I move—

Mr. Speaker, it does not often fall to the lot of a Minister of Finance that within a year of his taking office he has to introduce two Budgets. On the 28th February of this year I introduced my first Budget, and now on the 28th August, six months later, I am delivering what is practically another budget speech. It is a budget speech, not in the sense that it is expected of me to give the usual annual economic and financial review but in the sense that financial provision on a large scale has to be made.

Shame.

Apparently my hon. friend feels that the number should be larger. In regard to further details in connection with the internment camps, I may refer hon. members to the Minister who exercises control over this particular matter.

1. (b) Assistance to Farmers: This comes under three heads:
   1. (i) Assistance to mealie farmers £500,000
   2. (ii) Assistance to citrus farmers 100,000
      Against these two items we can put economies under other heads of the vote to an amount of £142,000. For that reason it is not necessary to vote the whole amount on the Estimates.
   3. (iii) Rebates on imported wheat £39,230

as against which economies under other heads of the vote can be put at an amount of £25,000.

The details in connection with these schemes were announced before the end of the last session. It is not necessary for me therefore to go into these matters at this stage.

In regard to the additional amount of £32,000,000 for defence, the amount which is estimated to be required for the current financial year is now placed at £46,000,000. During the last session £14,000,000 was voted for war expense account. An additional £32,000,000 is now being asked for. I want briefly to mention the reasons for this increase. First of all this is due to the change which came about in the general war position in May last. Secondly, it is the result of the entry of Italy into the war, which extended the military operations to the Continent of Africa. In the fourth place, it is the result of the necessity to expedite the defence measures of South Africa in view of the aggravation of the dangers facing us, and in the fifth place it is the result of a considerable increase in the number of recruits and the expansion of our forces.

There are, of course, people who will say that we should have anticipated all this, and that we should not come now to ask for an amount which is so much larger than the original amount asked for. By way of answer to this criticism — and I am going to answer in anticipation — it is only necessary to refer to what has taken place in a neutral country, namely the United States of America.

The original estimates in regard to defence for the financial year 1st July, 1940, to the 30th June, 1941, in America amounted to 1,840,000,000 dollars, that is to say £460,000,000.

But even before the financial year opened additional appropriations were approved of:

After that, on the 11th July, a further appropriation of £540,000 was approved of, and in addition to that a further amount of £672,000,000 for contracts which will only be carried out after the end of the year. If we leave this last figure out of account we get a further total additional appropriation of £1,155,000,000. In comparison the defence expenditure of this neutral country has increased faster than that of South Africa.

I propose, however, to leave these comparisons where they are.

I want to make a few remarks in regard to this amount of forty-six million pounds which we are going to spend here in South Africa this year:

(1) A large proportion of this expenditure may be regarded as being of a capital nature. It is not recurrent.

I think, for instance, when I say this, of the steps taken for the protection and the security of our coastal towns.

I have in mind the laying out of aerodromes and air ports.

I have in mind the provision of means of transport.

I have in mind the manufacture of munitions of a more permanent nature.

I have in mind the provision of supplies of food, equipment and other necessaries.

And we should especially not lose sight of the fact that in this amount is included the costs connected with preparatory steps which we should have taken before the war, but which were not taken.

(2) A large portion of this expense brings with it permanent advantages for our country which have nothing to do with the war as such. I want to mention two points in this connection:

1. (a) The special provision which has been made for technical training. That training takes place with a view to the requirements of the army, but for the young fellows who are being trained in that way it would be of lasting value. In the different centres where there are technical colleges in existence provision has been made for special technical training in courses running over six months for 4,000 young fellows at any specific period. I believe that that number is almost complete. This is a great asset to our country.
2. (b) The tremendous development which has taken place in the manufacture of war supplies is of great significance for the future of industry in South Africa.

The course of the war has thrown us back on our own initiative and our own resources. Articles and goods are now manufactured here in South Africa which nobody would have dreamt was possible of being manufactured here in the past. Only now have we found what our real industrial potentialities are in South Africa. If we make proper use of those potentialities in the post war years, it will give a tremendous stimulus to the welfare of South Africa. We have been learning in the last few months to appreciate the ability, the ingenuity and the initiative of our South African engineers, and to make the best use of them. We also realise now how fortunate we are as regards the adaptability and the ability of our industrial workers, and the high quality of their work. In the industrial sphere South Africa has during these times been thrown back on her own resources. South Africa has found herself. What has been taking place in the last few months signifies an important step forward in the industrial development of South Africa and it will undoubtedly promote the welfare of our country—it will also help towards a solution of the problems of the poverty in our country. Looked at from that point of view we can regard a large proportion of this expenditure as an excellent investment for the future.

(3) The third point follows from what I have just said.

That proportion of this money which will not be spent in South Africa is comparatively small. There are many things for which we originally placed orders abroad. Now those goods are being manufactured here, and the orders placed in other countries have fallen away. So there is no great increase in the payments which we shall have to make in countries abroad. It is our own people who are doing the work, and our own people who are earning the money, and it is our own raw materials which are principally being used. In the manufacture of munitions of war, in consequence of the development of our iron and steel, and our metal industry, practically 100 per cent. of the material being used is produced in South Africa. I say again —very little of this money will be spent in other countries. It means that our balance of trade is not being dislocated and that the financial means at our disposal are not weakened. It also means that the financial problem is by no means as difficult as it would otherwise have been.

(4) But there is yet another aspect of this matter. This money is required for the protection of the freedom of South Africa. For that reason I have no hesitation in putting this to the House — we know that the House will be prepared to find the money. One of the outstanding statesmen of olden days once described freedom as a possession of those who had the courage to defend it. In 1934 this House welcomed the recognition of the freedom of South Africa. In the Status Act we placed the seal on that freedom. To-day the freedom of South Africa, together with that of other countries, is in danger. Almost a year ago, on the 4th September, the majority of the House gave evidence that they had the courage to defend that freedom. At bye-elections, by people joining the army, and by other means, the majority of the people also proved that they had the courage to defend that freedom. I am convinced that the House and the people will again show themselves prepared to make the necessary sacrifices for the defence of our own freedom, and for the defence of the principle of freedom in the world.

I now proceed to my proposals to meet this additional expenditure. I shall commence by describing the position as it was at the end of last session.

(1) Revenue Account: Provision was made on the Main Estimates and the two Supplementary Estimates for an amount of £55,739,382.

The total amount which we have to find to make the Revenue Account balance is, therefore, £10,159,562.

It will not, however, be necessary to find the whole of this amount by means of additional taxation. The position, so far as this is concerned, is a good deal more favourable than hon. members may possibly think.

There are certain other amounts which we have at our disposal, for the reduction of that amount of £10,159,562.

We are, therefore, halfway to the £10,000,000. The principal items which have brought about this increase in revenue are the following:

A similar amount will be paid into the coinage fund of the Mint, which is invested with the Public Debt Commissioners and this will, therefore, serve to strengthen our loan position. In consequence, therefore, of the hoarding of silver coin an additional amount of at least £250,000 will be made available for the continuation of the war. Generally speaking it may be said that our revenue position is very sound. Receipts so far have been very satisfactory. On the basis of receipts up to the present, I would possibly be able to place the estimates higher, but I am still taking account of a possible drop in revenue during the second half-year. Only in regard to the receipts of the post office is it possible that we have been somewhat unduly optimistic in our original estimates. In that regard I have now reduced the estimates by £90,000.

It is desirable for me to say something here about the position in respect of the taxation of the gold mines. I mentioned the amount of £1,773,000 as our increased revenue from this source. That, however, is only the position as regards Revenue Account. On the Loan Account, that is to say from mining leases, we shall receive £264,000 less than we had expected. The net increase is, therefore, £1,509,000. Originally we estimated the contribution from the mines to the exchequer at £20,745,000; we now place it at £22,254,000.

Does that take account of the position which is being created in connection with the change in the method of the sale of gold?

No, I shall come to that later. That also brings some money into the exchequer. The new system of mining taxation was the principal part of our last budget, and that is the part which particularly calls for criticism. It was stated that I had sacrificed the interests of the state. We heard a great deal about Hoggenheimer. Well, these figures give ample proof of the fact that that criticism was unfounded.

It was also stated that I made too large a concession to the mines when I calculated that they would require £3,000,000 to pay for increasing working costs in consequence of war conditions. That amount of £3,000,000 was calculated on a basis of a 5 per cent. increase in working costs. Well, the published monthly figures have clearly proved that the actual increase will certainly not be less than 5 per cent.

It is, therefore, clear to-day that our change of policy in regard to mining taxation was fully justified. All the benefits which we had expected to secure for the country as a whole, have actually been achieved, and the interests of the state have been so well cared for that our estimates of revenue will be exceeded by £1,500,000.

I have, however, diverted from my main theme, and I now revert to it. An amount of £10,159,562 will have to be found. Against that we can put certain amounts— I have mentioned three items — which, together, total £5,053,500. That leaves an amount of £5,106,062. Of this amount I propose to find a sum of £4,825,000 by means of taxation. This leaves an estimated deficit of £281,062 which we need not worry our heads about.

It is hardly necessary for me to emphasise the significance of these figures. The deficit which we found ourselves faced with amounted to £10,159,562. It is necessary only to impose taxation in order to find an amount of £4,850,000.

Before I proceed to put forward my taxation proposals I first of all wish to deal with the position of our Loan Account.

I say apparent deficit because here, too, the position is a great deal better than it appears to be. The amount which we shall actually have to borrow is a great deal smaller than what I have just mentioned. Here again there are three amounts which we can put against those other figures.

This also contains my reply to the question put by the hon. member for Fauresmith. Perhaps it may also be desirable for me to tell the House here what the position is at the moment in connection with the sale of gold. It is often contended that we would be able to sell our gold more profitably in New York. That contention, of course, is based on the price which prevailed for a certain length of time, in the so-called unofficial market. I just want to point out that the last quotation of the unofficial market was 4.0½ dollars per £ and the official quotation was 4.2½ dollars per £. Consequently it would not help us greatly if we were to sell our gold in America.

This amount of £18,326,000 may appear to be a large amount. I have no doubt, however, that we shall be able to borrow it here in South Africa—from our banks, our trust and insurance companies, our building societies, from other financial bodies, and from the public as a whole. We shall proceed within the next few months to make arrangements for raising a loan. It is true that the amount is larger than what we have ever borrowed in South Africa in any one year. But it is also true that the financial position of South Africa has never before been as strong as it it is to-day. I have already made a comparison between the deposits in the Reserve Bank on the 16th February and on the 16th August. May I be allowed to make two other comparisons on the other side of the balance sheet. On the 16 th February the amount possessed by the bank stood at £31,922,000. On the 16th August it stood at £37,482,000. On the 16th February the “other assets” of the bank stood at £19,100.000. On the 16th August they stood at £24,471,000.

It should be clear to everyone how strong the position of the bank is and what support the bank can render to the Government. This is also significant in respect of the Government’s position towards the financial market in taking up loans.

I have said that we expect to be able to borrow £12,000,000 from the Public Debt Commissioners. That is a great deal more than we usually do. This, however, includes the amount which we expect to receive in consequence of the new issue of loan certificates, and which along this course are mad# available to the Treasury. The new issue has proved to be a great success. Good progress is being made with the encouragement of thrift among the people. The possibility of inflation which we have to take into account under present conditions is being checked. And in addition large amounts are being made available for investment. Up to the end of last week a little under £2,140,000 of the new certificates were sold to an amount of nearly £1,700,000. At the end of this month that is to say at the conclusion of the first three months of the campaign, the figures will probably be round about £2,300,000 certificates, and £1,825,000. For the further promotion of the campaign special steps are being taken to encourage the establishment of savings clubs in business institutions, workshops, etc. In that connection I wish to express my thanks for the assistance which is being rendered by all the large representative organisations of employers. We also owe thanks to the Central Thrift Committee under the guidance of Mr. C. J. Sibbett and the different local committees for their work for the promotion of the campaign as a whole. I definitely hope that the number of Union Loan Certificates of the new series which will be sold before the end of the financial year will reach a total of 5,000,000. That will then represent an amount of close on £4,000,000. I also wish to avail myself of this opportunity to commend the thrift movement among the people. It is a means by which a large proportion of our population — if the savings club system is developed, as we expect it to be, even among the poorer section of the population — will be able to help the country by their helping themselves. I have placed the amount which I expect to secure by means of increased taxataion at £4,825,000. The question will be asked whether the provision which we make from this source for our increased expenditure is adequate, and whether the burden which we are placing on the shoulders of those coming after us is not perhaps unreasonably large. In order to answer this question it is necessary that I should review the position as a whole.

I now proceed to enumerate the amounts at our disposal to cover this expenditure without leaving any burdens on the shoulders of posterity.

That is only the difference between this amount and the full amount of defence expenditure, namely £20,774,000, which it will be necessary to borrow. Of the amount of nearly £51,000,000 we are at this stage finding more than £30,000,000 and we leave £20,750,000 over for the future. With a view to the probability that our Revenue Estimates will be exceeded it may be stated that the estimates which I am now submitting amount to this, that we are only going to borrow 40 per cent. of the large amount required for defence purposes — the other 60 per cent. will be covered from current revenue, and not a penny of that will have to be paid by those who will succeed us. It may be fitting here for me to make a comparison between our financial experience in this war and the previous war. This war started in September and the previous war started a month earlier. Up to the end of the first full year of the war to present in progress we shall have to borrow less than £20,750,000, and the amount which was borrowed up to the end of the first full year of the last Great War, that is to say up to the 31st March, 1916, was nearly £19,750,000.

I have stated that we shall have to borrow £20,774,000 for defence purposes. Earlier on I mentioned the figures of £30,326,000 as the total amount which will have to be borrowed. The difference is represented by the amount which we shall have to borrow for purposes other than defence. We should not lose sight of the fact that in spite of the economies which we are effecting we are still carrying on with a capital programme for such purposes of more than £15,500,000, as against which we can place an amount of a little more than over £6,000,000, which will accrue to us from ordinary loan receipts. The ordinary capital programme with which we are still proceeding is a considerable one, a good deal larger than the amounts which we used to spend up to three years ago annually from our Loan Account. In spite of the war our work for the development of the permanent resources of our country has not been standing still.

I now proceed to submit my taxation proposals to the House. But first of all I wish to mention certain general principles which should to my mind be borne in mind with conditions such as those prevailling to-day.

1. (1) Taxation proposals must be of such a character that the cost of living shall be raised as little as possible in consequence. The Government has achieved a very large degree of success in its efforts to combat an increase in the cost of living. It is certainly not the Government’s wish that that good work shall now be interfered with as a result of its taxation proposals.
2. (2) Taxation proposals should dislocate as little as possible the existing economic structure, or interfere with the economic development of the country. This is a period of time which in spite of all the difficulties existing to-day offers an opportunity for expansion in the sphere of industry which will be of great permanent value to our country. We do not want to do anything which will prevent our country from enjoying those benefits to the full.
3. (3) New taxes, however unpleasant they may be, may, irrespective of the money they produce, promote a useful purpose. I have already referred to the danger of inflation in consequence of the larger amount of money which is in circulation. Our gold is bringing us in a great deal more money. The value of our exports so far as other products are concerned, has gone up. The increased Government expenditure operates in the same direction. All this means that the public as a whole has more money at its disposal to spend than in the past. If everybody having more money simply spends his additional income without taking heed of the object and the way of his expenditure, it can only lead to an increase in prices. That being so, it is in the interest of all of us that the excessive spending of money should be checked both by the encouragement of saving and by the imposition of taxes which serve to bring into the Exchequer money which might otherwise be spent in a wrongful manner. It is with a view to this that it is so strongly contended in Great Britain that however tremendous the taxation may already press upon people, sufficient is not yet being done to counteract the unnecessary spending of money by the citizens of the country. Our position is not similar to that of Great Britain. There the war expenditure in relation to the revenue of the people as a whole is very much higher than it is here, especially bearing in mind the increase of our income in consequence of the increased prices of our products such as gold and wool. Yet we should not entirely lose sight of the considerations which I have mentioned.

I have mentioned those principles, and we have tried to keep those principles before us in devising the proposals which I shall now submit to the House.

Our revenue falls under three main heads — Customs and Excise; Posts, Telegraphs and Telephones; and Inland Revenue.

From Customs and Excise I expect to get an additional amount of £1,950,000.

It must not be forgotten that nearly five months of the financial year have already passed. I can, therefore, only depend on the revenue of a few days over seven months. The increased tariffs will apply as from to-day.

I do not propose to introduce a general Customs increase. That would bring with it an increase in the cost of living. Nor do I intend proposing that we should go back on all the Customs reductions which have been made in the last few years by my predecessor, and which represent a considerable amount. Those reductions include items such as rice, tea, clothing of all kinds, as well as a great variety of other goods. This, too, I would not be able to do without causing an increase in the cost of living.

I shall confine myself to a few specific items:

1. (a) First of all, petrol. Our petrol tax is to-day low in comparison with that of other countries. The existing rate is 5d. per gallon, of which 3d. go.es to the National Roads Board, and 2d. to the Exchequer. I propose an increase of 3d. per gallon, the whole of which will go to the Exchequer. This will produce an amount of £1,585,000 in a complete year. This year it may be expected that we shall get an amount of £925,000.
2. (b) When raising the petrol tax we must not fail to take account of the effect of that increase on our locally manufactured motor fuel, that is to say Satmar and “Natal Spirit”. There is no reason why the manufacturers of those motor fuels should benefit from the increased petrol tax. I, therefore, propose an Excise on these types of fuel of 3d. per gallon. This in a full year will produce £110,000, and for the remainder of this year it will produce £65,000.
3. (c) I have not yet finished with the motor industry. I also propose an Excise Duty of 3d. per lb. on tubes and tyres, including bicycle tyres. It is clear from the report of the Board of Trade and Industry that the protection enjoyed at the moment by that local industry is too high. It is also important that I should state that as a result of the establishment of this local industry the annual loss suffered by the state in Customs Duties, according to the report of the Board of Trade and Industry, for 1938 has actually risen to an amount of more than £700,000 per annum. I have no reason to think that this industry is unable to bear the levy which I am proposing.
   In consequence of this proposal it is also necessary to place an Excise Duty of 2d. per lb. on re-treaded tyres.
   As a result of these proposals I expect that we shall receive £170,000 in a full year, and in what is left of this year, £100,000.
4. (d) I now come to the Excise on cigarettes. The price of cigarettes in the Union is low, and I see no reason why we should not increase the tax. The tax on cigarettes at the moment is a twofold one — it is partly raised by stamp duties — and the other portion is in the form of a tax per lb. weight of tobacco ready for consumption in the manufacture of cigarettes, or in the form of cigarettes. Together these two portions of the tax will, according to our estimate, give us £1,550,000. I want more. For the time being it is more convenient to increase the second part of this tax than the first part. I propose an additional 1s. 6d. per lb. weight of tobacco ready for consumption in the manufacture of cigarettes, or in the form of cigarettes. This in a full year will produce £800,000; in what remains of this year it will produce £460,000.
   This additional taxation amounts to a little less than 45d. per packet of ten cigarettes. The Department of Trade and Industry is taking the necessary steps to pre nt the price which the consumer has to pay on the basis of packets of ten cigarettes going up by more than ½d.
5. (e) I now come to liquor. In times like the present one cannot expect liquor to get off scot free from any additional taxation. I propose that the Customs tariff on whisky, imported brandy, rum and gin, be increased from 45s. to 52s. 6d. per gallon (which amounts to ⅝d. per tot), and as against that I propose that the Excise Duty on spirits (including potable Natal spirit) be increased by 2s. 6d. per gallon (which amounts to less than ¼d. per tot). The increased tax on whisky will in a full year produce £165,000, and for the remainder of this year it will produce £95,000.
   The increased tax on spirits will in a full year produce £155,000, and for the remainder of this year it will produce £90,000.
6. (f) Hon. members naturally will not expect beer to get off scot free. Here I propose an increase in the Excise per standard gallon of 10d. to 1s., which amounts to ⅙d. per pint bottle, and on the so-called 3d. beer from 5d. to 6d., which amounts to l/12d. per pint bottle. This increase will produce an additional amount of £70,000 in a full year, and for what is left of this year it will produce £40,000.
7. (g) I also propose a new Excise Duty on yeast of 1s. per lb. This in a full year will produce £300,000, and for what is left of the present year £175,000.

As hon. members know, by far the greatest proportion of the yeast which is manufactured is used in the illicit liquor trade. The fact that we are going to tax yeast now does not signify that there is going to be any relaxation in our efforts to combat this illicit liquor trade. We shall carry on with our efforts in this regard. As far as I am concerned I shall welcome it if our revenue from this source should be considerably reduced in consequence of the successful combating of this illicit trade. In the meantime I have no hesitation in drawing taxation revenue from this source.

It will also be necessary as a counterpart to this Excise Duty to impose a Customs Duty of 1s. on imported yeast.

I now come to the Post Office as one of our revenue collectors. At the moment the Post Office is a source of revenue to us. I do not at this stage propose going into the merits of the case. The fact remains that we cannot do without that revenue. And in present circumstances we even have to increase it. My proposal amounts to an increase in the postal rates on letters from 1d. to 1½d. In cases where the tariff is 3d. now—that is to say, to countries outside the British Commonwealth of Nations—there is no change. In all other cases it will be 1½d. per ounce. The post card tariff remains unchanged, as also the postage on accounts and similar commercial documents, and also papers. This change will come into effect on the 16th September. The amount produced in a full year will be £400,000, and in what is left of the present year £210,000.

There still remains an amount of £2,665,000 to be provided. That money will have to come from inland revenue. Here, too, I do not wish to propose a large number of small changes. I shall confine myself to a change in the scales as laid down in the Income Tax Act. In my budget speech of February last I pointed out that the income tax payer in South Africa in comparison with his colleague in other countries must be looked upon as being more than fortunate. Nobody can surely be so optimistic as not to expect an increase in the income tax at the present juncture. I propose that the normal income tax on individuals for this year and also the super tax shall be subject to a surcharge of 20 per cent. This will produce an amount of £900,000—£450,000 from normal tax, and £450,000 from super tax. It would undoubtedly have been possible to secure a similar additional amount in a more scientific manner. But at the present stage of the financial year it is not possible to do so for administrative and other reasons. The proposal I am making is in the circumstances the most convenient.

I want to point out that apart from the 20 per cent. surcharge all the other provisions in the Act in connection with the normal income tax on individuals remain unchanged. There is to be the same primary abatement of £400, the same abatement of £100 per child, and the same concession in regard to insurance premiums as is the case to-day. Even with this surcharge of 20 per cent. South Africa remains one of the most favoured countries in the world so far as the income tax payer is concerned.

When an abatement of 20 per cent.—which was subsequently raised to 30 per cent.—was granted on the normal income tax it was laid down that this would not bring with it any reduction in the provincial income tax. Steps were taken to protect the revenue of the provincial councils. We now are going to protect the taxpayer. It is therefore equitable towards the taxpayer that where he will now have to pay a surcharge this will not bring with it an automatic increase in his provincial income tax. The necessary steps to achieve that position will be taken.

In regard to companies (with the exception of mining companies) the income tax is to-day 2s. 6d. in the £. Here I am proposing an increase of 6d. in the £. That is to say from 2s. 6d. to 3s. in the £. This will give us a further £900,000.

While other companies have to pay an additional 6d. per £ it might be regarded as equitable that the gold mining companies should also be expected to pay a similar increase. So far as they are concerned the 2s. 6d. in the £ which other companies pay now may be compared with the fixed taxation basis of 15 per cent. or 3s. in the £. It might be expected that we should raise this to 3s. 6d. per £. I do not, however, propose doing so. What I propose doing, however, is to collect an equivalent amount in a different and more satisfactory manner. I propose that the special contribution instituted last session be increased from 9 per cent. to 11 per cent. This will produce £855,000. The other method would have produced £865,000. We are therefore going to collect £10,000 less —an insignificant amount, but the proposal which I am making means a fairer imposition of the tax. This also shows more clearly than the alternative proposal would have done that this is only a temporary surcharge.

Finally I come to diamonds; here I propose that the ordinary tax on diamond mining companies which to-day stands at 3s. per £ be increased to 3s. 6d. per £. This will give us an additional £10,000 this year.

The total amount of additional taxation from inland revenue is therefore £2,685,000.

Out of the three sources which I have mentioned we may expect to collect £4,825,000.

The raising of such an additional amount in the middle of the financial year, while bearing in mind the principles which I have set forth, is certainly not a small task. The fact that we have succeeded in doing so and that in a manner which at the same time is so reasonable, and will cause so little dislocation in our economic structure, is in itself evidence of the soundness of our financial position.

It is now for the House and for the country to express its judgment of what I have submitted here to-day. I expect that judgment to be a favourable one. I know that the amount of money which we have to find is a large one—a few years, perhaps even a few months ago, nearly everybody would have regarded it as incredibly high. That it is so high is naturally the result of the war which has burst out over the world and the result of South Africa’s decision to defend our freedom in a manner worthy of South Africa. That is the task which we have undertaken. It is a great task. Financially too it means that sacrifices have to be made, but that will not deter us. We have set our hand to the plough and we are not going to look back.

I imagine that most of us received two main impressions in listening to the speech by the hon. the Minister of Finance. The first impression, as I stated on a previous occasion, is the wonderful soundness of our financial position which is able to resist very severe shocks. How long this will last, however, how long that position will remain sound with the shocks it is now receiving, only the future will show us, and the second impression I think is that if one hears of the benefits which we are receiving, and are going to receive, it would seem to be almost a good thing or us if we could permanently be in a state of war, but I am afraid that the people outside will not be as optimistically disposed in regard to the position as my hon. friend is. I move—

I second.

Agreed to.

Debate adjourned; to be resumed on 30th August.