerd made when he returned from the Commonwealth Conference.

He goes still further, referring to this proviso, “only if it is in the interests of South Africa”, and says—

That proviso is exactly the same as that of the Nationalists. Many people may also get the impression that this is a detraction from the standpoint we have adopted ever since the Government lost us our Commonwealth membership.

It is this sort of story, that there will be “tumult on an unprecedented scale”, which has done the harm, but now we see something different. I see that at the last election one of their candidates said this—

South Africa may be stranded with a thousand million rand exports …

That is as the result of our becoming a Republic. He says—

The effect of the Common Market on South Africa will be heavy trade losses.

Do you know, Sir, who was the man who said that South Africa may be stranded with a thousand million rand exports? That man was Mr. Moolman, and it should be remembered that our total exports were not even R1,000,000,000. He will still be coming here, but the fact is that he is a business man from whom one expects a greater sense of responsibility than this. But it shows to what lengths even a business man will go if he wants to make political capital.

But I want to go further and show to what extent South Africa is being sabotaged by no less a person than the Leader of the United Party. In the Cape Times of 10 March 1961 he said this.


On a point of order, may the hon. member say that South Africa was sabotaged by the Leader of the Opposition?


The hon. the Deputy Minister should not say that the Leader of the Opposition sabotaged South Africa.


Then I withdraw it, but I want to indicate in what an utterly irresponsible way he acted. During the election in Pietermaritzburg he said this—

Sir de Villiers Graaff, the United Party leader, last night firmly ruled out any chance of South Africa becoming an associate member of the European Common Market so long as the Nationalist Government remained in office.

[Interjections.] Here we have a statement. South Africa has not even applied yet. South Africa must adopt a waiting attitude, mainly as the result of Britain’s application, but to say this in regard to such an important matter which will affect our economy on all fronts and to create the impression that South Africa cannot join as long as the Nationalist Government is in power, is utterly irresponsible. I want to say that this statement made by the Leader of the Opposition deserves the strongest condemnation as something aimed at undermining the economy of South Africa. There is no reason for it. It is a calculated undermining of South Africa and one can only express one’s strongest disapproval of it.

Apart from that, I have mentioned a few matters here which are calculated to harm South Africa economically and to derive political advantage from it, but I also want to mention another example. It was known that South Africa would leave the Commonwealth, and although it was said in the British House of Commons during the debate on the extension of our preferences that the fact that we left the Commonwealth would not affect our preferences, in spite of that the Opposition steadily made use of it, and the hon. member for Constantia (Mr. Waterson) said the following in their own publication—

The overwhelming proportion of our sugar, maize, fruit, wine and canned fruit which is exported goes to Britain and enjoy preferential tariffs without which they could hardly compete. Within twelve months those preferences will be a thing of the past.

Small wonder that the other newspapers also repeated what he said—

If South Africa became a Republic but left the Commonwealth the imperial preferences on which the Union’s export trade has been built will disappear.

Here a lead was given by the No. 1 speaker of the United Party on economic affairs. The fact is that this year has passed. There is no possibility of these preferences being ended.


What about sugar?


I can tell the hon. member something about sugar, if he wants to know. I do not want to say too much about sugar, but I want to remind the hon. member that this sugar agreement was entered into for a period of eight years and the price was fixed eights years ahead. That agreement was entered into between the Sugar Association and the British Government. It was not entered into with this Government, and it had nothing to do with preferences, but when this agreement was first entered into it was during the war years. Then there was a shortage of sugar and there were attempts to encourage the planting of sugar-cane. In 1943 the first agreement was entered into. In the first year South Africa got 7s. 6d. per ton more from Britain for her sugar. Then the agreement was entered into on an eight-year basis. The following year the world price of sugar rose to £16 per ton and South Africa received £14. 12s. 6d. The next year it increased to £21 5s. and South Africa received £16 4s. 6d. per ton. In 1945 the world price was £27 5s. a ton and South Africa received £18 17s. 6d., more than £8 less per ton. So one can go on. Even in 1950 we received £16 a ton less than the world price. Then there was a surplus of sugar and now the agreement has been terminated. The Sugar Association in South Africa and overseas took legal opinion which supported the standpoint of the Association that this agreement was still binding. They did not proceed further to institute litigation, but a compromise was arrived at in regard to the price. The fact is that it resulted in a loss of income, but if the Sugar Association wanted to insist on their legal rights, the position might perhaps have been quite different. A compromise was arrived at, but this history shows that in the years when the world price was high our sugar was sold below that price, because that was to Britain’s benefit. But now that the position has changed … [Interjections.] I want to revert to this fact. It was said that we would lose our preferences, but we have not lost them. We still have it and Britain still has it also, and in spite of the fact that we became a Republic outside the Commonwealth, our exports to Britain and to the Commonwealth countries increased from 51 per cent to 52.8 per cent. There was therefore an increase in our percentage of exports to Britain, and also in regard to our imports from Britain. There was a fall in the actual figure as the result of our restricted imports, but the percentage of what we imported from Britain during the year we became a Republic did not decline: on the contrary, it increased. In Australia there was just the opposite tendency, but I do not want to mention the figures.

There has been reference to boycotts, etc., but the fact is that our exports of canned fruit to Britain have increased. We maintained our position there, and the greatest percentage of canned fruit imported there came from South Africa. Then followed Australia and the U.S.A. There was reference to Commonwealth preferences. It is perhaps a fact that there was some uncertainty created, but the uncertainty about the continued existence of our preferences, and the fact that people tried to import more goods because they thought a stop would be put to it, was not the result of our leaving the Commonwealth, but the result of Britain’s decision to try to join the Common Market, and it affected not only us but every country of the Commonwealth. The Economist described it as the “Commonwealth’s Pilgrim’s Progress It referred to New Zealand as “the sacrificed land”; she was being sacrificed, and it referred to Australia as “the Wallabies’ Worries”, and to Canada as “awaiting the tiger No wonder that the Economist came to the conclusion that “old friendships fade. The club is not what it was. The far-flung Empire became the glorius Commonwealth, and then suddenly it seemed nothing but a noose around Britain’s neck”. Canada strenuously objected. Mr. Donald Fleming said—

Britain’s decision to negotiate for Common Market membership has caused disappointment and grave apprehension.

In regard to Australia, it was said—

Australia’s bonds with Britain weakening. Market decision accelerates rift.

There was thus the strongest reaction in those countries, and it also created uncertainty on their part. Therefore if there was any uncertainty it was not because we became a Republic, but because of Britain’s decision to try to join the Common Market.

But there were also other circumstances which led to the flight of capital here, apart from the way in which the Opposition acted. We know capital fled because there was talk of devaluation. But that did not take place in South Africa only; here it was much less. Devaluation started in Britain. Last year in June for the sixth time after the war it had a balance of payments crisis and there was strong talk of devaluation. Canada devalued and Australia and New Zealand also had balance of payments problems. Here there were certain people who would have liked to see devaluation. The Financial Times wrote—

Devaluation is opportune. Canada shows the value of manipulation. If devaluation is inevitable, do it now.

The Cape Times said—

Farmers would benefit should South Africa devalue the rand.

The Argus warned against the danger of devaluation; others favoured it, but the fact is that these rumours resulted in the fact that according to The Statist Britain alone in this period lost over £600,000,000 in flight capital simply as the result of these devaluation rumours. This also had an effect on our economy last year.

There was reference to shares. The fact is that when shares drop it is always the Government’s fault, and there is reference to Sharpeville to our leaving the Commonwealth. That had its effect on share prices, but when share prices rise we hear nothing about that; then it is not due to the Government’s contribution but to “the buoyancy of the market”. We admit that share prices fell, but the fact is that our share prices rose considerably since Sharpeville. In May last year the average index figure for our industrial shares was 72, and in December it had risen to 95, which proves that there is confidence in our industries. The index for commerce rose from 96 to 115. Our financial shares rose from 116 to 145, and our mining shares from 78 to 101. There was therefore a generally rising tendency, and there were rumours overseas as well as here which caused this. But thereafter there was again a big rise on the London market. Prices had fallen there also at that time, but they rose, and it is interesting to note that even after the election here prices rose still further, and small wonder that the London Daily Mail wrote—

The movement of money into South African shares is also being helped, paradoxically perhaps, by Dr. Verwoerd’s resounding victory in the last election. Even those who loathe his racial policy are prepared to admit that his victory is likely to provide a longish period of stability in South Africa, long enough to allow the Nationalist Government to develop its plans for raising the standard of living of the African people.

Those were its conclusions, but we hear nothing about that. We only hear about the fall in the price of our own shares. Let us, however, look at the London Stock Exchange, at the corporation stock, as it is called. South African stocks fell by 9 per cent, but in the case of Australia one loan fell by 6 per cent and another by 8 per cent. There they do not have the problems we have here. Those of Rhodesia and Nyasaland fell by 10 per cent. That of Birmingham, which is in Britain itself, fell by 7 per cent, as compared with 9 per cent in the case of South Africa; the Corporation of London fell by 7 per cent, the London City Council by 9 per cent, Middlesex by 9 per cent, precisely the same fall as in the case of our own Corporation shares on the London Exchange. We admit that shares fell. Losses were perhaps suffered, but what was the position on the London Exchange. In regard to textiles during the past year there was a much greater fall on the London Stock Exchange than on our own. I will read out the list. Textiles: English sewing cotton: the maximum was 42s. 7d. and the lowest was 23s., a fall of almost 50 per cent. The next is Fine Spinners, which fell from 31s. 10d. to 19s. 4d. Lancaster Cotton fell from 70s. 4d. to 44s. 9d. We therefore see the tremendous drop there was in textiles. Take steel. Colvilles fell from 81s. 3d. to 42s. 4d., almost 50 per cent. Take the engineering industry. Babcock and Wilcox fell from 36s. 9d. to 18s. 9d., again a fall of 50 per cent. That is how it was on the London Exchange. But just let something happen here which makes share prices fall and it is immediately the fault of the Government. The fact is that the position was worse for the London investor than for our own investor. If we want to regard it in terms of losses, then they lost more there than our investors lost here.

I just want to refer to a final aspect, namely that our investments in building societies have decreased. It is an admitted fact that we sent money overseas to buy shares. Savings were withdrawn from the building societies to acquire those shares on a scale unprecedented in our history. That resulted in a decrease in building activities. We could not maintain the same tempo. For the year ended 31 March 1961, there was still an increase of 7 per cent in deposits with the building societies. In the Federation there was a decrease. The position was much more advantageous here than in the Federation where a policy of partnership was followed. We must, however, also bear in mind that in regard to building activities satiation point had to some extent been reached. I see in the report about the building trade that—

A satiation point, at least temporarily, has been reached in the construction of certain types of buildings like flats and office buildings. We must therefore bear in mind that in regard to this type of building activity there will not be the same amount of activity.

Then we see another interesting thing, that according to The Statist also foreigners are withdrawing their capital from building societies. They write—

The hole in the societies’ funds has been created mainly, it seems, by the action of overseas insurance companies which formerly were willing to employ substantial lines of money in this field.

They therefore also withdrew capital from the country, but at the moment we know that the building societies are recovering, not only through capital from abroad but through drawing more of our own capital. The fact is that we shall have to learn to depend on our own capital to a greater extent. We are in the position to do so. Britain can no longer provide it on the scale on which it did so in the past. We know that even last year Britain had to apply strict measures to restrain the outflow of capital to foreign countries—

Britain puts brake on foreign loans. In the past Britain provided a large amount of capital for other countries but now we see that Paul Bareau writes the following—in The Statist Britain goes aborrowing. On capital and income account Britain is still a net creditor, but the margin is narrowing rapidly and if the present continues Britain will soon be a debtor country, sic transit gloria.

The fact is this: We must do the things that we have to do ourselves. This Budget indicates the direction, not only to raise the standard of living and to ensure that there will not be a greater measure of inflation, but to afford security not only in the economic sphere but also in the military sphere, so that we can hold our own against anyone who may want to attack us in any of these spheres.


Mr. Speaker, I should like to express surprise as a new member at the unwarranted attack I have just heard from the hon. the Deputy Minister of Economic Affairs who has just sat down. There was nothing constructive in what he said; it was a speech made up from press cuttings. I should like to say at the outset that the present situation here in this country has been brought on by the policy of the present Government. I would like to refer the Deputy Minister to this because it seems to me that it is going to be very difficult for the hon. the Minister to negotiate after the speech that we have just heard. I did not expect the hon. the Deputy Minister to indulge in a political attack but to analyse some of the aspects of our international situation and the Budget. I should like to say here in reference to what the Deputy Minister has just said concerning the statement by the hon. the Leader of the Opposition that there was perhaps not the opportunity of becoming a member of the European Common Market as long as the present Government remained in office, that this may well be true. I would recommend the hon. the Deputy Minister to study the Treaty of Rome, Clauses 135 and 137 and also to remember that Britain when applying for membership will be quite sure to protect the Commonwealth. France has already got protection for Algiers in the European Common Market. But we cannot expect the same consideration being outside the Commonwealth; an independent application may well lose out.

The hon. member for Soutpansberg (Mr. S. P. Botha) who spoke a little earlier referred to Dr. van Eck and Mr. Spiro. He was quoting from papers regarding the statements of these two gentleman and I should like to point out to the hon. member that Dr. van Eck in his statement is saying that we can be financially independent whereas Mr. Spiro says that since exchange control was imposed last year it has become progressively more difficult to find foreign capital seeking investment in this country. The increase in savings and the interest shown by institutions have not been matched by new capital issues. I would like to remind the hon. member and the Deputy Minister of the remarks of Sir Oliver Frank, until lately the Chairman of Lloyd’s Bank who said—

No country can live to itself alone; no country can be financially independent except the United States of America.

I should like to join with the hon. member for Jeppe (Dr. Cronje) who spoke earlier on and other hon. members in expressing appreciation to the Government for this White Paper which we have had issued on this Budget. It has facilitated the studying of the Budget considerably. I would also like to record my appreciation to Government Departments who have worked conscienciously and efficiently throughout the year which has, of course, incidentally assisted the hon. the Minister of Finance to steer the South African finances through the troubled waters of the last financial year and emerge with another surplus. A small surplus it is true of R5,000,000. I should like to join with the hon. member for Port Elizabeth (South) (Mr. Plewman) who said that at this time he felt that the Budget was going back to the days before Mr. Havenga instituted the methods of obtaining the current annual surplus. This was a method with which I could never agree. I think it is now time that we recognized that perhaps this Budget has taken a different turn. It has changed and it has now been restored, let us hope, to its primary role which is to balance revenue from current sources with spending for current purposes.

I would like to touch upon the increased allocation of funds to the four provinces. I know that this R4,900,000 which the hon. the Minister mentioned for schools and hospitals is only, of course, a temporary measure. It will only partly alleviate the situation which urgently requires adjustment. I know it is premature at this stage to speak on financial arrangements between the Central Government and the four provinces before the commission has submitted its report. But I do wish to say this that during the years that I was in the Transvaal Provincial Council I consistently urged the necessity for a reconsideration of the reduction in the present system of subsidies under the amended Financial Relations Act, the present arrangement by which provincial governments are subsidized on their 1956 expenditure figures plus 6 per cent which figure last year and other years has, of course, been increased. It has been calculated on the compounded amount of the previous year in keeping with the increase in the extra statutory allowances from 6 per cent to 7½ per cent. But even that is still not sufficient to cover the shortfall which the provinces experience every year in balancing their budgets. I feel the time has arrived for executive committees, with the taxpayers of South Africa behind them, to put up a very strong case indeed to the hon. the Minister for a substantial increase in both subsidy and loan funds to the provinces. You will remember, Mr. Speaker, that the Transvaal has half the White population, half the schools and half the teachers in South Africa and that she contributes more than 70 per cent to the Government’s inland revenue.

Turning to the Budget, Sir, according to international standard rules I heared Mr. Selwyn Lloyd last year delivering his Budget speech overseas and he also touched on this that you could judge a budget on two tests. It must deal adequately with your current problems and also, most important, will Jan Burger be better off as a result of the Budget? In examining this year’s Budget one cannot agree that it meets this test. Now is the time when the hon. the Minister is asking this House to vote this very large sum of R790,000,000 for us to raise these certain matters which are greatly perturbing the people throughout South Africa. And Jan Burger is now presented with a Budget with an increase in direct and indirect taxation of R14,200,000 and R21,500,000, a total of R35,700,000, with a 10 per cent income tax rise. The 10 per cent rebate is to go. Here I would like to say that the hon. the Minister last Wednesday cushioned the blow to the taxpayer to a certain degree by mentioning that repayment comes this year of the compulsory loan levy of five years ago. But this compulsory loan levy has an interest rate of 4½ per cent and I do not think that the present taxation which the Minister is imposing is going to have any interest rate on it at all. In fact this Budget which the hon. the Minister announced as being “all square”—he said “whatever comfort it may be, I offer the thought that but for the increased expenditure on the Defence Vote there would have been no short-fall in revenue to be met”—is “all square” because of the extra taxation which Jan Burger is paying. As the Press put it last Beer for Bullets”. Jan Burger is paying for Defence but he is paying for the policy of the Nationalist Government. He is no better off under this Budget and if he wants to know why he must look to the Central Government, because the crux of this matter is South Africa’s inability to obtain sufficient capital to finance her development. This has been touched upon by other members, but I would like to refer to it briefly: Surely the success of this Budget depends on South Africa’s economy continuing to expand and flourish so that it can provide the increased revenue which can be transferred to Loan Account. The hon. the Minister in his Budget speech said that the comparatively slow rate of growth in our economy remained a source of concern. We are presented in this Budget with that. I would like to ask the hon. the Minister why there should be decreases on such things as education, bursaries and grants and very much larger increases on other things in this Budget. With education as the battlefield to-day I think we could have seen something like a 68 per cent increase in the education vote. In this Budget the taxpayers are contributing to a defence insurance policy that would not have been necessary if the Government’s political policies had not taken South Africa into an isolated friendless position, isolated politically and economically and geographically at the tip of Southern Africa outside the Commonwealth, with no alliances. Do not let us delude ourselves in thinking, as the hon. member for Constantia (Mr. Waterson) said earlier on, that R120,000,000 is enough; “it is just a flea-bite”. Because if we need to defend ourselves truly here on account of the present Government’s policies, we must remember that guided missiles and loading machinery cost hundreds of millions of rand. To-day we are threatened by modern warfare; we are threatened by missiles from far away bases; by missiles launched by distant submarines, by missiles released by distant aeroplanes and eventually there will be missiles released from artificial satellites. We shall also have to face a germ warfare and a chemical warfare. Before this we had the bulwark of the Commonwealth behind us to protect us. Now we have to pay for all ourselves.

I would like to ask the hon. the Minister, concerning his statement earlier this parliamentary session, whether he expects aid for the Transkei from the World Bank Fund. The Minister, when he made this announcement said that “there was a distinct possibility that the Republic would be able to get aid for the Transkei from the International Development Association, the IDA”. Now in this booklet on the International Development Association you will note, Mr. Speaker, that one of the first things is that its aims are “to promote economic development and increase productivity and thus raise the standard of living in the less developed areas of the world”. In other words, increasing the productivity and raising the standard of living are linked. The Minister in referring to the International Development Association is, I think, referring to one of the lesser international financial organizations established for the support of under-developed countries. I am sure the hon. the Minister has seen this booklet. If he looks at it he will find that it cannot contribute the amount of money that is needed for the self-government plans of the Government for the Transkei. It distributes only very small amounts for road building and water work projects. Of course, I think the hon. the Minister knows these facts very well but the general public may be confused by the somewhat similar names of essentially differing international financial bodies. It is very easy to confuse the International Monetary Fund, the International Bank, the Reconstruction and Development Fund, the International Finance Corporation and the International Development Association, particularly as these establishments are often referred to by their initials only, making confusion worse: i.e. the I.M.F., the I.B., the I.F.C. and the I.D.A. The 1960-1 annual report which I have here of the International Development Association mentioned by the hon. the Minister shows that the only investment in Africa in the 1960-1 year was in the Sudan for a dam on the Blue Nile to the tune of 13,000,000 United States dollars, that is about R9,000,000 at the current rate. Only three other countries received aid from the I.D.A., namely Honduras in Central America received R6,000,000; Chile R14,000,000 and India R42,000,000. These sums are certainly useful but they are not impressive and the aid if obviously proportioned to the size and operation of the country and thus India received 60,000,000 dollars to help 500,000,000 people. That works out at about 12 United States cents or 8½ South African cents per head of the population. So much I feel for the hon. the Minister’s statement. It was the hon. member for Transkeian Territories (Mr. Hughes) who stated that the population in the Transkei was clamouring for employment. It is known that there are 1,500,000 people in the Transkei but of these over 500,000—they are a large proportion of the wage-earners— work outside the Territory in order to earn a wage. It is an established fact that only modern industries could employ people of the numbers needing employment in the Transkei. The capital cost of an industrial establishment per worker is as Mr. F. P. Spooner says in his book “South African Predicament”—

“ It will mean a capital cost of R2,000 per worker to successfully industrialize any of the reserves.”

It seems to me that it follows that the ten-year plan which we are told about concerning the amounts that are allocated in this present Budget, the ten-year plan during which period the people will also increase, will require something like R300,000,000 for the first ten years alone. Here we are told that it is going to be R140,000,000 for the first five year plan. We are told also by the hon. the Minister that a portion of the sum allocated last year was not spent, R7,500,000. It seems to me in this ten-year plan that the Government is offering R128,000,000 in ten years. And the puny sum that will be handed out by an organization which is a subsidiary of the World Bank, such as the International Development Association, should be viewed against these far more realistic requirements. The R300,000,000 would be required to develop only one territory. If this went further the funds required would run into thousands of millions of rand —far behond the capacity of any world bank to lend to any under-developed country.

I would like to refer here to a cutting from the London Times. I am sorry the hon. the Minister of Information is not here. For the information of the hon. Minister for Information I would like to inform him that the overseas London Times is a paper of standing and high repute, not only in Britain but it is read all over the Continent of Europe and in the U.S.A. Its articles are read with interest by a large body of public opinion in those countries. They mention aid proposals for under-developed countries and they say there is one danger—

Aid to under-developed countries: Most recipients of aid one finds in these countries tend to restrict the inflow of private investment as it would be foolish to pay market terms for foreign capital where it could be got through these banks.

That is something of which we shall have to be careful in raising any loan. There is, of course, the other point on which I should like to have the hon. the Minister’s opinion and it is this: Has the hon. the Minister considered that loans such as loans from the International Bank and the World Bank and its associates would bring with them an interference in the internal affairs of the Republic by the lender? Because the World Bank does not accept the backing of gold reserves for loans. No, Mr. Speaker, gold reserves are merely a security for currency but not for loans. So the lender country demands some say in the spending of the money that it lends. We know with the construction of the Kariba Dam in the Central African Federation experts from the World Bank went out there every few months to see that the money they were lending were being spent in the right way. They will be doing this also in South Africa. I think that is a point that must be considered by the Minister.

Mr. Speaker, if we are to be given for South Africa an expanding economy then we need much more foreign capital to be attracted to South Africa. I would like to join here with the hon. member for Kensington (Mr. Moore) and ask whether the hon. the Minister really believes that the policy which he is pursuing with shutting the door on foreign capital is going to attract foreign capital to South Africa? Because we ourselves know that in the past we have depended a great deal on this foreign capital. The Minister of Economic Affairs last year said, in reply to a question from the hon. member for Jeppes—

I agree that we should do everything in our power to attract foreign capital to this country especially genuine investment capital and especially capital which is accompanied by knowledge and especially capital which will bring about the development of new industry in co-operation with South African investors.

Regarding foreign capital two factors must be remembered. These two factors are: That the capital which is provided here in South Africa for the development of our industry and our mining all came from overseas, very nearly all came from overseas. While the success through capital investment within South Africa was remarkable, hon. members should not forget that practically as much capital money has been lost in the market here as has been successful. The riches of this country are to a great extent the results of the investment of foreign capital. We should be grateful for the foreign capital which has been sent in and we should never grudge the investors a penny. It seems to me that if we wish to pursue our economic development, if we wish to have car plants, if we wish to have car factories in Port Elizabeth, if we wish to have three oil refineries, if we wish to have the development of our gold mines—and the hon. the Minister knows that it costs R20,000,000 to finance one single gold mine whose life is only 30 years—if we wish to have these things, we as a young developing country must be ready for foreign capital to come in and help us develop it. It is for this Government to attract capital by offering favourable interest rates and competing with the rest of the world for the capital which there is on the market to-day. It seems to me that the hon. the Minister and hon. members have all been caught up in the web spun by the Nationalist Government. Because we have a great country with a great economic future and we have a strong belief in its tremendous potentialities, and also in the inherent goodwill and common sense of the majority of South Africans. But I feel that hon. members opposite must not neglect the interests of South Africa for the sake of party machine dictation. The least that can be expected from representatives on the Government side is that they should use all their influence to ease the financial burden on the taxpayer and to safeguard the future of a truly independent South Africa.

*Mr. J. J. FOUCHÉ:

Mr. Speaker, to be honest, having listened for the past half an hour to the hon. member for Johannesburg (North) (Mrs. Weiss) I feel so discouraged that I am tempted to throw in the towel in this struggle in this country. It is really a long time since I have heard such a message of doom as the one we have just heard from the hon. member. The hon. member for Johannesburg (North) complains about all the dangers which are threatening us as a result of the policy of this Government. I think it is easy merely to say that dangers are threatening as a result of the policies of a Government without being specific and saying precisely what those dangers are and exactly which policies are endangering the future of this country. I think that when members of the Opposition again talk about policies in the future, it would be just as well if they told us which policies were endangering our future. It is easy to make accusations without stating your grounds for making them. It is easy and convenient when one member has referred to policies which are creating dangers, simply to repeat what he has said without anybody telling us to which policies they object. If the Opposition say that this Government is following a policy which is endangering the future of our country and the people, I want them to tell us whether they are referring to the policy which this Government is following to try to ensure that White civilization will continue to exist in this fair country of ours. They should tell us whether they are against the policy of this Government which is aimed at meting out justice and fair treatment to all sections of the community in this fair fatherland of ours, a policy which, while ensuring the continued existence of the White nation at this southern-most tip of Africa, ensures at the same time that justice will be done to the non-White sections of our population.

At 10.25 p.m. the business under consideration was interrupted by Mr. Speaker in accordance with Standing Order No. 26 (1), and the debate was adjourned until 27 March.

The House adjourned at 10.26 p.m.