Order! With reference to the appointment, on 13 June 1985, of a Joint Committee on a Question of Privilege, I have to announce that the Committee concluded its proceedings this morning.

The Report of the Committee, in which it recommends inter alia that Mr F J le Roux, the honourable member for Brakpan, be exonerated from the charges against him, and that Mr C C Joubert, the compiler of the election pamphlet in question, present himself in my Chambers in order to tender a written apology for the breach of privilege committed by him, will be printed in the Minutes of Proceedings of the three Houses of Parliament today.

I have to announce further that Mr Joubert presented himself in my Chambers this morning, and tendered a written apology for the breach of privilege. His letter will also be printed in the Minutes of Proceedings of the three Houses.

as Chairman, presented the Report of the Select Committee on a Question of Privilege, as follows:

1. 1. Your Committee took note of the specific connection, in its terms of reference, of the allegations made in the election pamphlet in question, with inter alia section 10(3)(1) of the Powers and Privileges of Parliament Act, 1963, which states that one of the offences for which Parliament is empowered to punish for contempt, is “the publication of any false or scandalous libel on any member touching his conduct as a member”.
   Your Committee’s first task was accordingly to determine whether the statements contained in the election pamphlet indeed constituted a breach of privilege in terms of section 10(3)(1) of the Act.
2. 2. It soon became apparent that the prevailing opinion on the Committee was that for the most part (with the exception of one allegation) the statements made in the pamphlet, although critical of the working of Parliament under the new constitutional dispensation, were simply speculative, factually incorrect, prejudiced and exaggerated, but could not be regarded as constituting a breach of Parliamentary privilege in terms of section 10(3)(1) of the Act.
3. 3. The only allegation which your Committee felt should be considered more closely was the following:

1. 4. As in the case of previous committees appointed to investigate alleged breaches of Parliamentary privilege, your Committee found that its task was not made easier by the fact that the South African Parliament has a very limited body of precedent in respect of matters of privilege, and accordingly had to take note also of the guiding principles established by British committees on privilege, as referred to inter alia in Erskine May’s Parliamentary Practice.
   Some of these cautioned against an overhasty implementation of Parliament’s powers relating to privilege, stating inter alia that—
   1. (a) Parliamentary privilege is only applied in a case of allegations which this House regards as libellous towards Parliament and not in the case of criticism, however prejudiced or exaggerated such criticism may be (House of Commons Paper 112 of 1947-8, p iv, par 6; House of Commons Paper 34 of 1966-7, p 2);
   2. (b) when the effect of particular imputations is under consideration, regard must be had to the importance of preserving freedom of speech in matters of political controversy and also, in cases of ambiguity, to the intention of the speaker (House of Commons Paper 247 of 1963-4, p vi, par 7);
   3. (c) the law of Parliamentary privilege should not be administered in a way which would fetter or discourage the free expression of opinion or criticism, however prejudiced or exaggerated such opinion or criticism may be, and on the other hand the process of Parliamentary investigation should not be used in a way which would give importance to irresponsible statements (House of Commons Paper 112 of 1947-8; Report, pars 6 and 7—Committee of Privileges);
   4. (d) it is not consistent with the dignity of the House that penal proceedings for breach of privilege should be taken in the case of every defamatory statement which, strictly, may constitute a contempt of Parliament (House of Commons Paper 112 of 1947-8, p iv, par 6—Report of Committee of Privileges);
   5. (e) (Parliament is) not concerned with setting standards for political controversy or for the propriety, accuracy or taste of speeches made on public platforms outside Parliament. (It is) concerned only with the protection of the reputation, the character and the good name of the House itself. It is in that respect only and for that limited purpose that (it is) concerned with imputations against the conduct of individual members (House of Commons Paper 247 of 1963-4, par 8).
2. 5. Your Committee, however, also took note of the following:
   It is the duty of the House to deal with such reflections upon members as tend or may tend to undermine public respect for and confidence in the House itself as an institution (House of Commons Paper 247 of 1963-4, p vi, par 7 (Committee on Privileges)).
3. 6. Kilpin, writing in Parliamentary Procedure in South Africa (3rd ed), defines a breach of privilege as “a wilful disregard by a member or any other person of the lawful powers and privileges of Parliament. It is a contempt of Parliament …”. He supports the point of view in par 5 above by listing, as an example of such contempt, “indignities offered to members or officers of Parliament in connection with the performance of their duties” (p 103-4).
4. 7. In attempting to come to a decision on the case in question, your Committee felt it necessary to determine the “wilful” element relating to the authors of the statement contained in the election pamphlet, and accordingly resolved to invite Mr C C Joubert, in whose name the election pamphlet was distributed, to give evidence before it.
5. 8. In his evidence before the Committee, which was taken under oath, Mr Joubert accepted full responsibility for the publication of the article in question, and explained that, with the exception of subparagraph (i) below, which was allegedly based on a Hansard report, he had no facts at his disposal, other than newspaper reports and remarks made in private conversations, to substantiate claims—
   1. (i) that Parliament, as presently constituted, did less work than the Parliament under the previous Constitution;
   2. (ii) that Parliament only works on two days a week;
   3. (iii) that Coloured members are still recovering from the weekend on Mondays;
   4. (iv) that White members play golf on Wednesdays;
   5. (v) that Indian members have religious commitments on Fridays; and
   6. (vi) that work is interrupted due to a lack of quorums.

He further acknowledged that he was not conversant with Parliamentary procedure, relating especially to Standing Committees of Parliament.

He added that it had never been his intention to insult anybody, and that his reference to members recovering from the weekend was not intended to imply that members overindulged over weekends but was inserted in an attempt to introduce a lighter vein into the article.

He further acknowledged that the article in question had been loosely based on remarks Mr Le Roux had made in the course of a speech in the House of Assembly (Hansard, col 2843), and that the offending portions in the article, although (falsely) ascribed to Mr Le Roux, had in fact been written by himself and other contributors to the pamphlet, namely a Mr Du Bois and a Mr Mohr, in an attempt to introduce an element of humour and greater readability.

He added that he as prepared to apologize for any hurt or insult inadvertently caused by him as a result of his article.

1. 9. Although the reference in the article (see par 3) is to members of Parliament and not to Parliament as an institution, reflections on unnamed members of Parliament can on good authority (see May, 20th ed, p 152) be regarded as reflections on Parliament itself. Your Committee is of the opinion that the inescapable innuendo of the words in question constitutes a grave insult to members of Parliament in general, and to members of the House of Representatives in particular, and therefore a contempt of that House, and must as such be regarded as a breach of Parliamentary privilege.
2. 10. Your Committee, after hearing Mr Joubert’s evidence, came to the conclusion that it was still unable to regard the explanation and apology tendered by Mr Joubert as making sufficient amends for the insulting and derogatory reflection on members of Parliament, and accordingly recommends that Mr Joubert present himself at Mr Speaker’s Chambers, in order to present a written apology for the reflections cast upon Parliament, which apology it recommends should be printed in the Minutes of Proceedings of the three Houses of Parliament.
3. 11. Your Committee wishes to report further that it also considered the position of Mr F J le Roux, the honourable member for Brakpan, who is alleged to have made the remarks referred to in the article.
4. 12. In the light of the statements by Mr Joubert (see par 8), your Committee recommends that Mr Le Roux be exonerated from any charges against him.

J H HEYNS,

Chairman.

Committee Rooms

Parliament

18 June 1985.

Report to be considered.

Proceedings and evidence to be printed.

Mr Chairman, I move without notice:

Mr Chairman, the CP takes great pleasure in supporting this motion by the hon the Leader of the House, because if the standing committee were to be appointed, it would mean that a multiracial standing committee would also be appointed in regard to this portfolio and the few own affairs of the Whites that still remain. The motion of the hon the Leader of the House now means that a multiracial standing committee to guard over the few own affairs of the Whites is not going to be appointed. The CP therefore supports this wholeheartedly.

Mr Chairman, before the adjournment of the debate yesterday evening the question was asked as to what the alternative was to power-sharing among Whites, Coloureds, Indians and Black people as it is built into this Bill.

The CP accepts the premise that the peaceful coexistence of peoples and mutual co-operation arising among them can best be served by the full realization of each person’s right to self-determination. This is why the CP places the highest priority on White self-determination. At the same time, the right to self-determination of the Coloureds, Indians and the Black people is recognized by the CP.

We have the highest respect for a people with pride in itself, its own nationalism, a people that does not want to be an appendage of another group but wants to be a people in its own right. The CP therefore stands for a fair geographic arrangement as a basis for the realization of the separate political aspirations of the various peoples as a guarantee of their own freedom and self-determination and—this is very important—as a bulwark against political integration and a destructive power-struggle among the various peoples and groups.

The CP therefore regards it as absolutely essential for each people to have its own political structures and governing bodies at the highest as well as the lowest level. Why are we asking this? Because the CP believes in democratic government, that the voice of the people should rule at the highest as well as the lowest level; because by means of separate institutions the CP seeks to eliminate domination of one people by another; because own structures and governing bodies are the only guarantee of real self-determination and peace; and finally, because when different peoples and races or cultural groups are linked together in the same governing structures, as in these regional services councils, conflicts of interest develop— domination by majority groups or by a minority group, by effective retention of power by means of a qualified franchise as is built into this Bill. Blackmail tactics can also be used by minority groups that have co-ordinated their forces. One can also find group favouritism within such a multiracial government.

Separate local government bodies are the only means of avoiding domination of one group by another, of eliminating the favouring of one group above another, or of excluding blackmail of one group by another. They will also eliminate clashes of interest and conflict. [Time expired.]

Mr Chairman, I found it significant that in this debate both the PFP and the CP approached this Bill from their own political and ideological viewpoints. I have no fault to find with that. That is how it should be provided that it is done on the basis that the facts of South Africa are not ignored. Facts have the unpleasant habit, even if one ignores them, of not necessarily going away.

You obviously know about that.

As the hon member for Jeppe has made that observation now, let me say that he is also an unpleasant fact that will not go away. [Interjections.]

I want to refer to the PFP which as an alternative to this legislation offers us a policy of one man, one vote and a common voters’ roll.

What you said about me was nasty.

I admit it was a little nasty.

The hon member for Sea Point pointed out in his speech that this legislation would not have been necessary had the Government not thereby sought to ratify its policy of separate local authorities. The hon member said—and I quote from his unrevised Hansard: “There would not be the need to impose this grid of RSC’s.” That is not correct. The hon member knows that history teaches us—particularly in respect of the Western Cape but this also applies to other metropolises—that bodies have developed systematically that have rendered services at regional level. In this way the Cape City Council renders certain services at a regional level as does the Divisional Council. The fact remains that as a result of the interests of local authorities this rationalization in respect of the rendering of regional services is not progressing as desired—once again as a result of vested interests. If that rationalization which benefits the taxpayer does not make progress, it is the duty of the central Government to place instruments in the hands of local authorities and higher governmental bodies to ensure that progress is made with rationalization in the interests of the taxpayer. I maintain that this piece of legislation places the specific instrument in the hands of the bodies concerned to enable them to implement the proper rationalization of services in our country.

The second point I want to make in respect of the PFP is that they will concede that a backlog exists in the Coloured, Indian and Black areas in particular as regards infrastructure and general living conditions. There is a reason for this. I maintain that the Coloured, the Indian and the Black man have not always received their rightful share of the funds of the local authority. I maintain further that local authorities have not always had their priorities right when they have had to decide on the allocation of funds. I want to give the hon member for Sea Point an example. Some years ago his Prog-controlled City Council of Cape Town built a luxury civic centre with a mayor’s office larger than any I have ever seen in South Africa, at a cost of millions and millions of rand, while there were Coloured and Indian areas within their jurisdiction that did not have the benefit of sewerage, tarred roads or street lighting.

I have a complaint to make about that hon member. That hon member will agree with me because when we look at the allocation of funds by the Cape Town City Council, Bishopscourt, Sea Point and Rondebosch are examples. This is so. It does not surprise me that the PFP are opposed to this legislation because their voters in Rondebosch and Bishopscourt are going to suffer. The PFP’s policy of one man, one vote fails completely to consider one fact of life and that is nationalism. If the hon members of the PFP imagine that they can drive off from Bishopscourt, Houghton and other similar places in their Jaguars to fight an election in Elsies River and Langa, I want to tell them they are making a big mistake.

On the contrary the PFP is losing support among the voters at local authority level. The hon member for Sea Point will agree with me that it was his MPC who lost the election last September. He also happens to be the leader of the PFP in the Cape Provincial Council. He lost in the local government poll at Sea Point. He was replaced by an NP member but I shall tell the hon member why that man lost. It was because Sea Point residents were feeling the effects of the integration policy of that hon member and his party.

There is no difference between the Nats and the Progs.

I come now to the hon member for Kuruman. That hon member made a long speech in which he asked any number of questions. Unfortunately I cannot answer them all in the limited time at my disposal. There is an old adage that goes: “A fool can ask more questions than a wise man can answer.” [Interjections.]

I want to refer to the hon member for Waterberg who is unfortunately not here at present. The hon member made certain insinuations regarding the hon the Minister of Constitutional Development and Planning. I want to quote from the hon member’s unrevised speech in Hansard. He made a few statements referring to the hon the Minister, and I quote (Hansard: Assembly, 17 June 1985):

It does not surprise me that the hon member for Waterberg was astonished, because he did not know what it was all about. [Interjections.]

The hon member for Waterberg made certain insinuations regarding the hon the Minister of Constitutional Development and Planning. The hon member insinuated that that hon Minister had had us vote on certain statements that evening and then on the following morning impressed them upon us as matters of principle.

I want to tell this House that that is not true. What did we vote on the previous evening? I want to quote to the House:

That is a simple principle and it is after all the basis of this legislation. The hon member for Waterberg, however, did not know what it was all about and, when he wiped the sleep out of his eyes the following morning, he found that we had accepted a certain principle and that we were using the Bill to discuss it in an informal way.

Reform by stealth!

No wait. The hon member must please give me a chance. When we had to vote on this Bill at a later state, namely on the principle, the acceptability of the Bill and the clauses, the hon the leader of the CP was conspicuous by his absence. He was not even there to participate in the discussion. I want to tell the hon leader of the CP in his absence that before he casts suspicion upon others he must first make sure of his facts. [Interjections.] That was simply not true.

Time does not permit me to say much more but I should just like to refer briefly to what the hon member for Kuruman said. The hon member for Kuruman was kind enough as to tell us that CP policiy regarding third-tier government was to have separate local authorities. I want us to have a look at his example of Britstown which he mentioned here. His facts in connection with Britstown were not completely correct because there are other Black people in Britstown as well whom he did not mention …

I referred to the two, man!

And I am referring to the three.

Fine, do so then!

I want to point out to the hon member that he has to accept the consequences of his policy. If he wants to have third-tier government on an absolutely separate basis, without any liaison, it means that in Britstown he will have to have three water supply networks, three electricity systems, three sewerage systems and three airports. [Interjections.] The hon member will concede that there are towns that accommodate members of all four population groups.

Are the other hon members over there also so stupid?

No, the hon member must not say I am stupid. I know stupidity when I see it. [Interjections.] I just want to point out to the hon member that in terms of their allocation of land, no services of this nature will fall within a Coloured homeland. The hon member will then be in a position where Coloured, Indian and Black local authorities, as the hon member stated in his speech, will have to purchase these services from White local authorities. They will have no choice but to purchase them from us. Then this hon member is presumptuous enough to accuse us of trickery (verneukery)! It sounds to me like the pot calling the kettle black! How the hon member can on this basis find moral justification for naked White “baasskap” in the trickery (verneukery) of the Coloureds and the Indians is beyond my comprehension. I think it is time for members on that side of the House to forgo their crazy ideologies and look the facts in the face for a change so that we can make progress in this country. [Interjections.]

In conclusion I should like sincerely to thank the hon the Minister of Constitutional Development and Planning for his plan for practical local government. I want to thank the hon the Minister of Constitutional Development and Planning because we have been waiting for legislation in connection with practical local government for a long time. We can be of service to our taxpayers with this Bill, as is expected of us.

Order! Before calling upon the hon member for Bezuidenhout to speak I just want to point out that the word “trick” (verneuk), when it refers to a member of this House or to a political party of this House, is unparliamentary.

Mr Chairman, the hon member for Parow spoke about regional services and said that they had been developed to some extent in the Cape Province, but that it had not been properly done due to vested interests. To some extent that is perfectly true, but it is very difficult for a local authority not to worry about its own ratepayers. That not only applies to the city of Cape Town but also to every other town which looks after its own ratepayers in the first instance.

Secondly I want to say that I admire the hon member for Parow for one particular thing he said, namely that there was a backlog in the development of local authorities in the areas for Coloureds, Blacks and Indians, and that we as Whites carried a great amount of responsibility for that because we had not in the past given them what was their due. However, that is, no doubt, due to the policy of the NP whereby Blacks in particular were not even considered citizens of this country and therefore had no chance to participate in local government. For a long time they were considered only as sojourners.

When this Bill was first tabled and I had had an opportunity to study it, I was amazed at its complexity. I tried to think of whom the hon the Minister of Constitutional Development and Planning was trying to emulate. Then I remembered that he was putting himself into the shoes of that arch-British imperialist Disraeli who started complex systems of constitutional government for the British Empire. He once said—and I wish the hon the Minister would listen …

I am listening.

He once said:

How to govern this prodigious sprawl was one of the great political challenges of history. The new imperialism welcomed the challenge and fostered a response. The empire was to be consolidated and it was to be given system.

This is what I think the hon the Minister has done in formulating this particular Regional Services Councils Bill. Instead of building on the existing system which could easily have been advanced, it had to be destroyed. The hon member for Klip River last night gave us a clue to this. He said that the historical boundaries of South Africa, as devised by our political fathers at the National Convention in regard to our present provinces, may have outlived their usefulness. He also suggested that South Africa could be divided into more zones. It would have been easy to reconstitute eight zones in South Africa and to have divided the provincial councils accordingly by following the economic regions as devised by the hon the Minister’s own department.

May I just say that this Bill does not deal with that?

No, but I am coming to that. I am trying to say that it would have been far better to have had zoned governments elected by the people, for the third tier of government to have remained under them and for centralization to have taken place under smaller provincial councils. These zones are far better than the original provinces in that they have a far better economic basis. The provincial councils could then have become regional councils in which the administrators and elected representatives ultimately understood the requirements of their regions. They could have devised better plans for the better utilization of services within those areas. The elected representatives to whom the administrator would have been responsible could have been elected by that particular group to which they belonged to as a start even though I may have disagreed with it.

Parliament could then have divested itself of some of its powers by decentralizing. However, in this particular Bill exactly the opposite has happened. Everything has been centralized up to the power of the hon the Minister himself. In terms of this Bill the hon the Minister will have the ultimate power of control. On the other hand, if he had decentralized and given greater authority at the second and third tier of government, a far greater say would have been given to the people with regard to their own affairs.

This Bill is a farce in that the original prospect of decentralization has been reversed completely. Centralization has now been legalized. At the top of the imperial order sits our new Disraeli with his eight or more proconsuls, the administrators. However, in effect the administrators are no more than the governors we used to have in this country who listened to the imperial orders which will now come from the hon the Minister. These people will in turn be watching over their regional councils to see that they stay in line with NP policy.

I would have thought that the hon members on the other side of the House would have learnt a lesson from imperialism and that they would have adopted different methods. I regret that the hon the Minister of Finance is not present in the House because he has twice castigated hon members on this side of the House. He is cross because he says we are letting the world know about apartheid to the detriment of the Government. He repeated the same statement yesterday in respect of the hon member for Sea Point. The opinion of this side of the House is that this measure has characteristics of apartheid because it is based on group government and on colour.

We must clearly understand the problem that prevails. The predecessors of the NP under Dr Malan, the Herenigde Party, decided in 1947 to formulate a policy of political and social segregation so as to maintain White domination by a majority of a minority group over all other groups in South Africa, based on colour. Once having formulated the policy and steps to be taken to give legislative and governmental effect to this, some simple word or slogan had to be devised so as to imply what such a policy was about. That is how the word “apartheid” was devised by Mr Paul Sauer. This was a policy based solely on colour. There was to be no more “civilised man” basis as propounded previously where a man would be free to exercise his talents to the full in competition with his fellow human beings in this country. So when the population census took place in the early fifties, the statistics and information thereon were utilized to provide the necessary information for a population register, and every person born thereafter was attached to his group, and from the cradle to the grave had to remain in his group.

Apartheid simply means government in groups. This Bill seeks to establish a regional services council where group areas of different colour groups define the nature of the local authority that has to be established. There are White municipalities, Coloured management committees, Indian LACs and management committees and Black community councils. These can only be possible because a population register defines the group and then each group must live in its own designated area according to colour, and somehow or the other appoint its own local government structure.

However, as South Africa develops and the problems of urbanization overtake us the question of the provision of services on a wider basis has to be considered for practical and harsh economic reasons. In the days before the NP came to power, Coloureds, Indians and even Blacks participated to some extent by voting for a common local authority, albeit in some cases on a separate roll. Dr Abdurahman, for example, was the MPC for Castle and his daughter was a city councillor. However, the Nationalist Party has a policy of group separation which is what apartheid is all about. The Regional Services Councils Bill provides for representation on a group basis. Therefore, it is an extension of the apartheid system, and the hon the Minister of Finance knows this. Any other term used is merely a semantic differentiation. A rose by any other name would smell as sweet.

There are White people in South Africa who did not and do not approve of the apartheid policy. They are fully entitled to state their disapproval and, as long as they forswear violence and are prepared to abide by the system of election to this Chamber, they are fully entitled to state their views. The hon the Minister of Finance should know that there is a world outside South Africa. He should also remember what John Donne said: No man is an island unto himself; when the bell tolls, he must not ask for whom it tolls—it tolls for him. The hon the Minister of Finance must realize that he of his own free will chose to support the policy of the NP. He abides by it to this day. The world outside has different ideas as to how persons should be governed. Most people outside do not differentiate legally on the basis of colour. If they do, they also practise apartheid.

Before 1948 when the hordes of the Nazi rulers wished to dominate through violence and through their master race theory, the hon member for Sea Point and many of us on this side of the House or many of our parents were patriotic and saw fit to defend our fatherland so that this House of Assembly could be a place where free men could enjoy the privilege of the freedom of speech. We express in our way our attitude towards the Bill namely, that it is still an extension of the principles of apartheid or group separation as propounded by Paul Sauer.

The hon the Minister of Finance should know that it is not our voice alone that the world hears. The hon the Minister gives us credit for far greater influence than I believe we as a small opposition party have. Most of the world outside does not even know that there is a White opposition party in this House that is counter to apartheid, and fights for the rights of those who are not able to be heard in this House. [Interjections.]

Legal cosmetics may improve the looks of the Bill but do not deprive it of its basic weaknesses. Nevertheless, the hon the Minister of Finance is completely unjust in blaming the hon member for Sea Point for the sins of the Minister and his predecessors. The hon the Minister must realize that the bell tolls not for the hon member for Sea Point but for him.

Yet we must be grateful in some respects to the hon the Minister of Constitutional Development and Planning, and we must give him credit for some of the clauses in this Bill. He has become aware of the facts of harsh economics. These facts have even forced his NP and him to realize that people of colour will have to share and participate in responsible decision-making. This Bill will grant them the first opportunity. However, because of the way it is structured, it seems that the hon the Minister of Constitutional Development and Planning is building a hornets’ nest and he must not cry when he is stung.

I would like to deal briefly with the basis of taxation. I would like to draw the attention of the hon the Minister of Constitutional Development and Planning and the hon the Minister of Finanace to a very peculiar thing. I would like to quote from Musgrave’s book on Fiscal Systems where he shows that socialist taxation, in terms of the traditional Soviet system, is composed largely of turnover taxes and the government’s share in the profits of public enterprises. He says:

About 40% of the taxes collected in the USSR comes from turnover tax and about 20% comes from payroll taxes. In the Western World, however, turnover taxes have had the political advantage of yielding large amounts of revenue at what appears to be low rates. This increases the likelihood that the tax bite will be effective at least somewhere along the fines of production.

I have information to the effect that some thirty countries in the Western World, in the East and behind the Iron Curtain have imposed turnover taxes. About 24 of them, however, have given up turnover taxes because they are hot really effective. The only places where turnover taxes remain are the Soviet countries. A new system of taxation has been adopted in the Western World, and I predict now that this system of turnover taxes will in future have to be changed to a value-added tax because this is a fairer system of taxation.

Payroll taxes on the other hand are found in very few countries in the Western World. Where they do appear, they have been used for welfare purposes such as, in America where they are used for social security.

I would like now to deal with another problem which we have. It relates to clause 9(1) of the Bill, namely the apportionment of votes. The question revolves around how the members are going to vote in the council. [Interjections.] It says:

This excludes regional services provided in any industrial area or central business area which the administrator shall delimit. I find it most amazing that the areas should have been left out. I should like to ask the hon the Minister why it was necessary to leave them out. After all, when one considers one’s whole tax structure and the people who are going to pay, one can see that the greater amount of the taxation—and I am talking about the two levies now—is going to come out of the central business district and out of the industrial areas. I believe it is quite true to say that this will be almost in line with what is paid in income tax by the various centres.

Let us consider, as a whole, how taxation is derived in South Africa. For instance, in 1982 in the Transvaal a total amount of R1,9 billion was collected in personal income tax. Of this amount R1,494 billion was collected from those areas which constitute the PWV area, namely Johannesburg, Krugersdorp, Benoni, Brakpan, Germiston, Pretoria, Randfontein, Roodepoort, Springs and Vereeniging. That means that between 60% to 70% of the total tax for the Transvaal came from that region. Now we are going to establish taxes which are going to be over and above these. When one takes company tax, one finds that most of the company tax also comes from that area. In Natal for instance R272 million comes from the Durban Pinetown area. In the Cape, when one takes Cape Town, Bellville, Port Elizabeth, East London and Uitenhage one finds that R475 million comes from those areas. On the other hand, an area like Pofadder gives R242 000 to the Treasury.

The hon the Minister of Finance has the audacity to come into this House and ask why widow Pienaar should pay for subsidies on transport. First of all this tax is unfair because the very people who give the major amount of money have after what they buy in services been excluded in the apportionment of votes in the council. In addition to that they must pay the greater amount. I believe that this is something which should not have been brought into this particular Bill and it would have been far better, had it not been there.

Mr Chairman, I do not deem it necessary to react to anything the hon member for Bezuidenhout said, particularly not with the little time I have at my disposal.

The hon the Minister stated expressly that this measure can be seen as part of the Government’s reform programme. In my opinion we are dealing here with a very worthwhile measure, and I think one way to evaluate the merit of this piece of legislation is to test it against the norm set by the State President for the new dispensation we have entered. [Interjections.] The State President said that we were striving towards making the RSA a better place to live in, and I understood him to mean not only a better place for the individual but also for our population groups and communities.

The emphasis here is on our communities in particular. As a starting point in evaluating the legislation, we shall surely have to be honest in admitting that the RSA was previously not an equally good place to live in for all its people and communities. The fact is that, viewed collectively, there are still large gaps between the more privileged White communities and the other groups. There are still large gaps in respect of prosperity, benefits and opportunities. Nowhere are these differences more clearly identifiable than in the position of management bodies of colour in comparison with the White-controlled parent local authorities. This phenomenon can admittedly be explained historicaly, and an hon member of the CP also referred to this. It is probably true that one can explain this historically, if this will satisfy a less sensitive conscience, but we must simply not try to justify or defend it in this year of 1985. [Interjections.]

Under the present system of parent local authorities and satellite communities it will be very difficult—if not impossible—to correct this inequality. If it is to be rectified under the present system, it will happen very, very gradually, and this will also bring with it so much more frustration that it is an option we must certainly not even consider. Those of us who have had experience of this know and in fact admit that there has been a certain degree of improvement. The position today is definitely better than it was 20 or 30 years ago, although still not at all satisfactory. Why is this the case? It is simply because the parent local authority is fundamentally in the position of a ruling authority in respect of the inferred management body.

Authority of this nature often manifests itself in a paternalistic attitude. Paternalism towards someone or towards a body with self-respect cannot but lead to conflict and confrontation from time to time. We must of course admit that relationships between the parent local authorities and their satellite communities are not always what one would wish them to be. In fact they often leave much to be desired. Accusations have even been made backwards and forwards. The one does not believe the other is pulling its weight while the other one in turn suspects that one way or another it is being shortchanged.

History teaches us that a body such as this does not easily give up its authority voluntarily. This is also why the progress over the past year was so particularly slow.

One does not just simply abdicate.

Mr Chairman, I can testify to the fact that in some cases there is even an inbuilt resistance on the part of some of these bodies to relinquishing their authority. However, in the RSA of the eighties this is definitely no longer acceptable and that inequality must be eliminated or at least reduced. That then is also why the Government decided on this process of reform.

With this legislation under discussion—as I see it—we are reflecting that process of reform very pertinently. As the hon the Minister also indicated in his second reading speech, this legislation is aimed at effecting a distribution of income that will assure the less well-to-do local communities of basically essential services of a minimum standard. Much has already been said here about the inequality in revenue which has to be rectified. I think that in the present case the emphasis is not so much on inequality of revenue; it is more on the aspect of the inequality in satisfying the needs of the poorer communities. The proviso in clause 12(6)—and I shall come back to this later—is particularly pertinent in this connection.

At the level of local authorities there is an urgent need for and a fallow field awaiting a process of reform and rationalization such as this—precisely what is envisaged in the piece of legislation under discussion. Each redistribution of powers and privileges of course requires adjustment and it is necessary to develop a favourable climate for such a process. Part of this is the willingness and the preparedness of the more privileged to share their privileges with others. This of course means making allowances and even certain sacrifices too. That does not happen easily. It particularly does not happen easily when we are dealing with a situation of paternalism.

What happens now when the various contributions to the economy by the parent local authority and its satellite management body are evaluated? Each one then tends to overestimate its own contribution. The approach of each is of course subjective. Whether we want to admit it or not the existing system does not include a reliable process of arbitration that can decide authoritatively in this regard.

We continually hear management committees complaining that justice is not being done between themselves and parent local authorities. They believe they make a far greater contribution towards the community coffers than is due by them by way of services and facilities. At the same time there are also parent local authorities that are most unwilling to give recognition to the contributions that are in fact made by the other communities. This means that there can be no unanimity. In this connection members of the House of Representatives are fond of talking about the cake that has to be shared. Unrealistic, conflicting and excessive claims are sometimes made in regard to how the cake should be divided. It is this basic problem that we are now trying to rectify. Apart from this it is important to note that the so-called cake is simply too small to make it possible for each to be satisfied with its portion. The present available sources of revenue are simply inadequate. The greatest merit of this Bill lies in the fact that it is aimed at providing us with a way out of this dilemma.

As far as the financial aspect of the measure is concerned, in the first place provision is being made for a larger cake, if I may put it that way, and furthermore, for a more neutral, more independent and fairer process of sharing the larger cake as well. The mechanism is built into this measure, and here I am referring specifically to the proviso in clause 12(6) which ensures that there will be a fair distribution of available funds.

Mr Chairman, on a point of order: I should like to draw your attention to the fact that there is no quorum present in the House.

The attention of the presiding officer having been called to the absence of a quorum, the division bells were rung.

A quorum being present, debate resumed.

Order! The hon member for Sundays River may proceed.

Mr Chairman, I believe I have said enough to convince even the hon member for Sunnyside of the merit of this measure, and I am happy to support it.

You will never convince me, man!

Mr Chairman, at this stage I am the nineteenth speaker on this particular Bill and I understand there are another five to come, so it seems to me that I will have something of a difficult time to think up something new to say, and that those who succeed me are going to find it even harder. However, I must maintain my reputation of finding something new and I am sure I will manage to do so.

As the hon member for Durban Point illustrated, we cannot oppose the principle of the Bill. We cannot oppose the principle of this Bill which is to create and establish regional authorities. It is quite obvious that if one is going to establish regional authorities they will require money.

My problem is not with those principles; my problem is how one implements those principles. This is one of the sad things which one finds with the NP Government, namely that even when they do the right thing, they do it the wrong way. This is the kind of problem which one comes across time and time again even when it comes to good constitutional changes. What happens is that they eventually get around to doing the right things but they hide their lamp under a bushel so that we don’t derive international benefit from it. They are purely and simply trying to disguise the matter from people who are to the right of their political spectrum. They do not even get the benefit of the plaudits of the people to the left of their political spectrum within the country. So they get no benefit internally or externally.

They do the job.

They do the job. I agree with the hon member on that one. One can put a buttonhole on one’s lapel with a pin or one can put it on with a rivet. What is the sense in using a rivet? One ruins the suit in the process. This is the sort of thing with which one has to deal.

Again, as I indicated was the case this time last year when a similar Bill was discussed, regrettably the whole procedure is being rushed. I know the hon the Minister is going to say that we have spent all this time discussing it in the various committees. He will tell us that it has been to the standing committee and so on. Here we are faced with a very important Bill on the second last day of the session.

Again in respect of this Bill we find that it presupposes that another Bill, the Local Government Affairs Amendment Bill which was introduced in a joint sitting today, is going to be approved. I wonder what the situation will be with this Bill if the Local Government Affairs Amendment Bill is not passed. I find myself with a little query alongside that because then we shall be passing a Bill which has as an integral part of it an aspect of another Bill which may possibly not be passed. I do not suggest that it will not be passed because I am sure with the hon the Minister’s massive majority in this House and with his very, very persuasive manner in the other Houses it will be passed. The principle, however, is wrong that one passes a Bill presupposing another Bill is automatically going to be passed. It does give one the impression that the hon the Minister feels that he really does not have to worry too much about what we say in this House.

Did you not serve on the standing committee?

Oh yes, I am on the standing commitee.

This Bill is one of a number of Bills that have been framed to establish a new system of local government. There were a trilogy of Bills last year related to local government. There are two or three Bills that either have been introduced or are in the process of being dealt with at the moment dealing with local government. These Bills, one way or another, are all interrelated.

Every province has a local government ordinance. If any province had tried to establish a local government system by this piecemeal method, the Department of the Interior who handled it in those days would have not accepted it. They would have said: “Take this nonsense away until you have prepared a complete, comprehensive plan, so that we can see how one aspect relates to another.”

We have been faced with a succession of Bills, some of which were introduced last year and some this year, and one is virtually placed in the position that, by accepting one Bill, one is almost compelled also to accept another one.

That is purely coincidental.

The hon the Minister is being too modest by far; and he is not noted for his modesty. So, this particular Bill has been presented to the House this year on the basis of divide and rule. I think all will agree that the Bill presented last year, in spite of its being forced through to its Second Reading, was the most abominable sort of Bill that could have been presented. It was useless, totally unworkable and totally unreasonable as legislation. One must give the hon the Minister credit for doing the right thing: He realized, after the debate in this House, that it was a bad Bill and so he withdrew it and started virtually de novo.

In fairness I must say that this Bill represents a considerable improvement on the previous Bill. However, having said that, I must add that that does not mean that I think it is a good Bill, because I do not. I believe there are many faults and defects in this Bill. I will now touch upon certain of the faults. The one defect, I repeat, is that two vital features affecting the Bill are contained in another Bill. The one is the question of the Demarcation Board and the other is the rights and powers of management committees. Quite obviously, since that concerns another Bill, I am not in a position to talk on those particular aspects now.

As far as the Bill presently before us is concerned, I do not believe that the Demarcation Board is desirable, nor do I believe that it is necessary. I obviously believe that one has to have a body to demarcate the regions. That goes without saying. However, to have a national board to do that and then to have, in addition, virtually regional boards to carry on with the work, which they can do according to this Bill, in my opinion amounts to unnecessary bureaucracy and involves unnecessary expenditure, because the provinces have their administrations—I am not now referring to Provincial Councils, members of Executive Committees and the like—which have adequate personnel to handle these matters, together with local boards that could be created for that purpose, and know the local scene.

As I say, with the Bill before us we are faced with an accepted fait accompli although this has not yet gone through the House. Also in respect of the upgrading of the rights of management committees, local affairs committees and the like we are faced with the accepted fait accompli that the members of the Houses of Representatives and Delegates are automatically going to accept this. I am sure they will because I am sure the hon the Minister has done his homework and done it well—he is a very clever man. [Interjections.] I am therefore under no illusions. However, to me it is an affront to the dignity of Parliament to come forward with the automatic attitude that it does not matter what goes on anywhere else and that this is what the people will get. From that angle I believe that it is most unfortunate.

I come now to certain specifics of the Bill. I do not wish to go into too much detail as I do not want to waste too much of the time of this House. Time is moving on and many of us are hoping that we will finish some time tomorrow.

However, there is no question that the levies which are proposed here are absolute anathema. They are bad business and they will only be to the further detriment of business and commerce which are already hard pressed.

I know that the hon the Minister will say that the executives of the various chambers such as Assocom and Fedhasa have all accepted this. It may well be that their executives have done so but as a member myself of various of these organizations, I can assure the hon the Minister that the members do not accept it. Many of them are furious with their executives for having committed themselves to this. Whilst there may be a certain acceptance on the part of some people, it is a very, very divided community on the acceptance of this issue.

This issue is not only divided but is also unfair and illogical as has been well explained by other hon members in this House. The question of working on wages in a society where we have to create the maximum number of job opportunities is silly, to say the least of it.

One cannot work on the basis of turnover either where turnover bears no relation to profit. It can actually be a question of people who are losing money having to pay tax on their turnover. However, I do not want to go into this matter as many hon members have touched on it.

In the event of their going bankrupt, is the department going to be treated as a preferential creditor to the detriment of the interests of other people?

Finally, if a person does not pay for whatever reason—there is no restriction of reason as far as I can see—he can be fined R5 000. I accept the fact that if this is done with mala fides it may be justified. If it is the law one has to comply with it, stupid and ridiculous as the law may be. However, a fine of R5 000 imposed on a small business could in itself close down the business. I do not propose to say anything more on that matter as other hon members have spoke on it, perhaps more competently than I.

There is one other issue which I consider, to say the least of it, undemocratic, and that is having an appointed chairman and not an elected chairman.

One has a system which is interleaved between local government which is fully elected and Parliament which is almost fully elected. This system operates on a totally non-elective series of levels. The chairman of this regional council will be totally non-elective; he will be appointed by the Administrator with the approval of the Minister. As far as I can see the Administrator may not do anything without the approval of the Minister.

Then one will have the Administrator and executive members who are again appointed and not elected. One will therefore have a huge interspatial gap, and these persons will be nothing more or less than Government servants. They are going to be officials—perhaps of a higher level, perhaps of a medium level—but they are going to be nothing but officials, answerable to the Director-General of the department or the Minister.

Jobs for pals!

Please let me make my speech, Reuben—I did not interrupt yours.

I was just trying to help.

I know you are supporting me, old boy—thank you. [Interjections.]

The other point I wish to make is that, if any of these officials who are appointed and have no public accountability, happens to be of an independent turn of mind and wishes to do something that the hon the Minister does not like, the hon the Minister can forthwith have him fired. This is a difficult situation and, to say the least of it, it is not democratic. It is the removal of democracy from everything in the middle spectrum of government.

Another point which perturbs us is the compulsion imposed upon local authorities to divest themselves of the services that they may have been running very effectively and efficiently for many years. They can be divested of those services if that is considered to be in the interests of the regional services council because they are going to be the ones who will say whether they are going to take over those services or not.

Now the hon the Minister will say that the regional services council is represented by the various constituent local authorities. That is true, but the major local authority— and this is contrary to the opinion expressed by an hon member—is not going to have 50% of the say in all matters because there is a limitation on the power of a major local authority in a large number of local authorities comprising a regional authority. It may well be that a local authority will actually be divested of a service which has cost its ratepayers millions, and there will be no right to compensation—I use the expression advisedly—no right to compensation. There may be circumstances under which they will get compensation if the Administrator approves, but they are going to have to fight for it. To me this is quite wrong. If they can present a legitimate case there should be no question of having to fight for compensation.

The question of capital development funds for various trading undertakings has also not been finalized. I still have not had an adequate answer as to what is to happen to those, if there are specific funds that have been geared to, and built up to form a reserve for a particular department. That is another angle that we consider to be quite wrong and unjust. As has already been mentioned, there is the question of the two-thirds majority which, from my experience in local government and that of many other hon members in this House, is not always easy to obtain. However, having obtained this two-thirds majority in a multi-local authority body where there is a diversity of interests, a vast diversity between the large and the small local authorities, between the priorities of the White, Coloured, Indian and Black local authorities which are going to have enormous variations, an individual who happens to have a considerable amount of influence with an Administrator or the Minister, for whatever reason, whether it be political or any other, can have that two-thirds majority upset. One may have had to try two or three times to obtain that two-thirds majority in the first place and therefore to me this is a gross injustice; indeed, it is a miscarriage of justice.

The policy of different regions paying different rates is quite unacceptable. The hon member for Sundays River indicated that the primary objective of this Bill was to make South Africa a better place to live in. It has not always been a good place for all people to live in; paternalism etc should be removed but it is not easy to do this—this was the main theme of his speech. I accept that, and I think we all believe in that. I am a hundred percent behind the objective to get rid of paternalism and to allow every community to have the opportunity of standing on its own feet and paying its own way.

And paying for itself.

Yes. It must pay its own way. However, at the same time, because of historical reasons, they have to be given opportunities. Therefore, a certain degree of shall we say reverse discrimination may be necessary initially to get things under way. [Interjections.] I am not arguing; I am saying that it may be necessary. However, I do not believe that one should have this sort of discrimination among the regions because one may well find a heavily industrialized region with a large population alongside another region which has exactly the reverse composition and a relatively unsophisticated population. The one which is in a reverse situation with little industry and a large unsophisticated population requires money more than the other one. Yet, the money collected by a region is for that region. This is the intent. To me this is a very unrealistic way of approaching the problem. I cannot help but believe that we will in fact have to review the position in this regard.

I am a hundred percent behind the concept of bringing about massive changes in local government. I have no hang-ups about there being multiracial local authorities and neither do I have difficulties with ethnic local authorities. Our original Natal Plan made allowance for both of those. However, I do believe that this Bill is a badly thought-out Bill. The principles are right. I cannot quarrel about that and I must unfortunately, after much soul-searching, support the principles involved in this Bill. However, I wish this had gone through a Committee Stage because there are many of the clauses which I believe should be drastically changed.

Mr Chairman, I am very pleased that the hon member for Durban Point told us yesterday that they were supporting this Bill and the principles contained in it, because having listened to the hon member for Umbilo, I am a little confused as to whether or not he is supporting it. [Interjections.]

I said I am supporting it!

I see. The hon member mentioned the fact that the Government has a happy knack of doing the right thing, but that they always do it the wrong way.

An unhappy knack!

Fine, an unhappy knack. It is rather amazing that since 1977 that party has had a policy of local option. I want to ask them what happened to their policy of local option with reference to Palm Beach where 92% of the people voted against the province’s proposals but where the province has still gone ahead and done its own thing. [Interjections.] It is an interesting situation and it is nice to criticize. [Interjections.] It is indeed interesting.

I should like now to come to the hon member for Sea Point. I think he is a great master at drawing red herrings across a path, especially when it does not suit his own political philosophy. He made a great hoo-ha yesterday about the appeal, but I just want to refer him to clause 11(4) where the position is set out every clearly. Either he was unaware of the contents of this or he was attempting to mislead the House. I therefore refer him to clause 11(4) which reads:

1. (a) the failure of the council to perform a regional function;
2. (b) the insufficient performance by the council of a regional function;
3. (c) any decision or proposal of the council relating to a tariff or levy for services rendered by the council or to a recovery referred to in section 13;
4. (d) any determination by the council of a priority in connection with the appropriation of funds; and
5. (e) the refusal by the council of any application for exemption referred to in section 5.

So I do not believe that the hon member for Sea Point really knew what he was talking about. [Interjections.]

I want to come now to the hon Leader of the CP who I believe is an upright and Christian gentleman. He is not here today but nevertheless I want to say a few things to him. Surely he accepts—this also applies pertinently to the NRP—that in a CBD and in the industrial areas a great deal of the profits accrue to those industrialists and to those shop-owners merely because of the fact that they are supported financially by the non-Whites. The non-Whites come into the CBD’s and spend their money and the CBD’s enable the industrialists to make their money. Having said that and having agreed to that, however, I want to ask what the businessmen and the industrialists have done to uplift the community life of the non-Whites.

They paid their taxes.

That may well be so. I say, however, that the greed of the industrialists and the commercial houses has done absolutely nothing to uplift the lives of the non-Whites. This Bill whether one wants to admit it or not, is going to make provision for just that.

You are in the talking party, all right.

Not at all. It was interesting to hear the hon member for Umbilo make remarks about modesty in respect of the hon the Minister. I think he is the last one to make remarks of that kind. [Interjections.] Let us be quite frank. [Interjections.]

When one takes a look at the local situation I believe that this Bill has a tremendous potential for the lesser privileged local authorities. We have something like 14 local authorities stretching along the coast. Some of them are self-supporting, others not. The hon member knows the Development and Services Board runs some of these local authorities for the simple reason that they cannot support themselves. He will accept that. One need just look at sewerage. There are some areas which are desperately in need of sewerage facilities because of the density of the population but they cannot afford it because those people are not able to pay the charges for the facilities required.

To see how a regional services council will affect this situation, may I refer hon members to clause 12 which deals with the financing of the council, and in particular to subsection (6), the priviso to which reads:

I do not think with respect, that the NRP can complain about that philosophy.

In our particular area we have a regional water services corporation. That situation, I believe, is already the beginning of a regional services council because that water corporation takes water from the river, purifies it and retails it to the entire area. When one looks at this Bill and at a situation like that, one sees that one has the beginnings of a regional services board already in existence. I think this is something to think about. The Bill allows them to carry on on their own. It allows them to act as agents but it also allows them to come into the situation. I believe this is going to be a very interesting position because those statutory boards, with respect, consist of appointed people. The hon member for Umbilo was complaining about appointed people just now but his very province does exactly the same thing. They appoint people to these statutory bodies and they have no political responsibility to anybody. [Interjections.] Now it is a completely different story.

I say that this Bill has enormous potential particularly if one looks at an area like the South Coast. I think some people are under the impression that these regional services councils are going to have much more authority than local government. However, the regional services councils will have to comply with the same laws, the same statutes that affect local government. One cannot get away from it; they are no higher authority.

But they will obviate powers of other local authorities.

Not at all! At least, not without the consent of those local authorities. [Interjections.] The problem is that the hon member for Umbilo is what I would call a fundi on local government. [Interjections.] There is no doubt about that. I would, however, say that the hon member for Umbilo and his provincial executive committee seem to be at odds in respect of this particular Bill. He seems to be against it but his provincial executive committee seems to be all for it. So I do not know what the position is.

I would like to make one further point. [Interjections.] When one looks at some of the bigger local authorities—and I take a place like Uvongo, for instance, which is not a small local authority—one sees that up to now they have been unable to develop their sewage schemes because of costs. Now, because of pressure, they are reticulating their town but they have to go to the local water corporation to supply the disposal works. This is the type of thing which this Bill will provide for.

As far as Port Shepstone is concerned, regional services organizations are old hat. We have been working in conjunction with our Indian local authority, the Coloured local authority and the Development and Services Board insofar as sewage disposal is concerned. The relationship works very well. It works very well indeed.

I think it stinks!

You know, Sir, some people can never elevate their minds above the level of the sewer. I will not say to whom I am referring, but I think the particular hon member knows who I am talking about.

I think this Bill has tremendous potential for local authorities and can lead to the upliftment of those local authorities that before now have not been able to uplift themselves. As for the other local authorities, I am thoroughly convinced that with the right attitude and with the getting together of the local authorities as a whole—I am thinking particularly of areas like mine—this Bill has tremendous potential, notwithstanding what the hon member for Umbilo says.

Mr Chairman, the hon member for Umbilo had a problem. He was condemning the Bill but had to approve it. The hon member for South Coast, on the other hand, was set on approving the Bill but almost condemned it. [Interjections.]

One must ask oneself what the main reason is behind this Bill. One has irresistibly to toy with the thought that it might be part of some hidden agenda. One can indeed imagine a scenario where local authorities, having become more and more debilitated, had begun to wither away, and where there was a multiracial regional services council which expanded its operations, where discrimination did not apply, where people voted as one would like them to vote, that is, solely according to the fact that they were representatives of a community, and where the Group Areas Act had disappeared. That hon Minister, however, has got himself such a reputation as a brilliant constitutional fiddler that even when one speaks to the members of his own party, they put this scenario to one as the reason why one should support this Bill.

One also hears that the Bill is another step in the strategy of the devolution of power. The facts deny this, however. I must take the Bill at face value. It is a move to make Black local authorities more credible pieces of the jigsaw puzzle of apartheid, and it is a move to promote the decentralization of industry.

You supported the concept of Black local authorities.

The hon the Minister should know that that is not correct.

I believe that the hon the Minister has always been frank about the structures of apartheid and considers that the reason for the failure of Black local authorities stems largely from the lack of access to funds. I, therefore, have no reason to believe that this Bill must not be judged on anything other than what we see in front of us. One official has been quoted as describing it as a “salvage job”. He adds that upgrading is necessary or in three years’ time the whole place will be burning.

The irritation that the hon member for Mossel Bay showed at the description of this as an apartheid structure, is, I think symptomatic of the compartmentalized thinking we are inclined to get from that side of the House. It is a measure designed to transfer wealth to urban Black townships which we sealed off from the rest of the community by provisions of the Group Areas Act and many other apartheid measures. The intention is to make those areas more comfy and improve the quality of life of the residents, but there is one thing wrong with the whole strategy: It just will not work. It completely fails to come to terms with the degree of rejection of this Government’s constitutional structures that we find when we move in among the Blacks who are involved in resisting these structures and Government measures in Black townships. There is a gap between their thinking and the Government’s approach that is so wide that it can never ever be bridged by this type of measure, however much money is spent. [Interjections.]

The regional services councils are a multi-purpose creation that frankly present this party with a bit of a problem because the Government has become very adept at piggy-backing its apartheid structures on measures which have a lot of advantage to them. That presents us with a problem frequently because we have to look at a measure and approve it for the simple reason that it is much better than the thing it is replacing. The Bill provides for a redistribution of wealth to a section of the population which is hopelessly deprived. All our instincts make us want to support such a redistribution but by doing so in the present context we compromise ourselves and endorse Black political structures which Blacks themselves reject totally.

Although the hon the Minister states that the Bill takes into account the Government’s policy approach of maximum devolution of responsibility, power and decision-making, saying so does not make it so. The effect of the new councils is to centralize power in the hands of a government through its Administrator who is responsible upwards to that Minister, and by a procedure which means that even if 66% or more people vote in favour of a measure in that regional council, one of the people who does not support it can call for the matter to go to appeal and that decision can be reversed.

The hon the Minister of Finance has been very specific on how he sees this measure. In fact, in the past two weeks the hon the Minister of Finance has revealed his position only too clearly. Many of us had hoped— and I was one of them—that here was a sincere young man determined to contribute to reform from within that party. However, this has been revealed as wishful thinking. In fact, I spent a lot of the time, when we had a conference in Port Elizabeth a week ago and people asked me what I thought of the hon the Minister of Finance, telling them that I thought he was a sincere young man who was really attempting to do his work well. Then came Friday’s speech which absolutely horrified me. It has shown that he has not begun to question the bases on which the apartheid policy is based and is concerned only with the cosmetics of reform. His example of what he would like to call the system—co-operative coexistence—is an-indication that he is still at the stage where he is concerned with names, not facts.

He challenges the PFP to say whether a single one of them has ever said anything positive about removals. I sincerely hope not. This is a total failure to grasp the world’s and our horror of this type of social engineering. We do not believe we have, I quote, “painted a completely distorted picture of separate development”. In fact, if we have to choose our single most valuable contribution, it is to bring to the attention of South Africa and the world the effects of racial discrimination.

Beware the delusions of the central planner. When we come to examine this Bill as an instrument of taxation or as an instrument of government we are worried because we see its origin more in the delusions of omniscience that go with central planning than in an attempt at sound fiscal policies. It is no comfort to us to hear the hon the Minister say that the delay in the execution of this measure “vertraag die inwerkingstelling van ’n uiters belangrike grondwetlike ontwikkeling”. That puts the whole thing into focus. Apparently we cannot even submit this issue to the Margo Commission which is considering the whole structure of the country’s taxation at this moment. This shows a shocking inability to plan ahead. Once again, however—and pertinently—it lends point to the hon the Minister’s remark yesterday, and I quote: “Was there ever a worse time to leave Black councils without revenue?” Remarks like this cause businessmen serious concern. It paints a picture of the Government playing a chess game which has gone wrong. Troubles coincide and accumulate, while the player fights fires, unable to get ahead of the game, and one disaster follows another. In this instance the Government feels forced to slap major levies on to the most productive sector of the economy while this very sector is itself fighting for survival—while between sixteen and twenty companies go insolvent every day.

The hon the Minister of Finance told us plainly of his commitment to ideology rather than to sound economics. He says that if the Margo Commission were to come to light with an alternative that did not suit the Government’s ideological policies they would not be able to entertain it. That, I believe, puts everything completely into perspective. Let me quote what he says:

That is presumably the levies:

Again, later in his speech he says:

If businessmen can still bluff themselves after a statement such as this one, if they can still believe that this Government is exploring genuine reform, then they are beyond help.

Mr Chairman, one has to examine financial measures very carefully when they have that sort of ideological origin. It does not necessarily mean they are not good. They might still be good but one has to question them if that is the spur behind them.

In this case we must cast our minds back to the Budget Debate. Do you remember, Mr Chairman, during that debate, how determined the hon the Minister of Finance was to present a budget in which Government expenditure did not exceed the rate of inflation? Do you remember how complimentary we all were—including myself—that the increase in Government expenditure was contained at a level of 11,6%? These regional levies, however, are a tax on business. If R1,3 billion is to be raised in this manner it would put the increase in Government expenditure at over 15%.

This is not to say that this wealth transfer should not take place in favour of Black townships. It is to say, however, that we should have a very, very good look at all our other expenditure because in relation to the increase with this added it is way out of kilter. The regional services levy has lots of things wrong with it. It does not appear to have been gone into carefully at all. It appears, for example, that the regional services levy is a levy calculated, in the case of a partnership or sole trader, on the profits distributed to the partners or sole trader by way of drawings or loans. I should be grateful if the hon the Minister, when he replies to the debate, will deal with that point. I do not know how one taxes drawings or loans from a partnership. Does one get a rebate when one returns one’s drawing or loan? How does one withdraw profits from a partnership? Normally these have been taxed. Drawings, however, are borrowings from a partnership, and so are loans. The Bill states very specifically that the tax will be levied on this.

Our economic problem stems from the fact that too much in the way of resouces is being removed from the wealth-producing sector. What does the hon the Minister of Constitutional Development and Planning say on this matter? He says: “Development requirements have risen beyond the capacity of present total tax revenue.” Whose fault is that? One cannot just accept the fact. It is more important that that revenue be in the hands of the wealth-creating sector, the private sector, than in the hands of the Government to spend on its ideological junket. The reason given in support of the measure does not stand up to examination. For example, it is nonsense to say that the Government will be paying half the tax. It employs about 30% of the total number of Whites in the country. It is responsible for close to 30% of the gross domestic product and I fail to see how this can become 50% of the levies collected. It is not reasonable to say that because the levy is deductible before tax is calculated, the Government is consequently paying that portion of the tax as well. As we have learnt in respect of sales tax, for a levy to be increased by the Government to any level it chooses is only too easy. The hon the Minister says that it is specified that levies will not be recovered from consumers or employees, but does he honestly believe that that will happen?

In all fairness, that is not all I said.

That is all you said, except to add that in part they can be.

Well, that is important.

What I am saying, is that it will not only be recovered in part but totally. I can promise that what will happen is that a profit margin will be added when it is recovered. It must be because that is how a businessman runs his business.

This Government goes on its way careless of its tax base. It is the established, profitable company that creates growth and jobs. A fixation about ideological decentralization is dangerous for this reason.

There is another aspect of regional services councils that should be further examined, namely the compulsory use of services. This could have a serious effect on private enterprise. It is anticipated that it is the money-spinners that will be taken over by the regional services councils, namely water supply, electricity and abattoirs. At the moment these services represent an important source of the revenue of local authorities and they will become an important source of revenue for the new regional services councils. Local authorities are not going to be compensated for their assets and they will have a serious cash flow problem.

There are a whole series of functions which local authorities perform themselves, for example, refuse removal, transport and road construction. Many other local authorities give these services out on private tender. One of the adverse aspects of these regional services councils would be that many of these councils are going to end up with a vested interest in providing some of these services and will insist on performing these functions for all their members. This would be quite reasonable but would have a directly opposite effect to privatization. It would mean that regional services councils or their local authority agents would be doing refuse removal, transport and road construction and perhaps many other things as well. I believe that this aspect has not been researched properly and that it is quite ridiculous to go ahead with a piece of a far-reaching legislation such as this when the Margo Commission is sitting. It should at least be referred to that commission.

Mr Chairman, the time allowed to me is rather limited and consequently I shall not be able to react to everything the hon member for Walmer said. I should very much like to have reacted to many of the things he said, but I shall just have to leave that to the hon the Minister.

I want actually to react to just one aspect that was raised repeatedly during this debate. That is the controversy surrounding the use of the word “apartheid”, particularly as it is applied in this particular legislation. It is true that the hon member for Walmer discussed the matter again and demonstrated that the Bill was in fact apartheid legislation and formed part of an apartheid structure.

The hon the Minister of Finance set the cat among the pigeons here and told the hon members of the PFP that they were partly to blame for the false impression of us that exists abroad because they have connected everything with apartheid. They reacted violently to this.

I notice the hon member for Pinetown is here. I am pleased he is here because I should like to talk to him too. The hon members for Sea Point, Pinetown and Walmer, inter alia, reacted to that comment. What did the hon member for Pinetown say? He asked what was so terrible about describing this thing as apartheid. He asked: What is apartheid except differentiation on a racial basis? The hon member for Bezuidenhout said that this expression had originated with Dr Malan, and that it was purely and simply racial segregation. This legislation is genuinely reform legislation in the sense that when one looks at the situation of a particular section of our population today and at what the situation of that same section of the population will be once this Bill has been passed and its provisions implemented, one sees that those people will be in a far better position, not only politically but also financially. Their living conditions will therefore also be improved as a result. They will also be in a far better position politically speaking because for the first time now they will also have a say in providing valuable services in their region. They will therefore be in a better position, and that is why this legislation is in fact reform legislation. I should very much like to discuss this subject further but time does not permit me to do so.

On the other hand, hon members of the PFP are saying that this is an apartheid Bill. The definitions of apartheid given by the hon members for Pinetown and Bezuidenhout sound completely innocent. If they were true one could probably say that elements of apartheid were still visible particularly in regard to the basic principle of this Bill. I want now to quote another definition of apartheid:

When hon members of the PFP here tell us that this is an apartheid Bill, people abroad believe that we are oppressing, dehumanizing and enslaving people. Anyone who sees that in this legislation is really not involved in any kind of constructive dialogue on reform in South Africa.

At the moment the Government is occupied with reform. One measure after another is being introduced in order to negotiate a better life for the people of South Africa and to improve the living conditions of all the people of South Africa.

When we hear these kinds of noises from the ranks of the PFP, any advantage one could possibly have gained internationally or among our Black fellow citizens is adversely affected because they are led to believe that once again this is a measure intended to oppress them, to enslave them, and to keep them for ever in a subordinate position.

The members of the PFP should therefore not be so sanctimonious. In respect of many of the matters about which they criticized us in the past I will concede that they perhaps had a point. We also took cognizance of that. Now, however, the PFP must take what is coming to them for a change. They must also take their medicine for a change. I say that if we have a problem in regard to our international relationships and if there is a problem of increasing radicalization between ourselves and the Black people, the members of the PFP must also accept their share of the responsibility for creating those false impressions of the Government’s motives. They should examine their consciences for a moment to see whether in their excessive zeal to get at the Government in order to win a few political points they are not doing irreparable harm to the future of South Africa.

Mr Chairman, when one looks at this legislation, one is amazed to see how many changes were made in the standing committee. This is very important legislation. If one looks only at the aspect of the provision of services, it is very important legislation. It is a piece of legislation which could easily have been accepted in the country if it were not that the point of departure here is unfortunately to make it more politically effective as was pointed out by the hon member for Helderkruin. For that reason, this Bill is not acceptable to us.

The aspects in the Bill which bear reference to the provision of services, are something, however, to which one can give attention. If the Rand Water Board, the Natal Water Supply Corporation, Escom and similar bodies had been established purely on an economic basis, this legislation could have been wonderfully successful. Then one would also have had to get one’s loans from the central Government to supply services and it would perhaps not have been necessary to extend the tax basis as is being done today, something that will surely cause problems for us in future. I think it is going to be very difficult to collect the levies as is proposed in the legislation. Brazil and other countries started with purchase tax and it was shown that after a while it caused price increases and fueled inflation and made up part of it to such an extent that in the end it was simply not justified.

Another matter that bothers me a bit, is for example the explanation we are now getting about the redistribution of wealth. The hon the Minister justifiably indicated the view in America concerning the distribution of wealth. I want to tell him in passing I said a silly thing across the floor of the House yesterday and I am sorry about it because it did not befit me or him. I apologize to him. I felt very bad about it. It did not befit me and certainly not our relationship.

When it comes to the division of wealth, in America it has a bearing on tax in particular. Here, however, it boils down to the maintenance of the State. Our tax bears relation to the maintenance of the State.

[Inaudible.]

In a little while I want to speak to the hon member for Bezuidenhout about apartheid.

I merely want to say that tax is more concerned with maintenance of the State, for we are not a social state and I hope we do not become one. I hope that in the growth of our economy we shall create so many opportunities for each person who wants to work, that he will not have to depend on charity.

When one comes to the redistribution of wealth, one has to deal with wealth that has been built up.

No, there is a difference.

No, wait, let me deal with the hon member’s apartheid story quickly. I am a Protestant, but the day I die, I shall be buried 70 yards from that hon member. Why? Because he has apartheid in the cemetery. [Interjections.] There is a Catholic on the other side, not so. There is apartheid because a Catholic is lying there and I am a Protestant. [Interjections.] There is apartheid concerning all aspects of this country and I do not think we should take the Government to task about this unnecessarily. Bring the Government back to apartheid and bring prosperity to this country. [Interjections.]

The concept “redistribution” has various connotations world-wide. When the hon member for Pinetown spoke of the redistribution of wealth, he said: “Take from the haves and give to the have nots.” That became the slogan of the Marxists world-wide, in a country like Bolivia for example.

Why did my hon former colleagues in the NP and my brothers of yesterday—I sometimes long for them to be here with me—call the hon member for Pinetown a Marxist and a communist? They asked for him to be investigated by the Security Police because he had spoken of “the redistribution of wealth”. It is assumed, after all, that the nationalization of built-up capital and wealth is implied by a statement of this kind.

I remember that the former Prime Minister, Mr John Vorster, said in Alberton in 1977 that Mr Harry Oppenheimer could have his millions because he had worked for them. Mr Vorster said he wanted no part of them. We cannot advocate a redistribution of capital in this country.

Now we come to a very clever man, viz the Chancellor of the University of Stellenbosch. Who will tell me he is not a clever chap? [Interjections.] In a very important speech, he thanked the hon member for raising the matter of the redistribution of wealth once again. In addition he said that it was the nucleus of the liberals, of the PFP, its predecessor the PRP and such people. He said these people used that phrase abroad to make certain things known to the world. That is something different from mere ordinary tax. Those people say in a country like South Africa where people were oppressed previously, as they put it, and did not have the opportunity to build up capital, that capital should now be taken back from those who have and be redistributed.

Now we come to someone like our hon friend, Prof Terreblanche of Stellenbosch. He says the Whites should have a conscience about the capital they have built up and that it should be redistributed. Later he said that was not exactly what he had meant. The Chancellor of the University of Stellenbosch put them in their place and said liberals used the words I had quoted. I am now speaking of the previous chancellor, adv John Vorster. It was his speech.

What I want to say today, is this: Let us leave the expression “distribution of wealth” out of this discussion.

†Let us forget about the redistribution of wealth in this country. Let all of us work together. We have the mines, but now suddenly we find that there are people who talk about the fact that the wealth of the mines will have to be redistributed. That is nothing else but socialism. The hon member the Rev Hendrickse of the House of Representatives says that his party is a socialist party.

You say he wants to nationalize the gold-mines.

He wants to nationalize the gold-mines. I am afraid that by using that expression indiscriminately we are urging people to do things which we do not really intend them to do.

*I want to tell the hon the Minister I am sorry this legislation is being dealt with in this way. I still truly believe that when a region is divided up, there will be a local or regional management which will have more money than another. It is very clear that this legislation will cause that to happen. Once again, I am the man who is looking after the poor people. That is why I want to ask whether the levies should not rather be omitted and we should use the general taxes in this country to finance this provision of services.

Mr Chairman, it is very interesting that at the end of his very wise speech on the economy and finance this hon member said he was the man who looked after the poor. It would be interesting, however, to know from what sources he cares for the poor. Whose riches does the hon member use to look after the poor? Hon members on that side of the House are very unhappy because the realities of South Africa are passing them by entirely. Unfortunately I cannot respond to the hon member for Langlaagte’s explanation of the economy and the regulation of finance as I do not understand as much about it as he does. In consequence I shall leave the matter at that. [Interjections.]

I wish to revert for a moment, however, to the speech of the hon member for Pietersburg who stated here in the House yesterday that members on this side of the House who were in favour of the passing of this legislation were actually taking an unauthorized step. He stated that we did not have a mandate from the electorate to do so. [Interjections.] Nevertheless I want to put a question to the hon member. He is sitting on that side of the House now after having been elected to his seat as a member of the National Party in the 1981 election. In 1981 voters gave the Government a mandate to proceed with constitutional development. I wish to put it to the hon member now that not one of them on that side of the House was authorized by the voters—in the same terms as those in which the hon member referred to us—to sit there. The circumstances under which they were elected as members of this House do not authorize them to take the steps they are taking now. After the 1981 election a referendum was also held, however.

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

I am not prepared to reply to a question now as my time is too short for this.

After the 1981 election there was also a referendum and in that referendum White voters gave the Government the mandate by way of a two-thirds majority to proceed with constitutional development. [Interjections.] One of our hand-outs used during the referendum ran as follows:

I put it to the hon member for Pietersburg that this side of the House in truth has a mandate from the voters to act and inter alia to submit this legislation to the House. [Interjections.]

†I should like to come back for a moment to the remarks made by the hon member for Sea Point at the beginning of his speech yesterday afternoon. The hon member raised a point which he said was of less importance but with which he nevertheless wanted to deal. I should like to comment on his statement that the chairman of this standing committee is also a member of the executive. He said that he would like to see an arm’s length between the executive and the chairman of the standing committee who, in his words, “should look after the parliamentary side of dealing with the executive on this matter.”

It is interesting to note that his remarks are not quite consistent with the point which he made last year when this Bill was discussed. In fact, last year the hon member for Sea Point asked that this Bill be referred to the Select Committee on the Constitution. The hon member knows that this standing committee does not differ fundamentally from the old Select Committee on the Constitution apart from the fact that the members from the two other Houses are also included. However, it is interesting to note that the hon member only refers to the Minister as the chairman and as a member of the executive.

Yes, piloting the Bill through the House.

Yes, piloting the Bill through the House, but this standing committee is just an extension of the Select Committee on the Constitution, with the addition of the elected members of the executive of the other two Houses. What we in fact have here is what we did not have last year and to which the hon member for Sea Point objected.

The hon member also said that the members of the other bodies who discussed this Bill were not elected and were not representative of political parties. What we do in fact have in this standing committee are elected members representing political parties and who are in fact members of the executive— members of the Government. I cannot see where the problem lies. Last year the hon member wanted the Bill to be referred to the Select Committee on the Constitution. This year it has been dealt with by the standing committee which is actually the same committee. Therefore I cannot see the hon member’s problem in regard to this point. However, he referred to it as a less important matter and we can therefore leave it at that.

*A considerable amount was said here about the redistribution of wealth; the hon member for Langlaagte also referred to this. We are in the position where the time has come for us to count the cost of constitutional development or constitutional stagnation. I am referring specifically to the hon member for Waterberg and the hon members sitting behind him there in saying that, if people do not wish to do this, they should know that the idealogical tension between developed and underdeveloped areas will increase; it will not decrease.

The hon member for Waterberg said yesterday that this legislation was aimed at increasing conflict. I wish to put it to the hon member that he does not understand the realities of South Africa. [Interjections.] There is little value in splitting hairs on the relative blame which developed areas should bear for the poverty of their underdeveloped counterparts. In spite of the hon member for Waterberg’s prophetic vision on self-determination, this Government is creating a just and stable dispensation in South Africa.

This legislation deals with the transfer and redistribution of income and wealth. It also has political implications because the inter-twining of politics and the economy is of the closest. An inability—as apparently manifested by CP members—to bring about greater equity and stability in the economic sphere will simply neutralize efforts to stabilize the country politically. The need for greater equity arises from the fact that avoidable forms of poverty exist and that important elements of an acceptable standard of living are missing in underdeveloped communities.

This Bill also arises from the fact that the present constitutional dispensation gives some communities insufficient say in joint decision-making at the third tier. We shall have to bring this about to be able to offer effective resistance to internal and external groups who wish to overthrow the dispensation in South Africa violently. We shall have to do this in an attempt to accommodate the spiral of rising expectations, especially in Black ranks. We shall also have to do it, however, by simultaneously convincing those obtaining greater privileges of the reality that such privileges demand—the quid pro quo of greater responsibility and greater performance. That is the basis of this Bill.

It is important to realize that evolutionary transition to a new dispensation means that old conventions have to be dismantled. In Western countries this usually occurs by means of a change of government. Nevertheless as a change of government in this country is not on the cards in the foreseeable future, the present Government has to take these steps in the face of a dwindling opposition. [Interjections.] Fortunately constitutional solutions in South Africa, however, are dependent on currents within the NP. Fortunately the tide is flowing strongly in the direction of an enlightened policy and a more equitable dispensation and this tide is flowing so strongly and so convincingly that the realities of South Africa are passing those hon members by entirely.

Mr Chairman, in my speech I shall return to a few aspects mentioned by the hon member for Caledon but for the moment I wish to respond to his references to the hon member for Sea Point’s statement that it would have been preferable if there were a division between the executive and the legislative authority as regards the work of standing committees.

I believe the hon member for Caledon will concede that it is very difficult to determine the spheres covered by the two committees concerned. One of these, of which the hon the Minister is the chairman, comprises constitutional matters and the other, chaired by the hon member for Klip River, covers constitutional development and planning. We are now involved with a Bill which deals chiefly with so-called local authority matters and in another committee we are faced with a Bill dealing with the Prohibition of Political Interference Act as well as the entire question of the filling of vacancies on provincial councils and the whole matter of the extension of the term of local authorities. Consequently if the hon member can explain to me logically why one deals with it and the other not, I shall no longer have any doubts on this. In other committees, as in the latter, a member of Government is usually the chairman. The Minister appeared in other standing committees, not as the chairman, but as a witness to explain the Bill. This is a totally different situation in which the Minister appears. That is what the hon member for Sea Point implied. I associate myself fully with his view on this specific matter. Perhaps we may pursue this discussion on another occasion.

I intend responding to the hon member for Helderkruin’s speech but I wish to say at once that, as the last speaker on our side, I have no intention of going into the specific provisions of the Bill. I think these were reasonably well covered in speeches by hon members on the side of the Government as well as those of hon members for Walmer, Sea Point, Pinetown, Yeoville, Hillbrow, Bezuidenhout and also the hon member for Umbilo.

There is no doubt that this is an important Bill. In fact, it restructures the entire system of local government in South Africa to such a degree that what remains of the original systems of local government as we have known them and as they have developed traditionally in South Africa will be minimal. Functions remaining to ordinary local authorities after the creation of regional services councils and after the transfer of functions will be minimal indeed.

The entire system of local authorities has its problems but there are other related matters which will also disappear, for example the loyalty and the feeling of a body in close contact with the people. I wish to say to the hon member for Mossel Bay that I cannot comprehend that one of his primary statements could be the necessity for the creation of institutions in close touch with ordinary people but that he could drag in this Regional Services Councils Bill in that respect.

Why is the hon member attributing things to me that I did not say?

I understood it as I have interpreted it here.

In any case I wish to say that, because of its importance, there can be no doubt that this Bill aroused a great deal of interest. Neither can there be any doubt, however, that there was great resistance to the provisions of the Bill. This appears from the large number of memoranda submitted for consideration by the standing committee in connection with the Bill. I think the hon the Minister and the members of the committee will agree with me that the overwhelming majority of those memoranda rejected the Bill on points of principle. We all have to agree that those memoranda were preponderantly hostile to this Bill on points of principle. I wish to add immediately that those memoranda were submitted by important, leading institutions in our country. They were not individuals or institutions we could simply negate.

In consequence I wish to say—and the hon member for Sea Point referred to this—I deplore the decision of the standing committee not to call for any further memoranda from other institutions—including the memorandum of the hon member for Yeoville who referred to this yesterday—neither to grant permission for people to testify before the committee. If there is one thing which has emerged clearly from this debate it is that there are numerous problems and questions which will arise from the implementation of this Bill. No one can have any doubt on this score.

I regret I am no economist. From the nature of the case my knowledge and insight regarding finance and financial aspects of local authorities are limited. I should therefore have welcomed it if other people with greater knowledge and insight could have testified before us. I also wish to say in all modesty to my other colleagues on that committee that my own inadequacy in this regard is echoed in some of them. This is no reflection on them. I think it would in truth be correct to say that a large number of members of that standing committee are actually not experts on some of the points of principle dealt with in this Bill—as I am not.

In this respect I wish to say—and I am doing so to air my feelings—especially as regards the financial implications of the regional establishment levies and the regional services levies, that I am sorry the other members of the House of Assembly on the standing committee negatived the motion proposed by the hon member for Sea Point, namely that the committee should call for more memoranda and request more people to testify before it. Of this House only the hon members for Sea Point, Umbilo and Waterberg and I voted in favour of this motion that evidence should be heard. If at that stage that hon Minister had given the same guidance in the standing committee as always, he could have said to his colleagues in the House of Assembly: Look, for the sake of the importance of this matter and balanced judgment, it is essential that we hear evidence and therefore we shall permit it. Subsequently the hon the Minister and the majority party in the standing committee could have said: We do not want this memorandum or that man does not need to come, etc. I honestly wish to say I deplore the fact that we did not have the opportunity of hearing that expert evidence before the committee.

I am grateful that there were other people, like Mr Croeser and others who were probably experts, but Mr Croeser is part of the machinery which created the Bill and in my honest opinion it was essential for us to call in other people as well. I wish to reiterate that, if one points has emerged clearly from this discussion, also arising from a remark by the hon member for Walmer, it is the necessity for thinking anew—even before this Bill is promulgated—regarding its foundations and implications.

The hon members for Sea Point and Yeoville said—and I wish to put it very clearly to the hon the Minister again—firstly, that we believe it could be advantageous to furnish services on a regional basis—it is therefore irrelevant—and in consequence we welcome the creation in various areas of metropolitan authorities functioning on a voluntary footing particularly to provide services on a regional basis. Secondly, we welcome the creation of bodies on which members of all population groups serve. In that sense a regional services council is certainly an example of a body which will be representative of all the groups in South Africa.

We further accept the necessity of granting greater financial assistance to local authorities. It is clear that local authorities are in many respects incapable of furnishing the type of services required of them. We accept further that there are groups in our society which have been left behind in consequence of various circumstances and that it is of the utmost urgency that steps be taken to provide them with services and enhance their standard of living. I wish to state it very clearly that there is no dispute on these points.

But these are the very points at issue.

They are not all that is at issue. The hon member for Mossel Bay will have an opportunity to reply in good time.

At the end of this debate we now have to ask where we stand. I know the hon the Minister will have ample opportunity to reply but where do we on this side of the House stand at the end of the debate? In his amendment the hon member for Sea Point mentioned three specific points of criticism: Firstly, that it was based on the apatheid system—and I shall return to the hon members for Helderkruin and Caledon. The second was the autocratic powers of the administrator in particular. The third point was that while the Margo Commission was reviewing the tax structure, we had come with a totally new system of levies in this Bill and in fact with innovations unprecedented up to this point as regards the tax structure.

Let us now note briefly how far we have come as regards these three points indicated by the hon member for Sea Point in his motion.

In the first case there were various reactions to his statement that the substructure—the so-called building material—of this Bill was the policy of apartheid. That is what he said. He cited the further example of a building and the foundation stones on which it was erected. He said the substructure— that is actually my word—of this system lay in the apartheid policy of the Government. The hon member for Mossel Bay did not agree with this; he said it was untrue. Yet, I now wish to point out the conflicting reactions emanating from hon members on the side of the Government to this statement by the hon member for Sea Point as well as other statements made by hon members of my party.

I said nothing of the kind. I said it was not in the Bill!

No, the hon member for Mossel Bay made two comments. He said this measure was “colour-blind”—it is therefore not bound by race or colour. In addition he said this Bill was not primarily aimed at the creation of separate institutions; that other legislation dealt with that. Surely the fact that there is other legislation and that the measure in question is based on that legislation does not leave this Bill colour-blind in consequence. Not all!

I wish to take this further, however. I cannot understand the hon member for Mossel Bay’s remark in this respect, neither that of the hon member for Helderkruin and the hon member for Caledon. We need merely note the definition of the body involved as we find it in clause 1 of the Bill in question. It is therefore of no avail for us now to talk about Black local authorities or of authorities created in terms of legislation on Black local authorities and then to want to contend that this measure is colour-blind. Surely we cannot speak of other legislation dealing with White local authorities or local governing bodies or about Coloured and Indian local management committees while staring unseeingly at it and declaring it is “colourblind”. Surely that is nonsensical! I mean, it is there to be found in the legislation itself. I again wish to refer the hon member for Mossel Bay to clause 1 of the Bill in question. Its matter is abundantly obvious.

In addition the hon member for Mossel Bay knows—and he is also aware he knows—that as regards these matters the Government policy is based on apartheid. He knows this and he is also aware that in this House we accepted an entire series of measures further consolidating and perpetuating that principle in the sphere of local government. He knows it; neither can he deny it. The hon member for Mossel Bay further knows that in drawing up the legislation in question as well as in the creation of this system, those responsible for it—as we were in fact informed in the Standing Committee—acted within the framework of the Government policy of separate institutions. They actually said this themselves. It is totally beyond my comprehension how the hon member for Mossel Bay, the hon member for Helderkruin and the hon member for Caledon can therefore contend here that this is not so.

The hon member for Mossel Bay, as well as the hon member for Helderkruin and the hon member for Caledon, also knows that not only is it contrary to Government policy to have a single local authority on which all will have representation, regardless of race or colour, but also that this is legally impossible as well. They know that it cannot be carried out legally. They know it is legally impossible, not alone on the basis of legislation on the vote for local authorities, which we passed in this House but also …

But not in terms of the Bill in question!

Oh, man! Mr Chairman, surely the hon member for Mossel Bay knows that Ordinance 20 of 1984 provides very clearly who will have the vote. Formerly it applied only to parliamentary voters—as the hon member for Mossel Bay knows. In terms of the ordinance mentioned it was changed to voters registered to participate in elections for members of the House of Assembly. In this respect Coloureds were excluded as they—this is how it is put—naturally could not vote for members of the House of Assembly. They may also be voters, however, but then only as regards Pacaltsdorp or only in connection with groups areas reserved exclusively for Coloureds. That is the legal situation.

The hon member for Mossel Bay and the hon member for Helderkruin know that not only is this Government policy but that there is also no alternative in terms of legislation. Who is responsible for the legislation concerned? [Interjections.]

Something further I cannot understand is the following. The hon member for Klip River spoke just before the hon member for Mossel Bay. The hon member for Klip River said it was Government policy and the Government would not carry out the policy of the PFP. He said separate local authorities were in accordance with the policy of the Government and we should accept them as such as this was one of our political realities. Well, the hon member for Mossel Bay should not then tell me in all honesty that the measure is colour-blind.

I now with to return to what the hon the Minister of Finance said. He started the ball rolling and was followed by the hon members for Helderkruin and Caledon when they spoke on apartheid and the matters they laid at the door of the PFP. This was a continuation of the speech made by the hon the Minister of Finance last week. On that occasion I listened to him in great amazement and listened yesterday in even greater amazement when he basically repeated that charge. I have always known the hon the Minister of Finance to be an honest thinker. What did he say? He said the negative image existing overseas on South Africa—the hon member for Helderkruin spoke of our Black fellow citizens but I cannot quite understand how the hon member for Helderkruin can use that term in the light of what we have done as regards citizenship but I shall leave it at that—was attributable to PFP attacks on the so-called apartheid policy of the Government.

I did not say in total.

Then he should choose his words more carefully. If that is so, I wish to ask him whether it is true or not that until today Blacks have not been able to obtain any rights to land in urban areas except for the 99-year leasehold which they were permitted to obtain a few years ago. There is still no freehold for Blacks. Does the hon the Minister wish to deny that we struggled for years with job reservation and that part of the leeway in Black communities is attributable to restrictions place inter alia on their employment? Does the hon the Minister wish to deny that for years Blacks were not permitted to exercise any commercial rights, not even in their own Black areas, and that until a few years ago a Black was limited to one trading site in the urban area where he resided? Does the hon the Minister wish to deny that for years we placed a restriction on the State Vote for Black education and that for 17 years it was pegged at R13 million per annum? Does the hon the Minister wish to deny that, in spite of our appeal, it was the policy for years and contained in legislation that Black trade unions were not recognized? For years it was the policy not to recognize the permanence of Blacks in urban areas. It was Government policy to deprive Blacks of their South African citizenship.

May I put a question to the hon member? Do all restrictions referred to by the hon member still apply today?

There was talk of a negative image created here and abroad. An image is not created in a year nor destroyed in a year.

I want to proceed. I could cite one measure after the other so the hon the Minister of Finance should not tell us the resistance within and outside South Africa is the result of our fighting the Government on the apartheid policy. The hon the Minister should examine his own conscience more thoroughly in this respect. I do not wish to be misunderstood and immediately say we all welcome the steps taken over the past few years in moving away from it. We are not blind to this and the hon the Minister knows that we on this side of the House will support the Government as regards every constructive measure which it wishes to institute here and abroad.

But you are still calling this legislation apartheid.

Not necessarily and I have just attempted to indicate this to the hon the Minister.

It is very clear that this Bill makes it possible inter alia, if that is the objective, for management committees and other institutions which would never have viable under the old system to obtain an element of viability as there would now be a regional council to deal with certain functions. The hon the Minister said this was not the intention, and there would be no response to that, but we shall pursue this discussion when we get to another Bill.

There are many comments I wished to make to the hon the Minister of Finance but I shall leave it at that as I think I have conveyed my message to him clearly. He should not blame us for situations created by Government policy. He should not hold us responsible for them.

One of the fundamental principles of this Bill is the matter of finance. I wish to say immediately that the hon members for Yeoville and Walmer very clearly indicated problems which would result from this new financial system. We are waiting for the hon the Minister as not a single hon member on the Government side—I am speaking under correction but that is as far as my memory goes—ventured to respond to the financial analysis done by the hon member for Yeoville. I shall leave it at that regarding the hon the Minister of Finance as he spoke on the Margo Commission. I am not aware that any hon member on the Government side has up to this point replied to what the hon member for Yeoville said. I am naturally making an exception of the hon the Minister of Finance. We should be pleased to hear the hon the Minister in this regard.

It remains stupefying that, while a commission specially appointed to investigate our tax structure is sitting, we come here with motions which in fact cause fundamental changes to that structure. I wish to tell the Government that they have prepared a rod for their own backs in doing this. In future they will not be able to come to us and tell us they are unable to act as a commission has been appointed and that commission has to investigate and consequently the Government should first wait until the commission reports. In future the Government will not be able to hide behind commissions in evading steps they have to take.

A very strong consideration which was put forward time and again in the standing committee was that this measure should now be settled as it was necessary to assist Black communities and Black local authorities in this regard. The standpoint of this side is very clear and we have often been reviled as “kafferboeties” for it—to use that word— when appealing for better provision for Black communities.

That provision could and should have been made in another way. There is the legislation on the development of Black communities which makes special provision for a revolving fund. There is no reason why the Government could not have provided the necessary funds from the Treasury. I wish to take this further. Time and again the hon the Minister asked whether we were not in favour of Black local authorities. Certainly. Nevertheless I wish to state it very clearly that, as far as my memory goes, when Black local authorities were considered for the first time, we in that select committee said we would have preferred Blacks to fall under the normal ordinances of the respective provinces. It was then said this could not be carried out like that and from the nature of the case they then had to proceed to create a Black local government system—I want to give the hon the Minister credit for that— which they then did as closely as possible along the lines of the Transvaal ordinance.

The hon member for Sea Point then put it very clearly that we had said at that stage: For heaven’s sake, do not attempt introducing the measure without the proper financial basis for the functioning of those bodies. I said it on another occasion and I wish to repeat: It was a fatal mistake to launch those institutions without paying adequate attention to these considerations. We have repeated this time and again.

We have now landed in the situation of being faced with very great problems as regards Black local authorities. On this I wish to associate myself with the hon member for Sea Point in saying that a mere injection of funds is not going to rescue us from the dilemma in which we find ourselves. I believe the time has come. There are many needs in Black communities which cannot or need not be linked to the existing system of Black local authorities. I know what emerged from the recommendations of Mr Louis Rive on Soweto and Port Elizabeth. I wish to repeat that, as regards Black local authorities, I believe that at this stage we shall have to begin-from the top in creating the opportunity for proper participation by Blacks in the central legislative and executive authority. I am convinced of this. We are not going to succeed in this other matter by starting from the bottom.

Some of the main objects of the Bill are very clearly to promote decentralization and further impede the urbanization of Blacks. This will injure labour-intensive undertakings and in so doing the essential urbanization process will be hindered and restricted further. Whatever we do in the sphere of decentralization—and figures have been furnished here in this respect—we shall have to accept the urbanization of Blacks as inevitable. Our greatest challenge and our greatest problem is the creation of employment opportunities. If we merely consider the growth in population, there is no greater or more urgent problem facing us than that of employment. I believe any measure—and that includes this one—which actually taxes the employment of people, which from the nature of the case harms labour-intensive undertakings further, is fundamentally opposed to the best interests of our country and our people.

Mr Chairman, let me begin with a few general remarks which in my opinion are very important. First of all I should like to extend my gratitude and appreciation to the officials of my department who in my opinion have done exceptionally good work over a long period. Secondly I should like to place on record my gratitude and appreciation to all those involved with the promotion of local government systems, people who participate in it and do not theorize about it, for their contribution to the formulation of this legislation. I want to say that the legislation is the result of the contributions of knowledgeable people in the field of local government systems, people who, in the interests of South Africa and its people, were prepared to put aside their preconceived party political standpoints in order to bring about a better dispensation for the whole of South Africa.

That immediately brings me to this debate. It is a fact that not one of the political parties represented in the House of Assembly can, in respect of constitutional solutions at any government level, implement its specific philosophy and plan unaltered. Therefore, if we are to succeed in achieving a goal we all share, namely to ensure the participation of more people and more communities in the decision-making process, we shall have to be prepared to negotiate about that solution. Specifically those who have been exposed to democratic institutions longest will have to make an important contribution to that political process of negotiation. By way of introduction I made the appeal that in our discussion of this legislation we must be prepared to put aside certain of our preconceived standpoints in order to achieve a different goal, namely to enable larger numbers of people to participate in the systems of local government in our country.

Despite any arguments advanced by any member, the implementation of this legislation will imply that more people are now going to participate in the decision-making affecting their general interests than was the case before the acceptance of this legislation. In my opinion that represents real progress.

Secondly the legislation implies that, if we accept and implement it, the local government bodies will have access to new sources of revenue. It is a fact that the legislation was preceded by lengthy investigation to identify specific sources of revenue for local authorities. It is also a fact that involved in the lengthy process of identifying additional sources of income there were representatives of the private sector who agreed with the sources contained in this legislation. They were knowledgeable people from various organizations in the private sector. The inquiry by the Margo Commission serves them as a very convenient means of evading these particular responsibilities.

I listened to the hon member Prof Olivier saying that one of his party’s fundamental objections to the legislation rests with the sources of finance. It does not involve the political systems, but the sources of finance. Then hon member speaks on behalf of certain people when he says that, and I understand that. The fact remains that, if we were to accept the standpoints of the hon members of the Official Opposition in this regard, we would not introduce the system. On purely financial grouds we would then have to suspend the introduction of greater participation and a broadening of democratic decision-making. That is the fundamental reason, although other reasons are emphasized.

†In my reply to this debate I would like to indicate that it is not possible for me to reply in detail to the 25 speeches that have been made in the course of this debate. I therefore prefer to discuss the various approaches of the different parties to the legislation under consideration.

I would like to start with the hon member for Durban Point. I would like to say that that hon member started and concluded his speech on a positive note. I understand that both he and the hon member for Umbilo— notwithstanding certain reservations they have—will still support the Second Reading of this Bill because they accept the principles contained in it.

I would like to say to them that I am gratified by their approach in this regard. It is indicative of the fact that, notwithstanding hon members’ differences and their reservations, they are prepared to co-operate in a process of building and not of destroying.

The hon member for Durban Point referred to some of these difficulties and I would like to reply to them in the time I have at my disposal. According to Schedule 1 the new system should not cost the ratepayer more than the present costs of services. In Item 3 of Schedule 1 it is stated that cost-effectiveness and efficiency in the rendering of services are criteria which must be considered in the establishing of the councils. The hon member will understand that.

But not in the transfer of the functions.

No, also in the transfer of the functions in terms of clause 3(1).

The second point the hon member made was that it would be unfair to transfer assets such as capital reserve funds to the regional services councils without compensation to the local authorities. Again, clause 4(4) does provide for compensation in order to obtain a result which is “fair to all parties concerned”. Clause 4(2) provides that the Administrator will have to exercise his discretion and apply his mind to the facts of each case in deciding whether a particular asset should be transferred. Why should there, in principle, be a distinction drawn between tangible assets such as a fire-engine, which according to the hon the member can be transferred, and an asset such as a reserve fund which is intended to be used for acquiring assets like a fire-engine? That is the essence of the argument of the hon member in this regard. I believe that both types of assets should in principle be capable of being transferred to a regional services council.

Thirdly the hon member said: the chairman will be “a paid official in charge of an RSC”—I am quoting the hon member. That is obviously not the case. The chairman will in terms of clause 11(1) not even have a vote, so how he could possibly be in charge I would not know. I believe that the mere fact that a chairman may be remunerated for his services does not summarily turn him into an official and make him one of the officials of the institution. What we have tried to do is to make the chairman an impartial person because we believe that he should then be acceptable to all parties. One of the members of Ucasa said he preferred a nominated chairman to an elected one because an elected one also closes one of his eyes.

Fourthly the hon member in fact moved an amendment, namely that 50% of the income derived from rates and taxes in the central business areas—that is the commercial and industrial areas—should be transferred from the funds of the primary local authority to the regional councils.

For one year.

For one year, but what is the result of that? Local authorities have argued over many years that their funds are inadequate, and now they have to sacrifice some of those funds. More than that, that would imply that we would not have access to new resources which have been the subject-matter of investigations for more than a decade. It would therefore defeat the object of that exercise completely.

I should like now to deal with the speech of the hon member for Hillbrow. I considered his speech quite seriously. The hon member confused many issues in his speech last night; in fact, he confused too many issues for me to react to them all. The hon member, inter alia, confused regional services councils which are in fact local authorities …

No, they are not.

… with the provisional system or middle tier. I want to take it even further. I should like to refer to the fact that the RSC is a local authority, and will in terms of clause 4(1) have the powers of a local authority or a third tier authority.

No, that is not what I said.

Please, I did not interrupt you.

[Inaudible.]

Order! The hon the Minister must be afforded the opportunity to complete his speech.

I want to say again that these institutions must not be confused with the provincial administrations or the new dispensation that is anticipated in this particular tier of government.

However, I should like to take it further. The hon member suggested that his party wished to replace one of its members on the standing committee by the hon member for Yeoville, but the chairman—that is I—would not permit it.

[Inaudible.]

No, I am the chairman. Obviously that is not true. Firstly, according to the information at my disposal the decision in regard to which persons are to serve in the standing committees lies with Mr Speaker and not with me. Secondly, one of the parties on the committtee in fact changed its membership so as to permit the hon the Minister in charge of local government to serve on that committee. Thirdly, I am informed that the PFP did not apply to change their membership to accommodate the hon member for Yeoville. Therefore, to suggest that they had made that attempt and that I had refused, is simply not in accordance with the facts.

I should like to suggest to the hon member for Yeoville that he could have made a better contribution than some of the members who served on that committee. I pay him that compliment. [Interjections.] I regret that he did not have the chance to be a member of that committee so that he could have recorded a point of view instead of only having asked to give evidence.

I should like now to come to the hon member for Sea Point. Let me say that the hon member for Sea Point did in fact support local government for Black people, as did his party. At that stage he did so notwithstanding the fact that he and his party were—and still are, I presume—against institutions created for groups. I submit that he did that because he was at that stage positively disposed towards the improvement of the participation of Black communities.

You know what happened on the select committee.

Well, then I must presumably accept that he was not in favour of Black local authorities. However, the hon member for Sea Point presumed to attack this Bill, in his own words, on behalf of the country as a whole.

It is in fact gratifying to be able to say that the House of Representatives has unanimously accepted this Bill. It is also gratifying to state that the majority of the representatives of the House of Delegates on the standing committee supported this Bill. This, I believe, is a very interesting illustration of the choice with which all of us are increasingly being confronted. Does one, in spite of the differences in points of departure and in spite of the different philosophies and one’s own particular method of reform, want to be a builder of new structures, institutions and processes, or does one want to sit conveniently on the sidelines, safely ensconced behind one’s ideological purity and one’s wealth?

Many members of the standing committee from the other Houses of Parliament made no secret whatsoever of their rejection of many aspects of the Government’s policy but they were nevertheless prepared to enter into the debate in the committee in a spirit of building together. Notable exceptions have been the hon members of the PFP, the hon member of the CP and the Official Opposition in the House of Delegates. Let me say that this showed a very sad isolation of the two members of the Official Opposition in this House who reflected the attitude: “We shall not participate in the construction of the building because it is based on apartheid”. So too with the Act on Black local government.

Who sat on that committee?

Of course you sat there. [Interjections.] It is so convenient for the hon members of the Official Opposition who sit there to have a liberal conscience. It enables them to do nothing. It also enables them to resist the introduction of the new sources of income for the underdeveloped communities, a system which was accepted with applause by the House of Representatives. The system had the unanimous approval of the co-ordinating council. It is so easy for those hon members.

Of course those hon members favour, in theory, the upgrading of the living standards of all communities. However, it is quite clear today—we have seen the evidence—that they would like to delay that as long as possible if it costs money. And what better delaying tactic is there than hiding behind nice anti-apartheid slogans which, incidentally, also go down well with the New York Times. This is the evidence we have before us in terms of this Bill.

Let me now deal with the question of political accountability. This is another point which was raised by the hon member for Sea Point. Despite very patient explanations in the standing committee it still seems as if the hon member is unable to comprehend the principle of political accountability as well as the practical side of it. Let me deal with that. In case he wants to use this apparent argument again next year when we discuss the reform Bill in respect of provincial systems, I shall try one again to elucidate this matter if he is capable of understanding it. [Interjections.]

At present the Administrators are appointed by the State President for a fixed term of office but they are acountable financially and politically to the elected provincial councils. In my announcement on the new system in May this year I indicated that the Administrators and the members of the executive councils under the new system will also be appointed by the State President for a period of five years, but that their terms of office will coincide with these of the Government. Were the Government of the day to fall, it would also entail the termination of the term of office of the Administrators and the MEC’s. Their political accountability to this Parliament will therefore be increased and not decreased as the hon member argued in the committee and here. I trust that the hon member now understands this so that we do not have to repeat the same arguments all over again.

I would like to suggest, however, that the hon member should also strive for greater consistency in his arguments. Last year he demanded that this Bill be referred to the Select Committee on the Constitution. The hon member for Caledon reacted to this point that the hon member for Sea Point made. Quite unsuccessfully the hon member Prof Olivier tried to defend the hon member for Sea Point. The fact is that the composition of the committe on the Constitution was such that it had as many members of the executive then as it has now. We are now discussing the question of principles.

Do not get away from the point now.

No, I am not getting away from the point. The point the hon member made is that there should be a distance between the executive and Parliament when dealing with constitutional matters.

Between the chairman and the Ministry.

No, the executive. If that has always been his argument, he should have advanced that argument last year. He should have argued last year that the matter should be referred to a select committee other than the committee on the Constitution. The hon member cannot have it both ways.

Now we come to our next point, namely the question of appeals. The hon member became quite eloquent in his denunciation of the system proposed in the Bill in terms of which a minority group of one third or less can lodge an appeal on certain issues.

One local authority.

Well, that is what I am saying: One third or less. Yes, even one. I have always thought that the Official Opposition attached great value to the protection of minorities.

Whom are you appealing to?

I would like to ask where the protection of the PFP would be in terms of their philosophy.

You cannot really believe what you are saying.

Of course I believe it! Does the hon member believe in any protection whatsoever for minorities? How big must a minority be to be protected?

But whom are you appealing to?

I shall deal with that matter. The hon member for Yeoville has obviously not read that part of the Bill.

Of course I have read it.

The argument of the hon member for Sea Point does not relate to the question of who the appeal institution is, but to the question of whether or not a minority group of one third or one can lodge an appeal.

Do you have a precedent?

In all fairness, Sir, I want to say that I did not interrupt those hon members. Moreover, there are many other hon members to whom I have to reply.

It is thus completely frivolous for the hon member for Yeoville to argue now about the constitution of the appeal institution. That was not the point argued by the hon member for Sea Point. He argued that even after the two thirds majority had taken a decision, there should still be a right of appeal. [Interjections.]

Let me ask, seeing the hon members on the other side of the House believe in the protection of minorities: How do they define the minority they want to protect? How do they define the majority they want to protect a minority against? [Interjections.] You see, Sir, those hon members merely pay lip service to the concept of minorities and their protection. [Interjections.]

*I now turn to the hon member for Waterberg. I want to say at once to the hon member that he once again employed an untrue assertion. [Interjections.] The hon member for Parow dealt with that while the hon member was not present. [Interjections.] That is not unusual, however. That the hon member for Waterberg has a way with words is well known. Unfortunately he is thereby often tempted to follow a course he should rather not follow. I want to deal with certain such aspects today.

I should first like to turn to the concept of power-sharing. I want to compare his definition of that with mine. I will therefore be comparing the approach of the CP with that of this side of the House. If joint decision-making in whatever form amounts to power-sharing of some kind—and I say that that is the case—then the hon member for Waterberg supported power-sharing while he was still in the NP. [Interjections.] I must now be given an opportunity to discuss this for purposes of the record.

I refer to point six of the twelve-point plan of 1981. The hon member for Waterberg will not deny that he signed that, because his signature at least appears on it this time.

How often is the hon Minister still going to repeat that here?

It remains the truth. It will always remain the truth no matter how often it is repeated.

How often has that hon member read the Bible?

He does not read the Bible. [Interjections.] We all know the hon member signed that, and I quote it:

Therefore, at a stage in his life the hon member accepted the concept of power-sharing.

No. [Interjections.]

Yes, but I want to go further. The hon member for Waterberg— often as a matter of convenience—invokes the late Mr Vorster. I should however like to refer again to the debate that took place in this House on 12 April 1978 on the proposals of 1977. I want to quote the following from Hansard, col 4545:

And in col 4548:

However, the hon members describe the present Cabinet, which functions exactly as the Cabinet did under the old dispensation, as power-sharing. The hon member and his party have therefore accepted the concept of power-sharing, but now he rejects it.

I should like to make the folowing comment which in my opinion is important: The real question does not concern power-sharing. The essential political question of South Africa confronting all of us is whether power-sharing can take place within the framework of structures and processes which protect the self-determination of all communities while at the same time achieving and affirming joint responsibility. That is the fundamental question, and the Government’s answer to it is: “Yes, we believe it is possible.” The hon member for Waterberg says he is against common voters’ rolls. The NP is also against that, not because that would constitute power-sharing, but because it would prejudice the self-determination of groups. That is the reason.

The second important concept is the concept of self-determination. That brings me to the second mistake contained in the hon member’s argument. He wants to make an absolute of the concept of self-determination by raising it to the level of a synonum of sovereignty. I want to repeat: He wants to make an absolute of the concept of self-determination so that it will ultimately carry the same meaning as the concept of sovereignty. He therefore avers that self-determination cannot and must not be limited in any way. No people on earth enjoy unlimited self-determination, not even in the oldest state structure. All peoples must coexist with other peoples.

The interests and demands of those other peoples must be taken into account in the process of coexistence. In cases where communities are as closely interdependent as they are in our own country, the need to take one another into account and also the need for joint action inevitably become increasingly important. In this country we have to strike a balance between own and general affairs. Our salvation, and that of our country, does not lie in either the one or the other. It lies, however, in the acceptance of both.

Now I want to come to another point made by the hon member for Waterberg. This concerns the question of consensus. The concept of consensus is evidently foreign to the field of experience of the hon member for Waterberg—very, very foreign. He claims that the standing committee put certain matters to the vote and that that conflicts with the idea of consensus. I readily accept that it is not always easy to reach consensus. I want to add, however, that the presence of obstructionists—like the hon members of the Official Opposition and hon members of the CP—during a standing committee’s deliberation makes it even more difficult.

In an ideal world all decisions could probably be made unanimously. We do not, however, live in such a world. We merely strive after such an ideal. As practical people living in their imperfect and fragmentary world we turn to the majority parties in the first instance, because we must also function within the framework of the political realities. At the same time, however, we would also like to protect the legitimate interests of minorities. As a matter of fact, I have already said that what lies at the root of the appeal procedure provided for in clause 11 of the Bill before us is our efforts in that direction, our efforts to protect minority groups.

That brings me to the fourth mistake the hon member for Waterberg made. That concerns the concept of the distribution of revenue. The hon the Minister of Finance has already dealt effectively with this aspect. I should however like to approach it from a different angle today. I am pleased to see that the hon member for Langlaagte is now present in the House. He and I come from the same background. I therefore believe that he will understand better than the hon member for Waterberg what I am now going to say.

It is true that the CP have never really shown evidence of having an economic or financial policy—at least not in this House. Indeed, in his speech the hon member for Waterberg displayed a disturbing ignorance with regard to the economic history of the Afrikaner people as such—the Afrikaner people whom they speak of so highly. The hon member for Waterberg has evidently forgotten the people’s economic congress. He has also evidently forgotten the circumstances under which it was held. It may be a good thing to refresh the hon member’s memory.

He said that the redistribution of wealth is a dangerous concept and that the Bill under discussion contains a socialistic principle. The hon member for Yeoville dealt with that aspect. Does the hon member for Waterberg not know the history of the Afrikaner people’s economic rise? How else did we achieve anything—that is what I want the hon member for Waterberg to tell me—than by means of the redistribution of income?

The hon member for Langlaagte comes from a background in which poverty existed.

Yes, that is so.

Of course. I also come from such a background.

I want to ask him whether the upliftment of the poor Whites would have been possible without a redistribution of revenue. The hon member knows the answer to that, because he accepted it just as I did. His people accepted it just as mine did. However, what does the hon member continue to say together with Sabra and Prof Carel Boshoff? In this land a consolidation of land must take place on a massive scale for Blacks, Coloureds, Indians and Whites, or, to put it in words that will be familiar to the hon member for Waterberg: “Rather a small, poor, but White South Africa”. As my colleague the hon the Minister of Finance asked yesterday evening: What is land if not wealth? It is the basis of wealth. I further want to ask the hon member whether the wealth in this country is not the result of a joint effort by all its inhabitants. Naturally, White capital and expertise play a part, but it is still the result of the effort put in by the whole population of South Africa. Would White and Asian entrepreneurs have achieved the same success without Black labour? Would we have been able to debate today the capabilities of the PWV area had that not been built on Black labour? Can the presence of Black communities in what we describe as White South Africa not be ascribed to the need for the labour of those people and their need for the job opportunities we provide?

When are you going to finish?

I shall not ask that hon member any questions. I should like to put these questions, because we must settle this. Would our central business districts and our industrial areas have developed as they have without the purchasing power and labour of all the various communities?

You have already been speaking for longer than an hour.

Order! The hon Minister has every right to speak on this Bill as long as he wishes. The hon Minister may continue.

Employing innuendoes as the hon member usually does in debates, he referred to Prof Terreblanche. I want to say here that Prof Terreblanche is a personal friend of mine and that I am not ashamed of my friends. I also want to tell the hon member that I do not hold secret meetings with my friends against my leaders.

The hon member for Waterberg also referred to the philosophy of the redistribution of revenue as a new slogan. I do not quite follow him. Have we not always had that, for instance in the form of escalating income tax scales in terms of which people with a higher income pay more tax than others? He conceded himself that more could have been done for certain communities and that as regards conditions in certain residential areas there is room for considerable improvement. I want to go further and say that we do not underestimate the frustration effect certain forms of wealth have on the poor. We must not underestimate the extent to which living conditions which leave people without hope breed revolution. When I say that, I am not advocating revolution or accusing anyone, but I want to say that we must guard against these communities being exploited by people with different plans for South Africa to those we have. If we do not understand and acknowledge that, we will not be in a position to find solutions for the problems besetting our country.

It is going to be our responsibility to improve those living conditions. It is going to be our responsibility to improve that state of affairs. No one else is going to do that for us.

That is why we are now concerned with the sources available to local authorities. It does not just concern money. It also involves attempts to stabilize communities to prevent living conditions there turning them into breeding ground for the forces of destruction. In the standing committee the hon member for Waterberg said he conceded that conditions could be such that they could be improved, but he did not want to support the principle of sources. Indeed, he voted against that. In truth, only he voted against that. The hon member referred to the meeting of the standing committee at which there was allegedly talk of killing the golden goose. What does the hon member do, however? He immediately attaches a colour connotation to it by saying it is a white goose.

Why does he do that, if not for his petty party-political reasons? Apart from that, here again we find that something is being taken completely out of context, because what the hon members of the other Houses requested was precisely the protection of the goose that lays the golden eggs. I want to ask the hon member for Waterberg why he did not have the moral fibre to contradict that in the standing committee. It typifies his courage that he has to discuss that in the absence of those people. [Interjections.] I again ask why.

I want to emphasize that never in previous discussions about this Bill—and many were held with members of all population groups—did I come across the hon member for Waterberg’s alleged spirit of grab and seize amongst the members of other communities. What I did come across is a growing awareness in other communities that taking also requires giving, that he who wants to share, must contribute. Is it not a fact that the other communities only in a limited way, if at all, ever took part in the process of distribution and for that reason could not accept responsibility for how such a distribution is effected. Nor could they learn that if one wants one thing, one must sacrifice another. Now that we want to develop a system that will make that possible, that is the kind of argument with which we are confronted.

I turn to a last concept of the hon member for Waterberg, namely the concept of a unitary state. It seems that the concept of a unitary state has been a problematical one for the hon member throughout. The hon member juggles with concepts such as unitary state, regional federation, federation and single state in a manner we have come to expect from him. Logic and comprehension play no role in this whatsoever; it is all merely part of the climate in which the hon member and his party find themselves.

There is a last remark I want to make concerning the hon member and his party. In that same climate thoughts are aired such as “ do not drive the Whites too far”, “White revolution” and “cats and dogs being tied together by the tail”. In all seriousness I want to tell the hon member that the country is tired of such rhetoric. It provides no solutions. The country is tired of that type of game. What we really need in this country is people prepared to help with the task of construction rather than destruction.

I turn to the hon member for Pietersburg. I wish to thank the hon members of my own party for their speeches. I regret it that I have to be so negative and deal with this sort of thing rather than their speeches. I have said to the hon member for Pietersburg previously, and wish to repeat, that he must please stick to the facts, because once again he did not do so. What is more, this time it involved facts that are ascertainable, even by the hon member for Pietersburg. Can he and I not come to an agreement? Let us agree to differ on standpoint, philosophy and solutions, but let us also stick to the facts. Surely that is not asking too much of the hon member.

Concerning the accommodation of the Black communities we must naturally draw a distinction, as we have done, between die local level and the central level. What did the hon member do, however? It was not a mistake either; it was deliberate. The hon member quoted me and what I said about the central level he applied to the local level and vice versa. I say he did so deliberately and intentionally. Surely we agree that at the local level the Black communities must have fully-fledged local authorities, not so? Does the hon member agree? [Interjections.] The hon member for Lichtenburg affirmed that in the House. When I spoke about the same Bill last year, I said the following which the hon member for Pietersburg did not quote— and the hon member must listen now:

I was speaking of the Black people:

Now comes the important part:

Who said that now?

I said it on 11 July 1984 (Hansard, col 11240). However, the hon member conveniently leaves that out.

One cannot quote everything you say. That would take years.

I can understand that, because that hon member is not going to get that old in politics.

In the period since 1984 when this debate took place, Ucasa has been recognized as the official mouthpiece of the local authorities for Black communities and admitted to the coordinating council. I negotiated with Ucasa and also with the UME and other interested parties and on that basis Black local authorities obtained membership of the regional services councils.

On 10 October last year in his presidential address Mr Olans van Zyl, president of the TMA, said the following about Black representation on regional services councils:

Interestingly enough, the report was accepted by the entire congress with thanks and appreciation. In the minutes of the congress, on page 10, I read:

That must be Mulder.

Now listen carefully.

[Interjections.] I leave the hon member for Pietersburg there. I just want to say to him once again that he must tell me where the South Africa is in which there are more White people than people of colour.

Morgenzon!

No, that is a dream. [Interjections.] Morgenzon? There are 599 000 Black people in Region 28, and the hon member ought to know that. [Interjections.]

We have now discovered a new prophet, namely the hon member for Kuruman. He could, however, not understand why the divisional council system should not provide the services for the other smaller communities. Remember, he says we are taking the Coloured people for a ride, but it does not worry him if the divisional councils do so. He says he wants to give them full self-determination, but what self-determination does he want to give them within the divisional council system if he does not place them on the same voters’ roll? [Interjections.]

While the hon member for Kuruman was still a member of the NP—let me add that at that stage it was already very suspect—he believed … [Interjections.]

Finish off!

Order! The hon member Mr Theunissen has now interjected often enough that the hon the Minister must finish off. The hon member must now stop making those comments. The hon the Minister may continue.

At the time the hon member for Kuruman also believed that every person should individually within group context have a say in the decisions affecting his life, but now the hon member no longer believes in that. The hon prophet now has a new vision. He says he sees no multi-ethnic element in the regional services councils.

He complained that we are not making provision for population groups to serve as such. The hon member’s leader, however, complained that we can, by agreement, bring in a Black people in Ciskei. The hon prophet sees in this the destruction of local authorities.

Let us have a look at what happened in the debate. In this respect the hon member for Sea Point said: “The prime reason for the RSC is to make it possible for the Government to apply its policy of apartheid at a local authority level.” Both these hon members are going to vote against the legislation. [Interjections.] The hon member for Kuruman sees these councils in the future leading to political integration, while a colleague of his in the House who will be voting the same way, the hon member for Sea Point, says that the reason for the regional services councils is “to make the policy of apartheid at local level viable or workable in South Africa”. The hon member for Kuruman is therefore going to vote against a system that will make separate local authorities workable and viable in South Africa. [Interjections.]

The hon member took it upon himself to make a further prediction. He prophesied that the Whites would be in the majority in the SRCs. Then the CP accuse me of sacrificing the Whites’ self-determination. How is it possible? [Interjections.] The hon member went on to say that I did not have a mandate to do that. Surely that does not make sense. [Interjections.]

Let me tell the hon member how I see him and his party. I see them as South Africans who must in the first place come to terms with the facts of South Africa. In essence, the hon member’s problem is that their vision of South Africa is developing into an evasion of the facts. They are striving after an unreal, non-existent South Africa, a South Africa which has never existed and which, with the best will in the world, never will exist.

I want to conclude with a few facts. The first set of facts the hon member for Kuruman will have to acknowledge, is two dates: 2 November 1983 and 3 September 1984. It will do the hon member and other supporters of the party no good to ignore the fact of the outcome of the referendum. [Interjections.] Secondly it will not help to fight it all over again. It will not help the hon member either to wish away the new dispensation within which he is operating, because that is part of the reality of South Africa. [Interjections.]

The reality is that you are very long-winded.

If that hon member were as intelligent as I am long-winded, he would be able to make a meaningful contribution in this House. [Interjections.]

I maintain that the legislation makes provision for a spreading of the participation by communities. It makes provision for additional sources to strengthen local government and ease their task.

Mr Speaker, when my speech was interrupted on the previous occasion I had asked the question why we had this Bill before us. It is interesting to note that over the past two decades banking has followed a principle which I like to call three-six-three. They pay 3% on deposits, they ask 6% on loans and they tee off at three o’clock in the afternoons! [Interjections.]

*When a certain colleague of ours who resigned a few years ago was still in banking it was said that as a result of his activities banking would never be the same again. In view of the provisions in this Bill we must look at the development of banking during the past few years. Banking has changed immensely. Firstly we can look at the role played by technology, the computer in particular, in banking. Everyone will remember that in the olden days one had staff who saw only to the deposits, and staff who saw only to the loan aspect. As a result of the computer, however, we have the whole question of the margins on current accounts today, which extend from the deposits to the loans, in order to get the greatest possible margin on that balance.

We have also had changes in monetary policy recently under the leadership of Dr Gerhard de Kock, viz to promote competition in banking. Quite a few adjustments have been made during the past year. I am thinking for example of adjustments in the sphere of exchange rate control. Naturally this caused quite a bit of uncertainty and competition in banking. Consider how our interest rates have changed during the past few years, and how difficult it is for the banks to utilize the changed interest rates exactly correctly.

We can see, therefore, that in the whole process in which the monetary policy has moved away from the principle of three-six-three to a policy of an absolutely open system, a number of challenges have been made to banking. This change has caused our banks’ asset and liability structure to change. A few years ago the banks started moving very strongly into the sphere of hire purchase and rent. The Reserve Bank simply had to clamp down on that at some time or another and set certain requirements.

During the past two years we have found that our banks have begun establishing overseas branches and subsidiaries. Then we had the problem that the Reserve Bank had no control over those activities of our banks abroad. In addition there was the problem of contingent liability in the case of liabilities, that is the banks began practising so-called off-balance sheet financing on levels on which the Reserve Bank had no control. If we think that the questions of solvency and liquidity simply have to be taken care of in the country’s policy—the Reserve Bank simply must look at it—it is clear that with this movement in the direction of the development of overseas branches and subsidiaries, and the movement in the direction of contingent liability in the case of certain financial liabilities, a measure of the Reserve Bank’s power and influence has been lost. We can see that this competition, this more free market approach and changes in exchange rates and interest rates has caused our banks to look at all possibilities in order to make a profit. These developments have cause our banks to move away from the Reserve Bank’s control to a degree.

That is why one of the most important points in this Bill is that our branches and subsidiaries abroad be placed under better control. Our banks have negotiated loans abroad for local clients without these going through their books. This means these loan are not indicated in our net foreign reserve position. They are also not indicated in the quotas for overseas loans which have been allocated to our banks. We had to contend with the problem that our banks were exposed to currency risks which were really very dangerous. We saw what happened to a bank in Switzerland and also one in America. It is essential that our Reserve Bank intervene here to exert control over these financing activities which take place outside the control of the Reserve Bank.

The proposal in this Bill is that the requirements of the Reserve Bank be conformed to. I find it very interesting that the term “prudential requirements” is appearing in our banking literature for the first time. I tried for a long time to find an Afrikaans equivalent for “prudential requirements” and then heard that it was the stewardship of the Reserve Bank on the activities of our banks. We do not have a correct Afrikaans term for it yet, however. The Reserve Bank then said that this “off-balance sheet financing”, these activities of contingent liability in the case of liabilities, should also be placed under the control of the Reserve Bank. We therefore get three aspects in this Bill.

In the first place there must be reports to the Reserve Bank about the activities of the branches and subsidiaries. Secondly the consolidated statements of all the banks’ activities have to be compiled. Thirdly, better control is exerted over currency transactions where our banks are very vulnerable. It is very interesting that the conditional liability was not included under the control of the Reserve Bank at first, but it is being included now and certain capital requirements are being put in the case of such liabilities. The first object with this Bill is therefore to bring our overseas activities under better control.

The second question therefore is that of conditional liabilities. I had a look at the figures on the movement of the liability structure of our banks. As a result of competition our banks are moving increasingly in the direction of investments, which is perhaps more hazardous. If one considers what the contingent liability was locally, one sees that in 1981-82 it grew by 32%, in 1982-83 by 23% and in 1983-84 by 33%. Our contingent liability abroad, however, was 40% in 1982-83 and 54% in 1983-84. This section of banking activities which falls outside the control of the SA Reserve Bank has therefore grown very quickly. The problem is that the banks issue bills which they sign and then sell to the private sector on condition that they buy them back again after a certain period. This gives them liquidity which facilitates their position as far as their banking activities are concerned. After a certain period, however, they have to repay those bills, and this means that possibly they can develop a liquidity problem.

Secondly, as a result of the present situation of more fluctuating interest rates, the banks can also experience problems. If interest rates rise, for example, the banks may find that that is also added to what they have to repay. Eventually this can entail higher costs for them than they expected. The SA Reserve Bank now has three requirements: There have to be cash reserves, liquidity reserves and especially capital reserves—which is a very important aspect of this Bill— whereas previously our whole monetary policy was based mainly on our liquid asset requirements. We are therefore swinging away from liquidity to solvency by juxtaposing capital requirements against assets. This is as a result of the change in our asset structure—the development I mentioned—which is more hazardous.

I also want to mention that these capital ratios as against assets for which provision is not made in this Bill but which is going to be introduced by regulation, are truly going to cause important changes. It is also going to make our system very complex. It will be submitted to the Standing Committee on Finance later, but I think the SA Reserve Bank should be very careful with this. To a great extent it depends on how they determine their risk on the various assets. I hope they are not going to cause our banking any damage in this process.

When we come to the cash reserves it is also a move away from liquid asset reserve requirements to control monetary supply. As I said, previously our Reserve Bank worked on the basis of our liquid asset reserve requirements to control our monetary supply. As hon members will know, the SA Reserve Bank has admitted that they could not really succeed in getting our monetary supply under control using this method. They then come forward with this method of cash reserves. This gives us a powerful instrument, and we hope the SA Reserve Bank will succeed by this means in truly getting our monetary supply under control.

I have very little time, but I do want to mention that when it comes to inter-bank deposits where for the first time banks no longer have to take cash and liquid asset reserve requirements into account in interbank deposits and can subtract these from their liabilities, it will promote our interbank activities immensely and actually make our whole monetary system more flexible and elastic in this way.

I also want to say a few words about the elimination of the differentiation between banks, as determined by this Bill. As in foreign countries, we are going to have mergers and hopefully also greater effectiveness. We are going to allow the market to determine which institutions are necessary to a greater degree. We must remember, however, that South Africa is small and we should not follow the overseas patterns completely, but should still take South Africa’s problems into account. The De Kock report is not available yet, but many of the things I have mentioned come from it.

I want to conclude by referring to a last aspect which is an amendment to the Bill. Upon recommendation of the Standing Committee on Finance, clause 21(3)(a) was amended in such a way that the president of the Reserve Bank, together with the Minister of Finance, but not alone, must determine what these cash reserves should be. During the past few years the private sector has insisted that the president of the Reserve Bank should be independent of the Minister of Finance, but when we discussed this matter in the standing committee, we realized we could not make the president of the Reserve Bank solely responsible for it, for it is the Minister of Finance, after all, who indicates the political policy which is eventually ultimately responsible. I think our recommendation is correct and the business world must realize that their idea of giving total independence to the president of the Reserve Bank, will not work. My hon friend for Yeoville is not here at present, but the message he is giving the business world indirectly, is: We cannot accept what you are constantly proposing.

In summary I want to say we have a Bill here which is adjusting to the changes in banking in South Africa. It is is a Bill which is making better solvency of our banks and better monetary control over the monetary supply possible. I have thanked Drs Jacobs and Bertram and I think we can in fact accept this Bill without any problems, for they have promised to return to the standing committee with the problem of capital relations. We hope to do good work together in October and November in order to make a great success of these measures.

Mr Speaker, the hon member for Waterkloof went into some detail on certain technical aspects of the Bill under discussion at present. I agree with him wholeheartedly on these. All my notes for my speech contain exactly those points raised by the hon member. I shall save hon members a repetition of these, however, by not elaborating on them in as much detail as the hon member for Waterkloof. The hon member referred, for example, to affairs such as overseas branches of South African companies which should be placed under better control. He also referred to companies abroad of which the branches in South Africa should be controlled more strictly. He asked for the latter companies to submit separate as well as consolidated account statements so that the financial control exerted over them can be thorough and proper. There are a few other things to which the hon member referred, and which I want to react to in due course. That for the moment, however.

It is true that the SA Reserve Bank is the body in South Africa that deals with and controls the country’s monetary system. There is a matter in this connection which I should like to discuss with the hon the Minister tonight. When he took over the Finance portfolio last year, he was probably—even more than I was—aware that this control that has to be exerted by banking itself, is a very important factor. He was aware that the country’s finances were deteriorating and that international control measures and arrangements were truly under fire, and that there were a variety of other problems.

I put it to the hon the Minister, however, that he knew even in November last year that the Financial Institutions Act had to be amended. The hon the Minister has had since November 1984 to submit an amending Bill to the Standing Committee on Finance. He neglected to do so, however. I have the explanatory memorandum in connection with the measure under discussion in front of me. I see that it was ready for distribution on 4 March. The hon the Minister busied himself with other things, however. Why could he have the legislation in connection with auditors ready in January this year, and not this measure as well? Now however— right at the end of the session—the hon the Minister produces this amending Bill. Of course it is not a simple piece of legislation at all; on the contrary, it is extremely involved. I tell the hon the Minister in all sincerity that not all hon members who serve in the standing committee are equal to this. I myself had to make an extremely thorough study of this measure. There are other hon members who had to do the same. In addition the hon the Minister knows this. Therefore, to submit this Bill to the standing committee only at this late stage, is something I really cannot understand. Why has the hon the Minister done this? Why did he not submit this Bill to the standing committee earlier? In fact, he could have submitted this Bill to the standing committee in January this year. Then the standing committee could have heard the necessary evidence and called for the relevant documents in time. No, the hon the Minister preferred not to do so. He preferred to leave us in the dark.

The hon the Minister attacked the hon member for Kuruman the other day about an allegation in connection with an amount of $2 000 million which had left the country. Now I want to put it to the hon the Minister that the legislation in question is aimed at controlling things of that nature. He said he had consulted his department about it, but that they could not tell him where that money had come from. When I made a similar statement here on a prior occasion, the hon the Minister said frankly he did not accept my word for it, but did accept that of the hon member for Smithfield. He said he would believe it only if I could submit proof. When I supplied that proof, however, he still did not believe it.

I have a document here from which I should like to quote. The hon the Minister can get it from me later if he would like to read it. It is a document entitled PSL, published by the L T Patterson Strategy dedicated to the protection of your Retirement Security against purposeful government confiscation. I do not know whether or not the hon the Minister knows it. Perhaps he has read it previously. Actually it is a newsletter which appears regularly. The edition I am referring to is dated 31 May 1982. In 1983 I directed the attention of the hon the Minister’s predecessor, Prof Horwood, to this publication. If the hon the Minister should be interested in subscribing to this publication, I shall give him the name and address of its publisher here and now. It is L T Patterson, P O Box 37432, Cincinnati, Ohio, 45237, USA. There is another address too. It is P O Box 1059, 4001 Basle, Switzerland. This publication is therefore published in Europe and in America. I believe it is a financial publication which definitely cannot be written off summarily. One should really take note of this. I quote from it, as follows:

It goes even further. I should like to quote one more piece from this:

This is a publication that is distributed in America, England and Europe.

I cannot understand why the hon the Minister was so tardy in submitting this legislation earlier this year because it is a fact that the Reserve Bank does not have the power to exert control over these matters and I am grateful therefore that this measure is going to be passed now. The Reserve Bank will now get the authority to exert control over these matters. At the time Minister Horwood replied to my question (Hansard, Vol 105, Col 1710 of 24 February 1983), as follows:

The Minister said R2 000 million in the above. It should be $2 000 million. The Reserve Bank was probably also not aware, for they cannot be aware of everything, that Mr Rademeyer had taken Escom’s R8 million out of the country. A rogue remains a rogue and an ingenious businessman an ingenious businessman. The person who knows how to control his interests, does not forget how to do so. The same applies to the payment of tax. Avoiding tax is not illegal, whereas tax evasion is punishable and everyone knows what my very strong standpoint on tax evasion is. I do not blame anyone, however, who lawfully avoids paying certain taxes. I have experienced in my practice that there are people on all levels who do not know all the expenses they can deduct from tax. There are the deductions the Government grants in connection with machinery in factories for example. I am aware of people who were not aware of this benefit and did not deduct it for tax purposes and therefore lost the money. It is essential, therefore, that people with the necessary knowledge of tax legislation and so forth should give people advice on the tax they have to pay.

I am very pleased that this Bill is still to be passed during this session. The problem, however, is that all the necessary measures are not contained in it and the legislation will have to be amended again later. If the Bill had been submitted earlier this year, it would have looked much better now. This also applies to the legislation in connection with building societies which was also to have been submitted earlier, but which will now be held over. The hon the Minister has a Deputy Minister and if he tells me that he had too much work and did not have the time to pay attention to the legislation, surely he could have delegated the task to the Deputy Minister. Does the hon the Minister perhaps think the Deputy Minister was not equal to the task? He could have used the hon the Deputy Minister. There are three Ministers of the Budget now and the hon the Minister could have used the House of Assembly’s Minister of the Budget to prepare this legislation.

That would not have been a solution and the Constitution does not permit it in any case.

He could have prepared the legislation in the meantime and advised the hon the Minister. The Constitution does not prohibit that hon Minister from making a study of the matter. He could have made a study of it and then supplied the Minister with the necessary information. The hon the Minister is correct when he points out that that Minister could not have submitted the measure here, but at least he could have cleared up the whole matter. The hon the Deputy Minister could have done so as well. I want to say frankly I do not believe he is incompetent.

Talk about the Bill for a change.

I am talking about the Bill and I am worried about its being submitted so late. I agree with all the things said by the hon member for Waterkloof in this connection. I do not want to elaborate again upon all these things such as the contingent liability and the question of foreign reserves as well as the parity that has to be maintained, and capital requirements and deposits, for it is not necessary for me to do so.

Otherwise we support the Bill. I think we should convey our sincere thanks to our officials, the Reserve Bank and the Registrar of Financial Institutions. There was no quorum the morning they had to appear before the standing committee. They then had to waste their time all day long. Fortunately they were so kind that we could have discussions with them for a full hour that morning. I had the privilege of making use of their greater knowledge. I think all hon members on both sides owe a great debt of gratitude to this staff for the calm way in which they explained these aspects to all of us. They sacrified a great deal of their time to put these matters to us.

Mr Speaker, I listened very attentively to the hon member for Sunnyside. I hoped he would say something with which one could associate oneself, and fortunately he did so in his conclusion when he expressed thanks towards the Vice President of the Reserve Bank and the Registrar of Financial Institutions who assisted the Standing Committee on Finance. I should like to associate myself with the hon member in this connection in thanking them sincerely for the way in which they explained a highly technical and very difficult piece of legislation to 23 members of a standing committee, of whom many inevitably did not understand much of it. One has understanding for that. I think the hon member for Sunnyside proved with his speech tonight that he also understood very little of the legislation, because he raised a whole number of other things to make a speech about them. I sympathize with the hon member for Sunnyside in this connection.

In reply to what the hon member said, I want to make the point that it is an absolute fact that not only the hon the Minister and the hon the Deputy Minister, but also the Vice President of the Reserve Bank as well as the Registrar of Financial Institutions had constant discussions with the various banking institutions through the Technical Committee on Banking and Building Society Legislation. I have correspondence from as recently as the beginning of June with me. It is correspondence they exchanged with the various banking institutions to clear up certain aspects of this legislation about which there was not clarity and which entailed difficult technical conditions. That is the only reason for the “delay” in piloting this Bill through Parliament.

I should like to associate myself very briefly with a remark made by the hon member for Yeoville. The hon member for Waterkloof who is not here at present, referred to it as well. It concerns purely the question of the image of banking in South Africa. That is also what this whole legislation is about. It concerns banking in South Africa in particular because we can never allow an-image of banking in South Africa not to attest to soundness and security; that is abroad as well as locally.

It is absolutely essential for banking to maintain an image of pure stability, particularly under the present difficult economic conditions. We in South Africa can simply not afford our financial institutions not to be synonomous with security. We dare never allow what happened in other parts of the world, even in the USA, to happen in South Africa so that the foundations of the financial world are shaken as was the case here and there.

We are going out of our way today to convince the world that the course of disinvestment is not the correct one, but we shall have to guard against our financial institutions eventually being a cause of disinvestment taking place as a result of insecurity. In that light I want to look at the amendments moved in this Bill.

I have already referred to the fact that the technical committee has had discussions in particular with the various banking groups, the general banks, the clearing banks and the merchant banks, and that unanimity was reached to a great extent. In our discussions in the standing committee—and the hon member for Sunnyside can confirm this—we had discussions with all three banking groups and in principle everyone was satisfied with the Bill. Everyone was in favour of the fundamental amendment in respect of capital requirements which are based on obligations. It is quite true that there was anxiety here and there about the application thereof, but everyone was in favour of this banking amending Bill being passed by Parliament as soon as possible because it will provide greater security.

The hon member for Yeoville asked last week whether consideration had been given to the effect of the higher capital requirements on South Africa’s available capital sources, especially because of the fact that no job opportunities are created in this way. Firstly the remark should be made that the estimates of the banks’ total capital shortages are merely speculative at this stage. The Technical Committee on Banking and Building Society Legislation is still investigating the matter in conjunction with South African banks. A final decision has not yet been reached on what exactly banks’ capital requirements will be and in the course of which term they will be able to supplement those shortages.

It will be at least a billion rand.

That may be. Banks with shortages will be able to submit schemes to the Registrar of Banks in which they indicate how they intend to supplement those shortages.

Apart from capital shortages it should be taken into account that the banking sector will grow with the economy. That is why the capital requirements should be phased in carefully—there I agree fully with the hon member for Yeoville—in order to prevent the banks’ role in the growth process being restricted. Fact is—and we have to accept it—South Africa is a developing country and has a high population increase. There are many people for whom job opportunities have to be created. Economic growth in the long term is a high priority, therefore, which means that capital must be utilized as productively as possible, but banks play a key role in growth, both internally and abroad. It is absolutely essential that we have a sound financial and banking system. We may never lose sight of the fact that this must receive the highest priority. The creation of job opportunities is important, but I want to say the solvability of banks should receive the very highest priority.

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

Unfortunately I have very little time. The Bill is in fact trying to make it easier for banks to fulfil the revised capital requirements by allowing banks to issue subordinated debentures with a minimum period of seven years to an amount equal to 20% of their capital requirements. As we progress, one can see whether it is possible for this percentage to be increased.

In conclusion I want to refer to a small amendment of the Insurance Act, viz the amendment of section 60 by clause 7 of the Bill. It concerns the solvability of Lloyds in South Africa in respect of which the cover is being increased from 70% to 130%. In this connection the hon member for Yeoville also referred to the strong reaction in the Press concerning this situation. I merely want to make the point—my time has almost expired—that it is absolutely essential that even the agents of Lloyds, which in reality is a market and not a company, should ensure, just like the domestic companies, that people who have taken out cover with them in exchange for a premium, will be thoroughly secured. That is why I reject with contempt the idea that this amendment was included to try to protect the domestic companies against Lloyds. I think it is totally wrong and unfair towards the insurance profession as a whole.

Mr Chairman, the principal theme of the speech of the hon member for Paarl was in respect of banking, the necessity for internal and external security in that regard, and the fact that banks played an important part in the growth of South Africa. One heartily agrees with the fact that they are vitally important in collecting capital and making it available for development.

In an earlier debate one of the hon members indicated that I was something of a fundi in that field. I must confess that I am nothing like a fundi in this particular field and I would like to make it clear that I am not in the same league when it comes to the hon members for Yeoville and Waterkloof in respect of banking, although in other fields I could possibly teach them a thing or two. It was also suggested that I have no modesty; I am indicating that I do have some modesty. [Interjections.]

This Bill is generally highly technical financially and I could not presume to get too involved in the technicalities of it. We heard a great deal of evidence from the Reserve Bank and private bankers. There were of course also certain written evidence and representations from the various institutions affected by this Bill to the effect that they believe that what is before us is acceptable and desirable. If one can get the private sector and the Government sector to agree that something is desirable, my attitude in general must be to ask: Who am I to stand in their way?

There are certain aspects that are very important, particularly in the hazardous financial situation that has developed in certain-areas. An example is Lloyds with some of the problems that they have had such as the increase in their deposit in this country from 70% to 130%. This is desirable and they have accepted it. The strengthening of banking securities is also apparently generally accepted and considered highly desirable by our own people in the Reserve Bank and financial circles.

There is one other aspect that is of particular interest to me and that is the extending of the bond period of building societies so that all bonds can now have a 30 year term. I believe this is quite important because the very high interest rates that have hit the country in the past year or so have made life utterly impossible for many people.

I am aware that the building societies have endeavoured to ease the burden of the people who have bonds with them but, even so, a 20 year term on the very high rate that prevails today can be very onerous. This is particularly the case with people who have a smaller bond because they would presumably have a bigger bond if their income justified their ability to pay. I believe that this particular aspect is very important.

I do not think it is desirable to waste the time of this House when we have had so many erudite experts speaking on this subject by listening to somebody who is a veritable tyro on the issue. I would merely indicate for the record that we support this Bill quite happily.

Mr Speaker, I should like to thank hon members on both sides of the House for their support for this financial measure.

The hon member for Waterkloof referred to certain aspects of the De Kock Commission’s findings embodied in the legislation. I am very glad to be able to announce that at a small ceremony this afternoon Dr de Kock handed the report to the State President. It will be tabled tomorrow and there will be ample opportunity for hon members, the private sector and other interested parties to study it in detail and comment on it. In due course the Government will be formulating specific standpoints on it.

I also think it very fitting for this House to take note of the extremely important work done by this commission over a period of seven years and I think that a word of sincere thanks and appreciation should be extended to the Chairman, Dr de Kock himself, and the other members of this commission. The members of this commission were appointed on the basis of their business knowledge. They have all been people who have left their mark on the business world. They come from various disciplines. These were not a bunch of theoretical economists who were lumped together to do a piece of work, but in fact people who made their practical experience available to the commission, over all these years, to contribute towards reviewing South Africa’s monetary system.

A very important aspect of this commission’s report is that it was compiled on the basis of the utmost possible consensus and co-operation with the various interested branches of industry. Thus there are, for example, specific recommendations involving agriculture, and over a period of weeks this matter was discussed and clarified with organised agriculture.

This does not mean, however, that everything in the report is good news, but what appears in that report is the product of the work of experts—people with practical experience. It is also the product of intensive and fruitful discussions with various industries. I think a word of thanks should be extended to the chairman and the commision as a whole. It is interesting that the members of this commission, which sat for seven years negotiating and deliberating, not only survived in the physical sense, but that everyone’s services were available from the commencement to the completion of the commission’s proceedings. We owe them a great debt of thanks.

Mr Speaker, may I ask the hon the Minister whether it is the intention of the Government to issue a White Paper on the final report of the commission?

I am not sure that we will do it that way. It is most probable that it will be done by means of a White Paper but, as the hon member knows, in accordance with the interim reports and some of the aspects already contained in this report, certain legislation has so far been prepared, and perhaps the same thing will be done. How ever, we shall certainly go out of our way to make sure that it is properly considered and that the findings and the opinion of the Government be properly communicated. There will also be ample time available to debate it during next year’s session. I also presume that during the deliberations of the Standing Committee on Finance there will be an opportunity for a proper discussion of the report.

I want to thank the hon member for Yeoville for his exposition of various aspects of this Bill. I know that he literally had only a few minutes to prepare his speech for the Second Reading debate. I want to place on record my own appreciation of the fact that, despite that, which is supposed to be an impediment, the hon member made a real contribution towards an analysis of this particular Bill, which is a very intricate piece of legislation. I wish to thank him for it.

The first point the hon member made was that it would have been easier for the standing committee to deliberate upon it if the Bill had been ready much earlier in the session. Obviously I agree with him. The hon member for Sunnyside said something similar. For the sake of the record I should like to say that in October last year the original version of this Bill became available to Cabinet. However, that stage, on account of the highly technical and intricate nature of this particular Bill, the Cabinet felt that, prior even to considering it, it would refer the Bill to the Standing Committee on Finance for their perusal and any recommendations that might flow from that. In the end, at the beginning of this year, it was proven that it was not possible to implement that particular procedure. Subsequent to the decision to refer the Bill to the Standing Committee on Finance, the technical committee decided to incorporate some of the recommendations contained in the De Kock Commission’s report to be tabled tomorrow, and also some other aspects relating to certain ratios, into this Bill. It has thus undergone a process of refinement and certain provisions were also enhanced. However, at the same time, I presume that the degree of difficulty was being maintained. When eventually, at the beginning of this year, it became clear that it could not be referred to the Standing Committee on Finance, it was taken back and we then had to seek an opportunity to bring it before the Cabinet Committee and to submit it to the Cabinet. At that stage we were in the final throes of the Budget and it was simply not physically possible to get it through the proceedings of the Cabinet Committee on Economic Affairs or to get it onto the Cabinet agenda. The hon member will appreciate what the Cabinet agenda looks like in the final weeks before the presentation of the Budget.

However, the week after the presentation of the Budget it was discussed at great length by the Cabinet Committee on Economic Affairs and it was then referred to the law advisers and to the other people who translate ordinary English into this type of English which a layman like myself finds very difficult to understand. The hon member and other hon members will therefore certainly appreciate the fact that at that time our law advisors found it extremely difficult to push the job through at great speed. However, they still did their level best to produce it. Subsequent to that the normal procedure would follow.

However, in the interim period the technical committee took the trouble to discuss the suggestions with relation to aspects of the Bill at great length with the banking institutions. That is the reason why, when the people from banking institutions appeared before the standing committee, there was a great degree of agreement in their ranks. That, at least, expedited the process. I therefore wish to place on record my appreciation for the fact that despite their heavy workload the Standing Committee on Finance under the chairmanship of my colleague, the hon member for Smithfield, found it possible to deal with this Bill so that we could pass this Bill this session. We will thus be in a position to introduce these measures which will certainly, according to hon members’ own testimony tonight, enhance our banking system as such. I apologize for the fact that the committee had to do this work under great pressure, but it was simply not possible to avoid that.

*I really ought not to refer to this, but the hon member for Sunnyside certainly does not make it easy for one to communicate properly with him. There would be no use in my referring the matter to the hon the Deputy Minister. I think the hon member would do well to confine himself to the work he has to do, and we shall do the same in regard to Cabinet documents and the way in which we pass the Bills from the legal advisers through to the various Cabinet committees. It is done with the utmost possible speed.

I should very much like to thank the other members of the standing committee for their very wonderful co-operation in having matters dealt with, in spite of the fact that this had to be done under difficult circumstances.

†I want to agree fully with the hon member for Yeoville that the auditor plays a most important role in the whole question of banking institutions. It is true what the hon member said about the fact that the signature of the auditor should provide an unqualified measure of insurance and security to the depositors of funds at their particular financial institutions. I on my part will certainly do my utmost to ensure that this is in fact the case.

I also appreciate the hon member’s kind reference to the work of the Office of Financial Institutions. They are working under great pressure and they find it difficult to do all the work they are supposed to do. On occasions we have been forced to enlist the services of professional auditors to help us in this regard.

The De Kock Commission has also discussed the whole matter of divided supervision of the banking industry and they have recommended that a subcommittee be appointed consisting of representatives of the department and the Reserve Bank so that this matter can be reviewed. We do have certain ideas in this regard and we believe that we will be able to address that problem in the proper way in the very near future. I am very pleased to have received the hon member’s support, in principle, for a clampdown on the so-called investment brokers. The technical committee on banking and building society legislation is currently giving attention to a clearer definition of a bank and the business of banking. This will hopefully result in curtailing these undesirable practices. We are certainly very worried about this and if the least possibility of a malpractice is brought to our attention we shall certainly carry out investigations as soon as we possibly can.

*I have just read something about the building societies, and this links up with another problem the hon member for Sunnyside brought up for discussion. The facts about the Building Societies Bill, the new legislation, is that it is like an octopus. That legislation must now wed a financial institution to a company. The Companies’ Act is involved, including a whole range of laws and regulations. We therefore had to decide either to attempt to steamroller that measure and make a mess of it, in other words bring to the standing committee and to Parliament a draft Bill not properly assessed by the legal advisers in the context of the relationship it has to numerous other Acts, or to make the wise choice that we did, in fact, make. I conducted a long interview with my colleague, the hon the Minister of Justice, and with his chief legal adviser and the legal adviser working on this, and we agreed that they would unhurriedly, but with the utmost dispatch, tackle the Building Societies Bill and make it available as quickly as possible, during the recess, to the standing committee for consideration.

†Some of my hon colleagues have referred to some of the points raised by the hon member for Yeoville and I have nothing further to add. The question of the capital requirements, for example, was dealt with by the hon member for Paarl.

As far as the deposit insurance suggestion by the hon member for Yeoville is concerned I must say that in theory the idea is a good one but it has been investigated before and a decision was taken against it. We still believe that it will not be able to stand on its own. [Interjections.]

Order!

I wonder whether my hon colleagues would not like to give me a chance. By the end of the session one’s throat is hoarse from all the talking and it is a little difficult, when there is so much talking, to make oneself audible to those of one’s colleagues who have taken the trouble to participate in the debate. I would really appreciate it. Thank you very much.

†As far as deposit insurance is concerned, as I say, we support the principle of it but we do not have sufficient confidence in the viability of the scheme at this stage to be sure that we will not end up with a scheme that will again have to be subsidized by the State. At this point in time that is completely out of the question. However, it certainly is a constructive suggestion which should be borne in mind.

The hon member for Yeoville also referred to the effect of the new capital requirements on disintermediation and the cost of banking services. In this regard it must be borne in mind that the liquid asset requirements for banks will be substantially reduced and that vault cash will in terms of the amended Banks Act also form part of the bank’s minimum cash reserves. These concessions constitute a substantial cost saving for banks. Capital requirements will be phased in gradually over a period of time and ought not to create undue upward pressure on the cost of banking services. Competition in the banking system will also ensure that banking services are provided at minimum cost to the public. So we do not believe that the cost of banking services will increase and with the hon member for Yeoville we will keep a watchful eye on the whole affair.

To another point that the hon member for Yeoville raised I want to react by saying that the bank law provides that banks may issue for the purposes of their capital requirements subordinated loan stock to an amount of up to 20% of their requirements. The hon member for Paarl also referred to that. There is the concern that a particular bank might not be in a position to replace maturing loan stock and consequently fail to comply with the capital requirements laid down in the Banks Act. It is impossible to legislate for such an eventuality, and we on our part believe that that is purely a management function and that they will have to arrange the staggering of their maturity dates in such a way that they are not caught in an embarrassing position as far as that is concerned.

I have already responded to the hon member’s point about divided control. We are very concerned about it. Let me say to the hon member that on the standing committee, or perhaps as individual members, the hon members might make a contribution in this regard. One of the ideas which I believe warrants explorations is the possibility of an inspection body such as the Office of Financial Institutions. If an inspection has to be carried out either as a result of information received about malpractice that is being carried on or a routine inspection, the institution involved should be required to pay for such inspection. This will help to reduce our overall expenditure in that regard.

If something is wrong, yes.

Yes, if something is found to be wrong. This, however, is but one of many ideas which need to be explored and the subcommittee which the De Kock Commission recommends will certainly look at that.

*I would very much like to thank the hon member for Waterkloof. I think he really made an outstanding contribution, evidencing exceptional insight into this legislation. In his own words he gave a very accurate description—which was very comprehensible to all of us—of the content of the Bill. I want to thank him very sincerely for that.

I should also like to support the hon member in his vote of thanks to, and the pride he expressed about the quality of, the people employed by the banking authorities. The hon member mentioned the names of Dr Jacobs and Dr Burton, and I want to associate myself fully with what he said and also to thank these two gentlemen for the very hard work they did, not only in the preparation of this technical legislation, but also for the hours of negotiation they conducted with the banking sector.

The hon member made a very valid point, ie that banking in South Africa will never be the same again. The truth of the matter is that although South Africa is a developing country, it has an extremely sophisticated system that is strongly supported by a banking system which is not only rapidly adapting but is, in many respects, setting the pace for changes in the financial sphere in South Africa. We should actually be grateful for the fact that our large banks have never yet left us in the lurch. At a time when many banks in the USA are experiencing tremendous problems, we must be grateful for the fact that although there are banks in South Africa that come under great pressure from time to time, our banking industry is, in general fundamentally sound. Their co-operation in the restructuring of their capital is also certainly an indication of the fact that they want to meet their obligations in South Africa in an extremely responsible manner. I thank the hon member for his contribution in this connection.

I now come to another point which he raised and with which I want to associate myself. As an individual, and in my official capacity, I have really had nothing but the best possible co-operation from the SA Reserve Bank. That is indeed an institution that is fully independent but from the point of view of monetary control, the Treasury can never be divided up. It definitely cannot be done in this country, particularly not in the stage in which we find ourselves; and I doubt whether it would ever be acceptable, politically or otherwise. It depends, however, on the individuals concerned, and I can really place it on record that I have had the best possible and the most courteous co-operation—and expert co-operation too—from the President and his very competent Vice-President who supports him. Let me also express my thanks to them.

I have already responded to several points raised by the hon member for Sunnyside. I just want to tell him that if he quotes in this House from a publication that mentions “trilateral commission” and such nonsense, he really must not expect us to take any notice of it. I really do not think he should expect that of us. If I must choose between the credibility of the publication from which the hon member quoted and the information I receive from the SA Reserve Bank, I would, without any doubt, choose that of the SA Reserve Bank.

Hear, hear!

The hon member was tripped up by his own words. He first spoke of $2 000 million and then said $2 million.

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

No, just a moment, the hon member must just give me a chance. That is another piece of gossip that is disseminated abroad. [Interjections.] The amount he quoted from the publication was $2 000 million; in other words, $2 billion. Let me tell him that I have implicit faith in the Reserve Bank’s statement that there is no question of Anglo American having taken $2 billion out of this country in 1982. We are not, after all, a country large enough not to feel the pinch if the equivalent of R4 000 million left the country just like that. Is the hon member naive enough to think that something of that nature could have escaped the notice of the foreign exchange authorities? [Interjections.] Ah, shame, the hon member for Rissik thinks I need help with that argument, but that just goes to show how little he understands of figures! [Interjections.]

You know, you really are arrogant!

I am not arrogant; I am merely acquainted with the hon member’s complete inability to understand anything that is expressed in figures. I just want to emphasize that one ought not to take all that much notice of the nonsense the hon member for Sunnyside spouts across the floor of the House. In public, however, they quote these items from Hansard and record them in their pamphlets, and they seem credible because they come from Hansard. In spite of the fact that we are all irritated by that, and ought not to take all that much notice of it, I do think that I should place it on record that there is no such thing as Anglo American’s having taken $2 billion out of this country in 1982. That is untrue, and anyone stating that, verbally or in writing, is telling a lie.

Did they take less?

How can the hon member ask me whether they took any money out? [Interjections.] If the hon member wants an answer to a question like that, why does he not ask us to ask the foreign exchange authorities what information they can make available? The hon member, however, understands nothing of this. That is why he can ask such stupid questions. [Interjections.]

This links up with another statement the CP makes at every turn, ie that Anglo American and other companies supposedly do not pay tax. There is one thing, however, the hon member ought to know—he is, after all, an accountant and ought to correct his colleagues who say such things and write them in pamphlets—and that is that so-called holding companies do not pay tax because the only income they have is that derived from the dividends of the companies whose shares they hold. The hon member knows that, and will he not please tell me whether I am right or wrong when I say that a holding company does not pay tax?

Yes, that is right.

Thank you very much. The hon member for Sunnyside has just confirmed that every CP member who says that is telling a lie or an untruth. That you very much. I appreciate the fact that the hon member has said that. [Interjections.]

He is not the one who said it.

I am not saying the hon member said it, but I am appealing to the hon member’s integrity, as a professional man and a member of this Parliament, and ask him please to correct, within his own ranks, distorted propaganda on companies’ tax liability.

I already have my hands so full just fixing yours up. [Interjections.]

I want to put a final question to the hon member and then we must finish off. He says he is very glad about this legislation, because it would help to prevent another $2 billion leaving the country. He said he had studied the Bill, and so I now want to ask him in what clause of this Bill there is any provision to improve the flow of foreign exchange.

It will improve the overall control that exists at present.

The simple truth is this: In this Bill there is nothing, but nothing, which improves exchange control. So in the light of the passage the hon member quoted about money supposedly leaving the country, the hon member’s joy at this legislation is misplaced. [Interjections.] I am nevertheless grateful to the hon member for having supported the Bill, even though he does not know exactly what it contains. [Interjections.]

The hon member for Paarl made a very useful contribution, and I thank him sincerely for it. He prepared himself thoroughly and made a useful contribution about capital requirements.

†The hon member for Umbilo made some points with which I agree wholeheartedly. In dealing with matters of a highly technical nature such as the Bill now under discussion that happens to be a measure in relation to which all the technical experts on the side of the authorities are in agreement—particularly regarding the necessity for such legislation and the correctness of the draft form in which it has been submitted to Parliament— while the people who are bound to be affected by such legislation being enacted are also in agreement with the official experts, there is no reason at all why an ordinary layman should try to obstruct the passage of such legislation. As far as the highly technical aspects of this particular piece of legislation are concerned, I happen to be a layman. Therefore I am in full agreement with the hon member for Umbilo, and I also thank him most sincerely for his support of this measure.

I also agree with the hon member that if it had not been for this possibility of extending the repayment period in respect of bonds from 25 years to 30 years, many people would indeed have found themselves in dire straits in relation to this aspect. We have, however, all noticed the apparently very firmly established downward trend of interest rates at the moment. As long as we do not manipulate this downward trend, but rather leave interest rates to their own devices—for the right reasons of course—we can really look forward to a substantially lower pattern of interest rates in the not too distant future. That will be something that will also benefit all the very many bondholders in South Africa.

Mr Chairman, I merely want to put very briefly the point that in our view the words to be inserted in the proposed new section 15(1) should read “the duty assessed by the officer in terms of the Act” instead of the present wording, and I quote:

We desire the wording I have just quoted in order to make it clear that it is the Act which is applicable and not the discretion of the Controller. We moved an amendment to that effect in the standing committee, which was, however, not accepted. Therefore I merely place on record that that is our view on this stipulation.

Clause agreed to.

Clause 7:

Mr Chairman, I merely want to draw attention to the fact that insofar as clause 7 is concerned the same principle applies of giving an opportunity of discharging the onus. As in the case of other clauses in the Bill it should also be included in this particular clause. If this were indeed done many of our objections in relation to this clause would fall away.

Clause agreed to.

Clausel0:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 10, in line 38, after “shall” to insert:

Mr Chairman, I support that amendment and accept it.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 11:

Mr Chairman, I would just like to put our point of view with regard to this clause. The question of furnishing the information forthwith should in our view mean a reasonable period of time, provided of course that that reasonable time is not such that someone can manufacture evidence in order to fustrate the purpose of the provision. This suggestion was not accepted. We believe that these words should be inserted in line 52 and that this should apply unless there is a reasonable ground for being unable to do so. There can, for example, be a fire and one will not be able to comply with the requirement because it may well be that it is beyond one’s control. One should not be committing an offence in such an instance. Even though the clause is acceptable, we feel that it should be amended to improved it.

Mr Chairman, I think the hon member had the position explained to him in the standing committee. We have discussed the matter with the inspectorate and it would be administratively impossible if we do not have the clause reading as it does to apply the provision effectively. It would be open to much abuse if we allow for a reasonable time and for that reason we cannot and could not accept the hon member’s suggestion.

Clause agreed to.

Clause 13:

Mr Chairman, we are going to vote against this clause and the reason is that in terms of this clause—my view was supported unanimously by the standing committee—a perfectly innocent third party can have his property attached in satisfaction of an amount owing to the State. You, Mr Chairman, can for example lend your truck or tanker to the hon member for Houghton and she might then be owing duty which she hasn’t paid. It is your truck or tanker that would be attached and sold because the hon member for Houghton has not paid the duty in terms of the Customs and Excise Act. This offends against every principle of natural justice. We are supported in this by the Chambers of Commerce and the whole standing committee, and this is an utterly repugnant clause. If the person who arranges the Order Paper—I will not mention his name in this House—were to have put my motion on the Order Paper for discussion earlier, we could have had a full debate on this issue, because this is a clause which offends against the common law, against natural justice and is utterly undesirable.

Mr Chairman, if the hon member had spent as much time arguing the technicalities instead of the merits of the Bill itself when we had an opportunity to do so, he would have had adequate opportunity to debate this measure. This is no new principle. What we are doing is simply to extend an existing principle to imported goods. Furthermore, I want to assure the hon member that the utmost care will be taken where this lien is enforced and owners will be given the fullest opportunity to settle matters between themselves and the authorities.

I just want to put the member in perspective. Hon members must understand what we are up against. We have the situation that due to collusion between transgressors and sometimes also owners of the kind of vehicles we are talking about, the estimated loss—this is a conservative estimate—to the department at the moment in excise duty alone is something like R25 million a year.

The hon member will know that if one does not deal with the matter at source— with this I mean once one has lost the excise duty in that people are dealing illegally in fuel—one loses the road levy, two further levies and GST. The total loss to the State in this regard is estimated at something like R150 million a year.

I want to tell the hon member that nobody likes this kind of measure on the Statute Book. It is very leniently applied and only where necessary, and it may be that other methods may be found. The only other method which can be used easily at the moment is the method of guarantees. The hon member know what would happen if one were to ask for guarantees when people buy this kind of fuel. It will drive bona fide businessmen right out of business.

Nevertheless I want to give the hon member the assurance that we in the department are talking about it and seeking other remedies. If we can find other remedies which are acceptable and can result in adequate inspection and the adequate collection of revenue, then we will use such a means of doing so. I can give the hon member that assurance.

Mr Chairman, just for the record I want to make it clear that we too support the hon member for Yeoville in this regard. The only issue that seems to have been raised is in respect of fuel in tankers and the like. This clause actually does not confine it to this. It does seem to me to be quite wrong. I know that what are called CMT items which are supplied to another dealer for manufacture are excluded specifically in terms of the legislation, but even so it can so easily happen that people who are illegally importing all sorts of things can get away with not paying the duty. One can have vehicles there and all sorts of other stock temporarily in storage with those people, and then all of those items can be held. I think as a moral principle that that is quite wrong, and it certainly goes against all systems of justice that we understand. We leave it at that.

Mr Chairman, I should like to respond to the hon the Deputy Minister and to point out to him that the words which are to be included are “machinery, plant or equipment”. We have the simple situation that insofar as the very banks are concerned about which we were talking a few moments ago, their property, despite the fact that they are completely innocent, can be taken away in terms of this clause. It has been held by the Appellate Division that in terms of the existing section the wording of which is similar as regards the other duty, this can be done. Therefore one can take away the property of the innocent.

It is not taken away.

Well, one has a lien, and the effect of a lien is that that property is security for the debt. It therefore means that one can sell it, one can dispose of it. One realizes on it in order to pay for something which a person owes one.

Why is it that the whole of the standing committee, all three Houses, all the parties and everybody see the injustice of this but that when we come to this House the governing party just ignores everybody? When it comes to vote, the hon members who voted in the standing committee with us are now going to be on the other side. Has one ever heard of such a thing in one’s life? It is quite ridiculous. Everybody sees the injustice of this but the governing party uses its majority to impose an injustice upon people in South Africa who are utterly innocent of any connection with any crime or any wrongdoing. That is something nobody can expect us to support.

Mr Chairman, it is not that simple. The first reality is that neither this side of the Committee nor the members of the standing committee ride roughshod over the opinions of the standing committee or over anybody on it. As a matter of fact, as soon as the standing committee expressed that opinion and that was brought to my attention, I instructed the officials to get the opinion of the law advisers and to see if some other device could not be found to achieve what we wanted to achieve. We are talking here of R25 million in customs duty and everything that goes with it, or, as I mentioned earlier, R150 million-plus per year in a field where there is widespread dishonesty. We have to come to grips with it.

It is not only dishonesty or the loss of revenue that is involved. What happens? The man who is now abusing the law hawks about a tanker full of fuel and has a price advantage of 21 cents. So, what does he do? He stops by the roadside and sells this fuel to people in transport or to his own transport companies or connections at a reduced price enabling them to compete unfairly. It is, therefore, not only a loss of revenue that is involved, but it is also causing a disruption of competition.

I do not want to say that the way in which we are seeking to remedy the situation will remedy it in toto or that there is not some other way to go about it. All I want to say is that we did not ride roughshod over the hon member’s opinion or the opinion of the standing committee. We place those opinions before the law advisers and found that at this time there is no more satisfactory arrangement.

I have given the hon member the assurance that we are at the moment engaged in discussions in an attempt to find other remedies. If possible, we would like to find a less objectionable way of achieving our aims.

I want to say to the hon member that a lien is not such a terrible thing. It is a first call …

What? Is it not a terrible thing?

No, it is not such a terrible thing. I asked a senior member of the department how often in his experience the goods taken as a lien have been sold—not just held until payment had been made after which the goods were again released to the owners, but had actually been sold. He replied that in the 13 years he had been working with this it had happened only once. We use it as a deterrent against people who want to cheat. This is intended to deter those people from breaking and abusing the law and evading tax and, with a view to the interests of the State and the revenue of R150 million that is involved, the public interest demands of us that we act, and we have acted appropriately.

Mr Chairman, I move, subject to Standing Order No 52:

Agreed to (Official Opposition dissenting.)

Bill read a third time.

Fair copy of Bill certified and transmitted to the State President for his assent.

Mr Speaker, I move:

Apart from proposing the ratification of the increase in the rate of sales tax from 10% to 12% with effect from 25 March 1985, as announced on 18 March 1985 by the Minister of Finance in his Budget Speech in this House, the Bill also proposes several changes in the provisions of the Sales Tax Act. A comprehensive explanatory memorandum has been provided for the information of hon members, and I consequently do not intend to elucidate all the various amendments that are being proposed in the Bill in detail.

There are, however, two important concessions which I should like to mention. The first is the proposed amendment of the definition of “goods” as inserted by clause 1(1)(e) of the Bill. With effect from 1 July 1985 any livestock or poultry shall be excluded from the definition of “goods” when disposed of or utilized for private or domestic consumption, and consequently no sales tax will be levied in respect of the sale or utilization thereof. This amendment is considered to be an essential measure since a great deal of confusion has arisen as a result of the fact that the sale or utilization for own consumption of raw meat has been exempted from sales tax, while live animals sold or utilized for slaughtering purposes cannot technically be regarded as raw meat. People in the lower income groups, in particular, buy live poultry which is then slaughtered only when the meat is required, since they do not own refrigerators.

Secondly, in terms of the amendment which is being proposed in clause 1(1)(c) of the Bill it is provided that with effect from 1 September 1985 goods which are sold to foreign visitors to the Republic from certain special licenced customs and excise warehouses, ie duty-free shops and licenced manufacturing or storage warehouses in the jewellery trade, will be treated as having been “exported” and consequently such sales will not be subject to sales tax. This exemption is aimed at bringing the Republic into line with the internationally accepted treatment of sales of merchandise to foreign visitors and tourists, and at increasing foreign exchange earnings for the Republic. The exemption is not applicable to the sales of goods from those warehouses to tourists from countries within the customs union who are visiting the Republic. I may just mention that certain procedures with regard to the clearing and removal of the envisaged goods from the warehouses in question have already been introduced by Customs and Excise in order to ensure that the goods are in fact taken out of the Republic.

Furthermore, in terms of the amendment of the definition of “sale” which is being proposed in clause 1(1)(f) of the Bill, any disposal of goods under arrangements in terms of certain provisions of the Matrimonial Property Act, 1984, shall be excluded from that definition, and said disposal will therefore not be subject to sales tax.

The amendment which is being proposed in clause 3(1)(a) of the Bill seeks inter alia to tighten up control over the application of the exemption in respect of the sale of goods which are “exported” from the Republic. It has been found that some vendors have all too easily been persuaded by members of the public to treat goods as having been “exported” when in fact the essential requirements of the definition of that word in section 1 of the Sales Tax Act, 1978 have not been met. It is being proposed that with effect from 1 September 1985 any seller of goods who claims exemption from sales tax in respect of a sale of goods exported from the Republic shall furnish the seller with a prescribed declaration of the goods and in the absence of such a declaration the seller will not be entitled to account for that sale as a sale of exported goods in his sales tax return.

†The present procedure entitling registered vendors to make use of their sales tax registration certificates either by producing the original certificate or giving a photocopy thereof or a declaration relating to that certificate to a seller has been found to be unsatisfactory in many respects. Under the present system certificates can quite easily be falsified or made use of by persons not entitled to purchase goods free of sales tax. Vendors are very often indifferent towards such false certificates or the misuse of certificates, while purchasers have been reported to have claimed that the seller need not concern himself about the purchaser’s entitlement to claim an exemption from sales tax so long as a registration certificate has been produced.

The revised procedure contemplated in terms of clause 4(1) of the Bill will strengthen the procedure relating to the claiming of exemptions from sales tax so as to reduce, as far as possible, cases where sales tax ought to have been collected but has not been collected due to the misuse of sales tax registration certificates. In order to afford time for consultations with organized commerce and industry before the new procedure is introduced, the amendment to section 14(2) of the principal Act proposed by clause 4(1) of the Bill will only come into operation on a date fixed by the Minister of Finance by notice in the Gazette.

At this stage I wish to point out that inspections concerning sales tax matters are being carried out on an ever-increasing scale, due primarily to the fact that Inland Revenue has been able to supplement its inspection staff by obtaining the services of qualified persons from the ranks of national servicemen who have completed their basic military training. Those inspections are bearing fruit and this should serve as a warning to those persons who have not been accounting for the full amount of sales tax which should have been paid over to Inland Revenue.

Complaints have been lodged by traders whose trading establishments are located on the Republic side of borders with Bophuthatswana, to the effect that they are experiencing difficulty in competing with Bophuthatswana traders nearby, mainly because of being obliged to collect sales tax on all sales of goods concluded in the Republic, whereas no sales tax is leviable in Bophuthatswana.

The Government is aware of these problems and the matter has already been raised at a recent Joint Ministerial Commission meeting between Bophuthatswana and South Africa. This matter is being looked at very carefully, especially with a view to achieving tax harmonization between the various states which share common borders with our country. After all, there is the customs union between South Africa and its neighbouring states, so there is every reason to seek to achieve some measure of tax harmonization between this country and those states.

Hon members will have noted that in terms of clause 3(1)(c) of the Bill it is proposed to provide an exemption from sales tax in respect of the sale to or importation by any organization, not formed for gain, of any boat which the Commissioner for Inland Revenue is satisfied will be used by the organization solely for the purposes of rescue operations in or around the territorial waters or in the inland waters of the Republic, as the case may be.

The task which an organization such as the National Sea Rescue Institute carries out is indeed a laudable one, and consequently it is proposed that some relief from sales tax should be provided in order to assist such an organization to acquire the rescue craft which are so necessary in carrying out the rescue operations for which the organization has been formed.

I feel it is unnecessary to embark upon a detailed explanation of the further amendments proposed in the Bill, since they have all been explained in the explanatory memorandum.

Finally, it has become traditional to object to a broad base consumption tax on the grounds that it is regressive, that it taxes “necessities” like food and clothes and thus falls with particular severity upon the poor. It is, however, interesting to note that in New Zealand, which is presently on a course to introduce a simpler form of value added tax (VAT) designated as “a goods and services tax” (GST), it was said that to exempt food and clothes would be a highly inefficient way of assisting the lower income groups, for the rich would get most of the benefit.

Tables quoted in a booklet accompanying the White Paper concerning the introduction of that tax, disclose that although 29% of the expenditure of the lowest 10% of households is spent on food as against 7% of the highest groups, the absolute amount spent on food by the highest 10% is almost twice that of the lowest.

With clothes the contrast is said to be much more pronounced. The highest 10% spent a slightly larger proportion on clothes as compared with the poorest and about eight times as much in absolute terms. Thus out of every 100 dollars spent on clothes the richest pay $19,5 and the poorest $2,5.

In a recent interview in Australia, reported in the Australian Financial Review of 29 January 1985, Lord Barber, who brought in VAT in the United Kingdom, regretted that it had been introduced with zero rating in areas such as food, transport, housing, newspapers and books. He commented: “No exemptions—no anomalies is the best system.” In the United Kingdom it was, of course, a Conservative Government which introducted VAT against a Labour Opposition which warned that it would tax the poor man’s food. It did not. The cost of exempting food resulted in much higher compliance and administrative costs and a tax confined to little more than half total output.

In view of present economic circumstances it is, of course, not considered advisable to introduce any drastic changes. The Margo Commission will however address itself to these problems in due course and suggest the line we should take in South Africa.

I commend the Bill to the House.

Second Reading resumed

Mr Speaker, the Sales Tax Amendment Bill is becoming an annual event, and it is not only an annual event in the sense that we have a Bill to amend the Act, but it is becoming an annual occurrence …

Order!

Well, Sir, if all those who want to pay sales tax leave, then those who do not want to pay, stay and we can get on with the debate. Those of us who do not want to pay sales tax, will stay.

Every year we have the Bill before the House. What is remarkable is that every year we have an increase, and every year we indicate that, initially, when this tax was introduced, we were told that this was going to be a low-rate tax which would really not be felt by the people of South Africa. It was really something which we could take in our stride, which would mean very little to us financially. We were told that it would really be a mild measure. However, at that time we said that we did not believe what we were being told, and that this would be used and would be increased as we went along. There was great indignation on the part of the Government and the then Minister of Finance that we should venture to suggest that we could not accept what he was saying, namely that this was a low-level tax which we would not really feel.

However, where are we now? We are now in a situation where we are being asked to support a tax which now stands at 12%. The hon the Deputy Minister is going to reply to this debate, and I want him to get up here and say that this is a low-level tax which nobody in South Africa is feeling. That is what the Minister of Finance said when he sold us this particular tax.

You did not buy it?

I did not buy it, but he sold it. Unfortunately, however, the public of South Africa had no choice in the matter. They had it imposed upon them and a completely wrong impression was created and put across to the public. Therefore, as far as we are concerned, this is an issue where, at the time when the concept was introduced, the House was misled and put under a completely wrong impression, the public of South Africa were put under the wrong impression, and this is now becoming a real hard-hitting tax as far as the public of South Africa are concerned.

However, there is another issue, namely that of the relationship between direct and indirect taxation. No doubt the Margo Commission will deal with the handling of that particular aspect. However, at the time when this tax was introduced we said that where one has a society in which there is so much disparity in regard to income and wealth—and we had a very long lecture on the redistribution of wealth and income by both the hon the Minister of Finance and the hon the Minister of Constitutional Development and Planning—this was not an appropriate tax. It is certainly not an appropriate tax at a high level because the poorer one is, the more one actually spends and the less one is able to save. Consumption taxes are inherently in favour of those who are able to save and against those who are unable to save because of the level of their income. That is an economic fact, and one can find many examples of that everywhere in the world. That is why we find that insofar as clause 2 is concerned we certainly have to vote against it and, because that is really the crux of this whole measure, we have also to vote against the Second Reading of this Bill.

However, it is quite remarkable how one sometimes does get a change to come about. In this case, when the standing committee considered this Bill and also the Customs and Excise Amendment Bill, the decision was made unanimously that this duty on both rice and lentils should be removed. Hon members might remember that during the Second Reading debate of the Customs and Excise Amendment Bill I raised the issue of rice under “Customs” and also under “Sales Duty.” I want now to congratulate the chairman of the standing committee because he led the committee on this course. I particularly want to congratulate the member of the House of Delegates who took up this cause very forcefully because it is a matter which affects their people perhaps more than anybody else in South Africa. However, rice has become a staple food not only of their section of the community but also of other sections of the community, particularly at the lower income group level. What has happened is that as a result of that effort and of the effort of the members of the House of Delegates who persuaded the Chairman of heir Ministers’ Council to raise the matter in the Cabinet, we now have a commitment from the hon the Deputy Minister that GST is going to be removed from rice. I want to express my thanks to the hon the Deputy Minister for that.

*I think it is one of the compliments that the chairman of that standing committee also deserves, because in my opinion it proves that that committee can really work. During the latest debate I blamed them for voting against their own feelings and suggestions. However, on this occasion I want to tell the chairman that I think the standing committee has proven in this case that it can do excellent work. I am personally very satisfied that this matter was settled under these circumstances.

†I think that is actually something which shows that the standing committee system can produce very real results.

I just want to find out from the hon the Deputy Minister why he did not deal with lentils as well because the amount of income which he must get from rice is surely much bigger than the amount which he gets from lentils. The sale of lentils is actually relatively low and yet lentils is also a staple food of people who are not in a very high income group. I should therefore like the hon the Deputy Minister to tell us why he did not include lentils. [Interjections.] Perhaps he will also give us some figures in his reply as to what the estimates are of what the removal of GST from rice will cost. No doubt the hon the Minister of Finance will have worked out where he is going to get the money to replace that. I should also like to know what the GST on lentils will be. [Interjections.] Did the hon the Minister say that he was going to get it from fuel? [Interjections.]

What I should like to suggest to the hon the Minister of Finance and his Deputy Minister is that what really has to be done in order to compensate for all of this, is that the campaign against the evaders of payment of GST should be stepped up. I would appeal to the hon the Minister that he should strengthen the staff further because my view is that to charge GST and then not pay it in is actually theft. It is theft because the consumer has paid it. The money does not belong to the man who does not pay it in to the Commissioner for Inland Revenue and so he steals money twice: he steals the GST and he pays a lower amount of income tax because he shows lower receipts and therefore lower profits. This man is stealing twice. If the figures that we are given as to the extent of the abuse in this respect are correct, then, if we see to it that the abuse is rooted out, we will be able to grant more concessions in respect of GST. Even though we do not agree with the tax, once a tax is imposed and it is the law it must not just be paid by the willing people but by everyone. That is why we make the appeal that the people who are evading payment of this duty at the moment should take heed from this debate that further action, and more stringent action, will be taken against them. We ask that this should be clearly enunciated in the reply.

In addition to that there are some other things in this Bill for which I want to commend the hon the Deputy Minister and the department. The first of these is something that I have pleaded for for years, viz the question of the coins. There will be very many coin collectors who will applaud what has happened here. I must disclose my interest in this which is that I have repeatedly argued with people that there should never have been a GST in respect of coins. It is like saying to a man: Here is a coin which is legal tender but you have to pay GST in order to get it. We have argued in reverse in respect of other countries in the world where they have imposed sales tax on the Krugerrand. We have maintained that the Krugerrand was legal tender and that there should not be sales tax on it. However, we have done exactly the same thing here. I think our ability to argue against tax on the Krugerrand is much stronger now that we have put our own house in order. Therefore I believe this has been a good amendment.

The exemption in respect of livestock will, I believe, be dealt with by somebody else who is more familiar with the handling of that matter than I am, but we support that as well.

The other matter which is also something that we protested against but which is now being put right is the exemption from GST of goods in duty-free shops. I have spoken about this topic, I think, about three or four times in this House. There has been anger on the part of tourists when they enter a duty-free shop to find that they do pay duty and then someone says to them that duty-free does not mean duty-free; it means that one pays sales tax but not excise duty. Tourists do not understand that, and nobody understands it. Therefore I am pleased that at last there is to be a change in this respect and I think, from a public relations point of view, this will also do our tourist industry a lot of good.

The changes that have taken place in regard to the Matrimonial Property Act are obviously supported by us. They are necessary and desirable.

There is one other matter I want to touch upon. That is the provision which relates to GST in terms of clause 10 in respect of certain goods which may be imported into South Africa. Here there is an exemption which is both a customs duty exemption and an exemption in terms of GST for people who are residents and who return or non-residents who come here, who may bring into South Africa goods of any kind except certain goods which are specifically excluded—they are specifically mentioned here—such as television sets. However, there are other goods which also fall into that category and which are not mentioned here which anybody who comes from abroad may bring in up to value of R200. Anybody who has been overseas knows that that is what one may do. In addition to the R200, however, one is allowed to bring into South Africa, without duty and without GST: Wine, not exceeding 2 litres; spirituous and other alcoholic beverages … not exceeding 1 litre; manufactured tobacco, not exceeding 400 cigarettes and 50 cigars and 250 g of cigarette or pipe tobacco; and perfumery not exceeding 50 ml and toilet water not exceeding 250 ml.

What I want to ask is the following: Is this a system of encouraging the consumption of alcoholic liquor and tobacco? For instance, if I come along with a bottle of apple juice from Germany I have to pay duty on it if it exceeds R200 in value. If, however, it is alcoholic apple juice when I do not have to pay duty on it. So, Sir, we are actually encouraging two practices here. One is the consumption of alcoholic liquor and the other is the smoking of cigarettes, tobacco and cigars. [Interjections.] The hon the Deputy Minister can thus bring in if he wants—I was going to use myself as an example but it may well be the hon the Deputy Minister because he wants this—50 cigars and smoke ’them and then not pay duty on them. If, however, I bring in a little packet of sweets for a child I will have to pay duty. [Interjections.] That is the truth, Sir.

I would like to ask the hon the Deputy Minister to explain why he is so much in favour of alcohol and tobacco. [Interjections.] What is it that motivates him? I would like to suggest to him, Sir, that he get up in this House—because only he can do it; we in the Opposition are not allowed to move amendments which will have the effect of reducing revenue—and move an amendment that where the Bill provides for “spirituous or other alcoholic beverages” the provision be extended to include non-alcoholic beverages. [Interjections.]

Do you want a free vote on this one?

Yes, we want a free vote. I want to have non-alcoholic beverages included. Moreover, as an alternative to bringing in tobacco, cigarettes and cigars, I would like this right to be given to people who bring in not an excessive amount but, say, one kilogram of either sweets, chocolates, biscuits or cakes. I think that would be a reasonable alternative. It may indeed be traditional to bring in liquor and cigarettes but if one goes to a duty-free shop overseas today one can also buy sweets, one can also buy cakes, one can also buy biscuits and one can also buy non-alcoholic drinks.

Furthermore, I believe that this should be changed not only in this piece of legislation but also in the customs and excise legislation which we could not change this year because it was not included in the amending legislation. I would appeal to the hon the Deputy Minister to do that.

To come back to the fundamental principle, however, I must state that, in view of the increase in GST, we regret that we cannot vote for the Second Reading of this measure.

Mr Speaker, the hon member for Yeoville did in fact welcome certain of the concessions, and we on this side of the House also welcome the concessions which he welcomed.

The hon member for Yeoville’s objection is actually in regard to clause 2, namely the increase in GST from 10% to 12%. I accept the fact that the hon member for Yeoville has been working very hard today and is a trifle tired. Sir, I wish the hon member for Yeoville would give me a little attention when I am talking to him. I am pleased that the hon member for Yeoville is listening to me now.

Let us see what the effect will be if we accept the proposal of the hon member for Yeoville and do not increase GST from 10% to 12%. This GST—the additional 2%—to which he is opposed, has been collected from 25 March 1985 to date. The amount involved is about R250 million. If the hon member were to succeed in his opposition it would mean that those people who have paid that GST, namely the sellers, would have to be repaid that amount of R250 million; and when it was repaid to them, they in their turn would have to repay it to the consumers who originally paid that amount of R250 million in GST. It is therefore a ridiculous suggestion which the House will never be able to accept. For that reason the hon member’s proposal is totally unacceptable.

†I should also like to point out to the hon member for Yeoville that sales duty improves the quality of life of all South Africans. The hon members of the PFP would be the first people to talk about improving the quality of life, but in my submission they are merely paying lip service when they talk about improving the quality of life because this sales duty in fact goes towards improving the quality of fife. I shall show hon members to what extent it goes towards the improvement of the quality of life. When the PFP has an opportunity to support a measure to improve the quality of fife, they pay lip service to it and oppose it.

The estimated revenue from sales tax for 1985-86 will be R7,1 billion out of a total revenue of R24,4 billion. That means that sales tax comprises approximately 29,1% of the total expected revenue. What did the hon member for Yeoville say about that? There is 29,1% coming from that source; in other words, sales tax contributes a very substantial share towards all our essential services likes, for example, education, defence, housing, pensions, health services, food subsidies and social welfare, and so one can go on. Now, the question is which of these essential services would the hon member for Yeoville like to see cut?

The extra 2% will contribute R1,2 billion during 1985-86 and anybody who opposes this increase must spell out exactly where else this money must come from. Otherwise they must tell us exactly what expenditure items must be cut by R1,2 billion.

*If the PFP was in power and the hon member for Houghton was in control of law and order and the hon member for Pietermaritzburg South had a say in regard to defence matters, they would make all those cuts in those departments and then we would have chaos in this country. If the CP were in power GST would have to be increased from 12% to 80%, and then it will still not be sufficient to pay for the dreamland policy of White, Coloured and Indian homelands. [Interjections.] The Opposition is aware of the fact that billions of rand of this tax is spent on those people who need it most.

†The Government’s subsidy on maize and bread amounts to something like R450 million and foodstuffs, and essentials exempted from GST amount to a loss of revenue of R1 billion. This shows a Government that cares about the people. No tax collection system is perfect and the only way to ensure a hundred percent collection is to have an inspector at every till.

Let us have a look at what the situation is. The department estimated that GST would yield R5,864 billion during 1984-85, and the actual collections were R5,862 billion. This is a 99,97% collection on estimate and surely this shows the efficiency of the department. The inspection staff have an outstanding working record. They carried out 8 337 field inspections and 28 266 desk audits. The amount collected in 1984-85 as a result of 8 155 inspection audits represented R42,9 million in additional tax and penalties. This is a tribute to the department and its hardworking staff.

Every vendor has a duty to certify his turnover and pay the amount of GST owing. In these circumstances I have much pleasure in supporting this Bill.

Mr Speaker, I want to tell the hon member Mr Aronson the only ray of light for South Africa is the day on which the CP will assume the reigns of government.

I merely want to direct the hon the Deputy Minister’s attention to one clause. It is the very first clause in which game is excluded.

I refer to the very first clause. I quote from l(b)(vi): “Any livestock or poultry (other than game).” Game is therefore not included in the definition of “goods”. Where, therefore, a man sells or slaughters sheep or cattle for own use for example, it is not subject to sales tax, but game is not included in this.

I want to plead for the game farmers. Rice was recently exempted from sales tax. Why can we not do the same with game? Why do game farmers who slaughter their game have to pay extra? It will not entail a great loss of income for the Government. I want to ask the hon the Deputy Minister to consider making the necessary change.

Mr Chairman, the main issue in this legislation is of course the increase of GST from 10% to 12% being made retrospective to 25 March. It is virtually a fait accompli and I do not suppose that there is very much that one can do about it. I just want to say in passing that the previous Minister of Finance was very adament when GST was introduced that it would be retained at a low level and that any increases would be designed to reduce heavy payments of income tax. Of course, just as one discovers throughout the world, when the fiscus discovers ways of collecting money from people it very rarely relinquishes them to make life a little easier for the taxpayers. If their system is operating well they continue with it. Eventually it means that the tax that is paid by the public increases all the time on a greater percentage of the earnings of most people.

Naturally we are pleased that livestock and poultry for slaughter will be exempt from GST. I was also very pleased to hear an announcement made regarding rice. I am rather amazed that rice was not excluded in the first place because a very large percentage of our population use a considerable amount of rice as a basic foodstuff.

The question of gold coins is one that I have a certain ambivalence about, not that I believe that GST should be paid on gold coins. I believe as the hon member for Yeoville indicated that genuine coinage should be exempt from tax and GST. However, there are certain countries that add VAT, excise tax etcetera on the Krugerrand. I was wondering if it would not be a proposition to have some reciprocal business with these people. One of the worst offenders is Canada. They are pushing their Maple Leaf and making life just that much more difficult.

I might add that as a gold coin collector myself I am very happy to see these exempted from GST. However, I also feel that where countries do not play the game with us there is a certain merit in reciprocating their treatment with their particular coin.

The exempting of visitors from sales tax in the duty-free shops is quite right. The only comment I want to make in this regard is to say that perhaps we will now be able to keep the prices of commodities in the duty-free shops at more or less the same level as the prices for which these commodities can be bought outside those shops. Although there may be no duty, the duty-free shops jack up the profit margin to make up the difference, and I have yet to find that there is any real saving in buying from certainly the South African duty-free shops and probably many other duty-free shops elsewhere in the world.

Amendments to the definition of “sale” to accommodate the Matrimonial Property Act are obviously very necessary particularly in the transfer of assets between spouses, either voluntarily or legally as a consequence of a court decision.

Finally, I come to the question of the tidying up of sales tax registration certificates. I think this is essential. I have been exposed to the abuse of this from a business point of view and I believe that a great deal of the GST that we are losing is lost in this particular manner. I am therefore fully in support of this and I believe that if we can collect all the taxes to which we are entitled it may hopefully not be necessary to increase taxes in future.

There are a number of other items with which this Bill deals, but we are in total agreement with those points. The only thing we are unhappy about, and that I am afraid we cannot support, is the increase of general sales tax from 10% to 12%. However, there is nothing we can do about it—it is a fait accompli.

Mr Speaker, not surprisingly the increase in GST has attracted the most attention during the course of this debate. However, there have been some rather illogical comments made, particularly by the hon member Mr Aronson in this regard. First of all he seemed to think that an increase in GST was justified. He told us how much we all had to pay in GST, which unfortunately some of us know. The next line of logic was that all this money was used for good works, the implication being that if one is in favour of good works, one must be in favour of GST; the further implication in turn being that the higher the GST, the more one is in favour of good works. Obviously this hon Minister of Finance is more in favour of good works than his predecessor, but I hope he is not obsessively in favour of good works because otherwise we may all go bankrupt financing his good works.

It has been mentioned, inter alia, by the hon member for Umbilo, that the increase in GST is a fait accompli, and the hon member Mr Aronson said that we could not run around giving all the money back. Well, that is true for the period of a couple of months that has passed, but if this House and the hon the Minister were to accept the views put forward, there is no reason why GST could not be returned to a lower figure, as from 1 July, for example. The fact that we have had two or three nasty months does not necessarily mean that, if it were required, we could not take a turn for the better.

I find it interesting that that hon member is also very confident that we are collecting all this GST at present. There have been suggestions and estimates that very large sums are not being collected. Obviously it is impossible for anybody to prove that but the suspicion remains. When one studies the Auditor-General’s report in respect of ordinary income tax, which is much easier to assess and collect, I would be surprised if we were doing as well as that hon member would like to suggest we were.

I should like to add my word of welcome in respect of the addition of rice to the list of foods exempted from GST. Without elaborating at great length, I should like to come back to our request that all foods and prescribed medicines be exempted from GST. At that time the comment was made by hon members on the Government side that one could not go on adding items to that list, that there were probably too many items on the list already, and that we should wait for the report of the Margo Commission and so on. However, I think that what has happened in connection with the GST on rice indicates once again that where there is a will, there is a will, there is a way. If the Government really did feel strongly about it they could do something about the problem.

I think it is terribly important that we recognize the basic point that GST taxes people, whether they have enough money to survive or not. That is critical in our society. We know that there are people suffering severely because of malnutrition. We know that there are people who are in fact starving. We may argue about the numbers and the causes, but it is a fact that is not disputed. We must be very wary of merely talking of a narrow tax basis—which is true—but then, on the basis of that, talk about taxing people indirectly by means of GST, irrespective of the consequences that this may have for individuals and their families.

The hon member for Yeoville also mentioned the fact that when it was introduced GST was at 4%. It was going to be a low tax which would not harm anybody very much. The illustration that I used once before is worth remembering, and that is that if five years ago we had had GST at 12% instead of the rate we had at that time, we could have abolished all individual income tax, all stamp duties and fees, all transfer and stamp duty, all tax on interest and dividends and most of company tax as well with that money. The Fiscus would still have received the same amount of money. I think that the fact that we still have all those taxes, many of them at higher levels than they were at that stage, is a very clear indication of how far we have gone down the road of very heavy taxation in this country.

What about inflation?

Inflation is not the point I am making. I am taking the figure of 12% in the situation at that time, not the current income figure. If GST had been 12% at that time we would have been able to abolish all those other taxes. GST has grown since then but so, of course, has the amount which the Government is grabbing from people.

There are a couple of other clauses that I should like to refer to. The first one is clause 3. I should like to welcome the provision made in this clause. In paragraph (c)(ii) the following provision is made:

This is exempt from duty:

The sale to or the importation by such an organization is exempt from sales tax. I welcome that. Obviously the NSRI and similar organizations—if there are any—will benefit from this. They need all the assistance that we can give them.

Clause 10 covers a number of things, including exemption sales duty for various welfare and charitable purposes. Again I should like to welcome those provisions and say that we support them. However, I should like to ask the hon the Minister to look very hard at this question of welfare and charitable purposes because it would appear that some organizations which do the things to be exempt from tax also sometimes do other things and that then causes problems because they have to start paying GST on all their goods and not just on the ones which fall outside the exempted areas. I should like the hon the Minister to have a look at that so as to see if those people can be helped.

The final clause which I want to mention is clause 12 which is the moratorium until 30 August 1985 for sales tax dodgers. I am not a sales tax dodger so I do not have to welcome this clause in a personal capacity, but I do hope that it will enable people who have not been playing the game and who have not been complying with the law up to now to get their house in order and to pay that money. I think the hon member Mr Aronson may feel that there are no more of them and that they have all been caught by these inspectors about whom he has been telling us but I think many other hon members will believe that there are still large numbers of those people. The sooner they can be brought to book to pay their fair share of sales tax—even if I do not like the tax—the better.

Mr Speaker, I should like to deal very briefly with what hon members have said. Everybody is against the increase, but as far as the rest of the clauses are concerned, there seems to be general consensus.

The hon member for Yeoville mentioned that this is a tax which began as a very low tax and has been creeping up and climbing very rapidly. He said that he found this unacceptable and demanded that I should say that I think this is tax at a low level and that it does not hurt anybody. I will not say that, Sir. What I will say, is that while it is true that GST increased, the exclusions on staple foods came at the same time. Furthermore, not only did we grant exclusion on a whole host of staple foods when GST went up from 7% to 10% but on this occasion we have excluded rice. The hon member asked what the tax loss would be on the exclusion of rice, and the answer is something like R40 million per annum. On all the subsidized foods which are currently excluded from GST the estimated loss of revenue last year was something like R1 000 million.

At what rate?

At last year’s rate. The loss on this year’s rate on rice is estimated at R40 million.

The reason why rice is excluded and lentils still included is that one has to be consistent. Bread is excluded, maize meal is excluded and wholewheat meal is excluded. Those are staple foods. To the Asian community in particular, although not only to them, rice is a staple food, and therefore a consistent argument can be developed why rice should be excluded. If lentils, which is a legume, were to be excluded, a whole host of other dried vegetables or semi-processed vegetables would also have to be excluded. It was found that that was not possible.

Another exclusion which has been made, which hon members mentioned, is live poultry. It is true that particularly the poorer sections of our community, and more particularly those among the Black people who do not have refrigerators cannot buy fresh or frozen meats. They have to keep the chickens alive until such time as they eat them. The selling of live chickens to the Black people who keep them until they were ready to eat is a very big industry. For that reason we felt that it would be sensible and reasonable to exclude live poultry.

*The hon member for Sunnyside asked why we did not consequently exempt game or wild birds from tax. I do not think that would be consistent. A live buck is not exempt from sales tax, so how could a dead one be exempt.

The fact of the matter is, too, that here we are dealing with a luxury item. Generally speaking, game is a luxury item in our country. It is usually something that rich people eat. Going hunting these days is an expensive enterprise, and that is why game is a luxury item. To exempt game from taxation would not be fair and would not help the poor either. At this stage we cannot, therefore, accept the hon member’s suggestion.

†The hon member for Yeoville spoke about the creeping up of taxation as if this was something unusual as far as GST is concerned. It might be interesting to look at what has happened in other countries over a similar period as far as GST is concerned. I am using standard rates, that is the average rates, because as the hon member knows, many of these countries have a variety of taxes on different commodities. The standard rate of VAT in Denmark moved from 10% in 1967 to 22% in 1985; in France from 13,6% in 1968 to 18,6% in 1985; in Italy from 12% in 1973 to 18% in 1985; in the Netherlands from 12% to 19%, and so I can go on. The fact is that that tax has increased substantially in many other countries as well. [Interjections.]

The hon member also said that consumption tax, GST, strikes against the poor. Those were his words. I am not at all sure in my own mind whether or not the collection of GST or having a variable rate of GST is in fact the best way of helping poor people. I know that the Margo Commission will look at this. The hon member will remember that I mentioned the matter in my Second Reading speech.

Our situation becomes very interesting when we study a White Paper that has recently been prepared in New Zealand where they are bringing in a new VAT system. They make some very interesting observations. I think that if we were to apply these principles or these figures that they give to our situation, our situation would be much heightened because of the differences between the standards of living in our country and those in a country like New Zealand. For example, they say in their White Paper:

Then they go on to say:

If one therefore takes the real expenditure as a percentage of the income of the upper income groups and compares this with that of the lower income groups, one begins to wonder whether it would not be better to levy GST on everybody by applying a flat rate throughout and then to take the revenue that would so accrue and use that as direct subsidies or as direct help for people who can genuinely identify themselves as poor. I tend to feel that in this way one would be able to help people more adequately and in reality to a greater extent than one can when one has this tremendous waste as a result of the fact that people who do not require subsidization are actually being subsidized. We had the example that the hon member for Paarl once cited, namely that subsidized bread was being bought to feed pigs because it was the lowest-cost food available. [Interjections.]

The hon member made out a very convincing case here tonight for how good the system is that we are living under when he told us how the matter of rice had been raised in the standing committee, in this House, in the House of Delegates and then in the Cabinet, and how there had been participation, discussion and agreement. I think that was a classic case—in fact, a case history—of how effective this system of ours can be. I thank the hon member for that. [Interjections.]

The hon member commends us in regard to coins and duty-free shops. I thank him for that too.

In respect of clause 10, he points out the anomaly which presently exists in respect of wine and tobacco as opposed to cooldrinks, chocolates or biscuits that one might import. Thus one can bring in—duty free—wine and tobacco products to the value of R200 plus, whereas one would have to pay duty on goods other than wine and tobacco if these goods exceeded R200 in value. I want to point out to the hon member that if we wanted to change this we would also have to change the schedules in the Customs and Excise Act. These were drawn up on the basis of decision taken at the Brussels Convention which led to the Brussels Nomenclature. This is thus simply a reflection of the Brussels Nomenclature in the Act. I do have sympathy with the hon member. I can tell him that I share his view and I know that the hon the Minister does too. This is an anomaly and we will look at it. I do not think, however, that we should fight it all the way to Brussels. It is not all that important. Nevertheless, if we can adjust it without putting ourselves out of step with all of our trading partners worldwide, we will indeed look at it. I think, however, that to some extent his argument is spurious in the sense that it is not a terribly important matter. Still, as a matter of principle I accept what he says. It is right. We have listened to what he had to say and we share his feelings on the subject.

*I now just want to thank the hon member Mr Aronson very sincerely for the interesting speech he made. He told us that 29,1% of our revenue this year would come from GST. That is interesting, if we remember that last year GST comprised 26,9% of our-revenue. We therefore see that GST is increasing as a form of revenue-producing tax. That is a very good thing, because we believe it to be one of the soundest forms of taxation. The hon member also pointed out to us how important the tax is and how it is employed in the interests of poor people. I also want to thank him for that. I think I have already responded to the hon member for Sunnyside.

†The hon member for Umbilo said that some countries slap GST on gold coins and others do not. He wondered whether we should not in fact retaliate in kind and he mentioned the Maple Leaf. If the hon member does not know, I want to tell him that we have in fact brought an action in Gatt against the Province of Ontario. The hon member may know that it was a unilateral action by the Province of Ontario, and there is some argument now whether it is not the Federal Government of Canada which is really responsible because the Province of Ontario is bound by decisions of the Federal Government of Canada. The matter is being argued and to some extent it is sub judice. The case is being heard at the moment by the committee of Gatt. We have given evidence and I am sure we shall hear the findings of that committee in due course.

Hon members all welcomed the fact that items in duty-free shops would not be exempt from GST. I think the most important impact will not be upon duty-free shops but upon the factory shops which are licensed and registered by the Department of Customs and Excise and which are able to sell manufactured jewellery, curios etc. That is where large amounts will be spent by tourists.

The hon member for Cape Town Gardens welcomed the exclusion of rice from GST. I think I have already replied in this regard. He welcomed the NSRI exemption and mentioned clause 12.

We thank the hon members for their support of most of the clauses of this Bill and we understand that the only opposition is to the percentage increase.