With leave, I want to amend the notice of amendment standing in my name and I move—

1. (d) for conveyance of any passenger on any railway on which only first and third class accommodation is regularly provided, if such fare does not form part of an amount paid for conveyance on any such railway and any other railway; or,

I second.

I see that the Minister in his amendment makes a concession to people who are ill and are going to hospital. Now I want to ask why he puts the onus on the people to secure a refund within a month. Why, if they have a doctor’s certificate, cannot they be exempted from the tax from the start? This means extra trouble and extra work for the officials who have to handle the applications for repayment.

Amendment put and agreed to.

Amendment in Clause 6 put and agreed to, and the Bill, as amended, adopted.

I move as an unopposed motion—

I second.

We do not intend to delay this Bill for long, but we have no alternative but to protest for the last time against this tax. We are against it for the reasons we have given. We are opposed to it because it is in conflict with the spirit of the Constitution. It is nothing but a plundering expedition on the Railways, something that we have no right to do. It is a departure from the principle that the Railways must be used for business purposes. We feel further that this tax affects a certain class of the population who cannot afford to pay it. We have now had the acknowledgment from the Minister that the object is simply to collect money for general finance. At first the argument was that the object was mainly, or solely, to reduce the number of passengers, but we now have the acknowledgment that it is simply a plundering expedition to obtain money. This stressing of our objections to the Bill will suffice.

I want to associate myself with the protest against this tax. I cannot associate myself with the use of a tax on railway tickets for war purposes. If the Minister wants passengers to pay more because he needs more money let him do it, but let him use the money for Railway purposes and give Railway servants relief. It is in harmony with the Constitution. The railways are overloaded today and the Railway officials are bowed down by heavy burdens. Now the work is to be increased by a tax imposed by the Minister of Finance. I feel that the railways should not be used in this manner. It is also not fair to the Railway servants to ask them to collect money for the Minister of Finance. I protest that the money that should go to the Railway Treasury is going to the Minister of Finance.

Motion put and the House divided:

Ayes—59:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowen, R. W.

Bowker, T. B.

Carinus, J. G.

Clark, C. W.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Gilson, L. D.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Humphreys, W. B.

Jackson, D.

Johnson, H. A.

Lindhorst, B. H.

Long, B. K.

Marwick, J. S.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Robertson, R. B.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steyn, C. F.

Steytler, L. J.

Sturrock, F. C.

Sutter G. J.

Tothill, H. A.

Trollip, A. E.

Van Coller, C. M.

Van der Byl, P. V. G.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and J. W. Higgerty.

Noes—38:

Bekker, S.

Boltman, F. H.

Booysen, W. A.

Bosman, P. J.

Bremer, K.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Venter, J. A. P.

Verster, J. D. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Wilkens, Jacob.

Wilkens, Jan.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Motion accordingly agreed to.

Bill read a third time.

Before we come to the first amendment, as printed, I have an amendment on the Order Paper, which is simply consequential to the amendment we made in Committee for the recognition of local associations of underwriters. It is purely consequential. I move—

I second.

Agreed to.

Remaining amendment in Clause 1 put and agreed to.

In Clause 4,

There is an amendment relating to Clause 4 which appears in my name on the Order Paper on page 510, I intended to move—

1. (d) as an insurer authorised to carry on funeral business unless he has satisfied the Registrar that the manner in which and the rules according to which he proposes to carry on business adequately provide for the issue of a receipt for every premium received which shall clearly indicate the aggregate amount of premiums paid in respect of the policy concerned.

I understand from the hon. Minister that he is willing to accept the amendment in an altered form. In that case I do not propose to move my amendment. I leave it to the Minister to suggest the form he would like.

With leave, I would like to move the hon. member’s amendment in a slightly different form. He asks: “That in such cases the receipt shall clearly indicate the aggregate amount of premiums paid in respect of the policy concerned.” That, from the administrative point of view will give rise to difficulties. I propose, therefore, to move his amendment in such a form as to require that the receipt should clearly indicate the due date of the premium in respect of which such premium is made. I think that will achieve the effect the hon. member desires. I therefore move as an unopposed motion—

1. (d) as an insurer authorised to carry on funeral business unless he has satisfied the Registrar that the manner in which and the rules according to which he proposes to carry on business adequately provide for the issue of a receipt for every premium received which clearly indicates the due date of the premium in respect of which such payment is made.

I second.

Agreed to.

Amendments in Clauses 10, 15, 17, 18 and 35 put and agreed to.

In Clause 38,

There is an amendment printed in my name on page 510 of the Order Paper. This amendment is similar to that moved by me in the Committee stage. It is a matter of so much importance that I do urge the Minister, in the light of the debate we had the other day, to reconsider the matter with a view to the adoption of this amendment. We are surely not going to embody in the Insurance Act of this country a clause of this sort which will stand for the limitation or restriction of a policy, whenever an insured person goes out to defend his country, and it is for that reason that I have put this amendment again on the Order Paper, because I feel that on calm reflection the Minister might yet agree to the amendment which I have proposed, and which would leave the state of the law in a condition which would not be hateful to so large a class of the population of the Union. To give the right to any insurance company to invalidate the policy of a man who was killed outside the Union in the defence of the country, or who sacrificed his life in the Air Force, is to my mind quite wrong, and it is going contrary to the spirit of the public and to the war effort. I hope the Minister will agree to accept my amendment, which I move—

I second and would like to ask the Minister to consider this question. We debated this clause at considerable length in the Committee stage, and I understood the Minister to say that he would consider the matter and refer to it again when the report stage came up. I hope he will agree to this amendment.

I naturally appreciate the sentiments of the hon. gentlemen who have spoken on this matter, but I regret I cannot accept the amendment, nor indeed can I go any further than I indicated I would go, namely to introduce an amendment in the War Pensions Bill when that comes up, so as to cover the case of the £13 allowance to parents. But in general I think this should stand as it is. May I just repeat the position. In the Law of 1940 we empowered the Insurance Company in making a contract with a would-be policy-holder, to insert a stipulation by which war risks were excluded. We did that because otherwise we though it would have been difficult for soldiers to obtain cover unless they paid a loaded premium. That stipulation was inserted, and on that basis, contracts were entered into. I do not think it would be reasonable on our part now, having regard to what we ourselves did three years ago, in effect to declare that stipulation null and void. I am sorry, therefore, I shall not be able to accept this amendment.

Amendment put and negatived.

In Clause 39,

Amendment in Clause 39, line 70, page 50, put and agreed to.

I accepted at the Committee stage an amendment which raised the amount protected from £1,000 to £1,500, and that necessitates certain consequential amendments. I do not think the first amendment on the Order Paper is necessary. That is already covered. But it is necessary in the last line of this clause to insert “£500” before the word “pound”, I move—

I second.

Agreed to.

In Clause 42,

May I move a similar amendment in Clause 42. This is also a consequential amendment. I move—

I second.

Agreed to.

In Clause 44,

May I move a similar amendment in Clause 44—

I second.

Agreed to.

Amendment in the heading of Chapter IV put and agreed to.

In Clause 60,

I have four amendments on the Order Paper but two of the amendments you will rule out of order, Mr. Speaker, as those amendments entail an increase in taxation. I shall, therefore, only move the first two amendments.

I think the hon. member must confine himself to the first amendment.

Very well, Mr. Speaker, then I move that amendment as follows—

I have already during the debate on the second reading explained to the House why it is necessary to increase this amount from £5,000 to £10,000. It is the amount which every agent of Lloyds in the Union will be compelled to place with the Treasury as a deposit, over and above the amount of £30,000 which the Lloyds Company as such will deposit. I have indicated that if the House accepts the original provision that every agent must deposit £5,000 it will cause unfavourable discrimination against South African companies. I have shown that it is the policy of members on this side of the House to favour and give preference to South African companies, and that it should also be the policy of the Government to discriminate against foreign companies. The position of Lloyds is simply this. They receive the same amount in premiums for that sort of insurance as do all the other South African companies together. Lloyds have in the past always been privileged because they were not subject to any tax in the Union and could compete freely with South African companies. They were subject to no other obligation. It is now actually proposed by the Select Committee that there must be a measure of discrimination against Lloyds, but that measure of discrimination is not sufficient. According to the evidence before the Select Committee, Lloyds in 1939 collected premiums amounting to £166,300 in South Africa through the eight Lloyds agents who are in this country. This was the only information that came before the Select Committee, and it could only act on those grounds. It was also said by the representatives of Lloyds that the amounts of premiums collected during the years 1941 and 1942 were almost identical, viz., about £160,000. Since then, however, I have received more information in connection with this matter and I can say with reasonable certainty that Lloyds received about £240,000 in premiums last year. Particularly because of the abnormal times that prevail, Lloyds’ business in the Union is increasing. If we accept for the sake of argument that Lloyds obtained the sum of £240,000 in premiums in 1942, then we must accept that its liabilities on the basis of that premium-income must be in the neighbourhood of £250,000. The only security which this Bill offers the policy-holder in the Union is the security of £30,000 which Lloyds has to deposit with the Treasury, plus the £5,000 which the agent has to deposit with the Treasury. While other foreign companies must hold adequate assets in the Union to cover all their liabilities, Lloyds is treated very favourably in this respect, even by the recommendation of the Select Committee—the security which Lloyds must have here thus amounts to about £35,000, against possible liabilities of £250,000. It must be borne in mind that no limits are placed on the expansion of Lloyds’ business in South Africa. The possibility exists that Lloyds’ business in South Africa may be doubled in the next five years. And Lloyds are asked notwithstanding all those profits which they make in South Africa, to contribute only 2½ per cent. in taxation on premiums to the Treasury. It is also a fact that as a result of this Lloyds are free from the Excess Profits Duty, while our own local companies are obliged, if their business expands, to pay Excess Profits Duty to the Treasury apart from the ordinary Income Tax and Super Tax. Lloyds are exempted from all this and all that is asked of them is to pay to the Treasury 2½ per cent. of the premiums which they receive through their agents here in South Africa. If the Minister examines the matter thoroughly he will see that South African companies, as far as this is concerned, are discriminated against. They are liable to all the taxes of the Union. While the South African companies have in the past paid all the taxes, Lloyds have never yet paid. The first time that they will be asked to pay will be when this law comes into force. This is the position as far as Lloyds are concerned, and therefore we cannot come to any conclusion other than that Lloyds are favoured in a very great measure. We ask that discrimination be made in favour of South African companies, and if there is discrimination in this manner in favour of foreign companies then it is in conflict not only with the interests of South African companies but especially in conflict with the interests of South Africa. I repeat, to sum up, that the position of Lloyds is this: That every agent shall be compelled to deposit £5,000 in the Union Treasury and Lloyds itself the gross sum of £30,000. Those amounts will serve as security. Any policy-holder in South Africa will thus have the security of the £30,000 plus the £5,000 which is deposited by the agent. This is the only security. Over and above that no further restrictions are imposed on Lloyds. It can expand its business, and its business expands daily. Furthermore, Lloyds is liable to only one tax, viz., 2½ per cent. on the amount of its premium-income in South Africa. Against this, the South African companies are liable to the normal Income Tax and the Super Tax and the Excess Profits Duty. In addition Lloyds is favoured in that while it deposits £30,000, any other foreign company must retain sufficient assets in the Union to cover all its liabilities. In every sphere Lloyds is a strong competitor of the South African companies. It will be said that Lloyds provides for a specific need, namely, that it undertakes certain assurance that is not undertaken by other companies. But in a large measure that is no longer the case. The information at my disposal is that South African companies together with one or two foreign companies which do business here, viz., inter alia, the Yorkshire Insurance Company, to mention one, actually offers every kind of assurance which Lloyds undertakes at the moment. If the argument is put forward that, because Lloyds competes and is a non-tariff company, it keeps premiums in the country low, I want to say that that argument no longer applies. There are eight or nine other non-tariff companies which provide adequate competition to keep premiums low. I trust therefore that the Minister will accept the amendment at this stage. The same arguments are applicable to the other amendments which I shall move. The whole object is to discriminate against a foreign company, a company that only has agents in South Africa, which has no head office in South Africa, a company that employs no South Africans, a company whose profits all go out of South Africa, a company from which South Africa derives no benefit—against this company we must discriminate in favour of our own companies. It is my plea here, and the only way is to restrict the activities of Lloyds. Under the rules of the House we are not allowed to propose an increase of taxation. That onus rests on the Minister. All that we can do is to urge that steps be taken to restrict the activities of Lloyds and to prevent the expansion of its activities, and the only manner in which that can be done in some measure is to compel every agent to deposit £10,000 instead of £5,000, and in that way to prevent the appointment of additional agents and restrict the activities of the company to some degree so that South African companies may be favoured in that manner. I trust that the Minister will see his way clear to accept the amendment.

I second. It appears now that when the Select Committee dealt with this matter in connection with the Lloyds Company the Committee did not know of the facilities that already exist in the country for that kind of insurance which Lloyds specially undertakes. We were under the impression that Lloyds did insurance which was not done here to the same extent. Since the Select Committee sat there have come to our notice facts which show that in South Africa there are already institutions which do business in that sphere, and when we found that out we took up the attitude that the South African undertakings must be supported. I am convinced that if the hon. member for Brakpan (Mr. Trollip) had known what is already being done in this respect he would have agreed with us, and also other members of the Committee, that we must discriminate in favour of South African undertakings, and also to protect South African undertakings. The strong argument that was used at the time was that if we were to increase this amount the result would very probably be that the eight underwriters of Lloyds would be reduced so that perhaps only one or two remained. The business would then be in the hands of a monopoly as regards that sort of assurance. Now it seems that that is not the case, but that there are already in our country existing companies which do that work. Under this Bill we are now making provision that South African companies can do business on the same basis as Lloyds. That is the amendment effected in Clause 60. Since that is the case, and where we welcome the fact that South African companies will do this sort of work, I hold that we should encourage them by even discriminating in favour of South African companies. The hon. member for Fordsburg (Mr. B. J. Schoeman) raised the other points, but I think that where by means of this legislation we provide facilities for companies to do this work in our country, we must go further and definitely encourage them as against the foreign companies by discriminating in favour of them.

This matter was fairly thoroughly discussed on the occasion of the debate on the second reading, and I said then that I was in favour of the proposal of the Select Committee as it is embodied in this clause. I still stand by that. The real question is this: Is it desired to allow Lloyds to continue here or not? The Treasury is of the opinion that it is desirable. The Select Committee, too. My hon. friend said that Lloyds’ business last year reached the figure of £240,000. I have no official figures for after 1941. In 1941 the official figure for Lloyds’ business was £168,540. It was practically stabilised between 1939 and 1941. It may be that my hon. friend is right about the following year. If that is so, then the cause of it is the greater additional marine-insurance, especially as a result of the trade with South America. At the moment we have the position that our traders have a struggle to get that insurance. Even as regards that, it seems to me that Lloyds does a very useful service, apart from other special kinds of insurance which it is difficult to secure from ordinary insurance companies. Even in the light of the figures that my hon. friend mentioned, I must accept that Lloyds plays a useful rôle in our country. If that is accepted, then the further question is this: What is fair with reference to the competition between Lloyds and our own companies? In that connection we have in the first place the question of security. The Select Committee was apparently of the opinion that we do not really have to be concerned about the security offered by Lloyds. It is strong enough to meet its liabilities. That is also the opinion of the Treasury. For this reason I believe we can be satisfied with the provision concerning £30,000 which must be deposited with the Treasury. Then we come to the question of taxation. While Lloyds in the past paid no taxation, the Select Committee has in fact made provision on the basis of the original draft Bill for a tax on the premium which Lloyds must pay. The third question in connection with the amendment is the deposit of the individual agents of Lloyds. Hitherto it was £2,000. Our companies pay £10,000. But a company generally has a whole series of branches. The Lloyds agents are virtually independent, and in view of that fact it seems to me that if a Lloyds agent pays £5,000 it is a fair compromise. I support it and I hope that the House will not accept the amendment.

Question put: That the word “five”, proposed to be omitted, stand part of the Bill.

Upon which the House divided:

Ayes—59:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowen, R. W.

Bowker, T. B.

Carinus, J. G.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Gilson, L. D.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Howarth, F. T.

Humphreys, W. B.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Liebenberg, J. L. V.

Lindhorst, B. H.

Long, B. K.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Robertson, R. B.

Shearer, V. L.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steyn, C. F.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van Coller, C. M.

Van den Berg, M. J.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and J. W. Higgerty.

Noes—32:

Boltman, F. H.

Booysen, W. A.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Haywood, J. J.

Hugo, P. J.

Le Roux, S. P.

Loubser, S. M.

Malan, D. F.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Verster, J. D. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Wilkens, Jacob.

Wilkens, Jan.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Question accordingly affirmed and the amendment dropped.

Amendment in line 33, page 66, put and agreed to.

As I have already said, I cannot put the amendment in paragraph (f) which I wanted to propose, for according to the rules of the House I must obtain the approval of the Governor General if the levying of taxation is involved, and it is unfortunately not possible for private members to do this. I would therefore merely make an appeal to the Minister at least to take the matter into consideration in the Other Place. However, I move the amendment in paragraph (h)—

I thus propose that “£30,000” be deleted and be substituted by “£200,000”. The hon. Minister has asked whether it is desirable that Lloyds should continue to exist. I think everyone agrees that Lloyds should continue to exist to a certain extent, but that is no argument why Lloyds should be allowed to expand its business and as a result thereof to compete more and more with local insurance companies to the latters’ detriment. Lloyds may continue to exist for the special class of business in which they specialise, but it is the duty of the Government to ensure that it does not throw wide the doors so that Lloyds may become such a strong competitor that the local companies will be detrimentally affected in a large measure. As I have already said, the only security that Lloyds has to provide at the moment is £30,000, plus the £5,000 which every broker must provide. As the Minister said, the Select Committee also thought that Lloyds was strong enough to meet its commitments, but that can be said not only of Lloyds, and one must accept that also in respect of other foreign companies, that they are able to meet their commitments. We must bear in mind, however, that we are not living in normal times. We do not know what the economic situation is going to be after the war. The times are so uncertain that it is the duty of the Minister of Finance to give the greatest measure of protection to the South African policy-holders, whether it is detrimental to Lloyds or not. Lloyds should be compelled to provide adequate security in South Africa, so that there shall be no danger of South African policy-holders suffering loss. I have put the amount of £200,000. The reason, as I have said, is that according to my information Lloyds business has increased tremendously during the past year. According to my information their premium collections have risen to an amount of £240,000. Their commitments in this event must be about £250,000 at the moment, but it may be that in normal times the premium income will decrease again to the neighbourhood of £200,000. In order to find a reasonable figure for the security which they ought to provide to cover all their connections, I therefore arrived at the figure of £200,000. It is not only the security that is of so much importance in this case, but also the fairness. Why should Lloyds provide less security than other companies? Why should there be discrimination against other companies in favour of Lloyds. Lloyds can afford to provide the security, and the Minister should therefore compel it to do so. I want to point out again that I cannot put the amendment in connection with the taxation, but I want to ask the Minister to consider the suggestion of increasing the taxation. The position is simly that the 2½ per cent. taxation is now imposed permanently upon Lloyds, whether they expand their business or not. All they contribute to the Union Treasury is 2½ per cent. on the amount of the premiums which they collect. If it rises to £500 and their profits increase by £100,000, then they are still compelled to pay only the 2½ per cent. on the premium incomes. Other companies are in quite a different position. I have here the case of an old company which before the war paid about £8,000 in taxation. But now as a result of the increase in marine income they had to pay £48,000 income tax during the past year. The taxation so far as that company is concerned has increased by £40,000, but Lloyds will remain at the 2½ per cent. on premium incomes. The Chairman of the Select Committee will endorce my statement that it is calculated on the ordinary normal income tax that the ordinary companies have to pay, but it does not take into account the excess profits tax. What justification is there for making a South African company pay excess profits tax while foreign companies are exempted. It is the worst form of discrimination. I do not blame the Select Committee, for they acted unwittingly to a certain extent, but now the Minister knows what the position is and it is his duty to ensure that the discrimination shall not continue, and that our own companies shall be privileged. I move the amendment to give the policy-holders of South Africa sufficient protection. Lloyds can deposit £200,000, and then we shall at least know that the South African policy-holders are quite safe.

I second.

The hon. member’s amendment now is that Lloyds’ deposit must be increased to £200,000. He said that he had no objection to the continued existence of Lloyds, but that he does object to Lloyds being able to expand its business by way of discrimination, that through discrimination its business will be assisted. May I point out that the existing legislation makes the position considerably more difficult so far as Lloyds is concerned. In the first place Lloyds does not have to make a deposit today. We put it at £30,000. In the second place Lloyds pays no tax today. We provide for that. In the third place the deposits of Lloyds agents is today £2,000 and we are making it £5,000. It can thus hardly be said that this Bill encourages the expansion of Lloyds’ business. Then the hon. member, in support of his amendment, says that he wants to provide sufficient protection to the policy-holders in South Africa. That, of course, is a wish that we all entertain, but are we really anxious about the possibility that Lloyds will not be able to pay?

What about other companies?

They are not expected to deposit with the Treasury an amount equivalent to their commitments.

But to have assets in South Africa,

But there is no reason to fear that Lloyds has not the assets. The hon. member now wants Lloyds to deposit with the Treasury an amount equivalent to its commitments.

Because Lloyds, according to its constitution, cannot have those assets here.

What shall we attain thereby? From the point of view of the policy-holders we shaall achieve nothing by it. We are quite safe as the Bill now is.

Question put: That the word “thirty”, proposed to be omitted, stand part of the Bill.

Upon which the House divided:

Ayes—57:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M,

Allen, F. B.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowen, R. W.

Bowker, T. B.

Clark, C. W.

Collins, W. R.

Conradie, J. M.

Davis, A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Hirsch, J. G.

Hofmeyr, J. H.

Howarth, F. T.

Humphreys, W. B.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lindhorst, B. H.

Long, B. K.

Marwick, J. S.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Raubenheimer, L. J.

Robertson, R. B.

Shearer, V. L.

Solomon, B.

Sonnenberg, M.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van Coller, C. M.

Van den Berg, M. J.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Tellers: G. A. Friend and J. W. Higgerty.

Noes—32:

Boltman, F. H.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Conroy, E. A.

Dönges, T. E.

Erasmus, F. C.

Fouché, J. J.

Haywood, J. J.

Le Roux, P. M. K.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G,

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Verster, J. D. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Wilkens, Jan.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Question accordingly affirmed and the amendment dropped. New Sub-Section (2) in Clause 60, put and agreed to.

I have an amendment on page 510 of the Order Paper to insert a new subsection in this clause. This amendement has arisen as a result of the discussion in the Committee stage two days ago. I moved it then and the Minister suggested that I should Table and move my amendment at the Report stage. The object is to limit the rate of interest which insurance companies may charge in two respects—firstly in respect of loans made on security of life policies, secondly in respect of advances to meet premiums unpaid out of the surrender value of the policy, which I have called non-forfeiture advances. This matter has exercised my mind for some time, because while general interest rates for the last ten years have fallen considerably, interest rates are charged by insurance companies in respect of policy loans and non-forfeiture advances have not been reduced by a fraction, and I do feel that there should be some sympathetic connection between the two. I was in communication with the Minister in December 1940 on this subject and in January 1941 I received a reply from him in which he expresses his interest in the subject I have raised, and he adds this: “As I think you appreciate I have no power to act in a matter of this kind under the law as it now stands, but as has already been announced it is intended to introduce an insurance Bill which will replace the present Insurance Act. Shortly after the House resumes. This Bill will then be sent to a Select Committee. I think it desirable that the point raised in your letter should be brought up for consideration and it would seem that this could appropriately be done while the Bill is either before the House or the Select Committee.” When the Bill emerged in 1941 there was provision made in respect of both loans and non-forfeiture advances of limitation of interest, but in subsequent Bills that provision was dropped. I followed this matter up with a question to the Minister last year, and I find that the total amount involved in policy loans and non-forfeiture advances, was in 1940, just over £9,500,000. So that the amendment is probably now covering the substantial amount of about £10,000,000, which insurance companies—that is local and overseas companies—have loaned on the security of life policies. I asked the Minister the question last year as to the rates of interest which were being charged and his reply was that on policy loans the rate of interest varies between 6 per cent. and 7 per cent. These rates applied in both 1931 and 1941. And in respect of non-forfeiture advances the interest rates varied between 6 per cent. and 10 per cent. And there has been no change likewise as between 1931 and 1941. I also asked the Minister for purposes of comparison what rates of interest prevailed in respect of Government loans, and the reply summarised may be stated as this—in 1931 Government loans were running round about 4½ per cent. to 5 per cent., and in 1941 they varied from 2¼ per cent; to 3 per cent. There has in consequence been no sympathetic fall in the rates of interest charged by insurance companies in respect of these loans and non-forfeiture advances, and it is with the object of compelling companies to reduce the rates that I have Tabled this amendment. My proposal is just this, that companies should not in respect of policy loans charge interest at rates exceeding 4 per cent. compounded half yearly; and in respect of non-forfeiture advances the rate should not exceed 5 per cent. compounded half yearly. I submit that 4 per cent. and 5 per cent. compounded half yearly are highly satisfactory rates, having regard to the interest paid on Government securities, especially when one takes into account that a company has no finer security than a loan it makes against the security of its own policy. It is in effect lending purely portion of the money which it has received. The companies can suffer no loss whatever. In respect of Government loans, the investment is subject to fluctuation on the Stock Exchange and people may suffer loss there, but here we have the incongruous situation that it is now possible to borrow money on the security of a dwelling house at a far lower rate than on the security of a life policy. The position has got completely out of balance. I have the Minister’s letter in which he states that in the Act as it stands he has no power to bring redress to the policy-holders. Well, that is the purpose of my amendment. I have gone further in a small proviso to safeguard the position against any increase in interest rates in the reasonably near future by giving the Registrar the discretion if good cause is shown by the companies to increase the rate of interest to a figure not exceeding 6 per cent. That as a ceiling should be a satisfactory figure, because for many years now it has been the policy to charge 6 per cent. on policy loans. Twenty years ago one company to my knowledge—one large overseas company,—only charged 5 per cent. on non-forfeiture advances and I believe I am correct in saying that it has in the interim increased its rate to 6 per cent. I feel particularly strongly on this subject because of the effect which the rate of interest has on maintaining a policy in force under the non-forfeiture provisions. Where premiums are unpaid by the insured, the company advances the premium under the security of the policy, and the company adds interest to such advances periodically. Now, it is self evident that where we have very prominent companies in this country—and I can say two of our most prominent life companies—charge from 8 per cent. to 10 per cent. compound interest on non-forfeiture advances—charging such interest it must eat substantially into the surrender value of policies, and thereby rapidly shorten the period for which these policies could be maintained—it must do so more rapidly than if the interest rate is lower. At 10 per cent. compounded annually money will double itself in seven years, at 8 per cent. in nine years, whereas at 4 per cent. it will take 18 years and at 5 per cent. fourteen years. I think in the experience of all companies it is found that the great bulk of life policies fall under the non-forfeiture provisions at one time or other during their lives. There is further no doubt that many policies are pledged as security for loans. A large number of policy-holders are therefore affected, and my amendment particularly affects those who are in the forces, who are away on active service, and who for various reasons may find themselves unable to pay their premiums. They are in this unfortunate position, that when the premiums are advanced there is added this heavy rate of interest. If the rate of interest is reduced to the figures I suggest, it is in the interest of the policy-holders who may for various reasons require to have these advances made. It is all in their interests and I move the amendment in the light of it being in the definite interest of the policy-holders. It is true that some members may say that some companies may not wish to reduce their rates of interest, because they do not wish to encourage loans. I do not take much cognisance of that. When a person is sick and is involved in expense, he is only too pleased to know that a policy for which he has been paying for some time will carry itself and that it will be kept going during the period he is in trouble. Further, should anyone raise that objection I would say that in England the rate on policy loans has varied between 4 per cent. and 4½ per cent. for years past, and overseas companies have been lending money to their policy-holders in England at 4 per cent., but in South Africa they charge 6 per cent., and it is in order to redress this that I move my amendment. I move—

1. (6) Where a loan is granted by an insurer on the security of a policy, or where the surrender value of a policy is applied in terms of Sub-section (3) in maintaining the policy in force (hereinafter called a non-forfeiture advance), the rate of interest on such loan shall not exceed four per cent. per annum, compounded half-yearly, and the rate of interest on such non-forfeiture advance shall not exceed five per cent. per annum compounded half-yearly: Provided that, with the consent of the Registrar, and on good cause shown, interest may be charged as aforesaid at a rate not exceeding six per cent. per annum.

I second the amendment. The question which is now being dealt with is a far-reaching one affecting most policy-holders in South Africa to whatever company they may subscribe. A father of three sons who are at present on active service has drawn my attention to the rates of interest which are charged by a prominent company in South Africa, and I want to read the clause dealing with interest. He says that the cession document which the borrower is obliged to sign to obtain an advance contains the following clause:

I do not suppose this company is singular in the rate of interest charged, and in the method of doing business with borrowers. I think we must all realise that this is a very profitable business to the companies who issue these loans without risk of any sort. It is like lending a man his own money. He is due to receive the amount of the policy in due course, and we lend him a fragment of that on which we charge him full rates of interest—almost profiteering rates of interest—and we charge him in advance — he pays in advance before the interest actually becomes due. One company alone in South Africa shows in its balance sheet for 1941 that loans on their policies amounted to £3,960,303, nearly £4,000,000, issued to the distressful borrower at 6 per cent. interest payable in advance.

Some of them charge 8 per cent.

I am dealing with documentary evidence showing the rate of interest charged at present, and that will give this House an idea of the extensive business done by each company. I have only quoted the figures of one company. In one year the loans granted on policies amounted to a little short of £4,000,000. And if it is the business of the Government to limit profiteering on food, then surely it is the business of the Government to limit profiteering on interest on life policies. As the hon. member for Orange Grove (Mr. Bell) has said, a very large class of policy-holder in this country—the insurable lives of this country—are soldiers, are the men on active service, and the risk of their being obliged to borrow is very great. Their affairs in their absence are being carried on in the very best way possible in the circumstances, but there is scarcely a single absent soldier who does not suffer through his absence. In the case of farmers I have only recently heard of cases which prove to me that the whole of their farming is going downhill and they have to borrow on everything they have, and no doubt the majority borrow on their policies. They jeopardise their policies by so doing, because the policies become forfeitable in many instances if the interest is not paid on due date, as well as the premium. And so these men who deserve well of the country are obliged to jeopardise their policies of insurance, and the least we can do is to see that they are not charged excessive interest. I agree with what has been said by the hon. member for Orange Grove and I have merely quoted from a letter to show that there is very good cause, very good reason, for this House to pass this amendment. These insurance companies are safe in lending money to these people—they are actually lending them part of their own money and they charge them very highly for the benefit of borrowing their own money.

The hon. member for Orange Grove (Mr. Bell) has raised what is an important question, this question of the rate of interest on policy loans, and non-forfeiture advances, and I appreciate the sentiments with which he and the hon. member for Illovo (Mr. Marwick) have raised this matter. But I do not think it would be appropriate that this Bill should deal with this question here. We are at this stage concerned primarily with the question of security for the policy-holder. We do not purport in this Bill to go into the much wider question whether the policy-holder is getting value for his money. That raises a much wider question. There are several points which might be raised there—there is the question of premium rates and so on. We have not asked the House to concern itself with that aspect of the insurance business in this Bill. We have not got the information to deal with these matters. We are in this Bill taking steps to exercise powers of control in the matter of security, we are also taking steps to secure information, and it may be that in the light of that information these aspects of the matter will have to be dealt with. But I do not think we are in a position to deal with these aspects of insurance business just now, and therefore I am loath to raise this question at this stage. I think therefore I shall have to resist the amendment and to ask the hon. member to leave it to us to consider this and similar questions in the light of the information which we shall receive.

If this matter cannot be taken any further then I hope the hon. member will drop it, but in the light of the information that 8 per cent. and 10 per cent. is charged, the position certainly is a serious one. I must admit that I have heard of it, but I could not believe it. I thought the highest interest charged was 6 per cent., and that that rate was charged for a good reason, namely that most of these loans were for small amounts ranging from £10 to £60 or £70, loans which were repayable at any time. Anyone could walk into the office and pay off part of his loan which naturally meant that the work entailed in dealing with these small loans was very considerable. After all, the smallness of the loans, and the fact that there was a great deal of work involved, was partly responsible for the fact that 6 per cent. was charged. That is how I looked at the position. I hope if the matter must be left there, that it will be found that something can be done at some future time.

We shall certainly watch the position.

I feel very sympathetic towards the opinion expressed by the hon. member for Orange Grove (Mr. Bell).

When will it be done?

That does not depend on me, but on the people who will have charge of the administration of life insurance. I think the raising of this question by the hon. member will have a very good effect as it is. If it is found that it cannot be taken any further now I hope it will be settled to the benefit of the policy-holders. I only want to point out this that quite 60 per cent. of the policy-holders do not borrow on their policies and if the rates of interest on loans are reduced, they would suffer in the bonuses for the 40 per cent. who do borrow. I only mention that, not as an argument for the higher rates but I do want to point out that life insurances are really started for the definite purpose of protecting certain sections of the community, expecially dependants and widows of the insured persons, and unfortunately reducing the rate of interest on loans to below say even 6 per cent., will definitely mean that at the end the money left for dependants will be very much less than it is when higher rates have to be paid. Again I do not want to raise that an as argument for higher rates. The purpose of life insurance is to promote the security of dependants, and if we make it too easy to borrow it will not make it easy for the dependants.

A high rate reduces the amount paid out at death.

No, I don’t agree. But in view of the disclosures made here that there are companies which charge these high rates I hope the matter will be looked into.

I think it very unfortunate that the old clause dealing with rates of interest was left out of the Bill in Select Committee. We could have taken evidence on it otherwise. I think if the hon. member who has just spoken will go into the matter he will find that while they charge 6 per cent. on loans on life policies, they charge another 2 per cent. on the non-forfeiture clause.

That is correct.

But in view of what the Minister has said we cannot carry it very much further, but I want to say that it is a matter causing great concern to many people, but with the assurance of the Minister I hope something will be done.

Yes, I shall go into it.

Amendment put and the House divided:

Ayes—20:

Bowen, R. W.

Bremer, K.

Conradie, J. M.

Derbyshire, J. G.

Fouché, J. J.

Geldenhuys, C. H.

Goldberg, A.

Henderson. R. H.

Hooper, E. C.

Kentridge, M.

Le Roux, P. M. K.

Marwick, J. S.

Neate, C.

Pieterse, P. W. A.

Solomon, B.

Strydom, J. G.

Swart, C. R.

Venter, J. A. P.

Tellers: F. H. Acutt and R. E. Bell.

Noes—45:

Abrahamson, H.

Alexander, M.

Allen, F. B.

Bawden, W.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Clark, C. W.

Davis, A.

Deane, W. A.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander. A.

Gilson, L. D.

Hayward, G. N.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Hooper, E. C.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Lindhorst, B. H.

Long, B. K.

Molteno, D. B.

Mushet, J. W.

Payn, A. O. B.

Pocock, P. V.

Quinlan, S. C.

Robertson, R. B.

Solomon, V. G. F.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Trollip, A. E.

Van Coller, C. M.

Van den Berg, M. J.

Van der Byl, P. V. G.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and W. B. Humphreys.

Amendment accordingly negatived.

Amendments in Clauses 64 and 78 put and agreed to, and the Bill, as amended, adopted.

Bill read a third time.

I consider that the pension granted in this case is very low. I think it is the widow of Gen. Tobias Smuts. He was Assistant Commandant-General of Transvaal, and only £120 per annum is granted to the widow here. We had a case last year when we granted a widow of a former general £440, and it was not a South African general; and we then proposed that the widow of Gen. Bower should receive the same amount. Now I had thought that the Select Committee in its wisdom would accept that pension of £440 as its standard in similar cases. For that reason I would like to know why in this case only £120 is granted to the widow of a man who occupied such an important position in the old Republican Army.

This amount of £120 per year is the amount which is paid in most cases. The hon. member can mention instances where higher amounts have been paid, but I have the list here and he will find that in most cases the amount paid is £120 per year. We have the case of the widow of Col. Prinsloo, the widow of Brig.-General Purcell, the widow of General Maritz—all of them got £120—the case of Wessel Wessels—

How much did the widow of General Collyer get?

£400 per year, but that was the case of a widow of a man who died actually during military service, but this is different. These men, in respect of whose service we awarded a widow’s pension, did not die on military service. They actually rendered service during the old Boer War. All those men held high military ranks, and they have always been recognised by this House, and the amount which the hon. member objects to is the amount which should be paid except in special cases such as that of the widow of the late General Botha and the late President Steyn. We are merely following precedents in making this particular recommendation.

I think the hon. member is wrong. It has already been realised that the pensions in respect of some of the widows are too low, and in the case of Mrs. General de Wet the pension was increased, and it was also increased in the case of Mrs. President Steyn. Here we have one of the leading generals of the old Transvaal Republic. Why should the widow not also get. £400? I do not know if I may move that the pension be increased?

No, the hon. member can make no proposal that will involve increased expenditure.

Recommendation put and agreed to.

On Recommendation No. (5)—

I am surprised that in this case such a small sum as £24 should be granted. I knew the late Commandant well. He was a Commandant in the English War and also participated in the war of 1914, and was actively on commando and reached the rank of Lt.-Colonel. Now his widow is being given £24. I think that he had a pension of from £10 to £12 per month. Is it not possible to increase the pension of the widow?

In this particular case the husband actually drew a military pension of £75 per year in respect of his military service. I admit on the face of it £24 looks low, but the point is that this lady is drawing the old age pension and the amount of £24 brings it up to the limit what we call the means test, that is £72 per year. If we were to increase the amount, it would only be deducted from what she gets in old age pension and she would be no better off. In all she would still not get more than £72. We have precedents for this. In 1939 we paid the widow of Col. Trichardt £72. That was the actual amount she was awarded. However much we may exceed the £24 by, up to £72, that amount will be deducted from her old age pension.

She would be worse off because she would not get the cost of living allowance.

I am grateful for the explanation of the Chairman, but I think we must object as a matter of principle. Why should such a person receive pension plus old-age pension? Would it not be better to say: The person has rendered the services, and we give the pension?

Will she then be better off, for she now also receives cost of living allowance, but otherwise not.

Then I understand it.

Recommendation put and agreed to.

Remaining recommendations of Paragraph I and recommendations under Paragraph II put and agreed to.

In Paragraph IV,

I move—

Mr. J. P. Botha is an ex-teacher and an ex-inspector. He first served under the Cape Department of Education and thereafter under the Transvaal Department of Education. During his term of office under the Cape Department he contributed various amounts to the Cape Pension Fund, but it was not taken into consideration when he was transferred to the Transvaal, and consequently he got no pension in respect of the period during which he served under the Cape Department. It seems very unfair. If I am not mistaken, compensation has been granted on various occasions in this House in respect of a period during which an official was for instance out of the Service, but in this case the man was not out of the Service and he even contributed for a number of years to the pensions fund of the Cape Department, but notwithstanding this he now—I do not know for what reason, does not even get compensation in the form of a pension for the period of his service under the Cape Department of Education. I shall therefore be glad if this matter is referred back to the Select Committee so that they can consider what form of compensation they can grant in respect of those activities.

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

The aspect of the matter that I would like to emphasise, is this, that Mr. Botha was a teacher before Union when the country was under different administration. He entered the Cape Service and later served as an Inspector of Schools in the service of the Transvaal Education Administration of those days. Assuming that such a thing happened under Union, and a teacher should leave the Cape Administration to enter the service of the Transvaal Administration; then this difficulty would not arise. But he retired before Union came about. For the period that he served in the Cape Administration he got no compensation in the form of a pension. It seems to me that the Select Committee did not take into consideration that aspect of the matter, and for that reason I ask that this matter be referred back to the Select Committee so that this aspect of the matter can be thoroughly taken into consideration. Then there is also the case of Mr. Pretorius. Here is the case of a person who was in the service of the Government as a dip inspector and later as a stock inspector. His work is of an arduous nature. After he served for quite a number of years, he became physically unfit. For that reason the Government dismissed him. He appeared before the Medical Board and was declared physically unfit, and now he has to leave the service. There is no provision for such officials under the pension laws, and I would like the Minister of Finance also to give his attention to this aspect of the matter. For this kind of official, stock inspectors and dip inspectors, people who have been in service for years, no provision is made in repect of pension when they have to leave the service of the Government. They get a small sum of money in the form of a gratuity. They contribute something themselves, and then they get a small globular sum. I have forgotten what the amount is, but it is so small that the person concerned cannot start something with it. If such a person leaves the service he is then virtually on the street. This person according to my information—and I have known him well personally for years—has actually become physically unfit as the result of his arduous work. Now he has to leave the service, not out of his own free will but because the Government through the medium of the Medical Board now says to him: “We cannot keep you in the service any longer; you are too sickly.” There is no pension for him, and therefore he ultimately submitted a petition to this House to ask if the Government cannot grant him something more than the customary amount, in the form of a gratuity, which is given to these people. I do not know what the custom was in the past; I do not know whether in similar circumstances assistance was extended above what is provided for in the law. For that reason I ask that the matter be referred back to the Select Committee. I would like the Minister of Finance to give his attention to this aspect of the matter, namely if the time has not come when such servants of the State, who after all find themselves in the same circumstances as any State official who leaves the service with a pension—I want to ask the Minister if the time has not come to amend the pension laws in such a way that this kind of official shall also get a pension on the same basis as the ordinary official.

They can contribute something to the Provident Fund.

That is all; he can contribute something to the Provident Fund and then he gets a round sum of £200 or £250. The Minister will appreciate that the man can do nothing with that small sum. It does not enable him to make a new start. It is true; there is that small compensation. But it is not enough for the man to make a new start, and I therefore want to propose that the Minister should give his attention to this aspect of the matter.

I would like to ask the approval of the Committee that this case, No. 15, of Mr. C. E. G. Brits, be referred back to the Select Committee for reconsideration. I want to explain briefly what the case is. The person concerned was Officer Commanding the Special Service Battalion at the time. He was a member of the Defence Force of the Union of South Africa. During the World War he was a comparatively young man, and during his absence on military service at the time he did not think about a pension; he did not bother about it, as so often happens with young men. That was one of the reasons. The other reason was that his wage at the time was very small. He was a Lt.-Colonel when the Petition was served, and he is now in a position to pay in the amount which he did not pay for three years, so that his pension may be put in order. I think it is a reasonable request that his case should be referred back to the Select Committee. The other case I want to raise is that of Mr. Muller, No. 64. I think the Chairman of Committees will remember that a special Military Board sat in respect of this person who had an accident while he was in uniform, and that it was a very tragic case, and that the court that sat on the case said that it was a very hard case, and they recommended that although the man did not have the accident on active service, and although he was only in uniform but on his way to Tempe from Bloemfontein, where he was killed in a motor accident, that this case should receive the attention of the Select Committee on Pensions. For those reasons I would like to move a further amendment—

To deal first with the case of Pretorius. There are two different aspects in this case. One aspect was this whole question of non-pensionable service. A man who served years in a now pensionable position going out without any pension rights—that is a matter which the Committee cannot deal with. The Committee cannot alter the law. You have many thousands of such cases in this country where men such as unestablished post-masters, stock inspectors, etc., are in temporary positions, which do not carry any rights to contribute to pension funds. In this particular case this man Pretorius joined the service in 1926, and he was then in the position of a stock inspector, which is a non-pensionable post; he could not contribute to the pension fund. Subsequent to that date the Employees’ Provident Fund was started, and in 1936 he contributed to that fund. That was the first time he was able to contribute to any pension fund. He was retired on the ground of ill-health in 1941, and he received the full benefit to which he was entitled in view of his five years’ contribution to that fund. He was given £180 1s. 6d., and he was awarded the gratuity which is laid down in the Act, of £100 in respect of his previous service, which was non-pensionable. He had not contributed towards that £100, it was purely a gratuity which the Act provides for. The House will see that he received the full amount he was entitled to under the laws of this country. There is nothing special about this case, it is one that applies to hundreds and hundreds of men and women.

This man is now an invalid. He did not leave the service because he was incompetent, or because he had reached the age limit, but he left because as the result of his ill-health the Government could no longer employ him. So that he is without any means as far as the Government is concerned.

He was examined by a Medical Board, and the Board found that he was suffering from neurasthenia and expressed the opinion that his illness was due to constitutional causes and had no connection with the ordinary work. I can hardly conceive myself that a stock inspector, working in the open, would be likely to contract neurasthenia; that is a most unlikely thing. That was the finding of the Medical Board, and their report does not indicate that his condition is so serious that he cannot go on earning a living. However, if the hon. member thinks that any good purpose could be served by sending it back to the Committee, I have no objection. This case is common to a very large number of men and women in the public service, and to meet their cases needs an alteration of the whole system under which they are employed. The second case was that of J. P. Botha. Now this is an entirely different case. This man served in the old Cape service, in the Education Department; he joined in 1889 and served until 1908, when he resigned. There was no need for him to resign, there was no compulsion on him, he simply thought that he would better himself if he went to another Province. The Act under which his pension rights were secured did not allow of any refund of his pension contributions since he resigned of his own accord, and there is no law under which he can get this. When he joined the Transvaal service on April 16th, 1908, he had the option given him of contributing to the Transvaal Pension Fund, and he was told he could contribute from the beginning of his service, but he only elected to contribute from January 1st, 1909.

Less than a year.

Yes, but a man should take advantage of contributing as far back as he can. These men foolishly, no doubt, had the option to contribute but did not do so when they had the chance. In later years they see that they have made a mistake. When a man resigns of his own accord, presumably to better himself, he forfeits his pension rights, and that was what happened in this case. This is one of the cases in which I do not think any good can be done by referring it back. It is no good arguing the case, in fact both these cases are simple, plain sailing, but if the hon. member insists that it shall go back, I do not object, but I hold out to him very little hope that either of these cases would be favourably reviewed. In this case of Pretorius I may mention that this is already the third time he has petitioned the House and been refused. When three different committees have dealt with the case the hon. member may be satisfied that it has received the fullest consideration, and been dealt with according to the law.

There is one case in respect of which I would like to have information from the Chairman of the Pensions Committee. Is is Item No. 86, J. D. du B. Steyn. This case has been before the Select Committee more than once, and I would like to know what the objection is to the break in the service being condoned in this case, in view of the fact that it is done in so many cases.

This man was in the police service, and at the end of five years he took his discharge. It was a purely voluntary act on his part, and he went farming with the idea of bettering his prospects. After two years farming he came back again and rejoined the police, and he has stuck to the police ever since. You get so many of these cases where a man voluntarily resigns to better himself. He takes up another occupation, and when he fails at that he comes back to the police. Is it right that we should be asked to treat this man exactly as if he had given the State service from the time he joined? I do not think the hon. member could ever have served on this Select Committee, otherwise he would have realised what a number of these cases you get where men voluntarily resign in order to benefit themselves, and afterwards find they have made a mistake. Then they want all their pension rights restored and such petitions have always been refused.

I have served on that Committee, and I remember many cases where it was condoned.

I would like to move the following further amendment—

J. Botha was an engine driver who had 27 years and 9 months service, and he rendered loyal service. I look upon this matter as of exceptional importance, for the case of Botha is one of many cases, and the sort of cases that come before the Pensions Committee year after year. It is a class of case which has come to the attention of the Government, but in connection with which no assistance has been rendered hitherto. It is perhaps desirable that I should explain this case to the Committee, for I shall expect the Committee to take a decision on this by means of a ballot. For that reason it is perhaps desirable that I should explain what the duties were of this man who has now come to the Pensions Committee to ask for a little compensation, and alleviation. It is perhaps desirable to explain first of all what the work of an engine driver is. Generally he begins as a cleaner on the Railways. After about three years he becomes a stoker. After he has been a stoker for five years, he must write a driver’s examination, and about two years after that he becomes a driver. It takes him on an average ten years from the time that he commences on the Railways, to become an engine driver, and after ten years he then gets a wage of 15s. per day. Then he progresses gradually until he ultimately gets the maximum wage of 21s., and generally it takes him from 20 to 25 years from the time he entered the service before he gets that maximum wage of 21s. per day. The work of an engine driver is of a very arduous nature. He is expected to work day and night, to work on Sundays and Mondays, year in and year out. He has to work whether it is fine weather or whether it rains. For him there is no mercy. Under all weather conditions, and at any time of the day and night he must go out and do his work. On the engine driver rests an exceptionally big responsibility. He has control of the train and the rolling stock, and the value of thousands of pounds is entrusted to him. To him also is entrusted the lives of hundreds of passengers. He is perpetually keyed up. The whole responsibility rests upon him. The safety of the rolling stock and the safety of the passengers rests upon him. It is self-evident that after the effluxion of years, and with this perpetual anxiety, this should have a detrimental effect on his system. He works day and night in any weather; he has irregular meals and ultimately this reacts on his health to such an extent that it often happens that he must retire before he reaches the age of 55 years. Now what happens when an official after years of loyal service becomes broken in health, so that he is no longer in the position to continue his work? The Administration then has him medically examined. If they find that his physical health is of such a nature that he cannot continue the work longer, then they simply say to him: “Look, we can offer you other work, but not necessarily at the same wage—it is generally at a lower wage—or otherwise you may have the privilege of retiring from the service and taking a decreased pension.” After years of loyal service that is the treatment which the official receives. He must either take employment at a reduced wage, or he must retire from the service and receive a reduced pension. But then that pension is not calculated to the date when he would normally have retired from the service, but on the basis of the period of service up to the date of his retirement. That official is broken in health. He must now be prepared to accept work at 3s. or 4s. per day less, or he must retire. After all those years of service, particularly where his physical weakness is not due to anything which he himself has done, but to the work which he has had to do, he is treated in this way. In the case of Botha, the position is that he was an engine driver with a period of service of 27 years and nine months. He was a driver in the special grade, and he received the maximum wage of 21s. per day. While he was on duty a spark got into his eye, and damaged his eye to such an extent that the Administration decided, in view of the fact that his sight was impaired, that he could no longer continue his work as engine driver, and he was then faced with the choice of accepting work at a reduced wage, or of retiring from the service with a reduced pension. Botha chose to retire on pension, and then the Administration granted him an amount of £656 16s., and a pension of £9 per month. But now the Committee must bear in mind that this pension was not charity or a gratuity. It is a pension which was due to him. It is money which he paid in, and according to law the Administration contributed a certain amount. He retired on pension at the age of 53 years—two years before the normal age of retirement, namely 55 years. He also received compensation under the Workmen’s Compensation Act to an amount of £27 10s. Botha has now come to the Select Committee on Pensions and says: “Look, I have devoted my whole life to the service of the Administration, I have scarified my health, I was a loyal servant for 27 years, and while I carried out my duties my physical health was impaired, not as a result of anything for which I myself can be blamed, but as a result of the conditions under which I was obliged to work.” He said that the Administration then pushed him out, and now he asks the Pensions Committee to add the two years to his period of service so that, his pension may be improved. He retired at 53 years of age, and he asks that two years be added so that his pension can be calculated on the basis of his retirement at the age of 55 years. The Pensions Committee refused to do this. I learn that the Pensions Committee sent a deputation to go and see the Minister of Railways. I have raised this sort of case repeatedly here, and have asked the Administration to make provision for those officials whose physical health is impaired in one way or other during the last five years of their period of service. The Administration has not yet seen its way clear to do this. I ask that this item be referred back to the Select Committee.

Mr. Chairman, I listened to the hon. member regarding the small pay and small pensions granted to engine drivers, but that is a matter which lies entirely outside the terms of reference of the Pensions Committee. The hon. member was perfectly fair when he came before the Pensions Committee and said that he knew these men had both been treated in accordance with the pensions laws under which they were serving, and that they had got all they are entitled to under the Railways Pensions Act, but the hon. member said: “I want your Committee to make these recommendations in order that it may be a lever to force the Government to alter the pension laws as applied to the Railways.” That was his argument. I do not think this House expects the Pensions Committee to take up the attitude of making recommendations in a case in which a man has had absolutely proper treatment under existing pension legislation in order to use it as a lever to force the Government to alter the pension laws. I do not think the Pensions Committee should be asked to lend itself to an action of that sort. I do not want to go into the case, because the hon. member has given the House the exact facts. With regard to the engine driver, he would have got very much more if it has been proved that his condition was due to his work, but the eye specialist intimated that only a very small degree of the petitioner’s disability could be attributed to the sparks which got into his eye in the course of his employment. He recommended that the petitioner be paid £27 10s. as an act of grace. I think that clearly shows that his condition was not entirely due to his work, otherwise he would never have accepted so small a grant if there was any chance of getting a very much bigger one. The simple fact is that this man received all that he was entitled to. If the hon. member can persuade the Minister to alter the Pensions Act, good luck to him, but do not let the Committee be asked to do something which is essentially a matter for the Government.

I wish to support briefly the hon. member for Krugersdorp (Mr. M. J. van den Berg) in asking that Petition No. 15 should be referred back to the Committee. I may say I differed from my colleagues on the Select Committee when this petition was considered. The essence of the matter is that this official at the time was exceedingly young, and the chief reason for his default was that he was absent in Flanders fighting the battles of his country, I submit a circumstance under which a young man would be very liable to overlook his own personal advantage. That is what happened. His salary was very small indeed, and there might have been some difficulty in paying the amount; but that time has passed. With his salary as a lieutenant colonel he is very well able to make up the amounts if he is permitted to make these repayments. If it is permitted he will be better off, and neither the fund nor anybody else will be worse off. Surely when we can right an injustice at no expense to the State, we should do it.

I want to support the hon. member for Fordsburg (Mr. B. J. Schoeman) in the case of Botha. If anyone finds himself in that condition then he comes to this Parliament as the highest authority in the land, and he asks us for alleviation. Unfortunately he does not get it. This man has sacrificed his whole life, and now he comes with a fair request that these two years be added to his period of service so that he may get his rightful pension. But it is refused him. What is the object of the Pensions Committee? At the moment the Committee is purposeless. The Committee is getting into a groove. They simply say that a previous case was refused, and then all the other cases must also be refused. I sat on that Pensions Committee, and I do not want to sit on it again. Why not? Because they are useless. They are getting into a groove. I feel that they are there for the purpose of dealing with every case on its merits. Those cases come to Parliament as the highest authority for alleviation, and they do not get it. I really feel that this case which the hon. member for Fordsburg has raised ought to be referred back to the Select Committee. Had it been a higher official, five or ten years would quite easily have been added to his pension service. I want to draw attention to Case No. 26, which I presented in respect of a certain De Wit He was in the police. He committed a crime, but I do not know the particulars. His officer was against him, and the crime was virtually sought against him. He was put out not because he was unfit, but because he was supposed to have committed a crime. That was not the case. This man now gets nothing. Then there is the other case, namely, No. 44, Mary Jones. Her husband was in the police service for 40 years. He was on pension for a year or two when he died, and she was left behind with a small child on her hands. She had a few hundred pounds with which she could buy a small house. Do you know why she is refused? Because she still had £200 cash. She used this up in order to live. She is a person who does not want to go to charity to beg. She would rather die. She is also being refused by the Pensions Committee. There are hundreds of such cases that are refused. That is the argument of the Committee. I know that woman’s circumstances. The only way out we have is to present another petition again. So it goes from year to year. I feel that that Pensions Committee has now become a farce. I regret to say it, but I do not want to serve on that Committee, because I see that I am wasting my time. The cases are just disposed of, hundreds of cases. It is simply said that last year or the year before a similar case was disposed of in that way. Every case is not treated on its merits. The necessary time is not devoted to it.

You are wrong.

I sat on that Committee, and I know what I am talking about.

He did not listen.

I did listen. If there is a rich and influential man his request is granted, but there is no mercy for the poor man. I say it emphatically. Take the case of Mary Jones. Her husband rendered loyal service for more than 40 years, and she gets nothing. Let us be fair. This Select Committee is a fiasco, and I am sorry that it should be so.

I think I might say a few words in supplementing what the Chairman of the Select Committee has quite rightly said. He is correct in saying that what is asked for amounts to a negation of the whole Act. If the House agrees to this, it would have hundreds of cases which would be equally involved and which we would be required to meet. It is quite true that the engine driver has a hard life; in fact the hon. member for Fordsburg (Mr. B. J. Schoeman) stressed that fact so strongly that I began to suspect that his case could not on its merits be a good one, after his rather pathetic picture. But this is recognised in the conditions of service of engine drivers—they retire at 55 years instead of 60, they have an eight hour day instead of a nine hour day as in the case of other members of the running staff, and other concessions are made to them. But in Botha’s case it was not a matter of a breakdown but an accident, for which he got Workmen’s Compensation.

For which he was not responsible.

No, I don’t suppose he was. Nobody deliberately causes an accident. Then he retired and he decided to commute a portion of his pension, and he now gets the balance paid to him as provided by law. I only want to make this point, so far as hon. members opposite are concerned, I think the Select Committee has been advised of the fact that the question of the loss sustained under commutation as a result of the application of loading and consequently lowering the expectation of life, is being looked into, the idea being that the commutation factor would in all cases in future not be less than that laid down for the age of 60. Hon. members will appreciate that that will mean an alteration in the Pensions Act provisions and such alteration cannot be made without the consent of the people who are subscribing to their pension fund, and when that is done possibly to some extent cases such as this can be met, but we cannot do that now, and for these reasons I am afraid that there is very little hope of meeting this particular case.

I did not intend speaking, but I regret that the hon. member for Aliwal North (Capt. G. H. F. Strydom) made that remark about the Select Committee on Pensions. Where he calls it a farce, I must differ seriously from him. If the hon. member serves on the Select Committee and things were so wrong, then he should have remained there to put them right. I regret that he ran away. I want to tell him that matters are indeed treated on their merits. Thorough investigation is instituted. As regards the case raised by the hon. member for Waterberg (Mr. J. G. Strydom) there I must say honestly that I sympathise with that man who was a stock inspector. I agree 100 per cent. with the hon. member when he says that an injustice has been done to this man. It is an unfortunate phenomenon in our public service that there are so many people who spent the best of their lives in the service of the State, and when they become old and decrepit they are simply put on the street without compensation or with a small compensation, while they get no pension. That is the case with stock inspectors. We have also had cases in the Department of Posts and Telegraphs of people who gave their best services and were then put on the streets. I think the Chairman of the Select Committee has said that he has no objection to this case being referred back to the Select Committee. I want to support him in that. Let us investigate if there is not some little point in the position that will make it possible for us to meet him. I have every sympathy with that case, but at the same time we have to pay heed to the laws. We cannot get past, and even if we do evade them then we still do not evade the Minister of Finance. He keeps a vigilant eye on the purse to see that it is not opened too widely. I must say however that I have a great deal of sympathy with this case.

I am sorry the hon. member for Aliwal (Mr. G. H. F. Strydom) has used the language he did about the Pensions Committee — about members wasting their time on that Committee and so on.

Well, you know it is so.

Now I want to quote the case which he mentioned of the police constable. This man joined up in 1926. He was twice convicted of supplying liquor to natives, he was convicted of overriding a horse and of disobedience—he had four convictions against him, and he was eventually dismissed the Force as being unsuitable. That is the record of this man whose case the hon. member for Aliwal North instances as evidence that the Pensions Committee was a fiasco. We have also a report from the magistrate of his district in which it is stated that he and his wife and two children are living in a house at Kirkwood which belongs to his father and for which they pay no rent. The man has a butcher shop and he is doing quite well. He also has a motor car which he uses for his pleasure and his business. He is reported to be making a good living.

When was that?

That was in 1940. The hon. member did not adduce any further evidence contradicting this. This man was dismissed on four convictions and three years ago he was reported as being in comfortable circumstances and yet we are accused now by the hon. member of making a fiasco of a Committee of this House because we turned down a case of that sort. I hope the House will not return a case of this kind to the Committee. Now there is another case with which I have much more sympathy—the case of Mary Jones. But the information we have here is that her husband died, and left an estate worth £625. She is living in a cottage now, half of which she occupies, and she runs a small dairy business. She has £225 left in the bank and the rest she has invested in the cottage. There is no question of immediate want. There is no question of this woman being unable to live. If she finds the business fails, and she is in want, and comes back to the Committee, I have no doubt the Committee will deal sympathetically with her, but she is not in any worse case than any others who have worked hard but are not in want. The case he has put up for Mrs. Jones is a better case than the other one, but still she is not in immediate want. The hon. member came to me about this, he did not give evidence himself, but he came when the matter was finished and then he wanted something done. I said: “Don’t refer this back because if you do we shall deal with it again on the same reports.” I asked him to put in a fresh petition so that the present condition of the woman could be investigated, and if she was now in a state of poverty her circumstances would be dealt with. I don’t think I could have given him better advice. There is no want of sympathy. The hon. member knows I sympathise. If he could show that the woman’s means were exhausted she would receive every consideration.

I move as a further amendment—

In the first place I have to inform the House that the Select Committee differed sharply on this petition, so sharply that there was an equal division and that the petition was rejected only by the casting vote of the Chairman. Thus by virtue of the mere fact that the Select Committee was so strongly divided, I feel that we are entitled to ask that the petition be referred back. But there is also another reason. As you know this matter concerns the widow of a General who rendered great service to the country. Since 1893 he was in the service of the Transvaal Republic. He served in the Anglo-Boer War as commandant under General Koos de la Rey and later under General J. C. Smuts. He was wounded 4 times in the war. It is also said that during the Republican days he fought in three Kaffir Wars. I may say that Gen. Bouwer also rendered exceptional services in the Great War and he won a decoration. What we feel particularly in connection with this matter is that we have already created a precedent. To the widow of Gen. Collyer who rendered no greater services to the country than Gen. Bouwer, we have granted £400, but only £120 to this widow. We feel that this case should again be considered seriously. It is not right to make this discrimination. In addition we feel that one was a son of this country and that the other came from overseas and if there must be discrimination between the two then the son of this country should at least have preference over someone who came from overseas. We must not treat the widow of a son of the Union less fairly than the widow of someone who came from overseas. For that reason we ought to refer this position back to the Select Committee.

The Chairman of the Select Committee merely indicates that the man has committed a crime or crimes. I have said so myself. But the Chairman does not say that he got injured in service that the District Surgeon stated that he could no longer do mounted service. For that reason I say that the Select Committee is a farce; the Chairman brings up only unfavourable things and remains quiet about the rest. As regards the case of Mary Jones, she must apparently first use up the few pounds she has before she gets anything. Next year she may not need it anymore, for she may not live then. I also want to plead for the widow of General Bouwer. I knew him from the Boer War. He is one of the men who made Gen. Smuts in the Boer War. He came with Gen. Smuts from the Transvaal as a fighting commandant, and he fought to the bitter end. He fought again in the World War. He gained the D.T.D. I sat on the Select Committee when the two cases were dealt with, namely the case of the widow of Gen. Collyer and the case of the widow of Gen. Bouwer. Apparently the matter was again raised this year. I knew Gen. Collyer well. He came in the Boer War and fought against Gen. Bouwer and his widow gets £400, but the widow of Gen. Bouwer who gave his blood for South Africa and for South Africa alone, gets the paltry amount of £120. Why the difference? This is one of the cases that leads me to say that the Select Committee is a farce.

The hon. member has used that word twice, but he must cast no reflection on a Select Committee which has been appointed by this House.

I am sorry, but I hope they will improve in future. Both cases should be treated the same, but I hope the case will be referred back and put right.

I just want to reply to two cases on which the hon. member for Krugersdorp spoke. I want first to deal with what the hon. member for Durban, North (Rev. Miles-Cadman), said. He suggested that the man referred to was in Flanders when he had to make a determination about contributing to the pension fund. Here is his own letter, that he attested in the S.A.M.R. in 1918 and it was not until the end of 1923 when he had to make that determination. He had the right to contribute right back to 1918, but he did not exercise that right. He said definitely he only wished to contribute from 1923, when he enlisted for the second time. Now, it is the rule which the Committee always observes—you cannot give a man two opportunities to elect how far he wants to ante-date his pension contributions to the fund. If you were to do that you would create chaos in your pension fund. If you allowed a man to go back and get the benefit of a previous period in respect of which he had already refused to contribute you would simply upset all your pension arrangements. There is nothing personal about the refusal of this case; we are simply following precedents here, and we are following the procedure of the Department which has definitely refused to give a man two elections as to the date from which his pension rights shall commence. That is the position as far as Colonel Brits is concerned. Now the other case was that of Mrs. Muller, whose husband was killed while returning to duty. That is not a case which the Pensions Committee should be asked to deal with. That principle was a big bone of contention when the Act was passed.

There is a special Grants Board for these cases.

We cannot be asked as a Committee, or even the House cannot be asked, to upset a most vital principle of the Pensions Act. If the Minister sees fit, or if this House sees fit, to alter the Pensions Act, well and good, but this is a definite principle in the Act and I do not think that the Select Committee should be asked to go contrary to the Act itself without special reason. There are no compassionate grounds advanced, it is merely considered an injustice that when a man is killed in uniform his wife should not get a pension. Now with regard to Mrs. Bouwer, we argued that out last year and I do not think any purpose can be served by continuing that argument. Mrs. Bouwer has been treated in the same way as other widows have been treated. The widows of these old Boer War fighters have been considered by this House—these men have not been wounded, in respect of which they could get a pension, but fought bravely in the Boer War—their widows have been provided for in recognition of the services which their husbands have rendered. I think Ben Bouwer was well treated; he retired as a Civil Servant and he enjoyed a pension of £573 per year, of which he subsequently commuted one-third and received £2,050. He was well looked after by the Government; he sat on the Films Censors’ Board and on other Boards which gave him a good income, and he had every opportunity to provide for his wife. I don’t know what her circumstances are. I have no hesitation in saying that her husband rendered good services to the old Republic as many of the old Veg Generals did, and we have treated Mrs. Bouwer in the same spirit and in the same way as we have treated other widows. I am not going to make comparisons. We gave the widow of President Steyn £1,000 a year. There are certain others who also received higher grants, but I am not going to waste time by comparing the pensions which we awarded in various cases. I think the House should accept the position as they did last Session.

I do not wish to deal with the merits of the matters that have been raised here. I accept the recommendations of the Select Committee in these cases. Nor do I wish to go into the case of the widow of General Bouwer. It was discussed very fully last year. But I would just say that I do not believe we bring these matters further by referring them back to the Select Committee. The people may, of course, again submit petitions if they like. If any hon. member, even after the explanation of the Chairman of the Select Committee, still considers that a particular case should be referred back to the Select Committee, I shall not raise any objection, for it really makes no difference, but. I do not think we shall carry these cases further by discussing them now.

In spite of what the Minister of Finance has just said I think it is advisable that we should bring these facts to the notice of the Minister concerned. He is not a member of the Pensions Committee and he only goes on the advice of the Chairman of the Pensions Committee. He does not know what the facts are, and consequently he only knows the facts of which the Chairman of the Committee informs the House. The Minister of Railways has probably forgotten what the true functions of the Committee are. The Minister of Railways said that what is asked for will mean a direct negation of the Act. But surely everyone understood that the purpose in appointing this Committee is not to carry out strictly the provisions of any Pensions Act — the purpose of appointing this Committee is not merely that of strictly administering the Pensions Act, the purpose of this Committee is to go beyond any provisions of the Pensions Act, and they have done so in many cases which I can quote.

If it is justified.

It is a matter of opinion whether it is justified or not. The purpose of this Committee is to deal with cases for which no provision is made. This case which I have raised is one where the servant has received everything he was legally entitled to. But that is why his case is referred to the Committee so that the Committee can provide additional benefits on compassionate grounds. The Minister of Railways says that I presented a very pathetic picture. If the Minister really knew the conditions under which many of these Railway workers work he would find that it is even more pathetic than I described it. It is because of these conditions being so pathetic, because of these men being compelled to work under conditions which are in certain respects a scandal that we are compelled to describe these conditions to the Minister. After 27 years’ service Botha was injured and he was compelled to leave the service of the Administration. This was within two years of his reaching the pensionable age. No other provision can be made. He received £27 10s. workmen’s compensation. He also received the pension to which he was entitled. I say this, that giving 27 years of service to the Railways and being injured while on duty gives him the right to ask for two additional years being added to his pensionable service. That is all we ask for. It is not provided for in the Act. But that is the purpose of the Committee. They have done it before. Two years ago a similar case was presented to the Pensions Committee, which recommended that, some additional years be added to the servant’s years of service. The whole purpose of appealing to the Minister is that this matter should be taken into consideration again and that two years be added to the service of Botha, so that his pension can be based on the whole of his service as if he had retired at 55.

I am glad the hon. Minister of Railways is present now that we wish to raise the matter. I do not think it will be of the slightest avail. The Minister of Railways lately has the peculiar habit to sit and smile when something comes from this side of the House. It almost seems as if he does not take the matter seriously. But I do hope, however, that he will give attention to the case of Mr. Botha, who was injured in the service of the South African Railways and Harbours. The hon. member for Fordsburg (Mr. B. J. Schoeman) just now told of the discrimination being made between people drawing high salaries and those drawing small salaries. Now I wish to bring it to the Minister’s notice. In 1937, in 1938, although he was not Minister of Railways at the time, he was Minister without Portfolio in that Cabinet. At that time there were two persons in the Railway Service, Messrs. Turnbull and White. They held acting appointments over a period of 13 months. With the exception of two months, they held acting appointments for a continuous period of thirteen consecutive months. In respect of the period of their acting appointments, the one received an allowance of £300 and the other received an allowance of £400, and the Railway Administration went out of its way, in view of those allowances not being pensionable, not only to award those allowances to those persons, but also to bring into account that £300 and £400 respectively for pension purposes, with the result that those officials could draw higher pensions. That is something which is quite illegal, and although the Committee on Railways objected to it, it went through like that. The Minister was sitting there in the Cabinet, and he did not raise any objection. Today I wish to appeal to the Minister. Here we now have a person who has been injured, not through his own doing, but on account of being in the employ of the Railways. I would ask the Minister to agree to this case being referred back to the Select Committee, and that an exception be made in this case. It creates a bad impression and it causes discontent among the people drawing small salaries when things like these are permitted. In the case of highly paid officials, the Administration goes out of its way to help them, but when it comes to low paid officials, the Administration is unwilling to help them. I should like to appeal to the Committee to agree to this matter being referred back to the Select Committee.

I wish also to move as a further amendment—

To a certain extent it is a case similar to that of Mr. Botha, but in this particular case of Van der Walt, it will appear very clearly to the House that an even greater injustice was done to this official than to Mr. Botha. Van der Walt also was a special grade driver. He had had 27 years’ service, and when he retired from service, he was receiving 21s. per day. This is what happened to Van der Walt. He was working a passenger train to Pretoria, and when they arrived at Pretoria, he tried to couple two saloons. It was raining, the line was slippery, and he slipped on the line and broke his back. He was removed from there and never returned to his work again. His back was broken, and it is a wonder that the man was not completely paralysed. After being out of the service for a few months, he recovered to such an extent that he was able to go back to work, but it was quite impossible for him to resume his duties as locomotive driver. This is one of the pathetic cases which the Minister viewed with contempt when dealing with the case of Botha. When Van der Walt came back, the Administration came along and generously offered him other employment. He was totally incapacitated physically. His back was broken, and he walked about in a plaster of Paris jacket which he constantly had to wear, otherwise he might have lost his life. When he returned, the Administration offered him other employment. They offered him a job as supervisor at 14s. 1d. per day. After Van der Walt had completed 27 years’ service, after having reached the highest grade and having become a special driver, and had been receiving 21s. per day, after he had physically injured himself in the performance of his duties, the Administration had the cheek to offer him employment at 14s. 1d. per day. They expected of him to forego 7s. per day of his earnings. They deemed it a very special favour, after the man had been so severely injured that he was not in a position to do any form of physical work. The Administration comes along and generously offers him employment at 14s. 1d. per day, namely 7s. per day less than he had been receiving as engine driver. It is obvious that even if Van der Walt were prepared to accept it, he was not in a physical condition to accept that employment. Then I would also like to draw the Committee’s attention to the fact that when an official becomes physically incapacitated, and is offered other employment, then, if he accepts the other employment, he loses all his claim to compensation under the Act. After a year or two he then has no further claim to compensation. That would have been the position in the case of Van der Walt. He was then obliged to accept, the alternative, namely to retire from the service on pension. At the time of his retirement from service, Van der Walt was 52 years 2 months old. That is to say, it was within two years and ten months of the time when he would normally have retired from the service, namely at the age of 55 years. He commuted a third of his pension in cash, and received £447 cash and a pension of £9 10s. per month. And once again I have to point out that this was not charity, that it was not a gratuity that was given to Van der Walt, but that it simply is a pension which the Administration had to pay him on his retirement from the service. The pension allotted to him was calculated on that age of 52 years and 2 months. In addition to that, he received compensation to the amount of £385. That is what the man received, and he was then put out of work. He was young when he entered the service of the Administration. He gave up all his health, and eventually he was obliged to retire physically unfit, and the Administration came along to him and said: “You can either accept employment at 14s. 1d. per day, that is to say, 7s. per day less than you have been receiving, or otherwise we chuck you out and you receive a pension of £9 10s. per month.” Now Van der Walt comes to the Pensions Committee and requests that those two years and ten months be added to his service. It would then give him a slightly larger pension. But the Pensions Committee is unwilling to grant it. They say they have to carry out the Pension Act to the letter and the spirit. That is of course quite wrong. If they do that, they are of no use there. They are simply there to supersede the Act, and they are empowered to grant relief in this case, and they have not done so. I know they have sent a deputation to interview the Minister, but apparently the Minister does not know the conditions under which his officials are working, otherwise he would not refer to the pathetic pictures we are painting here. I should like to see him do what I had to do, to wield a spade on an engine, then he might have been a better Minister. Van der Walt rendered 29 years’ faithful service to the Administration, and now he asks that this period of two years and ten months be added for pension purposes. He says: “It was my duty to go between the two saloons to couple them on; the line was slippery and I slipped and broke my back. Today I am in the condition that I am unable to do other work; I am now walking about in a stiff jacket, and if I take it off, it might cost me my life.” The Hon. Minister has stated that an improvement is going to be made in the Pension Act. We accept that, but what he proposes will not yet cover cases such as these. Even if we have no other object in view this afternoon with this discussion, even if it is of no significance that the matter be referred back to the Select Committee, it is nevertheless necessary that this type of case should be brought to the notice of the Government in order that the officials outside may know with how much sympathy they are regarded by this Government.

I should like to associate myself with the remarks of the hon. member for Fordsburg (Mr. B. J. Schoeman), when he appealed to the Minister of Railways to do something tangible now for these people who receive a reduced pension in such circumstances. As the Minister himself knows, there has been a deputation to meet him, and I might say that the Select Committee as a whole felt that these three cases, those of Van der Walt, Botha and Kotze, were cases we should definitely bring to his notice. If the Minister were to give the assurance in this House, that he will go into the cases, and that he will in future do something for these people, it would create a feeling of contentment with those people. People like Van der Walt who became incapacitated in the employ of the Railways within a few years of the age limit, ought to be treated sympathetically. The Minister should do something for them. However you may argue about the matter, you feel that it is unsound and unfair that people who have given their service to the State, and who have lost their health in the employ of the State, should be penalised in this manner, and I do hope the Minister will reconsider the matter, and that he will give us some explanation that will be more satisfactory than the one we have had from him thus far.

Amendment proposed by Mr. M. J. van den Berg put and negatived.

Amendment proposed by Mr. B. J. Schoeman put and the Committee divided;

Ayes—32:

Boltman, F. H.

Bremer K.

Conradie, J. H.

De Wet, J. C.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Venter, J. A. P.

Viljoen, J. H.

Vosloo, L. J.

Wentzel, J. J.

Wilkens, Jacob

Wilkens, Jan

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—58:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus J. G.

Collins, W. R.

Conradie, J. M.

Davies, A.

Deane, W. A.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Higgerty, J. W.

Hofmeyr, J. H.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lawrence, H. G.

Lindhorst, B. H.

Long, B. K.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Smuts, J. C.

Solomon, V. G. F.

Sonnenberg, M.

Steyn, C. F.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and W. B. Humphreys.

Amendment accordingly negatived.

Amendment proposed by Mr. Loubser put and the Committee divided:

Ayes—34:

Boltman, F. H.

Bremer, K.

Conradie, J. H.

De Wet, J. C.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Venter, J. A. P.

Viljoen, J. H.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Wilkens, Jacob

Wilkens, Jan

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—63:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Collins, W. R.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Howarth, F. T.

Jackson, D.

Johnson H. A.

Kentridge, M.

Lawrence, H. G.

Long, B. K.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steyn, C. F.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van der Byl, P. V. G.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and W. B. Humphreys.

n Amendment accordingly negatived.

Original motion put.

On a point of order, Mr. Chairman, I noticed that the hon. member for Griqualand (Mr. Gilson) said “Yes” when you put the question, and I should like to demand that he vote on this side.

I notice the hon. member for Griqualand is not present in the House at the moment.

I should like to demand that he vote on this side.

He is not present.

On a point of order, Mr. Chairman, the hon. member has already voted by saying “Yes”, and we demand that his vote be registered on this side.

I cannot force the hon. member to vote when he is not present in the House. Only a member calling for a division can be forced to vote.

The Committee divided:

Ayes—35:

Boltman, F. H.

Bremer, K.

Conradie, J. H.

De Wet, J. C.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, A. P.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Venter, J. A. P.

Vosloo, L. J.

Warren, S. E.

Wentzel, J. J.

Wilkens, Jacob

Wilkens Jan

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Noes—62:

Abbott, C. B. M.

Abrahamson, H.

Acutt, F. H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, H. N. W.

Bowker, T. B.

Carinus, J. G.

Collins, W. R.

Conradie, J. M.

Davis, A.

Deane, W. A.

Derbyshire, J. G.

De Wet, H. C.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Higgerty, J. W.

Hirsch, J. G.

Hofmeyr, J. H.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lawrence, H. G.

Lindhorst, B. H.

Long, B. K.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Smuts, J. C.

Solomon, B.

Solomon, V. G. F.

Sonnenberg, M.

Steytler, L. J.

Sturrock, F. C.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van der Byl, P. V. G.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and W. B. Humphreys.

Motion accordingly negatived.

House Resumed:

The CHAIRMAN reported that the Committee had agreed to certain resolutions.

Report considered and adopted.

I move—

The purpose of this Bill is twofold. Its first object is to fix the rates of taxation under the Income Tax Act, which is something which this House has to do every year, whether the rates are changed or not. These rates are set forth in Section 1 of the Bill and are in accordance with the resolution adopted in Committee of Ways and Means. At the same time provision is made in Section 1, as I foreshadowed when I was moving the motion to go into Committee of Ways and Means, that the 15 per cent. surcharge will not be taken into account in determining the amount payable in Provincial Income Tax. A further clause which deals with the rates of taxation is Clause 8, which fixes the rate of tax on non-resident shareholders also in terms of the Committee of Ways and Means Resolution. As these rates were fully discussed in Committee of Ways and Means, there is no need for me to say anything more about them now. To that extent we are simply giving effect to what has been already approved of. The second portion of the Bill, however, is to introduce certain changes in the Income Tax Act; the most important of these changes were foreshadowed by me in my Budget statement which I presented towards the end of February. All of them are explained in the White Paper, of which copies have been laid on the Table and which has been made available to members. I shall refer first to those changes embodied in this Act which I mentioned in the Budget speech, and indicate how what I then said is being implemented here. In the first place I said that we proposed to take steps to exempt from normal tax the uniform, lodging and ration allowances of soldiers. Hon. members will see that that is being given effect to in Section 4 (1) (d) of the Bill which amends Section 10 of the Principal Act, the clause dealing with exemptions. One of the things which Section 4 (1) (d) does is to add a new paragraph to Section 10 of the Principal Act. It adds a new exemption in respect of uniform, ration and lodging allowances. Then in my Budget speech I foreshadowed certain changes in regard to the taxation of private companies. The House will remember that two years ago we made a very important change in the system of taxing private companies. It is not too much to say—and I know the hon. member for George (Mr. Werth) would agree with me if he were here—that the method of taxation of private companies in force until then had broken down and that the Treasury suffered considerable losses in consequence. The new system which we introduced two years ago was that of apportioning the income of a private company among the shareholders and then taxing the income so apportioned for purposes both of normal and super income tax in the hands of those shareholders. When we did that it was recognised that in certain circumstances it might not be possible or appropriate to apportion the income of private companies, and that in such cases it would be necessary in whole or in part to tax the income of a private company for normal tax purposes in the hands of the company, and for super tax purposes in the hands of the shareholder who received dividends from it. Section 39 of the Principal Act, that is the Act of 1941, consolidating the income tax law, made provision to deal with such cases. Now, in the Budget speech I indicated that we were going to extend the principle of regarding certain companies as public companies in part or whole for taxation purposes in such a way as to cover the case of the private companies with a considerable number of preferent shareholders. I say “considerable number” because if one brought in companies with a few private shareholders we would open the door to evasion. In Section 7 of this Bill, instead of amending Section 39 which was already amended last year, still further, we have decided to repeat the whole of that section together with last year’s amendment, and two further amendments which we are making this year. It will therefore be much more convenient to refer to as the whole section will be in one Statute Book instead of three. There are two new amendments, the one which I foreshadowed in my Budget speech, in relation to companies with a considerable number of preferent shareholders. That is provided for in the new Clause 39 (1) (e). To the other I shall refer later. The point is really this. The preferent shareholder is not really a partner in the company in the same way as the ordinary shareholder is a partner. The preferent shareholder has a limited interest which is not of a proprietorial nature. He plays little or no part in the company. Apportionment is therefore not appropriate to the preferent shareholder, and what we propose is to put back the preferent shareholders in private companies in regard to taxation to where they were before this apportionment system was decided on. In other words in respect of their income from the company the company will pay normal tax while they themselves will pay super tax on their dividends. The same principle therefore will apply as in the case of an ordinary company. That is provided for in Section 39 (1) (e) and to that amendment the proposals in Clause 4 (1) (b) and (c) are consequential. But there was an even more important change in the taxation of private companies which I foreshadowed, one which has as its object the removal of the main point of difficulty and criticism in regard to this otherwise desirable change in our taxation system, and that change is now provided for in Sections 10 and 11. The particular matter to which I am referring now is the position of the shareholder in a private company who, by virtue of the extent of his shareholding, can exercise very little control over the company, but who finds, that because of that relatively small shareholding, he has been called upon to pay on the apportionment to him of the company’s income an additional amount in taxation which bears a quite unreasonable relationship to what he actually gets. That of course happens where the private company, over the control of which he has little say, distributes in dividends an unduly small proportion of the company’s income. In the Act of 1941 we envisage the possibility of this kind of case arising, and therefore in Section 70, Sub-Section (5) of that Act, we provided that in certain circumstances the Commissioner might intervene on behalf of such a shareholder to recover from the company in respect of the additional tax paid by him over and above the amount of dividends received by him. In practice, however, that provision has proved to be largely ineffective, and it is because of that that most of the grievances of which we have heard in regard to taxation of private companies have arisen. The principle, however, was contained in the Act of 1941 but was incompletely embodied therein. And because of that I said in my Budget speech that we would extend the scope of the present legal provisions in relation to the recovery from the company of portion of the tax paid by the shareholders in three ways, and that is what we are doing now in this clause to which I am referring. In the first place I pointed out the fact that under the existing law recovery could only take place on behalf of the shareholder in respect of normal and super tax. I said it was only fair to extend that so as to cover provincial income tax, and personal and savings fund levy. That we are doing in Clause 10 which will replace Clause 7 (5) by a new sub-section. Then I said we intended to change the basis of the calculation of the amount which may be recovered. Under the present law the amount which may be recovered is the amount paid in taxation over and above the amount of dividends received. The new basis which I foreshadowed and to which we are giving effect is that the amount to be recovered will be the amount by which the aggregate of the shareholder’s tax exceeds the aggregate which he would have paid if in his assessment the actual dividends and not the amount apportioned had been included. That is a fairer basis. Then I also drew attention to the fact that under the existing law you recover the tax from the company on behalf of the shareholder, but the shareholder remains indebted to the company in respect of the amount so recovered, and that is a charge in respect of future dividends. The third of these points is rectified by Section 11 in this Bill which amends Section 71 of the Principal Act. Now, the effect of these proposals will simply be this, that the company will be liable for the shareholder’s taxation on the difference between the apportionment to him of the company’s income, and the dividends which he actually receives. That means simply that the shareholder will pay on the distributed income of the company, the distributed profits and the company will pay on the undistributed profits. I want to make it perfectly clear, because there has been a good deal of misunderstanding on this, that it is not contemplated that this will be so in the case of every shareholder. I am afraid that there was a misunderstanding originally. It was assumed that this principle would apply in the case of every shareholder and the criticisms in the Press were based on that assumption. I would remind the House that at present recovery is at the discretion of the Commissioner, and that we are retaining. What we are doing is to extend the scope of that recovery, change the basis of recovery, remove the right of the company to keep back from the shareholder what has been recovered, and at the same time to give the Commissioner an indication as to the circumstances in which he should use that discretionary power of recovery. At present the House has given him no indication, but we now propose to indicate the kind of case to which this discretion should apply, and that it is proposed to do in paragraph (d) of Section 70, which is contained in Section 10 of this Bill. I think I can say that this proposal is one which deals fairly with the interest of the State which will get what it is getting today, and of the company and of the shareholder. In all these cases of disproportionate taxation the company will pay on the undistributed part of its income and the shareholder on the distributed part, and that will enable us to eliminate such cases of serious hardship as have come to our notice. So far I have dealt only with the clauses of the Bill which implement the proposals of the Budget. With the remaining clauses I can deal briefly because of the explanations contained in the White Paper. Firstly I want to refer to Clause 2 with which must be read Clauses 3 and 5 (a). These clauses between them clarify the position in regard to liability for taxation on income derived from the use in the Union of patents. The principle implied in our legislation has never so far been clearly stated; what we are trying to do now is to state it clearly that income derived in the Union from the use of a patent is liable to taxation whether the patent was produced inside or outside the Union and whether the patent was derived from a single premium or from recurrent payments. The principle has always been accepted but never clearly stated, and the formulation of the principle in this clause puts the position without doubt. Then, in Clause 4 (a) we propose to clear up the position in regard to freedom from income tax of interest on deposits in the Post Office Savings Bank and on Savings Bank certificates. We have provided before that such income shall be free from income tax with the obvious intention of encouraging the small man to make such investments, but for the man who pays a high rate of income tax an investment which gives him 3 per cent. tax free is a pretty good investment, and people have been discovering the Post Office Savings Bank as a means of giving quite a substantial return. Therefore to close up that avenue we propose to limit the amount which shall be free of income tax to £25, which goes a long way and will cover the case of the small man and the man of modest means. In the same Section 4, in the second part of Section 4 (d), we propose to exempt from taxation the income of companies registered under Section 21 of the Companies Act. Such companies are of a charitable or public character, and it was never intended that they should be taxed. And finally, I come back to a point I mentioned before. I mentioned that we were making a second amendment in the old Section 39. That second amendment is contained in paragraph (f) of new Clause 39 (1). There we are taking steps to close the door to a possible method of tax evasion in respect of private companies. At present it is quite possible—I hope I am giving nothing away, but if the House accepts my proposal this opening will be stopped—at present it is possible to set up a chain of private companies, each holding shares in the other, so that there is no shareholder to apportion the income to, and ultimately you cannot tax the concern. This new Clause 39 (f) will make it possible to deal with such cases. I think I have covered the ground dealt with in this Bill and I do not think it is necessary for me to say any more at this stage.

Certain sections of the Bill dealing with the rectification of certain anomalies that have been discovered, we fully agree with. However, there are certain points, apart from trivial points which we could go into in Committee, certain points of principle which we have to bring before the House at this stage. We see a number of things in the Bill which again leave certain things to the discretion of the Commissioner for Inland Revenue. Section 3 of the principal Act reads as follows:

Here very wide powers are conferred upon the Commissioner. Under the old Act of 1925, we had the position that the Commissioner did not have to do everything personally, but that where he delegated powers to someone, it should be done by way of special delegation. In this Section, it is provided that it need not be done by way of special delegation. As it stands at present, it is possible that any office boy can act, and his finding is then the finding given on behalf of the Commissioner. I do not think there is a similar provision in any other of our Income Tax Acts. The Minister knows it is an Act of 1941. We cannot discuss it here, but under this Bill other cases are being left to the discretion of the Commissioner, and therefore we have to point out the dangers involved in leaving the discretion to the Commissioner, who in turn may again delegate it to others. I do not say it has been abused, but it undoubtedly is a very dangerous principle, especially as we are extending it in the Bill. In quite a number of places in the Bill, as in Clauses 2, 3, 4(b), 5, 7 and 10 we see references to “in the opinion of the Commissioner”. It is quite an interesting point, as to what the actual legal position is. When a discretion is conferred upon a person the general rule of law is that it should be exercised by himself personally, but when you have a section such as Section 3 of the Principal Act, it is quite an interesting question whether the general rule of law will apply in this case, namely, that when any discretion is conferred upon a person, to be exercised by him personally, it may not be delegated to another. These powers that are being conferred here are very important, and if it entails that “the opinion of the Commissioner” may also be included under Section 3, so that the powers may be delegated to any unidentified person, not being specifically delegated, it would be a dangerous principle. I do not think it could ever have been contemplated that the powers of the Commissioner may be delegated to any person in his office without specific delegation. I would just point out that it is a dangerous principle. It is an unfortunate fact that one finds an increasing tendency towards bureaucracy, and where in this Bill we are dealing with cases with reference to which there is no appeal to a wider body, it is still more essential that the powers of the Commissioner should not be so wide. Where he has such powers, it should be laid down that he should exercise those powers personally or through duly authorised delegates. I am glad that a certain measure of guidance is given to the Commissioner in Section 10 (d) of the Bill in respect of things he should take into consideration. I think that is a step in the right direction, that, it should not be left entirely to his discretion in regard to such important matters, but on the other hand, if we lay down certain principles in the legislation in this Chamber that have to be observed, we should simultaneously create a remedy in the event of those principles not being observed. What is the use of saying that certain things should be taken into consideration when the aggrieved person is without a remedy? It is a negation of the powers of Parliament. With reference to the change in Clause 7, which seeks to insert a new Section 39 in the Principal Act, I would just say that the Minister has pointed out that the preference shareholders’ position differs from that of the ordinary shareholders. They do not have a direct say in the company. But I should have thought, if that were so, their position is very similar to that of debenture holders. We know in the case of debenture holders the assessment is made in the hands of the taxpayer himself, and not in the hands of the company. I think that is the position, that the position of the holder of preference shares does not differ very much, and purely on logical grounds one would assume it would be more logical if the dividends of preference shareholders were assessed in their own hands and not in the hands of the company. But I am not so anxious to go into the merits of the question as to which one is the better; however, what I do wish to comment upon is the uncertainty presently existing. Under Section 39, as at present amended, it is provided:

It is not a provision that he shall do so, but a provision that he shall not be compelled to do so, and you will immediately realise the tremendous uncertainty in which the holder of preference shares is placed. It is now left hanging in the air whether, if he holds 5½ per cent. preference shares in a private company which otherwise complies with the provision that there should be more than 20 shareholders, whether the dividends will be exempt from tax or not. He does not know it beforehand. It will depend upon the discretion of the Commissioner. A man may be in the position that he has to find an investment of money, and it is necessary to know whether, if he buys such preference shares, their dividends will be exempt from tax or not. I consider that the uncertainty should be removed, whatever may be the best place of imposing the tax. An endeavour should be made in such cases to remove the uncertainty for a person who wishes to invest his money. He should know beforehand whether the shares are taxable or not, for even if he does escape it one year, the Commissioner may, in terms of his discretion, decide the next year not to tax it in the hands of the company, but in the hands of the shareholders or vice versa, and then his position would change completely. This uncertainty is not advantageous in a taxation scheme of this nature, and whatever the merits may be of the question as to whether the preference shares should be taxed in the hands of the company or of the individual, we cannot leave this decision to the discretion of the Commissioner. It is an important principle. The only other point I wish to comment upon is the surcharge of 15 per cent. It has already been discussed here on a previous occasion, and I do not wish to repeat other arguments now, but I should just like to point out that it is not a fair distribution of the burden of taxation. We on this side feel that when your normal tax is increased by 15 per cent., it should be higher in the case of the super tax. The basic rates of the ordinary tax and the super tax differ considerably, and where a surcharge is now made, we consider that there should also be a rising and increasing rate in respect of the super tax. And another point is that we feel that in these times a special lance should be broken for the middle class, married persons with incomes not exceeding £800 per annum. If a surcharge of 15 per cent. has to be imposed, we feel that the surcharge should only commence on an income basis which will exclude the ordinary man of the middle class. It should rather be more onerous and higher on those people who are better able to bear it, than the married persons of incomes not exceeding £800. For that reason we shall once again, as on a previous occasion, in Committee propose in this case that the surcharge of 15 per cent. shall not apply to salaries not exceeding £800. I think that is all I have to say at this stage. We can deal with the details at a later stage. I have just raised a few general principles.

I should like to bring to the Minister’s notice a case heard in the Supreme Court, the case of Marais vs. Commissioner for Inland Revenue. It is the case of a doctor who could not recover his accounts for quite a number of years owing to the state in which the country had been. In the past few years the economic position of some people has improved, and the result was that this year he has recovered more than £3,000 arrear debts. When making his income tax return, he wished to credit the amounts to the various years in which the accounts had been payable, but he was not permitted to do so. He desired that the various amounts should be allocated to the years in which they should have been paid for income tax purposes. As the law stands, however, he lost his case in the Supreme Court, and he has to pay income tax and super tax on the £3,000 he recovered in the one year. I have thought that the Minister might have had this case brought to his notice, and that he would have made provision in the law for meeting such taxpayers. I think it is quite unfair that when a man recovers arrear debts, he should be assessed for the whole amount in that one year, also for super tax. When reading through the Bill, I thought the Minister might have contemplated that in connection with Clause 5 (c) (4). This clause provides that there shall be included in the taxpayer’s income all amounts … . whether in the current or any previous year of assessment, which have been recovered or recouped during the current year of assessment, in terms of …

No, it does not fall within this.

I noticed that it did not recover the case. I wished to ask the Minister whether he coud not bring it under this. Will he not draft an amendment to meet this class of taxpayer? It will be a great help to the professional man. The position is that many people today are earning larger salaries than ever before, and the professional people are today having accounts paid, which were in arrear and which they most likely never thought to receive, and which they may have written off already. Now they are being taxed over and again on these amounts. I hope the Minister will give his attention to the matter. Then I also agree with the hon. member for Fauresmith (Dr. Dönges) in feeling perturbed about the discretion of the Commissioner. It is generally felt, and particularly among the legal practitioners, that the discretion of the Commissioner in regard to his “opinion” is put too widely. It is not definitely laid down that the Commissioner himself should give his attention to a matter, or whether he for instance may permit a junior clerk to give his attention to it. The Minister knows, as the hon. member for Fauresmith has explained, that the rule of law is that in such a case the Commissioner should himself give his attention to the matter, but it is not laid down definitely here. I think the Minister should make provision, and if he is unwilling to do so, he should see to it that the law includes a provision whereby the “opinion” of the Commissioner may be appealed against.

Mr. Speaker, there are certain points in the present Bill, which I want to bring to the Minister’s attention as they concern rather wide principles. First of all, I wish to deal with the apportionment of the profits of private companies, and the new Clause 39. This question of allocating the profits of private companies appears to me to be getting more and more involved each year. When the present Income Tax Act was first introduced in 1941, there was provision for three cases of exception, where the profits of private companies were not to be apportioned. In 1942 another case was added, bringing the exceptions up to four, and this year we find that there are two fresh cases, so that at the present stage there are now six different exceptions to the principle of allocating the profits of private companies. In addition to these exceptions, we find quite a large number of new provisions, which are designed to render equitable the principle of apportioning profits to the shareholders. Now, one cannot help asking oneself whether we are on the right road, whether this principle of apportioning profits to shareholders in private companies is a good principle or not. One is constrained to feel that it is not a good principle. Troubles are met with all along the road, and troubles of a rather serious character. I feel that the foundations of the building have given, and that all these different provisions that are now being introduced are in an attempt to cement up the cracks in the superstructure. The question arises how far are we going. Before this principle of apportioning a private company’s profits was brought into force, the old system of taxing the profits in the hands of the company in respect of normal tax led to many difficulties. It led to a similar building up of provisions designed to obviate the chance of evading taxation. It was felt when the principle was changed, when a public and not a private company was defined and the profits of the private companies were apportioned, that many of the difficulties would be overcome. But the seas appear to be rougher under the new method than they were under the old. It appears now that the allocation of profits in a private company is not a sound principle, and the reason mainly is that the profits of a private company are not within the control of the individual shareholder. The only portion of the profits of a private company which accrue to the shareholder is the portion which is distributed in the form of dividends. In that respect a private company differs entirely from a partnership. In a partnership the profits are divided between the partners and are actually credited to the personal accounts of the different partners. That is not the case in a private company, with the result that if a company pays a small dividend, or no dividend at all, the shareholder to whom the profits have been apportioned is called upon to pay the tax, normal and super-tax and others, on the amount so apportioned. The shareholder has no claim whatever on the profits of the company, that is to say on the remaining profits. He cannot compel the company to declare a dividend, he cannot claim any money from the undistributed profits which remain in the coffers of the company. There we come to the difficulty, which the Minister is endeavouring to surmount in the present measure. The Minister is proposing in this Bill that where a company has not distributed its full taxable profits the difference in the tax payable by the shareholder on the amount exceeding any dividend can be recovered from the company. In introducing the Bill the Minister said just now that the shareholder will pay tax on the distributed profits, and the company will pay on the undistributed profits. I want to examine this for a moment and see what an extraordinary state of affairs such a provision is going to bring about. Let us take the case of a shareholder with an income of £15,000 a year, and he receives an apportionment of profits from a company of £5,000, making his total income £20,000 a year. His tax is first calculated on £20,000, and then on £15,000. The one is subtracted from the other, and the difference is the amount of the tax, which the shareholder can then request the Commissioner to recover from the company. I have taken, of course, an extreme case. On the additional £5,000, that is to say the difference between £15,000 and £20,000, the taxation amounts to £4,609 8s. 6d., equal to 18s. 5d. in the £. In that case, sir, the amount which the Commissioner would be entitled to claim from the company is an amount equal to over 90 per cent. of the total profits that are calculated to be apportioned, the total taxable profits of the company. In other words, in respect of this particular shareholder the company might be obliged to pay over 90 per cent. of its taxable profits. Now, that shareholder may have no real controlling interest in the company, and that company may have paid nothing in dividends by reason of the fact that for purposes of expansion the profits have all been required to be ploughed into the business. Now there is another shareholder in that company, who earns a very much smaller income, and is dependent very largely on the company for his income. Say he earns £1,000 a year and his portion of the company’s profits is £500. The difference in the tax on the £500 is £49 19s. 11d., which is equal to 2s. in the £, and in his case the Commissioner would be asked to recover an amount equal to 10 per cent. of the taxable profits of the company. We have on the one hand a claim of 10 per cent. for the one shareholder and over 90 per cent. for the other shareholder. I have taken cases which may be extreme, but I have taken them purposely to illustrate the point at issue. The company is not entitled to recover these amounts from the shareholders and with that provision I quite agree. Whether the shareholder does recover or not rests entirely with the Commissioner. The Commissioner is to be given further very wide powers, and the Bill sets out a large number of aspects of the case, which the Commissioner has to take into account in deciding whether he is going to claim the amount from the company or not. Therefore, Sir, it is an open question as to whether a shareholder will pay on the distributed profits and the company will pay on the undistributed profits. I do not see how it is possible to say this. It is self-evident that with very few exceptions companies can never pay out the full amount of the taxable profits. It is almost inconceivable that any company can pay out the full amount. The dividend must be some figure of a lesser amount, and, being a lesser amount, it follows that there must in every case be a difference, on which the Commissioner can be asked to collect tax. I have given those figures of the two shareholders to show over what extremes the request can be made. There is a further illustration which I would like to quote. In the case of the person whose income was increased from £15,000 to £20,000, on the increased £5,000 the amount of tax is, as I have already said, equal to 18s. 5d. in the £. But where the shareholder has an income of £45,000, and gets a further apportionment of £5,000, making a total of £50,000, on the additional £5,000 the amount of tax is not as in the previous case £4,690 but £3,496, a matter of over £1,000 less, so that the shareholder who is earning £50,000 will pay £1,000 less in respect of that £5,000 than the shareholder who has an income of £20,000. In his case the amount of tax is equal to 14s. 5d. in the £, as against 18s. 5d. in the £ in the first case. That shows up one of the anomalies in our system, and it is due to the fact that we have progressive rates of taxation. The taxpayer with a comparatively small income will pay a far greater percentage of any increase of income from profits than will the taxpayer who is subject to the ceiling rates, to the limit rates. The Minister said just now that he proposed to limit the amount of interest received from the Post Office Savings Bank and other sources, which is free from taxation, and he says that a return of 3 per cent. free from tax is very acceptable. The effect of the figure that I gave just now is this, that if the taxpayer who is in that £15,000 to £20,000 class earned a little more from 3 per cent. Government Stock, for example, he would pay as additional tax 90 per cent. of the 3 per cent., leaving less than ½ per cent. net. I am afraid that the proposals that the Minister has introduced in this Bill are going to lead to very serious hardships and very serious difficulties. I think that, the basis upon which the surplus amount to be recovered from the company is computed is hardly a sound basis. I think it should not be based on the difference between the two calculations. I wonder whether the Minister would consider the question of making provision that where a private company has distributed a reasonable amount of profits by way of dividends, there can be no claim for tax against the company. This is an aspect which I think is well worth considering, because as it will stand a company is not for a long period going to know what its final position is going to be. In this Bill the Minister proposes to make certain of the provisions retrospective to 1941, and a company is in consequence never going to know when it is going to be called upon by the Commissioner to meet the taxes of any particular shareholder. Tax assessments are delayed in some cases for a year or two years, and a company is in the meanwhile in a very difficult position if it cannot over that period define what its liabilities are. That is a further disadvantage under the present proposals, and I suggest that this matter should be further considered, and perhaps certain amendments may be given effect to at the Committee stage. With regard to preference shares, in the memorandum or the White Paper which was issued there was this passage: “As a result of the changes proposed, preference shareholders will be put back into the same position as they occupied before the apportionment system was introduced. The company will be liable for normal tax on that portion of the income which goes to them, but they will themselves be liable for super tax on the amount of their dividends.” The principle of apportioning profits did upset the whole basis on which preference shares had been issued, for interest was paid on that basis. Preference shares were always free of normal tax in the hands of the recipient, the recipient being liable for super tax. But when the apportionment system was introduced preference shareholders became liable for the normal tax. I am glad to see that the hon. Minister is now proposing to restore the situation to what it was before, but I am perturbed when I read the Bill after reading the memorandum. I want to ask the hon. Minister why it is provided in the Bill that only the private company, which has at least twenty preference shareholders, will receive this benefit? There is no consideration of the amount of the preference shares issued. There may be a substantial preference share issue in the company, and it may be issued to a few shareholders. I think that the stipulation that this provision will only apply to companies possessing 20 or more preferent shareholders is unnecessary, and that it should apply to all such shareholders in any private company. The limitation is an undesirable one, and will not restore the situation in many cases, because many private companies do not as a rule possess a large number of preference shareholders. The principle of a private company is that the number of shareholders shall be limited. Such a provision as applicable to a public company can be well understood, but not when applicable to a private company. Then, in these new exceptions to apportionment, the position is further complicated because in the one case the company is to be taxed as an unmarried person and in another case it is to be taxed as a public company, and here we have more confusion in the rates of tax. I notice further that in each of these instances, although an abatement is due to a public company under the flat tax and an abatement is provided for in the case of unmarried persons, the provisions of the Bill specifically exclude the abatements. This appears to affect rather harshly the companies concerned. I am referring now to the new Section 39 of the Bill, and the paragraphs on page 10. I do not know why these companies should not be allowed to receive the same abatements as other companies and individuals. There appears to me to be no real reason for it, but perhaps the hon. Minister will be able to tell us why. Then I wish to come back again to a point that I have raised in this House on several occasions. I wish to ask the Minister categorically why it is that in the case of a private company, when the profits are apportioned the losses are not apportioned. This aspect is going to be of more importance still if the provisions relating to the recovery of taxes become law. The provision leads to taxpayers in some instances paying more in income tax than they receive by way of nett income. If it is fair—and the White Paper claims that it is fair—that the profits of a private company should be apportioned amongst the shareholders, then I do submit that it is only fair and equitable that the losses should be likewise apportioned so that if a shareholder in company A makes a substantial profit and if in company B he suffers a substantial loss, the loss should be set off against the profit, and the tax should be computed on his nett income. That is the principle applicable to a partnership. In the case of a partnership, the profits are apportioned between the partners; losses are likewise apportioned, and the partner as an individual pays income tax on the nett balance only. The shareholder as an individual finds himself in the invidious position that he is asked to pay tax on all his profits, and that on his losses he can obtain no respite whatever. The Minister has told us on previous occasions that there is a good reason for this, namely that losses are carried forward in the books of the company. But I do sumbit, because our income tax is assessed in annual compartments, there is no justification whatever for carrying losses forward in the accounts of the company and taxing the individual each year on the profits he makes. I submit that it is an absolutely inequitable position. I have had many serious representations made to me on the point, and I am anxious to impress this fact upon the Minister, so that he will give it the due consideration which it merits. If losses were to be apportioned and to be subject to apportionment in the same way that the profits are, it would go a long way towards helping to smooth out some of the difficulties which exist at the present time. It would at least show that in our taxation measures there is an endeavour to treat the taxpayer as fairly as possible, where under the present condition no one can blame any taxpayer for feeling a sense of grievance that he is being unfairly treated. Finally, in regard to the surcharge on normal and super tax of 15 per cent., I do not wish to repeat what I said earlier, that the basis of a percentage surcharge is not the soundest of bases. But I would like to know from the hon. Minister whether this 15 per cent. surcharge is going to apply to the personal and savings levy. Apparently this year it will not, because in the case of the personal and savings levy, the amount of tax is based on the previous year’s assessment. But in the coming year the surcharge may apply, as the Minister has framed the Bill.

I should like to make a special appeal to the hon. the Minister of Finance, to meet the farmers, particularly in regard to the assessment of their taxes. In doing so, I should like to ask the Minister to meet the farmers in the first place by simplifying the tax forms. At the moment the forms are so complicated that the farmers are obliged to go to an attorney or an accountant to have the forms filled in. They experience great difficulty with it. But what I particularly wish to ask the Minister to do, is that where a farmer has made his choice in terms of Section 14 (5) of the Act in connection with the assessment of his income, he should meet the farmers by making facilities available to the farmer whereby he may alter his choice. May I point out to the Minister that certain farmers in those areas which are afflicted by drought, sometimes find it impossible to keep their stock because they run the risk of losing their stock owing to the drought. They deem it expedient then to sell some of their stock, and when the farmer does that, he experiences much hardship in regard to his income tax. If he had made the choice of being assessed on the cash basis, he finds it very difficult to again change over to the basis of live stock. In that case the Minister will tell me, that according to the principal Act, the Commissioner has the right to permit a farmer to change over to the other alternative to the one he chose when he originally made his choice. But I would just say to the Minister there are many difficulties incidental to this. The Commissioner refuses to permit this, and I know of a number of cases where he has refused to permit the farmer to change over. I hope the Minister will agree that in such cases where we find a farmer deciding to sell some of his stock as a result of circumstances over which he has no control, we should meet the farmer, for otherwise he will have to pay so much more income tax. Farmers who have never paid excess profits tax, have to do so then. I know of a case of an ordinary farmer who was assessed for more than £1,200 because he had decided to sell a portion of his live stock in order thereby to safeguard himself against the drought then prevailing, and as he did not know what the future might have in store for him. In that case it is necessary that the Minister should amend the relevant, section of the Act so as to give the farmer in such cases the right to change over to the other basis. There are only two courses left to the farmer—the cash basis or the stock basis. In those cases where special circumstances prevail, the Minister ought to amend the Act so as to compel the Commissioner to give the farmer the right to change his election in such circumstances. In many cases the Commissioner absolutely refuses to go into the matter. I do not know whether it is specially brought to his notice, or whether it is the sub-commissioners who assume the right to decide about it. Then I may also tell the Minister that the various sub-commissioners do not all administer that section of the Act in the same manner. Therefore it is extremely important, in the interests of the farmers, that that section should be amended to the effect that instead of the Commissioner having the discretion, he should permit such a choice. Hon. members here have said that the discretion has to be specially given to the Commissioner and that he should not be permitted to delegate it. I should like to appeal to the Minister that the Commissioner should not have a discretion here, but that he should be obliged, where the farmer has already made his election, to permit him to change that choice in the circumstances that arise from time to time. As the Minister of Finance can appreciate, the farmer has a very hard time of it, for when a drought prevails, they do not know when it is going to stop. If they do not sell their stock, they might lose all. They do not know whether the drought will continue or whether it will break. If they take the risk, it might happen that they lose their stock, as has so frequently happened in the past. Therefore I hope the Minister will give his earnest attention to this matter, for I may give him the assurance that the farmers have a difficult time of it, especially in the North-West, where things are so uncertain, and where drought prevails from time to time. The farmers have to do something to safeguard themselves, and I hope the Minister will see to it that Section 4 (5) of Act No. 31 of 1941 is so amended that definite relief is given to the farmers in terms of that section. I can assure the Minister that the farmers are suffering a great hardship in the circumstances. I have referred to the case of a farmer who was compelled, in view of his farm having become so dry and his stock having died, and because he was afraid that his losses would increase progressively as a result of the drought, to sell a portion of his stock. He was compelled to sell a portion of his original stock, and the result was that he had to pay £1,200 income tax. Let me say, in all fairness to the Department, that they eventually reduced the amount. It was a hard struggle, and eventually this farmer had to pay between £700 and £800. It was a large sum he had to pay, and I can assure the Minister that in comparison with his usual income, this man was not assessed on his income. The amount he had to pay was not an assessment on his actual income. In the circumstances he had been compelled to sell his stock, and it was not his fault that he had to do so. I do hope the Minister will realise this difficulty of the farmers, particularly of the farmers in the North-Western areas which are frequently ravaged by drought.

In connection with the arguments of my hon. friend here next to me, I should like to say that I do not associate myself with him. I know of a case where a farmer carried on agriculture and also had a cattle farm. He sold his agricultural farm and wanted to become stock farmer. He went to the Commissioner and asked to be transferred to the cattle basis for income tax purposes, and his request was refused. I hope therefore the Minister will give attention to this matter.

Yes, I shall give attention to that matter.

With regard to the case mentioned by my hon. friend, of the man who had to pay £1,200, I would say that that farmer was not careful enough, for if he went to the Commissioner, he would have found that he had the right to deduct his original number of stock. He could have objected if he was assessed on that. In any case I am glad the Minister has stated that he will consider that point.

May I first reply to the last two speakers, and tell them that I propose giving attention to the question they have raised here, as a whole.

The hon. member for Fauresmith (Dr. Dönges) raised the question of the discretion of the Commissioner of Inland Revenue. In that regard, this Bill does not go further in principle, than the original Act went.

Not in principle, but it does contain new provisions.

I think my hon. friend knows why we accorded the general discretion in the Principal Act. The object is to safeguard against interference on the part of the Minister, upon whom influence may be brought to bear, and Parliament has always accepted the view that the Commissioner of Inland Revenue should be independent.

Not by the court.

I think we should retain his independent position. Whether the discretion is put too widely is another question to which I shall give attention. My hon. friend has perhaps gone a little too far in saying that there is no provision for appeal in this legislation. There is an appeal in the first place to the special court and then to the Supreme Court. He did not of course mean that, but he gave that impression. He has also not fully realised the difference between debentures and preference shares. Debentures are only taxed on the interest received. But preference shares in terms of the present Act, are taxed on the apportionment to the holder thereof of his share of the income of the company, and it is here where we wish to make a change. He has also referred to the 15 per cent. surcharge. He wants a distinction to be made between the surcharge on normal income tax and the surcharge on super tax. He has already stated that the basic rates of normal tax and super tax differ considerably. That means that the 15 per cent. on normal tax and the 15 per cent. on super tax will also differ considerably. We need not impose a higher percentage in order to make a difference.

The difference should be more considerable.

We shall not fight about that at present. As regards the middle class, I would again point out that a married taxpayer with two children and an income of £500, pays a surcharge of 10d., and if he has an income of £800, he pays £3 2s.

Why not give it to him as a present.

The reason for that we have already discussed ad nauseam. The reason is that we want everybody to pay on the same basis. The hon. member for Gordonia (Mr. J. H. Conradie) has raised the Marais case. I do not have much sympathy with such cases.

Why not?

He chose to be on that basis, and as long as it was in his favour, he wished to remain on it. Now that it goes against him, he wants to change over to another basis.

Why not?

It would mean that the law would have to be amended.

Could he not be assessed in a different manner?

Not according to law.

†The hon. member for Orange Grove (Mr. Bell) has raised the question of the system of taxation of private companies, and obviously he would like us to abandon what we did two years ago. I do not think there is very much chance of that, I am not prepared to agree with him that we are on the wrong road; we are on the right road. Up to two years ago we had a system which was too lax and broke down on that account. We introduced a new system which in the nature of things, was too rigid in the first instance, and the fact that we are relaxing its rigidities is certainly not an indication that the system has broken down. The hon. member has referred to the extraordinary state of affairs which may arise under this amendment that I am proposing. Obviously that was based on the assumption that in every case where a shareholder asks for recovery he will get it. Surely he has only to look at paragraph 3 of the hew Section 70 (5) to know that he won’t get it in every case; he will only get it in cases where there is justification for getting it.

[Inaudible.]

Yes, but it can hardly mean that in cases such as the hon. member mentioned, he is going to get it. I shall be very much surprised if that is so. The hon. gentleman has also referred to the discretion of the Commissioner. He says we are giving him further wide powers. No, sir, we are not giving him further wide powers. He has those powers of recovery in the existing law. But we are in fact limiting his powers, because for the first time Parliament is telling him what he must take into account in the exercise of those powers.

And if he does not?

Parliament, I take it, will be prepared to trust him to exercise his powers properly in terms of the Act. I cannot believe, Sir, that these hardships and difficulties that the hon. member assumes will arise, for the simple reason that this system is not going to be applied in every case; it is only intended to be applied in the cases contemplated by the section. This new section will go a long way towards removing the hardships and difficulties.

Then you are discriminating between one taxpayer and another.

That is in the law today, and we are telling the Commissioner on what basis he must act. At the present moment he has absolute discretion. The hon. member has made the suggestion that when a private company has distributed a reasonable dividend we should wash our hands of that company and not impose further taxation on its income. But we tax a public company on the whole of its income. The hon. member’s proposal is that the company should pay no tax on the balance of its income, on the undistributed portion of that income. I am afraid I cannot agree to that.

The Minister has misunderstood me. The ordinary shareholder pays the normal and super-tax on the whole of the undistributed profits.

My hon. friend wants to get away from apportionment. According to his suggestion only the amount paid by way of dividends will be taxable. Otherwise his suggestion means nothing. Then the hon. member has raised the question why in relation to preference shareholders we have put in a stipulation that there should be 20 such. I explained that before the hon. member came into the House, and the reason I gave was that if we allowed this procedure to be followed with a small number of shareholders, we would undoubtedly open the door for evasion, and I think there is a further point that where you have a small number of preference shareholders their relationship would be much more of a proprietorial nature than when there is a large number of shareholders. Then he has again raised the question of the non-apportionment of losses. Well, I have not satisfied him in the past, and I shall not satisfy him again. My answer must be the same, the losses are carried forward on the books of the company, and if we acted as my hon. friend wishes us to act it would simply mean that some people would be having it both ways.

Not at all.

Surely, Mr. Speaker, they will be having it both ways if their losses are apportioned and at the same time they are carried forward on the books of the company. In other words, you would be allowing them for the losses twice over.

That is not so.

Of course it is not so.

Motion put and the House divided:

Ayes—58:

Abbott, C. B. M.

Abrahamson, H.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bell, R. E.

Botha, N. N. W.

Bowker, T. B.

Carinus, J. G.

Conradie, J. M.

Deane, W. A.

Derbyshire, J. G.

Dolley, G.

Du Toit, R. J.

Fourie, J. P.

Friedlander, A.

Gilson, L. D.

Gluckman, H.

Goldberg, A.

Hayward, G. N.

Hemming, G. K.

Henderson, R. H.

Heyns, G. C. S.

Hirsch, J. G.

Hofmeyr, J. H.

Howarth, F. T.

Jackson, D.

Johnson, H. A.

Kentridge, M.

Lawrence, H. G.

Long, B. K.

Miles-Cadman. C. F.

Moll, A. M.

Molteno, D. B.

Mushet, J. W.

Neate, C.

Payn, A. O. B.

Pocock, P. V.

Raubenheimer, L. J.

Robertson, R. B.

Rood, K.

Smuts, J. C.

Solomon, B.

Sonnenberg, M.

Steyn, C. F.

Steytler, L. J.

Sutter, G. J.

Tothill, H. A.

Trollip, A. E.

Van Coller, C. M.

Van den Berg. M. J.

Wallach, I.

Wares, A. P. J.

Warren, C. M.

Waterson, S. F.

Tellers: G. A. Friend and J. W. Higgerty.

Noes—35:

Bezuidenhout, J. T.

Boltman, F. H.

Bremer, K.

Brits, G. P.

Conradie, J. H.

Dönges, T. E.

Du Plessis, P. J.

Erasmus, F. C.

Fouché, J. J.

Geldenhuys, C. H.

Haywood, J. J.

Hugo, P. J.

Le Roux, P. M. K.

Le Roux, S. P.

Loubser, S. M.

Louw, E. H.

Malan, D. F.

Olivier, P. J.

Pieterse, P. W. A.

Schoeman, B. J.

Serfontein, J. J.

Steyn, G. P.

Strauss, E. R.

Strydom, G. H. F.

Strydom, J. G.

Swart, C. R.

Van der Merwe, R. A. T.

Van Zyl, J. J. M.

Viljoen, J. H.

Warren, S. E.

Wilkens, Jacob.

Wilkens, Jan.

Wolfaard, G. v. Z.

Tellers: J. F. T. Naudé and P. O. Sauer.

Motion accordingly agreed to.

Bill read a second time; House to go into Committee on the Bill on 15th April.

I notice here that 300 morgen of the farm “Vaalbank” in the District of Albert are to be alloted to the owner of the adjoining holding “Poortjie”. I should like to have some information in regard to this matter and I shall explain why. “Vaalbank” is situate in the District of Venterstad and used to be 1,350 morgen in extent. In 1926 or 1927 it was bought by three people for £5,400 or approximately £4 per morgen. When these three persons fell into arrear with their payments, the Minister cancelled the holding. A certain Mr. Van der Walt remained behind there and for the first year after the cancellation of the holding the Land Board allowed Mr. Van der Walt to occupy it on payment of a certain sum. For the second year, however, much to my surprise, the Land Board refused to let the holding to Mr. Van der Walt for the sum of £80. I should now like to hear from the Minister why the Land Board saw fit to allow Mr. Van der Walt to remain on the holding during the first year, whereas they did not want to allow him to remain there for the second year when he offered them the same rent as was offered by the person to whom the holding was subsequently let. At the time I personally wired to the Land Board to inform them that he was able to pay half the rent in advance. The Minister will now notice that the land which was originally sold for £4 per morgen, is now, as far as the section is concerned which is to be joined to the adjoining holding, to be sold for £1 10s. per morgen. I have nothing to do with that transaction. I wish the person good luck who obtained that land. But I now come back to Mr. Van der Walt. He is one of the three persons who originally bought the farm. They paid £1,350 out of their own pockets to erect windmills and build houses and construct a weir—the value of the improvements is over £1,000. Mr. Van der Walt is not receiving preference in the allotment of the holding; his offer is refused. The Department comes along and sells part of the land for £1 10s. per morgen. Seeing that they paid that large sum and made those improvements it would only be fair to give them an opportunity of receiving the benefit of the decreased value. Another point is that the adjoining holding “Poortjie” used to be 430 morgen. Now 300 morgen of “Vaalbank” are to be added to it, so that “Poortjie” will be 730 morgen in extent and “Vaalbank” 900 morgen. If “Poortjie” becomes an economic holding by the addition of 300 morgen, the farm “Vaalbank,” reckoned on the same basis, becomes totally uneconomic. Yesterday afternoon I asked the Minister what is his policy in regard to the cancellation of holdings. Here a man who has effected many improvements is ejected. He has four children, one of whom is at the University, the three smaller ones still attending school. He was ejected in January, 1941, when there was a severe drought, and he had to sell his sheep for 10s. and 12s., as he could not obtain money otherwise. I know his circumstances. Today he is doing brick-laying and masonry work at Bethulie. I now want to ask the Minister: If 300 morgen are sold at £1 10s. per morgen, at what price does he value the remainder of the farm? If he values the remainder also at £1 10s., is it not possible then to re-instate Mr. van der Walt on the 900 morgen? He did not receive a square deal. He was in arrear, but he was not treated in a fair manner. He still had 600 sheep left and he was prepared to pay £80 rent, but they did not want to grant it to him and the Department has not given me sufficient reasons why they allowed the man to stay on the holding for the first year but refused to do so for the second year. In fairness to Van der Walt, the Minister should consider meeting him.

The information I have in regard to this matter is that the holding “Vaalbank”, in extent 1,351 morgen, was originally allotted to three applicants under Section 11 in 1926. It was allotted at an uneconomic price, I think of £5,400. The lease was cancelled owing to non-payment, on 31st July, 1940. The tenants were four years in arrear with their interest. Two of the tenants left and the third one remained behind as caretaker. Mr. van der Walt remained behind and the farm was then let at a fixed rental as from 1st April, 1942. The position was explained to the hon. member in a letter which stated inter alia that an amount of £704 was remitted for the years 1931 to 1934, but in spite of that concession the debt of these people continued to grow. Van der Walt’s tender for the lease was not accepted because, in the opinion of the Land Board, he was too weak financially. After those people had been there for 15 years and had not met their obligations, the Department intervened. They also treated Van der Walt in a considerate manner. All the information was supplied to the hon. member. In regard to the question whether the remainder of the farm is still economic, I presume that if that portion is cut off from “Vaalbank” to make the adjoining holding an economic one, “Vaalbank” itself will become an uneconomic holding.

The Minister now takes up the point of view that I am in possession of all the information. I asked the Minister the question: Van der Walt was appointed in 1941. The first year after the cancellation he remained on the farm and paid his rent.

He was appointed as caretaker on 1st January, 1942.

No, you chased him away in 1942.

The lease was cancelled on 31st July, 1940.

He was appointed as caretaker for the first year and he met his obligations.

Not according to my information here.

He paid the rent which he was asked to pay. In the second year he had a few hundred more sheep and he tendered to rent the farm for £80. This was refused, and somebody else got it for £80. Why was he chased off after the first year, when he offered to rent the farm for £80 ? He met his obligations during the first year.

As caretaker he did not pay anything.

With due deference to the Minister I want to tell him that his information is incorrect. I do not know the amount he paid during the first year, but he did pay. For the second year, however, he offered £80 and his offer was refused.

At 5.55 p.m. the Chairman stated that, in accordance with the Sessional Orders adopted on the 28th January and 26th March, 1943, and Standing Order No. 26 (1), he would report progress and ask leave to sit again.

House Resumed:

The CHAIRMAN reported progress and asked leave to sit again; House to resume in Committee on 14th April.