as Chairman, presented the Eighth Report of the Standing Select Committee on Finance, relative to the Financial Institutions Amendment Bill [No 100—85 (GA)], as follows:

CHW SIMKIN,

Chairman.

Committee Rooms

Parliament

10 June 1985.

Bill to be read a second time.

Report, proceedings and evidence to be printed.

as Chairman, presented the Report of the Standing Select Committee on Public Accounts.

Report, proceedings and evidence to be printed and considered in Committee of the Whole House.

as Chairman, presented the Seventh Report of the Standing Select Committee on Co-operation, Development and Education, relative to certain Proclamations and Government Notices, as follows:

H J TEMPEL,

Chairman.

Committee Rooms

Parliament

11 June 1985.

as Chairman, presented the First Report of the Standing Select Committee on Environment Affairs and Tourism, relative to certain State-owned land, as follows:

The Standing Committee on Environment Affairs and Tourism having considered the various papers referred to it, your Committee wishes to recommend that the House approve the following:

1. (1) The proposed withdrawal from demarcation in terms of section 8(2) of the Forest Act, 1968, for handing back to the Department of Public Works and Land Affairs for further disposal of the farm Glencoe, being component 43 of the Cockscomb State Forest, situate in the administrative division of Hankey, Province of the Cape of Good Hope;
2. (2) the proposed withdrawal from demarcation in terms of section 8(2) of the Forest Act, 1968, for handing back to the Department of Public Works and Land Affairs for further disposal of lot K40, being component 1 of the Kwa-Mbonambi State Forest, situate in the administrative division of Lower Umfolozi, Province of Natal;
3. (3) the proposed withdrawal from demarcation in terms of section 8(2) of the Forest Act, 1968, for handing back to the Department of Public Works and Land Affairs for further disposal, but not before the veld has recovered and the weeds have been eradicated, of portions 1 and 2 and the remainder of the farm Glencoe, being components 24, 23 and 22 of the Hogsback State Forest, and the remainder of the farm Coolin, being component 30 of the Hogsback State Forest, situate in the administrative division of Cathcart, Province of the Cape of Good Hope;
4. (4) the proposed withdrawal from demarcation in terms of section 8(2) of the Forest Act, 1968, for handing back to the Department of Public Works and Land Affairs for further disposal, of portions of farms 88, Doornkloof 101 and Tydsgenoeg 102, being components 5, 7 and 8 of the Nuweberg State Forest, situate in the administrative division of Caledon, Province of the Cape of Good Hope;
5. (5) the proposed granting in terms of section 9(1)(b)(ii) of the Forest Act, 1968, of a temporary right for the erection of a weir and the laying of a pipeline in favour of Berg and Dal Landgoed (Pty) Ltd on and over the Marloth Nature Reserve on the Swellendam State Forest, which has been declared a nature reserve in terms of section 7 of the Forest Act, 1968, situate in the administrative division of Swellendam, Province of the Cape of Good Hope;
6. (6) the proposed granting in terms of section 9(1) of the Forest Act, 1968, of a servitudinal right of water abutment, water storage, installation of a pump and the laying of a water pipeline in favour of Messrs D E and G C Landman on and over portion 1 of Farm 788, being component 5 of the Kromriver State Forest, situate in the administrative division of Humansdorp, Province of the Cape of Good Hope; and
7. (7) the exclusion in terms of section 2(3) of the National Parks Act, 1976, of portions of land, in extent totalling 5 080,4842 hectares, as described below, from the Kalahari Gemsbok National Park, situate in the administrative division of Gordonia, Province of the Cape of Good Hope, for alienation to the Director-General: Administration: House of Representatives.

A GELDENHUYS,

Chairman.

Committee Rooms

Parliament

11 June 1985.

Report to be considered in Committee of the Whole House.

Mr Speaker, I move:

As is customary, this Bill deals with diverse matters pertaining to the State Revenue Fund. Since the various clauses are fully explained in the memorandum on the objects of the bill, I do not consider it necessary to deal with all the clauses in detail. However, I should like to say a little more about clauses 1 and 2, as well as the question of the redemption prior to maturity of stock issued to persons for land consolidation purposes, a matter on which the Standing Committee on Finance was unable to reach consensus. Consequently the Bill had to be submitted for Second Reading without the clauses which were initially included in it to make provision for this matter. I shall, however, move by way of an amendment that the relevant clause be re-inserted in the Bill.

Clauses I and 2 deal with the Sishen/Saldanha iron ore export project. The history of this project is explained at some length in the memorandum on the objects of the Bill, but I nevertheless wish to refer to the matter again.

This project was initiated at the beginning of the seventies. At that stage the construction of the railway line and harbour facilities were considered a viable proposition by the Government in view of the favourable economic situation and the demand for iron ore overseas. With the wisdom of hindsight it is easy to say that the Government took the wrong decision. The fact of the matter is that no one could have foreseen that the world demand for iron ore would level off so drastically.

In spite of the low level of iron ore exports we nevertheless have the assets, viz a modern railway network and harbour. We are still exporting iron ore. What is more, at the present rate of exchange, it is estimated that an operating surplus of almost R127 million can be expected during the current financial year. In addition to this we shall also earn approximately R400 million in foreign exchange, which is certainly not to be sneezed at.

†Let me at this juncture clarify the mechanics of the financial arrangements between the South African Transport Services, Iscor and the Exchequer. In the books of the Treasury the outstanding Exchequer loans of the South African Transport Services will be reduced by R814,3 million. Calculated at an average interest rate of 12,65% per annum this relieves South African Transport Services of interest payments to the Exchequer of slightly more than R103 million per year. This enables the South African Transport Services to transport iron ore over the line for Iscor at a substantially reduced tariff. This in turn enables Iscor to remain competitive on overseas markets and, at the same time, to generate a small operating surplus. Iscor is contractually bound to surrender to the South African Transport Services, and the South African Transport Services to pay over to the Exchequer, 80% of such operating suprlus. In addition, the South African Transport Services is contractually bound to pay over to the Exchequer the whole of any operating surplus generated by traffic other than Iscor’s over the line. The payments thus made to the Exchequer will be applied to the reduction of the R814,3 million outstanding in the Treasury’s books. Although this process may take many years to complete, hon members can see that there is, at this stage, no question of the Government having written off the R814,3 million.

Given the factual situation that the railway line and harbour facilities exist, that 3 000 jobs are dependent on this project and that it is a big earner of foreign exchange, there is no better solution. The Government is convinced that the decision it took to proceed with the export of iron ore on this restructured basis, is the correct one and in the best interests of South Africa and all its people.

We must not forget that the world demand for iron ore is unstable—wide fluctuations are possible. An increased demand for iron ore is also a possibility in which case our decision will be more than vindicated.

As far as the redemption of land consolidation-related stock prior to maturity is concerned, Clause 3 of the Bill as originally introduced, provided therefor, but consensus could not be reached by the Standing Committee on Finance. Members of the Opposition were not happy with the scope of the proposed relief and felt that those persons who had already disposed of their paper at a loss should also be compensated. The situation then arises of people who traded their stock at a profit. Should they now be asked to pay this profit to Revenue?

On the standing committee it was explained that it will not be possible to determine at what loss the paper that has already been traded was disposed of because the market price on any day would be dependent on the coupon rate of the paper, the remaining time to maturity, negotiability and the interest rates at the time of the transaction. Apart from that, it was explained that these transactions frequently take place by way of negotiation between the parties or their agents or brokers and are not always necessarily transacted at market related rates or yields. It is a question of supply and demand.

*Here I should like to mention that approximately 277 brokers are registered on the Exchange and a person could, at any time since 1976, have disposed of his paper through any of these brokers and therefore not through the Treasury himself. In terms of the Income Tax Act, institutions are only required to keep their records for five years and according to my information the various broker members only keep their records for a maximum of five years, owing to their tremendously large volume of paperwork. In all likelihood, therefore, no records exist of any stock traded by brokers between the years 1976 and 1980.

I therefore want to conclude by saying that a case can be made out for helping the original holders of consolidation-related stock or their heirs on compassionate grounds by redeeming the stock at face value prior to maturity. In this connection I want to make it clear, however, that these concessions are being made on compassionate grounds and that the Government is not in any way prepared to consider compensation in respect of any interest or capital loss that may have been sustained over the years in respect of this stock or any other Government paper.

Second Reading resumed

Mr Speaker, the hon the Leader of the House is not present at the moment but we should like to convey to him our good wishes for today and perhaps start the debate in that fashion. I want to make that particularly clear to him because he is now 58 years of age, I think, and I just want to establish quite clearly that there is no responsibility on our part as far as his parentage is concerned. It is merely that we are happy that he has reached this birthday and we hope he will reach many more.

The Bill we are presently discussing deals with a variety of subjects. The first is perhaps the most contentious of all, viz the Sishen/Saldanha railway line and the iron ore mine which is related to it. There is a question of an indebtedness which is presently running at R114 million which we regard as being a loss to the taxpayer, because according to the wording of this provision what is happening is that the State is now assuming this liability and to all intents and purposes that liability will disappear. All that will happen is that if profits are made from the iron ore mine, the State will receive a percentage of the profits from such a venture. To all intents and purposes the whole matter starts off with a loss of some R814 million, and in terms of subsection (2) of clause 2 there will be, as far as the taxpayer is concerned, a further loss of interest of R103 million per annum in respect of the amount of the loan which is now written off. That, to use a colloquial phrase, is not peanuts. It can by no means be regarded as a minor matter.

Secondly there is a matter which I think we will discuss—it is no longer included in the Bill, but I understand the hon the Deputy Minister is going to try to bring it back at some stage—and that is the question of compensation to certain individuals in respect of losses on Government stock.

Thirdly the Bill contains provisions relating to amendments to the Exchequer and Audit Act which include the question of the liability of public servants for failure to carry out duties and certain changes in audit procedure.

Lastly there is the question of the ratification of the transfer of certain property to homelands which have become independent and where, in the past, there has perhaps been a misinterpretation of the law as it stood them. Perhaps I could dispose of this matter right away by saying that, as far as we are concerned, we will support this provision because obviously it was intended that there should be further transfers of property, whether immovable or otherwise, after independence, and that that authority therefore should be given. I do not propose to devote any more time to that particular matter.

However, if I may, I will turn immediately to the question of the iron ore mine and the Sishen/Saldanha railway line. Of course, the question that needs to be raised and needs to be raised pertinently right at the beginning of the debate, is whether this iron ore development should ever have taken place in the first instance; and secondly, whether the railway line should have been built at all. The question of course is: If it should have been built, has the Government, has the SATS, and have Iscor acted as prudent businessmen in this particular matter? We are going to suggest—and I believe we are going to prove—that they have not done so. Thirdly the question arises, concerning the loss which now exists, as to who should bear that particular loss; and fourthly, whether the steps which are now proposed are the correct ones to take in the circumstances. Are there alternative steps open to us, and if so, are those better steps, and should they not rather be taken?

The problem in actually debating this matter is that there is a report which is referred to as the Maree Committee report. That report is not available to hon members of this House. It has a rather strange history, because the…

That is not true. I made it available to members of this House. I said so in my Press statement.

Is it public property now?

No, part of it is confidential.

No, that is the point. That is why I am going to deal with the history of the report. What happened was that questions were asked by the hon member for Port Elizabeth Central in order to have that report made available, and we were told that it was confidential.

Does the hon member want to cause harm to Iscor? The report is available to members.

The hon the Minister is starting something here, and he must just know what he is starting because now he is going to have to finish it. The reality is that nobody has caused harm to Iscor…

[Inaudible.]

If the hon Minister will allow me to put my case before interjecting, I will gladly answer his question. I shall do so when I have put my case in regard to this report.

We sought to put a question on the Question Paper but it was refused to the hon member for Port Elizabeth Central. Then the matter came before the Standing Committee on Finance. The report was produced on the Standing Committee on Finance, and it was made part of the record of the proceedings of that committee. The following day I had delivered to me in my office a piece of paper said to be the front page of that report, on which was marked the word: “Secret.” I have it here and I can show it to the hon members. [Interjections.] Then it was said to be secret.

The question now arises as to what use can be made of this report. The attitude which we adopted in the committee and which I adopt now, is that if there are matters in that report which should not be made public for good and sufficient reason, our cooperation is available. However, the whole of that report does not fall into that category; only sections of it fall into that category. What we decided to do was what had been done on that committee previously and what is done on the Public Accounts Committee, namely that the committee would appoint a sub-committee in order to deal with this sensitive information; that we would give the opportunity to the people concerned—which include the Iscor people—to go through the documents and then tell us what they regard as sensitive; and that we as a committee would then decide whether we agreed or not. Unfortunately, what has happened is the following: The pressure of work under which the Standing Committee on Finance has been put is such that we have not been able to have a meeting of that committee. We have only got back the marked portions of the evidence which they wanted excluded. In so far as the report is concerned, they want the whole of the report not to be made public. That is the truth of it.

One of the remarkable things therefore is that the report as a whole cannot be made public. I will concede immediately that there are portions of it which, if made public, might be harmful to Iscor, and I have no desire to do anything that may become harmful to Iscor, but the argument cannot be advanced that because there are some sensitive portions in a report, those portions cannot be excluded and the rest of the report be made available.

Exactly the same thing has happened in regard to the evidence, because what has happened there is that, when the officials were asked to mark what they regarded as sensitive, they just marked vast quantities of it as sensitive, including questions which one had asked. Some of the questions I asked—not the answers—have been marked as being sensitive. So, in fact, one cannot even quote the questions one asked in order to put the full information before the public. When one is dealing with sums of money of this magnitude, the public are entitled to know who has wasted their money, who has made the mistakes, and how, in fact, the situation can be put right. Under the cover of the contention that there are some portions which are sensitive—which I agree with—the whole of it is being suppressed and we are prevented from presenting that report without those sensitive portions to the public. That is the charge against the hon the Minister. If he wants to interject, now is the time for him to do so and tell this House whether he actually agrees that the non-sensitive portions of the Maree Commission’s report should also be suppressed.

Not a word out of him.

Now there is silence.

It is available.

If it is available, will the hon the Minister mark on that report what he regards as sensitive and agree that the rest can be made public?

The people who must decide, have the report available to them.

But we cannot refer to it. [Interjections.] How does one debate something when one is not allowed to quote from it? I mean, really, with great respect to the hon the Minister, he has had lots of time. He has been sitting on this report not for days or weeks or months, but for a long time, and he will not say which portions of the report are sensitive or not because he wants to keep back the whole of it.

I shall tell hon members why: Because that report proves beyond doubt the incompetence with which this matter has been handled. That is why it is being suppressed. There is no other reason whatsoever. That is the truth of it. [Interjections.] What is happening now is that the hon the Minister is preventing the public from judging on all the facts relating to this matter as to whether the charge of incompetence which I make is a valid one or not. However, those of us who have read the report know that that is a fact. On the basis of what is public knowledge and what can be made available, I think I should be able to demonstrate, at least to a degree, the utter incompetence with which this matter has been handled.

I want to stress that neither the hon the Minister of Trade and Industry nor the hon the Minister of Finance who came to that committee—it was the one occasion on which he honoured us with his presence—nor any member of the committee has suggested that there are any questions of defence or national security involved. All that is involved is the business interests of Iscor—nothing more and nothing less. That is in fact the reality which is in question here.

Another difficulty that arises is that the way in which the committee is working, the pressure under which it is working and the pressure under which the parliamentary staff is working, makes it actually impossible to have the evidence published so that the whole of Parliament can have it available to it and so that it can be made available to the public. It is only available to members of the standing committee who in fact can participate in the debate. I want to suggest that there is actually no rush to get this provision through. When one looks at this provision one sees that the agreement was actually concluded without the authority of Parliament as long ago as 1 October 1984. So, whether in fact there is some magic in getting it ratified retrospectively with an NP majority today, I do not know, although it does not make any difference. The reality is that it was already done in October 1984. Therefore, what we are being asked to do today is to ratify something that was already done in 1984. The question of the availability of the evidence and the publication thereof could very easily have been attended to, and we could then have debated this whole matter from which the public would have been able to learn the full circumstances surrounding this matter.

Let us look at some of the aspects surrounding this particular matter because some fascinating things have been said about this matter by people who have had something to do with it on the part of the Government. I should like to quote here from the Hansard of the then Minister of Transport, Mr Louwrens Muller of 25 September 1974, col 372930. He says this:

I should like hon members to note this figure:

And then he goes on to talk about the St Croix scheme.

I must say, Sir, that these words of the former Minister are really quite remarkable. When we look at the history of this matter—as I shall demonstrate in a moment—we realize that to suggest that the matter was viable or, in fact, for anybody to have made such a statement to Parliament—we must remember that this is a Government Minister speaking; there is collective Cabinet responsibility, and the same political party is still in power—in the light of the content of the Maree Commission report and the evidence given to the standing committee, makes absolute nonsense of what a Minister tells Parliament—absolute nonsense!

Also at that time in Parliament there was a very erudite gentlemen by the name of Mr I F A de Villiers who also contributed towards this debate. There was at that stage another report that Parliament had not been able to see and that was the Straszacker report. Parliament had not been able to see that report either. Mr De Villiers takes up this matter with the Minister in language which is perhaps more picturesque than mine. In col 3750 of Hansard, referring to the Sishen-Saldanha scheme, Mr De Villiers has the following to say:

It would appear to me as though the hon the Minister of Trade and Industry is following in the footsteps of this former Minister of Transport in leading us on to this “Alice in Blunderland” situation.

Mr De Villiers goes on to say (col 3751):

We are accustomed, Sir, to that kind of activity in this House.

Mr De Villiers then proceeded to challenge the Minister to produce the report of the Straszacker Commission, and he says the following:

What have we actually got? Interest payments of R50 million per annum? No, interest payments that are actually more than double that amount, namely R103 million per annum. Not only that; we are going to write it off! Let us also look at the figures of what the project actually cost. The original cost was R460 million. It then went up to R480 million. In 1977 it was R776 million, and the latest available figure puts the cost at R1 147 million. Nobody could have been more of a forecaster of the inaccuracy of the Government’s projections than the erudite Mr De Villiers whom we had sitting in these benches in those days in order to highlight what was taking place. That is how the cost escalated.

What is even more important is this contract of 17 million tons of ore a year. When the project was originally approved by the Government in 1971 a condition—and a sensible one at that—was laid down, namely that the project should only be proceeded with if there were long-term contracts. It would have been right if that had been done, but the reality is that it was not done. In 1973 Iscor demanded that it should own and run the railway line or else it would not go on with the project. Eventually Iscor decided that it did not want the railway line and it was then transferred back to the SATS and we had legislation before us to accomplish that. If those contracts for the export of 17 million tons of ore per annum had been concluded before the project was embarked upon and if they had been long-term contracts, we would not be in this mess. However, the truth is that it was not done and as a result of that we are now told that this project will be viable if there are exports of between 10 and 12 million tons a year. We have had more than 10 and 12 million tons exported a year but the project has still not been viable. The viability of this project over the long term is, therefore, something which can be very seriously questioned.

I want to ask a number of simple questions. When we look at the evidence with regard to the quality of the ore that is being mined, certain questions arise. There are certain limitations in regard to the quality of the ore which affect its marketability because only a limited amount can be sold in the world market. The cost of production is another factor which is material in relation to this. Another factor is the cost of transport which has to take into account the amortization of the cost of the railway line. When it comes to markets and the competitiveness of the ore in those markets, what is happening is that inside South Africa the attitude is adopted that one has to relate the price at which one sells to the cost of the article, whereas in international markets it is not the cost that is at issue but the competitive price structure.

Therefore, when we enter the market outside South Africa and there is not the factor present of this Government with its cost philosophy, we have to deal with prices on an international, competitive basis. In this regard it is quite obvious from the evidence that has been given that this project is viable only if two sets of circumstances obtain, neither of which we would like to see in South Africa. Firstly, it is viable only if there is a high rate of inflation in South Africa in relation to the rate of inflation our trading partners are experiencing. That is according to the evidence that was given. Therefore, while the Minister of Finance should be working to bring down the rate of inflation in relation to our trading partners, to make this project viable we actually have to have a high rate of inflation in relation to our trading partners. How does one reconcile these two factors? Secondly, according to the evidence given, this project is viable only if the value of the rand is low. At the time of the original calculations the rand was valued at 80 cents. Now it is valued at 50 cents. However, if the rand appreciates, the whole viability of this project is brought into question. The viability of this project is therefore dependent on two things we do not like in South Africa, viz high inflation in relation to our trading partners and a low value of the rand. That is the position.

When dealing with this, we have to take into account not only the price structure internationally, but also the competition that exists internationally. At the moment there is a surplus of iron ore in world markets. About that there is no question. In addition to that, there are major projects coming onstream, and particularly the Caracas project, which are going to affect that market even more. It is also argued that some countries would like to see us in the market so that there will be greater competition. Of course they would, because that gives them a greater bargaining factor as buyers. The question is, however, whether we should play a role in the market to assist other people to buy ore at a lower price. Those are questions which I think need to be answered pertinently before a judgement is made in regard to this issue. Not only must we deal with the past and the hopeless mess that was made of this project, but we must also ask ourselves whether in fact this is a viable project for the future. To my mind a key issue is that we are told that this project will be viable if, as I have said, 10 to 12 million tons is exported per year, while in fact it has not been viable when exports exceeded that tonnage.

It is interesting that Iscor itself undertook an investigation. I do not want to refer to the results of Iscor’s investigation, because I do not have the full report and because those portions of the evidence relating to this matter have been marked as being of a sensitive nature. What I can say, however, is that Iscor itself decided that this project should be closed down. Then there was the Maree Commission’s report in which it was recommended that the project should be privatized. Now we have the recommendation which amounts to the Government saying: “No, do not privatize, do not close down: Go ahead.”

Let us look at why this has taken place. Firstly, there are socio-economic reasons why in fact this project should be proceeded with. I must say that I am impressed with the socio-economic reasons, because there are some 3 000 people involved in this project as well as their families and the surrounding structure on which others depend for their living. In that regard one is concerned that those people should not be deprived of their livelihood and their existence. If it means, as it did in the case of the O’okiep company, that we have to put money in in order to keep the project going for socio-economic reasons, one is in favour of that, provided that it is done on the correct basis, a basis with reasonable prospects for the future.

Secondly we should also ask who should be paying for it because who is going to get the benefit and who is going to reap the profit in the long run? The issue of the socioeconomic aspect is one with which we shall have to deal when we look at the viability of the project because the project may not be viable from a purely economic point of view, yet for socio-economic reasons the Government may decide to continue with it. I accept that argument and I do not quarrel with it even though I would imagine that with the kind of free enterprise philosophy which the hon the Minister periodically advances he should be arguing against me on this point. However, I accept that as a reality.

The question arises who should actually pay for this loss. Should it be the taxpayer who pays for it or should it come out of the SATS or out of Iscor? One of the fascinating things which I find here is that when the hon the Minister of Trade and Industry—I must concede that this is one of the portions which he did not ask to be deleted and therefore I may quote it—was asked what was going to happen in relation to this, he replied:

[Interjections.] I then asked: “Is it not something like a monopolistic situation?” His reply reads:

A further question to the hon the Minister reads:

The hon the Minister replied:

R70 million.

On that occasion the hon the Minister said R60 million, and now he says R70 million, but I am not arguing. The principle remains the same. There are two fundamentals which are involved here. The first, in so far as the argument is concerned that this should be financed through the price of steel, I think is a most remarkable argument because I would imagine that in a so-called free enterprise economy of which the hon the Minister boasts, one does not take one’s losses on an iron ore mine of which one has made a mess and, because one has a monopolistic position and a Government which controls Iscor and fixes the prices, then increase the price of steel to pay for one’s incompetence. That is not the way in which a free enterprise system works.

The second point—this is where I put the challenge to the hon the Minister—is that surely not only the surplus on the operation of this mine but also the profits of Iscor should be used in order to pay for the mistakes which have been made. Why should the taxpayer have to pay? The profits should be used for that purpose. That is the submission we make here today and that is why we cannot accept that this should be the basis on which it should be done. [Time expired.]

Mr Speaker, the House has become accustomed to the hon member for Yeoville and the rather extravagant language which he uses from time to time. At times he is very contradictory. He said earlier today when he started that the result of the State taking over the capital responsibility for this railway line would be that the State could lose R103 million in interest. Then he said that was not peanuts in anybody’s language. Earlier this session, however, when the hon member referred to the allocation of R100 million by the hon the Minister of Finance for the creation of jobs, he said that was a drop in the ocean.

You are proving my point.

Where the State is so restructuring the capital cost of the Sishen/Saldanha railway fine in order to ensure that it will not have to be closed down whereby 3 000 people’s jobs will be lost, this amount of money which the Government will now carry is not peanuts in anybody’s language. However, the R100 million which the hon the Minister of Finance adds to his Budget figure to create jobs is regarded by the hon member as just a drop in the ocean. I think it is clear that at times the hon member uses rather extravagant language. It was also he who, during the debate on the hon the Minister of the Budget’s Vote called for more State expenditure on housing, for education, health and welfare and so on. When the hon the Minister of the Budget asked him: “Who do you think I am? Do you think I am Father Christmas?”, he replied—and I remember the hon member’s words: “It may be strange, coming from me who is a Jew, but I do believe in Father Christmas.” It is clear that one moment the hon member for Yeoville wants the State to be Father Christmas and the next moment he wants the State to take a totally different tack.

The hon member also mentioned the Maree Report. I agree with him that the Standing Committee on Finance has been under tremendous pressure the past few weeks. I am glad the hon the Minister of Finance is here today and I am going to repeat what I said yesterday. I hope he will organize his financial Bills in such a way during this recess that the committee can handle these Bills early in the session and not have to handle them at the end of the session along with all the other tax Bills with which we have to deal. The hon member for Yeoville is correct in saying that that committee is under tremendous pressure at this time.

I saw the so-called censored draft of the evidence of the standing committee on this matter and there were red lines alongside much of it. However, I want to put it to the hon member for Yeoville that a lot of that evidence was so confused because not only were the members of the committee not quite clear on certain aspects of the rates, tariffs etcetera, but also some of the officials from the department who were giving evidence. Therefore, to have left any of that evidence in the report, would have confused any future reader of the report. When I went through it, I thought it best to remove the lot, and we then received just one sheet of foolscap which clarified the whole issue. If only we could have replaced possibly 15 pages of discussion in the committee with that, it would have resolved the whole matter.

The hon member went on to talk about the viability of the project. Certainly, 10 or more years ago, with circumstances like the rate of exchange being what they were, 17 million tons probably was the break-even point for this project to be viable. However, today with the rand being worth only 50 US cents, one can come down to 10 million tons. Therefore, I agree with the hon member that the viability of this project is going to depend upon the rand exchange rate with other countries but I want to put it to him that this applies to almost any business in the export field today.

Mr Speaker, may I ask the hon member for Amanzimtoti whether he remembers that he actually supported Mr De Villiers in the attitude he adopted to Sishen/Saldanha in the days when he was in the United Party?

I am going to another statement by the expert to which the hon member referred and which relates to what happened at that time. The hon member can quote people who are not inexperienced, as he says, like Mr I F A de Villiers. That hon member quoted what he had said in 1974.I want to quote what he said on 30 April 1976 when we debated making the railway line a multipurpose one. He said (Hansard: Assembly, vol 62, col 5892):

That was what that experienced and highly qualified hon member said at that time. [Interjections.] We can quote what people said then and now but I want to put it to the hon member for Yeoville that we have to look at this matter for what it is today. The hon member said that Iscor should pay for this loss out of its profits. Iscor is a State-owned corporation. Does he now want Iscor as a whole to become rather shaky financially?

However, rather than refer in more detail to the hon member for Yeoville’s speech, I should like to make my own contribution to this debate. I believe this Bill should be seen in perspective. In the 1970’s, before the Opec oil prices became applicable, great emphasis was placed on expanding the infrastructure of South Africa and exploiting more of our natural resources such as coal and iron ore. It was commonly debated and written about at that time that we should exploit these assets in order to achieve the economic growth which South Africa required. There was also pressure on the Government—and I have just quoted Mr De Villiers on this point—to develop the more remote parts of South Africa, and one way to develop a remote area is to put a railway line through it.

The State therefore decided on two major infrastructural projects. The one was the Sishen-Saldanha railway line plus the Saldanha harbour and the other one was the Vryheid-Richards Bay railway line plus the Richards Bay harbour. Both of these projects were designed to exploit natural resources in South Africa. In the Cape it was iron ore and in Natal it was coal. It was practically unanimously agreed in all quarters at that time that it was in the long-term interests of South Africa that those projects should continue.

I recall—even though it was that far back—reading in the Press that it was then estimated that the revenue and foreign exchange which South Africa would get from both coal and iron ore exports would eventually equal what we received for gold at that time.

There was certainly a difference of opinion then, as there is now, in regard to these projects, especially in regard to Sishen-Saldanha. There were those people who believed that this railway line should have been built and operated by the SA Railways, and there were those who said that Iscor alone should build and operate it. In retrospect, I think we must agree that those who advocated that that railway line should have been built and operated by the SA Railways, now the SATS, and that it should have been a multipurpose railway line have been proven to be correct. Those who originated the scheme were proved to be wrong in that particular regard.

However, there were reasons at that time why the Government decided to have Iscor develop that scheme. I quote from Hansard, 30 April 1976, col 5815.I do not intend to go into great detail but the then Minister of Economic Affairs said: “The additional traffic”—he was referring to traffic other than iron ore from Sishen that could have been on that line—“must be …sufficient …to justify the additional expenditure”. The Minister then stated that there was at that early stage no guarantee that there would be that increased additional traffic.

The second requirement was that that additional traffic had to fit in with Iscor’s movements of large tonnages requiring specialized trucks etc. Thirdly, Iscor had accepted the responsibility of this huge interest obligation and it was burdened with it. The question was how other users would fit into the scheme.

Furthermore, in Hansard, col 5831 of the same year, the Minister of Economic Affairs clearly explained that it would have cost far more to build the railway line if it had been built at that time as a multipurpose railway line for other users as well. There were therefore acceptable reasons at that time why that first decision was taken.

As the hon member for Yeoville has said, it was first estimated that Iscor would and planned to export some 17 million tons of ore via this railway line. At that time it was estimated that other users would supply about 1,5 million tons of traffic and at one time they said this could grow to 16 million tons of traffic. However, I submit that this is all history now.

Before the line was completed a Bill came before this House in 1976 to make it a multipurpose railway line. Most hon members were in agreement that this should be done. One only has to study the volume of Hansard from which I have quoted very briefly to see that everybody was in agreement with that particulr development

I quote from Hansard, 1976, col 5817, where Mr Van Hoogstraten, a member of the Official Opposition at the time, said on 30 April: “I rise to give this Bill our enthusiastic support.” In col 5829 Mr I F A de Villiers said: “We support this Bill for reasons which go right back to 1937.” I have already quoted that.

When one reads that debate one sees that the common thought was that the fine should be opened for all users.

When was that?

In 1976. It had not yet been handed over to the SATS. Even at that stage, there were those—especially those in Opposition—who said that the railway line should be operated by the then South African Railways. There was also the submission that the tariffs should be standard for all users of the railway line.

The story goes on into the next year, 1977, when the then Minister of Transport brought another Bill before the House. The object of this Bill was to allow the then SA Railways to purchase the railway line. If the hon member for Port Elizabeth Central is interested, he need only look at the Hansard of that debate (24 March 1977, col 4290). At that time the hon member for Durban Point said “it was our idea” in the first place that it should be accepted. Gordon Waddell, the then member for Parktown if I remember correctly—he was a member of the PFP at that time—supported it. He thought it was a good idea. When one reads that debate, one can see how hon members accepted the fact that the SATS should take this over.

There was, however, one hon member of the opposition, namely Mr Hickman, who talked about the possibility of future losses in the operation of this railway line (Hansard, 24 March 1977, col 4300). It may also be interesting to hon members to read col 4304 of that particular debate. There the Minister said that these losses would be the responsibility of Iscor. What, however, was the net result at that time? The SATS bought the railway line for R450 million. It spent a further R200 million on electrifying and improving the line for other users. May I say, however, that despite the promises from the private sector that they would use this particular railway line, the anticipated traffic did not materialize over the years because of the change in economic circumstances throughout the world since 1974-75.

The line actually started operating during July 1976, and the SATS took it over in April 1977. Since those days, however, major economic changes have taken place in South Africa. The oil and energy crisis had a major effect on world industry and on the world economy. There was a fuel-saving programme that stretched across the world and the result of this was that motor manufacturers, equipment manufacturers, indeed any manufacturer of fuel-operated machinery, changed their designs. They made their vehicles fighter by for instance using more plastics. As a result of this, there was a decrease in the demand for steel and thus for iron ore.

Then we had the world recession with the general fall-off in demand. There was the fall-off by the traditional users of iron ore, because many other nations—at the same time that South Africa developed this—were developing their own steel production plants in their own countries. They were also developing their own ore deposits. Australia was developing ore deposits. Ore deposits were being developed in South America; and in the Far East, in Taiwan and particularly in Japan steel production increased tremendously; so much so that there is a saying today that the smokestack industries of the world have switched from the West to the East. As a result of this, there was a fall-off in demand for South African ore.

This was not a phenomenon that affected South Africa only. It affected many other nations as well. Indeed, when one reads the Maree report one sees on page 16 the differences over a period of time in the quantities of iron ore exports and steel production throughout the world.

I submit that these changing circumstances were largely to blame for the financial circumstances in which Iscor found itself. Over a period, as the hon member for Yeoville said, the losses, mainly the interest burden, have amounted to in excess of R100 million. This loss could just not be carried by exports to foreign countries. What this Bill is now saying is that these losses are being capitalized and that the State is going to take over both the railway line, the initial construction costs and the interest costs that have built up and that have now been capitalized to an amount of R814,3 million.

May I say in this regard that the Press reports one reads on this matter are not entirely correct. In fact they are rather emotional and rather sensational. One reads editorials which say: Given the sort of track record, it is hardly surprising that Iscor has shown losses of R814,3 million. I submit to the Press that these are not losses; this was not taking over a loss. The taxpayers of South Africa are not being asked to pay Iscor for its losses. What is happening is that the State is taking over the ownership of a railway line which cost R650 million to build in the first place. I believe in the public’s right to know, but I also believe that the public has the right to know the correct facts of the situation and should not be subjected to this type of sensational reporting.

With this Bill there is a general restructuring of the capital base of this asset so that it is allowed to continue operation, and that is most important. We have to keep this railway line in operation in order to keep the iron ore mines operating at Sishen. We have to keep Saldanha harbour in operation. The hon member for Yeoville said that there were 3 000 people directly employed in this project. I submit that there is at least another 3 000 people living in Saldanha who are dependent on the income earned by those 3 000 railway employees, people such as shopkeepers, etc. In the committee I asked how many people’s livelihood depended on this railway line, and it was estimated that it was something of the order of 15 000 people.

At the same time we have to keep this line operating in order to earn something like R300 million in foreign exchange. We also have to keep it operating because economic circumstances may change in the future. We have seen how the dollar-rand exchange rate has made this project more viable. Therefore we must keep it operating because, who knows, in the future this could become a major profit-earner for the State and for South Africa.

What has happened is that the State has taken over the responsibility of the capital ownership of this railway line. This means that Iscor mines and markets are kept open and that the ore will continue to be exported. The SATS will transport the ore to the harbour and will recover its actual operating costs, also from loading the ore onto ships. The ore will be sold overseas and the SATS, as I said, will be paid its operating costs. The surplus from the sale of the ore, after the ore mine costs and the transport costs have been paid, will then be divided two ways. Iscor will get 20% of that surplus and the State will get 80% of it. For the current year, 1985-86 it is estimated that the surplus, after mining costs and after the SATS has been paid for its transport costs, will be R138 million, which means that Iscor’s share of 20% will be R27,6 million. The State’s share of 80% will be R110,4 million. It is estimated that income from other users, after the costs of the SATS have been deducted, will result in a further R17,2 million going to the State. This means that the total income to the State in the current year, after Iscor has been paid out and after the SATS has been paid out, will be R127,6 million. This is about 15% on the R814 million which it has just taken over. This R127,6 million will be used to redeem the State’s investment in this particular project. So, even if one charged the rate of interest which is currently being charged on this loan which the State has taken over—which averages 12,65% and amounts to R103 million—it would still mean that, after the State had paid that interest, there would still be R24,6 million to redeem the investment. I believe that this is a good investment in the light of the jobs at stake and in the light of the foreign exchange at stake, the assets, etc. I also believe that we have to look at the role the State has played in the economic development of South Africa. We have to look not only at Iscor, but also at the SATS, Sasol, Escom, Armscor and all these major industrial projects in South Africa which were initiated by the State. Can any hon member in the PFP say to me that these developments were not wise developments and that we should do without these developments? I believe that what is happening now is that the State, which after all owns both Iscor and the SATS has restructured its capital so as to keep this project viable for the time being until circumstances change for the better.

This Government does not only have its State corporations to promote economic and industrial growth. We have many people from the private sector coming to the State asking for certain incentives. We have export promotion incentives, tax incentives to the private sector for decentralization reasons, import replacement incentives etc. Most of these which are paid out of taxpayers’ pockets are used to develop the economy of South Africa. What I am trying to say is that in the past the State, regardless of the Government in power at the time, has used its power to build South Africa economically. This is especially the case of the SATS. One needs only look at the financing of the SATS which one can find in the Auditor-General’s report. One finds in its capital structure—its so-called share capital which are Treasury loans which have been converted into what one could call permanent capital from time to time—that the State’s shareholding as at 31 March 1984 was R4 208 million. I am talking about the SATS. The loan capital of the SATS was R4 428 million. What I am trying to indicate is that Iscor is a State-owned corporation. In the private sector today, with the economic circumstances being what they are, there is a lot of capital restructuring going on in South Africa. There are private companies where a person may have interests in two or three private companies and where one, because of the debt burden or the heavy interest burden on loans is converting loan capital into share capital by pumping its own money into the company in order to keep that particular operation viable. That is all the State is doing here at the present time.

I want to ask the Opposition what their alternative to this is. Are they asking the State to close down the railway line and the harbour, or are they asking that Iscor should export iron ore at a loss? Are they asking that Iscor should carry this burden, and in so doing, as I have already mentioned, put at risk the capital structure of Iscor itself? Are they asking that Iscor should raise the local price of steel as to then add further fuel to the fires of inflation in South Africa? I ask those hon members: Where are their bleeding hearts now? Are they interested in the people in the Western Cape? Are they interested in all those people who depend upon that railway line? What is it that they really want?

I have pleasure in supporting this Bill.

Mr Speaker, the hon member for Amanzimtoti will no doubt pardon me for not reacting to his speech. My colleague, the hon member for Kuruman, will discuss those two clauses dealing with the Sishen/Saldanha railway line.

We have before us a Bill which is one of a series of omnibus financial laws, and generally speaking this Bill has only three clauses which are in fact at issue. The others are only really rectifications and additions. However, I want to discuss clause 3.

The main point of clause 3 is that the stock issued to the people who …

Mr Speaker, on a point of order: I do not think that clause 3 is at issue now.

Mr Speaker, I am speaking about the previous clause 3.

[Inaudible.]

I want to refer now to the Second Reading speech by the hon the Minister in which he said …

[Inaudible.]

Mr Speaker, on a point of order: The clause 3 to which the hon member is referring is not in the Bill which we are now discussing.

The hon member for Sunnyside must reconsider his position.

Mr Speaker, in the Bill which appeared before the Standing Committee on Finance …

Order! The hon member for Sunnyside must reconsider his position because that clause 3 is not in the Bill under discussion.

Then, Mr Speaker, I just want to point out that when a Bill comes before us and is referred to a standing committee—in this case the Bill was referred to the Standing Committee on Finance—and that committee rejects or amends any clause, in terms of the new dispensation we do not have a Committee Stage in which one can amend it anew unless the Minister and the Government consent to something of the kind being done.

Mr Speaker, may I address you on the point of order?

No, I understand the hon member’s point of order and the hon member for Sunnyside must abide by my ruling. If the hon member had perhaps prepared himself to discuss clause 3 which no longer exists then it is perhaps better for him to withdraw from the debate at this stage unless, of course, he wants to discuss something else.

Then, Mr Speaker, at this stage I just want to point out that according to this Second Reading speech the Minister will rectify the matter later and therefore I shall not discuss the matter further. However I think it would be as well if I were to point out at this stage that the way in which the new system works is absolutely unsatisfactory. I shall withhold my further comment until later.

I just want to say to the hon member for Sunnyside that he may have an opportunity to discuss what he wanted to discuss now, during the Committee Stage.

Mr Speaker, I am sorry that the hon member for Sunnyside could not proceed with his speech but he obviously prepared himself in a particular direction. [Interjections.] Before I continue with my address, I should just like to make the comment that this roof leaks very, very badly indeed, and if it gets worse throughout the Chamber, may I suggest that we are presented with umbrellas so that we do not get too wet while we are making our speeches?

There are enough “Nats” in this Chamber!

The other point I want to make, is that if we are going to have rain coming in, it should be on the Nat benches because that would be more appropriate. [Interjections.]

The hon member for Yeoville, I believe, made a very good address in respect of the background to the Sishen/Saldanha operation. However, I regret—and I shall come to it in due course—that I cannot quite agree with his conclusions stemming from that. The points he made as to whether it should have come into being or not, and the way in which he expounded his case, was a first class exposition.

As indicated by other hon members, this Bill covers a variety of matters relating to the State Revenue Fund. For the most part we find the Bill acceptable. It does not need particular comment as it covers the updating of the names of accounts and allows for the other Houses and the redesignation of offices and matters consequent thereto. Clause 11 makes a common sense suggestion regarding the approach to audit in various departments in that test audits be legalized—as in fact I believe is the case now, with some doubtful legality. I believe this to be quite realistic because, with the numbers of accounts that have to be audited by the staff available, it would appear to be an utter impossibility to do them in any sort of meaningful time. There seemed to be some doubt as to whether even if one wanted to pay for the staff, one could get the number of staff readily. I therefore feel that this is a practical proposition.

The clauses that particularly concern me are also those that concern other members, namely clauses 1 and 2. I do not want to go over the whole historical background of the Sishen/Saldanha project because that has been more than adequately done by the hon member for Yeoville. As I see it, the problem before us is that we are faced with the situation of what to do with this railway fine. According to some people, the answer is to close the project down and to call it a day. To me that would be utterly ridiculous. We are faced with the situation where there is a certain indebtedness to the tune of about R814 million.

As I have also mentioned in the standing committee, whether the money is owed by Iscor, by SATS or the State Revenue Fund, it does not materially make very much difference, because in the end it is the public who owes the money and is getting the railway lines or harbour services or whatever it may be. This is the crunch. If one tries to equate this with a business situation, there is no doubt that a business that is in the position in which Iscor finds itself will go bankrupt and fold and that will be the end of the story. However, I look at the situation purely and simply from the angle of its being necessary to keep the project going.

I go along fully with the hon member for Yeoville and do not question it at all when he says that there was obviously carelessness in the original process of getting the Sishen/ Saldanha project under way, that there were promises given by various entrepreneurs outside the Government sector which have not materialized and, quite frankly that there seems to have been considerable naivety in the original situation. It is now a question of what is the best thing to do to look after the funds of the people of South Africa.

There is no way we in this party can support any concept of closing this project down. There are a number of reasons why it would be undesirable from our point of view. The first is the obvious socio-economic one. Although there is a relatively small number of employees, about 3 000, there are approximately 13 000 to 14 000 people whose homes and livelihood would be seriously adversely affected. There are no other likely job opportunities which would absorb those people within a radius, I am told, of hundreds of kilometres. How is one going to provide for that situation? These people are human beings who have a livelihood, women and children to consider. As far as I am concerned, I believe that before a project is closed down there must be a very good reason. It might be said that it would be cheaper to close the project down and give a subsidy to keep the mine going, but what is one going to do with the product after it has been mined? One still has to get it away. One cannot keep the mine going unless one keeps the line going as well.

There is a second point that I believe should be considered, namely that the Sishen/Saldanha project exports a considerable amount of iron ore. Admittedly the prices are not what they used to be. Admittedly it is not the project one hoped it would be—certainly, it is not the project the ambitious people who produced the scheme in the first place thought it would be. Nonetheless, it does still provide a considerable amount of foreign exchange. There are surpluses on the whole project which are used to pay some of the interest that is due. In the last year for which I believe I saw figures there was in fact even a small surplus above and beyond that to pay off some of the capital costs. As we are faced with something that is already there and not with a potentiality, the day may, furthermore, well come when such a project will again be a valuable asset to South Africa.

As the hon member for Amanzimtoti has indicated, there is no doubt about it that constructing a railway line through a wide open space and a largely underdeveloped part of the country does have a great deal to do with the opening up and developing of that part of the country. Although the Sishen-Saldanha project on hindsight was absolute nonsense to start with as far as I am concerned—I say that with a certain cynicism because hindsight is always pretty accurate—I do believe that at the time there were clear warnings given that perhaps that scheme should not have been proceeded with.

I think the hon member for Amanzimtoti made the sort of speech he would have made had he still been in these benches, except for one or two minor points. The one is that he referred to it as a good investment under the circumstances. With due respect, Sir, I cannot consider it a good investment even under these circumstances. However, it is an investment we are stuck with and we have to make the best of it. The hon member tried to justify why this was a good investment by referring to other State enterprises and asking whether they were good or bad and whether they were in the interests of the country. I agree with him that many of the previous State enterprises and those that are in operation at the moment were and are good projects. I have no quarrel with that. Some of them are even good business undertakings. However, the hon member must please not attempt to stretch credibility—his by saying it and mine by accepting it—too far by claiming that this is a good project.

Mr Chairman, may I ask the hon member whether he is aware that over the years some R4 200 million which the State has converted to so-called share capital in the SATS is not interestbearing capital as far as the State is concerned?

Mr Chairman, I really cannot see the relevance of that particular question, but I do not wish to have a quarrel with the hon member for Amanzimtoti. I think he is trying to make the best he can of a bad job. In fact, that is what I am trying to do too. At the same time I feel he must not stretch credibility to that extent.

The hon member for Sunnyside endeavoured to raise the issue of clause 3 which has been excluded and therefore his comments were considered to be out of order. I also was largely geared to speaking on the same subject. I would hope that in due course one of my colleagues will be able to speak on this or, when we reach the Committee Stage, we will be able to raise this issue, because we consider it to be of vital significance.

Mr Chairman, the hon member for Umbilo correctly congratulated the hon member for Yeoville on a very good exposition on the whole subject of the Sishen/Saldanha line, but he seemed to think nevertheless that the Government was doing the right thing in continuing. I shall deal with that particular point later in my speech. What he did say was that with the wisdom of hindsight one could see that it was a bad plan.

With respect, I believe there were many people in this House who at that time believed that it was a bad thing. Indeed, it did not need the wisdom of hindsight; it just needed a little wisdom in the first place. It needed some wisdom in 1972, 1973 and 1974 to get it right.

Were you in the Uitenhage riots?

No, I was not in the Uitenhage riots, but perhaps we shall talk a little more about those riots on Thursday.

The hon member for Amanzimtoti said that the hon member for Yeoville had some conflicting views on these matters. I want to say that there is nothing quite as serious as the hon member’s own conflicting views because a few years back he called the SATS a parasite and this year he is praising them to the sky. Furthermore he wanted to know what was wrong with the taxpayer having to bail out Iscor, but when the sugar farmers got into trouble, he said that the sugar farmer had to bite the bullet. In some instances he is in favour of people being paid out and in other instances he is not in favour of them being paid out. I would say that he is just paying his masters in the political coin that they want. [Interjections.]

The hon member for Amanzimtoti quoted a number of things which had been said on this side of the House by Mr Gordon Waddell, the then member for Parktown, and Mr I F A de Villiers, the then member for Constantia, where they welcomed the fact that the SATS were to take over the railway line. There was nothing wrong with that; of course we welcomed it. It was a CloudCuckooland scheme that Iscor themselves should build and run a railway line in the first place. It should never have happened.

In 1974—I quote from Hansard, 1974, col 3753—Mr I F A de Villiers said:

This does not mean that those hon members were not ab initio against this scheme. That this scheme was a mistake was clearly recognized. Mr I F A de Villiers, as the hon member for Yeoville said, at the time called it an “Alice in Blunderland” scheme.

Mr Chairman, may I ask the hon member whether or not he heard me correctly when I quoted Mr De Villiers as saying at that time—it was in 1973:

I am not doubting that that part of the country needed to be developed. I am not doubting that they needed a railway line, but that they needed this line all the way down from Sishen to Saldanha I do not think the then hon member ever said. Of course that area in the Western Cape needed infrastructure, and if it had that infrastructure done on a proper basis by the SATS in the first place and run by the Cape Western Division rather than having a special regional office which costs a lot of money, I think we could then have had a better situation.

What it really went back to in those old days was that we had a case of Coetzee vs Loubser. Coetzee was the General Manager of Iscor and Kobus Loubser was the General Manager of the SATS. In those days they were two youngish men with a great future in front of them as well as behind them. They clashed on this issue. Coetzee wanted to go ahead with this scheme while Loubser said it was going to be a complete and total disaster. They were supported by their respective Ministers. The hon Ben Schoeman was then the Minister of Railways, and he was against this scheme. There was no question in anybody’s mind about the fact that he was against it. The hon S L Muller was then Minister of Economic Affairs. He was responsible for Iscor, and took the side of his man. He was totally in favour of this scheme. The net result of all this was that Mr S L Muller ultimately became Minister of Transport and, as Minister of Transport, he had the input on both ends. Ultimately, the taxpayer of South Africa is suffering as a result of the decisions that were made in those days.

I think the crux of the matter comes down to these long-term contracts. The original report on the Sishen/Saldanha project of May 1972, produced by the South African Iron and Steel Industrial Corporation, Limited—in other words Iscor—which I have here states:

I am now going to quote from the statement by the hon S L Muller on 3 December 1971. The statement reads:

I interrupt the quotation there for a moment to say that if the government of that day had stuck to that decision, the Sishen/Saldanha line would never have been built. [Interjections.] I am not quoting from Hansard; I am quoting from the Sishen/Saldanha project report and, more precisely, I am quoting from a statement which was issued by the hon S L Muller on that occasion. He goes on to say:

Sir, what a nonsensical statement that was at that time! It was the crux of the whole matter. If the long-term contracts had been forthcoming, this scheme would not have been the disaster it became. If they were not forthcoming, the line should not have been built.

When you speak about long-term contracts, how many years do you have in mind?

I believe we are basically looking at ten year contracts in this regard. [Interjections.]

This Government has said, of course, that the whole reason why the scheme has not worked is because of the change in the world economic position. However, here I have clearly quoted from a report dated May 1972 indicating that even at that stage, before the scheme had been proceeded with, there were unfavourable economic world conditions. The hon Minister at the time was aware of that because this was an extract from his own statement.

What do we thus have? We have a clear indication that the Government was aware of the position but that they went ahead regardless. The question one has to ask is: Why? What happened to make the Government change its mind and continue with this whole scheme without having had adequate protection, safeguards and contracts? We can only speculate as to what the reason was. I would love to know. I do not believe the real reason is mentioned in the report but one of the things that concerns me is that so often in the South African situation secrecy provisions are hidden behind in order to protect the Government. I do not know whether this was the case with the Straszacker report way back in the early seventies or whether it is the case with the Maree report today. I believe however, that there is no doubt that secrecy has been invoked by the Government as far as the Straszacker report and the Maree report is concerned.

It must leave us with a big question mark in our minds. It must also leave the tax-paying public, who are after all the people who will be responsible for paying out this money, with a big question mark in their minds as to why the Government changed its mind. Were there any vested interests that were affected which meant that this decision was altered?

This matter has been publicized in the Press recently. As a result I have had a number of representations from various persons in connection with farms that were bought by Iscor in the Sishen-Saldanha area because of this scheme.

I understand that some 15 to 20 farms were purchased at that time and that large sums of money were paid for them. They were not purchased at agricultural land prices but at development land prices. I understand that they were paying of the order of R1 000 per hectare for farms which I think were agriculturally worth perhaps R50 per hectare in those days and are now worth perhaps R120 per hectare. When these farms were purchased at that time, a large sum of money was spent on them, and some were not even connected with each other, but were quite far away from Saldanha. However, they were basically all in that area.

What concerns me is that I understand that those farms are still owned by Iscor today and they have not been developed. They have been let over a period of time to farmers in the area, but the rentals for those farms have escalated so much in the past year that many of the farmers have withdrawn. I understand a number of those farms are now being left idle.

I assume that those farms are shown in Iscor’s balance sheet at the price at which they were purchased. This would be of the order of R1 000 per hectare. It is quite obvious that they are not longer worth that amount of money and they should not be reflected in Iscor’s books at that amount of money. Why should Iscor continue to hold them and is this perhaps included as part of the R814,3 million?

They are up for sale.

I am very pleased to hear that they are up for sale as I was not aware of that. I hope they are being sold at realistic agricultural land values. I welcome the hon the Minister’s announcement in this regard as I think that that definitely has to be done.

There is one more aspect of this matter with which I want to deal, namely the question: What is the alternative? I believe there are more alternatives than those the Maree Commission considered. As far as I can see, they considered only the total closing of the line and continuing with it on a basis which would allow for the continued export of iron ore.

However, way back in the 1970’s there was the alternative of the St Croix scheme. I happened to be quite well aware of it at that stage because a man by the name of Pieter Wilhelmi had iron ore contracts with Japan and he managed to get the finance for building the St Croix scheme at that stage. I happened to sit on a board with him at that time, so I had many conversations with him.

When the St Croix scheme was first proposed in the 1960’s, it would have cost R28 million. By the time the Sishen/Saldanha scheme was ultimately decided on, the St Croix scheme would have cost of the order of R120 million—so it had gone up about four times during that period. However, that amount was still an awful lot less than the disastrous Sishen/Saldanha scheme cost.

The decision went against Port Elizabeth and St Croix at that stage. However, when one reconsiders the whole matter, as we are doing now, and when one considers that the taxpayers of this country will have to forfeit some R100 million in interest per annum for quite a considerable period of time, then one surely has to say that we should allow a discounted cash flow and see if there is not an alternative which, perhaps over a ten-year period, will produce a better return for the South African taxpayers. In the fight of that I believe that one should look at the St Croix scheme again. I think it is more than just iron ore that is involved. I think there are other matters that could be involved as well, for instance coal.

If St Croix were viable are you suggesting we close Saldanha Bay?

I am simply saying that we should look at whether it is going to be to the best advantage of the taxpayers of South Africa to develop the St Croix scheme or to continue with the Sishen/ Saldanha scheme. So, yes, clearly …

So if it is not viable we should close it down?

One has to take the alternatives, am I right? The one alternative means that no more capital need be spent since it has already been spent on the Sishen/Saldanha scheme. The other is going to entail expenditure of a considerable sum of money. There is no doubt about it. However, it is possible that the advantages of the St Croix scheme might be such that they would outweigh the disadvantages of closing the Sishen/Saldanha scheme.

I want to turn now to the subject of coal. At the moment all our coal goes out in bulk through Richards Bay. With the problems in Mozambique, however, a fair amount of coal has been coming down and has been exported on a breakbulk basis from the Port Elizabeth harbour. So would it not be good strategy to have an alternate method of exporting our coal? St Croix could provide that.

Secondly, quite a lot of manganese ore is exported through Port Elizabeth at the moment. It is being exported from the centre of the city, and there is no doubt about the fact that ecologically this causes problems. Anybody who has been to the yacht basin at Port Elizabeth harbour and seen the amount of dust that floats around and covers everything within sight will, I think, appreciate that while Port Elizabeth does not want to lose their exporting of manganese ore, it would be an advantage if this could be done from a point other than in the city centre, for instance St Croix. Obviously iron ore from Sishen could also be exported from that area. In fact, one could even bring other products down and export them through there.

I am therefore not sure whether this Government has adequately considered the alternative. It is quite possible that an investigation such as the one outlined would continue to make the same recommendations that we have in front of us now. I can fully foresee that. However, I also believe that the alternatives have not been looked at adequately, and I believe that they should be.

So because of this enormous expenditure of R814 million of the taxpayers’ money—directly as a result of the blunders of this Government—we in the Official Opposition will be opposing the passage of this Bill.

Mr Speaker, when I asked what had happened to the arm of the hon member for Port Elizabeth Central, they told me he had slipped in Salem Oil. [Interjections.] Now, as I sit here listening to him, I am very concerned that he may fall off the Sishen/Saldanha ore train and hurt his leg.

He bumped his head.

Yes, as someone has just said, perhaps he bumped his head.

We have heard a great deal of history here. Extract after extract of speeches made from 1971 up to the present have been quoted. However, let us get to the crux of the matter. South Africa is rich in basic raw materials. That is our advantage. We are not yet an industrial country. Our exports, if one analyses them, still consist of minerals, processed minerals and agricultural products. In any event, we subsidize many of them. The maize farmers will not agree with me, but now and again we also have to do with maize.

If, then, that is one’s advantage, and if that is how one finances one’s imports, then surely it is correct to develop one’s strategy to develop those resources further and to export them. Surely that is normal. That is how we all thought in 1950 and in 1970, and we shall continue to think so in future. If one accepts that these are our most important export products, then one has to consider how one is going to get that ore out of the ground and refine it. For that one needs capital. This means that all these projects we have tackled over the years are capital intensive. We cannot get away from that. Nowadays it is enormously expensive to develop a new mine, and it has become enormously expensive to build a new railway line.

This brings one to the third point with which the hon members opposite will agree. It is that exports of this kind are extremely sensitive to business cycles. When a recession comes, those prices are the first to fall, and the volume of those products is the first to drop. When one has a capital-intensive industry and the price and volume drop, one suffers losses. That is what we are faced with here. We are experiencing one of the biggest recessions of the post-war years. In many other countries, steel factories have been closed. We, too, could have done this—it has been suggested. However, unlike other countries, we cannot simply close the factories, because our first point is still that the export of minerals is our most important source of revenue in this country. We must think about the long-term benefits. This is what the Kitshoff Committee did at the time. They did not cause such scandals as has been intimated here. I have in mind people like Mr Muller and Mr Coetzee of Iscor, to whom I want to pay tribute today for the idea they cherished at the time. We must not allow the recession to confuse us. We must think of long-term consequences. Circumstances will improve. They are already improving. This project is already no longer bankrupt. It never was bankrupt. However, if one were to believe the statements of hon members opposite and the suggestions of certain newspapers, what we have here is a general bankruptcy. I think that that is damaging. We are not faced with that.

I now wish to turn to the hon member for Yeoville. When he began to talk about purchasing power parity he really gave it an odd twist. I am not sure whether he ever looked up what it meant. I think he knows what it means because he is too intelligent not to know. However, he makes the statement that it is said that the success of this project depends on high inflation. That is one of his points of view. Then, however, he immediately addresses the hon the Minister of Finance, whom he does not like very much some days, and tells him that he, after all, does not advocate a high rate of inflation. After that he said that the success of this project depended on a weakening in the exchange rate, but then he wanted to attack the Government and accordingly said that this Government and this hon Minister of Finance were in fact striving to achieve an improvement in the rate of exchange. He then reached the final conclusion that this project was dependent on totally incorrect assumptions which could cause this country a great deal of harm.

Now let us look at what is really the case. Let us consider inflation and the drop in the exchange rate together. What the purchasing power parity theory really says is that when there is inflation, the rate of exchange has to drop in order to remain competitive. However, if there is no inflation, the exchange rate need not be adjusted. I do not know why the hon member for Yeoville gets involved in such things. After all, he is intelligent enough to put a matter in its correct perspective.

Let us now consider what else is happening here. Surely a restructuring of capital is taking place here. A great deal can still be said one way or another, but what this amounts to is that the marginal cost can now be covered by the marginal revenue. This proves that the project is still economically viable. This is precisely what we find in the evidence before us, viz that the marginal revenue is higher than the marignal cost in this case. I am sorry to have to use economic jargon here, but I think it is necessary because this is a basic point of departure in this instance. The marginal revenue is already higher than the marginal cost, and for that reason this loan can even be repaid.

However, it is now being said that this R814 million must now be recovered immediately from the taxpayer. It is an immediate loss and now the taxpayer is paying for it. There is now talk of how hard hit the poor taxpayer is going to be because those weaklings in the Kitshoff Committee and Iscor did such stupid things, and this Government did not have the common sense to realize what a mess they were faced with and now the taxpayers have to pay for it.

However, this is not so. This amount has not been totally lost. A clause has been inserted into this Bill to the effect that 80% of the surplus of the operating revenue is paid over in order to pay off the loan of R814 million plus interest. If one is pessimistic like the CP, who see no future for the country, I understand that they will believe that we shall never be able to repay this debt of R814 million. We on this side of the House are not so pessimistic, however. We consider that we are already moving into a time of prosperity and we believe, too, that the Western world is gradually recovering from a very deep recession. This does not mean that the responsibility has been taken away from Iscor totally. To an extent it is still there, and Iscor still has to make a contribution, to the extent that surpluses occur.

Now, however, I come to another point, viz the principle of State aid. I gain the impression that the Opposition believes that in this instance the State may not help. The State must now allow Iscor to bear the full loss. Everyone tends to be cautious about saying that this project should be terminated. However, the principle of State aid is doubted in this instance but it is nothing new in our economy for the State to grant aid. We helped the low-grade ore gold mines. In that instance we continued to help when they encountered problems. It is a formula in terms of which they are assisted, and when things go well with them, then they contribute towards State revenue. In recent times we helped the copper mines. There is nothing unusual about the State assisting an enterprise which is hard hit by the recession. However, when the economy flourishes again that body contributes once more. We have achieved great success in that regard in the past. Call to mind, for example, how we struggled with Sasol I at the outset. We had a hard time of it due to those problems, but what has Sasol not meant to us in the long term? Must we write off Cahora Bassa totally, for example? Did the Portuguese make a terribly bad decision? I believe that Cahora Bassa may still make a considerable contribution to cheap energy in South Africa one day.

I now turn to a third point, viz the issue of infrastructure. Reference has again been made to the ridiculous decision by Iskor which began to build and run a railway. However, there is nothing strange about that, because in many of the development projects in Africa and South America one often finds that it is a total project including the mine, a railway line and a harbour. I do not think Iscor thought that they were totally crazy, however. They thought that if they operated the railway line themselves, they could perhaps do so more cheaply. We cannot take that amiss of them. In the mean time other people also wanted to transport ore and the project was transferred to the SATS.

Venomous statements are being made in this regard, but let us take a brief look at the Richards Bay development. My colleague for Amanzimtoti has just mentioned it, but I want to take the matter a little further. That railway line between Vryheid and Richards Bay, as the coal export harbour, would not have been such a great success either had we not had an oil crisis, because when the oil crisis occurred, the demand for coal increased tremendously. It has made it necessary for us to keep increasing the capacity of Richards Bay harbour. This is a success story. One cannot always achieve success, but this project is also going to be a success in the long term because the Northern Cape has the necessary water, due to the Orange River schemes that are being built, and Escom provides power there. Moreover, we developed the only deep-sea harbour on the West Coast there. In fact, it is so good that I thought my colleague, the hon member for Sunnyside, was going to get up here and make the offer that the CP would buy that whole area for their new homeland for Whites. Unfortunately he was ruled out of order and therefore did not have a chance to make that offer to us.

We must also look at the future. There is a new deep-sea harbour on the West Coast, but if we extend the railway line to Upington one day we shall be reducing the transportation distance between the north—the economic heart of South Africa—and the West Coast. I do not think the hon members of the Opposition appreciate the strategic importance that the harbour of Saldanha may have for us in future, or the possibilities this railway line offers us in future. The people who began these projects are in my opinion entrepreneurs in South African economic history and I wholeheartedly support this legislation.

Mr Chairman, I want to congratulate the hon member for Waterkloof on the very neat contribution he made here this afternoon. It was really a pleasure to listen to a competent specialist stating his case in this field. The hon member’s thinking was positive, and he said things would improve and that in considering this Bill and this project, we should consider the long term. I agree wholeheartedly with everything he said, except that I think that the railway fine from Upington downwards can be linked up with the existing Sishen/Saldanha fine to achieve exactly what the hon member has in mind.

I can also accept that the hon member for Port Elizabeth Central made a plea here for this project to be abandoned and for consideration to be given to an alternative, viz St Croix. The hon member made this plea purely from the point of view of regional interest. At the time, when we had to consider the Sishen/Saldanha-project, the St Croix project was also considered, and the hon member himself said today that at that stage the project would have cost R120 million. If we have to consider what it will cost today I wonder whether his alternative would not also cost more than R800 million, while the Sishen/Saldanha line is available to take the iron ore from Sishen to a west coast harbour where it is exported and earns foreign exchange for South Africa.

Now you are speaking for your area.

Yes. I am adopting this standpoint inter alia because I am also speaking with regional interest in mind. At the time, when St Croix and the Sishen/Saldanha railway line were being considered, the guarantee was given that a certain quantity of iron ore would be exported through the Port Elizabeth harbour. At present the Sishen/Kimberley railway line carries the ore which goes to Newcastle, Vanderbijlpark and Pretoria, and in 1972 this railway line was already the most remunerative railway line in South Africa and has already reached its maximum carrying capacity.

I am grateful that the government has decided that the Sishen/Saldanha project will be proceeded with. Early in the 70’s, after due consideration, and taking the then prevailing economic situation into account, the government decided that the Sishen/Saldanha railway line would be built as well as the harbour at Saldanha bay. The railway line was to take mainly iron ore and manganese to Saldanha, from where it would be exported. At that stage plans were also drawn up for the building of a semis factory at either Sishen or Saldanha Bay. The decision to build the Sishen/Saldanha railway line was taken in the best interest of South Africa. At the time, when it had to be decided whether ore would be exported via a new harbour at Saldanha Bay or via St Croix I was a determined champion of the building of the Sishen/Saldanha railway line.

I still think today that it was a decision which at that stage was taken in the best interests of South Africa. At the time, when it was decided that Iscor would build and operate the railway line, my personal opinion was that that was the wrong decision. My standpoint was that the SATS should build and operate the railway line because they were the experts in that field. My standpoint was, and I stated it in my maiden speech 15 years ago, that the Sishen/Saldanha railway line would be built and extended from Sishen through Kuruman to Pudimoe and that the railway line should be operated by the SATS. In that way a railway line from the PWV area through the mineral-rich Northern and North-Western Cape to a new West Coast harbour would become a practical reality, Botswana and the then Rhodesia would have been provided with a shorter route to a South African harbour at Saldanha Bay, South West Africa would have been put on a short cut to the Rand and the Northern and North-Western Cape would have been given a short cut to the PWV area. Iscor built the railway fine. It is a single-purpose railway line without stations and without links with any other railway system.

The mineral-rich North-Western Cape, which largely comprises Namaqualand, acquired no railway link. It was an incorrect decision by the then government, but it yielded to the obstinate pressure exerted by Iscor at that stage. In the meantime the government decided that the Sishen-Kuruman-Pudimoe-railway line should be built. I am grateful that the hon the Minister of Transport Affairs is present today, because it was in his period in office that this important decision was taken and I want to thank him for that. It was decided that the construction of this railway line would be started in 1985, but unfortunately due to poor economic conditions, the project has been shelved. This was an outstanding decision which would have given rise to the creation of a vital line of development from a West Coast harbour to a PWV area. It is a line of development which would create imaginative opportunities for development along the line, to the benefit of the whole of South Africa as well as our neighbouring state Bophuthatswana. One need only consider that development that could take place in the Sishen-Kuruman area near the border of Bophuthatswana. Job opportunities for thousands for Tswanas could be created here. They could sell their labour to the semis factory or a fourth Iscor and still live in their own fatherland. They could live together with their families and enjoy the privilege of citizenship in their own fatherland, and sell their labour in South Africa on a commuter basis. This region is approximately 50 kilometres from the border of Bophuthatswana.

In the days that lie ahead a Bill will come before this House which will make provision for the building of a railway line from Mitchell’s Plain to Cape Town, a distance of 40 km and a travelling time of 55 minutes. In the same way the Tswanas, too, will live in their own fatherland and sell their labour at places like Hotazel, Sishen and other places. They could make use of a commuter service daily. It is a line of development that creates opportunities for an imaginative government to establish meaningful decentralization of development away from the overconcentration of the PWV area. If the Government takes the correct decision and plans to develop Saldanha Bay harbour and establish growth poles along this line of development by linking the Sishen/Saldanha line with the PWV area, the R814 million that this will involve would be a major investment in the future. It would be an investment in respect of orderly and meaningful planning in the RSA, an investment in regard to meaningful development in South Africa and an investment in the future of the Northern and North-Western Cape, both of which regions are richly endowed with minerals but which also form an important part of the food granary of South Africa.

It is as a result of this Bill that iron ore can be transported to Saldanha Bay at a considerably lower tariff, since the SATS does not have to pay more than R103 million in interest annually, as Iscor does. This means that South Africa’s ore can be put on the world market at a better and more competitive price, ore which is at present earning very valuable foreign exchange for South Africa. Moreover there are mountains of lower-grade iron ore at Sishen, ore which is not economically transportable at this stage but which can be exported. When South Africa is experiencing better economic conditions than at present, and when the demand for steel in the world increases—and I agree with the hon member for Waterkloof that this will happen in future—then South Africa will undoubtedly take a fresh look at the construction of a semis factory or the development of a fourth Iscor. In such a case the ideal place would be the Sishen-Kuruman region, as close as possible to the border of Bophuthatswana. Then it will be possible to utilize this low grade ore, too, ore that has already been mined. Then the Black workers may be settled in their own fatherland and may live with their families and sell their work daily on a commuter basis.

The CP supports this Bill and we hope that the acceptance of this Bill will contribute towards the creation of a dynamic development plan from Saldanha Bay through the Northern and North-Western Cape and through the Western Transvaal to the PWV area, with the railway line as the vital artery. We support the Bill in the hope that the hon the Minister of Transport, however difficult it may be at this stage, will make the short distance between Sishen and Pudimoe which is still lacking, a reality as soon as possible in order to make the Sishen/Saldanha railway line a practical reality as a new line of development, a new vital artery which will not only mean a big investment for South Africa on the road ahead but will also play a major role in the development of this country of ours.

Mr Chairman, I want to begin by thanking the hon member who has just resumed his seat, as well as the other hon members who have participated in the debate, for their support of the clauses, except, of course, for clauses 1 and 2, dealing with the Sishen/Saldanha railway fine.

†Sir, I do not want to repeat all the arguments that have been put so well by so many of my colleagues. The hon member for Waterkloof and the hon member for Amanzimtoti, for instance, put their case very well and advanced many good arguments why this was a reasonable decision, given the circumstances. There are, however, a few things one must say.

I want to start with the hon member for Port Elizabeth Central because I think his contribution was the most outlandish one. I think it is therefore appropriate for me to start there. Why do I call his contribution outlandish? He accepts and understands that the international steel industry is experiencing a recession. He understands how problematical the whole question of iron ore exports is now. He understands, I hope, how uncertain the whole future is as far as iron ore exports are concerned. He understands the difficulty that Iscor and the SATS experience. If I am not mistaken he has by now also had insight into the Maree Report. If he has not had such insight it is his fault because the hon the Minister of Trade and Industry issued an open invitation to all hon members including hon members other than members of the standing committee to have sight of the documents. One of the colleagues of the hon member for Port Elizabeth Central, the hon member for Walmer, availed himself of that opportunity some weeks ago.

I have read it.

Therefore the whole allegation which the hon member made in The Argus of 27 May this year that the Government was intending to keep this whole question under wraps is not correct and I hope the hon member will withdraw that because he knows that it is not true.

But the public has to know.

I shall come to that argument too.

I want to tell that hon member that I have some figures available. One can perhaps understand it when with the benefit of hindsight he criticizes the decision, and I must say that there is some substance in some of the arguments raised. The hon member suggests that we should again look at St Croix as an additional harbour, but given the kind of uncertainty that exists in the international iron and steel industry and the sword of Damocles which hangs over iron ore exports, such a suggestion is absolutely ridiculous.

What happens if it is cheaper?

The hon the Chief Whip should first listen to my arguments and thereafter he can decide whether that is a reasonable question.

I have some figures here for 1969. At that time the St Croix figures for the anticipated construction cost—at that time the feasibility studies were also done on the Sishen/Saldanha railway line—were between 20% and 25% below what they were for the Sishen/ Saldanha line. An upgrading of those two figures allowing for an inflation rate of something like 10% or 12%, showed in 1984 that to have built St Croix then would have cost something in excess of R860 million. I want to tell the hon member that it is not necessary to have any feasibility studies …

It was a mistake…

Well, that is a different issue which we may argue, but I disagree with the hon member. To suggest that we should now consider spending another R860 million, given the hon member’s view and not mine, would be to suggest that we throw good money after bad money. There are decided disadvantages to build St Croix anyway. At the time when Sishen/Salsanha was given the go ahead, further studies would have had to be done in respect of St Croix. The preliminary studies that had been done showed that to build St Croix was going to cost only between 20% and 25% less than to build Sishen/Saldanha, but further studies would have had to be done.

Certain practical problems arose during the construction of Sishen/Saldanha, but the hon member should not for a moment think that practical problems would not have arisen had we tried to build a harbour at sea. The hon member knows better than anybody else the kind of sea that runs off the coast of St Croix, even if one were to build on the lee shore. The corrosion, the maintenance, the costs of building in that kind of sea make me say that I would not be at all surprised that had we gone ahead with St Croix the costs would have run away with us anyway. I do not, however, like to enter into a kind of hypothetical argument.

In reality if we take the 1969 costs and upgrade them just at the inflation rate, we are now talking about something like R860 million were we to go ahead with St Croix. I want to tell the hon member that is out. There is something else which I should like to tell him

Mr Chairman, may I ask the hon the Deputy Minister where he got the figure of about 20% less because it does not agree with the figures that I have?

I will give the figures to the hon member for Port Elizabeth Central later.

The fact of the matter is—and I must say this in parenthesis because I have a hobby which is a great private interest of mine and which I share with many other people—that this relates to the whole question of conservation. I want to say to that hon member if he were to ask me to put a coal loading berth—as he is now suggesting—on the most fragile marine island reserve in our country, off the East Coast, that I do not know at what cost we could justify the destruction of the ecology of the most sensitive, most important marine reserve on the entire East Cost of South Africa. [Interjections.] If the that hon member were to come forward with the proposition to build a coal or ore loading berth there, I want to tell him that I would fight him from every platform in this country. The hon member might have got away with it in 1970 but he will not get away with something like that in 1985. [Interjections.]

Have you been there?

I know the reserve intimately; I know it very well indeed. I have landed there and I know the glace well.

Your Government wanted to put it there.

In its wisdom my Government decided not to do so. [Interjections.]

The hon member for Port Elizabeth Central is usually such a pessimist but he now seems to have turned into a super optimist because if he sees such a tremendous future in the iron and steel industry of South Africa that he is prepared to throw in another R1 000 million, then I must say, optimistic though I am, that I do not share that degree of optimism with him.

That hon member also mentioned the question of Iscor land. There is clearly an excess of land in some of the areas where Iscor is at present. By way of an interjection my hon colleague the Minister of Trade and Industry mentioned that the matter was under review. I can tell the hon member that Iscor is in fact in the process of selling excess land which is not required in the specific area or, alternatively, if that is not possible, they are looking at the rational utilization of that land to optimize the use of it but with due regard to lessees so as not to unsettle long-term leases which may exist on certain of the land. The hon member said he was pleased about that.

The hon member also said that we should have had long-term contracts before we entered into this agreement. I do not want to argue the matter. It might have been possible to conclude long-term contracts. However, how can one structure a long-term contract when one undertakes a project of this magnitude which is going to take six years to be built and when there are so many unknown factors as to what the final cost will be? That hon member himself and other hon members argued that the final cost of the project was way in excess of what was initially anticipated.

Three times as high.

[Inaudible.]

Earlier on there were also long-term contracts that Iscor had, but like many long-term contracts in terms of which one has to deliver goods contractually the price itself is reviewed by way of a formula every year or every other year. The price has to be reviewed for a variety of reasons which are obvious, or should be obvious to hon members.

However, by way of an interjection I asked that hon member how many years he had in mind when he spoke about long-term contracts. He replied that he was thinking of something like 10 years. Did he mean 10 years from the time of completion of the project?

A 10 year contract for the supply of ore.

That was what your Government said. Your own Government took that decision.

Very well. In the overall scheme of things it might have been more convenient but I do not think it would have mattered. If that hon member is right, it would now be time to re-negotiate. Would he like to re-negotiate now? [Interjections.]

Order! There are too many interjections. Hon members should tone down their interjections.

We would have been in the re-negotiation phase about two years ago.

But you are doing that now!

We are negotiating in the light of the realities. Of course we are doing it now; we are re-negotiating contracts as they expire. That is the whole point that I am making.

You are now entering into ad hoc contracts …

No, we are not entering into ad hoc contracts.

[Inaudible.]

That is not true. We are negotiating …

Please, do not say it is not true.

Order! I request the hon member for Yeoville to reduce the number of interjections. The hon the Deputy Minister may continue.

I deny that we are entering into ad hoc contracts. I know the report. I have read it backwards. I want to tell that hon member that we are negotiating for best possible contracts available in the market today. Iscor is well run and well managed. The proof of the pudding is in the eating. The fact of the matter is—the hon member for Waterkloof mentioned this—that almost every steel industry in the world today is being heavily subsidized by governments in order to keep them alive. Iscor is not; Iscor is viable and it is showing profits. These profits are relatively small, given the size of its capital base …

Is this not a subsidy you are giving them?

Sure, it could be argued that there is an element of subsidy in this. However, this element of subsidy is a relatively small one. Steel industries have closed down worldwide and others are heavily subsidized by governments. Given the fact that Iscor is maintaining its profitability in the face of this worldwide climate in respect of the steel industry, I say it is a credit to them.

The hon member for Umbilo said that he found the Bill acceptable and I thank him for his support. He spoke of one of the clauses which deals with full audits not being possible and he said that he agrees with random auditing. I also want to thank him for his remarks on that aspect. He then spoke of the importance of keeping the 12 000 or 13 000 people supported and said that this decision on the Sishen/Saldanha scheme does that. We appreciate those remarks as well. He also made the very pertinent remark that hindsight is an exact science.

*I regret that the hon member for Sunnyside was unable to participate in the debate. However, he will be able to state his case in the Committee Stage, and we look forward to hearing what he has to say.

†The hon member for Amanzimtoti made a very fine contribution. He set out the whole situation very well and he spelt out the problems and the challenges. I must compliment him on that. He also mentioned that Iscor is not making a loss, but that it is an asset that is being taken over. That is true. If we wanted to write off this amount, we would simply have amended the Exchequer and Audit Act and written off the amount. We have that option, but it does not look as if that is necessary. With the surpluses indicated this year, it looks, if one is optimistic or even realistic, as though we have an even chance or a good chance of recoverying the capital. We can then leave that line intact with all the opportunities and benefits it offers that area in the future.

I want to say something more on that matter. If we look at some of the benefits of keeping open the options, there is no question about the matter. I think the hon member for Kuruman put it very well. He indicated some of the potential opportunities that exist for the development of that area. There is massive potential. That whole western part of our country is dry. They have suffered from the low steel prices, the results of which we are discussing now. In a few days’ time we will be discussing the problems at O’okiep that are also the result of the worldwide recession. That part of the world was struck again by that.

Those parts are still reeling from a drought which some people say was the worst in 100 or 200 years. The karakul farmers are having a terrible time, as are all the stock farmers in those parts. They have had one of the worst experiences in living history. If there is a part of our country that is deserving of some kind of support, then it is that part of our country. How can we rationally argue that we can have feeding schemes for the stock farmers there and that we can do all kinds of things to help the farmers on the land—and we have—but that we should not do something to keep the operations going there now when they are in this equally difficult situation?

The fact of the matter is that Saldanha is a deep-sea harbour. It is probably the greatest natural harbour on our coast. It has unlimited potential for the future. The whole of the northern or north-western part of our country is an Aladdin’s Cave of minerals. We know that there are massive zinc deposits there that have been discovered but not tapped. We have Black Mountain. If we were to close that fine, we would have to write off Black Mountain. The hon member for Port Elizabeth Central can feed that into his calculator. Who is going to pay for the closing down of Black Mountain, and who is going to compensate that company if we close the Sishen-Saldanha line as he suggested we do?

It is also a reality that that whole Orange River Valley has an enormous agricultural potential for the future in respect of irrigation. This fine could also be important where we may have to move agricultural products in bulk. That is another good reason for keeping that option open for the future.

The hon member for Yeoville spoke of a loss of R814 million. It is not a loss of R814 million. If it were a loss we would have written it off. We have not written it off; it is money that is going to be recovered. What is a loss, I would readily agree, is the loss of interest. That is a loss, yes. However, to say as he did that the capital amount of R814 million in a loss is not correct. It is not a loss. It may become a loss, but if things do get worse we may have to review the situation again.

May I ask the hon Deputy Minister a question?

When I have finished putting forward my arguments—I am working against the clock—we can talk about it.

It is a very simple question.

All right.

Mr Chairman, I want to put a very simple question to the hon Deputy Minister. If in fact Iscor does not make any profits from the mine and does not pay over the 80% of the profit, that is if there is no profit, the capital will never be repaid and there will then be a loss of over R800 million. In the meantime over R100 million in interest is definitely being lost and will never be repaid. Is that not so?

I am not saying that we could not move into a position where that becomes a loss. For instance, if the international market for iron ore were to fall off even further and Iscor did not have lower tariffs for the movement of iron ore and if Iscor were unable to export and so on, we could of course suffer a loss. That hon member, however, says we have already suffered a loss. There is no loss as such. There is a contingent liability for a loss, but there is as yet no loss. As a matter of fact, there is every indication that this year we will get back an amount in excess of the interest we would have received plus a certain amount to reduce the capital. Furthermore, we have an asset in the line—and it is an appreciating asset!

The fact is that aside from the potential of the region, one can for a very small amount—I think it is R40 million—upgrade the potential of that line from the current 18 000 million tons to something like 40 000 million tons without any difficulty at all.

The hon member for Yeoville asked how one can debate a matter when one cannot refer to it. I agree, that is the situation in this House. It is also true to say, however, that that hon member and all of the members of his committee had the Maree report before them in the standing committee. The officials were present, the Ministers were present, and they were able to have the fullest possible discussion. All the Opposition parties, in fact all the parties in all the Houses, had that opportunity. Because the Government is trying to protect Iscor because there are certain facts in that report that relate to cost data, marketing strategies and so on, to say now that the details of that report must be made public is, I think, unreasonable. He says we should exclude that information. I do not think it is a big issue, Mr Chairman. I think that the public of South Africa have sufficient confidence. I think the hon member for Yeoville underestimates the confidence that the people of South Africa have in him.

But if they find out that one is bluffing, they can get very cross.

I think the people of South Africa are quite satisfied to know that the hon member for Yeoville has seen the document. I do not think they would also expect it to be before this House, particularly not if they understand that they also have an interest in this great venture, Iscor, in which R4 billion has been invested I do not think the people of South Africa want to do anything that will be prejudicial to the trading and business interests of that great enterprise of ours in South Africa.

The hon member for Yeoville said there was no rush to get this provision through. I would agree. There is no rush, but then again, there is no reason for us to delay the matter either. Therefore, I think we are dealing with it at the appropriate time.

The hon member for Yeoville also had something to say about the escalation of the costs to Iscor through the years. It is true that there was an escalation of costs. What that hon member did not mention, however, was that in the escalation figures that he was mentioning were included capital amounts for upgrading the scheme, for example, the whole line was electrified.

How much? It was a very small proportion.

It was not such a small proportion. Some of the escalation in costs was due to physical problems which were encountered with the harbour itself, such as the enormous blasting which had to be undertaken in order to deepen the harbour. This had not been anticipated on the scale that was required. The fact of the matter is that the scheme was upgraded and so the escalation that he mentioned was not entirely accurate.

The hon member further said that the project was only viable in two sets of circumstances, viz if the inflation rate is higher and the exchange rate value of the rand is low. There is a third set of circumstances, however. If the price of steel is to go up, the whole thing might also look a little different. The hon member for Waterkloof also mentioned that by means of tax write-offs and in other ways we are supporting other mines in South Africa and, where we have done so over the years, it has proved to be in South Africa’s long-term interest and a sensible decision. In the same way I believe this to be a sensible decision given the current circumstances.

The hon member suggested—I should just like to check with him whether this is really what he meant—that Iscor should finance these losses from its profits. Is that what the hon member said?

Yes.

Sir, Iscor belongs to the public of South Africa. How can it finance losses from its profits if its profits are marginal? This year they were only R70 million.

R200 million.

All right, that was last year.

What about next year?

Next year? I would rather not say, but it is not going to be very good. What I would like to ask, however, is: How would Iscor fund it from its profits? Iscor would then have to increase its prices and, if Iscor were to increase its prices, who would pay for it? It would be the secondary steel industry in South Africa and that would have an inflationary ripple effect right through the economy of our country. This industry is the single biggest industrial employer in South Africa.

Do you not believe in free enterprise?

Sure, I believe in free enterprise. However, I believe that the step that the hon member for Yeoville suggests would be the very worst thing that we could do. It would be the way of carrying this loss into the home of every consumer in South Africa. Instead of that, it is now a contingent liability which we will erode over the years and, as it is eliminated, all kinds of options open up such as privatization and others. I am not pessimistic about it; I am optimistic. We do not have all the wisdom, but I do want to point out to the hon member for Yeoville the things that have taken place due to the reasons that have been advanced—I do not want to repeat them again—the international recession, a different approach to materials used in order to make motor cars fighter, for instance the use of plastic and aluminium, etc.

The hon member for Waterkloof, I think, mentioned the windfall profit that we made at Richards Bay, which we had not anticipated. When we planned Richards Bay nobody anticipated the impact of the tremendous oil prices on the coal price. The result is that Richards Bay has become a far greater money-spinner than anybody ever anticipated. However, the same oil prices that brought the windfall profit for Richards Bay, have brought a loss, or, if one likes, more difficult circumstances to Saldanha Bay. What we have therefore gained on the swings at Richards Bay, we have lost on the roundabouts at Saldanha Bay. I think both were sensible schemes in the long term, and I am sure that in the fullness of time that will become evident.

I thank all hon members who participated in the debate.

Mr Chairman, I move:

Agreed to.

Committee Stage

Clause 1:

Mr Chairman, we have debated clause 1 at some length, but I think there are a number of things that arise, particularly from the reply of the hon the Deputy Minister, which I think need to be dealt with here.

The first thing is that the hon the Deputy Minister said quite categorically—he used the word “untrue’’—when I said that it was not a question of there being long-term contracts but that the policy was going to be that we were going to deal with it by way of ad hoc and opportunity contracts, that that was not the case. When I told him that it was in the report, he denied it and said that he had read the report from front to back. I now want to read the relative portion in the report.

I made it clear to you what I meant.

No, the hon the Deputy Minister said it was untrue. The report reads:

See what I mean? For the hon the Deputy Minister to say that this is untrue, is exactly the opposite of what is stated in the report which he refuses to make public and from which I have now read out a portion to him. This illustrates the whole question of secrecy. It enables the hon the Deputy Minister to make statements that are not true and then to shelter behind the secrecy provisions which relate to this report. That is the tragedy of it and demonstrates beyond doubt that one cannot allow a situation to develop where members of the committee have seen the report but the public are not allowed to see the report. I would not read something from the report which is secret to jeopardize anybody, but that report should have been made public because it would have exposed the Government for what it is actually doing in this regard. The truth is that the secrecy provision is being applied so that the public of South Africa do not know what the real facts are on which the decision is based.

The second fundamental issue is one of the reasons why an unsatisfactory situation pertains. We do not have the accountability by Iscor which exists in respect of other matters which are under the control of the Auditor-General. All that happens is that we have an opportunity once a year during the discussion of the Vote of the hon the Minister of Trade and Industry to ask him questions about Iscor. The time is usually limited because we have to cover a multitude of subjects in that debate. If the accounts of Iscor were in fact subject to audit by the Auditor-General and if he had to appear before the Standing Committee on Public Accounts, the whole situation with regard to Iscor would be quite different. In addition, the whole question with regard to this mine and the contracts would have been known long ago and Parliament would have been in possession of information about the viability of this project far earlier than is the case now. That is one of the flaws of having a firm of private auditors only instead of having private auditors who are appointed by and under the control of the Auditor-General. I want to repeat that this is necessary and should take place.

The third point I want to make is what I would call the peanuts point. It is quite remarkable that the hon member for Amanzimtoti can compare the amount of R103 million in lost interest with the R100 million which is the total amount that is voted to deal with unemployment and poverty in the whole of South Africa. The R103 million relates to the provision we are dealing with here, while the R100 million is the additional amount to be voted in order to deal with poverty over the whole of South Africa. Whereas the R100 million is obviously peanuts when it comes to trying to relieve poverty and unemployment in the whole of South Africa, R103 million is certainly not peanuts when it has to do with interest in respect of one railway line that has been built. I have to point out, with great respect, that that kind of comparison actually illustrates a state of mind, namely that when one has made a mistake and has not done the right thing, R103 million is peanuts, but that when it comes to the plight of the poor and the unemployed, R100 million is a lot of money. There is a fundamental difference of philosophy between us and the Government in respect of this issue. We take the view that there should be more money for the relief of poverty, which is a serious problem in South Africa, and for the relief of unemployment, and that in the circumstances the R100 million is utterly inadequate.

Another issue which I think we have to deal with here is what this route can in fact be used for so that we can get greater advantage from it. One of the things that has not yet been fully investigated—and I actually cannot believe that it has not been investigated—is the possibility of the alternative route from the north to the south, to Cape Town. This railway line could in part be used for this purpose. That would not only be important from a purely commercial point of view but it would also be very important from a strategic point of view for South Africa. We asked questions on this in the committee and I am surprised that this has not been adequately investigated.

The position is that we do have a railway line and we do have a mine we should not have had. Hon members may say that that is hindsight, but in reality some people did have foresight. It can also be said that a government is judged by the degree of its foresight and the degree of its planning. If a government in fact does not have foresight and is unable to plan adequately for the future, it is not the kind of government that is required. The hon the Minister of Finance sits there smiling, but one day he is going to have to give account of whether he has foresight or not. That is the test. It is not good enough to say: “Okay, anybody can make mistakes.” Sure, anybody can make mistakes, but the reason why one is made Minister of Finance …

Mr Chairman, may I ask the hon member whether the construction of the Vryheid/Richards Bay line and the Richards Bay harbour were acts of foresight on the part of the Government?

Certainly. I want to tell the hon member that I am prepared to concede that not everything this Government does is stupid. I think it is impossible for the Government to be wrong all the time. It must be right some of the time; but, my goodness, it tries to be wrong all the time. [Interjections.] Sometimes the Government is lucky and does not go wrong. Really, Sir, to suggest that the Government is wrong all the time is very surprising, coming from the hon member for Amanzimtoti, because he is now the great defender of this Government. I am certainly not prepared to say that the Government is wrong all the time. In this case, however, it was wrong and this is going to cost the taxpayer a tremendous amount of money. The test of a government, as I say, is whether it has foresight and can plan correctly.

Mr Chairman, I would share the hon member’s view that not everything the Government does is wrong or stupid. I would say that not everything the Opposition does it stupid, although I think most of the things the Opposition does are stupid.

The hon member makes a big play here because I said that what he had said was untrue. However, I motivated that in what I said to him in response to his attack on the Government. The hon member gave the impression that it was the inefficiency of the Government on the one hand and the inefficiency of Iscor as a State institution on the other that led to this set of circumstances arising. Among the inefficiencies he mentioned was the fact that ad hoc decisions were being taken. All I am trying to say to the hon member—and if there was a misunderstanding, I apologize to him—is that the world markets are difficult and one has to take short-term decisions and long-term decisions because one is negotiating in a difficult market. That is all I was trying to say. I said in the context of replying to that hon member where he said there had been a loss of R814 million, that that was untrue. There was not a loss of R814 million. It was a contingent liability that the State took over; not a loss.

The hon member made great play of the whole question of secrecy, but I do not think I should repeat the arguments in that regard and delay the Committee. I think we have canvassed those arguments sufficiently in the course of this debate. What I do want to say is that the hon member, having just talked about secrecy, went on to talk about private auditing of Iscor. I do not know whether there was any malice in his word construction or in the order in which he arranged his arguments, but the impression is that because there is a private audit of Iscor, somehow the pubic are not being protected. [Interjections.]

I want to say that I have the fullest confidence in those two firms of auditors that audit Iscor’s books. I think they are doing a grand job. If the hon member says to me that he thinks in principle parastatals should be the responsibility of the Auditor-General and that they should report through the Auditor-General to Parliament, I may say that in my personal capacity I share his views. The hon member knows that. I give it to him for nothing, but I share his views and I think a great number of people in Government share those views too.

The hon member then talked about peanuts. He said that they regarded the R100 million as peanuts. He went even further to say not only that they regard the R100 million as peanuts but also that those peanuts were all that the Government gave to all of the poor in South Africa. He said all the Government spent on poverty was R100 million. The hon member knows very well that that is not true. He is far too intelligent, far too well-informed and far too well-versed. He reads the Budget backwards and forwards. While we are sleeping, he reads the Budget. [Interjections.]

The hon member knows very well what we spend on pensions. [Interjections.] I am now replying to the hon member, but if he does not want me to reply, I shall sit down. Then, however, he will get up and say that I am rude to him because I do not want to reply. It is a very difficult situation when one replies to the hon member. I am trying to reply to him, and if I am not doing it very well, I apologize but I am doing my best.

The hon member says we are spending peanuts on poverty, but it is not true. He should look at what we spend on pensions, on bread subsidies, on transport subsidies, on housing and housing subsidies and on Khayelitsha. [Interjections.] I am not arguing with the hon member; I am just saying that when he makes the bald statement that we spend R100 million on poverty, it is simply not true. We spend vast amounts on helping the disadvantaged and the poor in this country. I am putting it no higher than that, and that is all I am saying. The R100 million to which he has referred is a special grant under special circumstances which have arisen in particularly distressed areas of our country. If the hon member’s benchmate looks sourly at me, then she must look sourly at the hon member because if he wants to advance silly statements then I must spend time replying to him for the sake of the record.

The hon member spoke of an alternative route to Cape Town. Of course in a sense there is an alternative route because Cape Town is linked to Saldanha. I think he is right though. I think it is time that that railway was looked at. As a matter of fact we are looking at it now. There are various alternatives. The hon member knows that there are large deposits of coal in Botswana and that they are considering the export of that coal. Saldanha is one of the possible export habours as is Maputo, Richard’s Bay and so on. There are possibilities and perhaps they will reach fruition at some time in the future.

The last point the hon member mentioned was that the Government could be judged on its planning. He asked what had happened to Government projects, but I think the hon member for Amanzimtoti has dealt with that very well.

Order! The hon the Deputy Minister alleged that the hon member for Yeoville had said something that was untrue. Subsequently he added that the hon member for Yeoville knew it. Although they were two distinct statements, the inference can be drawn that the hon member for Yeoville was guilty of knowingly stating an untruth. I therefore request the hon the Deputy Minister to withdraw the second of his two statements.

Mr Chairman if you heard it in that way, far be it from me not to withdraw it.

Clause agreed to (Official Opposition dissenting).

Clause 2 agreed to (Official Opposition dissenting).

New Clause to follow Clause 2:

Mr Chairman, I move:

That, notwithstanding the provisions of Rule 31 (5), the following be a new Clause to follow Clause 2:

Mr Chairman, this particular amendment was part of the original Bill and fell away in the standing committee for reasons which, I think, are known to the hon the Deputy Minister. However, I think there are some very important principles involved in this.

We should like to put the following to the hon the Deputy Minister: Firstly, the circumstances under which this particular position arose that people were given Government stock instead of being paid in cash were circumstances which, I think, should never have arisen at all. Once this position had arisen and the Government stock was issued, it should in my opinion have been made clear to the people involved that they could dispose of that stock immediately. I believe anybody who had any knowledge of what Government stock represented, whether he was a stockbroker, an attorney or even a member of Parliament—there were some of them who were pushing for that at the time—should have been able to advise the farmers concerned that they could put that stock on the market to sell it. If they had sold it the moment they got it, most of them would not have suffered any loss whatsoever. Therefore, I think there was a grave fault in relation to this matter right from the very beginning.

The second issue that arises insofar as the stock is concerned is that we were given a schedule in terms of which it appeared that at various times while the people held the stock—even if they did not sell it immediately—they could have sold it without loss. In many cases they could have sold it at a profit. However, they decided to hold on to the stock. That is a fact and this schedule sets it all out.

Only for a short time.

Well, the time varied. I have a letter here which is part of the evidence and everybody on the committee has this letter. One can see in the letter that they could have sold the stock at various times because it was issued at different times and different stock was issued to different people. At various times they could have sold the stock at a profit. Some of them did not have another chance of selling at a profit after they originally got it; that I concede immediately.

The question which arises is whether people should actually be protected against their own lack of business judgement. If we do that, then it creates a precedent which applies to a whole series of other things.

One cannot select a particular group of people and say: “You did not have the business judgement, therefore you suffered a loss. Now we are going to compensate you for it.” It is no use saying it is a unique occasion and the only time that it will ever happen. In reality, a precedent is being created.

Let me give an example of the situation in which this precedent can become very material. The Government obliges pension funds to buy Government stock in quantity. They have to buy it. If they buy it at the wrong interest rate and the stock decreases in value, every person in that pension fund is potentially prejudiced. Certainly, the management of the pension fund should have the expertise to handle it and should be able to trade in it and be allowed to deal with it. However, if, as is permissible in law, one creates a pension fund for oneself and one buys Government stock and then loses money, one can come along to one’s MP and he will lobby for one. The result will be that one will get legislation to compensate one. There one is compelled to buy and compelled to hold. Here nobody compelled one to hold and one was able to sell it at any time that one wanted to. So, we are creating a very important precedent.

He is compelled to hold it till it is mature.

No, he is not compelled to hold it till it is mature. Any farmer could have sold at any time. He could have gone to the market and sold it immediately.

There is another point which arises. I suggested in the standing committee that an amendment be added, which I asked the hon the Minister to move. Mr Chairman, I will move it, but you may well say to me that I cannot do so. The amendment that I want to move is to add at the end of the proposed new clause: “And may compensate persons who are proved to have suffered loss as a result of the sale of such registered stock.” Mr Chairman, I am going to ask the hon the Minister to move it if you will not let me do so.

The reason I ask is a very simple one. If one had Government stock and one was really desperate and needed money, one would have sold it. However, the fact that one still has it now after having had some of the stock for a very long time—some of the stock was issued as long ago as 1976 and was issued at various times thereafter right up to 1980—and one did not sell it, seems to me to indicate that either one pledged it to the bank in order to raise money, or alternatively one had sufficient money and did not need to sell it. The whole argument of the people who wanted compensation was that they needed the money in order to buy new farms and create a new livelihood for themselves.

What one is doing in this new clause is actually helping the people who held on to their stock and who have not been under financial pressure. The ones who were under financial pressure and who were forced to sell their stock at a loss because they desperately needed the money, are not being helped. To me that does not seem to be a reasonable or logical approach to the matter. The people who were forced to sell it were financially worse off than the ones who were able to hold on to the stock for six to nine years, or whatever the period was in the various cases.

In our view, if one is going to compensate people, one should compensate the people who really suffered the loss, not the people who were able to hold onto their stock and who are perhaps even now still able to hold on to it till it matures. What one is doing now, is helping that select group of persons that had the resources. Take the hon the Leader of the House for example. He could sit on his Government stock till the year 2009 and it would not worry him. Other people who are under pressure and have to sell their stock and will suffer the loss, will not be compensated.

We think that that is not right; we think it is inequitable. We believe that the people who were really hard-up and who were forced to sell, perhaps have a greater claim to compensation than the people who were able to hold on to their stock.

Mr Chairman, that is why I move the following amendment to the proposed new Clause:

I know that this amendment does involve the expenditure, I think, of further public money and that it should therefore be moved by an hon Minister or an hon Deputy Minister.

Order! The hon member for Yeoville has moved the amendment as read out by him. The hon member has also correctly anticipated my ruling.

Unfortunately I cannot accept the hon member’s amendment for the very reason that he himself mentioned, namely that it involves increased expenditure which is only acceptable upon the recommendation of the State President. Unless the hon the Deputy Minister of Finance is prepared to move the amendment himself, I am unable to accept the amendment as moved by the hon member for Yeoville.

Mr Chairman, I think the arguments advanced by the hon member for Yeoville are clear proof that he had no idea of what was involved as far as land consolidation in the first instance and the farmers in the second instance were concerned. He makes a comparison with pension funds, and I want to tell him that the two affairs he tried to compare are not comparable at all.

The actual idea was to be able to make offers to a larger number of affected owners for their properties annually and to finalise consolidation proposals quickly. Therefore, as the hon member correctly said, during the period between 1976 and 1980, internal registered stock, on a par with the then market-related interest rates of between 9% and 11,5%, and an average term of 20 years, was utilised in part payment for the puchase of land, buildings and the goodwill of business undertakings for the purpose of land consolidation.

During October 1981 I made a plea for the repayment of this stock. I then pointed out that farmers whose land had been bought for consolidation purposes, had been partly recompensed in the form of long-term State stock. They therefore received 40% cash and 60% in the form of stock. As interest rates did not change much at that stage, it was found that there was not too much or too little to gain or to lose if the stock was sold before the redemption date.

With the recent faster increase in interest rates and the scarcity of capital, this causes problems, however, particularly for our older people who need the cash even for their daily requirements. They can barely afford the capital loss. I also pointed out at the time that these people had not obtained the stock of their own free will. The State forced them to receive 60% of the capital in the form of stock. In truth they had no choice. In retrospect it is also very clear that few, if any, of the people realised the full implications and complications of the possession of fixed interest rate and fixed period stock. On 10 May 1985 the nominal value of the stock still in the possession of the 482 original holders or heirs, amounted to R31,7 million, whereas the market price amounted to 19,9 million. The potential loss is therefore estimated at R11,8 million if this stock is redeemed at face value.

I should like to refer hon members briefly to the report of the Advocate-General, Report No 8 of 29 June 1984. I quote from pages 19, 20 and 21. It is very interesting to read that report. Paragraph 3.7.15 reads:

Paragraph 3.7.16 reads:

Paragraph 3.7.17 reads:

Paragraph 3.7.19 reads:

In conclusion I want to quote paragraph 3.7.22 of the Advocate-General’s report:

In his second reading speech the hon the Deputy Minister stated very dearly the reasons as to why persons who have disposed of their stocks and suffered losses cannot be recompensed. Therefore I do not want to react further to this matter. I want to conclude by saying that as a result of all these arguments we support the decision to redeem the original holders of theis consolidation-linked paper, or their heirs, ahead of time.

Mr Chairman, in the first place I want to thank the hon the Deputy Minister for having this clause discussed again. It was a sad moment when I realized what had in fact happened to this clause. I do not want to repeat the facts and statistics mentioned by the hon member for Smithfield, but there were only three Indians in the standing committee with its various components and the vote there was two to one. To think the interests of 482 persons amounting to R30 million were merely wiped from the table. We thank the hon the Minister for having this clause discussed again, for according to the rules of the House I could not propose that here.

What has really happened since? We were told it was not expropriation, but had taken place voluntarily. The people could decide whether or not to accept it. It is not that simple, however. Most of the interested parties did not really have a choice, but had to accept, for what was the true position? It was clear and everyone knew it, that that land, whether farmland or other property, would be transferred to the Black states. The market value is taken into account with the valuation of land. Those people’s properties depreciated little by little, however, because there were no buyers who would buy them. No one is going to buy a farm or a property in a town if he knows it is to be transferred to another state.

That is why I say it was very unfair of the Government to apply this stock as payment at that time.

Who was the Minister responsible for that?

Whichever Minister it was, the Government did it. Now the blame is being placed on one Minister, just like when the Soweto unrest took place and one Minister got all the blame. Now that the whole country is burning down, the Minister is innocent. [Interjections.] No, do not let us fight now.

Since we have learnt the lesson, we hope that this method will not be used again when future consolidation takes place. I asked for all the people who had received some of that stock and suffered losses to be recompensed. Those who did make a profit; good luck to them, as the English would say. I am thinking of sad cases, however, and as the hon the Deputy Minister says, it is not easy to track them down. If those people come forward, however, and can submit proof—we are not talking about people who take chances—I ask the hon the Minister to look at their position.

Once again I want to say we are very grateful that this clause was dealt with again.

Mr Chairman, I wish to rise in connection with this clause and once again to express my appreciation that consideration has being given to the paying out of this Government stock at par.

Those of us who have been involved with out constituents who have suffered financial embarrassment as a result of accepting Government stock as part payment for their farms will heave a sigh of relief that this decision has now been taken. I know that my colleague the hon member for King William’s Town as well as other hon members representing rural constituencies, will feel much the same. The hon member for Yeoville made a very relevant point, although I accept the fact that his amendment was not accepted. I sympathize to a very great extent with the sentiments that he expressed, although I also realize that it is not a practical proposition to reimburse the actual losses that were sustained by farmers whom this Government stock was issued.

If one has to make a rough calculation, one can safely assume that the original holders of the stock have lost almost R20 million as a result of the stock having been discounted. Admittedly, those who disposed of their stock early, did make a profit.

I do want to appeal to the hon the Deputy Minister that he should exercise a certain flexibility in regard to the applications he may receive relative to the redemption of this stock. There are instances where Government stock has been transferred within a family, and I would ask him to treat any appeal in this connection sympathetically, because there may be certain reasons why this government stock was transferred in order to enable a son or beneficiary to purchase land.

Another point the hon member for Yeoville raised which is also very relevant, is that there is no doubt that farmers who accepted Government stock in the first instance were not fully aware of the implications involved in accepting payment in this form. Furthermore, I can assure hon members that the landowners concerned would not have agreed to accept Government stock had they known the full implications involved. One must bear in mind the invidious position in which they were placed immediately their farms were set aside for consolidation purposes, by virtue of the fact that the farms in question had been earmarked and could no longer be sold on the open market. [Interjections.]

Order! Hon members must please speak more softly.

The position of those farmers became virtually untenable.

It is therefore with much pleasure that we support this clause, because we welcome it as a fair reward for those who have suffered as a result of this form of payment.

Mr Chairman, I thank the hon members for their support and their explanations. I cannot agree with the hon members of the Official Opposition. Unhappily I cannot return the compliment insofar as I cannot propose the amendment the Official Opposition would like me to propose. If I did so, the financial consequences would be very great. I heard what they said; I listened with a sympathetic ear to what they were saying, but I do not want to repeat the argument put forward so eloquently earlier by the hon member for Smithfield.

New Clause agreed to (Official Opposition dissenting).

Business interrupted in accordance with Standing Order No 19.

House Resumed:

Progress reported and leave granted to sit again.