Mr. Speaker, the speeches made by the hon. the Opposition last week, during the Third Reading of this Appropriation Bill, were in many respects extremely disappointing to me as Minister of Finance. Only in a very minor respect were there gratifying signs to be discerned. These speeches were disappointing because I had hoped and expected that the Opposition would, during this debate at least, find it possible to devote more attention to financial problems. I expected this, especially in view of the actions and speeches of members of the Opposition in regard to the economy of our country in recent months, and in view of the importance of financial discussions in world politics today. I am aware that in Budget debates, and particularly in a debate of this nature, in which the Third Reading of this Appropriation Bill is now being discussed, all kinds of matters are discussed, but I really hoped that under these particular circumstances in the economic history of South Africa and in view of all the criticism of the Opposition, a great deal more would be said in this respect.

It is true that the hon. members for Parktown and Constantia, and to a certain extent the hon. the Leader of the Opposition as well, discussed financial problems, but as far as the hon. the Leader of the Opposition is concerned, with whom I want to begin, he had an entirely different object in view than the discussion of finances. I think the hon. the Leader of the Opposition was profoundly aware of how catastrophic the course of this session had been for his party, and felt that he had to use this last major opportunity to try, by means of a fiery and lively speech, to save what was still left to save to instil new life into his party, and to hold together what was coming apart. In this kind of revival speech it is difficult for one to deal with financial problems; for that purpose they are frequently too dry.

The hon. the Leader of the Opposition felt that he should again fall back on the old tried formula, in other words, the old method of beating the racial drum. I am aware that that side of the House always accuses this side of having included the race problem everywhere, which is not true. Last Thursday, in the first speech in this debate, we heard the hon. the Leader of the Opposition making what was not only a racial speech, but what was really a scaremongering speech, with an attempt at intimidation, on all the dangers threatening South Africa from the east and from the west and all over, not only Black peril, Sir, but also White peril and Red peril.

Sir, we do not mind the hon. the Leader of the Opposition and other leaders reminding us as South Africans from time to time of national and international problems confronting us, but I definitely take it amiss of the hon. the Leader, who is a very sensible person, deliberately making, in these difficult times in the international sphere, and in view of this delicate situation in which we find ourselves, a scaremongering speech, an intimidatory speech here which could only be harmful to South Africa both at home and abroad. I also take it amiss of him for accusing the National Party Government of having been the cause of all those dangers. [Interjections.]

Mr. Speaker, there you have again heard the National Party being accused of this. The National Party was even characterized by the hon. the Leader of the Opposition as being a security risk. [Interjections.] That is irresponsible conduct by a party. Was the National Party responsible for the establishment of 40 Black states in Africa which are not friendly towards South Africa? Was the National Party in South Africa responsible for a U.N. which consists of a majority of Black and communistic states, which were hostile even to Gen. Smuts? Was the National Party responsible for the rise of communism in China and in Russia, which is penetrating to Africa? Surely it is nonsensical to make statements of that kind; especially since these are people who desire to take over the government of the country. It is a pity the hon. the Leader of the Opposition had to close this session for his party on such a note, for it meant nothing but intimidation. We on this side of the House have frequently stated—they are aware of this—that we have no faith in the unity and in the policy and in the strength of the United Party, but we nevertheless expected the hon. the Leader of the Opposition to have such faith in the strength and the policy of his party that he would not find it necessary to close the session with this kind of speech.

Sir, what was also disappointing in the speeches of hon. members opposite was that they came forward again in this debate with precisely the same old matters they have been discussing all this session, and previous sessions as well. They raised the same questions without producing anything new. Sir, I got the impression that the Opposition is tired. I got the impression that they have run out of things to say; that they have nothing further to say to the people. Admittedly we heard a great deal concerning the problem of inflation and the need for growth, but these are things we have been discussing for the past 25 years and more. In fact, in the discussions which took place this session, and particularly during this debate, it appeared that we agree with one another on many of these matters. We are all aware of the dangers of inflation.

We are all aware of the need to combat inflation and to eradicate this disease. We are all aware of the need for real growth; we are all aware that real growth is necessary for us in the political and economic spheres. Sir, there was one element in this debate which was gratifying. The hon. member for Parktown explained to the House here in a calm and peaceful way that we had made some progress this session in the financial sphere. The hon. member mentioned a considerable number of matters in regard to which definite progress had been made during this session. I think he enumerated approximately a dozen matters here.

I am grateful to the hon. member for having done so. But then I also found it interesting that the hon. member availed himself of the opportunity to state naïvely that it was in fact the United Party which should get the credit for each one of those items of progress; that they had taken the initiative in each of those cases. Mr. Speaker, I should like to debate this matter, but I do not want to take up too much of the time of this House, and I should really not like to spoil the satisfaction of that hon. member, particularly in view of the sombre period his party has been through during this session.

Sir, I come now to the two major problems which have so frequently been discussed here. Before I proceed to discuss the international position, I first want to say something about inflation. I agree with hon. members on that side that inflation is a dangerous phenomenon and that we should all co-operate to destroy it in this country and to eradicate it as far as possible. I said this years ago, and we on this side said this years ago when inflation began. But when this side was prepared to apply unpopular fiscal and monetary measures—classical methods which are applied throughout the world and which are again going to be applied now in West Germany, America and other countries— we received absolutely no support from that side of the House. Not only did we receive no support, but we encountered opposition, and we sometimes heard some members on that side say that a little inflation was perhaps a good thing in order to promote economic growth. Sir, inflation is the subject which is being discussed today, and not only here in South Africa; inflation is not only a South African problem. South Africa is not the only country which is suffering from that disease.

South Africa is one of the few countries which perhaps has remedies for it, but inflation has become a world-wide phenomenon such as we have never before seen in the economic history of the world. There were times, after the war for example, where for a short period, in a country such as Germany, there was tremendous runaway inflation. But South Africa today forms part of a pattern of protracted world-wide inflation to which all countries are subject. The hon. the Leader of the Opposition hinted here that the rate of inflation in South Africa was far higher than in other countries. Sir, let us concede that. Let us concede that at this juncture it may be correct that the rate of inflation in South Africa is higher than in some other countries. But there were also times in the past when the rate of inflation in South Africa was far lower than in other countries. There were times when inflation in some countries was greater and in other countries less.

Surely hon. members opposite know that in no country do price levels remain horizontally equal; that there are times when prices rise and that there are other times when prices fall. There are times, as far as the rate of inflation is concerned, when we may perhaps be at the bottom of the list, and then there are other times when we may perhaps be at the top of the list. During the period 1963-’72 for example, the average rate of inflation was 2,4% in South Africa; in Germany during that period of nine years it was 3,01%, in Italy 3,5%, in Canada 3,44%, in the U.S.A. 3,68%, in France 4,26%, in the United Kingdom 5,05% and in Japan 5,44%. During that long period South Africa was one of the countries with the lowest rate of inflation in the Western world. But there must also be times when the rate of inflation in South Africa will be higher than the rate of inflation in other countries.

I want to give the hon. the Leader of the Opposition the assurance that the time will soon arrive when the rate of inflation in South Africa will again be lower than in most Western countries. The hon. the Leader of the Opposition tried to imply here that the rate of inflation in South Africa is now higher than it was during other periods; that it was higher than it was last year and higher than in previous years. But precisely the same argument applies in other countries; the rate of inflation in other countries is also higher this year than in previous years. Surely inflation does not follow an even course. In the history of every economy there are times when it reaches high levels and times when it reaches low levels, times when prices rise and times when prices fall. After all, there is such a thing as an economic cycle. Has the hon. the Leader of the Opposition never heard of this? It is quite possible that during one period prices will be higher and during other periods lower.

Sir, let us examine for a while the causes of inflation; I think the hon. the Leader of the Opposition should take these into consideration as well. If we consider the first quarter of this year and analyse the rate of inflation we find that the greatest price increases occurred in regard to two items in particular, viz. foodstuffs and services. You will recall, Sir, that during the first quarter of this year food prices rose by not less than 29%. That rise was attributable in the first place to an unprecedented drought in the last quarter of last year. Food prices comprise a quarter of the cost of living index, and in that quarter food prices contributed more than 7% to the increase in the rate of inflation. During the past year, from March to March, when the rate of inflation was 9,9%, the food prices were 17,5%. In other words, foodstuffs contributed 4,5%, almost half, to that increase in the rate of inflation. Those increases occurred in respect of meat and vegetables in particular, two items which are difficult to subsidize. Rises also occurred in respect of services, those of doctors, advocates, attorneys and others. It is interesting to note that during the first quarter of this year the increase in respect of other items, particularly of manufactured articles, commodities which might be controllable, was 6,3%, which in these times is not too high a rate of inflation. If we want to resist inflation we must consider those elements, i.e. that it was higher in respect of foodstuffs and services in particular, in other words items which are difficult to control. The hon. the Leader of the Opposition and other hon. members opposite implied here that the State ought to have done far more to stem inflation. Of course the State has to do a great deal, but there are limits to what the State can and cannot do, particularly in a non-socialistic country such as ours. Why did the hon. the Leader of the Opposition and others not point out the duty of the individual? Sir, has it not already become a habit with us, with us and with others, to demand more and more from the State and more and more from our nation, and from our neighbours, without ourselves producing something in return? Is it not a fact that throughout the world today we are experiencing a relative decrease in productivity? Is it not true that mankind is to an ever increasing extent demanding remuneration in monetary terms, without supplying the necessary production? And let us now, as parliamentarians, be honest among ourselves here. Is it not true that the fundamental problems of today, in this country and in the world, one of the greatest problems in today’s economy is that human production is not keeping pace with the wages which are being received for that production? It seems as though wages are rising far more rapidly than man’s productivity is rising. Should the hon. member not also have referred to some slight extent to the duty of the individual? We will not be able to combat inflation if every citizen of the country does not also contribute his share in the form of increased production. Why did the hon. member not refer as well to the duty of the businessmen? There are hon. members who did in fact refer to the duty of the businessman, his duty in respect of better management, better organization and more technical knowledge and the use of technical means.

They have their labour problem.

There are businessmen today who have more labour than they need, because they are hoarding labour. For that reason the productivity figure per man hour is lower than it should be. Why did the hon. the Leader of the Opposition not also refer to the duty which the Opposition has in this respect as well? It is the duty of the Opposition, as part of this Parliament, to come forward with positive suggestions affecting fundamental causes, and not merely suggestions for doctoring symptoms. There is an obligation of resting on the shoulders of the Opposition to be less negative, not to be merely aggressive, and to refrain from telling the world and the country to such an extent of the tremendous dangers which will supposedly threaten us in future, and practise intimidation in that way. Leaders on the opposite side spoke of the erosion of our standards of living by inflation. Of course something like this is theoretically true. It is true that the standard of living could drop as a result of the erosion of the price factor through inflation. Although it is theoretically true in principle, it is not true in regard to this country. We have frequently mentioned that the income of our workers has risen far more rapidly than the increase in inflation. The hon. the Leader of the Opposition said that we could have alleviated the problem if we had, every year, added to the wage of the worker a cost of living allowance based on the cost of living index. But then the worker would have been far worse off, for the wage increases which have been granted in the years since we came to power have been far more than the worker would have received if this had been done only according to the cost of living index.

There is another reason for that …

I do not want to go into these things in detail, but there are statistics which prove to us that if we compare the duration of labour in minutes, hours, days or months, for which one has to pay an ordinary worker to purchase a certain article, such as a motor car, we find that the work hours today are less than in the case of most articles; that is, for example, less than it was ten years ago. We also have the figures which indicate that in regard to all earnings and salaries in South Africa, the employees’ remuneration increased from 63,5% in 1965 to 68,3% in 1971.

I am afraid that, consciously or unconsciously, a completely erroneous impression is being created by some hon. members, and I am referring to an allegation made by my hon. friend, the hon. member for Yeoville, the other day when he spoke entirely in good faith of the dangerous situation in which South Africa supposedly found itself because the rate of inflation was higher than the growth rate. Earlier the hon. member for Constantia, and I think the hon. member for Parktown and other hon. members as well, had spoken and drawn extremely alarmistic conclusions from the fact that the rate of inflation is higher than the growth rate. What does the hon. member mean by growth rate? Does he mean the real growth rate or does he mean the growth rate in monetary terms? The real growth rate of a country is that growth rate which remains after one has subtracted the rate of inflation from the growth rate in monetary terms. When we say that we have a 3%, 4% or 5% growth rate, then it is the real growth rate after the figure for inflation has been subtracted. But hon. members are giving the public the impression that the growth rate in South Africa is lower than the rate of inflation, in other words, that we are declinin3 economically, that we are retrogressing instead of progressing. To mention an example, if your monetary growth rate is 10% and your rate of inflation is 7%, then your real growth rate is 3%, and our growth rate figures which we had last year were after that rate of inflation had been substracted. I think hon. members should be careful not to disseminate that idea any further in the country.

But what was very interesting as well was that we were being made to believe, in order to frighten the people, that South Africa was allegedly the only country where the rate of inflation was higher than the actual growth rate. That is not true. It is very important to know that there is almost no country in the world where the rate of inflation is not higher than the real growth rate. I have the figures for 1971, the latest comparable figures I was able to obtain. In the United Kingdom, New Zealand, the Netherlands, Australia, Italy, the U.S.A., France and Japan, the rate of inflation was higher than the real growth rate. In the United Kingdom the rate of inflation in 1971 was 9,4% and the growth rate 1,07%. In New Zealand the rate of inflation was 4,44% and the growth rate 3,10%. In the Netherlands the rate of inflation as 7,48% and the growth rate 4,72%. In Australia the rate of inflation was 6,04% and the growth rate 3,66%. I am referring to the real growth rate. In Israel the rate of inflation was 12,02% and the growth rate 9,96%. Italy’s rate of inflation was 4,93% as against a growth rate of 3,12%. So I can continue and mention examples. South Africa was one of the best in 1971 when the rate of inflation was 5,66% and the growth rate 4,17%. I want to ask my hon. friends to please refrain from telling the world that the rate of inflation in South Africa is higher than the growth rate, and that in that respect our country stands alone in the world. The real growth rate of South Africa remains among the best there are.

I believe there will soon be a reduction in the rate of the level of inflation which we have at present reached, in spite of the pessimistic remarks made by my hon. friends on that side of the House.

I quickly want to furnish the reasons why I believe that the rate index will be reduced, or will at least be stabilized. I believe in the first place that the devaluation, which had an effect on our prices, is working itself out, if it has not already done so completely. In the second place the 5% revaluation of the rand of a week or two ago will make itself positively felt in the form of a reduction in the rate of inflation. Prices are a major item responsible for the increase in costs, but I hope that this will be alleviated through better agricultural conditions. In addition most government-administered price determinations for certain foodstuffs have been made. It is hoped that rates of inflation in other countries, which have a major effect on South Africa, will improve. I note with satisfaction that the E.E.C. countries are going to get together to make joint attempts to curb inflation. Such action is long overdue. I hope that a reduction in the rate of inflation there will help us through the import products. I see that President Nixon is going to make a statement in regard to inflation soon. If the prices of imported products from those countries and other countries can be reduced, our prices must come down. This must inevitably happen because we are importing goods to the value of approximately a quarter of our gross domestic product. I believe that housing costs will decline in the sense that rates of interest are falling. In conclusion I feel that we in South Africa will experience increased growth in the months which lie ahead. With increased growth, with greater production, there will be a reduction of unit costs in our production, and in this way there could be an improvement in our cost of living index.

In conclusion therefore I want to say that my hon. friends on the opposite side of the House used absolutely erroneous arguments in regard to inflation, and that they created erroneous impressions. I want to conclude with the optimistic idea that I believe that the period of our greatest inflation will at last be brought to an end now and that it will gradually taper off, provided factors which are completely beyond our control do not alter it again.

I come now to the question of growth. As regards the question of growth, real economic growth, I agree with the hon. members on this side of the House that growth is absolutely essential for the welfare and the happiness of a nation. I agree that it is absolutely essential for internal stability and for external security, as well as for the position South Africa has to occupy in the world. This Government has done a tremendous amount to stimulate growth. This latest Budget was from the outset termed a “growth Budget”, and it was accepted as such by the majority in the country. Steps were taken here and announced in the Budget—I do not want to mention them all for there are dozens of them—which were aimed at furthering growth in South Africa to such an extent that there are economists who are saying that the Government has already done too much in this regard. I want to avail myself of this opportunity to express my dissatisfaction with a few businessmen. I say “a few businessmen” for they do not represent the businessmen of South Africa, but perhaps only a small group of businessmen. These businessmen recently announced in a dramatic way that they refused to expand their factories and increase their production unless the South African Government undertook to do certain things. I reiterate that fortunately there are few of them who said this. This is not the spirit of the South African businessman in general. There are people who say the opposite, who say that we should be careful not to do more. There are people who say, and during the past week I heard a few leaders of these people saying this, that after everything the Government had done the ball was now in the court of the businessman, and that it was now up to them to do something. If those businessmen persist in asking for more and more from the Government, then they may as well ask the Government to take over their production, manufacture their products, sell their products, and simply give them the profits. They want to steer us in the direction of socialism.

The hon. the Leader of the Opposition said that other countries had a higher growth rate than ours. To this I give the same reply I gave in regard to inflation. It is true that during the past year there have been other countries which had higher growth rates than ours, but there were not many of them. On the contrary, there were some of the Western countries which experienced less real growth than we did.

But our population growth is taking place at a greater rate than theirs.

I shall come to that in a moment. The total gross domestic product in South Africa was comparable with that of leading countries in the Western world, although it was not as high as that of some other countries, for example Japan and, last year only, America. Under these circumstances we experienced a growth with which we may be satisfied. We know that it should be higher. There were periods in history when the growth of South Africa’s economy was far greater than that of other countries. In the ’sixties our real growth was between 6% and 7%, and there are few countries in the world which are able to maintain that high average growth rate over such a long period, a period of almost ten years. I want to tell the hon. the Leader of the Opposition that things change, there are fluctuations. The one year the one country is higher, and the next it is lower again. There will be times when we are higher than other countries, only to decline again during a subsequent stage. I want to give hon. members the assurance that, according to the signs of the times, it will not be long before the growth rate of South Africa will count among the highest in the world.

†I now want to come to a very interesting chapter in the speeches from members on the other side of the House. I want to discuss the reasons which they have advanced for the slow growth rate in the South African economy. There are five reasons which the hon. members have advanced and I should like to deal briefly with them one by one.

The first reason which they have advanced for the slow growth rate in the South African economy over the last two years is the rate of inflation. The hon. members for Parktown and Constantia and the hon. the Leader of the Opposition advanced this aspect as the first reason for slow growth rate in South Africa. I want to say again that I agree with the hon. gentlemen that inflation is the enemy of growth. We are with them in saying that it is essential that we should combat inflation in order again to promote growth. I said this many years ago, but when we on this side were fighting inflation by means of fiscal and monetary measures we had little support by the other side of the House. They even hinted that some measure of inflation was essential for economic development.

A second factor which the hon. members, particularly the hon. member for Constantia and I think the hon. the Leader of the Opposition, mentioned was the lack of demand. They said that there was not sufficient demand.

I agree.

The hon. the Leader of the Opposition agrees that he has said that one of the limiting factors is the lack of demand in the economy. I find it very funny to have to repeat it once again particularly for the benefit of my hon. friend the Leader of the Opposition. Some years ago when we had a situation similar to the one we are having at present and when I told a reporter in the course of a Press interview that I thought what we needed in South Africa was more demand—we should buy more—my hon. friend attacked me year after year and said that I preached the doctrine of “spend for prosperity”, words which I never even used. I think the chickens are now coming home to roost. In times like those we are experiencing at the moment, when there is a lack of demand, we find the hon. the Leader of the Opposition, who has attacked me for saying that demand was necessary …

And what is happening now?

No, you cannot get out of this at all. He now comes and says that demand is what is necessary. We as a Government have been trying by means of different measures to stimulate demand but we do it cautiously lest we very soon find ourselves again in a position where we have demand inflation on top of cost inflation. Therefore we cannot push demand at all costs. I think the hon. members must agree that the Government has done a great deal by means of, for example, the earlier repayment of loan leviese and particularly through the Budget, to stimulate demand. The hon. member for Parktown has been honest enough to concede that. [Interjections.] He said that the Government had done a great deal to stimulate demand.

He says that he is always honest.

I think at this time it will be dangerous to stimulate demand too strongly. I think it will be wise to await the expected industrial development in the hope that the demand will be created by such development itself. A very interesting point in this regard has been mentioned by the hon. member for Constantia and I quote—“High inflation does not always produce more spending.” It is interesting because we have often heard, particularly from the hon. members of the Opposition, that inflation feeds upon itself; that in times of inflation people, because they expect prices to rise, buy more than they should. They buy in anticipation of the expected higher prices. These things seem to be in conflict with one another, but I do not want to make an issue of this point. I merely want to mention it in order to show how difficult it sometimes is to understand economic phenomena and how dangerous it is to generalize.

A third reason which the hon. the Leader of the Opposition advances—careful note should be taken of this—as one of the main causes for the slow growth is high Government spending. I must say that I am at a complete loss to understand how and why the hon. gentleman could have said anything of this nature. Last year when the Government reduced the rate of spending to the lowest possible limit, we not only saw a high rate of inflation but we received complaints from all over the economic field. These complaints came from people in commerce and industry, particularly in the engineering and construction industries. They complained that their growth has decreased because of the slowing down of Government expenditure. Moreover, we have just heard from the hon. member for Constantia that he agrees that one of the reasons for the slower growth was the lack of demand. And now when the Government as the main source to stimulate demand through its Budget increases demand by its spending, the hon. the Leader of the Opposition comes along and says that this increased demand caused by Government spending is inhibiting growth. I cannot understand it. The Opposition must be honest with the public and with this House.

We always are.

Not in this case. Either there should be a creation of more demand because lack of demand is the main reason for the lack of industrial growth, or the Government should stop spending so as to create demand.

The Government spends in competition with the private sector and pushes up prices, as you know.

Thank you, Mr. Speaker. The hon. Leader says the Government spends in competition with the private sector. But we have just been told and the hon. member has agreed and said so the other day, that the private sector is not spending enough. It cannot be in competition; Government spending supplements private spending. The Government through its Budget creates spending power for the private sector and for other sectors. It is one of the main economic laws and is known by every economist right throughout the world. In times of recession and depression it is Government spending that can stimulate demand. Now my hon. friend comes with a completely new economic law of which I have never heard before. I think the time has arrived that the hon. members on the other side have to make up their minds as to whether demand should be stimulated or not and whether the Government should have a part in stimulating demand or not. Otherwise the Government is free of all blame. Moreover, Government spending has been mainly in regard to infrastructure which is essential for any economic development.

But connected with this argument, there is another one raised by the hon. Leader of the Opposition which is even more curious. One of the causes of the lack of growth, he says, is the budgetary policy of this Government, i.e. foreign borrowing and deficit spending. This first argument goes a bit further. In the last argument which I mentioned, he said that the Government was spending too much and that this was inhibiting growth. In this argument he says the Government finances its expenditure by means of borrowing from abroad and by deficit budgeting which means borrowing at home. I have pointed out that this has been conceded by the hon. gentleman over there and by the hon. the Leader of the Opposition namely that demand should be created. It is accepted all over the world that the Government is the main instance to create demand through its Budget. Now, Mr. Speaker, if this is accepted how should the Government have financed its Budget? We are not allowed, the hon. the Leader of the Opposition says, to borrow abroad. It is wrong to borrow abroad. In spite of the fact that we often hear that we should bring in foreign capital into the country we should now not be allowed to borrow abroad. We should also not borrow domestically in other words, taking my hon. friend’s reasoning to its logical conclusion the only thing the Government has to do is to increase taxes drastically.

What I said was that you may easily increase inflation …

That is quite different. I agree with that. You could increase inflation.

That is what I said.

The hon. member wants to get away from the main substance of his argument now.

No, you have my Hansard.

I have it and have studied it very carefully. The main reason advanced was Government borrowing by means of loans abroad. I am not talking about inflation at present. I am away from that subject. The mistake the Government makes, you said, is that it finances its Budget by borrowing abroad and by borrowing locally.

Those are the two horns of your dilemma.

It is not the horns of a dilemma at all. If we want to create demand by Government spending does the hon. gentleman want me to do that by increasing taxes? I think it is ridiculous to think that you could create demand other than by a deficit budget or through loans from abroad and locally. I have never heard of economics of this nature, never in my life. I think it is completely unacceptable. But then there is something else which I would like to put to my hon. friend just to show how muddled the thinking of the Opposition is. On the one hand the Leader of the Opposition states that he is against deficit spending at this stage of our economic development. On the other hand, we have heard from several members on the other side about the possibility of large increases in the Revenue Account of the Government on account of the higher free market price of gold. Nobody can say what the increase in taxation will be. It is impossible to say, because of many other factors. I think hon. members will agree. But let us accept that there will in fact be a substantial rise in revenue for the State on account of the higher gold price. Now, obviously, if the hon. the Leader of the Opposition is strongly against Government deficit spending …

You are misstating my argument.

The hon. the Leader of the Opposition—he can read his speech again—has said that one of the reasons for slow growth is Government deficit spending. Now I say if that is one of the arguments used by the hon. member, who is in the corner now and wants to get out, then he should have been one of the first to rise in this House and propose that the additional revenue from the gold mining taxation should be used to wipe out or reduce the Budget deficit. But he did not even hint in that direction; he said nothing about it. On the contrary, he allowed his members on that side of the House to put forth the argument that we should not put this money back into the coffers of the State and thereby reduce deficit spending, but they ask very strongly that we should put all that money into the stream, that we should increase liquidity, and that we should therefore really increase inflation in this country. The matter becomes completely incomprehensible to me. I think the time has arrived that the hon. members of the Opposition should come together and bring forth one united economic policy. At present it seems to me that there is complete lack of contact between the hon. the leader and his members in regard to economic policy.

The last point raised by hon. members on the other side of the House was devaluation, devaluation is then one of the reasons for the slow growth in this country. Sir, I am finding it more and more difficult to follow the reasoning of hon. members on the other side of the House. Whatever differences of opinion we may have as to the reasons for devaluation, the fact is that devaluation has been essential for economic recovery in South Africa, and everybody acknowledges it today. I wonder where my hon. friend from Constantia, who is now shaking his head, thinks South Africa would have been today if we had not devalued in 1971. Devaluation has laid the basis for further industrial and general economic development. Devaluation has decreased the imports and increased the exports of South Africa. Devaluation has laid the basis for South African industry to compete better with foreign countries here and abroad. Do hon. members not agree that devaluation has put us in a better position to compete with our products here and abroad? Devaluation has brought a more favourable balance of payments, in fact it has brought it into equilibrium.

Has it increased inflation?

We are talking about … [Interjections.] I have said that quite openly. It has increased inflation. I have said it many a time in this House and I have been quite honest about it. The problem is now whether devaluation has inhibited growth. I say, “No, it has not.” Devaluation has brought all these advantages I have mentioned. It has amongst other things, increased our foreign reserves. It has also brought about a recovery in the Stock Exchange and has brought greater liquidity in the country as a whole, leaving apart the question of a higher gold price. I think there is nobody in this country today, or a very, very small proportion of the people, who would take the attitude of those members who say that devaluation is the cause of slow growth in this country. But if that is the case, if the hon. member for Parktown and the hon. the Leader of the Opposition believe that devaluation is the cause of slow growth …

Who said so?

The hon. member for Constantia said that. Well, it seems the hon. member does not agree. You see, Mr. Speaker, the hon. member and the hon. member for Constantia do not agree. It is good to have that on record. If the hon. the Leader of the Opposition and other hon. members on that side of the House agree that devaluation has been inhibiting growth, why did he not tell us last year that he was against devaluation? Sir, you will remember how, at one stage during the debate last year, I did my best to elicit from that side of the House their attitude on inflation, and to get them to tell us whether they were for or against inflation. But they were silent. Eventually I accused them of wanting to tell the public, when it suited them, that they were either for or against inflation.

You mean devaluation.

Yes, I am sorry; I meant devaluation. Let me repeat that. I said that they would go out and tell the country, when it suited them, that they were against devaluation, and that, when it suited them, they would tell the public that they were in favour of devaluation. Then my hon. friend, the hon. member for Parktown, said: “But I have said that we agree with devaluation. I have told you, on behalf of my people.” At that moment only did he say that they as a party accepted and agreed with devaluation.

They said it was an act of insolvency.

Yes, they said it was an act of insolvency. Mr. Speaker, if hon. members were opposed to devaluation, they should have said so last year and not now.

In conclusion I want to assure my hon. friends that we are today at the lowest phase of the economic cycle. We have been high up, and in the last three years we have been low, but the signs of growth are already there. In every sphere we see the signs of growth. We see demand picking up. We see inventories which have been used up, being replenished. We see for instance, persons making use of their full capacities. Our statistics for the first quarter of the year tell us that a definite increase is already on the way, and I am sure that hon. members will see this very soon.

*Mr. Speaker, I think I have now spent enough time castigating the members of the Opposition. I now want to return, in conclusion and, to their relief, to less contentious questions. I should like to say a few words about the international position and, in particular, about the question of gold.

You will have to get a move on.

No, my time is unlimited. Is the hon. member afraid I shall come back to the Opposition again? As far as the international position is concerned, hon. members on both sides of the House know that during the past few years we have had one crisis after another. Hon. members know that we now find ourselves in what is virtually a situation of chronic crisis in the international monetary sphere, and that if this crisis is not resolved, we may expect a dangerous situation in the world in the monetary sphere. Hon. members know that in December, 1971, a meeting of the great powers was held in Washington, at which the so-called Smithsonian Agreement, which introduced a readjustment of exchange rates, was concluded. That Smithsonian Agreement was described by President Nixon as being “the most significant monetary agreement in the history of the world”. That “most significant agreement” had not lasted six months when Britain felt itself forced to float sterling downwards, i.e. to break away from the agreement. Three or four months afterwards America broke it again by devaluing. Numerous other countries, particularly the important European countries, then began to float their currencies against the dollar, or the dollar began to float against their currencies, whichever way we want to put it. The International Monetary Fund then appointed the so-called Committee of Twenty to go into the entire international monetary problem and to offer suggestions for solving the problem. On this Committee of Twenty South Africa is represented, by its Minister of Finance, as one of the associated members. We attended the first meeting in Washington. We were unable to attend the second meeting, which was held on 27th March in Washington, because of the Budget. But we do have “deputies” and advisers in the persons of Mr. Brown, the Secretary for Finance, and Dr. De Jongh, president of the Reserve Bank, Dr. Gerhard de Kock and Dr. Smit, who is in Washington.

Sir, I now want to deal very briefly and very fleetingly with a few of the most important problems confronting the world today, and wherever I can, I shall explain South Africa’s attitude in regard to them. The first problem confronting the world today is the so-called adjustment process. If we consider the position throughout the entire world, we find that certain countries have for many years now had a considerable unfavourable balance of trade, with the result that their reserves have become consistently diminished. On the other hand there are countries with a very favourable balance of trade with the result that their reserves have consistently increased. On the one hand we find a country such as America, which has a tremendous balance of payments problem, and on the other we find countries such as Japan and West Germany with a very favourable balance of trade and tremendously high reserves. The question is now being posed as to what should happen when one finds this phenomenon of divergent development in different parts of the world. Under the Bretton Woods Agreement every country’s currency and parity is fixed in terms of gold—fixed adjustable parities—and a country could only alter its parity when it experienced fundamental disequilibrium. It is now being felt that perhaps there is something wrong with the old system of fixed adjustable parities and that another method should be adopted which would perhaps make it possible to effect more rapid and better adjustments. From the representations received, two things emerged; in the first place the idea arose that in regard to the old Monetary Fund, countries which find themselves in a position such as the one I sketched above should be allowed to devalue or revalue more frequently, and to do so by a smaller percentage. This idea is more or less acceptable, but in this idea lurks the danger that countries may constantly manipulate their exchange rates to the disadvantage of other countries. It is therefore not very easy to accept this idea. But there is another claim which is being made, particularly by the United States, which is very difficult to accept. The United States expressed the opinion, for example, that where one has this major disparity, where the U.S.A. on the one hand has the problem of diminishing reserves, while in the reverse position one finds Japan and Western Germany, it ought to be the duty of these surplus countries, viz. Japan and Germany, to take steps to restore equilibrium in the world. I maintain that this is an unfair state of affairs. It could mean that the healthy man should take the medicine instead of the sick man taking it. It would mean that those countries which had a healthy economy as a result of keeping inflation in check, of improving productivity and of keeping their cost structure so high that they could compete with foreign countries, should be penalized by being compelled to revalue, and not that country which is the guilty party because it has a weak economy and which cannot, owing to such weak economy, compete abroad. It is not the guilty country which is compelled to do so. If the idea of a compulsory revaluation by the surplus countries alone were to be applied, it would be unfair.

Today they are coming forward with a new idea, i.e. that so-called objective criteria should be established, objective statistical criteria which can determine whether a country should devalue or revalue. I think the idea that a computer should have to determine whether a country should devalue or revalue should be rejected at all costs. We should reject the idea that a country may be compelled by outside forces, regardless of its internal situation and of what the temporary nature of its crisis may be, to revalue or devalue. We are confronted by the problem of the adjustment process, in respect of which there are various ideas, but for which it has not yet been possible to find any solution. However, I may not disclose any of the confidential negotiations which took place on the Committee of Twenty and its “Deputies”.

The second major problem, and one with which everyone is acquainted, is that of the dollar. In recent times we have heard a great deal concerning the gold crisis. However, it is not a gold crisis, but a dollar crisis. For several years we have had the position that the balance of payments of the U.S.A. shows a tremendous deficit, and that a flood of dollars has streamed abroad. During the past quarter of this year the negative, the unfavourable balance of payments, of America was more than 10 milliard dollars. At that rate it could mean that there could be a balance of payments deficit of 40 milliard dollars this year. It has been calculated that dollars have been created in this way in the rest of the world, particularly in Western Europe and Japan, with which America is paying its deficit of more than 80 milliard dollars. This is a very dangerous situation. It is a very dangerous situation that the currency of one country, namely the dollar, should flood the world in their milliards, while the other countries are powerless against this. I am not saying this out of any form of rancour against the dollar, for I think that it should be very clearly understood that what is involved here is not a struggle between the dollar and gold. We have stated, and we state it openly here, that we believe that the dollar must be strong and that it must be made possible for the dollar to become strong. Without a strong dollar we will find no solution to our monetary problems in the world. We must help, and I believe that we in South Africa in our small and humble way, can assist in strengthening the dollar so that it can once again assume its position in world trade. One of the reasons for the world crisis today is in fact the lack of confidence which arose owing to the fact that America could not control its balance of payments, showed such great deficits, and that they adopted the attitude of “benign neglect”. In other words, they do not mind how much money flows out and how much money flows in. The worst thing that happened was not only that this balance showed a deficit, but that recently the United States made the dollar inconvertible. The United States severed the dollar from gold and in that way, as it were, said to the world: “I am paying you in I.O.U.s, but am not going to redeem those I.O.U.s; I am paying you on paper, but I am not going to cash that paper with real money.” This creates a very dangerous situation in the world, for many a dollar throughout the world became inconvertible. An answer to that question has to be found. In the first place there is the question of the old dollar, those 80 milliard or more dollars, a question which is primarily the problem of a few big countries which could perhaps be disposed of bilaterally. In the second place there is the question of the new dollars which are being created year after year. What must be done with all those dollars which bring inflation in the world, which create lack of confidence in the dollar and which disrupt the world monetary system? It is very clear that one of the major causes of monetary unrest, of the monetary crisis, is attributable to the vast quantity of dollars which are inconvertible and more and more of which are constantly being created. As long as it is the privilege of the U.S.A. to pay in its own money, to pay for its overseas transactions with its own dollars, and while, in addition to that, the dollar is still inconvertible although we and the other countries have to pay in hard cash—we cannot pay in rands and subsequently tell the world we will not cash those rands—I maintain that as long as America has that privileged position in contrast to other countries there can be no final solution to the world crisis.

But let me just indicate briefly, Mr. Speaker, how we in our small and humble way can assist in resolving that difficulty, the difficulty in regard to that dollar overhang of 60-80 billion dollars. Our reply to that question is that the price of gold, to which I shall return subsequently, should be restored to its correct level. Suppose the price of gold were increased not to 120 dollars as it is today, but to 150 dollars, for it has to be higher than the free market price, then those 11 billion dollars which America possesses are suddenly worth 40 billion dollars, as against its debts of 80 billion. To a certain extent its debts have already been funded. But in addition to that countries such as West Germany and others, which have tremendous quantities of gold and are making tremendous profits on paper through the revaluation, the three or fourfold increase in the value of gold they have, could lend that extra gold to the U.S.A. at a lower rate of interest. This would give America sufficient gold so that its dollar would for the moment be convertible; a Marshall Plan in reverse, if you want to call it that—-the lending of dollars to America so that America will again have enough dollars in its possession to make the dollar convertible and to create confidence in the dollar again, provided America accepts the internal discipline of not continuing to create any further dollars. I think that we could in this way and in this direction find a solution, where gold and the increase in the gold price could be the solution to the dollar problem.

A fourth problem confronting the world today is that of floating currencies. There was a time when currencies were anchored to gold. But recently the tendency has arisen to an increasing extent for countries to sever their currencies from the parity and allow them to float according to the laws of supply and demand, and today one finds that the currencies of almost all the important countries are floating, either alone as in the case of Canada, Britain and Italy, or jointly as in the case of most countries of the European Economic Community, which are linked together. Now, if there is no fixed rate of exchange and no anchors, then I fear we have reached a period of tremendous uncertainty in the international world which cannot be beneficial to trade for there is never absolute certainty concerning the value of any currency. They are floating all the time. The question now arises whether the Monetary Fund, or the monetary authorities should allow this floating of currencies, and under what circumstances they should allow it, and to what extent they should allow it. A host of problems arise in regard to this floating of the principal currencies. We want to express the hope in South Africa that those floating currencies, whether it is a clean float or a dirty float, will be terminated, for I believe that if it is not terminated and if the currencies of the world do not return to fixed anchors again, disastrous consequences lie ahead for the entire world in the monetary and commercial sphere. Then we would be retrogressing to the period 30 years ago when there were constant changes in the rates of exchange, which one country effected to the detriment of another.

Then I want to refer briefly to the problem of capital movements. This is also a new phenomenon which we find in the world today, i.e. that vast quantities of short-term capital move from one country to another for the slightest reason— perhaps a small difference in interest rates, perhaps a fear that a country may devalue or perhaps an expectation that another country will revalue. Then there is a movement of powerful funds throughout the world, which has a disrupting effect on rates of exchange. It is not easy to say where all that money comes from. It is calculated that today there is an amount of not less than 250 billion dollars hanging over the globe like a cloud and drifting from one country to another. It is fed by these dollars which I mentioned. It is being fed by the vast number of multi-national companies, and it is being fed by the money of oil magnates as well as the money of individual speculators. The result is that great control has to be exercised throughout the world today over the movement of money. All countries have it. Switzerland, Germany and France have it—unnatural control which is not good for the world. We shall have to find a method, but the answer has not yet been found. A plan will have to be devised for this tremendous quantity of money which is drifting throughout the world. If they suspect that things are not going well with a currency, such as that of Britain during the first half of last year, then they leave that country and force that country into devaluation. If they think they can make a profit, as in Germany or in Japan, they all go to those countries and exert pressure on those currencies to force them to revalue and in that way make a speculative profit. This is a tremendous danger for which no answer has yet been found.

The sixth one I want to mention is the problem of the numéraire. What should the nucleus of the world’s money system really be? What should the unit be around which the entire system revolves; what should the actual criterion of all currencies be? What should the actual unit of account be? The world is realizing that this can no longer be the dollar. There is no longer confidence in the dollar. There are too many dollars; too many of them are being created. The dollar is the creation of one country’s government. The dollar cannot play that role. It can in fact play a role in future, but it can no longer fulfil that role of the numéraire, of forming the central point of the world’s money systems, and sterling is in even less of a position to fulfil that role. What should the numéraire be, the unit of account, the criterion, the nucleus of the world’s monetary systems? Gold is not accepted either. I do not want to go into the entire matter of gold; but gold is not accepted either, and now the world has in principle arrived at the acceptance of a new idea, viz. that of the Special Drawing Rights, that the SDRs should become the fulcrum, the basis, the centre, the nucleus of the world system, and that all monetary systems should express their value, their parity, as it were, in terms of SDRs. We already observe in the documents of the International Monetary Fund that, whereas they previously expressed the amounts paid into the Fund in dollars or in other monetary units, they are today stating that a country owes them so many SDRs. Everything is in terms of the SDRs. We do not find this system of SDRs so easy to accept. These SDRs are also a human creation. They are nothing but book entries; it is all on paper. It is not even paper money any more; it is simply paper. We once said that we were prepared to accept SDRs to a certain extent, provided they were linked to gold, were ties, provided they did not take the place of gold, but were supplementary to gold and provided they were linked to gold, were based on gold. But I am afraid that the world is, in the first place, forcing upon us a monetary system which is young and untried, a human creation the consequences of which we are not yet able to calculate. It is paper money, which has to become the basis of all calculations. In addition there is a second danger as well. This is the danger that they are saying that the new SDRs should be cut loose from gold. Previously they were anchored to gold, but now they should be cut loose even from gold. There they are in isolation, floating in the air. They have no intrinsic value whatsoever. There is nothing concrete about them. They have no reality. They are pieces of paper which cannot impart any confidence. They are without gold. They are not paper gold, and if one asks these people what an SDR is, then they tell you an SDR is an SDR. Another question which is bound up with this and is just as dangerous, is the idea we have been hearing expressed that the dollar debts—in other words the 60 or 80 billion dollars which are owed on the short term—should be paid by the application of SDRs. SDRs should be issued in sufficient quantities and should be given in the place of dollars to those to whom the dollars are owed. I think something like this is absolutely unfair. It is harmful if one has to make payment by means of paper money. The dollar does in fact have a value in the sense that it is the currency of the country, of a powerful, economically strong country. The SDR must now take the place of the dollar. In addition there is also the danger that the SDR which will now be issued to us all, is the property of the world community and therefore entails that all of us, the international community, have to pay America’s debts. I think that that is an extremely unfair idea.

There is in addition another equally dangerous idea. Recently we have heard frequently of assistance to developing countries in Africa, Asia, South America and elsewhere. Tremendous assistance is being rendered to them through the World Bank and the International Development Association (IDA), but it is not enough. The developing countries complain that they are not receiving enough assistance from the developed countries. The bright idea has now been advanced that we should create SDRs and distribute these to the developing countries. They can then come to us, to Germany, France and other countries with those SDRs, that paper money, to pay with paper money and no longer in dollars. I maintain that this is an extremely dangerous idea. I think that people who harbour ideas such as these do not realize that they are endangering the SDR, that they do not realize that they are undermining confidence in the SDR, for the SDR is still young and untried. They are making demands on it and placing a burden on it which it is not capable of bearing. They are even destroying it at this very moment in that they want to use it as a stopgap, for this represents all kinds of problems to the world for which they do not have a practical solution. They now want to try to solve the problems of the world with a “book entry in Washington”, as the Governor of Malaysia said.

I want to say a few words about gold. I think the gold factor remains one of the greatest factors in the modern monetary world, and particularly as far as recent weeks and months are concerned when gold proved that it would not allow itself to be suppressed and that it had a powerful life of its own. In spite of the fact that big nations want to keep it down, it is so strong that it always rises again. An American financial leader said the other day that the price of gold meant less to him than the price of a hamburger. I want to say that that assertion that they are less interested in the price of gold than in the price of hamburgers travelled like a shock through the Western world and not only through this country, for it revealed the indifference of certain people to this tremendous problem of gold and the monetary system in that it demonstrated the cynicism of certain people. Fortunately it is a minority which regard the problems of the world with such a measure of cynicism.

In the time I still have at my disposal I do not want to quote all the arguments we Have advanced in order to accord gold its position and to cause it to retain its position and to cause its price in the monetary system of the world to be increased. I have already done so sufficiently both here and abroad. I should like to repeat here that I said a few years ago that we would already have said our say in regard to the gold price, as the world is now doing, but that what would happen in the meantime would be that events would overtake those theories. That is consequently what happened. In spite of all the theories and the attempts by certain countries in the world to demonetise, disparage and keep gold down, the power of the economy has caused gold to win through and has once again proved the strength of gold. Events overtook the theories.

While I am dealing with the question of gold, I want to discuss briefly the recent increase in the price of gold, the reasons for and the result of that increase. In the first place I want to say that the tremendous increases we have recently seen in the price of gold were not something altogether unnatural. In reply to the question some are asking, i.e. whether the price will not fall back again to a considerable extent, I say that these increases are not altogether unnatural, for just consider how price increases have occurred in all minerals, metals and commodities since 1934—al-almost 40 years ago—in a natural, normal manner. I am referring to the purely normal increases. The price of copper increased 20 times during this period of 40 years, and that of platinum eight times, while the prices of most minerals have increased three, four, or fivefold owing to the depreciation of money. These were natural increases. If gold had been free—it has never been free—it would also have shown those natural price increases and the price today would perhaps have been even higher. Gold was recently freed in Japan, and Japanese citizens are now purchasing gold. They will still purchase far more. In America there are movements afoot by Congress, as you know, to allow the purchase of gold. This may also become a reality. If gold is made a free commodity for the public, free in the sense that it is no longer bound by a two-tier system which has become unrealistic, the natural course of gold sales will entail that its price is maintained or boosted even further.

The second reason for the increase in the price of gold is the lack of confidence in the dollar. I have already mentioned that the dollar is no longer accepted as the basis, the nucleus, the most important currency in the world, and that it is being rejected. Attendant upon that is the tremendous uncertainty in the monetary system of the world. The difficult problems confronting the world, which I have sketched only superficially, the divergent opinions, the slender chance that a solution will soon be found—everywhere there is uncertainty and the people are looking fearfully to the future—all these things entail a flight to gold. There is always a flight to gold when there is uncertainty concerning currencies. When paper money is introduced, people fall back on gold.

This question of floating monetary units which I mentioned also entails a measure of uncertainty and instability. The public wants certainty. These floating currencies are also a factor in the rise in the gold price. Then there is talk of the SDRs which were allegedly to become the centre of the world’s monetary system. They were then to be used for all the purposes which I mentioned, and more. Confidence in the SDRs has already been shaken. People think that once they have demonetized gold and have ousted gold from the world monetary system, it will be all over with gold. The facts of past events have already proved that this is not true. I want to allege that if they should oust or demonetize gold, the price of gold will increase even further because the people will have even less confidence in the world monetary system. This will happen because the element of gold has been removed from it. Gold is the only element in which man really has confidence. I think it is absolutely nonsensical and incomprehensible, in the times in which we are living, to devise a world monetary system, which rejects what has shown itself to be the element in which mankind still has confidence. If they discard it from the future world system it will be to the benefit of gold and to the detriment of that system. People will have no confidence in that system. When monetary values diminish, people look for assets, tangible assets. Gold is one of the commodities to which people in all countries are turning because the values of their monetary systems are diminishing all the time. In this regard I refer to the oil-producing countries which recently increased their oil prices. Hon. members have all heard about the energy crisis in America; members have heard of the increasing use of petrol in America which will in future assume fantastic proportions. For that America has to pay in dollars, and ever more dollars. And these gold sheiks who are saddled with phenomenal quantities of dollars, do not know what to do with those dollars. They are buying gold and will in future, with the increasing number of dollars, buy an increasing amount of gold. What are the consequences of this rise in the price of gold? Mr. Faulkner, the Under Secretary of the American Treasury entrusted with international monetary problems, said: No one can include gold in the world monetary system any more, for look at how its price is rising. He said that gold could therefore not form the basis. But Mr. Faulkner’s reasoning is faulty. Why is the price of gold soaring? It is because the value of money and paper money is diminishing. The fault lies not so much in gold, but in the monetary systems. The people are buying gold because they are afraid of paper money. If they could only succeed for once in remedying their monetary systems, things would be different.

There is constant talk of speculators; it is being said that it is the speculators who are causing the price to soar to such an extent. Yes, there is an element of speculation in this. But it is not so much the speculators as those people who are seeking security for their money. It is the people of the big multi-national companies and others who are afraid of paper money. It is not their fault if they are looking for safe investment if investment in other monetary units is unsafe.

Today we find it to be an unfortunate fact that gold, as an international monetary basis, has been immobilized. Countries do not want to pay their foreign debts in gold. Even a country such as Italy, which is antigold, was one of the first to say, when it had to make a foreign payment in gold: “No, I am not going to pay in gold.” None of the countries want to relinquish their gold, particularly not at a price of 42 dollars. Those people fixed the official price of gold at 42 dollars, but when they have to make payment to other countries, they say that they are not going to sell their gold at 42 dollars. What confidence should one not have in a monetary system if one fixes its official price but is not prepared to trade gold at that price? The disadvantage is now that in the vaults of all the gold-owning countries the gold is lying quite immobile. It is not moving; it is not being used internationally for the payment of debts. Nobody wants to relinquish its gold at 42 dollars. Surely this indicates that the gold price is unrealistic and of an ephemeral nature. It is Gresham’s Law which is operating here, and not the weakness of gold. Gresham’s Law states that weak money ousts good money. It means that when weak and good currencies are circulating, we pay with the weak currency and hold back the gold currency. That is Gresham’s Law. The same applies in the international world. When one has to effect payments in the international sphere, one does so with weak currency and keeps back one’s best currency, gold. This is further proof that the world believes in gold. The result of this process has been that the world has once again turned its attention to gold. This has been most noticeable recently, particularly during the past few months. People who did not want to talk or even think about gold, are beginning to be interested in and to talk about it. It is again becoming the subject of discussion at international congresses. Once again gold is beginning to attract attention. I have every confidence that in the international monetary world as well gold will again assume its position although, as I have said, it is not necessary for us that this should happen. I believe that the free market price of gold will be sufficient for us. It is for the sake of the world system and the confidence in it, that we are advocating that gold should be incorporated into it.

Now, in conclusion, what are the consequences for South Africa? South Africa’s foreign balance of payments has improved tremendously. On current account we have a large income, more than we expected in the price of gold. We should not, as that hon. friend did, talk about a piece of good fortune which befell us. The hon. member referred to a “windfall” which came our way. There was farsightedness on the part of this Government. [Interjection.] Let me prove this. Several years ago this Government commenced a programme of assistance to marginal mines, mines which were making very little or no profit. Why did the Government assist them? Because it believed that the price of gold was going to rise and that those mines could then become economic again. Do you know what happened? An amount of approximately R12 million was spent in pumping water out. In loans to mines we spent slightly more than R70 million. Do you know what we have gained in the form of additional gold from those mines? More than R500 million in the last few months! My hon. friends must not say that this is a “windfall”. Our current account as well as our capital account has been improved. People have been able to invest more capital in gold mines than in other directions. There was a complete improvement in our balance of payments. I believe that in future South Africa will have to rely more and more on its ores, and I hope more on its processed ores. I know that there will be a longer life for our mines because we are now exploiting low-grade ores.

Secondly, it has brought greater liquidity in the economy. Money is in abundant supply. You can get money everywhere. It is not a time now in which money is tight. Thirdly, it has entailed that we have a basis for further growth. The additional profits which the gold mines are making and the additional money which is coming in as a result of taxation, are all factors which will play a role in our future growth. Fourthly, it has of course brought with it more taxes, that source of revenue which my friends would so much like to lay their hands on in order to distribute. Either we must now use less of our reserves for financing our Budget, or we can do something else with it to the benefit of the country. We shall subsequently reach a decision in this regard, after we have pondered the matter. Fifthly, we adhere to the idea which we have stated a few times already, namely that if this increase in the price of gold on the free market should result in an increase in the official price of gold, we will be prepared to set aside part of our book profits, our reserves, for assistance to developing countries, countries which we shall select. We are still prepared to do this.

Lastly the strengthening of the position of gold has contributed to the rand being what it is today—one of the strongest currencies in the world. In spite of inflation, the rand remains one of the strongest currencies in the world. I am by no means optimistic about the development of the monetary position in the world. I do not expect that a plan will be submitted for the solution of the monetary problems of the world when the IMF meets in September at Nairobi. These problems are too complicated and the opinions too divergent. I am pessimistic about the future in that respect, i.e. the basis on which the problem is now being approached. But, Sir, I am optimistic in regard to our own position. I am optimistic in regard to South Africa. I am optimistic in regard to our gold. Gold will continue to glitter and will continue to be to the benefit of our country. That is one of the reasons I want to mention, together with all the other reasons, why I believe in a fine future for my fatherland. I believe there is a great future for gold, and that there is a golden future for South Africa.

Motion agreed to.

Bill read a Third Time.

Mr. Chairman, I move as an amendment—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 79:

Mr. Chairman, I move as an amendment—

Amendment agreed to.

Clause, as amended, agreed to.

Clause 120:

Mr. Chairman, I move as an amendment—

Amendment agreed to.

Clause, as amended, agreed to.

House Resumed:

Bill reported with amendments. Report Stage taken without debate. Bill read a Third Time.

Mr. Speaker, when the debate on this Bill was adjourned on Wednesday evening, I was discussing the strike clause. I pointed out that this Bill would not be applicable to Bantu doing farm labour; that it would not be applicable to Bantu serving in private homes; that it would not be applicable to Bantu in the employ of the Government or to Bantu in the employ of the Provincial Administrations. I also mentioned that it would not be applicable to Bantu in the employ of the gold-1973-06-11 and coal-mining industries either. I tried to stress that the provisions of this Bill were not as wide as many people wanted to make out. But apart from the scope of this measure, I think that it is also important just to repeat which Bantu may not strike in terms of the provisions of this Bill. It is important to take cognizance of the fact that Bantu performing essential services may not strike in terms of this measure. In the second place, Bantu serving in industries supplying perishable foodstuffs may not strike either. It is also essential to take cognizance of the fact that it would be illegal for Bantu to strike in a case where a wage determination had been valid for a period of less than a year. We also welcome the idea which the hon. the Minister mentioned here, namely that he would introduce an amendment in the Committee Stage in terms of which Bantu would not be allowed to strike during the term of an agreement under the Industrial Conciliation Act, should such an agreement exist. Then, too, it is very important to take cognizance of that fact that a strike may not take place when a dispute is referred to a wage board. It is also important to take cognizance of the fact that the necessary machinery is now being created to refer a dispute, when declared, to a liaison committee, a works committee or a co-ordinating committee to see whether the dispute cannot be settled. Provision is also being made in this measure for a dispute, if declared, to be referred by the regional committee or the Central Labour Board to a wage board for settlement. Sir, the right to strike is a precious possession in the hands of any responsible employee, but I think that what we should stress in this regard is that that right must not be abused. In this connection I want to address a very serious plea to the Bantu employees of South Africa to remember that this right to strike which they are now being given, will not give them the right to organize processions or street demonstrations. This right to strike may only be exercised when a dispute arises between employer and employee. Sir, I believe that we already have responsible Bantu employees in South Africa and that they will elect responsible people to represent them on these committees. I think that we should stress this aspect here.

Sir, since this Bill provides for the right for the Bantu to strike under certain circumstances, I want to address a plea to the hon. the Minister for very strict action to be taken against militant elements and agitators who have nothing to do with the dispute in question and who try to incite the Bantu employees into organizing processions as a means of enforcing rights falling outside the scope of the Act. Sir, we want to hope and trust that this Act will be administered in the spirit of its new title, in other words to provide for good Bantu labour relations in South Africa. We want to thank the hon. the Minister for this Bill.

Sir, in the late hours of this particular Session, I, too, should like to make at least a few remarks on this Bill. As my colleague, the hon. member for Yeoville, has already indicated, we support this legislation, and we welcome it as we regard it as a major improvement on what exists at present. For the first time in years we have here a recognition on the part of the Government of the reality of what is happening in industry in South Africa. We have here a measure where, for the first time, the Government is pushing its ostrich policy somewhat to the background. Sir, in this particular case we are indeed not in a position to give guidance from the front, but we think that in this case we have once again pushed the Government in the right direction from behind.

Sir, what we are dealing with here is, of course, an amending measure, but it is one effecting radical amendments to the existing legislation. In fact, here we have a fundamental change which is reflected not only in the philosophy exposed here, but, as the hon. member has just said, even in the amendment of the title of the legislation; it gives us an indication of the radical amendment which is being effected here. We accept that the Government probably wants to act speedily in these circumstances and that for that reason this change is being effected by means of an amending measure. But, Sir, this is important legislation which will be used by many people, and in its present form one will, of course, have to read two Acts together and next to each other; this will complicate matters and therefore I should like to suggest to the hon. the Minister that he should, at the first possible opportunity, submit to us a consolidating measure in which all the provisions concerned in this regard, will be contained.

Sir, this legislation is actually concerned with the relationship between employers and employees; between managements on the one hand and workers on the other hand. What we are really dealing with here is something which, to my mind, may be termed the labour right. This labour right was probably laid down in legislation for the first time when the English placed their Trades and Disputes Act on the Statute Book at the beginning of this century. I think we should point out that in the course of this century, a set of rights has developed as far as labourers are concerned. I think it is universally accepted that there are mainly three rights which labourers ought to have. The first is the right to unite; in other words, to organize, and to do it at a national level as well. In this legislation we have before us, this right is, of course, not being granted to the Black workers. The whole basis here is that of decentralization. They are being granted the right to unite on a local basis, but they are not being granted the right to organize on a national basis. The second right which is universally accepted, is the right of collective bargaining. To a certain extent this right is being granted in this legislation, but the whole idea in this legislation is once again the concept of fragmentation. Although the idea of bargaining is indeed being embodied in this measure, it is once again, by way of the procedure we are discussing now, being done in a fragmentary manner. The third general right which is universally accepted, is the right to strike. This is being provided for in this legislation, although the right to strike is being made subject to certain strict reservations.

Sir, seen against that sort of background, which is commonly accepted, I just want to tell you why, to my mind, this legislation is an improvement on the present legislation. Firstly, I think it is an improvement because the Government accepts here that Black workers have the right to act on their own behalf; to take part in the bargaining activity themselves. It appears as though there must always be a measure of industrial disquiet before these measures are taken. I think it may be accepted that it was the strikes of 1922, which led to the loss of 250 lives and during which more than 600 people were injured, which gave rise to the introduction and passing of the Industrial Conciliation Act; and I think one may accept that it was the strikes by Black workers earlier this year which gave rise to this amending Bill we are discussing at present. Up to now the Government’s whole line of thought was that the Black worker should be eliminated from the bargaining procedure. The Government’s approach was one of paternalism. The attitude was that the authorities knew better, that the authorities determined what was good and what was not so good for the Black workers. The myth which existed, was that the Black workers could have no share in the determination of their own destiny in this industrial context. Here we now have for the first time the tremendous change in the Government’s attitude, and now the Government accepts that the Black man can act on his own behalf in the industrial context; and, of course, this had to happen, for at present 80% of the workers in South Africa are Black, and they are not being employed at low levels only. They are moving higher and higher in the hierarchy of jobs. In the liaison committees for which provision is being made in this Bill, and the works committees which are also, being established, we see that the machinery is now being created for the first time for giving the Black workers a direct share in consultations on their own working conditions, and so forth. We regard it as a step in the right direction.

The second improvement we see in this Bill, is that the communication procedures are being improved and facilitated. If a communication gap exists in the labour context, it immediately results in confused relations between employers and employees and then problems follow. Managements must, of course, be aware of any degree of dissatisfaction amongst their workers as soon as it arises. If the communication procedures are good and adequate, then one is able to act more readily. Otherwise, if there is a gap, it tends to bring about its own impetus for further conflict. Therefore we regard this as another improvement.

†The third advantage of this legislation I want to note is the fact that in this measure before us the punitive aspects are reduced to a minimum. There is a minimum of compulsion. I think this is important because what has been shown in these recent strikes is that there is no purpose in having punitive measures in legislation unless you are in a position to enforce them. Quite cleary the Government during these recent strikes, and very wisely, did not take action against the Black workers who went on strike, because had they done so it would have aggravated a very serious situation even further.

A fourth advantage of this legislation is that now for the first time provision is made for strike action by Black workers. Now, I do not think one must take the point of view that strikes are necessarily a good thing because obviously they are not. Strikes often bring in their wake all sorts of unfortunate repercussions. Nor can I deal with the etiology of strikes as such, except to make this point that they serve a very useful psychological purpose because they provide a release mechanism. Workers who are contented—this has been proved by research—never go on strike, but strike action is usually as the result of a situation that has developed and which workers find intolerable, and the strike represents their only form of escaping from it. As a Black leader said so significantly recently, expressing it in his own way, during the strikes in Durban: “We are not on strike. Previously we spoke but they did not listen; now we have stopped work so that they can see.” I think that from this point of view it illustrates what I have in mind. The irony of the situation of course is that whenever we talked about the possibility and the desirability of Black trade unions the chorus that came from the other side was: “Do you want them to strike?” Now we have the Government itself introducing legislation which legalizes the very thing that they have been accusing us of.

Three years ago you said that to me.

I think a fifth advantage of this legislation is that it will speed up negotiations. It means that one can resolve disputes before the parties involved take up entrenched positions. Once you have a time gap, a certain rigidity begins to set in and the parties involved take up fixed position and meaningful bargaining becomes difficult. But similarly this legislation provides for a cooling off period, and we feel that that also is necessary because it demarcates clearly the steps which must be followed in any particular dispute. Obviously the impetuous kind of quick strike that one so often encounters is disadvantageous because once they have struck you get a possible loss of face if they retreat from their previous position. Here we must remember though that we are not dealing with a highly sophisticated, unionised work force. Here we are dealing with Black people who in general might be less disciplined than perhaps some of their White counterparts, who have had more experience in this field. But I think nevertheless that the necessity for these provisions here are self-evident.

Having indicated all the advantages of this legislation, I think it is proper too for one to draw attention to the weaknesses. We have here, as I have already indicated, as far as the Government is concerned, a major departure from the position they have previously taken up. Previously, whenever we talked about industrial representation, the Minister said: “No, they could not have industrial representation of consequence here; but they can have trade unions in the homelands,” and that sort of ideological rubbish. Obviously we are pleased that the Government has departed from this point of view. But in this legislation we also see the death-knell of apartheid. This is the final nail in the coffin of apartheid.

Now the weakness as we see it is that this legislation is firstly, cumbersome. It provides for a plethora of committees and a whole network of provisions which must be followed, and I think in time to come the Government will find it necessary to simplify the procedures. Otherwise I think we run the danger of getting lost in an absolute bureaucratic maze.

I think a second weakness in this legislation is that it treats all Black workers as one group, and this is unsound because in our work force of Black people there are some highly sophisticated workers, workers with university training, and then of course we have masses of migratory workers who are often illiterate and who certainly have not reached any sort of industrial sophistication. You cannot group all these workers into one category and put them under one umbrella. You do not do it with the White workers because it will not work and you cannot do it with the Black workers because it will not work either.

A third disadvantage and weakness of this legislation is that it perpetuates the two-stream idea. You now have one set of unions that are mixed and that cater for Whites, Indians and Coloureds, and you have a completely different set of procedures for workers who are Black. The Black workers will see this immediately as discrimination. Already some of the Black leaders have said that this is stop-gap legislation and that they cannot accept it in the long term. My fear is that if you persevere with this two-stream approach, you will perpetuate conflict in the industrial sphere. It also means that once you have two groups, they begin to bargain from conflicting positions. We have had ample experience of this sort of thing. In Zambia, for example, the Black workers were all in one union and the Whites were all in a completely different set of unions. All that happened in practice was that these two unions were fighting one another all the time and management was completely lost between the two.

I think a fourth weakness in this legislation is that it dilutes the power of existing unions. The existing unions are now becoming completely unrepresentative of our work force. In some cases they represent no more than 10% of the actual workers in that particular group. I think that under this procedure the bargaining power of the existing trade unions will wither away. I find this surprising because we remember well that this Government rode to power on the backs of the trade unions, but it now seems to me that they are abandoning these trade unions and that they are destroying the very power with which they were vested.

In the fifth instance I think that although this is perhaps helpful at this stage, we shall have to think in terms of more meaningful representation for Black workers. They will see this legislation as discrimination against them and it will lead to further agitation. It will lead to a polarization between Black workers and other groups of workers and it will emphasize their conflicting requirements. If there is industrial strife of this kind, it will inevitably lead to racial strife and that is something which we must avoid.

At every conceivable opportunity this Government tells us that the Industrial Conciliation Act is one of the soundest pieces of legislation in the whole world. If that were so—I happen to accept that it is a good piece of legislation—why must the bulk of your work force then be excluded from the provisions of that sound piece of legislation?

The argument which is raised from time to time is that the Government cannot accept the formation of Black unions because they will be subject to outside agitation. The counter-question, of course, is: What is the Government going to do if Black workers do form unions? They have unions at the moment. There are a number in existence. I see that one gentleman now wants to organize all the Black workers in the engineering industry—there are 250 000 Black workers in that industry—to form a union. What is the Government going to do about it? Can they stop it? You might not give them recognition but they will be there; they will exist. If they then decide that they are going to strike, what will the Government do about that? Are they gooing to lock them up in their thousands if they have a Black union and they do strike? I think we must anticipate a situation that will become extremely dangerous and I think we must work in the direction of more meaningful industrial representation as soon as we possibly can.

There is nothing so unusual about the idea of Black unions. This Government appointed the Botha Commission 20 years ago. That commission unanimously recommended that there should be Black unions. I admit that they disagreed as to how it should be done. Half of them said there should be mixed unions and the other half of the commission advocated that there should be separate unions. However, the principle of Black unions or of the unionization of Black workers was accepted by the Government’s own commission of inquiry which they appointed 20 years ago. In whatever way you look at it, this is the direction in which we shall have to work.

I want to conclude by saying that we support this legislation because we see that it is an improvement on what we have at the present time. We believe it is still entirely inadequate. We think that as far as the Government is concerned they are here co-operating with the inevitable and we think that in time to come we shall have to be far more realistic about this whole situation than is being done in this present piece of legislation.

The hon. the Minister of Labour must be a very worried man this morning, because both of the Opposition speakers who have so far participated in the debate spoke in fairly glowing terms of this legislation and the benefits it will bring to South Africa. This must be a feather in the cap of the hon. the Minister. I am astonished that they did not go so far as to thank the hon. the Minister, but we know them and we know that they are sometimes lacking in good manners.

You are just a sourmouth.

I would rather be a sour-mouth than be a Bands. The hon. member for Hillbrow devoted a fairly large part of his speech to their reasons for supporting this legislation, but in his arguments in support of the legislation he followed basically the same course as did the hon. member for Yeoville, who participated in this debate last week. The hon. member for Yeoville stated specifically and categorically that, as far as they were concerned, this legislation did not go far enough. Like the hon. member for Yeoville, the hon. member for Hillbrow too had something to say about non-White trade unions this morning. The Government’s attitude to the question of non-White trade unions has been discussed very thoroughly from time to time, and during this session as well. What is of importance to us and to our workers outside is that when the Opposition speak of trade unions for non-Whites here, they are not alone in that plea. One must take note of those with whom they run. One has in mind, for instance, a person such as Canon Collins, who asks trade unions to organize the South African non-Whites. Then one comes to the real reason why these hon. members are advocating trade unions for non-Whites. This gentleman says that if the British trade unions were to set aside money and staff, he could establish well-organized unions among the non-White labour forces in South Africa and by so doing bring a powerful weapon into being against race discrimination. That is what it is all about. They want to break down the existing order that has always been acceptable to South Africa. For that reason the National Party and the National Party Government will never be able to consider this matter in the same light as the United Party does. There will, therefore, never be a basis on which these two parties can arrive at a settlement in regard to this matter.

I now want to mention another interesting matter. When the hon. member for Hillbrow dealt with, as he called them, the weaknesses in the Bill, he said that there was a danger inherent in it which could sound the death-knell of apartheid. He expressed his fear that this Bill would create the opportunity to destroy apartheid. I do not want to deal with this point now, except to say that it appears to me as though the Opposition are beginning to see the light when they say that something may be done to make the traditional, accepted policy of separate development acceptable to them and express the fear that it may possibly be destroyed now.

He also mentioned another matter which was the same as that which they raised at the start of the session. The hon. member for Yeoville also mentioned it the other day. It is that they say that they divide Bantu labour into three groups and that, as far as our labour legislation is concerned, one must approach the matter on that basis. There is a sophisticated labour group, a lower one and then the people who are right at the bottom. It is not necessary for us to debate this matter this morning. In an earlier debate the hon. the Minister dealt most thoroughly with the Opposition as far as this particular matter was concerned. If they come along here with the story that these works committees and liaison committees will mean the fragmentation of our labour forces, I want to ask them: Where is there greater fragmentation, fragmentation that is going to cause greater friction, than precisely this arbitrary division of people into various categories? From a practical point of view I want to ask them where one is going to draw the line when one begins to classify people and categorize them.

I say that we must heartily congratulate the hon. the Minister of Labour on this legislation which he has introduced in this House. From the nature of the case it is legislation that is of importance to this country of ours. Any labour legislation is important because it deals with the fortunes of people who make their contribution to the progress, the peace and the quiet of South Africa in some form or another, particularly to progress in the economic sphere. As far as the peace and quiet which are so necessary for our country are concerned, I want to say that we as a National Government have an outstanding record, which is also due to the outstanding work which the Minister of Labour is doing in this connection. So much so that in 1972 we only had six strikes in which 354 Whites and eight coloured people were involved, and only 16 strikes affecting Bantu workers, in which 3 374 people were involved. This is the record to which this Government can lay claim.

When legislation is introduced, legislation which deals with labour matters, one has to consider that legislation carefully— quite correctly so—and one must see whether it complies with the requirements made of good labour legislation; this in contrast to the attitude of the Opposition which continues to approach these matters from one angle only. They consider this legislation—whether it is labour legislation or whatever it may be, is not relevant—from the point of view of the party-political advantage they can derive from it. We must accept the fact that they will present this legislation outside as it suits them as a United Party to do so. I do not have the time now to go into that aspect of the matter, but the hon. member for Yeoville in his speech the other day gave a hint of this when he referred to the strike clause. He made much of indicating that they had never been in favour of strikes. I can just imagine what will happen at a future election. A member like the hon. member for Durban Point, who is known for this sort of thing, and others on that side, will go from platform to platform and tell the people of South Africa what a “Kafferboetie” Government this is—they have even given the Bantu the right to strike! This has always been the attitude of the United Party in regard to legislation and when the welfare and the survival of the country has been at stake.

In contrast to this the National Government, a strong government, has always made the test of its legislation whether that legislation is in the best interests of South Africa and the people of South Africa. When it has introduced labour legislation, this Government has not simply passed that legislation in an arbitrary fashion. When this Government introduces legislation in this House, it does so with certain predetermined aims. This legislation complies with those requirements that have been set. It is a multi-purpose Bill which makes provision for certain matters which we need not deal with now. The crux of the matter is, in the first place, that as a result of the machinery that is being set up, this legislation will contribute towards maintaining industrial peace in South Africa. But the Government does not only want to bring about industrial peace; it also wants to bring about industrial peace with the help of this legislation by presenting this Bill within the framework of the accepted policy of multi-nationalism in South Africa. Because this is so, we make no apology for it.

The hon. member for Hillbrow may laugh. I want to issue this challenge: That we discuss this point in this House again when what is envisaged by this legislation has been proved in practice. Just as the value of every piece of legislation in the labour sphere that this Government has ever introduced into this House, has been proved in practice, so too will this legislation prove in practice the tremendous potential it holds for maintaining industrial peace in South Africa within the framework of the accepted policy of multi-nationalism.

How do you associate it with multi-nationalism?

We can always debate the point that the hon. member is making now, at a later stage. There will not be time to do so this morning. The Government wants to maintain industrial peace by strengthening the correct employer/employee relationship.

I want to give my full support to this Bill because the channels which these works committees and liaison committees provide will do a great deal in this connection. Clear channels are being created in this Bill along which the employer on the one hand and the employee on the other can find each other. They can only contribute towards maintaining industrial peace, and that is what we are striving for. But this Bill is also aimed at protecting the interests of the Bantu workers in this country. One need make no apology in this regard either. The Bantu workers in this country have over the years made a very important contribution towards the economic growth of and progress in South Africa. Nobody has ever denied that. Because channels are now being created for them to enable them to bargain in their own interests by another means as well, their interests can be protected very well.

Inasmuch as there is not much difference of opinion in regard to the principle of the Bill, it will be fitting if on this occasion we not only pay tribute to the particular Minister and his officials or having applied our industrial legislation with great tac, diplomacy and success over the years—and this year particularly has been a difficult year—but also express our thanks to them in that in the process they have been prepared to go out of their way in the interests of South Africa. As this legislation will be placed on the Statute Book soon, I think that it is fitting for us in advance to wish them success with its implementation. I have pleasure therefore in supporting the hon. the Minister in having introduced this Bill.

Mr. Speaker, I do not think that the hon. member who has just sat down, needs to be so concerned about what he calls the “uitbuiting van hierdie aan eleentheid deur die Opposisie”, because I do not see the right to strike as the most vital factor of this Bill. I think the question of striking is already something in the past tense. The hon. the Minister and the Government have seen what good it has done them to hold back from the Black people even the opportunity to negotiate and the chance to make satisfactory representations with regard to the problems under which they suffered so long, problems relating to the improvement in their conditions, their rate of pay and opportunities to play their part in the productive life of this country.

There is no question, of course, that a tremendous façade of the Government side has been broken down completely by a series of factual events. So it was necessary to provide for the opportunity to strike, not as something to be highlighted and welcomed, as the hon. member for Hillbrow has said, but rather as an indication that some bargaining and negotiating capacity city has at last been conceded by the hon. the Minister and his Government in the realization of the fact that 80% of the labour force in this country consists of Bantu people, who hitherto have been completely excluded, in terms of the Industrial Conciliation Act, from any opportunity of making representations with regard to their own affairs. To me, this Bill is creating the machinery for collective bargaining in a very limited and somewhat tortuous manner. Although it accords with the Industrial Conciliation Act, it does not provide the elbow room, or the manoeuvring room, for the normal procedure of conciliation boards, in which the worker is represented at the same table as the employer.

The Bill, I must say, does make certain provisions with regard to the opportunity of the worker himself per se, being introduced at discussions of a conciliation board. But like every other provision of this particular Bill, this concession is based entirely on a permissive basis. Even the possibility of some pressure from the side of officialdom with regard to the establishment of works committees has also been removed, in the light, as the hon. the Minister has said, of representations which have been made, even though—I am prepared to accept this—those representations were made by employers. But that does not in any way remove the responsibility from the shoulders of the hon. the Minister with regard to his approach to the Bill. His duty is to listen to representations and to use his discretion in a wise manner in order to establish what is the best procedure to employ. But throughout this Bill, everything is provided on a completely permissive basis.

For example, works committees may be established; regional committees may be established; regional committees may invite members to partake with them in discussions at conciliation board meetings. All these provisions are of a permissive nature. What is being relied on, mainly, is the goodwill and sympathy, not only of the employer, but also of Government officialdom, more particularly of Government policy. That is perhaps the crux of the whole of this legislation. Of course, we welcome every opportunity given, not particularly because it is a concession in any way, but because it is vitally important for and in the interest of future race relations, peace and harmony in this country that the whole question of labour should be recognized as such. It is not so much the fact that it is Black labour that has hitherto not been sufficiently represented, but the fact that it is labour in the proper and real sense of the term with which we are dealing. Here the Bill is making, as I have said, certain tortuous steps towards recognizing and accepting that fact, and to a great extent breaking down the crust of prejudice which has grown over the years. There is no pleading here for a specific section, but for labour to be recognized as such. In doing that, we are obliged to take certain steps from a legislative point of view in order to make that realization a more factual one and something that is workable. As I say, it will need tremendous sympathy and understanding. I hope that that will be forthcoming, because there is very little else in the Bill, with its permissive powers that can bring about anything, unless it is encouraged and receives the impetus of an understanding outlook on the part both of the Government and the employer.

In this sense I think the Bill does present a challenge to the employer of labour in this country, as well as to representatives of trade unions, to ensure that the machinery will not prove to be as cumbersome or as unwieldy as it appears to be, and that it will not nullify the objective which is sought. Sincerity and honesty of purpose should be the motivation in everything that will be done in endeavouring to make the provisions of this legislation effective and workable.

As has been pointed out, some of the provisions have already existed for a long time. Provision for works committees has existed since, I think, 1952 or 1953, and look what happened. We found ourselves recently almost paralyzed, with something like 18 works committees established, and this after legislation to this end had been in existence for over 20 years. This upheaval did not come about through any instigation or incitement. It is all very well to dismiss it as such, but that was perhaps done in order to save the red faces of the Government itself, and its policy. In fact this upheaval resulted from the sheer agony of realization on the part of the worker. That is how the Government must view this whole particular issue.

Even wage board determinations are only recommendations to the hon. the Minister which he can accept or reject, or in respect of which he can call for further investigation. In many senses it is in his hands entirely to ensure that he is up to date with regard to the economic situation in the country. He can assist in regulating satisfactory wage determinations, which in any event take place only at his own request. That is how the Wage Act works, and that is where a great responsibility rests upon the Government. I am not, however, prepared in any way to minimize the culpability of the employer in this respect, and therefore I believe that, even with the latest determinations which the hon. the Minister has advertised in the Gazette and which probably by this time have already been approved, where the minimum has been raised by as much as 34% to 52% in the case of various classes of workers, these adjustments have not yet resulted in what can be regarded as a satisfactory minimum livable wage. The responsibility therefore still rests with the employers, who should perhaps be encouraged in this respect by the officials of the Department of Labour, who have a better knowledge and a better appreciation of the position, to ensure that higher wages than those laid down as a minimum are paid. It has always been said that minimums mean nothing, because higher wages are paid, but unfortunately such a minimum wage very often becomes a yardstick used by the employer, who is not at all concerned as to the future economic wealth of the country and who is very often not concerned with the future peaceful life of this country and the advancement of all its peoples. Employment can very often be viewed from a purely selfish point of view, and that is, as I pointed out on another occasion, part of human nature. Therefore I think it is our duty to appreciate that a low wage, although it may be an improvement on a previous standard, does not become the yardstick by which the worker’s remuneration is measured.

I feel that unless further efforts in many directions are made, a great deal of the ideas which, for instance, the Productivity and Wages Association has been talking about and which it has published in its papers will be lost. If a better understanding is not brought about by means of educative measures on the part of the State, and by means of an encouragement to workers by way of an investigation into their conditions of work, which will bring about a better understanding between employer and employee, this Bill will go only part of the way towards assuaging this problem. This Bill has none of the power nor any of the teeth which normal labour legislation should have. No doubt this arises out of a sense of fear on the part of the Government that enormous organizations may be established which could overwhelm the capacity of the country to meet the problem, but in the absence of the teeth which I think this Bill should have, other methods such as educational methods should be employed to ensure that a better situation will prevail.

Furthermore, I should like to ask the hon. the Minister whether he can give us an assurance that he will not only encourage the growth of more regional committees throughout the country—this is probably one of the most important factors with regard to negotiation—but that he will at the same time review the position regarding wage determinations more constantly than he has done in the past. I fully believe that, had he kept abreast of modern conditions, modern requirements in the field of labour, the cost of living and the conditions of workers, we may have avoided to a large extent the troubles which faced us in the early part of this year. This is evidenced by the fact that the hon. the Minister called upon the Wage Board immediately to undertake a post-haste investigation into various aspects relating to unskilled work throughout the country. He received the report within a few months. I believe that it is his duty—and I should like to have an assurance from him in this regard—to keen that position constantly under review. He must personally be acquainted with what is going on so that he can give the lead in this particular matter. This is a very vital factor, especially in those cases where you find people who are at the mercy of a particular wage determination in which they have played a very small part, although the viewpoints of their employers have to a great extent been taken into account. This approach one finds even in some of the provisions of this Bill. The Wage Board, which is an impartial body, should receive encouragement to keep completely abreast of present-day conditions. If it is necessary, the hon. the Minister should even consider some modification to the present Wage Act with regard to the conditions under which the boards have to work, to ensure that constant review takes place. There should be adequate opportunity for speedy investigations, and even re-investigations, to take place. Perhaps such a modification should aim at providing that the Wage Board should take into account not only the ability of an industry to pay, but also the fact that the worker has to have a minimum livable wage, so that we can avoid the sort of unrest which occurred earlier this year.

This unrest, I may say, could have led to one of the most serious situations this country has ever faced, had we not fortunately had the goodwill of the Police Force and the good humour and goodwill of the Bantu peoples of South Africa, who by instinct are built that way. We were very fortunate indeed to escape very serious repercussions. This is the sort of situation which the hon. the Minister must ensure is avoided. He alone can ensure that, because he is the one who gives the lead in these matters. He will have to keep himself au fait with all the facts, with everything that is happening in South Africa in this regard. With these thoughts I can only express the sincere hope that this Bill will, in its interpretation and in its practical application, make an important contribution to the improvement in the situation as we have known it in the past.

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

Mr. Speaker, judging from the three speeches made so far by hon. members of the Opposition, I believe that we on this side are entitled to make two basic deductions in regard to their standpoint. In the first instance we note that the United Party is rejoicing in the matter of this Bill supposedly being an indication of the so-called crumbling of the National Party’s policy of separate development. The hon. member for Yeoville calls it the recognition of the permanency of the Bantu worker in the White area. In the second instance we can make the deduction that the United Party feels that this Bill does not go far enough because it does not provide for the establishment of Bantu trade unions.

Sir. I should like to attempt to indicate that in regard to both of these standpoints the United Party is mistaken, and badly mistaken. So let me deal in the very first place with the United Party’s allegation that this Bill, in the words of the hon. member for Hillbrow, is ringing in the end, or the beginning of the end, of apartheid; the hon. member for Yeoville goes even further. He says that the National Party has stolen a march on the United Party through this legislation and in this way he is insinuating that by means of this Bill the National Party is deserting its basic principles in regard to the Bantu and in regard to Bantu labour.

In contra-distinction to this, Mr. Speaker, what are the true facts? To be able to judge whether the United Party has reason to rejoice, to be able to judge whether they are correct in saying that separate development is beginning to crumble, it is necessary to consider the basic principles of the labour policy of the National Party. What are the fundamental aspects? I should like to reply to this question on the basis of two speeches by the hon. the Minister of Finance in a recent debate.

What does the Minister of Labour say?

In col. 4384 of this year’s Hansard, the Minister of Finance, referring to Bantu training, said the following—

He went on to say—

Sir, herein lies the answer. These words of the hon. the Minister can be applied with equal validity to the Bill at present before this House. Our intention with this Bill is nothing more nor less than to ensure a satisfied Bantu workers’ corps and to maintain industrial peace. Sir, if we were to start tampering with the control over Bantu labour, if we were to submit to the demands of the U.P. that employers should be allowed to utilize Bantu labour freely and cause a situation of competition between the White worker and the non-White worker to arise, then, perhaps, they would be justified in raising the question of permanency, but the regulation of a system of bargaining between employers and employees in specific labour situations has nothing whatsoever to do with permanency, and the right to strike is only an aspect of this system of bargaining we intend to establish by means of this Bill.

Sir, we are unable to steal a march on the Opposition in regard to this matter, because we are not behind them on the same road, nor are they in front of us. No, Mr. Speaker, in regard to their labour policy, too, the United Party is on a different road to ours. They are on the road of total integration in all spheres, including the labour sphere, in that they want to integrate the employer and the employee in one great labour structure by means of non-White affiliation with trade unions and all manner of little formulas; that is their road, and the National Party is taking a different road altogether. The National Party is taking the road of separateness, in the sphere of labour as well, the road of protection of the White worker, the road of control over Bantu employment, the road of separate machinery for various situations and various people. That is why I say that this Bill has nothing whatsoever to do with permanency. Apparently the hon. member has a cramp, but he should not display it here. I maintain with conviction that the fundamental principles of the policy of the National Party are not being affected by this Bill. The Bantu who are here, are not hereby being given the right to remain here permanently and to strike. No, the group of Bantu who at any given moment are employed in the White area, are being given the right to strike under certain circumstances while—and this is important— and only while they are so employed. The question of which Bantu may work here, of the period for which they may work here and of who allows them to work here —all these matters may well be related to the fundamental principles of the labour policy of the National Party, but not the question of how those who are allowed to work here in a given situation, are able to arrange their labour relations and their conditions of service. That is why I say that the rejoicing of the United Party is misplaced. As always, the National Party will continue to see to the maintenance of industrial peace, which is the objective of this Bill, but, as always, the National Party will also continue to see to the maintenance of our way of life and the protection of the White worker in his own area.

In the second instance the United Party complains because the Government does not want to recognize Bantu trade unions. On this point I should like to state as a point of departure that we in South Africa are faced with an individual and a unique situation. That is why solutions acceptable elsewhere are not necessarily the correct solutions for us, and that is why we should always display originality in our thinking and planning towards the solution of our problems. If we are able to find anything beneficial from the experience of others and from examples elsewhere, then we should certainly accept it, but similarly, if we perceive dangers from what happens elsewhere, we should ensure that we do not fall into the same trap. And that is just as true in the field of labour. We are aware of the danger of Bantu trade unions because of the abuse of trade-unionism in other countries, and I repeat “in other countries”, and that is why the most weighty objection to Bantu trade unions is based on the security risk this would contain for us. The hon. the Minister and other hon. members have gone into that aspact fully and I shall therefore not deal with it any further. But I should like to go further and mention a few supporting arguments, scientifically grounded arguments, indicating why we may question the desirability of Bantu trade unions.

In the first instance we have the situation here, and I have experienced this in my own constituency, that White trade unions are already experiencing problems in keeping abreast of the diversification and complexities of our present industrial situation, with the manpower and the means at their disposal, and how much the more would this not hold true for Bantu trade unions? In contradistinction to this, this Bill introduces a flexible committee system which ensures that workers who are acquainted with their particular situation, would themselves be in a position to negotiate their conditions of service within that service situation with which they are acquainted.

A second aspect is that it is a universal problem throughout the Western world where trade-unionism has been refined and developed in detail, that a trade union sometimes experiences serious problems because a clash of interests may occur between two groups of its members which it has to represent. An American professor says the following in an article entitled “Collective Bargaining in the U.S.A.” in the International Labour Review of June, 1972-

Now we can imagine that precisely the same thing could happen here where trade unions are negotiating and where a clash of interests could occur between the White members and the affiliated Bantu members under U.P. policy—that is, if ever they were to come into power again. Such a clash of interests could arise and it would contain all the ingredients of a very serious friction situation. In contradistinction to that this Bill, with its flexible committee system and separate bargaining by separate groups of interested parties in respect of their particular situation with which they are acquainted, ensures that situations such as those, in which there would be clashes of interests, would be ruled out.

In the third instance, decentralization of employees’ organizations as envisaged by this Bill is by no means so strange a concept in the modern Western world. In the article from which I have already quoted, the learned author, who, I may add in passing, is a professor at an American university deals with these very same labour questions, the tendency of decentralization as against centralization in large trade unions as it is revealing itself in America. He comes to the following conclusion—

Before coming to this conclusion he quotes some illuminating figures. He says—

And that is what is important—

I think that from the above it may be deduced that tremendous decentralization has already taken place in a developed country such as America and I could therefore imagine that on scientific grounds the decentralized committee system and liaison committee system envisaged by this Bill bodes well for the hopes of the Bantu workers to be given good representation, which will ensure that the negotiation on their behalf will take place on a high level. For these reasons I believe that decentralization as embodied in this Bill, also rests on scientific grounds and has more than a good chance of success. That is why I want to support this positive Bill. I support the Bill because it is flexible and because it offers a practical means of handling the labour problems of our Bantu worker. It is to their benefit, but also to the benefit of the whole of South Africa because it is capable of ensuring industrial peace. When we have industrial peace, all workers enjoy the resultant progress and benefit. In conclusion I want to associate myself with the plea addressed to employers by the hon. member for Jeppes to go out of their way to make use of the machinery created in this Bill for the promotion of industrial peace.

Mr. Speaker, I agree with the hon. member for Vereeniging when he says that he does not share the United Party’s view that this Bill means in fact acceptance of the permanency of the urban African. I wish it did. I agree with him that it does not. This Bill applies equally to migrant workers who are in the urban area at any particular time as it does to urban workers who are there from birth onwards. I can also unfortunately not share the United Party’s optimistic view that this Bill is going to mean the beginning of the end of apartheid. I am afraid that is not so. There I agree with the hon. member for Vereeniging. I cannot however agree with his optimistic assessment of the probable effects of this measure.

I said originally when this measure was published that I am not going to oppose it. I am not going to oppose this Bill although as I have also stated originally I have very strong reservations about it. However, to some extent this Bill is a step forward, albeit a tottering step forward. It is a step in the right direction in that, now for the first time, the Government implicitly recognizes at least one or two facts of life in South Africa. One of these facts of life is that to prohibit strikes does not necessarily prevent strikes from taking place. We all saw this as a stark reality in South Africa at the beginning of this year when over 60 000 African workers went on strike in Natal. Illegal the strikes certainly were, but the absence of legal sanction did not prevent them from taking place. For once, as I said at the time, the Government showed what I believe to be wisdom and restraint, and the police acted with wisdom and restraint during those strikes. I sincerely hope that that forbearance will continue despite the hon. the Minister’s rather ominous remark when he introduced the Second Reading of this Bill and despite the rather ominous threat coming from the hon. member on my left, the member for Vanderbijlpark. I want to point out that the Durban strikes … [Interjections.] I wonder whether hon. member opposite will just keep quiet.

Order!

Thank you, Mr. Speaker. It is impossible to speak when hon. members are talking aloud. The Durban strikes were by no means the only illegal strikes we have experienced in South Africa although people like to pretend that they were. They have already forgotten about the South-West African strikes. They have forgotten that over the past five years we have had various strikes from various workers—dock workers in Cape Town, dock workers in Durban, bus drivers, and various other workers throughout the country. Prohibiting strikes, as I say, does not necessarily prevent them.

The other reality of the situation is that for the first time the Government is now at least giving a right, albeit an extremely circumscribed right, to Black workers to strike under very limited conditions. It is the first time that this has happened in South Africa since 1942. Not even the Bill which was introduced, but never passed, by the Smuts Government allowed the right to strike. Therefore, to that extent we have taken a tottering step in the right direction.

I believe too that the Bill is a tacit admission by the hon. the Minister that what he said last year was so much nonsense. He said that existing legislation was quite adequate to deal with Black workers and that we did not require any other form of legislation. It is true that at the time he was referring to recognition of some limited form of trade union, but he did, nevertheless, make the statement that he thought that legislation, as it existed, was quite adequate and that the Bantu Labour (Settlement of Disputes) Act, as it existed, was more than enough for the Black workers. Because of these two steps forward in the right direction, I am not going to oppose the Bill, but I have very strong reservations about it. I want to enlarge upon them now.

I want to look a little more closely at clause 9, which is to be amended in the Committee Stage. I refer to the important clause that gives the circumscribed right to strike. The hon. member for Yeoville said that it would have been unthinkable a year ago to have conceded such a right. Well, it might have been unthinkable among the United Party and it might have been unthinkable among the Government members, but let me point out that trade union recognition and the right to strike have certainly been the policy of my party ever since I can remember. It is astonishing indeed that it should have taken both the Government and the Opposition so long to accept which is a normal feature of modern industrial democracy, for Black workers in South Africa.

Does your memory only go back 13 years?

No, my memory goes back much further but at least my party, when it formulated its principles …

Thirteen years—that is how far your memory goes back.

From its inception the Progressive Party decided that it was going to allow the Blacks the right to strike and that it would give official trade union recognition for Black workers.

The hon. member for Vanderbijlpark, when he spoke last Wednesday, gave us details of the limitations within which this clause is going to operate. He pointed out, first of all, that by definition many workers are excluded from the purview of the Bantu Labour (Settlement of Disputes) Act, and that is quite true. Furthermore he pointed out that local authority employees, workers in essential services, workers in food processing plants, and so on, workers connected with the supplying of fuel to local authorities and various other workers were, in fact, excluded from the purview of clause 9 of the Bill. Of course there are various other circumstances under which Black workers still may not strike and that is when an industrial conciliation agreement is in operation and when a wage board determination has been in existence for less than a year. He detailed all those exceptions and I do not want to repeat what he said. It was pointed out by the hon. member for Yeoville that the provisions of section 65 of the Industrial Conciliation Act are largely contained in this Bill; in other words, that the prohibition which applies to Black workers with regard to the right to strike also applies to White workers in terms of the said section. However, he said it was different in that under the Industrial Conciliation Act, compulsory arbitration is laid down for White workers whilst it is not laid down for Black workers in this Bill. I want to point out that there is in fact a very considerable difference between Black workers under this Bill and the prohibition to strike and White workers who are not allowed to strike under the Industrial Conciliation Act. In the case of White workers it is perfectly reasonable, for instance, not to allow them to strike while an industrial conciliation agreement is in operation, because they have been party to the agreement which was reached—they were part and parcel of the negotiations which laid down the conditions of work, the wages, etc., to which they agreed at the time. For that reason the prohibition is perfectly reasonable, but surely it is very different in the case of the Black workers. Under the Bill, as I see it—if I am wrong I hope the hon. the Minister will correct me—a few Black workers may attend the industrial conciliation board meetings. What I want to know is when will they have the right to take part in discussions and will they have the right to vote? As I read this Bill, no such right is extended to them. They may attend as observers and may perhaps even put forward a point of view, but when the actual decision is voted upon, for conditions of work, wages and so on, I do not believe these Black workers will have any part in the negotiations. If I am right in that, what I said originally is correct, and that is that what applies to the White workers in prohibiting them from striking under the Industrial Conciliation Act is very different indeed from what applies to Black workers under clause 9. I hope the hon. the Minister will clarify the situation as far as that is concerned.

There is an anomaly caused by the fact that a selected part of the Industrial Conciliation Act has been grafted on to the Bantu Labour (Settlement of Dispute) Act, with which in fact it has very little in common. If I may point out another example of how the strike provisions are out of context and how they have been grafted on to a totally different system of legislation, and I should like to point to the works committees. The bill places a prohibition on strikes by Black workers engaged in essential services. This works committee system, with its liaison and co-ordinating and works committees, has also been grafted on to a law which is very different in basis from the Industrial Conciliation Act, which prevents White workers who are working in essential industries from striking. I think it was last year that the hon. the Minister took me to task in this House and said that I never told people overseas that the same prohibition that was placed on Black workers to strike in essential industries applied also to White workers in essential industries. I agree that I did not tell people overseas that, for the simple reason two entirely different systems apply, because even though the White workers in essential industries are prohibited from striking, they have behind them powerful and well-organized trade unions. These trade unions can arrange work to the rule and threaten all sorts of actions against the hon. the Minister including that they are no longer going to vote for the Nationalist Party. That is a very different situation indeed from the situation of the vast number of Black workers who have no trade union or organization behind them and who of course have no vote. Therefore their position vis-à-vis the Government is very different from the position of White workers who are also working in essential industries and are not allowed to strike.

I want to point out that the limited right to strike is very unlikely in any case to be adhered to by Black workers, by hungry workers, in the essential industries just as the original complete prohibition of strikes was not adhered to in Durban at the beginning of this year. That is one of the reasons why I stated that I did not believe that this Bill was likely to prevent strikes, because unless there are massive increases in wages together with improvements in the conditions of work of those industrial workers who do fall under the purview of this Bill, simply laying down a rule that Black workers are not allowed to strike under conditions A, B and C, is not, I believe, going to have any effect whatsoever. My opinion is borne out by two important trade union leaders. The one is Mr. Grobbelaar of Tucsa, who has the strongest reservations about this Bill. In fact he says that if anything, it is going to lead to chaos in industry. Only today I found another quotation, this time from Mr. Liebenberg, who claimed that African workers were no better off now than they were before and in any case, he said, if they wanted to strike, and if they felt there was justification, they would strike. That is Mr. Liebenberg’s view of this Bill. Therefore, just to lay down prohibitions under this Bill against strikes is not going to stop strikes any more than the total prohibition of strikes stopped strikes before this measure, unless very real improvements are effected as soon as possible in the service conditions of the workers. The hon. member for Hillbrow stated quite correctly this morning that it is only contented workers who do not go on strike.

I now want to turn to the works committees, the liaison committees and the co-ordinating works committees and try to get a little clarification on some of these things as well.

I have said before, and I say again, that the works committees system which we have had for over 20 years in this country, has not been a success. Now the hon. the Minister is pinning all his hopes on an extension of the very system which in fact has failed. That it has failed we see from the increasing gap between skilled and unskilled wages, that is really between wages of white workers and wages of Black workers in South Africa over the years, a gap which has steadily increased. The functioning of the works committees has not in any way been able to obviate that. I believe there are many built-in deficiencies in the works committee system, and I hope the hon. the Minister will tell me where this Bill is in any way going to remove those built-in deficiencies. The first and important one is that the labour officers functioning under the Settlement of Disputes Act, even as amended, are going to be utterly at sea, as they were originally, when appearing before wage boards and industrial councils and they have to discuss all the technicalities of job descriptions, etc., when they are trying to negotiate on behalf of the Black workers. The White trade unions have pointed this out over and over again, namely that the officials, and of course there are not nearly enough of them, are quite unable to make themselves au fait with all the technicalities of job descriptions, etc.

Then I would like to ask the hon. the Minister what real, enforceable legal negotiating powers there will be in the agreements that are reached between the works committees and the employers. I know that the hon. the Minister has taken unto himself the power, if the agreements cover a sufficient number of employers in a particular industry, to extend the agreements by decree to the rest of the industry concerned. A great deal is therefore going to depend on how far the hon. the Minister is going to use his power in this regard. I hope he is going to tell us that he is going to use these powers fairly extensively. I hope he will explain to me exactly what status in law an agreement will have which is signed between a works committee, or a liaison committee, and an employer. I think this is a very important thing indeed.

There is another built-in deficiency, namely that employers—I notice that to some extent the ministerial decree will overcome this—do not like to make unilateral agreements. To what extent is the well-disposed employer going to be put at a disadvantage vis-à-vis his competitors in the same field. The hon. the Minister is going to have to use his decree, as I say, extensively in order to offset that disadvantage. Does the hon. the Minister not anticipate that the co-ordination of the demands of dozens of works committees— there will be thousands of works committees if this provision is implemented properly—to fit into the industrial conciliation system, is going to be very difficult? He must admit that the great advantage of a properly organized trade union system is that it has properly trained and full-time officials who are able to negotiate and to act at the Industrial Conciliation Board’s meetings in order to negotiate on behalf of the workers in a specific industry. The works committees do not enjoy that advantage; they do not have full-time officials, they will not have the people who will be able to negotiate effectively, they will have no one to do any research for them, no one to prepare a case, no one to study the feasibility of their own proposals and demands, or to understand the legal implications. The White trade unions required years of experience of well-trained officials, working on a full-time and paid basis, to negotiate for them. May I just point out an example of this? I am told, for instance, that the industrial conciliation proceedings in the iron and steel industry took six months to thrash out in 1968, when wide-scale negotiations took place. There were eight unions involved and these had 120 officials to represent the 75 000 White, Coloured and Indian workers belonging to those trade unions. The employers had the same number of officials. For the 150 000 Black workers involved there was one labour officer and a member of the Central Labour Board. I do not believe that the new Bill improves this situation. I do not believe that putting an additional Black man or two on to the regional board is going to improve the situation. They still will not have the full-time officials to negotiate with them.

One of the advances made in the Bill is that the African members of the works committees may, if the Minister deems it expedient, be appointed to regional committees. These regional committees consist of a White Bantu labour officer and a few African members. They can co-opt a member of the works committee of an industry that is experiencing a labour dispute. Members of these committees can then attend meetings of the Industrial Council. In this regard I have a pertinent question to put to the hon. the Minister. In whose time do these members of the works committees perform their functions? They have to have an altruistic employer to give them time off, presumably, to go and attend all these sittings. As I say, some of these proceedings take weeks and even months to finalize. Where is one going to find the altruistic employer who is prepared to allow this work to be done in his time? That is one very pertinent question I want to put to the hon. the Minister. I know there is a clause in this Bill which prevents victimization, but I do not think that this gives complete protection. For instance, when a works committee member, having been appointed to a regional board, wants to attend a meeting to represent his works committee there, can the hon. the Minister guarantee, firstly, that the employer is going to give the man time off and, secondly, that he is not in any way going to jeopardize his position at the factory as a result of this? I think that these are pertinent questions which the hon. the Minister must answer, because these are very real problems which are going to flow out of the implementation of this Bill.

I have three other questions to ask the hon. the Minister, if I can get through them in time. Would he explain to me, please, why it is that a works committee in a particular industry can only be formed if there is not a liaison committee? I am just wondering why he has given the liaison committee a sort of pre-eminent position over and above the works committee. As I read this provision, the employer plays a dominating part in a liaison committee which he does not play in a works committee. Half the members of the liaison committee come from the workers, while the other half are designated by the employer, as I read this Bill. Furthermore, the chairman is appointed by the employer or may also, of course, be recommended by members of the committee but, as I say, half the committee consists of members designated by the employer. It seems to me that the liaison committee is the sort of committee that an employer is likely to go for rather than a works committee. Indeed, it is just possible, is it not, that employers will form liaison committees, perhaps to prevent the formation of works committees, if they happen to have a number of militant workers who want to form a works committee?

Then I want to ask the hon. the Minister: Why do workers wanting to form a works committee now have to meet under the chairmanship of the employer or his authorized representative instead of under the chairmanship of the Bantu labour officer of the area concerned, as was previously the case in the original Bill? Are there too few Bantu labour officers? Does the hon. the Minister envisage such a mushrooming of works committees that he will be unable to provide the officials concerned? I would like to know that.

Thirdly, and perhaps most important of all, can the hon. the Minister give me the assurance that once this Bill has been passed by this House and implemented, he is not going to prohibit the existence of African trade unions? I would like to have a categorical assurance from the hon. the Minister on that score. I know perfectly well that in law African trade unions are not recognized, that the Industrial Conciliation Act’s definition of “employee” specifically excludes Black workers, and therefore Blacks cannot belong to registered trade unions. But this does not obviate the fact that many African trade unions do in fact exist and are functioning. Now, can the hon. the Minister give me the assurance that he does not intend in any way extending this measure in order to prohibit the formation or existence of Black trade unions, and also that he is not going to prohibit Black trade unions, the representatives of Black workers, from attending Wage Board negotiations? I think this is a very important question indeed, which I would like the hon. the Minister to answer.

Finally, I see as one of the great weaknesses of this Bill, the fact that there will be no co-ordination really on an industry basis. Everything takes place within a plant itself. The co-ordinating committee is for a plant itself and I see no co-ordination on an industry basis. I think it is a very complicated and cumbersome effort indeed of trying to organize a labour force. Of course, the most important objection is that it leaves the labour force split on racial lines. I think that this can lead to a very dangerous polarization of the interests of Black workers as against the interests of White workers.

I want to conclude by saying that I cannot emphasize too strongly that I believe that this is a makeshift measure, that it is designed largely to overcome the Minister’s reluctance to give Africans proper trade union rights, to give them the proper right of collective bargaining—to enable them, in short, to join or to form registered trade unions. I want to say, quite categorically, that I do not believe that this measure is any substitute at all for real trade union rights. History has shown, not only in South Africa, but in other countries as well, that proper collective bargaining rights is an absolute, basic essential for orderly industrial democracy, which aims on the one hand at decent working conditions and wages for workers and on the other hand at a properly disciplined labour movement which can sift out the reasonable demands and distil legitimate grievances of the workers. I believe that is essential. I am firmly of the opinion that a far less complicated and a far more efficient way of dealing with labour problems in South Africa would have been a simple amendment to the definition of “employee” in the Industrial Conciliation Act, such as I proposed earlier this year in a private member’s motion, so as to allow the Black workers of South Africa the same rights in an industrial democracy as we have allowed White, Indian and Coloured workers over the past 50 years.

Mr. Speaker, the hon. member for Houghton put a few questions to the hon. the Minister, and I just want to come back to one or two of those questions in as much as an opinion is also required from the Opposition in regard to the replies to those questions.

One of the last points raised by the hon. member, is the question of liaison committees. She wanted to indicate—this is the way I understood her—that she would prefer to see a works committee being allowed in a factory as well—if I may use the word “factory”—in spite of the fact that it was already possible for there to be a liaison committee. In that way she wanted to indicate that a liaison committee was actually less desirable—if I understood her correctly— than a works committee. We on this side feel that a liaison committee is preferable, because the operation of the liaison committee will create a situation which will be more conducive to proper communication between employer and employee. What one will have in the case of a liaison committee is, as we see it, the following: There will be a number of workers sitting around a table along with a number of people representing the employer. I want to assume at once that any manufacturer with any insight into this matter will, as the employer, appoint people to that liaison committee who in the first instance will at least have a knowledge of the nature of the Bantu, who in the second instance will, it is hoped, know his language, and who in the third instance—this is very important—will also know the labour legislation. Therefore one will immediately have a position where it will be possible for the employer to train the employee as regards the operation of our labour legislation. I think that I am speaking on behalf of this side of the House when I say that we give preference to the liaison committee principle.

The second point which the hon. member made, was that the Bantu who would be represented on the Conciliation Board would, in terms of the Bill as it reads at present, have no right to vote or to speak. The Opposition is well aware of the fact that no such right is granted in the Bill to the Bantu who will be represented there. In terms of the Bill such a person may not vote, nor may he speak. It really seems to me—and this was the argument we advanced—that it would be the ultimate in total absurdity to put these people there and then to expect them to sit there like a bunch of sphinxes. I think that it would be a motion of no-confidence as regards the negotiations which could take place between employer and employee, to say as a matter of principle that the Bantu who are represented there should not be allowed to talk. If, therefore, the hon. member for Houghton is correct when she says that that will be the case, we agree with her that something should be done about the matter, but I really do not believe that this could be the intention of the Bill.

Now I come to the next point I want to raise. The hon. member for Houghton has never hesitated to air her opinions on labour legislation without mincing matters. She has always indicated that as far as labour legislation and labour in general are concerned, she has a policy, a clear-cut policy, and that she stands by it. However, we know that it is one of the points of policy of the hon. member for Houghton that certain people in South Africa should be denied the right to vote. They would not be allowed to vote because they would not comply with certain qualifications. One of these qualifications is an income qualification. Now the hon. member says that although she does not want to give these people the right to vote, she will give them the right to strike and to organize themselves into trade unions. In terms of her labour legislation, and through their labour organizations, these people will therefore have the right to strike. And do you know, Sir, what they will, inter alia, be able to strike for? For more pay. Because of her policy, therefore, the hon. member is openly introducing a political element into her labour legislation. The fact that people will be able to strike for more pay so as to be able to vote, therefore puts her point of policy, as far as I am concerned, on a very vulnerable level.

Nonsense! That is a silly argument.

She says that is nonsense, Sir. She may be right, but if I had belonged to the Progressive Party, I would have considered that situation very carefully.

The hon. member also claims, along with the hon. members for Springs and Vereeniging, that we supposedly said that this legislation would mean the death-knell for apartheid in all respects. Of course we never claimed that. In the long run this may well be the case, but as far as the immediate effect is concerned, this legislation has definitely toppled one of the basic principles of the apartheid ideology. In order to organize labour, it seems to me that the first prerequisite is the following: One must have some permanence for the employees. One cannot organize people who move about all over the country. Sir, the moment one has permanence, one is already encroaching upon one of the long familiar ideological points of policy of the Government.

If one wants a good Opposition, one must have permanence, too.

The hon. member for Vanderbijl Park says that all they are seeking in this regard, is the welfare of the worker. Sir, the hon. member quoted here from an American magazine, and I now want to read out to him what Time wrote about a state of affairs, which is very similar to that of South Africa, pursuant to strikes which occurred in France and Germany and which were not started by French and German workers, but by so-called migrant labour, which in France comprises only 17%—not 70% as is the case in South Africa—of the total labour force and in Germany only 11% of the total labour force. We read the following in Time of 21st May, 1973—

May I just mention here in passing that this column in Time refers to “guest problems”. They regard these people as guest workers, but the term “guest workers” is no stranger to this House. Hon. members on that side have also referred to the Bantu workers in our urban areas as guest workers. But listen to what Time says—

Because they felt unhappy about this position, they very successfully called strikes in both Germany and France, in spite of the fact that they represented a small minority of the labour force in those countries. Sir, let us see to what extent we can draw a line between their position and the position in South Africa. Elsewhere in the same report we read the following—

They talk of “natives”, but these are White “natives”—

That is the situation which has developed there. That is the degree of happiness derived from that situation, and that is why I say to the hon. member that if one wants to organize, one must have permanence. If one wants to bring about happiness in the ranks of one’s workers, and one wants to do so by means of these organizations, then one runs the risk of bringing strikes upon oneself unless one regards these people not as “second-class citizens”, but to a large extent as “first-class citizens”, and that is precisely what this Government, in terms of its policy, does not want to do.

Your policy defines three classes of citizens.

The hon. member for Vereeniging said that trade unionism was totally wrong in principle in South Africa, and then he mentioned a few reasons. He said that those people who would have to be brought together in trade unions …

I spoke about the Bantu.

Yes, he said that they did not have the necessary experience. Sir, this is true, but will the hon. member stand up and tell us that he really believes that there are no Bantu in South Africa who are advanced and educated enough to understand the principles of trade unionism in South Africa? For example, does the hon. member mean to tell me that Bantu working for the Press—Bantu journalists—will not understand the matter either? If the hon. gentleman says that they do not have experience, then I want to remind him that his party has been governing for the past 25 years, and to that I want to add that the legislation which could have given these people experience of negotiation, has been on the Statute Book of South Africa for almost 20 years without having been touched. While these people should have been gaining experience in this connection, the Government did absolutely nothing in regard to that situation. The hon. member should therefore not be so quick to speak about experience, because I could easily turn around and say, “Yes, but you have been governing for the past 25 years; you have had an Act to provide these people with the necessary training, but you have done nothing about it. And today you come along and say that these people do not have experience.” But let us quote from the Holy Book. If this should be the case, then I say to my friend, “But woe to that man by whom the offence cometh.” And he may be the hon. member for Vereeniging. Another reason, according to him, why we should not introduce trade-unionism for the Banu is the serious clashes of interest this would cause between certain groups. This is one of the very points I wanted to mention. As the hon. member has mentioned, this morning it was pointed out that in the South African labour context we were at present building up two parallel organizations, on the one hand the Industrial Conciliation Act which is there, simply and solely, for the labour organization of the Whites, the Coloureds and the Asiatics and which operates exclusively for them. No one else may be admitted to it, and if he should perhaps get there, then he must obtain association right at the top with the Industrial Conciliation Board by way of a few individuals. On the other hand, we now have a Bill, a development of the position which has existed since 1953, which contains at least the embryo of bargaining legislation for the Bantu. A start is being made here. This is the other pillar, the other column, which is to aid only the Black man. But there is a third pillar which is going to rise and which has already received the Government’s stamp of approval, and that is the labour legislation which is being promised to the Bantu areas. Unfortunately it is a fact that in the Bantu areas the hon. the Minister will be unable to say that he does not want trade unions. In fact, he himself says that he does not want to say anything in that connection. In other words, let me put it in this way: One has a White trade union movement and one has a primary system of trade-unionism for the Bantu working in the White area, and then one has a third pillar, the one which will rise in the Bantu areas. But in all three cases the workers form an integral part of the South African economy and as I see it there is no doubt that one will get situations where conflict must occur. It is therefore not a question of conflict being eliminated by means of this legislation. On the contrary, this is one of the things which worries me. I am telling the hon. the Minister in all honesty that this is worrying me. Are we on the right road? That is why I say that in the short term this may have the effect of throwing overboard certain principles of apartheid, but in the long term this is another method of giving the essentials of apartheid greater stability and of developing them. One has three pillars: The Whites and then in White South Africa a pitch black one for the Bantu in South Africa and a third one in the Bantu areas. I can believe that a situation which would be extremely unhealthy for South Africa could develop. This is certainly a point of which the hon. the Minister cannot be unaware.

Then I should also like to say something else to the hon. the Minister. Whatever one’s legislation may say, the hon. the Minister like everyone else, knows that unless the state of mind, the spirit, and the willingness on the part of the employer and the employee are such that that legislation can be made to work, the whole transaction will come to grief. Now I am rather sorry that the hon. the Minister deprived his inspectors of the right to insist on the establishment of works committees under certain conditions. I am very sorry about that but since this is the case, I do not want to argue with him. But I want to address a very serious request to the hon. the Minister and I address it against this background. This Bill is a development of the Act given to us in 1953 and we cannot afford to allow it to fail again. But I just have the feeling that it may fail unless the matter has the backing of the hon. the Minister and his department; unless inspiration emanates from the Department of Labour for more of these committees to be established and unless the Department of Labour ensures that they are operated successfully. In other words, the hon. the Minister must go out of his way to encourage, to the greatest extent possible, the establishment of these organizations and to ensure that they will work. The hon. member for Houghton referred to certain practical problems. I have no doubt that practical problems will in fact arise. This is in fact where the hon. the Minister can take administrative action in order to ensure that those matters are ironed out. I believe that this is a Bill which one cannot approve of in all respects. But it is not a Bill which should have moved the hon. member for Springs to say that our attitude was further evidence that in our attitude towards trade unions we were destroying certain values in South Africa. As long as it is the viewpoint of those hon. members that we want to destroy these values in South Africa, they may as well forget about consensus in South Africa. I want to tell him that I believe that this could work to a considerable extent provided it received the backing of the hon. the Minister and his department and provided it is regarded with goodwill on the part of the employer and the employee. A further condition is that it should not be exploited for political gain. I hope this will not happen. I am being quite honest with the hon. the Minister. The situations which may arise must not be exploited for political reasons. We are confronting one of the biggest problems in South Africa, where we will have to work within the framework of the ideology of the Nationalist Party. I have to tell the hon. the Minister very courteously that we have certain misgivings. We have quite a few problems. But we are willing to give this Bill a chance in order to see how it works out, but then we want to request the hon. the Minister to be the first person, if he should find that it is not working out, to come to this House and say that the matter should be reviewed. It may become apparent that we have allowed the labour force of South Africa to remain unversed in trade unionism for too long. I therefore ask that he should give his support to the implementation of the Bill and that he should be the first person to report to this House if matters do not work out.

Mr. Speaker, we on this side of the House support this Bill. The hon. member for Maitland has just referred to certain reservations. In this regard I want to raise one point with the hon. the Minister, something that sticks in my throat. I hope he will have a reply which will satisfy me somewhat more with regard to the system contained in this Bill. The hon. member for Vereeniging expressed certain reservations about the recognition of trade unions and referred to what was happening overseas. He said we could not accept the solution of other countries here and that we should seek and try to find our own solutions. He also said that we should recognize the dangers existing elsewhere. However, I am experiencing that very problem. In this Bill I can see a danger which caused great difficulties elsewhere. I refer specifically to the works committee.

†Mr. Speaker, I will tell the House what my problem is. I raise this with the hon. the Minister not in any spirit of criticism of the measure before us, but because we have seen in this century a revolution break out which has changed the course of history and which brought untold deprivation, suffering and misery to millions of people. I refer to the Bolshevik Revolution in Russia in 1917. This revolution broke out as a result of a works committee. The works committee, and that is my opinion, is precisely the same organization which was known in Russia as a Soviet. It is precisely the same thing. I want to quote very briefly from a book which I have, entitled “Russia in Revolution”, by Lionel Kochan. One can buy this book at Maskew Millers and it costs R2.

Is it banned?

No, it is not banned and I do not get a commission for selling it. I recommend that the hon. the Minister should have a good look at it. It deals with the period between 1905 and 1917 in Russia when the Soviet was a factory organization and when the Soviet movement became an alternative government to the Tsarist and later the Revolutionary Government in Russia. I should like to mention just very briefly the first series of large strikes which took place in Russia. The occasion was the coronation of the new Tsar, Nicolas II—

I want to draw the attention of the House to the recent strikes which took place in Durban. It is mentioned in this book that a new development in Russia was the self-discipline and the absence of the customary violence and drunkenness. What we saw in Durban were strikes taking place without organization. This was the strike of the faceless ones. These were people without organization. One of the prime difficulties which the employers had in negotiating with strikers was that there was no organization. They had to find people who were prepared to speak for those strikers. There was no drunkenness; there was no violence. It was a most remarkable occurrence altogether—

I think that is extremely important. We should recognize that this is a potential for a revolutionary provisional government. The Soviet grew rapidly—within several days it had grown from representing some 40 000 workers to representatives of 226 trade unions and other factory organizations. In other words, the thing snow-balled out of all recognition. It goes on to say here—

I want to make the point that you have a workers’ council. You have a council of people employed in one factory. You have a council or group of people representing the workers in one specific factory with one specific interest as opposed to a trade union which has representation from people spread all over the country, from people who have a specific interest in that they are in a specific trade. They are recognized for the skill that they possess. If you are going to take the workers in a factory, you are talking an amorphous mass en bloc and you are giving into the hands of those people one specialized interest. All they want is more for themselves.

The hon. member for Maitland mentioned the point of the connection, the close ties with the homeland governments where unions will be organized. However, the experience which they found in Russia was that the works committees, the Soviets, destroyed the trade union movement, because they were on a factory basis organized as a special group of workers. The ability for intimidation and organization of a small group of workers, 300 or 400, as opposed to a large organization which is a trade union, can well be more dangerous to South Africa than a trade union organization can be—I say it can well be and I do not go further than that—because basically the trade union organization is a conservative organization. It is designed to protect the interests of the members of that trade union against anybody else who does not have the qualifications that those members of the trade unions have. It has happened overseas. We have seen it happen that trade unions have developed into an extreme leftwing pressure group which has been able to cripple countries in certain instances, because they have been infiltrated by communists. I do not think that that will be quite so likely to happen in our country where there is a surplus of labour, where the trade union members, as in the old days of the guild, have something of a status of their own to protect. I raise this question with the hon. the Minister because I feel that having set up this organization and having got these works committees established, it might well become necessary to take a further step, and that is to unionize and to organize Black workers on an industry-wide basis rather than to have them divided on a small localized basis with very narrow and close ties with the homeland areas. This will be particularly the case with Natal, which is so close to the actual working places and the places where they live.

I would like to raise a further minor matter with the hon. the Minister. Here I have a telegram I received from a factory in Natal which has had a works committee for 53 years. This works committee consists of representatives from all races— Coloureds, Indians and Bantu—and its is working very satisfactorily indeed and has been able to create mutually accepted mechanisms and a forum for discussion of all industrial practices and wage conditions. Indian and Coloured employees falling outside the provisions of the Bill might now have to seek other means of representation with possible disruptive side-effects, whereas at present all members of the committee sit jointly on a mutually successful works liaison committee. I would be very grateful indeed if the hon. the Minister could give us an assurance that where you have established organizations such as this, wherein all the races of the workers who are working in that factory are represented, nothing will be done which will prevent them from continuing on that basis. We have this difference and we have these organizations such as trade unions which represent certain people, but at the same time we have works committees which are now to be established which are to represent other people who fall outside the ambit of the trade unions. Here you have an example of a factory where this joint committee is working very successfully indeed. I hope the hon. the Minister will give me the assurance that that will be allowed to continue.

Mr. Speaker, if a Government obtains support from the Opposition for any measure which he submits, it welcomes the support: in fact, with the introduction of so many of the measures the relevant Minister requests the support of the whole House. For that reason I also welcome the support I obtain from the Opposition in this connection. Since this support has been accompanied by a few assumptions, it is necessary for us to have complete clarity about those assumptions before this legislation is passed.

The main speaker on the Opposition side, the hon. member for Yeoville, raked up here, as did his colleague, the hon. member for Maitland, their beloved obsession with the question of the permanence of Black workers in the White area and linked that beloved obsession to this measure. How absurd such a conclusion is, is perhaps most strikingly evident from the main objective of this measure now before us. The main objective of this measure is to bring about greater order in Bantu labour relations in South Africa, because without an orderly labour force our country cannot make proper progress. That is why this legislation had to make its appearance with a view to establishing anew an orderly pattern of labour relations. But to take up the fact that we are coming along with a measure like this, in order to establish a new pattern, as an acknowledgment of the Bantu’s permanence in the White area, as the hon. member for Vanderbijl park and the hon. member for Vereeniging indicated a while ago, is a complete mistake. If the provisions in this Bill must grant permanence to the Black workers in the White areas, then the numerous legislative and administrative measures, which this Government has adopted over a period of 25 years to regulate an orderly society, must also, surely, have served to bring about permanence here. Then these 500 000 Bantu workers who work here in terms of industrial council agreements and whose wages and conditions of service are determined by these agreements, and have been so determined since earliest times, must already have become permanent inhabitants of White South Africa according to the United Party’s reasoning. If this reasoning has any substance, the Bantu, who have been covered by the Unemployment Insurance Act since 1949 and have obtained benefits from the Unemployment Insurance Fund, whether they come from Botswana, the Transkei or wherever the case may be, must by now have been considered permanent inhabitants of the Republic. If this reasoning of the United Party holds any water, the supplying of housing to Bantu workers, the supplying of schools and recreation facilities here in White South Africa, must also have served, by now, to grant permanence to them here. That is just as foolish a conclusion as it is to regard those guest workers, to whom the hon. member for Maitland referred a moment ago, those who work in Switzerland, Germany and other European countries and enjoy exactly the same benefits as the workers of those respective countries— which also includes the right to strike, as the hon. member also mentioned—as permanent inhabitants of those countries. One can now see how foolish this whole point of departure of the United Party is. If such social facilities, which one offers to people who are within the borders of one’s country at a given moment, whether they be conditions of service or whatever the case may be, are seen as proof that one is granting those people permanence, I am afraid that all the immigration laws of the world will have to be rewritten, because then all the provisions and principles, according to which permanent domicile in a country takes place, will again have to come under review. That is why I say that this assumption, on which the United Party is now building up its thinking, is a complete mistake. That is why it is necessary to say here very appositely that this measure does not grant permancence to Bantu workers in South Africa. If it is necessary to say so, I say it again because the United Party has come to the fore with this obsession.

This measure is actually creating for us a clear definition of our labour arrangements. It creates for us a clear definition and tells the Bantu workers how they can offer their labour, in a fair and orderly manner, here in White South Africa. That is the object of this measure. Let me also add that this measure is not going to provide a home for persons who want to disregard or circumvent the laws of this country. The assurance which the hon. member for Vanderbijlpark gave in this connection, i.e. that this legislation is not going to be used, by people who are enjoying the hospitality of this country, in order to circumvent the laws of this country, I also want to give with the utmost satisfaction.

The hon. gentlemen opposite also came to the fore with another favourite obsession, i.e. that of trade unions. They advocated this in various forms: We had it in its most extreme form from the hon. member from Houghton down to the plea by implication which we have just had from the hon. member for Maitland. These days this is being dished up by the United Party in the form of a three stage trade union organization: The sophisticated Bantu may now belong to trade unions; those who are not all that sophisticated, may now be affiliated; and the rest can simply participate in works committees. What a mix-up would that not cause in one’s whole labour relationship! I wonder whether the United Party has ever thought what the effect of such a three stage classification of people in one’s Bantu labour force would be on those people. I wonder whether they have ever realized what confusion this would cause amongst the Bantu workers, and I wonder whether they have ever considered what tensions this would cause amongst those Bantu workers. The fact that certain Bantu workers may belong to trade unions, according to the United Party, while others may not, I do not actually find strange either. It is in complete accord with the political thinking of the United Party which believes that in the political sphere certain non-Whites can get the franchise and others not.

They will all get it.

This side of the House, this party and this Government do not believe in such a circumvention of people’s realities. That is why this legislation is being drawn up in such a way as to create the same communication rights and opportunities for all Bantu workers, but we are also imposing upon all Bantu workers the same obligations, so that all Bantu workers will be under the same obligation as their co-workers.

The hon. member for Mooi River expressed his concern, towards the end, in connection with the Soviet-like danger which these works committees could embody. In connection with this Soviet-type of danger, which the hon. member for Mooi River has dished up, I can only say that we have learned from the world— from South Africa. Africa and elsewhere —that communism penetrates trade unions much more easily than any other institution. Trade unions are those bodies, those organizations, which are most easily penetrated by communists. If this works committee system supposedly embodies so much danger, if this system supposedly lends itself so well to communist infiltration, one is inclined to ask oneself why there has never vet, in the past 20 years, been any communist infiltration into the works committees of South Africa. I concede that we have had few of them, but whether there are few or many, if there is any substance in that claim that the works committee system lends itself to communist infiltration, this should already have happened in the 118 of them over the past 20 years. No. I am afraid there is really no substance in this. I do not think there is anything in this prediction that can really upset one. I think that is far more than can be said of the Bantu trade unions which we have knowledge of in South Africa.

The hon. members for Yeoville, Jeppes and Maitland also referred to another aspect, i.e. the question of the coercion by the department that had to be exercised on employees in order to establish works committees. There was something like that implied in the published Bill. The objections to that from the employers’ organizations, however, were so strong that I felt that on those grounds I should withdraw it, because I need those people’s co-operation for this to work. The objections, which the employers’ organizations in the country expressed against this kind of coercion, are nothing unusual. In our Industrial Conciliation Act there is no coercion upon employers to establish employers’ organizations: there is no coercion upon workers to establish trade unions. In fact, there is no element of coercion in labour legislation. We were asked why we now wanted to introduce it here. It was on those grounds that I subsequently decided that it should be left out. However, I want to assure the House that my department will continue, as requested here by various speakers, to get employers, and through employers, the Bantu workers, to establish these works committees. Today I am in the fortunate position that I am actually dealing with new understanding and insight on the part of the employers. In the discussions I have held in recent months with employers’ organizations, I encountered a completely new understanding, on the part of those employers, in connection with the necessity for these communication channels, in contrast to what obtained a year or two ago. For that reason I believe that the employers are today in the mood to do their share. From my side our department will certainly contribute its share too.

In addition the hon. member for Yeoville, and one of the hon. members who also spoke, raised the question of compulsory arbitration. The hon. member for Yeoville actually expressed his regret at the fact that no provision was being made in this measure for compulsory arbitration. Sir, provision is actually being made for that in this measure. In this connection I refer the hon. member to clauses 10 and 11. What the provisions in those two clauses amount to is that if these various works committees, liaison committees and co-ordinating committees cannot reach a satisfactory solution, the dispute can be referred to the Central Labour Board. If it then appears that the Central Labour Board cannot settle the matter either, the Board must inform the Minister about that. Then it will be the task of the Minister to decide whether this labour matter, whether it be a dispute or whatever the case may be, must be referred to the Wage Board or not. A request of this nature by the Bantu Labour Board must be complied with by the Minister. If the Bantu Labour Board requests it, the Minister must refer the matter to the Wage Board, and the recommendation of the Wage Board must either be accepted or rejected. That recommendation, in the form of an order, is equal to compulsory arbitration. In other words, this measure contains that element which the hon. member advocated.

The hon. member for Hillbrow also complained, inter alia, about the fact that the representative position of the trade unions is now being weakened as a result of this development. He said that they would now no longer be able to negotiate efficiently. The position is such that up to now Bantu workers have not been included in the provision of the representative position of trade unions. That will be continued with. This Bill makes no difference whatsoever to that calculation. As in the past, the presence of Bantu workers will have no effect on the provision of the representative position of trade unions.

But that is specifically our complain.

Yes, but it constitutes a part of the existing labour legislation.

The hon. member for Jeppes said that these works committees are only being allowed on a “permissive” basis. No, I am afraid that has not been correctly interpreted.

That does apply to the establishment.

No. That is incorrect, because these Bantu workers can decide whether they want a works committee. Once they have decided upon that, that employer is compelled to take the necessary steps to establish such a committee. If he does not do so, such an employer is guilty of an offence. The establishment of this committee is therefore not of a permissive nature either.

The hon. member for Jeppes also wanted the assurance from me that wage determinations would be reviewed more frequently. This Bill specifically provides that wage regulations will, in future, be issued at much shorter intervals than in the past. The Wage Board will still continue with its normal investigations, as in the past, but the position is that throughout the years the Wage Board has investigated by far the majority of the industries in the country very thoroughly. They are very thoroughly acquainted with the labour situations in probably the vast majority of our industries in the country. Because this is so, the emphasis will, in future, fall more on the reviewing of wages, which can be done in a shorter period of time because it is not necessary for the entire industry to be investigated as in the past. I may just mention that apart from the announcement which I made earlier in the session in connection with investigation into those five determinations, I have recently withdrawn eight orders that were issued for an investigation into various industries. I replaced those eight orders with an order that only wages in those respective industries must be reviewed. This will result in the necessary speeding up also taking place.

The hon. member for Houghton put a whole series of questions to me. I shall reply to some of them now; the others she is free to ask me in the Committee Stage. Those I shall reply to now are the following: She wanted to know whether the Black workers, who are now going to attend the Industrial Council meetings, would be able to join in discussions and whether they would be able to vote. They will be able to join in discussions, Sir; otherwise their attendance would be completely useless and unnecessary. That is the reason why they are able to go there. They will be able to go and state their cases there. But they will not vote because they do not belong to that Industrial Council.

The hon. member had many misgivings about the works committees because, in actual fact, the hon. member wants out and out trade unions for those people. I can just tell the hon. member that I expect great things from these works committees. I think they are going to be much more practical than the trade unions which the hon. member advocates, and which even the United Party advocates in their fashion. These works committees will really be dealing with working conditions in their specific factories. They will be much better able to bargain and negotiate with the relevant employers than would be the case if someone had to come from head office once a year to speak to the employers. In fact, the workers would possibly never even see such a person. I think there will be much more direct contact between the Bantu workers and their employers, and this will enable them to carry out much better negotiations in this connection.

The hon. member also wanted to know what our attitude was in connection with Bantu trade unions. There is no change in our attitude whatsoever. The Government does not acknowledge Bantu trade unions, and it does not intend to acknowledge them either. If the hon. member feels very strongly about the matter, there is only one solution for her; she must just see to it that she becomes strong enough so that she can take over the reins of Government. Then she can implement her policy.

Mr. Speaker, may I just ask the hon. the Minister whether he will not answer that question in a more positive way? I did not ask him whether the Government was going to recognize Black trade unions. I asked him whether this Bill was going to constitute a step in the direction of prohibiting Black trade unions.

Mr. Speaker, if we had wanted to prohibit those trade unions, Minister Schoeman would already have done so in 1953. This has never been done; we have felt that they could simply struggle on like that. I think that the establishment of these works committees will really deprive those favourite Bantu trade unions of the hon. member of their life’s blood and any necessity for existence. I therefore think that such a prohibition is unnecessary.

In conclusion, Sir, I want to express the hope that this measure, which creates these communication channels for us on the one hand, is really going to make a big contribution to good labour relations. As far as I am concerned, it is a foregone conclusion that the most important requirements for good Bantu labour relations are fair treatment and a fair wage. I think that those are by far the most important requirements that must be met, and these communication channels will contribute to those important requirements being met. Besides that, Sir, I believe that this measure is going to be of value because these provisions about strikes are now so clearly defined that before Bantu workers can resort to any strikes they will know very well what the reference points for their action are. I think the State will also be much better able to maintain labour peace on that basis in the future.

What about the liaison committee that represents Bantu, Indians and Coloureds in Natal?

I am sorry; that slipped my mind. Sir, the hon. member for Mooi River referred to Bantu, Indians and Coloureds who had formed a liaison committee in a factory in Natal, and he wanted to know to what extent they are affected by this measure. They are not being rendered null and void. That is a local matter that can exist in any factory, and if that employer finds that that local arrangement works well, he is free to carry on with it.

Motion agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

It will be recalled that it was announced in the Railway Budget speech during March this year that parliamentary approval would be sought for the construction of certain lines of railway to cater for the conveyance of large numbers of non-Whites being settled in the Tswana homeland to the north of Pretoria.

The Inter-departmental Committee for the Conveyance of Non-Whites, which was appointed to report on and submit recommendations in regard to transport facilities for non-Whites between legally established non-White residential areas and their centres of employment, has considered the future conveyance of non-Whites between Mabopane and the Pretoria area.

According to the committee’s report, some 45 000 Bantu were already residing in Mabopane, which is being planned, as a city for more than 500 000 residents, and approximately an additional 112 000 persons are at present residing in the areas adjoining Mabopane. It is expected that by 1978 some 52 000 passengers will have to be conveyed by train from Mabopane daily.

The committee has recommended that an electrified double line of railway, approximately 20 kilometres in length, be provided as soon as possible between Wintemest (near Pretoria North) and Mabopane for the conveyance of Bantu employed in the Pretoria area. The cost of the line is estimated at nearly R20 million.

The number of trains which will have to be run over the proposed railway line can only be handled efficiently and expeditiously over the existing railway network between Pretoria North and Bosman Street station if facilities for the running of the trains and station facilities for the handling of the additional passengers are also improved. As existing stations in the Pretoria area cannot be improved to the extent required, provision will have to be made for an additional station, and the committee has consequently recommended that a connecting line of approximately 5,5 kilometres, which is to branch off from the existing Pretoria-Hercules section, to a new station at Belle Ombré, near the Asiatic Bazaar, be provided. The estimated cost of this phase of the project is R15 million.

The committee further recommended that certain other improvements, e.g. the quadrupling of a portion of the Pretoria-Pretoria North line, remodelling of Pretoria North and Hercules stations, trebling of the existing line between Pretoria North and Winternest and the necessary staging facilities for the additional train sets which will have to be acquired for the conveyance of the non-Whites, be also embarked upon.

The Railways and Harbours Board conducted an inspection in loco in regard to the proposed new lines of railway and has recommended the construction thereof, as well as acceptance of the other recommendations outlined, but on the explicit understanding that the Railway Administration be indemnified by the Treasury against operating losses in the exploitation of the lines.

The total cost of the railway lines, additional facilities (staging facilities excluded)and equipment to provide the necessary rail transport between Mabopane and Pretoria, is provisionally estimated to be of the order of R62,4 million. Full details of the project, which will take approximately four years to complete, are furnished in the Board’s report which has already been tabled.

The Opposition is not going to oppose this Bill. Neither do we want to delay its approval by the House, and we therefore hope to dispose of the other stages of the Bill immediately after this, because it is quite clear that all of us agree that employers should be conveyed to their centres of employment. If there are people who draw inferences from this in regard to overtures and coalition on the part of the Opposition, they are quite welcome to do so.

I just want to ask the Deputy Minister whether he could explain to us why there is such a vast difference between the two lines as far as the cost per kilometre is concerned. In the first case, i.e. the line between Pretoria and Hercules to Belle Ombré, 5,5 km cost R15 million and in the case of the junction between Winternest and Mabopane the cost is R19 million for 20 km. This is an enormous difference and I am interested to know what the reason for it is. I do not want to suggest what the answer is, but is it due to the fact that one of the two lines is probably going to run for a longer distance through a built-up urban area? If that is the reason, I think the Deputy Minister should take into consideration the fact that it is becoming increasingly more expensive to construct railway lines through urban areas while the problem of traffic congestion in our cities is becoming more serious every day. Something will have to be done also to use railway lines in order to alleviate urban traffic. I do not know whether it is going to be underground trains or monorail trains, but something will have to be done and the sooner it is done the better, because the costs are increasing by the day.

I hope this work will be completed soon and that this will promote the economic activities of the urban areas concerned.

This Bill is a very welcome step to alleviate and possibly, to a large extent, solve the pressing traffic problems in the northern areas of Pretoria. For this we in Pretoria and particularly, we in the northern part of Pretoria have every reason to be thankful. Over the past years representations have been made to the South African Railways, to the Minister and to the Deputy Minister for the provision of facilities which will help us with our problems. These bodies have constantly been working to that end. For example, I have in mind the National Party Council of Pretoria. I have in mind the hon. member for Wonderboom, who also made representations in this regard, and myself who also worked to have these transport facilities provided there. We want to express our gratitude and appreciation on behalf of the Party Council of Pretoria and in particular on behalf of the inhabitants of Hercules and Wonderboom, to the Minister and the Deputy Minister for taking a personal interest in the investigation and planning to allow of this Bill being before this House now. It is also my pleasant duty to convey my sincere gratitude to the staff members of the S.A. Railways, in particular to the technicians who dealt with this matter and who carried out the investigations and the planning of this new railway line with a zeal which has made it possible for this Bill to be presented to the House at this early stage. At times the Minister went out of his way to find a solution for this traffic problem. Even at a very advanced stage a different route was submitted for consideration. For example the hon. the Deputy Minister decided that consideration should be given to a link-up with the existing section, i.e. the Pretoria-Brits section. This we also appreciate. We realized that this was not possible on account of the problem of higher costs as well as the delay which would have been caused by the construction of the new railway line along this route in order to cope with these traffic problems.

I should just like to draw the attention of the Deputy Minister to a few aspects. These concern the remodelling of the Pretoria North station. While this station is being remodelled to provide for a section of the double railway line at Pretoria North station, I think it will be a good thing for the hon. the Deputy Minister to act in close liaison with the Pretoria City Council and the Province, both of whom are concerned with the double carriageway which runs parallel to the railway line and passes the station. While this remodelling is being carried out, it would probably be worth his while to consider the construction of a pedestrian overhead bridge over both the railway lines and the road. The thousands of passengers getting on and off trains at the Pretoria North station usually run blindly across the double railway line to catch the buses which transport them elsewhere. The situation prevailing there at present is a most dangerous one.

There is one other matter I should very much like to bring to the attention of the hon. the Deputy Minister, i.e. the question of passenger facilities. Provision will have to be made for adequate facilities at the Pretoria North, Wonderboom, Mountain View, Daspoort and Hercules stations for the thousands of Bantu workers who use the railway line every day. Taken at an average over three days, I think there are at present 6 000 movements of Bantu passengers getting on and off trains at Hercules every day. This causes enormous congestion, and to my mind this is something we should try to avoid in the interests of both the Whites and the Bantu. In the near future at least 50 000 Bantu workers will have to be transported from the Mabopane area to Pretoria, where they are employed. It is in the interests of both the Whites and the Bantu that this congestion should be eliminated. The traffic problems in the northern part of Pretoria are assuming dangerous proportions. I have the greatest respect for the patience of both the Whites and the non-Whites. There is considerable congestion on the part of these Bantu who travel through those areas daily. These Bantu create a danger for themselves and for those people who have to use the road. For that reason it is imperative that there should be close liaison with the other bodies dealing with road transportation. The next question I want to discuss is the number of buses transporting Bantu workers from Mabopane to Pretoria. In the early morning and late in the afternoon there are literally strings of these buses on those roads and as a result terrible traffic congestions are caused. We ask that, if possible, the transportation of Bantu by bus be curtailed once this section is completed. We hope this disruption of the traffic, which is at present taking place on an unprecedented scale, will be eliminated altogether at a later stage and that the Bantu who have to get up at three o’clock in the morning in order to catch a bus and arrive at home late in the evening will also benefit from this.

As far as the landowners are concerned, we want to ask that culverts and/or bridges should be provided in cases where the land belonging to these people is cut in two by the railway line. If this appears to be impractical, we suggest that these people be afforded the right to subdivide their land.

We want to address a friendly request that this section will enjoy the highest priority under these circumstances. We want to express the hope that when this new railway line has been completed, the whole of Pretoria and not only the northern part of Pretoria will benefit from it.

Mr. Speaker, in the first place I want to reply to the questions put to me by the hon. member for Yeoville. The difference in costs is caused mainly because the terrain differs. If the hon. member refers to the report of the Railways and Harbours Board he will see that there is a considerable difference as far as the standard of these two lines is concerned. The Belle Ombré line will have a Class I standard. While the line to Mabopane will have a mass of 48 kilogram per metre, the Belle Ombré line will have a mass of 70 kilogram per metre. In addition, the terrains of the two lines differ considerably. The scope of the grade separation structures—this is a new term for bridges—will be considerable. The line will cross the Apies River twice and at these points large bridges will have to be constructed.

Do you want to imitate Churchill now by crossing the Apies River?

The late Sir Winston forded the river once, but we have to cross the mighty Apies twice. The hon. member will appreciate that it is a mighty Apies we will have to span. Furthermore, there are two other smaller streams which will have to be spanned. According to the engineers considerable earthworks will have to be undertaken. The first 13 kilometres of the other line will be constructed over terrain which is relatively far easier, and for that reason there is a considerable difference in costs.

I want to thank the hon. member for Hercules for his remarks. I also want to mention that the hon. member for Wonderboom apologized for his not being able to be present here today. He is in Pretoria on account of unavoidable circumstances. I want to thank him in his absence for the contribution he made and for the manner in which he, together with the hon. member for Hercules, served his constituency and the interests of his voters. Together with the Pretoria Council of the National Party these two hon. members as well as other hon. members representing constituencies in Pretoria furnished the Railways and Harbours Board with information and gave a comprehensive explanation of local circumstances. I want to thank them for the way in which they did so and, at the same time, for their patience, as was quite rightly said by the hon. member for Hercules. I am aware of the rather difficult circumstances prevailing there; I am aware of the bus traffic there and the traffic congestion it causes, and I am grateful that matters went so smoothly up to now. For that reason all of us joining them in their gratitude that we are now in a position to hold out as a prospect the fact that we shall be able to solve this problem in four years’ time. It is the intention to complete construction of this railway line within four years. Arising from his question in regard to liaison, I want to assure him that close liaison is being maintained between the Railway Administration on the one hand and the City Council and provincial authority on the other hand in respect of any problems which may arise. This applies in particular to pedestrian control, which is a major and real problem. This is a real problem because large numbers of people are concentrated at a certain point during peak hours, but there will be close consultation between the parties concerned.

In regard to passenger facilities, the remarks made by the hon. member are borne in mind and the Management, according to circumstances and as the numbers increase, will see to it that the necessary facilities are provided. If hon. members care to refer to the first part of the report of the Railways and Harbours Board, they will notice the projections made there in respect of the volume of passenger traffic, and to what extent this is going to increase during the years. From that hon. members will see that this will, in fact, draw a large number of passengers to a specific point in Pretoria.

The hon. member also asked that bridges and culverts be provided in cases where land is going to be divided. I now want to tell the hon. member that provision is being made for this in the Expropriation Act, which has been in operation for the past few years, and that people whose land is divided by the railway line should have no problems and that consolidation may easily be allowed on both sides of the line. A culvert or a bridge is an expensive structure and it is not always the best solution. For that reason provision is being made for the consolidation of odd pieces of land on both sides of the line, and so forth.

As far as priority is concerned, it is estimated that construction of the railway line will take approximately four years. The work is being tackled with great speed and urgency, and this matter enjoys high priority. I want to tell the hon. member that I shall leave no stone unturned when dealing with this matter. It is possible that this work may be completed earlier, although it is anticipated to be completed in approximately four years’ time.

Motion agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, I move—

I want to say at once that most of the provisions contained in this Bill are provisions which have to implement the Budget proposals. Consequently it is not my intention to explain these provisions in detail. I want to confine myself mainly to certain broad principles contained in the Bill. I want to say at once that I am under no illusions about the fact that the measures benefiting bodies or persons will most probably not receive as warm a welcome as would those for which members asked but did not get.

The rates of tax for the current year of assessment are being laid down in the Schedule to the Bill. Hon. members are aware that these rates are the same as were those for last year, except that, as the hon. the Minister of Finance announced in his Budget speech, the 20% surcharge on personal income tax, which is payable in cases where tax liability amounts to R150 or more, is being reduced to 10%. However, in the case of a person who is over 60 years of age and whose income does not exceed R5 000 per annum, the surcharge of 10% will not be payable. The 3% loan levy on the dividend receipts of companies is also being abolished.

Taxation on royalties

The effect of the existing statutory provisions is that royalties paid to foreigners for the right of use of patents, designs, trade marks, etc., as well as any know-how payments relating to such patents, etc., are subject to taxation at the rate of 12,3% in the Republic. The requirement in respect of the taxability of know-how payments, namely the link with the use of a patent, has not only caused difficult administrative problems, but it has also been found that international concerns are increasingly negotiating know-how payments without linking these payments to the right of use of patents, etc.

In terms of the amendments introduced by clauses 4(b) and (c), 6 and 20, all know-how payments, i.e. payments for scientific, technical, industrial and commercial knowledge and information, which may also include certain management fees, are to be dealt with on the same basis as that for ordinary royalties for patents, etc., paid to foreigners.

Companies registered in terms of section 21 of the Companies Act of 1926

Section 10(1)(o) of the principal Act grants automatic exemption from income tax in the case of an association registered as a company in terms of a licence granted under section 21 of the Companies Act, 1926. The Van Wyk De Vries Commission of Inquiry into the Companies Act drew attention in paragraph 25 of its main report to several irregularities in regard to such organizations. Inter alia, the view was expressed that—

1. (a) some of them should never have been registered under section 21;
2. (b) as time went by some of them departed from their original objectives;
3. (c) a number of them were apparently ordinary business undertakings doing business in competition with taxpayers; and
4. (d) an anomaly existed in that certain sports bodies registered under section 21 were enjoying full exemption from income tax, whereas unregistered bodies had to pay tax on their investment income.

The commission went on to express the view that whereas it seemed to be justified that bodies which are not out for profitmaking and the main object of which is the promotion of religious, charitable, cultural, social or recreational objectives should be exempt from income tax, that exemption should not be controlled by any Act other than the Income Tax Act.

I want to say at once that the Government accepts this latter principle, i.e. that any exemption from tax must be granted by the Income Tax Act. Since that Act already contains provisions granting full or partial exemption to bodies of the kind which the Commission has in mind, section 10(1)(o) of the principal Act is being withdrawn by clause 7(1)(c) of this Bill. However, this amendment will only come into operation with effect from years of assessment ending on or after 1st January, 1975; and companies enjoying this exemption at the moment and falling under section 21, will in the meantime have to apply to the Department of Inland Revenue for exemption in terms of the other existing provisions of the Income Tax Act, to which I referred a moment ago. Many of them should be able to qualify without more ado for either full or partial exemption, whereas others will possibly have to amend their articles of association and the way in which they are doing business in order to qualify for either full or partial exemption. However, in my opinion there will be sufficient time—because the legislation in regard to this clause will only come into operation at a later stage—for such companies to put their house in order, possibly to amend their articles of association, if necessary, and to make representations in this regard to the Department of Inland Revenue.

Moneys from certain training funds

Clause 7(1)(d) introduces a tax exemption into section 10 of the principal Act. This is in respect of half of the payments made to industrialists from training funds approved in terms of the Industrial Conciliation Act. These payments are only made to industrialists who are training artisans, and the intention is to encourage industrial training through this exemption.

Annuities

Now I come to annuities. The hon. member for Parktown will know that the specific section to which I am referring now, is also one in respect of which he made pleas from time to time. In terms of section l(xi)(a) of the principal Act the full amount received or accrued by a person by way of annuity shall be taxable. In the case of a purchased annuity this implies a measure of unfairness, as the hon. members argued before and which I now concede, for in actual fact a portion of that repayment represents capital of the receiver. He is therefore paying tax on the repayment of his own capital. In terms of the new section 10A, which is being inserted in the principal Act by clause 8, only an amount representing the interest content of the annuity will from now on be taxable. This concession only applies to annuities purchased for cash in a lump sum from insurers. I want to concede that certain arguments may be advanced as to whether this benefit is wide enough in scope. I also take it that hon. members will avail themselves of this opportunity to discuss this matter with me.

Pension and retirement annuity funds

The amendments effected by clauses 9(a) and (b) increase the maximum amount allowed to be deducted in respect of contributions to approved pensions and retirement annuity funds from R1 000 and R2 000 to R1 250 and R2 500, respectively.

Exporters’ allowance

Now I come to the exporters’ allowance, for which provision is being made in this Bill. This exporters’ allowance is being calculated on certain specified items of expenditure, which have been defined in the principal Act as “market development expenditure”. These items of expenditure represent expenditure aimed at the development of export markets. Clause 10 extends the definition so that expenditure relating to the maintenance of export markets will also qualify for the allowance. The allowance is also being extended to certain service industries. In this particular connection I must point out that a list of the trades qualifying for this allowance will be published in the Government Gazette in due course. Another new provision which is being introduced, is that in future the exporters’ allowance will only be granted to exporters registered as such with the Department of Commerce. Producers of agricultural products exporting such products through marketing councils are not affected by the latter amendment.

The amendments I have mentioned will come into operation as from the beginning of the years of assessment ended or ending on or after 28th March, 1973. In spite of this exporters who have not yet been registered with the Department of Commerce will be still entitled to receive for the first year ending on or before 31st December, 1973, the allowance in respect of expenditure which would qualify as market development expenditure under the old dispensation. This should be regarded as a measure serving as a bridge between the old and the new approach.

Investment allowances

Clause 12 increases the investment allowance in respect of industrial machinery brought into use between 1st April, 1973, and 30th June, 1977, from 15% to 20% of the purchase price of such machinery, whereas clause 13 increases the allowance in respect of industrial buildings from 10% to 15%. The requirement in respect of the latter is that the erection of such buildings must commence on or after 1st April, 1973, but before 30th June, 1977, and that it must be brought into use between 1st April, 1973, and 30th June, 1978. In the case of industries in the economic development areas, these allowances may be increased by an additional 35% and 25%, respectively, i.e. 35% in respect of the machinery and 25% in respect of the industrial buildings.

Assessed losses

The balance of an assessed loss may be carried forward from one year to the next and set off against the taxpayer’s income from a trade for the latter year. But such assessed loss may not be carried forward to a year during which the taxpayer did not carry on a trade. In such a case it falls away completely. It has been decided to remove this prohibition in the case of individuals. However, if one has regard to the danger of tax evasion schemes, it may not be allowed that the same privilege be granted to companies. Clause 15 introduces the necessary amendments.

Physically disabled persons

I refer now to the circumstances of physically disabled persons, on whose behalf several hon. members have made pleas. Section 11(v) of the principal Act makes provision for the deduction of expenditure not exceeding R600 which a taxpayer has to incur as a result of a physical disability. This deduction is only granted if the expenditure has to be incurred to enable the person concerned to do his work or carry on his trade. Clause 17 removes this requirement, and from now on persons whose income consists of, for example, pensions or investment income will also be able to enjoy this concession. In addition, this concession was limited to persons whose income did not exceed R4 000 (or in certain cases, R5 000) per year. This had the effect that as a result of receiving an income exceeding R4 000 or R5 000 by R1, a person could be deprived of the benefit implied by this provision. In terms of the amendment now being introduced, the deduction will gradually taper off by R1 for every R10 by which the income of the person concerned exceeds R4 000 (or R5 000) per year.

Mining taxation

Clause 21 amends the basis on which mines may redeem their capital expenditure for tax purposes. As from the 1974 year of assessment all producing mines may write off their current capital expenditure in the year in which it is incurred. In the case of non-producing mines the capital expenditure is accumulated and is allowable as a deduction in the year in which the mine starts production. Some of the old mines still have balances of unredeemed capital expenditure. It will be possible to write off these balances over a period of four years in the case of gold mines, or, in the case of other mines, over the life of the mine concerned, but not exceeding a period of 30 years.

Non-resident shareholders’ tax

Clause 22 withdraws the exemption from the non-resident shareholders* tax which applies at present in respect of dividends being paid out in countries abroad by South African insurance companies. In our view there is no valid reason why foreign shareholders of insurance companies should be favoured above shareholders in other South African companies.

Undistributed profits tax

Hon. members will recall that every year this House has to vote ex gratia payments in respect of undistributed profits tax in cases where companies are actually doing more than the minimum required by the Act and are distributing dividends too early, i.e. before the beginning of the specified period for the distribution of the dividends for a particular year. At a later stage they find that, as a result of the early distribution, such dividends are not allowed to be deducted from the company’s distributable income for the purposes of undistributed profits tax, and then a technical liability arises for such tax. In such cases the House is therefore being asked to approve every case individually as a favour and an act of grace. The hon. member for Parktown, who, also in his capacity as member of the Select Committee on Public Accounts, has had to deal with problems arising from this position, recommended during the discussion of the last Additional Appropriation that the Act be amended in this respect. His suggestion is being accepted gratefully. This clause makes the necessary provision in that respect. Clause 23 confers upon the Secretary for Inland Revenue a discretion in terms of which he may, in cases where the spirit of the Act has been complied with and sufficient dividends have in fact been distributed, deem a dividend which has for good reasons been declared too early, to fall within the prescribed period.

In the determination of the distributable profit for the purposes of the undistributed profits tax, a deduction is allowed in respect of the purchase of factory machinery. In cases where this deduction is more than sufficient to wipe out the tax liability, the companies concerned are not enjoying the full benefit of the concession. In terms of the amendment introduced by clause 24, this deduction will be limited to an amount sufficient to wipe out the tax liability, and it will be possible to carry forward the balance of the expenditure to be allowed to be deducted in respect of the next succeeding year or years of assessment. In terms of clause 25 the maximum reserve which a company may build up prior to its becoming liable to pay the undistributed profits tax is being increased, as an incentive to capital formation in the small production company, from R20 000 to R50 000.

Single-premium insurance policies

Hon. members will recall that the hon. the Minister of Finance spoke last year about certain single-premium insurance policies which were being marketed by the insurance companies and which were in actual fact nothing but fixed deposits on which interest was being paid. Subsequently legislation was in fact introduced in order that the profit-content of the return of these “non-standard” policies might be taxed. The rules for determining the taxable amount are contained in the Sixth Schedule to the principal Act. These rules are, from the nature of the case, extremely technical and involved, and during the past year the Department of Inland Revenue, in consultation with the insurance trade, examined and reconsidered them closely. A series of amendments are now being introduced (clauses 27 to 41), amendments which will eliminate all the inconsistencies that have come to light. The nature of the amendments is explained in the explanatory memorandum, and there is also a schedule to the explanatory memorandum in which a summary is given of the Sixth Schedule to the principal Act. As I have already said, the whole matter is an extremely technical one, and I trust that hon. members will now be able to understand the provisions more easily.

There are a few other amendments as well. However, they are of a less important nature and are, in my opinion, explained fully in the explanatory memorandum. I shall therefore not take up the time of the House by enlarging on them.

†Mr. Speaker, in conclusion I wish to state that in reply to a question put by the hon. member for Parktown during the debate on the Department of Inland Revenue’s Vote, I stated that it was impossible to give a direct answer as to whether or not profits arising from the sale of flats sold under sectional titles were taxable.

I went on to say that the test, as the hon. member will know, is whether the asset in question was bought with speculative intent or whether it was bought with the intention of holding it for some time and not for speculative purposes, so the normal test will apply in this particular regard.

My department has now drawn my attention to the fact that it may be inferred from what I said that speculative intent was the sole or main criterion to be applied. But, having regard to a recent special court decision which confirmed assessments raised according to the department’s interpretation of the law, regard must also be had to whether or not the profit can be said to have resulted from a scheme of profit-making.

The length of holding and original intention are important but need not necessarily be decisive in deciding whether or not a profit on the sale of an asset is taxable.

I make this statement for the sake of clarity and to show hon. members how difficult it is to lay down hard and fast rules in such cases. Each case must, as I have said, be judged on its merits in accordance with the law.

Mr. Speaker, the hon. the Deputy Minister has dealt with the provisions of the Bill in fair detail, in addition to which we have had the benefit of the explanatory memorandum, for which we are very grateful. But the Bill this year, Sir, for the second year running, deals to a great extent with the Sixth Schedule to the Act. For two years now we have had at least half the Income Tax Bill trying to plug the loophole of the single-premium policy. I know it is a very difficult and a very vexed question. I must tell you, Sir, that the income tax specialists with whom I have discussions from time to time won’t even talk to me about this Sixth Schedule, and I am going to be kind to the hon. the Deputy Minister this afternoon; I am not going to mention it in any detail, because frankly I do not understand it. It is one of these very specialist sectors of the Income Tax Act, and we have had words in full measure on the question of plugging this loophole. I only hope that we will now find that we have the answers as well. The hon. the Deputy Minister did say that the explanatory memorandum dealt with it in some detail; I agree, but what we need now is an explanatory memorandum to the explanatory memorandum; then we might be able to grasp what it is really all about.

Sir, the hon. the Minister of Finance, in his Budget, set himself the task of getting a sluggish economy, with an unsatisfactory growth rate of 3,1%, off the ground, and this Bill gives effect to a number of the hon. the Minister’s objectives. For example, in an endeavour to stimulate the economy, the surcharge on personal income tax has been reduced from 20% to I 10%. I must put on record that we have still not, despite this reduction of the surcharge, got down to the basic maximum recommended by the Franzsen Commission, which was a 60% tax. We are still paying 66% as the maximum marginal rate, and it is very interesting how sometimes the hon. the Minister will come to the House and say that he is doing certain things as the result of the recommendations of the Franzsen Commission, as if that was the alpha and the omega of all things, but then a little later he ignores the Franzsen Commission entirely, as was done in this case.

Theoretically the reduction of the surcharge from 20% to 10% should put more buying power into the hands of the public and help to relieve the increasing demand that the hon. the Minister and we are looking for, and for this reason, and because the reduction of the surcharge by 10% will provide some small degree of incentive to the taxpayers, we welcome this reduction.

We also welcome the final demise of the loan levy on divided receipts of companies. You know, it really was just plain foolishness when this particular provision was introduced in 1971. Fortunately it did not stay with us for very long. Over a period of two short years the hon. the Minister of Finance has quietly slid out of his own embarrassment in this situation. At the time we told the hon. the Minister that we did not think it was a workable proposition, and our position we took at the time has been proved to be well founded. Anyway, I am sure that the hon. the Minister, is like ourselves, glad to see the last of this particular provision. I believe it is a pity that when the hon. the Minister did away with this loan levy on dividends received, he did not at the same time remove this 2½% surcharge on the 40% tax paid by companies. This would have left more funds, in the hands of the companies and there would have been further resources available for investment by companies in the manufacturing industries. We need this investment very much at the moment.

More deficit spending.

Sir, I cannot discuss what took place this morning because you, Mr. Speaker, will not allow me to do so, but I think the hon. the Minister of Finance rather missed the point this morning in mixing up inflation and expansion. You see, Sir, I know the hon. the Minister has a very difficult task. He is on the horns of a dilemma. On the one hand he wants to reduce inflation, correctly, and on the other hand he wants expansion, and these two things do not really go together. This is his problem, and we appreciate it. He has to try to balance the financial requirements of the State with the steps that are necessary to meet his Budget’s economic objectives. I accept that, and it is not an easy task, but I would have thought at the moment it would perhaps have been advisable to veer over to the side of reduction of taxation of companies, so that they would have these additional funds available for the expansion of their businesses.

The provisions of clause 7 of the Bill, to amend sections 10(1) to 10(3) of the Act, is welcomed by us. The principle that an employer who receives consideration for the in-service training of his employees should pay tax on only 50% of such consideration, is a sound one. I hope perhaps one day we will be able to go a little further as this concept develops. But, you know, Sir, principles earn very little merit unless they are put into practice. The hon. the Minister of Finance has now made the financial concession and I hope his colleague will not frustrate him in this objective of achieving a better trained labour force, in the case of the Bantu particularly. Indeed, what we expect from the Government at the moment is unconditional support for the concept of maximum in-service training. Too often in the past we have put provisions on the Statute Book, provisions which we hoped would break some of the log jams with which we have been dealing year after year in this House, but we have found that they were merely provisions on the Statute Book, with really minimum achievement. I hope now that the application of this provision will be encouraged by the Government as a whole, to see that the in-service training of personnel really takes place.

I understand the hon. the Deputy Minister’s problems but despite his remarks I am still a little concerned with clause 7(1)(c) of this Bill which does away with the present income tax exemption of companies registered in terms of the existing section 21 of the Companies Act of 1926, i.e. companies not for profit. I have had representations from a wide spectrum of companies dealing with every possible thing. They are concerned about it. Now, we know that in terms of the proposed new Companies Act far more companies will be able to be formed as associations not for gain as are permitted at the moment. They would do so without the licence that is required in terms of section 21. But what we are concerned about is the present companies. What is the position in regard to existing companies? I know of the provision to which the hon. the Deputy Minister referred in terms of section 10(1)(f) of the Companies Act. Companies may gain exemption if they can be classified as ecclesiastical, charitable or educational institutions of a public character. I think the operative words really are “public character”. We are afraid that some of these companies affected by this amendment— the section 21 companies—may not be held to have a public interest. There may also be some other reason. I am glad of the assurance by the hon. the Deputy Minister that the proviso in respect of this particular section only comes into force on 1st January, 1975, and that it is done to enable companies to make representations to the department. If it is found that there is still a problem we can amend the Act next year.

Now, the increased exporters allowances, machinery investment allowances and the building investment allowances provided for in clauses 10 to 12 and 13 of the Bill can certainly be useful aids in the expansion of our industrial capacities. But here again the real value will be directly related to the extent that these benefits are used by the private sector. These benefits do not stand alone. They are only meaningful under certain circumstances. They are meaningful when demand outstrips capacity so that new capacity is needed. Then you can get a value through these benefits, when there is a firm belief that inflation will be contained and that the private sector is satisfied that we are not in a cycle of go-stop. Otherwise people are not going to invest in new plant, machinery or even in buildings. They become meaningful if there is confidence, both in the short and long term in the economic future of South Africa. These are the basic factors involved in making these concessions which we have had from the hon. the Minister effective. I sincerely hope that they will be used to the full.

Clause 15 of the Bill gives the benefit to a person other than a company of setting off against income an assessed loss incurred by him. This new provision was dealt with by the hon. the Deputy Minister and corrects a situation which has always been considered by us as being somewhat inequitable. The hon. the Minister has said that he cannot extend this to companies. It is going to be limited to individuals. I would like to ask him to reconsider this. It seems to me to be difficult to find a basic reason for discrimination between the individual and a company. In any case the hon. the Deputy Minister will know that in most cases the problem of no income by a company in any one year is easily got around by a whole host of legal methods, probably better known to the hon. the Deputy Minister than to me. I can assure the hon. the Minister when I was in practice that I never allowed any of my companies to get into a situation, where they couldn’t carry their loss of a particular year forward to the next year.

The Secretary for Inland Revenue has all the protection he needs in terms of section 103(2). This section gives him the power to deal with any company using assessed losses to avoid tax payment. He has all the protection in the world he needs. I think it will be in everybody’s interest if this provision which is now brought in in regard to individuals were to be extended to companies because then it would be put in its proper perspective. As I have said it is so easy to get around it that it has very little value.

We are glad to see the increases in the Bill mentioned by the hon. the Deputy Minister in regard to contributions to pension funds and current contributions to retirement annuities. I think we have to accept that the value of money has dropped. One wants to have the incentive for people to continue in their jobs and to give of their best to industry and to South Africa.

I now want to go back to clause 8 of the Bill which the hon. the Minister did deal with. The marginal heading of this clause reads: “Exemption of capital element of purchased annuities”. The hon. the Deputy Minister has explained the effect of this new exemption, namely that the portion of an annuity payment in terms of the clause which is regarded as capital will no longer be subject to tax. I think we have now agreed between us that this is a fair situation. The hon. the Minister has said so and it is quite right. However, I wonder whether he will perhaps be prepared to give some consideration to taking the matter a little further. The new provisions apply to a purchased annuity and only to a purchased annuity. There are other types of annuities where I think the principle holds good equally as well. I am referring to other policies which have a capital element, for example a family benefit policy. It seems to me that once we accept a principle, we should extend it to other types of policies where the payment really is, in effect, a return of capital.

It is interesting that when we make a suggestion which is going to make life a little easier for the Government, it is accepted with alacrity. I refer to the small matter for which the hon. the deputy Minister was kind enough to thank me. This is in connection with clause 23 of the Bill where in future we shall not have to come to Parliament with regular monotony each year to ask for confirmation or for authority for these ex gratia payments. It is a technical issue; it is nothing else. Nobody is trying to avoid taxation, but it is just that the Act is so constructed that sometimes you have a situation which is unavoidable. As I said, when we discussed this earlier this session, we have full confidence in the ability of the Secretary and his department to deal with these matters.

It is interesting to see how expeditiously a recommendation from this side of the House can be adopted. If the hon. the Deputy Minister and my friend, the hon. the Minister, will only continue in this way, we shall get things right so much more quickly and we shall save an awful lot of time, because we shall not have to repeat them every year. When we make a recommendation, we do so with all seriousness and after a great deal of consideration.

The provisions of an Income Tax Bill go far beyond the simple act of increasing or reducing taxation. A change in the scope or rate of income tax is an instrument which is used by the Government to achieve objectives in a variety of areas. I want to refer to two matters which we believe should have the attention of the Government.

It will be readily conceded that higher productivity is one of our most urgent current requirements. The hon. the Minister accepted this this morning and we all know it is basic to what we are trying to do. I believe the hon. the Minister and the hon. the Deputy Minister missed an opportunity to strike a blow for further productivity by failing to give further relief to the married working woman. The hon. the Minister is moving too cautiously in this matter. It was in 1965 that the then Minister of Finance, Dr. Dönges, made the first concession to the married working woman by introducing a formula which reduced slightly the rate of tax on joint incomes up to just over R8 000. In 1968 the formula was somewhat improved but not to any great degree. The following year, 1969, following the report of the Franzsen commission, the then formula was scrapped entirely and a flat allowance of R500 per annum was introduced in its place. However, there was a proviso that this R500 was reduced by R1 for every R10 by which the combined income of husband and wife exceeded R8 000. Last year a further change was made and the proviso for the tapering off of the R500 where the joint income exceeded R8 000 was removed. The allowance remained at R500 irrespective of the joint income. This is where we stand today.

I really believe in all seriousness that we should do more. The R500 allowance in 1973, taken into the context of cost of living and salaries earned and what-have-you is far too low. I think we have one of the lowest employment ratios of married women workers in the Western world and if we want to change the situation we have to offer a financial inducement to the working woman far in excess of R500. I do not think R500 means terribly much today. We introduced it in 1969 and it is now 1973 and the whole complexion of salaries has changed to such an extent that there are many married women today who could and would be working today who are not working. The tragedy is that we are not getting the top calibre of married woman, in other words, the professional woman, the university-trained woman, the woman who can go into commerce and industry. The experienced person does not have sufficient incentive because all she gets is this allowance of R500. We have believed for some time that the ideal would be to go over to a system of individual taxation, but I would say that this is still some distance away. Therefore, I would like to ask the hon. the Deputy Minister to give further consideration—he cannot do it this year, but next year—to this whole situation. We need these women desperately and I believe we have to go out of our way to make it worth while for them to come into commerce and industry and into the professions. I believe that once you commit yourself to a principle, as we have done in this case, you should use it to its maximum benefit. I do not think that we are doing so.

The second issue is that of making the interest payable on mortgage bonds on residential property deductable for purposes. I do not have to deal with the shortage of housing; that has been dealt with fully in other debates. But what I do say is that if we really want to encourage home ownership, ownership either of homes or of sectional title flats, the most potent weapon we could use would be to make the interest payable on bonds for homes tax deductable. The hon. the Minister has taken a number of steps towards making home ownership more easily attainable this year. These are very important steps. He has made meaningful concessions in respect of transfer duty. I think this is going to give a great impetus to young people to acquire their own homes. He has improved the conditions relating to the home-ownership saving scheme; he has enabled the building societies to obtain more funds for household bonds by permitting tax free investment in building societies. We welcome these measures; they are very important measures. Nevertheless I still believe that we should follow the pattern followed overseas in many countries where the interest payable on mortgage bonds is tax deductable or deductable from income, because this would be one of the most important steps we could take. There is a moral issue involved here. There was a report in the Press a little while ago saying that a certain gentleman had paid R250 000 for his house. That is a lot of money for a house, but I do not think that that was a very big amount for the gentleman involved. Had he invested his R250 000 say, by lending it, he would have received 10% interest on it, namely R25 000 per year, before tax is deducted. As a wealthy man with other income he would have paid the marginal rate of 66% on this R25 000. In other words, he would have paid an amount of R16 500 in tax. That would mean that he would have been left with R8 500 per annum after tax. A man who buys a house for R250 000 does not take a bond; he pays in cash. Therefore he has an amount of R250 000 which he invests in a house, which actually costs him R8 500 per year after tax, and the remainder, the R16 500, is borne by the fiscus. This is the tax the country loses by this man putting his money into a house instead of putting his money into an investment which would bring him a 10% return. Therefore the rich man has a very, very important benefit here. He is getting the income on the R250 000 that he has invested in the house tax free, whereas the little man who only has a small amount of capital to invest in his home and who has only a low marginal rate gets no benefit whatsoever. This is a case which I think should be given very serious thought, because I think that the rich man is getting preferential treatment. If you are rich enough to buy and pay for your house you gain a very substantial tax benefit over the little man who cannot afford more than a small deposit. I think he is being penalized. I hope that the hon. the Deputy Minister will give consideration to the points I have raised. Perhaps we can deal with them in the coming year. I have raised these matters objectively, I hope, to try to achieve the two objectives I have mentioned. The first relates to the position of married women. I said that they should be enabled to go into the business, the financial and the educational sectors, and so make a real contribution towards productivity. The second is in regard to interest on home mortgages, namely to assist the small man, the younger person, to own his home and to give him at least the same advantages that the wealthy man has in terms of our laws. This has been an interesting Bill this year, because for the first time in many years we have had no additional tax proposals. We therefore welcome the Bill and it will have our support.

Mr. Speaker, the hon. member for Parktown has just said that they welcome and support this Bill, and therefore it would probably not be fitting for me to make a long speech about it. However there are a few remarks I must make.

It is very clear to me that all this Bill does is give effect to the proposals made by the hon. the Minister of Finance in his Budget speech. There are a few minor exceptions, but in general it simply gives effect to those proposals. I have a problem with the hon. member for Parktown again, who simply could not resist the temptation to make himself guilty of a certain measure of doubletalk. Again this afternoon he elaborated on the necessity to lower the maximum marginal tariff from 65% to 60%, with which, of course, I fully agree. But if the hon. the Minister were to respond to this appeal by the hon. member for Parktown, then as surely as twice two is four he will come along at the next Budget and say that this is a rich man’s budget again. This is our problem with the hon. member.

Now it is true that the hon. member has often come up with proposals which have subsequently been accepted by the hon. the Minister; we readily concede this. What we do expect, however, is that when the hon. the Minister does pay attention to suggestions made by the hon. the Opposition, the hon. the Minister should not in the same breath be accused of benefiting the rich people only.

Another aspect to which I should like to draw attention, is the question of working mothers. I want to concede at once that the hon. member for Parktown presented a good plea for the married working woman. But here, too, we are dealing with priorities. Although the hon. member pleaded so eloquently for concessions, he must appreciate that the hon. the Minister is only able to act within the framework of the possible. He cannot make tax concessions if by so doing he is unable to balance his books. Now, it is true that the hon. the Opposition is continually pleading for increased expenditure by the State for the establishment of a greater number of services. It is not so easy for the hon. the Minister to balance his books when there are requests on the one hand for more expenditure in order to provide more services, and for concessions in regard to tax on the other.

You will get in more tax, because more women will work.

I fear the hon. member’s logic is letting him down, for if he should make a concession of R2 000 on the income of a working woman, the tax on that would not be R2 000. Perhaps it would only be R500, and then he must still get R1 500 from somewhere. I fear therefore that the hon. member’s logic is letting him down in this respect.

I have already said that this Bill gives effect to the proposals made by the hon. the Minister in his Budget speech. As I have said, there are a few exceptions, such as the concession in respect of expenses incurred on behalf of handicapped dependents. This is being brought into line with the principle which is already being applied in regard to income tax on aged persons where a person with an income of up to R1 700 does not pay tax and where subsequently, up to and including R4 000, the concession in respect of his tax gradually decreases until, at R4 000, it disappears completely. This principle is also being applied now in regard to the costs incurred on behalf of handicapped dependents, and we welcome this, of course. I am very grateful for it.

Personally I only see one shortcoming which I should like to have seen rectified, but I want to say at once that I admit and accept that it could not have been done in this Bill because it would have affected the entire Budget of the hon. the Minister of Finance. However, I want to make another appeal to the effect that much more attention should be given in future to the desperate lot of those retired persons, those aged persons, who live off their own income. There is no doubt that here we are dealing with people who are really suffering hardships. Recently my hon. friend and colleague, the hon. member for Worcester, who sits quite close to me here, again discussed with me the enormous problems he has to deal with because he has so many pensioners in his constituency. People who were able to maintain quite a reasonable standard of living when they retired, are today, as a result of the effect of inflation, no longer able to maintain a reasonable standard. Here I want to say at once that I accept that this cannot be rectified in this Bill because it would affect the Budget, but I do want to advocate that more attention be given to this in future. If a person has provided for his old age by making sacrifices during his working life, we dare not ever penalize him in his old age for having done so. We must accommodate him because we would otherwise be destroying a people’s will to save. If two people work side by side and the one lives off his entire income while the other saves for his old age, the man who has lived off his entire income—equal to that of the man next to him—is provided for by the State in his old age, but the man who has lived frugally, who has sacrificed and really experienced hardships, becomes bitterly dissatisfied when, a few years after his retirement, he finds that his income is no longer adequate and that he is suffering hardships, because he suffered hardships while he was working, while the other man did not, but lived off his entire income. Now this person who suffered hardships while working for a pleasant old age, becomes bitterly dissatisfied, and rightly so. That is why I repeat that I accept that nothing could have been done about it in this Bill, but I hope and trust that something will be done for these people in the next Budget.

Mr. Speaker, I too would like to make a plea but on behalf of another category of taxpayers. This is a matter which has possibly been discussed in this House before and I would like to direct the attention of the hon. the Minister and the hon. the Deputy Minister to it again because there are a number of these people who constantly complain about what they feel to be differentiation so far as their status is concerned with regard to the method of taxation. I refer to the divorcee who, in many instances, although divorced, still finds herself faced with all the problems with which any widow is faced. In terms of the definitions, a widow or widower is included in the definition of a married person, but a divorced person is not included. Save for certain abatements for their children, divorced persons are being taxed on the basis of a single person and they are very sore about this because, as I have said, they feel that they have not by virtue of the divorce resolved all the problems which the average widowed person, who is accustomed to family life, to children, and possibly in later years to grandchildren, meets with in the course of her daily affairs. Therefore there is that differentiation about which they feel very unhappy indeed. They feel that there should not be any difference in approach with regard to the way in which their income is taxed. I do know that this definition provided for the widow as long ago as 1929—so I understand—and there should be no real reason why the position of the divorced woman should not be gone into once again. I have a letter here, for instance, from a dozen ladies who I suppose must be in their middle years, who complain not only about this particular issue, but about the fact that they are denied the full benefit of medical expenses which in the case of a married woman would entitle them to subtract R150 per annum, whereas a divorced person falls in a lower category, which only provides for an amount of R75. However, the amount conceded to them in this respect is another facet of the picture in regard to which they suffer. This problem is not only encountered by people whom one meets in the street. Even business and professional women’s organizations have discussed this matter before, and they feel that this is an anomaly which should be remedied. A divorcee with no dependants could hold the same job and have the same degree of seniority as the widow, but they pay different taxes. They feel that this is a matter which should be put right. That is really all I would like to add on the subject, because I know that this plea must have been put to the hon. the Minister on previous occasions. However, I do think that, as is the case with all taxation, advance is made gradually. I know the fiscus does not want to lose more than it should. However, I do not think that this is a matter which should be ignored, because there is, to my mind, not a great deal of money involved, except to the people making the plea. It is on their behalf that I would like to recommend that when taxation proposals are considered in future, the hon. the Minister should take the plea of divorced persons into account.

Mr. Speaker, the hon. member for Jeppes made a plea here for the divorced woman, and asked that she should be taxed on another tariff. I do not want to say a great deal about that. I think that the hon. the Deputy Minister will reply to that. I just want to tell him that it is true that nowadays, after the change introduced in the tax legislation, divorced women are far better off than previously. Previously they had to pay tax on the allowance they received as well, but nowadays this is tax-free. However, I think the hon. the Deputy Minister will deal with that matter in full.

I could not Quite follow the argument of the hon. member for Parktown in regard to a house which a rich man sells for R250 000. As I understand it, what his argument basically amounts to is that if this person were to invest his money, it constitutes an advantage to the rich man. I want to tell the hon. member for Parktown that in our circumstances a rich man has an advantage at all times. He is able to buy certain things which other people cannot. After all, a man without money who wants to buy a house must borrow the money, because he must nay the price for it. But if a man does have money, and he decides to buy a house for cash, why should he be prejudiced? Perhaps he does not want to get into debt: he wants to buy the house; perhaps he wants to bequeath it for one reason or another: perhaps he calculates that if he should make a straight purchase of the house, the appreciation in the value of land would be beneficial for his family. I believe that the argument of the hon. member for Parktown could perhaps be correct if one proceeds from the assumption that a man wants to invest the money, but in this case I really cannot see what the difference is. He has this advantage that he could sell the premises at a later stage and make a capital gain on it, but I do not quite follow the hon. member’s argument

You missed the point; you do not have these problems in Pietersburg!

Mr. Speaker, this Bill, of course, is one of the most pleasant Bills one has been able to discuss in this House in many years. It is an Income Tax Bill which proposes tax reductions throughout. Once again it proves the wisdom of this Government. Once again it is an indication of the good administration of this Government, which has now made it possible for these benefits to be passed on to our people. I want to convey my sincere congratulations to the hon. the Minister of Finance, as well as the hon. the Deputy Minister on this legislation. I hope that if this is the kind of income tax legislation which the Deputy Minister submits, there will be much more of the same and that we shall continue to have tax reductions. Instead of the Opposition saying “Thank you very much” for this, and instead of being satisfied, they are asking for more. They are never satisfied. The hon. the Minister cannot give more. I am sure that he would give more if he could, but there is such a thing as financial stability and the obligations of the State which must be met, and because of this it is not so easy.

I would like to refer to a few items in this Bill which are very important for our future growth and for investment in our production industries. I cannot omit to mention that we are very grateful for the fact that this 10% surcharge is now being reduced; this brings the marginal scale back to 66% The Franzsen scale is of course the ideal scale, but it is not so easy to achieve that position. I take it that we shall achieve this in future. Another item which in my opinion is very important, is the exporters’ allowance for which provision is now being made so as to break into overseas markets and maintain them. These eight items in regard to additional types of expenditure which are now to be allowed on a 100% basis, are in my opinion a step in the right direction. We are a country which is becoming increasingly dependent on exports and it is very important that provision be made for these items. I want to thank the hon. the Minister for this. I also want to say that in view of the difficult international monetary situation, to which the hon. the Minister referred earlier today, it is extremely important that we should retain our foreign markets. Another item which I think is very important, is the permission now given for the mines to write off capital expenditure during the year in which they are incurred. This will also greatly facilitate the position of the professional people dealing with this. Then, too, there is the question of the tax on undistributed profits. I am really pleased that that reserve of R20 000 has been increased to R50 000. The question is now: Is this R50 000 high enough? We must make a serious attempt to ensure that capital formation and accumulation is applied to better effect. This tax on undistributed profits is a very good tax. A balance must be maintained between the various companies so that they do not withhold money unnecessarily, but I do want to advocate that this be reconsidered next year so that the reserve could perhaps be increased. I am very pleased that permission is now being granted for purchases of machinery and equipment to be transferred to the following year. I believe that this will also encourage investment. Then, too, there is the question of investment allowances which are being increased not only in the metropolitan areas, but in our economic development areas as well. This is very necessary. I do not think there is another country in the world today which encourages investment to the extent that we do. Sir, we are all pleased that the 3% loan levy has been abolished, and we are also very pleased that company tax has not been increased. I hope that it will be possible for it to remain on the present basis. Our company tax is the very lowest in the world. If there is one great factor attracting foreign investors to South Africa, then it is the fact that our company tax is 41 cents in the rand.

Sir, I just want to associate myself with the plea made by the hon. member for Paarl on behalf of certain people who have saved over the years. In this connection I want to refer specifically to people who have saved their money through the years and lent it to other people on mortgage. Those people find themselves in this position: They may be sitting with a 10 or a 15 year mortgage and they may be elderly people. They are in the position that their capital is not growing to the extent that the country is progressing in the economic sphere. These people have to live on the interest they receive on the mortgage and after so many years they get the capital amount back; the capital is then worth so much less, in terms of the buying power of money, then it was when they invested the money in the mortgage. Here I want to plead for an accommodation for these people, similar to the accommodation for investors who have invested money in building societies. Building society dividends are now being dealt with on the same basis as the dividends of ordinary companies. Sir, in many cases the total income of these people comprises interest on mortgages. I want to plead for the introduction of a scheme in terms of which these people can re-invest a certain part of their income in such a way as to enable their capital sum to grow with the rate of inflation. The possibility of making specific concessions to these people so that the interest they receive on mortgages may be taxable on the same basis as company and building society dividends, could perhaps be investigated on an administrative level.

Sir, once again I want to congratulate the hon. the Deputy Minister on this legislation. I hope that next year he will be able to introduce an income tax bill which will be even better than this one.

Mr. Speaker, to begin with I just want to make the general remark that I agree with the hon. member for Parktown that we should do everything in our power to ensure stable economic growth, with a view to ensuring the overall prosperity of the country as well as improving the standard of living of the entire population. I just want to make the general remark at once that it is the responsibility of the State, as I see it in this particular regard, to identify the limiting factors which may exist and which militate against continued economic growth, and then to try to take steps to eliminate the factors which have a restrictive effect on our economic growth. I also think, Sir, that few could argue with me when I say that in its Budget proposals which are being implemented by means of this measure, the State has played its full part in ensuring economic growth. The contribution of the State comprises the measures adopted for the promotion of exports; the tax concessions; the reduction in the sales duty on certain commodities in these Budget proposals, as well as the reductions announced during the recess; also the export allowances and the raising of the limit on undistributed profits, to which the hon. member for Pietermartizburg referred here. I want to say that although the growth we foresee and for which those objectives were in fact formulated in this measure, is not reflected in the statistics, all the indications are there that this process of growth is gaining momentum. Naturally it would be difficult to quantify the percentage growth at this stage, two months after the budget proposals were tabled. But I want to say that since the State has made concessions in its sphere to stimulate growth, and since it has taken steps to increase liquidity and stimulate demand to a reasonable or moderate extent with a view to increased demand and production and a reduction in unit costs, there is in my opinion every reason for the private sector to avail itself of these opportunities. I think that seen from the point of view of the private sector, there is little reason for not making full use of these opportunities and concessions. I do not think that this is the time to have a repetition of a second or third reading budget debate except to say only that I think that if we were all to co-operate in emphasizing the positive opportunities that exist for economic growth, instead of overemphasizing the negative factors, which also exist, and in so doing ensure the confidence we need, I believe that we all have a responsibility in this particular connection to go into detail because we agree with one another on the overall objectives of economic growth.

I want to reply very briefly to the various arguments raised by hon. members. I want to hasten to reply to the hon. member for Parktown in regard to the misgivings and fears which exist in connection with the amendment of the Companies Act and the consequential amendment of the Income Tax Act in regard to the section 21 companies. First of all I want to say that the principle recommended by the Van Wyk de Vries Commission, namely that tax exemptions or reductions should be effected in terms of the Income Tax Act rather than in terms of any other legislation, is accepted by the Government. Secondly I want to say that the Government further accepts the principle that certain non-profit organizations with charitable and religious objectives, and which provide general social services as prescribed by the Act, qualify for tax exemption or tax relief. Thirdly I want to repeat that since the provisions of the Bill in respect of this particular aspect only come into operation in January, 1975, in my opinion sufficient opportunity is being afforded the affected companies which are experiencing problems as to whether they will still qualify in future—although they are seeking to achieve these praiseworthy objectives—for tax exemption or tax reduction, to make representations to the department to accommodate their particular circumstances. In my opinion, therefore, there is sufficient opportunity to cover the particular circumstances. In general I want to give the assurance that it was not the intention with the amendment of the Companies Act nor with the amendment of the Income Tax Act to penalize people doing charity work for other people. All that is happening at this stage is that provision is being made for the exemption, whether in part or in full, in this Act and not through another Act, and I hope that the hon. member will accept my assurance in this regard.

The hon. member referred once again to the question of annuities and also the scope of the amendment. I want to concede to him immediately that there are various forms of annuity which are not defined within the scope of this amendment. I do not consider it necessary at this stage to debate the other forms of annuities. Suffice it to say that we have now taken the first step, and this is to have made tax-free the capital repayment element of these annuities which consist of a single payment. I must concede at once that there are other funds to which people contribute. However, the fact of the matter is that the contribution to such funds is already deductible from the taxable income for tax purposes. I do not think that I should take this matter any further at this stage, except to say that we shall take a look at the various circumstances from time to time.

The hon. member for Parktown also made a plea that for tax purposes we should also regard interest on houseowners’ bonds or house bonds as deductible from taxable income.

†I should like to start off by saying that the prohibition in the Act itself of the deduction of private and domestic expenditure from a man’s income is, I think, a sound principle. I do not think anybody would be able to argue this particular statement with me. Because, were it not so, there would be no tax basis on which taxes could realistically be levied.

*I think there are a number of reasons for advancing the argument which the hon. member has advanced in this particular connection, but if one were to concede that the interest on house mortgage bonds were to be made deductible from the taxable income of a taxpayer, it would mean that one was accepting a specific principle, namely that one is making domestic expenditure deductible from a man’s taxable income …

No, what about medical expenses?

No, I shall take the argument further. The hon. member advocated only that we should deduct interest on house mortgage bonds from taxable income. But inherent in that is the principle that one should make the costs of accommodation deductible from taxable income. Let us consider the position of that person who does not have a house but who has to cede a certain part of his income for accommodation. He has to cede it in the form of rental. At what ratio should we begin? We should then be discriminating against those who have to rent a house, from whom rental would not be deducted, while on the other hand the interest with regard to the house-owner is being deducted. The man who owns the house, in any event, still has the benefit of possible capital appreciation on his asset, while the lessee does not have this. I think hon. members will concede that a number of different forms of deduction are already being allowed, but I think that if we should accede to this particular one, it would entail a substantial reduction in revenue for the State.

†The costs to the fiscus would be considerable. Let me give the following information to the hon. member. If regard is had to the fact that bonds held by building societies alone amounted to R3 107 million at the end of January, 1973, and that the interest thereon could amount to approximately R250 million, the tax thereon at the very modest rate of 10% would amount to R25 million. If you concede this sort of revenue you have to find it elsewhere.

*Mr. Speaker, I think that at this stage I have replied adequately to the question posed by the hon. member. We can discuss this matter again at a later stage. I want to say that I am not unsympathetic towards these people. However, one cannot, when one is dealing with fiscal measures, operate on an ad hoc basis. We shall consider all the proposals and give attention to them from time to time.

The hon. member has referred to the position of married women. The hon. member argued that we should raise the amount of the deduction in regard to the income of married women, which at present stands at R500, further. He argued that the principle had been introduced for the first time in 1969, and that the salary structures and levels had changed since then so that the amount of R500 was longer realistic. He accordingly argued that it should be raised. The hon. member also said that the hon. the Minister often presents reports of commissions as an argument when introducing certain matters which are in accordance with such reports, but that he nevertheless deviates from the recommendations in such reports when it suits him. I think the hon. member will concede that we cannot merely govern by reports of commissions and that we have to govern in our own right.

I want to say that the Franzsen Commission found no decisive or convincing evidence that the amount allowed at present is inadequate to cover the situation. I want to try to explain at once that this concession is not aimed at compensating the person for the additional expenditure incurred by such a married woman in making the additional contribution to the joint income. Here, too, we must beware of too large a gap between the taxability of people where there is only a single bread-winner in the family and those where there are two. The Franzsen Commission arrived at the conclusion—and I concur—that there is no real justification for drawing too great a distinction between families solely on the basis of the fact that in one case the woman earns an income, because serious discrimination against a single bread-winner could arise from this. I should like to mention an example. Let us take family A which comprises a man and a woman who work. The man earns R7 000 and the woman R3 000 per annum. As against this, let us take family B which has only one bread-winner. He earns R7 000 by way of salary, but by working overtime or by doing other work in addition to his norma work, he earns an additional R3 000. The income of both families is then R10 000 per annum. Both families have two dependent children who must be cared for. Because of the R500 per annum deducted from the income of the wife, family A will pay R1 177, but family B will pay R1 309. Consequently there will be a difference of R132 between the two families. If the amount which could be deducted were to be increased to R750 per annum, the difference would then be R198 and if it were to be made R1 000 the difference would be R295. I should like to continue by saying that the Standing Committee on Income Tax will also consider this particular issue and will also consider the circumstances involved to assess whether the concession is still adequate to serve the purpose for which this was introduced. I hope that the hon. member will be content with my reply.

The hon. member for Jeppes referred to the position of the divorced woman. I want to say at once that other hon. members have already at various stages presented corresponding pleas to us. The hon. member for Bloemfontein West did so, and other hon. members as well.

†I should like to say that the tax treatment of divorced persons is a vexed one. I think this has taxed the ingenuity of successive Ministers of Finance and their officials to the extreme.

And Deputy Ministers.

It has been said that the levying of taxation is not a science but an art.

What do you say, Chris?

I agree, because I think a truer word has never been said, especially in view of the question of maintaining parity of taxability between the various classes of taxpayers. I think the hon. member is perfectly correct where he has pointed out that parity does not exist in the treatment of the widow as against that of the divorced woman in certain cases. One of the principles of taxation which is as true today as it was when it was first enunciated by Adam Smith is that tax should be levied according to the ability of the taxpayer to pay that tax. Looking in isolation at the method of taxation of a divorcee, I would submit, and I am sure, that this requirement has been met, especially in cases where there are no children dependent upon the divorcee. Unfortunately, when it comes to tax measures the position of the divorcee is not being looked at objectively, but is compared, as I have said, with that of a widow or widower who is, for tax purposes, treated as a married person.

*The question arises whether the fault does not lie in the latter situation and whether the divorcee is not being accorded unfavourable treatment, stemming from this set of circumstances.

†I would like to say immediately that having regard to the principle of the ability to pay, the tax treatment of the widow is probably out of step. However, I hasten to say that there is no member who would come to me and suggest that we should not allow these benefits to the widow which are allowed to widows at present. The treatment of widowed persons goes back, as the hon. member quite correctly indicated, to 1929, when the difference in tax treatment between single and married persons was very small. There was only one rate of tax, and the only difference was in the differentiated tax abatements. The tax principles were not so clearly established at that stage.

*Once again I want to say at once that at this stage I am unable to accede to the plea by the hon. member. I think that we should refer this provision as well to the Standing Committee on Income Tax for further investigation.

I think that I have now replied to hon. members opposite, and I just want to come back briefly to the hon. member for Pietersburg who expressed his thanks for the benefits flowing from this legislation in regard to those capital expenditures deductable in the year in which they are incurred. He referred to the benefits of the raising of the reserves of undistributed profits from R20 000 to R50 000.

Like the hon. member for Paarl, the hon. member pleaded on behalf of those people who are living off an income accruing to them from their own savings. I want to say at once that we have every sympathy for these people who have provided for themselves and who now, as a result of the price increases and inflation, find themselves in the position that the value of money is depreciating. I want to say at once that various concessions have already been made to people who live off the interest on their incomes, concessions in the form of investment opportunities in which they can at least avoid taxability in regard to that income. For example there are the State’s own forms of investment. There are building society benefits where people can invest free of tax or partially free of tax. I could just conclude by saying that once again we shall not be unsympathetic towards the voices which have been raised in this particular connection. We are sympathetically inclined in regard to these people who are unable to augment their own incomes as other people are able to do. We shall lend a sympathetic ear as far as that is concerned.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Clause 8:

Mr. Chairman, I would like to join the hon. member for Parktown in welcoming this measure to exempt from income tax the capital element in the payment of annuities as far as annuities which are paid either to the person who purchased them for a lump sum in the first place or to his spouse are concerned. The query I want to put to the hon. the Deputy Minister is why this concession is confined to the original purchaser and his spouse and third parties excluded from it. I can see no difference whatsoever in principle of excluding from income tax the capital amount of an annuity whether that annuity is enjoyed by the purchaser himself, by his wife or by a third party. There may well be instances where annuities purchased in a lump sum for a third party would attract donations tax, but I can see no reason whatsoever for their attracting income tax. This is a capital repayment made originally in a lump sum which is being returned to a third party. I would like to mention to the hon. the Deputy Minister that I think in practice annuities purchased for third parties are purchased for persons who are, generally speaking, not well off so that they are not likely to attract income tax to any great extent. There would therefore not be a great loss of revenue if this concession were to be extended. I think annuities purchased for third parties are often purchased for less well-off relatives of people, for faithful servants and by employers as retirement benefits for their employees. It seems to me quite wrong that the capital element in those annuities even though they be for third persons, should be taxed. I would like to learn the thinking of the hon. Deputy Minister in this regard.

Mr. Chairman, I just want to explain again that the amendment which is being introduced now in regard to that portion of an annuity repaid as capital, is in fact a recommendation arising from the report of the Franzsen Commission. In the second place and as I have said, the hon. member for Parktown made several pleas in this regard. I must say immediately, however, that there is a difference in respect of these annuities bought by a person for himself, or for his dependants, or for a third person. In the normal course of events the receiver of an annuity pays a certain amount to an insurance company and the insurance company undertakes to pay him an annuity up to the death of the receiver of such annuity or until the expiration of a particular period of time. It is true that there will be an element of a repayment of personal capital when such annuity is paid up to his death or for a specific period of time. This clause now limits the scope to this specific set of circumstances. What the hon. member asks now, is why we could not go further and also apply this in respect of annuities purchased for third parties. But the underlying element and principle is not the same when a person buys an annuity for himself and when he buys the annuity for someone else. In a case of this nature the beneficiary made no contribution towards the annuity whatsoever.

†Where in the first case a man has made a capital contribution towards his annuity and consequently there is the principle that in the repayment of the capital part of that annuity to him, his own capital repayments should not be taxed, the position is completely different in the case where one person has purchased an annuity for a third party. In that case the third party has made no capital contribution towards that annuity. When the annuity is therefore paid to him there is no element of the repayment of own capital to that particular third party. It is therefore not possible to extend the provision of the Bill to cover that eventuality.

Clause agreed to.

House Resumed:

Bill read a Third Time.

Mr. Speaker, I move—

Even before the First Reading of this Bill copies of the draft Bill as well as the explanatory notes were made available to certain hon. members on both sides of this House so as to enable them to study the provisions, since these constitute voluminous legislation comprising a host of items.

Except for the customary section in regard to the commencement of certain provisions contained in the Schedules to the Bill, the text of the Bill consists mainly of less important corrections.

Section 48(2) of the Customs of Excise Act, 1964, provides that the Minister may from time to time amend Schedule No. 1 to the said Act, on the recommendation of the Board of Trade and Industries or whenever he deems it expedient in the public interest to do so, by reducing any duty specified in the said Schedule. Sometimes it happens, especially in respect of sales duty, in regard to which the hon. member for Constantia makes pleas from time to time, that the Minister introduces such reduction with retrospective effect, i.e. a reduction on which he has decided and of which notice has been given. At the moment there is no provision in the legislation for providing for such a set of circumstances. Provision is now being made in clause 1(b), in terms of which the Minister may, after consultation with the Board of Trade and Industries or whenever he deems it expedient in the public interest to do so, introduce such a reduction with retrospective effect. This provision will be implemented circumspectly and use will only be made of it in exceptional cases.

As hon. members are aware, the sales duty on motor vehicles was reduced by 2½% with effect from 17th November, 1972. Although this reduction is only applicable in respect of motor vehicles removed from any customs and excise manufacturing warehouse on or after the said date, the manufacturers immediately passed on the reduction to the buying public by reducing the prices of motor vehicles sold by dealers as from 17th November, 1972.

†In other words, the price was reduced on cars that were on the floor on the 17th November, 1972, on which the higher sales duty had in fact been paid by the dealers. When the tax was reduced, the purchase price of the cars was in fact also reduced at the expense of the manufacturers.

*Since several weeks sometimes go by before a vehicle cleared from a customs and excise manufacturing warehouse is sold, this had the effect that motor vehicles on which the higher sales duty had been paid, were sold by dealers at the reduced prices and that they consequently had to bear that loss. Such vehicles were therefore sold at a loss to the manufacturer. It has been ascertained that vehicles sold on 17th November, 1972, had been removed from the customs and excise warehouses concerned during October, 1972, and, in exceptional cases, before October, 1972. In order to compensate manufacturers or their loss in income it is being proposed that the reduction in the rate of sales duty on motor vehicles be made retrospective to 1st October, 1972. A provision to this effect is contained in clause 6(8) of the Bill. Allow me just to say in passing that I want to express my appreciation to the motor industry, which immediately put the reduction in the sales duty into operation as from the effective date, with the result that the consumer public herefore received the benefit of the reduced sales duty on motor vehicles.

The Schedules, which comprise the major part of this Bill, also contain—except for the taxation proposals in respect of imported and excisable cigarettes and cigarette tobacco—amendments to the Schedules to the principal Act which were effected by notice in the Government Gazette on the recommendation of the Board of Trade and Industries during the period 29th January, 1972, to 2nd February, 1973, and which are now being sanctioned under the provisions of the said Act.

Mr. Speaker, I want to thank the hon. the Deputy Minister for letting us have the Bill and the explanatory memorandum some time beforehand. It was of great assistance to us. But if my memory serves me correctly, in previous years we have had a printed copy of the explanatory memorandum available for all members. We have not had it this year. Perhaps the hon. the Deputy Minister will be able to tell us what has gone wrong.

As is customary, the Bill before us covers the recommendations of the Board of Trade and Industry, amendments to enable us to deal with the Brussels nomenclatures and the implementation of the Budget proposals of the hon. the Minister of Finance in so far as they affect customs and excise and sales duty. But there are a number of matters this year which I want to discuss. The Bill makes provision for an increase in duty on a number of items this year, inter alia towels, fencing and baling wires, certain aluminium products, tubes, piping, tableknives, aluminium slugs and many other items. All these increases carry the approval of the Board of Trade and Industry. But I presume that a great number of them, if not all, arise from the policy of tariff protection instead of import control. We subscribe to the policy of tariff protection instead of import control, but I think we have made it quite clear on a number of occasions that we believe that tariff protection should only be given in certain specific instances, for example, where we are dealing with industries which are essential for the security of the State. These industries have to be built up and, if necessary, against foreign competition. We have said that we go along with tariff protection for industries that are export orientated or industries that are labour intensive because of the essentiality of providing the maximum number of jobs which we can in South Africa. There are probably other industries which I have not mentioned with which we would go along in respect of this policy. But I hope that the policy is going to be that tariff protection should be used only in special and specific cases. It should not be a general concept that tariff protection should be utilized for the protection of industries now that we are gradually and, I hope, continuously going to move further and further away from import control. Because every time we impose a higher duty on an item that we import into South Africa, we are aiding inflation. We help inflation in two ways, either by the direct increase in the cost of the imported article, or by increasing the cost of local goods by removing the price discipline of imported competition, and one of the things that we need to accept in spcific cases is the discipline of importation to see that the prices of local articles do not get out of hand. When we are faced with this rate of inflation which we are having at the moment, I believe that the question of increased duties must be handled with a great deal of care and after a great deal of investigation.

Sir, there is one increase in regard to excise duties to which we cannot subscribe and to which we are opposed, and that is the increase in the customs and excise stamp duty on cigarettes. This has gone up from 6 cents to 6,5 cents for 10 cigarettes, and there is a similar increase in the duty on cigarette tobacco. Sir, this is going to produce R9 million a year for the Fiscus. Flow did the hon. the Minister of Finance motivate this increase? He said—

Sir, I would hazard a guess that the public would be very happy to put up with the inconvenience of the odd ½ cent on cigarette prices in order to save ½ cent on a packet of 10 cigarettes. I think I can speak with a certain amount of confidence and say that I speak on their behalf when I say that they regard R9 million as a high price to pay for the removal of a small inconvenience. We cannot support this duty, Sir, and we will vote against it in the Committee Stage, when I will have a little more to say about it.

The Bill makes some provision for the reduction of sales duties and in other cases for the removal of sales duties. Some of these were announced some while ago. For example, we do not pay a sales duty on soap any more. But we do not believe that these reductions or removals go far enough. During this period of unprecedented inflation that we are going through, we believe that the hon. the Minister and the hon. the Deputy Minister have got to reduce sales duties to the lowest possible level. In fact, most of the sales duties, except on luxury items, should be removed even if only temporarily. The hon. the. Minister knows that one of the few non-inflationary measures that we can take to help the struggling public is to reduce sales duties further. We are still expecting to collect R162 million from sales duties this year. Sir, that is a lot of money. Originally, when the sales duty was first introduced, we were going to collect R90 million; that was the objective. Last year we collected R180,5 million, and this year it is going to be R162 million. We believe that the hon. the Deputy Minister could well give up a great deal of this money. He has the power to do so; as a matter of fact, he has now taken the power to do it retrospectively. Why take powers if you do not use them? Our advice to the Government is to use these powers and to reduce these duties very considerably. There are a great number of bread-and-butter items where we would like to see the sales duties completely removed, or at least greatly reduced. Sir, we have a problem here in that the only items that we can deal with are the items that appear in this Bill, otherwise we would have a lot more to say. But nevertheless we will propose in the Committee Stage a wide range of items where we think this duty should be completely removed. We believe that at this stage everything should be done to bring down the cost of living as quickly as possible.

There are some interesting items in the schedules. We have for example on page 40 of the Bill the tariff dealing with television sets. It does not really matter what the number of the tariff is, but television sets now attract a duty up to R500 and on television parts we have very much the same thing, where an enormously high rate of duty is put on. I think R250 is the actual duty on a television set or if you import it you cannot land it at a cost of less than R500. In other words, if you manage to buy a television set overseas for R100 then the duty becomes R400. On page 19 of the memorandum it says the duty on television receiving sets, excluding cabinets and other parts thereof, is increased from 20% to 100% or R500 each less the f.o.b. price. That is quite an increase. In 85.21.15 and 81.21.25 specific provision is made for picture tubes of the kind used in television receiving sets and the duty thereon is increased from 12,5% general and 7,5% preferential to 100% or R250, and 95% or 250 each less 5% preferential, recommended by the BTI. So it seems that the BTI have decided that no television sets are going to enter the country, except that there is a saving proviso, I must admit, later in the Bill which says that the Secretary for Commerce and Industry can allow them to be brought in by permit at a rebate of full duty less 12,5%. Perhaps the hon. the Deputy Minister would like to tell us something about these duties on television sets. The amendments to Schedule 7 seem to be well-conceived and we welcome them but I also want to mention one or two. The first one is on page 88. There we have a sales duty situation where at present goods purchased by schools, colleges, etc., get a reduction of sales duty only in respect of furniture. This has been extended to cover all goods purchased by such schools or colleges for their own use which will now be subject to rebate of the sales duty. This is a very good thing, and we welcome it. Then if we go on to page 92 you have under 706.01 another sales duty item. There is now a refund of the full duty, the full sales duty, by an exporter registered with the Secretary for Commerce as an approved exporter. It would seem to me that this is to enable goods purchased in this country for export abroad to be free from sales duty, and that again is satisfactory. We then move on to page 94 and again there is a new provision, 708.03 abandoning sales duty on goods sent abroad for processing or repair, provided they are exported under customs and excise supervision, retain the essential character, are returned to the exporter and no change of ownership takes place. That is another very useful proviso. Then we have item 709.04 on page 94, a full rebate of sales duty on bona fide unsolicited gifts of not more than two parcels per person per calendar year and of which the value for customs duty purposes per parcel does not exceed R10 (excluding goods contained in passengers’ baggage) consigned by natural persons abroad to natural persons in the Republic. These gifts which come from abroad have for some time not been subject to customs duty, but have been subject to sales duty. We are glad to see that this has now been removed.

In this connection I would like to pay a tribute to the Secretary for Customs and Excise and the department for being mindful of these things that affect the public. Customs duty and sales duty become very personal things as far as the public is concerned. There is a direct impact of these duties. You arrive from overseas for example and find yourself faced with a certain set of circumstances or you get a gift from abroad as we have here. It affects you personally. There have been in the past a number of pinpricks which the public has had to put up with. It is encouraging to see that cognizance is being taken of things which are important to the public but of very little consequence to the fiscus. It is the same in regard to the question of schools. I have had to approach the department on a number of occasions for relief in regard to purchases of items for schools in so far as customs duty and sales duty are concerned. It concerned a number of items which were not classified as furniture. Now that problem has been overcome. Where parents through their own funds buy equipment for the school those items become the property of the school immediately they are handed over to the school.

It becomes the property of the province.

Yes, immediately they are handed over by the parents, they become the property of the province. It is important that these items should not be subject to the duty or the sales tax. We are therefore glad to see that the sales duty side of it is now excluded in terms of this Bill. We will support the Bill at the Second Reading. In Committee Stage we will have something to say about tobacco tax, cigarette tax and something further to say about sales duty.

Mr. Speaker, the hon. member for Parktown made it clear to the hon. the Deputy Minister that we are not opposed to the application of tariff duty where it is applied for the protection of local industry within the Republic and where it is in the public interest to apply such tariffs. This is particularly so in order to inhibit the dumping of surplus production of goods from overseas countries in the Republic at very much reduced prices. The hon. member for Parktown referred to an explanatory memorandum which he had received. It appears that we do not only have most favoured nations when it comes to goods imported into this country, but we also appear to have most favoured members in this House who get explanatory memoranda. I want to add my word to those of the hon. member for Parktown in regard to the lack of an explanatory memorandum this year. We have had it in the past and I believe it to be a system which should continue. I must protect again that we need these explanatory memoranda not only in respect of this Bill but in respect of many others, where we did not have them during this session.

The hon. member for Parktown said that we accept the principle of a tariff duty to protect local industry. He went on to say that the Government must deal with each particular item as it comes before it and that there must not simply be protection for protection’s sake and that it should not be at the expense of the local consumer in particular. I am sure the hon. the Deputy Minister knows that I wish to refer to an item, a protective tariff which was applied by Government Notice R.483 and published in the Government Gazette on the 30th March, 1973.

You cannot discuss that now.

I disagree with the hon. the Deputy Minister. I believe that it can be discussed now and I believe that it is the right place to discuss it in terms of this particular Bill. The tariff protection that I am referring to is in regard to seamless steel piping of up to 114,30 millimetres or 4 inches in diameter, and welded pipes and piping up to a diameter of 168,30 millimetres or 6 inches, to which this hon. Minister, as the result of a recommendation of the Board of Trade, has applied a tariff of 15% ad valorem, plus 220 cents per 1 000 kg on imports. As I have said, if the local production of piping in this country is adequate to meet the demand of the people of South Africa, I agree with such tariff protection. However, what is the position in South Africa? What do we find is the position regarding steel pipes in this country? I asked the hon. the Minister of Economic Affairs on 29th May what the position was. We find that during 1972 the average production of steel piping in this country amounted to 27 000 metric tons per month. Of that, 900 metric tons were exported. I agree that we should export it and that we should maintain our export markets by all means. The imports amounted to 2 400 metric tons and the local consumption was an average of 28 500 metric tons per month. It means that it is 1 500 metric tons above the local production of steel piping and 2 400 metric tons above what is left of the local production after we have exported the 900 metric tons per month. We find that in the first three months of this year the situation was even more serious. The average production for the first three months of this year was only 36 000 metric tons while the average consumption in this country was 38 400 metric tons. It means that the gap has now increased from 1 500 metric tons per month to 2 400 metric tons per month. We also find that there were applications for the import of steel piping. Thirty-one applications were received and they were all approved. The total sum involved amounted to R1 782 000, and that will pay for plus-minus 12 000 tons of piping. Quite obviously the department of the hon. the Minister of Economic Affairs acknowledges that there is a shortage of piping in this country and he therefore granted these import permits because the importing of piping was necessary. Let us deal with the question of the price of these pipes. I must admit that if the price was to be reduced by the importation of pipes, a protective tariff could have been justified, but the hon. the Minister, if I could only get his attention because it is quite obvious that he is not interested in listening to what I have to say … [Interjections.] He is more interested in what the hon. member for Smithfield has to say. It is all very well for the hon. the Deputy Minister to throw his hands around; he could at least show us the courtesy of listening to us when we make representations in this House. I think the hon. the Deputy Minister will have to learn this, and the sooner he learns it the better for him and for the House. The point that I am making is that if the hon. the Deputy Minister knew his job he would know that there is a ring price maintained in steel pipes in this country by the manufacturers of pipes. He would also know that in the last three months the ring price has increased by 20% and that the locally manufactured pipes in this country are being sold at 20% above the ring price, in other words, 20% above what it should be. It is being done because of this 15% tariff which has been added to the imported pipes. This could have kept the price of the locally manufactured pipes to an even level instead of allowing these dealers to increase their prices by 20%.

Who is fighting with you?

I am fighting with them and the hon. the Minister is going to fight them, too, because I believe that this is for the benefit of all the people of South Africa. We have outside of this building a tremendous block of flats going up. When is that block of flats going to be completed? They do not have the pipes to complete the building. Any order placed today with a local manufacturer of pipes by a dealer is met with the news that delivery will only take place in eight to ten months’ time, and if you are lucky you will get pipes from the local manufacturer in eight months’ time. But this Government places a tariff of 15% on the imported article which can serve two purposes, firstly, to keep the price of the local pipes down to the proper level and, secondly, to allow these buildings to be completed and to meet the demands for piping in the country at the moment. But this Government has placed a tariff on this article and has allowed these conditions to develop. One large firm of pipe resellers in this country two months ago went round to every large centre in the Republic and bought every foot of second-hand piping that they could lay their hands on and they are today holding the building contractors and home-builders to ransom because these people cannot even buy second-hand piping. One particular firm which has a supply of piping will not sell and every week the price is increased. This firm will not sell the small supplies it has because it knows that it has a virtual monopoly and will be able to sell those pipes at a higher price later. The price has been placed at an inflated level because of the tariff protection on the importation of piping by this Government.

But we must look further. What is the position in the manufacturing industry of steel pipes? Are they able to supply the piping? I go so far as to say that the answer is no. Now why are they unable to supply the piping? They are unable to supply it because South Africa, with one of the largest iron and steel corporations in the world, our own Iscor of which we are so proud, cannot supply sufficient steel for those firms to manufacture the steel pipes which are required. This was denied by the hon. the Minister of Economic Affairs in reply to a question on the 29th of May, 1973, but my information is that Iscor had to buy back the steel which it had exported from this country in an attempt to satisfy the demand of these manufacturers for that particular type of steel. This same question to which I have referred, replied to on 29th May, shows that there is a shortage of strip steel in South Africa, because in 1972 Iscor exported 101 000 metric tons of strip steel and imported 9 000 tons. But in the first quarter of 1973 Iscor only exported 8 000 tons of strip steel but had to import 12 000 tons, 50% more than it exported. But as if that was not sufficient, two firms have applied for and received permission to import strip steel to a total value of R2 890 000, which I estimate to be in the region of 28 000 tons of strip steel, to enable them to continue to produce pipes in this country. I believe that this is a shocking situation in which we find ourselves. When you find that these two firms to which I have referred now have their workers on short time because they do not have the steel to produce the pipes and that they are at the same time telling their dealers that if they are lucky they will get delivery in eight or ten months’ time, then I believe that time has come for the hon. the Minister to review the decision that was taken as a result of the investigation by the Board of Trade and which was published in the Government Gazette of 30th March, adding this 15% tax. I believe that in terms of the amendment we are now approving in clause 1, namely that the Minister may reduce these tariffs, with retrospective effect, he would be doing South Africa a service if he were to review immediately the tariff that was imposed on the 30th March and delete it with effect from the 1st April, 1973. I believe that a case can be made out for the 3 000 workers that are employed in this industry. The case was made, when the tariff protection was sought, that there were 3 000 workers who needed protection. I believe that today they need even more protection, because they are on short time now while we are sitting here. They are already on short time; so this is not something which is projected into the future. I repeat, I believe the hon. the Deputy Minister can do South Africa a service if he reviews the position and withdraws this tariff with retrospective effect to 1st April.

Mr. Speaker, the hon. member for Pietermaritzburg District has the ability to be obnoxious without even trying. I immediately want to tell him that he need not lecture me.

Order! The hon. the Deputy Minister must withdraw the word “obnoxious”.

I withdraw it, Mr. Speaker. I just want to say that the hon. member has no reason to give me a lesson in courtesy. But I paid attention to what he said. He began by asking where the explanatory memorandum is which has been printed in the past and given to members. That is surely not the case. It just goes to prove that in the past he has never taken the trouble to look for or read any memorandum in connection with the legislation that is being considered. Throughout the years it has been the custom for a limited number of the explanatory memoranda to be duplicated and given to the financial groups on both sides of the House. There is consequently no deviation in that specific connection. So there is no point in his getting on his cart and thinking he can score a point. As far as this Bill is concerned, the fact is that we are making a gesture to both sides of the House by giving them copies. A limited number are duplicated and made available so that the respective groups from both sides of the House can study the legislation before the time on the basis of the fact that the legislation is complex and bulky. Instead of the hon. member accepting this with thanks, he finds in this a reason to stand up here and speak in those terms without first going to confirm whether that is, in fact, the case.

The hon. member for Parktown mentioned various aspects that I briefly want to reply to. He quite rightly remarked that the increase in tariffs takes place on the recommendation of the Board of Trade and Industry and that the Department of Customs and Excise can approve or reject those recommendations. He said he believed there should only be tariff protection in specific cases. He referred, inter alia, to a few specific cases, for example industrial products for strategic purposes, for which there must be tariff protection. Secondly he said that this should not be employed to take the place of import control. I think it is important for me to say something in this respect. In the first place I want to say that the Secretary for the Department of Customs and Excise and this department, which is involved in that, are entrusted, from the nature of the case, with the fiscal aspect of tariff protection in general. The recommendations for tariff protection are considered by this department after the Board of Trade and Industry has made a recommendation to the Department of Economic Affairs, and that department in turn has directed the requests to our department. I want to say at once that the hon. member will know that as a result of South Africa’ lack of freedom in terms of the GATT arrangement of 1947—and I am not saying this in a spirit of reproach—it is today a fact that South Africa does not have the full right that most other Western countries have, i.e. to protect its industries. The practice has proved that because of our lack of freedom in that specific connection, the practical situation already exists such that South Africa is giving concessions in respect of 40% of its imports and obtaining direct concessions in respect of only 7% of its exports. In other words, our ties to GATT and the general principle that South Africa has conscientiously carried out its international obligations as far as possible, means that South Africa has been placed in a very bad position by virtue of this lack of freedom. Secondly I want to say, in that specific connection, that because a quid pro quo principle was accepted at the time, to the effect that for every concession obtained a concessions must be relinquished, it is becoming increasingly more difficult in view of the net result of the difficult position we are already in.

Business suspended at 6.30 p.m. and resumed at 8.05 p.m.

Mr. Speaker, before the House adjourned I was replying to the hon. member for Parktown’s argument in connection with tariff protection. I think I must make the general remark that the Government, like the hon. member, is very much aware of the fact that industry has a contribution to make to our economic development. I am happy to say that although the manufacturing industry, which is that specific sector in our economy for which the incentive measures were adopted in the Budget proposals, was only responsible for about 19,2% of our gross domestic product in 1952, the position has changed considerably. It is actually an achievement, for a young country like South Africa, that its factory system, its industries, could develop to the extent that their present contribution is about 23% and also that this is balanced and spread across a wide front. The hon. member is aware of the fact that the Government has been adopting a policy of tariff protection for its own industries since 1925. I think we are all experiencing the benefit of that today.

I want to say at once that I cannot agree with the hon. member about the fact that we should only use tariff protection for the protection of strategic industries; I think we must go further. I immediately concede that on a short-term basis tariff protection could also have a cost increasing effect, but on a long-term basis there are tremendous benefits which the country could generally derive from the protection of its industries, because on a long-term basis prices would be decreased and our country would be protected against foreign competition.

The Government accepts, in the first place, that there must be a positive policy aimed at the protection of our industries. Secondly, such a policy does not pre-suppose that we should remove the competitive aspect from our industries. But with the development, particularly after a Second World War, of enormous trade blocs that can compete on many markets, it has become more essential for us to protect our industries locally. I want to say at once that the protection is not supposed to result in industries not having to compete in terms of quality. I think the essence of this lies in the fact that industries must not depend solely on protection, but that they themselves must become competitive. I think they can only become competitive if they are protected, in the initial stages, from unfair competition abroad.

Sir, I do not intend to address the House for much longer, except to say that the hon. member spoke about the question of excise duty on cigarettes. Reference was also made to sales duty. The hon. member indicated that he would broach these two subjects again in the Committee Stage, and I therefore suggest that we discuss it then.

In conclusion I just want to reply to the hon. member for Pietermaritzburg District on the question of protection for steel pipes. I want to say at once that the tariff position, in other words the correct position in that particular connection, has already been applicable since 1925, and that applications were forthcoming, from the nine manufacturers of these pipes in South Africa, against what they claimed was unfair competition from abroad. The hon. member will be able to understand that at this stage I do not want to mention the countries from which the unfair competition came. But, Sir, the facts in that connection are that the investment in the industry of only four of the nine applicants represented more than R45 million; that in their industries they employ about 30 000 factory workers and that they can process 360 000 tons of steel annually. Important considerations were consequently submitted to the Board of Trade and Industry for the protection of these particular industries, for the reasons which I have mentioned here, but I immediately want to undertake that I shall consider the representations of the hon. member and refer them back to the Board of Trade and Industry to see if there is any merit in his standpoint.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Schedule 1:

Mr. Chairman, I move as an amendment—

This tariff item increases the sales duty from 6 cents to 6,5 cents on 10 cigarettes, and there is a similar increase in the duty on cigarette tobacco. Sir, I said in the Second Reading debate that the motivation of the hon. the Minister for this additional ½ cent on a packet of ten cigarettes was that it had been found necessary to give the cigarette manufacturers an additional ½ cent per packet of ten cigarettes because of rising costs, and the hon. the Minister said that to avoid any inconvenience to the public and to the supplier, he was going to make it easy for everybody and take an extra ½ cent duty which, as I pointed out a little earlier, is going to cost the taxpayer some R9 million a year. Sir, one of the problems that we have with the Government is that they are so utterly out of touch with what happens outside this building and certain offices in Pretoria. I have here a wad of cuttings out of newspapers from the Cape and the Transvaal, and the hon. the Minister of Finance will be interested to note from these advertisements that there are dozens and dozens and dozens of items which are all sold at something plus ½ cent. Here are some examples: Yoghurt, 5½ cents, Quinn’s honey and spice, 19½ cents; guavas, 10½ cents; custard powder, 23½ cents; grapefruit juice, 39½ cents; meal, 29½ cents; Bovril, 47½ cents; tinned soups, 19½ cents; Carlton serviettes,10½ cents. Sir, I could go on for hours. I do not know how much more evidence the hon. the Minister would like to have. Here are some more examples: Bournville cocoa, 49½ cents; instant soups, 11½ cents; buttermilk rusks, 42½ cents; Eno fruit salts, 47½ cents, and then something in which the hon. the Minister and I are interested: Brylcreem, 47½ cents.

And also the Minister of Defence.

Yes, and also the hon. the Minister of Defence. Here are further examples: Golden Spread margarine, 14½ cents. You find in the case of item after item that the prices advertised are so much plus ½ cent. If you follow the logic of the hon. the Minister’s argument, that is, that in order to save the public the inconvenience of paying in half cents you must increase the sales duty by ½ cent on all these items, then I think he could do away with all other forms of taxation, because this would produce enough money for him to run the entire country, if the principle is accepted that you must not deal in ½ cents. Because this is what the hon. the Minister said; he wants to save people inconvenience. Sir, the public are being inconvenienced to their benefit, morning, noon and night, by virtue of the fact that practically every article that you can buy in the line of groceries is being sold at so much plus half a cent. I think therefore that the hon. the Minister’s argument really falls away, and I hope that the hon. the Deputy Minister is going to stand up and tell us that in view of the fact that it has now been proved beyond any shadow of doubt that it is no inconvenience to the public to pay in ½ cents, he is prepared to leave the excise and customs duties on cigarettes exactly as they are. There is no need for this increase. The hon. the Minister and the hon. the Deputy Minister do not need this money. The issue here is not whether people should smoke or not smoke; this is something quite different, and I hope that the hon. the Deputy Minister, who is a heavy smoker, is not going to argue that people should not smoke, because that has nothing to do with taxation. This is a taxing measure, and we do not believe that this additional tax should be placed upon the public. This is simply another way of accelerating the rate of inflation, and I hope that the hon. the Deputy Minister will be prepared to accept this amendment.

Mr. Chairman, I am not surprised that the hon. member could not immediately locate his amendment because he became so bogged down in the bazaar items to which he referred here. Sir, I think the hon. member will concede that he stated, a little out of perspective, the reason which the hon. the Minister advanced, i.e. to facilitate the position in the commercial sector. Sir, apart from what the hon. the Minister said, i.e. that an increase of half a cent on a packet of ten cigarettes had been granted to the commercial sector and that it would facilitate the position of the commercial sector if the price were rounded off by adding an additional half cent in the form of sales duty, there are also other considerations.

But who buys ten cigarettes at a time?

The hon. member for Durban Point must not interrupt me now. I am one of the hardest smokers and I pay the tax with pleasure. The hon. member is aware of the fact that from this specific source an additional amount of about R9 million will be collected. He is also aware, in all probability, of the fact that the Budget proposals will actually result in a deficit of R298 million on the Current Revenue Account. In addition the hon. member is also aware of the fact that on the Loan Account we are budgeting for a deficit of R109 million. We are consequently budgeting for a total deficit of R407 million for the year. But on the other hand the hon. member is also aware of concessions that have been made, in respect of sales duty, by the Minister of Finance in the Budget itself, which will amount to R13 million this year, over and above the concessions that were already made during the recess. The hon. member is also aware of the concession on transfer duty. Actually he is aware of concessions to the tune of R89 million, and I do not think that on the basis of this single motivation we can accept the hon. member’s amendment.

Mr. Chairman, in the Second Reading debate on this Bill the hon. member for Parktown made reference to the high cost of living and to the impact of the high rate of inflation under which all our people in South Africa are suffering. It is against this background, Sir, that I wish to move the following amendment—

This might well be described as an omnibus amendment and I should also like to describe it as an octopus amendment, because we have sought, after a careful study of the sales duty applied under this schedule, to limit the far-reaching impact that it has on so many facets of our lives and on so many persons who live in our economy. It may seem odd that a relatively junior member of the party and a backbencher should be moving such an all-embracing amendment but it is perhaps symbolic to say that a backbencher on this occasion is making representations on behalf of the backbenchers amongst those persons in our community who are normally not vocal in the ordinary economy. I refer to those who are oppressed, those who live in the economic shadows and who feel that life is burdensome upon them and who suffer most from this indirect form of sales tax. It is for that reason that we have studied closely the individual items submitted in this schedule and we have selected those items which hit directly at the householder and the community in commerce and industry and every person in our society. We have isolated the essential items as against the items which can be regarded more as luxuries. In each case, as I shall deal with them briefly, you will see that we believe that the hon. the Minister of Finance and the hon. the Deputy Minister could well afford to make these concessions if they believe, as they have stated in this session, that the public of South Africa are suffering under extremely high rates of inflation and that the cost of living in this country has never been higher.

I want to deal with the items more specifically and to give you an indication, they deal, in the first instance, with such items as sauces and condiments, mustard and chocolates used for children. These are all at the retail sales level. [Interjections.] If our life is not dull enough having a shortage of meat, having a shortage of vegetables and the dull monotony to which our people in their ordinary daily lives are committed under this present Government’s régime where food is becoming a luxury, I ask whether it is right to apply a tax of 10% on such items. We pass on again to the hardy annual to which I will always refer and that is the matter of perfumery and cosmetics.

That’s it!

If there is a man amongst us tonight who does not feel that his wife is prejudiced and possibly living off the household petty cash because of the high increase in the price of perfumery and cosmetics, if there is a man amongst us who does not feel that the women are at least entitled to some consideration in the time when money is purchasing so little, then I would ask whether we honestly believe that we can afford a sales duty of 30% on these important items in the lives of our female folk. I will leave those items that deal with stationery and office equipment to another speaker on this side of the House.

I now come to another essential household article, I refer under sales duty Item 141.58.01 referring to carpets and rugs. There has been reference in this House during this session to the extremely high prices of carpets which are being imported into South Africa. But under any circumstances, whether carpets are manufactured genuinely in Persia, Iran, Teheran, Turkey, North Africa, Durban or Cape Town, the manufacture of carpets is expensive. By the time an ordinary carpet or handcrafted rug reaches the consumer and can fulfil the function of giving a warm underfoot feeling to those of us who come home in the winter, then I will ask again whether this House honestly believes that we can afford a sales duty of 20% on carpets and rugs at a time when we can ill afford to buy the essentials for our homes.

Then I move to another large range of household equipment. Again I want to appeal to members on both sides of the House to consider whether in keeping our homes together, in making it possible for the young married South African to build up a home of any standing, we can afford even at Treasury level, even at the level of the hon. the Minister of Finance, to impose crippling sales duty taxes on such items as refrigerators, water heaters, washing machines, knitting machines, sewing machines, electric irons and boilers. These items are part of the necessities of living as we know it today. We have been deprived of the right to have servants under the Government’s ideological policies. We try to make life easy for the housewife and we try to make it possible to bring up a healthy, normal, satisfied and vigorous family, but with these crippling duties life is indeed becoming a struggle.

Then I pass on to sales duty Item 150.00 which is broadly, described as “Household furniture”, carrying a sales duty of 10%. It is my submission that if we want to make an immediate and positive gesture to reduce the cost of living in the only way that is possible and tan$$$ible with immediate effect, then of all items, we should remove entirely the existing duty of 10% on household furniture.

Then I come to an item which is dear to the hearts of men who sit on both sides of this House. I refer specifically to sales duty Item 147.87.02, namely motor-cars under R2 250 and also motor-cars over R2 250. In this case the sales duty is considerable bearing in mind that due to this Government’s policies the high local content that has been prescribed by this Government, the price of motor-cars in this country is higher than in most countries of the world. Link that with the logic of the fact that in this country we have a less effective public transport system than most countries in the world, and we will all realize that the motor-car is in no sense a luxury. It is, on the contrary, an essential necessity. It is necessary for our way of living. This applies as much to the farming community as it does to the town community. We just do not have the ability to cope with the daily movement of our citizens in and out of the cities and around the countryside. When one is dealing with vehicles under R2 250 and one realizes that the tax on such vehicles is 7,5% and one sees that the tax on vehicles over R2 250 is 12,5%, then, if one wants to realize the impact of the sales duties on vehicles in these particular price ranges, one must only read tonight’s Argus in which the prices are given of those vehicles which our Cabinet Ministers are now beginning to purchase having abandoned the concept of the 1960s of the flashy Cadillac and moving into the Mercedes and Jaguar range. When they buy these cars, they are free of sales tax. It will also become possible for the normal individual in our society to buy that sort of vehicle if the crippling sales tax is removed. I submit the Cabinet should pay attention particularly to this issue so that the man in the street, the young married man who needs transport, can be enabled to enjoy transport at a reasonable price by eliminating these items.

Then I come to a more essential item and that is the motor-cycle under 200 cubic centimetres. In this country we are faced with a tremendously increasing market for persons who want a cheap form of transport. I refer to our African community, our Indian community, our Coloured community and once again to our younger people. [Time expired.]

Mr. Chairman, I want to support in the strongest terms the amendment tabled by the hon. member for Cape Town Gardens. I think that we on this side of the House have made it amply clear in the debate on the Third Reading of the Appropriation Bill and again this afternoon on the Second Reading of this Bill that we consider that inflation in this country has reached a critical stage and that it calls for extraordinary steps. This amendment is one of those extraordinary steps that it is proposed this Government should take. Unfortunately in his reply to our previous representations under the Third Reading in the Appropriation Bill the reply of the hon. the Minister of Finance … [Interjections.]

Order! Hon. members must give the hon. member an opportunity to make his speech.

… was hardly satisfactory on the question of the steps to be taken to fight inflation. One of the ways in which prices can be effectively reduced is to reduce indirect taxation, such as the sales tax. In an earlier debate the hon. the Deputy Minister referred to the fact that the Government was following taxation principles based on the tenets of Adam Smith, that it was observing the principle of the “ability of people to pay” taxation. I want to suggest to the Government that when it applies sales tax it is not observing that tenet, because it is applying taxation to people who can least afford to pay that taxation. For that reason we consider this amendment to be an urgent one. We would have liked to see an amendment applied on a much wider front than this amendment is but we realize that according to the rules of this Committee that that is not possible. The items covered by this amendment fall broadly into two categories. Firstly, there are consumer goods which my hon. friend, the hon. member for Cape Town Gardens, has dealt with, consumer goods where the sales tax directly affects the consumer and directly increases the cost of living. The second category is producer goods, both capital goods and goods of a consumable nature, when the tax indirectly pushes up prices because it pushes up the cost of production of goods and services. There are some items included in the amendment that are both consumer goods and producer goods and under this particular category falls the hardy annual of toilet paper—toilet paper being one of the consumer goods in the home and a consumable material in the factory. Honestly, I cannot see the justification for keeping a sales tax on such a necessary item as this. [Interjections.]

They are starting a newspaper instead.

I want particularly to focus attention on some of the producer goods which are subject to sales tax and which are included in this amendment. I cannot see why raw materials for offices, for shops, for banks, for insurance companies, for financial institutions and generally, for commercial enterprises, items such as ink removers, stencil correctors, duplicator stencils, file covers, document folders, book covers, paper clips, indexing tags and other stationery goods and office equipment such as carbon and other copying paper, writing, typewriter and duplicating paper, paper for use with office machines and the like, blotting-paper, punch cards and magnetic cards for use with computers, should be treated differently from raw materials consumed in industry. Nor can I see why the plant and equipment which are used in offices, by financial institutions, banks and so on, items such as calculating machines, accounting machines, cash registers, postage franking machines, ticket-issuing machines and similar machines incorporating a calculating device, which items include computers, items which are all subject to the relatively high rate of sales tax of 15% should be treated differently from the plant and equipment used by industry.

The Government has avoided—and I think quite rightly avoided—applying the sales tax to raw materials and to plant which are used in industry. They have done so in order to keep down the cost of production. I think it is completely wrong and completely unwise that financial institutions and commerce generally should be discriminated against in so far as the raw materials and the plant and equipment which they use are concerned. They are as much a part of the productive enterprise of this country as are the industrial concerns. I think it is wrong that their costs should be inflated in this matter by applying sales tax to these items. I therefore have much pleasure in supporting the amendment that is before the House.

Mr. Chairman, I did not intend speaking in this debate, but I am driven to do so by the attitude of total contempt which has been revealed by Government members tonight for the welfare and interests of the struggling masses of the people of South Africa. If we had seen from the Government one single flash of compassion, just an indication that at least they were interested, that they were prepared to get up this evening to debate on merit the amendment before this House, we could have treated them with some respect, because then they would have been debating the merits of the issue which is in front of this House. But their attitude of total contempt for the struggles of the people is not to be reasoned away. I am not standing up tonight to try to play the fool … [Interjections.] … but to place on record the attitude—and particularly the attitude of these members to my left— when my colleagues, the hon. members for Constantia and for Cape Town Gardens, were dealing with serious aspects like the cost of transport, the cost of raw materials required by commerce which affect the cost of living of every South African, we had nothing but jokes and disregard and complete disinterest and levity from members of the Government.

I believe that the housewives of South Africa must know what the attitude of the Government members of Parliament is when we come to debate matters concerning the welfare of the people. This Parliament, this highest council of the land, is here considering the cost of living and a small issue in the total picture of a R3 000 million Budget, a small item which is not only going to be totally lost in the gold profits alone, but totally lost in the total revenue which this Government will receive this year. The people of South Africa, the housewife, the mother, the widow with children, the pensioner, the persons struggling to exist must know that, when we raise an issue which will require of the Government the sacrifice of a small amount of revenue particularly affecting the cost of living, the attitude of the Nationalist Party members of this House is one of contempt for their problems, disrespect for their difficulties and levity about their burdens. These items, which we have raised here, affect the cost of living of the people.

What about the reduction in the tax on toilet soap?

You see, Mr. Chairman, hon. members treat cleanliness as a joke. I want to say that we opposed the tax on soap when it was introduced. We said that we hoped that ultimately a sense of cleanliness would pervade the thinking of the Government. Ultimately, they did reduce the sales tax on soap. The hon. member for Vanderbijlpark thinks that cleanliness is a joke.

You are a joke.

Cleanliness is not a joke to the mother who has to wash napkins; it is not a joke to the housewife who has to wash her linen and who has to keep her children clean. To her it is not a joke, but a serious issue and part of the problem of living.

You are the biggest joke out.

Look at the items concerned. Before I deal with our amendment, may I deal with one item outside my remarks, an item in respect of which I would like some clarity from the hon. the Deputy Minister. I refer to page 56, sales duty Item 147, tariff heading 89,01 which includes lifeboats amongst the items that are exempt from tax. I should just like to establish that the reference to lifeboats includes surf lifeboats, which are used by the Surf Lifesaving Association of South Africa. This association consists of a group of magnificent young men who dedicate their time to saving the lives of the bathers in the sea around our coast. They do so voluntarily, at their own expense and without aid. There are thousands of these young men who give their time, weekend after weekend, to serve the public. I hope that the surf lifeboats that they use will be included in this exemption.

Turning to the other items whose removal we have recommended, I will start off at the beginning, with sweets.

Candy out of the baby’s mouth.

Yes, one can say it is like taking candy from kids. The tax that is being levied on sugar confectionery, on sweets, has meant that the child, who traditionally gets a limited amount of pocket-money, the child who goes along with a five cent piece which used to buy a packet of sweets, now finds that that packet of sweets costs 6c. The parent does not normally give the extra 1 cent. Surely this Government is not so bankrupt; this Government whose Minister of Finance waxed lyrical about the future this morning, who spoke of gold and of the magnificent future of South Africa. This Government taxes sugar. Having taxed the sugar, it then taxes the sweets made out of that sugar, the sweets of the children of South Africa. Is that how desperate we are? Is that how desperate South Africa is for a few miserable rands to tax an item such as this? Spices such as mustard, which change food from being simply nourishment into being tasty, are taxed. So are paints. When one goes through these items one finds that they are daily household items, things which you require in every home—table and kitchen utensils. These are not luxuries. What would it cost the Government to remove the tax on these items?—nothing, a bagatelle, but it would affect the housewife far more. We have pointed out before that a 15% sales duty at source becomes a 30%, 40% or 50% duty by the time it reaches the purchaser in the home. So by sacrificing R1 million, the Government would save the housewife at least R2 million. By the time the 15% tax for the wholesaler has escalated to 30% or 50% for the retailer, and even 100% in some cases, the initial tax has grown and grown. So what will be the small sacrifice in revenue which we are asking mean to the Government? But it will be a multiplied saving to the people who have to buy the goods. This is one of the few, one of the only opportunities, where the Government can save the purchaser a great deal more than it has to sacrifice. With any other tax you save a person only the amount you give him as a concession. If you reduce income tax by 5%, you are saving the people 5%. But with sales duty, if you remove a 10% tax, you are saving double that or more in actual cost to the housewife. [Time expired.]

Mr. Chairman, this evening the hon. member for Durban Point was again at his buffooning best.

I shall tell my voters what you think.

The hon. member for Durban Point immediately indicated that he had not intended to take part in the debate. He said that the reason why he was, in fact, going to take part was because this side of the House was taking the representations up lightly. Sir, I now ask, in all reasonableness: What right has he to say that? No one on this side of the House has yet stood up to reply to the representations.

A second point is important. I now want to ask: What representations has the hon. member for Durban Point ever made to the Minister or to me for the decrease of the sales duty, except to try to score political points in this House?

From the beginning.

The fact is that there are many hon. members in the House who have come to the department with several considerations and advocated the decrease of the sales duty. I want to give him an example. He can take as an example the hon. member for Cape Town Gardens, who did so in a specific connection. But the hon. member for Durban Point is the last person who should swaggeringly try to score points, as he tried to do this evening. In addition, it is surely ridiculous to discuss fiscal and tax measures in so haphazard a fashion. The hon. member says that the concessions, which are being requested, are a bagatelle. I am now asking him whether he can tell the House what these concessions would mean. This evening he furnished a long plea about why we should accept the amendment of the hon. member for Cape Town Gardens. He says these small concessions would, in actual fact, have no significance. I want to ask him, if he wishes to motivate his case: How much is involved? I can only take him seriously if he can motivate this statement of his. Other hon. members opposite motivated their speeches; I shall immediately concede that much. But, as usual, he merely sought an excellent opportunity to score points. I now accuse him of not having the faintest idea of what the costs of these concessions are. In fact, Sir, he did not even take the trouble to ask.

But tell me how much.

I do not want to tell him, Sir, because the hon. member asked for concessions which he himself describes as “minimal”, and he does not have the vaguest idea what that means.

R20 million?

Sir, the second point I want to make is that the hon. member for Durban Point evidently forgets that the items involved here appear in the schedule because the sales duty on these items is being decreased. There was nothing from hon. members opposite to say that these items represent decreases. Do you know, what, Sir? I have the impression that he thinks these items are appearing here because they represent increases.

No …

I want to make a third point. Since the introduction of sales duty, this Government has thought fit to decrease the sales duty from time to time.

But who introduced it?

Sir, in case the hon. member for Benoni does not know it, sales duty was introduced on the basis of the recommendations of the Franzsen Committee to extend the tax basis in the country. If he is a Rip van Winkle who has just woken up, he must please not interrupt me. Sir, let me now say this in all reasonableness: The Government has decreased the sales duty from time to time. In fact, it is now assuming legislative powers, not only to decrease sales duty, but even to decrease it with retrospective effect in specific circumstances. The proposals, upon which the amendment followed, are nothing more than part of the process of taking the necessary steps, from time to time and in the light of general circumstances, to bring this about—as the Government has also, from time to time in the past, taken such steps. The hon. member for Cape Town Gardens, who is interested in the motor industry, will immediately concede that when the sales duty on motor vehicles was decreased last year on 17th November, this was one of the most important stimuli in being of assistance to the motor industry. He will immediately concede that as a result of that, not only was the industry assisted, but also the consumer. To make the point, as a general statement, that this decrease of the sales duty would purely and simply decrease the inflation rate drastically, is surely incorrect. The hon. member for Constantia knows, after all, that it is incorrect. He surely knows that sales duty furnishes a nominal contribution to the cost structure in general. But that is not the point. What is important is that, in the first place, these items represent action on the part of the Government to decrease the sales duty on particular items and commodities. Secondly, experience has proved that from time to time, and in the light of its own financial position, the Government has never hesitated, in the least, to decrease the sales duty. Point No. 3: There have been representations, from time to time, that this form of sales duty should be changed and replaced by another form of indirect taxation. I have repeatedly told hon. members that the whole question of the levying of the sales duty at the import point or at the manufacturing point, is being investigated by the Standing Commission on Taxation; and hon. members also know that we have said that one of the big problems with introducing an alternative system, whatever it may be, relates chiefly to administrative aspects. Hon. members also know that the fact that the sales duty is collected at this point is chiefly ascribable to the fact that the number of tax collection points are smaller than would otherwise have been the case. But, Sir, let me content myself with saying that from time to time, in the light of its own financial position and obligations, the Government views this taxation, as it does all other forms of taxation as well. The Government will not hesitate, if it is possible, to decrease this taxation as well from time to time, as it has already done last year. Sir, I do not think the hon. member for Gardens knows what the financial implications of the acceptance of his amendment would be.

R150 million.

The hon. member says R150 million; that is incorrect, but I do not blame him either, because I do not know when his party has ever been right in any respect with what they have said. The fact is that the acceptance of this proposal alone, apart from the proposal of the hon. member for Parktown which would cost the State R9 million, would cost R66 million in a single year. But I do not want to discuss the amount now. I just want to make the point that from time to time the Government will take a look at this form of taxation with reference to the amount, with reference to the pressure on specific sectors and on the relevant industry and with respect to the consumer’s own position, but I think hon. members will concede that it is not possible to accept the amendment at this stage.

Mr. Chairman, I think the hon. the Deputy Minister has been a little unfair, because I think he will acknowledge that we have mentioned in this House on more than one occasion the fact that there has been a decrease in the sales duty on a number of items. But, Sir, we must look at the history of this question of sales duties and put it into the context of the cost of living today. I would be the first to acknowledge that when the sales duty was introduced, it was introduced (a) as a result of the recommendations of the Franzsen Commission and (b) because the Franzsen Commission said that in order to serve any real purpose it had to be wide-based. We accept that but, Sir, there are two points that we must bear in mind. First of all, in the case of every single item here, where we have asked for a further reduction, in most cases to nil, they are items which we believe can by no stretch of the imagination be considered to be luxury items; they are absolute essentials for the people and mainly for the poorer people. Take a sewing machine or a knitting machine, for example. Who reaps the benefit of a sewing machine or a knitting machine; It is the poorer section of the community who make their own clothes, not because they want to do so but because they have to. But, Sir, there is another thing that we must not forget. When the Franzsen Commission recommended that there should be a sales tax, they said that we must have indirect taxation so that we could reduce direct taxation, and they said that the maximum personal income tax should be reduced to a level of 60%. This year it has been reduced to 66%. It is expected that personal income tax this year, according to the second and final print of the Estimates of Revenue for the financial year ending the 31st March, 1974, will produce R804 million. Six per cent on R804 million is R48 million. It is probably not 6% because the 6% is added on, and I do not know what the factor is that I have to take off.

One-twelfth.

Very well, six times eight makes 48, and 48 less one-twelfth is 44, so R44 million is going to be saved. Sir, and the hon. the Deputy Minister can speak from now until tomorrow morning and he will not be able to establish that the loss to the Fiscus on these items which we have dealt with in the sales duty schedule, if they are removed completely, will amount to R44 million; it is just not possible.

R66 million.

How do you work that out?

Obviously I must accept the hon. the Deputy Minister’s word; I do not know how he gets his figure. Very well, then it is going to cost him R22 million in terms of the report of the Franzsen Commission. That is fair enough in this present situation. The hon. the Deputy Minister will not quibble that to assist the lower income groups, if the fiscus has to sacrifice R22 million, it is not going to do any harm. They have already made that up and more since the hon. the Minister introduced his Budget in March. I hope he is going to have a lot more still to come because then we can tell him how to spend it. No, there are factors here and there are facets there. I know that the Government has produced a Budget. I know it is difficult to get a budget altered. I am well aware of that fact. However, the hon. the Deputy Minister rightly says that the hon. the Minister has the right without Parliament to reduce these items. He will have the right in terms of this Bill, if it is passed, to reduce the items retrospectively. This is also a good provision to which we subscribe. We would only have had half the discussion which we have had, had it been the intention of the hon. the Minister to reduce some of these items. We hope that as a result of what we have pointed out to him tonight, he will reduce them still further. This is what we are aiming at: To see what we can do to help the lower income groups at the moment because of the heavy burden they are carrying.

Question put: That the items, percentage rates, paragraphs, and tariff headings proposed to be omitted, stand part of the Schedule,

Upon which the Committee divided:

Tellers: W. A. Cruywagen, S. F. Kotzé, P. C. Roux and H. J. van Wyk.

Tellers: H. J. Bronkhorst and W. M. Sutton.

Question accordingly affirmed and amendments dropped.

Schedule agreed to.

House Resumed:

Bill read a Third Time.

Mr. Speaker, I move—

I do not think hon. members expect me to make on this occasion a Second Reading speech on this Bill. Hon. members are aware of the fact that the Finance Bill comes up every year as a sequence to miscellaneous matters affecting the Railway and Harbour Fund and the Consolidated Revenue Fund. This Bill contains very little that is new. Most of the matters appearing under the items are matters on which decisions have already been taken and in regard to which announcements have already been made. There is therefore very little that is new in this Bill. Hon. members also know that this Bill is virtually an omnibus Bill, and that one does not find any one principle running through it. For that reason one cannot make a Second Reading speech on the principles of the Bill. Hon. members have in fact been furnished with an explanatory memorandum in which the details of every clause are explained fully. This is the type of Bill which can best be dealt with at the Committee Stage, and for that reason I do not want to say any more about it.

Mr. Speaker, we have no objection to this Bill but there are one or two clauses that I would like to deal with now because they are linked together. I will deal with them separately in the Committee Stage. The first clause is clause 7 where we have a situation where the Scientific and Industrial Research Council as a result of an oversight has, since 26th March, 1969, paid a responsibility allowance to six officers which was not approved by the Ministers concerned. In clause 8 we have the Scientific and Industrial Research Council’s approving of a subsistence allowance of R20 per day payable to the president of the council during official visits overseas. The approval of the Minister of Planning in consultation with the Minister of Finance, which is necessary before such an allowance can be paid, was not obtained for the payment of this allowance. In the same way, in clause 9 we have the C.S.I.R. approving a Christmas bonus of R5 to be paid to non-White employees who did not qualify for a holiday savings bonus and they paid this with effect from December, 1968. In clause 10 we have the C.S.I.R. granting an ex gratia supplementary amount in connection with housing as a result of what they say is a misinterpretation.

Here we have four instances where some of our great scientific institutions, if I might call them that, have made payments that they were not permitted to make in terms of laws, rules and regulations. We know that scientists are notorious for having scant regard for the necessity of accounting and administration and in many cases I must say that I cannot blame them. Their job is to get on with their scientific work. However, in each one of these four cases which are mentioned in the explanatory memorandum—for which I want to thank the hon. the Minister since it has given us a great deal of help—a payment has been made that should not have been made. Obviously we have to approve of these payments since the people concerned have already received the money, payment has been made and there is very little we can do about it. I do hope, however we can have an assurance from the hon. the Minister that he has made it quite clear to these organizations that they must take steps if they have not already taken steps, to ensure that there is no repetition. I think it is bad for the administration of any Government department that they should have to come to Parliament for a confirmation of payments such as these.

Clause 12 deals with the payment to Armscor of an amount of R14 million. I think here once again there is very little the hon. the Minister can do, because it is no good our paying interest when there is no chance whatever of the loan being reduced. The only thing that does concern me here is that this might in effect be construed as a further defence item of expenditure appearing in a different form. This concerns us.

The hon. the Minister has already heard my views on clause 13 in relation to the Building Societies Act where as a result of his own legislation he is now forced to find the money to deposit with the building societies. I do not want to repeat that argument, because I do not think it is necessary.

In clauses 16, 17 and 18 the hon. the Minister is asking for additional rights in terms of the Public Debt Commissioners Act. In terms of the Act as it exists at the moment, there is only provision for the disposal of credit balances on the income and expenditure account of the commissioners. Now the hon. the Minister is asking for the right to dispose of the debit balances by the creation of a reserve account and the writing off of the debit balances against the reserve account. I do not quite follow how this applies and it is an interesting state of affairs and a sign of the time that after all these years that the Public Debt Commissioners have been operating, there has to be an amendment of the Act at this stage to provide for losses in regard to their operations. I would be grateful if the hon. the Minister would tell us just what losses he envisages that make this particular clause necessary. Otherwise we support the Bill.

Mr. Speaker, I should like to give the hon. member and also the House an explanation in respect of clauses 7, 8, 9 and 10. In all four these cases there were bona fide mistakes that had been made by the C.S.I.R. In the first case the position was such that prior to 26th March, 1969, the C.S.I.R. paid allowances without any ministerial approval. This was therefore customary for them, and when the Act came along in 1969 indicating that they were not allowed to pay such maintenance allowances without the approval of the relevant Minister, this was not made retrospective in effect. They then lost sight of the fact that they could not do this, and consequently six officials were paid such maintenance allowances without any approval having been obtained. This matter, and this is the important point I now want to mention to the hon. member, was immediately rectified. Three cases were immediately rectified by means of adjustments to their salaries and the other three will possibly be adjusted as soon as possible. The only reason why the matter has not been rectified in respect of the other three, is simply because they are on their maximum salary notches. However, instructions have been issued to the effect that this must be done as soon as possible. In respect of clause 7 I therefore readily give the hon. member the assurance that this custom, which was a bona fide mistake, has been stopped.

In respect of clause 8 the position is exactly the same. Here there was also a bona fide mistake that took place in terms of that same Act. It must be remembered that the C.S.I.R. is semi-state institution which had the right, in terms of section 10 of Act No. 32 of 1962, to appoint officials and employees and to act as they wished in respect of those persons. Only with the advent of the 1969 Act was this position changed, and this bona fide mistake was then made. In respect of clause 8 the C.S.I.R. decided, on 2nd September, 1966, that an additional amount of R20 per day should be paid to the president of the C.S.I.R. for travels abroad, apart from his normal travel and subsistence expenses. In 1969 they neglected to obtain the necessary approval because they did not realize this.This custom was stopped on 5th March, 1971, and therefore I give the hon. member the unqualified assurance in this case too that it will not happen again.

In respect of clause 9 the position is that the C.S.I.R. made a payment of R5 per employee as a Christmas bonus to those of its non-White employees who did not qualify for a holiday savings bonus. Again as a result of the fact that they did not know that this 1969 Act was not made retrospective in effect, and because they followed the existing practice over the years, they subsequently also paid that R5 as a Christmas bonus to their non-White employees. The Auditor-General then pointed this out and this practice was also stopped as a result of the fact that it does not have the necessary authorization. Therefore I can also give the hon. member the requested assurance in respect of clause 9.

Lastly, as far as clause 10 is concerned, I can say that housing in South-West Africa is also a very big problem as far as the C.S.I.R. is concerned, as it is, in fact, for all bodies that have to operate there. After the rental was recovered from officials according to official tariffs, there was still a difference between the rent collected and the actual rental. The C.S.I.R. argues that here, too, it has always been their custom to do it in this way and that here they did not have knowledge of the 1969 measures either. For that reason they made this bona fide mistake. They subsequently made an ex gratia payment that indicates the difference between the rent collected and the actual rental that should have been paid. The ministerial approval was obtained from 22nd May, 1972, for the payment of housing benefits in accordance with state tariffs as laid down. In respect of clause 10 I can therefore also give the hon. member the assurance that that practice of making ex gratia payments has been stopped and that the position has now been legalized, i.e. that they can only pay out the necessary rental in accordance with the public service tariffs. That is briefly the position.

Mr. Speaker, I am just standing up to refer to one point which the hon. member raised. I take it that the hon. member has no fundamental objection to what is set out in the explanatory memorandum in connection with clause 12. The hon. member’s question was more specifically concerned with whether this could not be interpreted as a further indirect contribution to defence. The answer to that is that it can, in fact, be so interpreted, but with this difference: The take-over of Atlas was coupled with a few objectives, i.e. greater efficiency better rationalization and an attempt to reduce the costs of aircraft, from which we have benefited. The real benefit to the State in the Atlas take-over was the tremendous value in capital that accrued to the State for a smaller amount than the real value of the capital assets. The fact today is that the assets of Atlas are so extensive that it was actually of great benefit to the State to bring about that takeover. Consequently this step will not involve recurrent expenditure, this actually being an expenditure which is greatly to the benefit of the State.

Mr. Speaker, I think the hon. member received replies to two of his questions from my hon. colleague. I just want to add to what the hon. the Minister of Defence said that the principle which is applied here to convert a loan into shares is not a few principle. We have already had this in the case of the Broadcast Corporation and we have had it in the case of the Post Office, where we converted old loans into shares. That principle is consequently not a new one.

The hon. member asked me about two other matters. One of his questions was about building societies. I do not think the matter is quite clear. Although 20% was guaranteed earlier, here it is now being provided that in future 10% will be guaranteed and that 10% must be paid in cash at the building society.

†Ten per cent must be paid in cash and 10% will be guaranteed. We find that it would not be fair to require of private companies or public companies that they should pay that 10% whereas the State does not pay 10% in respect of State employees. That is why the State is also included. All companies pay 10% and so does the State. The amount now is a small amount of approximately R4 million. That is in respect of all the loans which have been made so far. In years to come, of course, the loans will only be for the particular year and the amount involved will be much smaller.

In regard to the Public Debt Commissioner’s, this is a very technical matter. Let me just explain it to the Opposition in this way: Interest rates fluctuate very much, they go up and down and when you buy Government stock at an interest rate of 9% and the interest rate falls to 6%, this stock is very valuable. On the contrary, if you buy at 6%, and interest rates go up to 9%, the 6% interest rate stock has much less value. Now one finds, with the fluctuation of interest rates, that the value of the stock with which the Public Debt Commissioners deal goes up and down. Now they only want a fund …

A reserve fund.

… Yes, an account relating to high-priced stocks into which they could deposit some of the profits resulting from a fall in interest rates, as the Minister thinks fit, and from which they could pay the losses when interest rates rise and the value of low-interest rate stocks falls again. That is the only idea behind this provision.

Motion agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, I move—

I want to say at once that this Bill amends the Companies Act of 1926, the Transfer Duty Act of 1949 and the Stamp Duties Act of 1968. Actually, most of the amendments proposed in this Bill give effect to taxation proposals announced by the hon. the Minister of Finance in his Budget speech. Furthermore, a comprehensive explanatory memorandum has been made available to hon. members, and therefore it is not my intention to take up the time of the House unnecessarily with the explanation of the various provisions. The most important aspects are the following:

Companies Act, 1926

The annual duties payable for company licences in terms of this Act amount to 25 cents per R1 000 of the issued capital with a minimum of R10. This rate remains unchanged, except that the minimum is now, in terms of clause 1, being fixed at R50 per company with effect from 1st April 1973, planattory memorandum has been made

Transfer Duty Act, 1949

Clause 2 makes provision for increased rebates in respect of the transfer duties payable on the acquisition of property by a person for occupation by himself or some of his relatives. These increased rebates apply to transactions in respect of the purchase of property which took place on or after 29th March 1973. The new rebates are in the case of improved property two-thirds of the duty if the value of the property is R15 000 or less one-half on a value of between R15 000 and R20 000 and one-third on a value of between R20 000 and R25 000. On undeveloped property there is a rebate of two-thirds on the transfer duties payable if the value of the land amounts to R15 00 or less.

Clause 3 introduces exemptions from transfer duties in respect of property acquired by regional water services corporations and the Abattoir Commission. These bodies have been established by law, the former in terms of the Water Services Ordinance 1963 of Natal and the latter by the Abattoir Commission Act 1967. I just want to point out that in the latter case the exemption only applies in respect of property acquired for abattoir purposes.

Clause 4:

A unit or section of a building as contemplated in the Sectional Titles Act of 1971 —usually a flat—constitutes a property for the purposes of the Transfer Duty Act; consequently transfer duties are payable in respect of the acquisition of such a unit. As hon. members will know, the position for many years was that certain property companies were ostensibly “selling” flats, but as the Act read at the time, the buyer could not acquire ownership of or title to the flat in question. What he did acquire was a share in the company to which the right of possession of a particular flat was linked. The Sectional Titles Act, 1971, provides that in such cases the shareholder may now insist that the property owner should have a sectional title approved in terms of the Act and should have ownership in respect of that particular flat conveyed to him for a consideration not exceeding the consideration that would have been payable at the stage when he bought this share. In most cases this consideration will therefore be equivalent to the purchase price of the share which he bought from the company and which was linked to the flat.

This Bill inserts in the Transfer Duty Act a new section 9A, which provides that in these cases the date of the transaction shall be the date on which the shareholder acquired the right to occupy the flat in question—in other words, the date on which he bought his share. This means that the value on which the transfer duties are to be calculated will usually be the purchase price of the share plus part of the cost of the relevant sectional plan. This is an important concession because, if one has regard to the increase in the value of fixed property, it may be expected that the value of the flat in respect of which registration may now be obtained, will be much higher than the amount originally paid for the share.

Another effect of the amendment is that persons who bought their shares prior to 29th March, 1973, will not be entitled to the increased rebates on transfer duties which are being introduced now. In cases of transactions effected between 16th March, 1964, and 28th March, 1973, the rebates will amount to two-thirds of the transfer duties where the value does not exceed R5 000, one-half where it does not exceed R10 000 and one-third where it does not exceed R15 000.

However, it would be unfair to regard, for the purposes of calculating the fine on unpaid transfer duties, the date of purchase of the share as being the date of the transaction, for at that stage it was not possible for the buyer to take transfer of the flat. In terms of the provisions being introduced now, the fine in such cases will only be imposed if payment of transfer duties is effected after the expiry of a period of six months as from the date of registration of the sectional plan or after the expiry of a period of 18 months as from the date of commencement of the Sectional Titles Act as applicable to the area in which the relevant building is situated, whichever period expires first.

Stamp Duties Act

The exemption from paying stamp duties enjoyed by local authorities and several bodies of a similar nature, is being extended by clause 6 so as to include regional water services corporations and water boards established in terms of the Natal Water Services Ordinance of 1963 and the Water Act of 1956, respectively, as well as the Electricity Supply Commission.

In terms of clauses 9 and 14, the stamp duty on company share capital, for which provision is made in Item 10 of Schedule 1 to the principal Act, is being withdrawn. The reason for this is that a similar levy in the form of a fee in terms of the proposed Companies Act will be payable to the Registrar of Companies. This is therefore being done in order to avoid double payments.

The stamp duty payable in respect of the original issue of a company’s shares, is calculated on the nominal value of the shares. In terms of the provisions of the proposed new Companies Act, a company’s share capital may now consist of shares having a par value or of shares having no par value, but usually not of a combination of the two types. In the case of a company issuing shares having no par value, the full yield of the issue has to go to its capital account. It may not issue shares at a premium, and stamp duty will have to be paid on the full issue price of the shares. In order to maintain parity between the two types of shares, stamp duty will, in the case of shares which do have a par value, be levied on the nominal value of the shares plus any premium paid for them. The necessary amendments are being introduced by clauses 10 and 16.

The provisions of clause 10(1)(c) seek to eliminate loopholes in section 23(10) of the Stamp Duties Act. Hon. members will know that a stamp duty of 1% is being levied in respect of the registration of transfer of certain marketable securities, including company shares, stock and debentures. In 1969 it was discovered that this stamp duty had been avoided by means of entering into a scheme of arrangement or reconstruction of a company in terms of which shares in a company were cancelled and the shareholder received shares in a second company in lieu of the cancelled shares. The cancelled shares were then restored and issued to the second company. It is unnecessary to go into all the details of such transactions, except to say that what happens in actual practice is that an interest in shares held by one person is transferred to another person without the transfer thereof being registered. In 1969 the Stamp Duties Act was amended in order that a special stamp duty might be levied in such cases. It has now come to light that similar schemes are being entered into, schemes involving stock or debentures instead of shares. In terms of the amendment such transactions will also be subject to the special stamp duty.

After the original Bill had been read a first time, it came to light that two large institutions, the advisers of which I am sure know very well what stamp duties the Act envisages should be paid in connection with the reconstruction and/or take-over of companies, had devised a further scheme for avoiding those stamp duties. I am using the word “avoid” because I do not wish to use the word “evade”. In terms of this scheme they do not resort to the cancellation of the shares, stock or debentures, but a complicated and abnormal process is being followed in order to render existing shares virtually valueless, without cancelling them formally. The documents which notify the shareholders of the take-over, and which subsequently received prominence in the daily Press, make it clear that the avoidance of stamp duties is the only reason why an abnormal process of takeover was being followed.

It stands to reason that the Government may not close its eyes to these avoidance practices, and for that reason the original Bill was withdrawn and an amended one, in terms of which these loopholes will be eliminated, was introduced. If, as is customary, the amendment had to apply in its entirety as from today, this take-over, which has not yet been finalized, would be subject to the full stamp duty. Whilst I have no sympathy in this regard with these institutions and their ingenious advisers, the general public are, however, involved in the matter as well since they acted in good faith in entering into transactions in regard to these shares on the exchange. It is for this reason alone that the amendment will come into force in respect of take-overs arising from an application made to the court on or after 6th June, 1973, i.e. the date on which this Bill was read a first time.

Our other tax laws do not contain general tax avoidance provisions similar to those of section 103 of the Income Tax Act, but I nevertheless want to sound a word of warning to the effect that in cases where persons have in their ingenuity devised abnormal schemes for the purpose of circumventing the spirit of the tax laws, schemes which amount to blatant tax avoidance, there will be no hesitation in annulling such schemes. The accommodating spirit which is being shown now, should therefore not be seen as a precedent.

The provisions in terms of which certain companies could be registered by licence under section 21 of the Companies Act, 1926, are not being repeated in the proposed new Companies Act. At the moment these companies are enjoying an exemption from stamp duty on bonds given by them. This exemption is being revoked in terms of clause 12, since it will be possible for companies with divergent objectives to be registered freely under the proposed new section 21. However, companies which are ecclesiastical, charitable or educational institutions of a public nature, will still enjoy an exemption under the other provisions of the Act.

As I have already pointed out to hon. members, transfer duties are paid on the acquisition of a unit or section of a building in terms of the Sectional Titles Act. However, the transfer of units in terms of this Act is not effected by means of transfer deeds, but by means of an endorsement made by the Registrar of Deeds on the sectional title deed. In terms of clause 20 of this Bill any such endorsement shall for the purposes of Item 21 of Schedule 1 to the principal Act be deemed to be a transfer deed. The effect is that a transfer of units in terms of the Sectional Titles Act will be subject to the same stamp duty as applies in the case of a transfer of fixed property.

Mr. Speaker, we come now to the last of the financial Bills.

Hear, hear!

The hon. member says “Hear, hear!”; I subscribe to that entirely, and I am sure the hon. the Deputy Minister does too. This again is an omnibus Bill which amends a large number of Acts. The hon. the Deputy Minister has given us a detailed description of the Bill and once again we are grateful for having had an explanatory memorandum. We support the Bill because the clauses of the Bill are acceptable to us. We particularly welcome the lowering of the transfer duty on residential properties which are owner-acquired. We have felt for a long time that this is necessary, and I am glad that the hon. the Minister has helped again to encourage the young people to acquire their own homes. We are also very glad to see that a realistic and a fair attitude has been taken in regard to the question of the transfer of properties under sectional title where the properties are owned at the present moment by way of shares and where sectional title will now be transferred to the owners, in that transfer duty will not be levied at the present-day value, but at the value at the time of the purchase of the property. I have a little bit of reservation on this particular situation even now, because it did seem to me that where transfer duty was paid on the acquisition of the property by the company, one might have gone a little bit further and said that on conversion to sectional title there should be no further duty paid. Because the acquisition of these properties can take place in two ways. It can take place by way of a mere transfer of shares, in which case no transfer duty is paid, and then I agree entirely that on transfer to proper ownership in terms of the Sectional Titles Act, transfer duty should be attracted. I think that is correct, but in the second case, where a company, which gives a person occupation of a flat in terms of a shareholding, actually pays transfer duty on the acquisition of the property, it seems to me that some consideration might be given to those people because transfer duty in effect has already been paid. But the procedure laid down, that the valuation will be as at the date of occupation and not the present-day valuation, is a very fair and acceptable one.

The Bill introduces a new principle regarding the stamping of shares and stocks or debenture certificates. Where the securities are issued at a premium, the stamp duty is now payable not only on the nominal value of the share, but on the premium as well. Sir, the Government has a wonderful way of saying that because A happened, we have to treat B in the same way. Because in terms of the Companies Act we now have a share of no par value, we must now no longer charge the duty on the nominal value of the share; we must charge duty on the premium paid as well.

There are problems.

I know that there are problems. Fortunately in this case we go along with the principle involved, but not because of the no-par-value shares. I think it is correct that when a share is issued at a premium, duty should be paid on the nominal value plus the premium because that is the issue price of the share. But I do not accept the reason which has been given for the change, namely that there are no-par-value shares, because this is just a case of saying, “Well, we do this, so let us do that, and in that way bring another RX into the Fiscus.”

Sir, most of the other provisions of the Bill are consequential upon the passing of the Sectional Titles Act and of the Companies Act and are necessary to implement those Acts. The hon. the Minister dealt with the amendment, if I can call it that, in this Bill in that the Bill had to be withdrawn and a new Bill substituted because of a situation that arose. We subscribe to this change because we have said so often in this House that we do not like retrospective legislation. People do things on the basis of legislation that is existing at a particular time. I think it is always wrong to act retrospectively to penalize them.

The hon. the Deputy Minister might have been a little more alert in this case because certain companies, who are going to benefit as a result of this Bill now only providing for a change as from the 6th June, I think it is, have already benefited. What they have done is well known to me and I am sure to the hon. the Deputy Minister and the department. In fact, I think it was known to them a long time ago, within days of its being done, when it was suggested that a change was going to take place. They were commended in one of the financial papers for having found a way of saving duty. If the hon. the Deputy Minister had at some stage gone to them to tell them that they should not proceed with what they were doing because he did not like it in principle, he might not have had to come today to change this provision to a new date.

There is one clause in this Bill of which we are not enamoured at all, although we are not going to vote against it. I refer to the clause which makes the minimum cost of a company licensed from 1st April 1973, £25. I have to use pounds because that is what is in the Bill. Although when I tried to write the pound sign, I found it difficult because I could not write it anymore. There is a similar provision in the Companies Act which makes the same provision effective from 1st January, 1974. This Bill, as I have said, makes it effective from 1st April, 1973.

Let us have a look at the history. Before 1st January, 1968, the minimum company licence was £1. It is only a matter of five or six years ago. After 1st January, 1968, it was increased fivefold to £5. From 1st April this year it is again increased fivefold from £5 to £25. If we follow the pattern of each time the minimum company licence is raised—it is raised five times— then the next time the hon. the Minister decides he is going to raise the minimum company licence, it is going to be five times £25. That is going to be £125 or R250.

I believe that we must be careful not to make the conditions of establishing small private companies too onerous. Private companies play a very important part in our economy. It is well to remember that from small beginnings big things grow. A lot of the biggest companies which we have in this country today started as very, very small companies indeed. They were started by people who had very, little capital. Probably in those days they did not have the £25 they would have to pay today to get a company licence. We must be careful not to discourage the really small man, because the old saying “he started on a shoe-string” is still applicable today, fortunately, as it has been all the years. This is the man who really builds the economy: The man who has nothing, but has the courage to go out and work hard and create something. I hope that we shall not have a further increase in company licence fees for many, many decades to come. Perhaps we have gone too high already, but it has been accepted as £25 and we shall let it go at that.

What about a little reduction?

Mr. Speaker, I want to refer to two aspects mentioned by the hon. member. The first relates to companies in which shares have been sold which are linked to a flat. The argument was advanced that the company concerned had already paid transfer duty at the time it acquired the property and that it seemed somewhat unfair that transfer duty should be paid on the transfer of the shares in a particular flat as well. However, the hon. member will know that it is a principle contained in the legislation that each subsequent transaction in regard to property is taxable in terms of the legal provisions relating to transfer duty. In the second place, it is often very difficult to provide for the various exceptions to the rule. In the case of many of these companies a property was purchased on which blocks of flats were subsequently built. It is extremely difficult to determine, for the purposes of the second transfer duty transaction, what the value of the building is as against the value of the unimproved property. I do not think that it is necessary for me to take this any further; the hon. member will appreciate that there are practical problems.

In the last instance I come to the remarks made by the hon. member in regard to licence fees for companies. I do not want to spend much time on this except to tell him that this, too, forms part of the amendments arising from the recommendations of the commission on taxation. An analysis of the situation indicates that about 180 000 companies are registered in our country and that an additional 14 000 to 16 000 are registered every year. On the other hand, large numbers of companies are cancelled every year, too. Of these 180 000 to which I have referred, 93% or 165 000 pay the minimum licence fee; in other words, up to now it has been R10 and in the future it will be R50. Only 55% of these companies pay any income tax at present. The hon. member is aware of the fact that very often companies are established for purposes other than the ordinary purposes of a company, namely to be able to enjoy the tax benefits of a company. I am not against this and the hon. member must not misunderstand me. However, the hon. member will understand that the volume of work for the office, administratively and otherwise, is increased to a tremendous extent by the stream of small companies being registered and subsequently cancelled. I hope he will appreciate this proposal. In my opinion there is sound motivation for the amendment.

Motion agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, I move—

The Anatomical Donations and Post-Mortem Examinations Act of 1970 enjoys a high international reputation and is regarded as model legislation on this subject. In terms of the Act, effective control is being exercised over the donation and disposal of human tissue.

We are deeply grateful to those people who are prepared to donate their bodies or tissue of their bodies in terms of the provision of the Act and, in so doing, to relieve the suffering of others. The employment of human tissue for scientific purposes is, however, a relatively new development in South Africa, and it will be some time before sufficient tissue becomes available in terms of the existing provisions of the Act to satisfy this demand.

Meanwhile, however, there is an urgent need for specific tissues which are not available in sufficient quantity in South Africa, and which cannot be obtained from overseas sources either. In this connection specific reference is made to the pituitary gland.

This gland is approximately the size of a pea and it is located below the rear part of the brain and produces hormones that are responsible for the growth of the human body. In the event of this gland not producing hormones the body will not grow and the condition develops which is known as pituitary dwarfism.

The condition certainly does not affect the brain. On the contrary, such a dwarf is usually very intelligent and, for the rest, is normal in all respects. In later years, however, the fact that such a person is a dwarf causes many psychological problems, and he is faced with the situation that he is a source of amusement to many misguided and thoughtless people.

As can be appreciated, such a condition causes much grief and mental anguish on the part of the parents of such children, and they do everything within their power to obtain treatment for the children.

Such patients are treated with hormones produced from the pituitary gland. In spite of intensive research throughout the world no substitute has been found for the human growth hormone. Growth hormones have been isolated in various species such as cattle, pigs and sheep. It has been found that each of the hormones of the different species increases the degree of growth in rats. However, in contrast with other hormones such as insulin, which, irrespective of their origin, are active in the human body, the growth hormones of animal origin have absolutely no effect on the human system. Because of its intricate structure it is now also considered most improbable that it will ever be possible for the growth hormone to be produced synthetically on a scale that would make it worthwhile. So in this respect the human being is an individual species, and the human system will react only to hormones of the human body.

From two to three of the glands are required for the production of a weekly dose for the treatment of a single patient. The treatment takes approximately six years. Between 100 and 150 glands are required for the production of hormones for a year’s treatment of a single patient.

It is estimated that there are approximately 75 pituitary dwarfs in the Republic at present, and that approximately 10 000 pituitary glands are required annually for the treatment of these patients. Of this number of dwarfs only five or six are actually being treated with a substance obtained from Sweden.

The question may rightly be asked why supplies are not being obtained from overseas for the treatment of these patients. It is difficult to obtain factual information in this regard abroad. In Britain, 60 000 glands are collected every year, and these are just sufficient to produce hormones for the treatment of the patients in that country, who number between 500 and 600. In other words, Britain can only satisfy its own requirements. The same position exists in all the other countries where this substance is produced.

As far as the Swedish substance is concerned, it is estimated that it would cost approximately R3 000 a year to treat a single patient in South Africa. So the cost of the complete course for a single patient would amount to R18 000, and that for the 75 patients approximately R1 350 000.

No person with an average income could afford this astronomical amount, and even if there had been legal provision for the State to render financial assistance in this regard, which is not the case, South Africa could not afford it either.

While development has been taking place in the rest of the world, research has not stood still in South Africa either. Mindful of the fact that it would not be possible to obtain supplies of the hormone substance from overseas sources, Prof. S. M. Joubert of the University of Natal, in his capacity as adviser to the National Chemical Research Laboratory of the C.S.I.R., suggested that the laboratory undertake the production of the hormone as one of its projects, and a start was made on this project in February, 1969.

The first task of our scientists was to catch up with the knowledge concerning the extraction and purification of the hormone from the gland, which the pioneers, i.e. the U.S.A. and Britain, had already gained. From a technical point of view it was not very difficult to prepare the hormone, due to the information made available by the two countries in the form of literature and through personal contact. Serious problems were experienced in obtaining glands, however, but it has fortunately been possible to obtain small quantities, mainly from overseas sources, which have enabled our scientists to prove that we too are capable of producing a hormone of equal or even greater purity compared with that manufactured in other countries, and in at least equal and even larger quantities.

After serious appeals the laboratory has been able to build up a supply of 500 glands, although it took a considerable time and it was made possible mainly by favours on a personal basis. With these supplies in hand the progress made by the laboratory has been rapid and dramatic. So much so that I am happy to be able to announce that our scientists have developed a completely new process exclusive to South Africa, which is unique in its simplicity and the ease with which it is applied for producing the hormones from the glands. With this process it is possible to produce, for clinical use in South Africa, a hormone of exceptionally high purity, in quantities comparable with the product being produced overseas, in contrast with the raw material of approximately 50% purity being used in other countries. Although it is appreciated by these countries that the use of the low-grade product could be the cause of serious complications in the treatment of the dwarfs, no purification is carried out because of the tremendous loss of hormones they experience in the production process they apply.

It would therefore appear that we have not only caught up with overseas countries in this field, but that we are even ahead of them in many respects. It is an open question how long we shall be able to maintain this advantage, and it will depend particularly on the availability of glands. Publication of the work of our scientists is being held back because of a number of minor matters which have arisen and which need to be cleared up, and this can happen only if further quantities of glands become available. So the shortage of glands has an effect on the treatment of people, not only in South Africa, but throughout the world, because this kind of knowledge is available in the interests of mankind as a whole.

I should like to avail myself of this opportunity of congratulating our scientists very sincerely on their special achievement. This achievement is all the more praiseworthy in view of the fact that it is estimated that the cost of treatment with the South African substance will amount to approximately R300 per year per patient, which is within the means of practically every average person. I should like to give our scientists the assurance that we are proud of them and that their achievement will contribute greatly to the enhancement of the international reputation of our scientists.

This amendment Bill is specifically aimed at obtaining sufficient glands for research and the production of hormones. Only recently my department and I, in consequence of, inter alia, representations by the S.A. Medical Research Council, became aware of the very delicate position in which the Republic finds itself in respect of the availability of these hormones. The Department of Health immediately looked into the matter more closely, and submitted to me the proposals contained in the present Bill, which proposals were accepted by the Cabinet.

I should now like to explain the provisions of the Bill.

Clause 1 of the Bill merely corrects an error.

In clause 2, the new subjection 6A(1), authority is given to medical practitioners conducting judicial post-mortems to remove from the bodies on which the examination is being carried out tissue which the Minister has indicated by regulation and to donate it to institutions which the Minister has prescribed by regulation. In this connection I should like to explain two aspects more fully.

In the event of a post-mortem the body of the deceased is violated in any case. It is normal procedure to open the skull and to examine the brain. Consequently the removal of the gland under these circumstances will involve no further violation of the body over and above which occurs in the normal course of events. So the removal of glands from the bodies of such persons seems to be the proper course to take with a view to satisfying our requirements under present circumstances.

It is estimated that judicial post-mortems are carried out on approximately 30 000 bodies in South Africa each year. We believe this figure to be approximately 38 000. So there will be sufficient glands available for the treatment of pituitary dwarfs in South Africa.

The other aspect to which I would like to refer is the fact that the Bill does not refer specifically to the pituitary gland, but to tissue in general. In the first place it would be rather ridiculous to make a law in respect of the removal of a single gland, and I believe that it is not the normal practice in our legislation in any case to make laws in this way.

In the second place a similar situation may arise in future which would compel the Minister, should the measures proposed in the Bill not be acceptable, to come back to Parliament for further amendments to the legislation.

In the third place we obtain certain tissues, including bone tissue, from overseas sources. The situation may easily arise that such sources may be closed to us, in which case we would be completely dependent on donations in terms of the existing Act, which are hopelessly inadequate. It can therefore be appreciated what a critical situation could arise in these circumstances.

Consequently it has been decided to follow the procedure as set out in the Bill in order to provide for any situation that may arise in the future. In my opinion adequate protective measures are being provided to prevent any abuse of this power. In subsection 6A(2) the removal of tissue is prohibited in the following circumstances:

1. (a) in the event of such removal of tissue in any way affecting the outcome of such examination; and
2. (b) if, at the time of such examination, the medical practitioner carrying out the examination should have reason to believe that—

1. (i) such body or the tissue in question has been donated by the deceased; or
2. (ii) the removal would be contrary to any direction given by the deceased person before his death.

Section 3(2), which is mentioned in this subsection, deals with the establishment of death and provides that it must be done by at least two medical practitioners. In the present case the provision is not necessary, since such post-mortems are governed by the Post-Mortem Examinations Act of 1959. Furthermore, section 5 lays down the procedure to be followed and the authority to obtained for the removal of tissue. These provisions are not applicable in the present case either, since the whole matter is governed by law and in terms of regulations. In these circumstances the provisions of section 6A(1) are being omitted from the provisions of section 3(2) and 5.

Further protective measures are contained in the following provisions:

1. (a) Clause 4, the new subsection 13(2), provides that the Minister may issue a regulation in respect of tissue that may be removed only on recommendation of either the Drugs Control Council or the South African Medical Research Council.
2. (b) The new section 13(3) provides that the Minister shall publish in the Government Gazette for comment any regulations relating to the subject in question.
3. (c) The new section 13(4) provides that any such regulation made by the Minister must be tabled in Parliament.
4. (d) Section 13(5) gives Parliament the power to declare a regulation or a provision to cease to be of force and effect and provides protection in respect of action taken in terms of such provision.

In other words, in this case the Minister will be responsible to Parliament, and ultimately Parliament will also be responsible in the event of such regulations remaining in force. In the circumstances there can consequently be no suggestion of arbitrary or autocratic action by the Minister.

The amendment in clause 3 is being made merely to cover tissue obtained in terms of section 6A and of the regulations.

Clause 4 empowers the Minister to make regulations. In terms of paragraph (dA)(i) the Minister may lay down by regulation which tissue may be removed. In terms of paragraph (dA)(ii) the Minister may stipulate to which authorized institutions such tissue may be donated and the purpose for which it may be used. Paragraph (dA) (iii) empowers the Minister to prescribe to which persons or bodies an authorized institution may supply tissue or therapeutic substance and to prescribe the moneys which the authorized institution may charge, and paragraph (iv) deals with the reports which must be submitted.

It is therefore possible to exercise complete control over the prices which an authorized institution receives in respect of tissue. Section 10 of the Act clearly provides that no person other than an authorized institution may receive any payment in respect of any tissue, and in terms of the proposed regulations it will be possible to control such prices. Section 10(3) provides that this provision does not prevent a medial practitioner or dentist from charging fees for professional services. In other words, the patient will pay the same price for the tissue or therapeutic substance as the price charged by the authorized institution, and the medical practitioner or dentist will only be allowed to charge the fees applicable to the professional services rendered by him.

The opinion is held that since the tissue is being obtained under special circumstances, in terms of special authorization, to help distressed persons who could not otherwise be helped, there should be no profit on such tissue.

This Bill was referred to the Departments of Justice and Police and to the provincial administrations for their comment, and no objection was received. With this legislation we are making a serious attempt to provide the necessary measures to relieve the distress of suffering people. It is realized by all that it is a far-reaching step that we are proposing and that there may be moral and ethical objections. In the light of the circumstances as I have explained them, I do not have the slightest hesitation in making these proposals, and I also enjoy the full support of my colleagues in the Cabinet. Whatever our differences in the political field, I believe that we are in full agreement about the treatment of our sick, and in the light of this I trust that I may rely on the House to support this Bill.

Mr. Speaker, this Bill has already been to the Other Place and my hon. colleagues there have given the Minister their support. We on this side of the House intend doing the same. This is a most fascinating subject that the hon. the Minister has dealt with this evening. The little gland we have been discussing, has eluded its synthetic manufacture for many years; for over 50 years scientists have been trying to synthetize the growth hormone, but they have failed, over this long period. We hope, with the new methods that are being used today, especially in South Africa, it will not be long before we will be able not only to produce the extracts from this gland and to make it freely available to the unfortunate people who need it, but also be able to find ways and means of building this up synthetically so that we will not have to go to the human body for it. It is quite strange that this is one of the few glands in the body that has evaded the scientist’s attacks. It is quite strange, too, that this gland, although it is so complicated and so small, has been able to give forth other substances which the body must have and can be manufactured synthetically. Yet the growth hormone has not been isolated in any other form other than from the human pituitary in order to help other human beings.

This leads me immediately to say that, although we have a new and much cheaper method in South Africa of producing the hormone, this Bill will save time—and the hon. the Minister will agree with me—with regard to the necessary tests that will take place after a supply of the hormone has been provided. What has happened in the past is that, although we know all about the work of the hormone and although we know all about the deficiency in pituitary dwarfs, it is strange that over all these years we have been unable to collect a sufficient supply of this substance. That is because of our laws, which did not make provision for us to remove parts of the body for scientific purposes? Yet in medico-legal post-mortems parts of the body have been removed for medico-legal purposes, for further examination. That has happened. Yet, for therapeutic purposes it has been denied. There are three methods, which were mentioned, of getting the gland. Firstly, a donation can be made before death. The donor himself or a relative can make arrangements to give part of the body or the whole body for scientific purposes. However, this is not common, even today. Then you get them at post-mortems for diagnostic purposes. Thirdly, there is the medico-legal removal of parts of the body. I think there is something missing in our attempts to procure the gland. I want to make one suggestion to the hon. the Minister now, before I go into any detail about what is happening. When a death certificate is presented to a family for detail, the doctor will require certain information to fill in on the certificate. He asks the age, the address, how long the patient has been ill, etc. I should like to see on the death certificate a portion which can be filled in by the doctor by which permission can be given there and then for the gland or any other part of the body to be removed. It is going to be simple to do, because it is done at the time when the form is filled in. The doctor can get the necessary permission there and then. Provision can be made on this form for the relative to sign, thereby giving written permission for the removal of the gland. I think we must think about that. It may help tremendously in obtaining a larger supply than through the medico-legal postmortems, which are going to be the main source of our supply.

Whatever we say here tonight, there are people who are going to feel that a dead body perhaps is going to be unnecessarily violated. That is only natural. People are going to say: “Well, what are they going to do next? They are going to start off with the pituitary gland, then they are going to take this and then that. They are taking hearts; they are taking livers. What is going to be left to bury?” That is what is going to happen. People do talk along these lines. The Minister has hinted at this possibility this evening already. The Minister has said that this Bill is going to make provision for other parts of the body to be removed if necessary. He is going to give safeguards and guarantees; but are the people outside going to be satisfied? We have to think along these lines. I am not going to suggest that we should object to what the Minister wants, because I have to look at this question from a scientific and medical point of view, and I agree that we need it. But we have to take into consideration as well the feelings of relatives. Where people do not claim bodies and where there is no objection, the matter is, of course, simple. But is the Minister going to make provision that, where there is a medico-legal postmortem and the relatives object to the removal of the gland, it shall not be taken? Is the Minister also going to give ample opportunity, when he gives notice by regulation that he is going to ask permission to use other parts of the body—bone or cartilage for instance—for sufficient publicity to be given in the Press as well as in the Government Gazette that that is going to take place? We want the public to know what is happening. I do not want anybody to say: “They kept us in the dark. They passed a Bill in Parliament, and nobody knew what it was all about.” I think we want to be quite open with the public about what is intended in this Bill and I am sure that we will receive the support of the majority of the people in our country today.

There might still be difficulties in obtaining a sufficient supply of the gland. I hope that it will not be the case. As the Minister knows, and as he has told us, there are close to 40 000 post-mortems. However, in this type of work there is always a certain amount of wastage. I do not know—perhaps the Minister will tell us—whether provision is being made for the storage of the glands that are not being used at the time. I should also like him to tell us how long a gland is viable after death. Can it be frozen, and then used? Or does it have to be used immediately? These are points which I should like clarified. I do not know whether the hon. the Minister has this information, but it is something we have to know. We do not want glands or any part of the body to be removed unless they are going to be used. I would hate to see such things being wasted. The whole world today is waiting for these glands. If we are not going to use them, perhaps we can export them to some of the other countries that need them so badly. I do not intend going through the matters which the hon. the Minister so ably dealt with in the Other Place. In regard to the question concerning those parts of the body which he wants in future to be made use of, we support him as long as he gives the assurance that there will be no unnecessary violation of a body and that the public will know what is going to happen.

I finally want to give the hon. the Minister the assurance that this side of the House will do what it can to assist him in getting the Bill through the House.

I should like to thank the hon. member for Rosettenville for supporting the Bill on behalf of the Opposition. The hon. member referred to the subject matter of the Bill as a fascinating subject. I agree with him that it is the most fascinating subject we have dealt with this evening. Sitting here, waiting for something fascinating to come up was a little frustrating. I think this Bill is a feather in the cap not only of our scientists but also of my department. It is only three months ago that the department and some of the newspapers brought this matter to my attention. Some of the members of the Opposition also raised this matter. It is therefore perhaps also a feather in the cap of all parliamentarians who want to get on with the job.

I think the hon. member can rest assured that there are adequate safeguards in the Bill to prevent any abuses. All these cases will be medico-legal cases. It is therefore not a question of asking the family’s permission. Hon. members must realize that it is only in the big centres that we are going to have the post mortems; we are going to have from eight to ten per day and it will be a cumbersome matter if you have to bring all these families together to explain the whole matter to them. That is why we have resorted to this. So many safeguards have been written into the Bill and the Minister has to prescribe so many conditions that I do not think there will be any abuses. If the hon. member still thinks that the family should be brought into the picture we can of course give that aspect further attention when the regulations are drawn up. The hon. member also asked whether we would have enough of these elands available. Approximately 38 000 post mortems are being done yearly and I think we only need about 10 000 glands. A gland can be kept from 24 to 48 hours at the most. We have to have the gland from a particular person and very soon. Any defects and deficiencies in the Bill we will rectify from time to time. Several matters of course will be dealt with by way of regulation. We are at the moment still considering some of the points raised in the Other Place to safeguard the people against possible abuses.

Motion agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, the House worked so well today that I move at this stage—

Agreed to.