House of Assembly: Vol5 - WEDNESDAY 8 JULY 1925
Mr. SPEAKER took the Chair at
Mr. KEYTER, as Chairman, brought up the fourth report of the Select Committee on Native Affairs.
Report to be printed and considered in Committee of the Whole House on Friday.
The MINISER OF FINANCE laid upon the Table—
Memoranda referred to Select Committee on Pensions.
The MINISTER OF LANDS laid upon the Table—
- (133) Proposed revaluation of the allotment price of the holdings comprising the farm “Rietfontein” No. 27, district Middelburg, Transvaal.
- (134) Proposed grant of strip of Crown Land along the foreshore at Heroldsbay, division of George.
Papers referred to Select Committee on Crown Lands.
First Order read: Second Reading,—Income Tax Bill.
This Bill carries out the resolution adopted, in Committee of Ways and Means, and gives effect to the two important changes which the Government intends introducing in regard to the income tax system. One is the abolition of the dividend tax, and the consolidation of the previous rates of normal tax and dividend tax into one normal tax rate; and the other is the re-introduction of the farmers’ option. We also provide for the increased abatement which we propose to give under this Bill in respect of the children of income tax payers. As the result of the first mentioned change chapter III of the old Act falls out in its entirety; whilst the provisions dealing with the introduction of the farmers’ option hon. members will find in Clause 15 of the Bill. Apart from these important changes we have taken the opportunity of re-enacting the whole income tax and of making a certain number of minor amendments in existing legislation; also through changes we endeavour to remove certain obscurities which exist at present under the existing Act. Hon. members will find that opportunity has also been taken of re-arranging the order of sections so as to secure a more logical sequence of the provisions of the Act. I want to give a short summary of the principal changes we are introducing. In chapter 1 there is practically no change. In chapter 2, section 7, the definition of gross income has been redrawn so as to bring within the term all amounts received for services rendered, and also payments in regard to commutation of salary due. A further important alteration is in section 10, dealing with the question of exemption. Additional exemptions are provided in respect of miners’ phthisis, also post office savings bank interest and interest in respect of union loan certificates. These are all exemptions from payment of income tax. Section 15 deals with farmers’ option. Then provision in regard to that is also made, under which the commissioner may call for certain returns which will enable him to protect the farmers’ original capital from being taxed. Section 18 is new. It deals with the taxation of profits made by overseas principals on sales made by agents in the Union. That is reintroducing the principle which appeared informer income tax legislation, but was afterwards dropped. Sections 29 and 30 deal with super tax and provide for carrying forward losses in regard to normal tax, and deduct that from the income payable which is liable to supertax under certain circumstances. Hon. members will see that bonus shares distributions from profits are brought under the tax. There is no reason why profits distributed in this form should be given a privileged position. That, in the past, has been liable to abuse. In chapter 3, section 44, hon. members will find that provision is made for increased penalties. The present penalties, according to the department, do not appear to be a sufficient deterrent. Hon. members will see in the report of the Commissioners for Inland Revenue, which deals with certain cases investigated, that out of 283 cases no less than £19,000 was imposed as penalty. If you want to put a stop to that sort of thing it is necessary that we should make the penalties much more strict than at present. Section 45 makes definite provision for additional assessments. It is not really an alteration in practice. In section 72 hon. members will see that we extend the definition of dependents. We extend the abatement there to an allowance to any person who contributes £30 or its value to a dependent as defined. Formerly it was laid down that this £30 had to be contributed by one person, otherwise the allowance was not permissible. We are attempting to deal with the question of the creation of trusts in favour of minor children. This is a favourite method by which evasion was practised. For instance, parents have created trusts for their minor children, and have thus escaped the supertax, the section is 9 (3). We exclude from taxation the earnings of the child himself. If the trust is created by the parent, and in that way if he could avoid super-tax we propose to tax that part of the income of the child in the hands of the parent. I now move the second reading.
I want to say a few words in regard to this Bill. In the first place I want to express very great regret, which most hon. members must feel, that this Bill has been introduced at such a late stage of the session, especially in view of the large amount of work we have still to get through. We generally understand we are going to adjourn about the 25th or the end of the month. Here is a Bill with 74 clauses which has been introduced and explained by the Minister. I do not think, with very great respect to him and recognising the amount of work he has to do, that he has been quite fair to the House and the people in bringing it in at this stage. It is a very important Bill and affects a large number of people, and no doubt a lot of controversy will arise out of it, largely because it has been introduced at this late hour. I doubt whether many members of this House have studied this Bill. The House is thoroughly tired. The Bill we know’, is drawn very much on the lines of the old Bill. I will admit that, but, of course, it is a consolidating Bill, and in this Bill the Government and Income Tax Department are taking the opportunity to make alterations where there have been decisions against them in the courts, and there is no chance in the courts in future. The case mentioned in connection with Clause 9 (3) is one of them. Quite a new principle has been introduced in regard to trusts. It provides that income derived from a trust which has been made by a parent in favour of a minor child shall in future be reckoned as part of the income of the parent. That is put in to meet a case tried before the courts, which the Income Tax Commissioner lost. What has been the result of this? The money in the trust has disappeared. It has left the country. The very thing my hon. friend was after, and it is quite a debatable point, whether it is fair. There is no provision made in this clause for a case where a trust is in the hands of a trustee other than the parent. There is no provision whereby the parent can get a refund of income tax paid by him where the trust is in other hands than his own. Then there is one most important change which my hon. friend has not mentioned, or rather, he did mention it casually. It is in regard to a limited company. The dividend tax has been abolished, and the normal tax has been increased from a flat-rate of 1s. 6d. in the £ to a flat-rate of 2s. 6d. in the £.
The Committee of Ways and Means approved of that.
This is a tax of about 12½ per cent. on the income, and it is certainly going to have extremely important results, as I shall try to show. We have an important principle in our income tax, under which a company must pay the tax due on interest on debentures, as is laid down here, and then the company can recover, as in some cases they do, from the debenture holders, but what is the position? Suppose a company has a debt of £5,000, held in debentures. The interest at the rate of 6 per cent. comes to £300 per annum, and the tax of 2s. 6d. in the £ comes to £37 10s. or 12½ per cent. It may be that the interest is the sole income of the debenture holder. I know of a case where the debenture holder only gets £150 per annum and has to pay the tax at 2s. 6d. in the £, which is more than the income tax imposed up to £2,400. On the other hand, suppose another company has a debt of £5,000 which they have given a bond for. The interest at 6 per cent is also £300, and in that case the £300 is paid direct to the bondholder. There is no deduction of tax, and if it is the only income of the bond-holder, she will not pay a 6d. in income tax. It is very strange that there should be this differentiation, and that the debenture holder should be so severely taxed, while the bondholder gets off scot free. In the latter case, the interest received has to be brought up to the bondholders’ own income tax account. It must be clearly understood that a debenture is a security for a loan, just in the same way as a bond; but in the one case the law looks on the debenture loan as part of the capital, and they have to pay this 2s. 6d. in the £ on the total, amount, while in the case of the bond, the law looks upon the amount which is lent simply as a loan, and the company will pay to the bondholder the amount of interest due and have nothing more to do with it. This matter has become serious simply on account of the Minister, under this Bill, and his previous motion in Committee of Ways and Means, increasing the tax on companies from 1s. 6d. to 2s. 6d. in the £, and that is why some of us have raised a very strong protest. Debentures are a favourite method of raising money with a good many people, and are also a favourite method of investment, and are also looked upon as very safe. If a man holds debentures, he can pledge them or sell part of them. I am not exaggerating when I say that this heavy tax of 2s. 6d. on the £ is going to hamper enterprize in South Africa and make it difficult to raise loans, of which cases have already been brought to my notice; or, if you do raise a loan, you will have to pay considerably more in interest than you pay now. This 2s. 6d. means that the income of a debenture holder is reduced from say 6 to 5¼ per cent. That is the nett income he gets. This is going to discourage investors; because there is a sense of injustice about it, especially for the small man, and it is going to hamper industrial development. When some of these small concerns want to raise additional capital up to about £10,000, a favourite method of raising that money is in debentures, but when you have got to pay a tax of 2s. 6d. on the interest, it is a very different story. Instead of people who raise debentures being able to get money at 6 per cent., as they are able to do now, they will, as a result of this increased tax, be compelled to pay 7 per cent. which will undoubtedly cripple many enterprises and not tend to industrial or trade expansion. The Minister would do far better to charge a company 2s. 6d. in the £ on its profits and only 1s. 6d. on debenture interest. That would remove a sense of injustice which is felt particularly by the small holders of debentures. The general opinion among financial men in Cape Town is that this heavy impost is going to hamper small concerns when they wish to raise money. I understood the Minister stated he had no desire to tax capital, but I do not think he realizes the far-reaching effects of this proposal.
It is not an innovation.
No, but you are increasing it. What has brought the thing to a head is the increasing of the rate from 1s. 6d. to 2s. 6d. in the £. Another change the Minister has made, which I think is also a mistake, is the farmers’ option clause, which means that the farmer has the option when he takes stock to do it on the cash basis, and then he need not worry at all about the number of his stock. The other option is the adoption of the usual commercial method of taking stock at the beginning and end of the year. The latter is the only sound method; the cash basis is not sound.
The farmer need not take it unless he wants it.
Yes, but it is the easier plan. At first the farmer will not pay any tax at all, as he will put his profits into stock. Eventually, however, he has to pay not only normal tax, but some times super tax, especially in the event of a deceased estate being wound up. This system will encourage farmers to overstock, as they know that if they put their profits into purchasing new stock they can, for the time being evade payment of income tax. Clause 18 gives power to the Income Tax Commissioner to tax an oversea principal on the profits estimated to be derived from the sale of his goods in South Africa. Shipowners and the cable company are treated in the same way, and there is an almost identical clause in the New Zealand Act. In Clause 66 there is an important principle which I think is unjust, income tax being made a first charge on the assets of the people concerned.
It is in the existing Act.
Then it should be altered as it is unjust. There was a case within about 30 miles of Cape Town where a man during the boom times of 1920 made a lot of money, and was assessed for about £4,000 for income tax, but in 1921, when the sum became payable, the slump had arrived, and the assets disappeared, and—if I recollect rightly—the commissioner claimed the £4,000. Why should the State have a preference over the ordinary creditors? I believe the creditors in that estate only received 3s. 6d. in the £. These are just a few of the more important points in the Bill; there are other points which could be made, but one wants to be as brief as possible. The changes should receive great consideration. I regret that the Bill was not introduced earlier, for at this late stage of the session hon. members, who are growing weary, cannot give it the consideration it should receive.
The hon. member for Cape Town (Central) (Mr. Jagger) has referred to the fact that some of the changes in the Bill are rather important. I, however, wish to express my keen disappointment, and that of a large number of Government supporters, both in the House and outside, that in reality no important changes are made for the benefit of the vast majority of the taxpayers. More than half of the income tax payers will get no relief whatever under the Bill. I must say I look in vain to find anything in the nature of a material change from the policy we have been accustomed to during the last few years in South Africa. It is a grave reflection on representatives in the Cabinet that they have been able to use so little influence on the Minister. Last session we were told that it was impossible to make any alteration in the incidence of the income tax, and as the Minister had inherited the Budget from the previous Minister one could understand the difficulty. But the position is entirely different this session. We have been told by the Minister that it was impossible to make any alteration in the way of increased exemptions for the small income tax payers, without shifting the burdens on to another section of income tax payers, and that he objected to adopt such a course. Seriously I say that explanation is of no value at the present time. The present Bill and its provisions have been arranged by the Minister without it having been influenced or guided by the late Minister of Finance, and therefore we had a right to expect some alterations in the provisions. There would have been no real hardship in shifting the burden on to those people who pay on the higher incomes up to £5,000 a year and more. It is interesting to examine the proportions in which the taxable income is divided among the income tax payers and to note that as the amount of incomes increase, more and more of it concentrates in the hands of fewer and fewer people. The report of the Commissioner for Inland Revenue for the year 1923-’24 discloses some very interesting figures. The people who are in receipt of incomes up to £500 a year number 39,355, that is 50.26 per cent. of the income tax payers, and they are in receipt of 29.22 per cent. of the taxable income. Between £500 and £1,000 per annum 29,281, or 37.40 per cent. of income tax payers, are in receipt of 34.60 per cent. of taxable income. Between £1,000 and £2,000 per annum 7,146, or only 9.13 per cent. of the taxpayers, are in receipt of 18.07 per cent. of the taxable income. Between £2,000 and £2,500 per annum 1,003, or only 1.28 per cent. of the taxpayers, are in receipt of 4.18 per cent. of the taxable income. Incomes between £2.500 and £5,000 per year are enjoyed by 1,214, or only 1.55 per cent. of the income tax payers, and they are in receipt of 7.40 per cent. of taxable income, and those enjoying incomes of over £5,000 a year comprise 301, or only 38 of the taxpayers, and they are in receipt of 4.66 per cent. of the taxable income. The consideration in imposing taxation should not be the amount of money which the income tax payer pays to revenue, nor even the amount of his income. The criterion should be the amount of money left over to the income tax payer after he has paid his income. In the light of that principle it is obvious the man in receipt of an income up to £500 per annum is in a much worse position than the man with £5,000 a year, even though he pays 7s. in the £. I say advisedly, that the man in receipt of £5,000 per annum who wants more than £5,000 whilst there are people starving round him, is a hog. I believe there should not be any starvation in the country when there are people in receipt of incomes which are more than they require. As a result of representations which have been made to the Minister from the cross-benches, some concessions have been granted in the alteration of the abatement for children from £50 to £60 per annum. I say advisedly, that such a concession is just the same as throwing a crumb to the starving man whilst the rich man is left in undisturbed possession of the cake he is consuming. That will not satisfy the vast majority of people. I have already stated that the criterion should not be the amount of revenue derived from the income tax. There is another principle that should be considered in arranging your financial policy and making your income tax arrangements. Your financial policy and your taxation proposals should be so arranged as to secure the ultimate breaking down of the inequalities in the wealth distribution in the country. On the census of production and distribution which I have gone through I have found that the position approximately is that 5.1 per cent of the European population is in receipt of 77 per cent. of the wealth production of the country, and the remaining 94.9 per cent. is in receipt of the remaining 23 per cent. It is therefore necessary for the Minister to arrange taxation so as to break down this inequitable distribution. There would be a further advantage in altering the incidence of taxation, because it would enable the poorer classes to spend more on the necessities of life, and would prevent the richer classes from spending so much money on luxuries, and it would mean that more would be spent in South Africa and less overseas. I realize at this stage, that one can only register a protest on these matters without any hope of it being effective. As a friendly suggestion and not as hostile criticism, I would say to the Minister the least he can do is to make up his mind to meet the wishes of the vast majority of the supporters of the Government, not merely the members of the Labour party, and to see to it that there should be some definite change in policy, and that in future his inspiration with regard to financial policy shall come from his own supporters and not from his opponents or from the heads of departments who are actuated by old ideas. I want to say this, that unless some such change takes place in the financial policy for which the Minister is responsible, then the confused thought which at present is simmering in the minds of the toiling masses of this country, will gradually and assuredly be converted into a deliberate reflection that, no matter whether you have one side or the other in power in this country, the Government is only being utilized as the executive of capitalism and the supporter of the privileged classes.
Before I offer a few words of criticism on this Bill, allow me to express my keen sympathy with the Minister in regard to the speech just delivered from the crossbenches. Knowing that my hon. friend on the treasury bench holds the very contrary views to those expressed by the hon. member for Troyeville (Mr. Kentridge) the commiseration which I offer the Minister is all the more sincere. What shall I say to my friends sitting behind the Minister? The doctrine embodied in the speech of the hon. member for Troyeville is, in the first place, a doctrine of clear confiscation of the legitimate assets of citizens of this country, and in the second place, the hon. member has pleaded for the total reorganization of our whole economic system. I would like to know what would be the economic position of this country, what would be the confidence that this country would inspire among people who would in future endeavour to develop its resources, if this sort of doctrine were to be adopted as Ministerial doctrine. It is about time, after listening to a speech of that nature, that hon. members sitting over there and hon. members sitting on this side should begin to think seriously of the future of our country.
interjected a remark.
The hon. member for Bloemfontein (North) (Mr. Barlow) now and again gets an opportunity under the auspices of a member of the Ministry of educating the country outside. Not long ago he had an opportunity at Robertson. I think Ministers are doing no service to the people of this country by taking out on country platforms persons like the hon. member for Bloemfontein (North).
They have taken the hon. member for Troyeville (Mr. Kentridge) on occasions.
Yes, and I believe the hon. member for Troyeville. The sooner we recognize that we should endeavour to counteract with all the force and all the influence that we possess this sort of doctrine and also disparage the conduct of Ministers in introducing these Bolshevists and Socialists to the backveld the better it will be for our country. I always said that this combination is an unholy combination.
I am afraid the hon. member is rather wandering from the subject.
We are now busy taxing the people, we are laying burdens upon the people, and I am discussing the conduct of the Government in propagating through the members on the cross benches these doctrines through the back veld. I now wish to say a few words in regard to the proposed company taxation. On a previous occasion I have mentioned that I thought an exceedingly heavy tax is now being imposed upon companies, especially young companies. Apparently the hon. member for Somerset (Mr. Fourie) is now submitting to this sort of doctrine that you must tax companies, tax capital. Is he also getting permeated with that sort of doctrine?
“Contaminated” is the word.
The Minister now proposes to take away from the companies that exemption which they had under the dividend tax amounting to £2,500. In regard to big companies, they never felt it, because when the big companies were paying big dividends that £2,500 was under the existing law eliminated, but the small companies are very hard hit under the proposals of the Minister, by which they will have to pay a flat rate of 2s. 6d. in the £. I also referred at the time, as the Minister will know, to the fact that he is now proposing to tax private companies also on the flat rate of 2s. 6d. in the £. I pointed out on a previous occasion that I thought it should be the duty of the Government to encourage the flotation of private companies. Private companies give a stability to business, and that stability is made permanent after the death of partners in a concern. The other day I quoted as an example the case of a family man having his sons in partnership with him and floating a company. The Minister rather scornfully looked upon that point of the sons in partnership with the father. Apart from the family arrangement, there are businesses in this country which one would like to see permanently carried on, and the only way in which you can do that, in order to give stability and endurance to such a business concern, is to float it into a private company. Now the Minister comes along and says that in future private companies will also have to pay 2s. 6d. in the £. I think that is placing a very heavy burden of taxation upon that class of company, and you are in future going to induce people not to resort to that safe and stable mode of carrying on their business. I know in my own township, only a year ago, a merchant—he had been paying the ordinary tax of 1s. in the £—for family reasons put his concern into a private company. Even if this year he makes only £500, he will have to pay 2s. 6d. in the £. I ask, is it fair? It is practically the same business as before. Now, as a private company in which there is a family interest the family has to pay 2s. 6d. in the £.
His liability is limited.
Yes, his liability is limited, but his profit is limited. Let me say a word in regard to the farmers’ option. I represent a very big farming community, of grain farmers and stock farmers, and I can say here that the farming constituency I represent will not welcome the option. The Minister is now creating a competition between one farmer and his neighbour. You are creating a feeling of dissatisfaction among the same class of taxpayers which, to my mind, is entirely unnecessary.
But they have a free choice.
But I say that some people will exercise the option.
Why should they not be satisfied then?
Is it necessary at all? The Minister in his Budget speech clearly said that this is going to mean an increase of taxation on the farmers.
I never said anything of the kind.
The Minister distinctly said that a farmer who avails himself of the cash basis who is now on the stock basis is going to pay more.
Yes, that is another matter.
I want to say this, that under the existing basis the farmer can take into account all debts during the year, stock that have died off and all other losses. If a stud animal was to die the farmer can deduct the value of that animal. If he holds a public sale the proceeds of that sale are taken as part of his stock, but now the income tax commissioner can come along and say: that is part of your income. There has been very great trouble in the past in regard to these two options which were allowed to the farmers. What we farmers want is that the Minister should devise a more simple form of making a return. That is really the great difficulty with which our farmers have to cope. I know it is a most difficult matter to deal with the farmers’ income tax. I have no objection to the farmers being treated on a separate basis, but they would like the Minister to devise a different mode of return, a more simple mode. Our people feel that the form at present is too complicated, and they are not able to understand it when they make out their returns. There is one other point which the hon. member for Cape Town (Cen tral) (Mr. Jagger) referred to. That is the question of the taxation on debentures. I would like the Minister to refer to section 13. I would like to know from the Minister whether interest derived from municipal debentures is subject to this debenture tax. If so I would point out that this is laying down a tax which is going to hit very hard the different town councils in the Cape Province at any rate. It is very difficult for a town council to give a a mortgage bond. They are only authorized to issue debentures for their loans. If people investing money in town councils have now to pay 2s. 6d. in the £ on the debenture interest, I am afraid the Minister is going to make it very difficult for local authorities to obtain the necessary funds for their developments. Speaking again from a case in my own constituency, the Caledon town council is on the point of raising £30,000 for water works. They have to go to the public market on debentures. If the people who are on the point of advancing money on debentures to the town council have to pay on that interest 2s. 6d. in the £ it will be a serious handicap. It is a very important point, and I hope the Minister in his reply will refer to it. There is another point which came to my knowledge in actual practice. I quite agree with the Minister that the State had preference before under the old law, but the Minister knows that that income is not at once collected. A man goes insolvent and owes income tax to the amount of perhaps £200 or £300. The Government comes along and takes that in preference to all existing general mortgages. I see no reason why the Government should be placed in a different position from ordinary creditors. What reason is there that can be advanced? I therefore submit that in committee stage the Minister should agree to an amendment in that regard. These are the only remarks I have to offer in regard to this Bill, and I also wish to agree with the hon. member for Cape Town (Central) (Mr. Jagger), that it is very difficult for us at this stage, after this long session, and a large number of very important Bills still on the Table, to give proper study to an important measure of this nature.
I think the hon. member for Troyeville (Mr. Kentridge) has given us some enlightenment in regard to the policy which we learn from him we may expect from a different Government on the other side in the future. He enunciated a proposition, which I think it is worth while dwelling on for a short time—one of the most remarkable I venture to say ever enunciated within the walls of this House He referred to those “hogs” who earn more than £5,000 per annum who, he said, were hogs for the reason that they enjoyed that income.
May I interrupt to prevent any misconception. I said any men who had £5,000 a year and wanted more, while others were starving, were hogs.
He said the income of £5,000 should be taken from that man. That is not a chance expression on the part of the hon. member; but the socialistic policy which we all expect when he and those who think with him are able to exercise more power than they do at present. He said that policy should be enforced; because those enjoying in excess of £5.000 were those who squandered their money. That argument is precisely the one which was heard on all sides on the eve of the Russian revolution. This cry of my hon. friend against “hogs” is precisely the cry which brought about that revolution. Let us examine it in detail. In the case of the 301 people who enjoy incomes exceeding £5,000 a year, I presume he would transfer the excess to the coffers of the State, to lessen the liability for income tax of the other persons with incomes of lower amount. The amount so transferred would be about £1,000,000 and the policy which he puts before us as that of a future Government is that this million pounds will go to reduce the £15.000,000 which is claimed from those who have incomes up to £5,000 per annum. The fallacy underlying his argument is that those who squander incomes in excess of £5.000 are not to be found in South Africa. We have no “idle rich” leading luxurious lives in South Africa, but in place of describing these people as “hogs” I should describe them as the “busy bees” who, by their savings, and the investment of these savings, are the people we are relying on to-day to provide capital to develop the country. The hon. member’s theory is the very negation of that policy which we all believe to be the right one for the development of the country. It seems to me to be desirable that those outside the House should have some idea of the schemes which lie latent in the mind of the hon. member for Troyeville, who hopes one day to be treasurer of the Union, and who, apparently, has full designs on then particular incomes. Coming back to the Bill. I think the Minister can hardly be congratulated upon what I might call an extension of the attack upon companies with limited liability. We find in three directions this increase in the margin of difference in the rates between companies and individuals—I admit it is a difference to be found in the existing legislation—i.e., between the tax imposed on individuals and upon companies, but it has been lengthened, and the Minister has, in the first place, abolished the difference that has existed for a number of years in respect of private companies. So far as debenture interest is concerned, he has indicated that he still holds by the theory that, for some occult reason, the income of companies in this country should be taxed as if they were always fit for more taxation than individuals. The hon. member for Bloemfontein (North) (Mr. Barlow) referred to the argument that companies have a peculiar privilege, as he put it, in an interruption, a privilege of becoming “safe from bankruptcy”; because, as he stated, they had limited liability. And apparently for that reason, and I know of no other given in the committee of Ways and Means, we are to have the taxation on dividends increased from 10½ to 12½ per cent. I think there is an entire fallacy there. So far from it being a privilege to be incorporated as a limited liability company, the State makes a charge of 5s. on its normal capital for registration, and 5s. on the issue of its shares, and it is taxed at least as highly as an individual. Does the Minister realize that this principle of limited liability, which was evolved about 1845, and developed in England after 1862, chiefly promoted that wonderful commercial development that took place in England during that year.
It is very soulless.
We are not now solely concerned with sentimental considerations of that sort. We are considering whether a person, because he invests in a limited liability company, should be taxed through it up to the hilt and far in excess of what he would pay as an individual taxpayer. I think this is a fallacy, and unless something is done to stop it, you will find it increasingly difficult to find capital for developing this country. I want to refer later to one or two of those provisions which seem to me to increase those burdens on companies, but before doing that I would like to say to the Minister that he must realize that if we are going to give the impression in this country arid abroad that we are determined to tax capital in this manner; that we are determined to abolish preference, and now, to take the latest illustration, we are determined to tax people in another country who may sell their goods in this country, it will do harm to our credit, which he will find a tangible and adverse factor when he goes into the market of another country to find money for loan development. I refer to the tax which it is proposed to impose on those persons abroad who may sell goods for delivery in South Africa. When the Minister introduced the Bill, he referred to sales that were made in the Union by agents for foreign principals. But the Bill goes very much further, and introduces the principle that where any person in the Union receives a commission for the sale of goods, whether inside or outside the Union, then that agent shall be responsible for collecting income tax on the proceeds of those sales. For instance, if an agent books an order for £10,000 worth of machinery with his firm in London, and the goods are delivered, the principal will be deemed to have made an income of £500 on that particular order and the agent will be liable to be assessed on that if he happens to have in his possession assets of the principal. When people in England learn that, in addition to having to pay the British income tax of 4s. in the £, they will have to pay income tax in South Africa as well, there will be a very considerable outcry indeed. Will this not give rise to this argument that, if we tax a man abroad on goods delivered in this country, why, in turn, should not the farmers and other primary producers, who do not pay income tax in England, be taxed there as well? Our primary producers, so long as they conclude contracts for the sale of their produce here, are not liable to English income tax. There is such a thing as retaliation, and it is a very reasonable principle that, if we choose to say to the seller in England—I merely take England as an example, as she is the country with which we do most of our trade—
Why, in turn, should not a demand spring up that the primary producers in this country, who enjoy the benefits of that market, should not also be called upon to pay income tax there, through their agents there in England, on the sale price of diamonds, wool and other produce? After all, this tax will not bring in any income worth considering, but will cause a large amount of irritation. Think of the irritation and annoyance this will cause, coming on the top of other matters which have evoked considerable criticism abroad. It will hardly redound to our advantage, especially when we go on to the London market and try to raise money on the favourable terms given to dominion loans raised in England. As to the tax of 2s. 6d. in the £ on debenture interest, it is true that the House has adopted the principle, and we have had many cases showing how inequitable it is. If a company borrows money on bond no tax will be paid other than the ordinary income tax by the holder of the bond, but if the company raises money in the form of debentures a tax of 12½ per cent. will have to be paid. This, as has been pointed out by the hon. member for Cape Town (Central) (Mr. Jagger), is going to make loan money particularly expensive for companies. At present there is a difficulty in investing money. First mortgages are not offering so readily to-day, and people are being asked to invest in industrial concerns. But any company going into the market to-day will have to pay a higher rate of interest in order to cover this additional tax.
Is that not the case in the case of shareholders:
I am speaking of debenture interest.
How does the position of the debenture holder differ from that of the shareholder?
The shareholder takes the chance of making a bigger profit.
The debenture holder’s position is more secure.
Yes, but why charge him 12½ per cent. when, if he lent the company money on a mortgage bond, he would only pay at the normal tax rate? The Minister may say that this having been adopted by the House it is too late to remedy it now, but cannot the Minister make an exemption in the case of the small taxpayer, who derives a limited income from this class of security? The Minister said he thought it would be impossible to make a refund, but I do not understand why that should be so. I propose to submit in committee, an amendment in respect of debenture interest which does not exceed a certain figure, entitling the holder to a refund so as to bring the amount of tax paid by him down to the figure he would have paid at the normal rate on his total income. What would be the practical difficulties against doing that? Why is it impossible to give effect to that particular principle? It would make no difference to the Minister’s revenue, as I am satisfied that the £200,000 which the Minister hopes to secure will be only a portion of the total increased revenue under this head, which will probably amount to £350,000 or £400,000. The Minister has been very conservative in estimating that he will receive only £200,000 through this alteration of the law. The system of making refunds is well-known in the United Kingdom, and refunds are made to persons who pay income tax in the dominions. What would be easier in this Union?
Do you know what it costs them?
I don’t see how it can cost very much. Each taxpayer has his own folio. When the assessment is made the particulars must show what refund is coming to the taxpayer. The additional cost to the Union would be when after the assessment had been made and the tax paid the department receives an application for a refund, and in such case the department would refer to the file and ascertain if it were due, and if so would send a refund warrant to the taxpayer. That would not mean a very great deal of correspondence. If the Minister thinks the taxpayer should be responsible for the extra cost, let Kim deduct 5 per. cent. from the refund. That would be a simple matter, and I venture to think that charge would far exceed any expense that would have to be borne by the department. I hope, in the committee stage, to table an amendment dealing with that, and I ask the Minister to give it consideration, because I appeal to him to-day on behalf of a large body of comparatively small investors, who have invested money in debentures in South Africa without any knowledge of this drastic alteration in the taxation, and who find themselves now faced with another 5 per cent. after having paid only 7½ per cent. under earlier taxation. I should like to refer to a new provision contained in the Act whereby the Minister proposes to add back to the revenue of parents all income derived from trusts which they have created in favour of minor children. If a parent has settled £10,000 on trustees for a minor child that income will be taxed in the hands of the trustee, and the Minister proposes now that the income shall be added back to the parents’ income and the parents will have no right of recourse to the trust fund. Why does the Minister desire to do that? It is a far-reaching step. He said that in the past there has been evasion just as there had been so he said, evasion in regard to bonus shares. I cannot understand, if a man does a perfectly legitimate thing in making a donation to his children, why that should be regarded as an evasion. The Minister feels it is evasion, because in the case of wealthy parents the liability for super-tax is diminished. The Minister will create a very grave hardship. Why, I ask him, does he select a donation to a minor child? What is the logical difference between a minor and a major child? The position of the law as it stands now in respect of such donations is that the parent has no control of the income, which may be capitalized for the benefit of the children, and if it is added back tn his own income he may have to pay the tax, if his own income is insufficient, out of capital. Why should it be called evasion? On what principle does the Minister go? The income in the hands of the trustee pays the full rate of tax. I suggest to the Minister that, if his department has advised him that there are numerous cases of this kind, he has no right immediately to conclude that it has been done purely for the purpose of evading payment of the income tax, any more than the Minister should assume that it was done for the purpose of avoiding death duties. If he thinks it is evasion let us have some evidence on the point. It is unreasonable to penalize persons who have acted fully within their rights in parting with their assets. It cannot be put right once they are invested with the trustees. A donor may have done this 10 or 20 years ago, before there was any income tax law. Surely, I say, it is unreasonable to say he must now find the additional tax.
No, we will let him recover it. It is not of much importance because it is nearly always the same person.
That is where the Minister is wrong. It is legitimate to make a donation on a footing that the parent himself is trustee, but where other persons obtain control of the income, how can the Minister say it is the same person.
There are very few of these cases; it is done for one purpose as a rule.
If the Minister had taken some evidence from his department on this point he would have found that he is wrong. I think the officers of the department will show him that it is a difficult thing to prove that a donation is made in order to get a reduction under the income tax, and therefore impossible to hold that the object is to evade the law. If the Minister is bound to introduce this principle to make A pay the debt of B, on the supposition that in the past evasion of the law is concerned, then we are entitled to some evidence to show that there has been sufficient evasion to bring about this alteration of the law introduced in this section. We have also the case of the issue of bonus shares where the Minister is running against a common practice which has been in operation in England and has been found in the courts there to be legitimate, and which is nothing more than a distribution of capital. Why should a man be liable to pay in cash income tax on shares where he gets two pieces of paper instead of one as before. I have seen a case like this occur in practice. A man may only have one source of income and may receive a distribution in bonus shares on a considerable sum representing the profits of a company which has been capitalized and which they cannot distribute in cash. The man must realize capital assets in order to pay the tax on these bonus shares.
Why shouldn’t they distribute in cash?
Because they may not have the cash. They might have had their money locked up in stock, I might tell the Minister that this is something which, since 1920, has been very conspicuous in the affairs of companies in this country. He will find innumerable cases, if he enquires in his department, where companies have not been able to pay dividends, because their money was locked up in stock. To create a position under which it is possible to control a man who receives pieces of paper which are assumed in law to be income to realize capital assets in order to pay super tax in cash is certainly a great injustice. There is one further point I would mention. The Minister, in providing for the setting off against super tax of losses on normal tax account, has done something for which, I think, a number of people will be grateful, and has remedied what has undoubtedly been a serious defect in the Act since 1917. This matter has been brought to the attention of Parliament during the last two years, and there are cases where these assessments have been made, and, in fact, have been paid out of capital. I would like to ask the Minister whether, as a matter of departmental administration, he will be prepared to authorize refunds to be made in cases of that kind.
How can I alter the law departmentally?
The Minister could introduce an amendment in this Act so that, departmentally, where the department was satisfied upon the facts, a refund could be made.
We cannot go back.
I do feel that this is a point which the Minister should not dismiss so lightly from his mind. Surely it is reasonable, where a protest has been made, and the department has recognized the hardship, but has had to carry out the law, that the Minister should feel disposed in this Act to make some provision, so that his department, as a matter of administration, where satisfied upon the facts, could make this refund. The other points which arise in connection with this Bill are very largely Committee points, and I would like to close merely by asking the Minister, when this amendment is put on the paper in reference to the position of the small debenture holder, carefully to consider it.
It has been said that if you go far enough east you come west, and the hon. member for Cape Town (Gardens) (Mr. Coulter) has completely proved that to be a truism, because by going extensively in the direction of relieving capitalism he has proved what we have been contending here all along, that socialism is correct, or that the socialists who advocate socialism are correct in their advocacy. The hon. member has now definitely proved what we have been contending, that capital is profit, that the capital of to-day is the profit of yesterday.
On this occasion the hon. member (Mr. Coulter) wholeheartedly throws himself into our arms. We welcome him, and we hope he will stay with us. We always listen with pleasure to the hon. gentleman and his scholarly speeches. It is, therefore, with the greater regret that I find that he should have thought it necessary to misrepresent the hon. member for Troyeville (Mr. Kentridge). He said that my hon. friend here had stated that a man was a hog who enjoyed more than £5,000 a year, and he persisted in that, despite the explanation of my hon. friend. What my hon. friend said was that when a man with £5,000 a year wanted more, hoped to get more, strove for more, reached out for more, while others are on the verge of starvation, he then is a hog. I think that the hon. member for Gardens will realize that, at all events, he made a mistake when he turned upon my hon. friend (Mr. Kentridge) and, perhaps unwittingly, misrepresented what he said. There was one very delightful thing which the hon. member for Gardens did this afternoon. He proved conclusively that he has been studying the question of Russia. That is always delightful reading. I do not know whether he pursued his studies sufficiently far, but if he didn’t. I hope he will.
I call attention to the fact that there is no quorum.
House counted, and Mr. Speaker declared that a quorum was present.
If the hon. member will pursue his studies into the question of Russia and its present position, he will find that, despite all the misrepresentation that has been going on, there is no doubt that the alteration in regime, in method, in system that now has taken place in Russia has proved to be a gigantic success. One other thing which the hon. member for Gardens said struck me as extraordinary, and I think it must have so impressed hon. members of this House, even those on his own side, and that was when, apropos the remark of my hon. friend here (Mr. Kentridge), that a man receiving £5,000 a year should have the surplus of that £5,000 extinguished by taxation, he (Mr, Coulter) said that there were no “idle rich” in South Africa. It is the joke of the session unquestionably. I hope the hon. member is possessed of the saving grace of humour because he, even at long last, will probably go home and laugh at his own joke. There are no idle rich in South Africa! Therefore he considers, I suppose, that every man who is receiving anything above what we look upon as necessary for life in South Africa is a man who, to use his own words, is a busy bee. Incidentally, may I say that some of these busy bees sting, and very sorely, those poor unfortunates who are not the drones, but the worker bees producing the honey. It is a joke to say there are no idle rich in South Africa as a result of the activity of those who are engaged in industry in South Africa. What is the position? In his endeavour to impress upon the House that there are no idle rich in South Africa. I suppose he had in his mind the idea that those who are receiving £5.000 or more—and I will not subscribe to the idea that a man earns £5.000 a year; it is usually done for him by someone else, who gets very little in the process—that the income was pretty well always being paid out as money that was overplus from any particular industry. He omitted to mention some very important facts. Perhaps coincident with the payment of the £5,000 the shareholders may be getting their dividends. He omitted to tell us all the methods of watering capital that are employed. I want to say this to my hon. friend who is so very much concerned with the possibility of taxation of bonus shares, that these shares are not capital. They only become capital after they are bonus shares, but originally they are profits produced by those engaged in the industry. The argument he himself uses rather stresses the point. He said they cannot be paid in cash, because that money may be invested in stock and, therefore, could not be realized. Does not that carry with it the pre-supposition that in turn it is earning dividends by being employed somewhere else, and, therefore, is fit subject for taxation directly? Perhaps the Minister might take the advice of the hon. gentleman and wait a little bit to see what they have produced in dividends and tax on the dividends as well. I hope the hon. member for Beaconsfield (Col. Sir David Harris) will not think I am making an attack on any individual. I am not going to do so, but I must read what has been placed in my hands and what strikes me as a most remarkable contrast. There are no idle rich in South Africa! There are no idle rich who have drawn their finance from South Africa! Here I have—no doubt it has been arranged and collated—something which makes a very pretty contrast apropos of that, statement that there are no idle rich—
That is one side of the picture. Here is another—
This is part of the evidence in an enquiry into a suicide. I will not read it all, but it transpires that this man committed suicide because he had got so tired of his life and of the suffering engendered as the result of having contracted miners’ phthisis, possibly in the course of producing some of this £250.000. That is the contrast I want to put to the House. I remember Mr. Solly Joel coming out to South Africa during the war period and having a Conference with—
and issuing certain instructions to “my goldmining managers.” Later on, he had interviews with “my diamond-mining managers” and gave them certain instructions. I think I am quite correct in saying that this man, who got tired of his life and his suffering through contracting miners’ phthisis, may have contracted it in the course of getting some of the £250,000 that provided the jewels worn by this estimable lady. When you are talking about the iniquity of taxing so heavily those who are in receipt of an income—I say it is not earned—of £5.000 and over, and when the hon. member for Gardens (Mr. Coulter) turned upon the hon. member for Troyeville (Mr. Kentridge) in the sarcastic manner in which he did because he dared to suggest in this House—not for the first time—that you should extinguish the overplus of £5,000 by means of taxation, I want the House to remember this contrast, and that there are men, women and little children who are starving, while the hon. member pleads for letting off taxation those getting over £5,000, who are not “idle rich,” but are “busy bees” of commerce and industry. You will fill their mouths, if you take off the overplus of production which the man who produces does not receive, but which goes into the pockets of those people who my hon. friend objects to being called the “idle rich.” There are all these methods by which leakages take place which, if they were diverted into the correct channels would go a long way to evening up the living conditions of those people who are on the verge of starvation in South Africa. Again, I want to express my great regret that the treasurer has not seen fit to keep his election pledge by raising the exemption to £500.
What election pledge? I didn’t make any.
I hope my hon. friend will forgive me, but he must not shuffle out of it. Let us be perfectly honest. Whether my hon. friend did, from the public platform, or by manifesto, give that pledge, is not the point. The Nationalist party and the Labour party, as a party, gave pledges in that direction.
Because my hon. friend did not do so, it does not follow that he is not bound by that pledge, and I hope, between now and next year, he will give his most serious attention to the advisability of raising that limit of exemption.
I hope not.
The hon. member had better be careful. I for one, am not going to subscribe to expressing one view to the electorate, whether in the form of a pledge of a printed manifesto, and in the House, legislatively express another opinion. It is immoral, and I am not going to stand for that. I think my hon. friend over there is bound equally with the treasurer, and with my hon. friends in this corner, and I want them to realize their responsibilities to the electorate. I know it is too late now, because all the financial plans are made, and everything has been based upon this method and amount of collection, and, therefore. I am not going to be so foolish as to ask the Minister to make an alteration in his plans at this late stage in the session. I think the hon. member for Cape Town (Central) (Mr. Jagger), who has interjected just now, has called me an Mbonga, but I do not think that can be laid to my charge. I do not think we can discuss this matter as lightly as the Minister proposes to do. I hope that the Minister will consider this question, and in framing his budget proposals next year will decide that this exemption in the income tax has got to be altered. Let him do it by steeper grading. He could have done it this year; but I want to give him this warning, that these representations will be made very forcibly indeed between now and next year. There is another matter. The Minister did me the honour to recommend to the Governor-General that I should form one of a commission to enquire into pension grievances. That commission was appointed, and we went as thoroughly as we were able into the various grievances, and we made certain recommendations, and I regret to observe that practically no notice has been taken of the recommendations of that commission. I do not claim all the intellect of the country; but, having done my work as honestly as I could, in collaboration with other hon. gentlemen, this seems to me extraordinary.
The hon. member cannot discuss this question under this Bill. It has to deal merely with taxation measures. The hon. member can discuss the matter on the second reading of the Appropriation Bill.
In view of your ruling, Mr. Speaker, I will not proceed further with the question, but the Minister might consider the matter in the meantime, and I will take advantage of the Appropriation Bill to bring up this matter, which is causing a tremendous amount of heartburning. At least two of my colleagues are not at all satisfied at the way in which the Minister has given consideration to the recommendations.
I was one of those who hung on the words of the hon. member for Troyeville (Mr. Kentridge) and listened to his speech with the usual care that I devote to speeches of that hon. member, and I could not help asking myself: What degree of sincerity was there behind those words?
I am sorry to interrupt the hon. member, but he must not attribute want of sincerity to other hon. members.
I am not attributing insincerity to the hon. member, but I was asking myself the question, how much sincerity there was behind his words; but I will not pursue that matter, But the hon. member for Troyeville always appears to me to be living a kind of Dr. Jekyll and Mr. Hyde existence. The Dr. Jekyll part of him is this: He is a comfortable, middle-class person, with a very sound commercial practice at the side bar. Occasionally the Mr, Hyde part emerged and we hear speeches such as we have listened to this afternoon. He says that if a man earns more than £5,000 a year and is not prepared to forego the excess for the benefit of the starving, he is a hog. I have no doubt whatever that there is a large number of people in this country who would put the limit very much lower than £5,000. Let us assume that the hon. member for Troyeville (Mr. Kentridge) earns £2,000 a year. A large number of people would say that anyone who earned £1,000 and is not prepared to forego the excess for the benefit of the starving is a hog. Whether one is a hog in the eyes of the starving multitude is very largely a matter of degree. I have not the slightest doubt that a large number of people think the hon. member for Benoni (Mr. Madeley) is a hog because he earns more than £500 a year. When we start hurling accusations of hoggishness about I wonder where we are going to fix the figure. I listened to a number of the friends of the hon. member for Troyeville speaking at the bottom of Adderley Street last Sunday night, and the language used was precisely the same that he has used.
I was not there.
The hon. member would not be allowed to go there because he would be called a hog. They would say of him—
Those people used the same language as he has used this afternoon, only they referred to the Labourites as a bourgeois party battening on the “under-dog” of this country. I suggest to the hon. members for Troyeville and Benoni that instead of indulging in this form of soapbox oratory, which cuts no ice and has no practical effect in altering the burden of taxation, they should ask themselves in what manner the Bill can be amended so as to lighten the burden on the smaller and poorer family man. I am going to make one or two suggestions in that direction in committee, and I hope I shall have the support of my two hon. friends. If these hon. gentlemen will not support me it is fair to draw the inference that what they have been saying here this afternoon is so much window-dressing and eye-wash to enable them to save their faces with their constituents. It has always struck me as a serious anomaly that if a man owns his own house and lives in it, he need not bring the, rental value of it up in his income tax return, while a man who is not fortunate enough to own a house, but has to hire one, is not allowed to make any reduction for the rent he pays. I raised the point in 1919 when a discussion on this matter crystallized in an amendment which the hon. member for Cape Town (Central) (Mr. Jagger) moved, and which I propose to move again this session. The amendment is to add to the legal deductions from the taxable income any sum in excess of £120 which shall have been paid as rent for a dwelling-house actually occupied by the taxpayer or his family.
Quite a good amendment.
That protects the man who has not saved enough money with which to buy a house. In 1919 the Labour members supported that amendment. I invite the hon. member for Troyeville, instead of ranting and fulminating, to combine with me in doing something practical so as to reduce the burden of taxation on the smaller family man. The second practical amendment I want to suggest is this. It has struck me as an extraordinary anomaly that when I own a house and my business calls me away to another part of the Union and I let the house, I must bring up in my income tax return the net rent I derive from the letting of the house. But if I hire another house I am not allowed to deduct the rent I pay for that house. That happens annually to every member of Parliament and civil servant who comes down here from the north for the session. It might also happen in case one occupies another house in the same town, because one’s own house might have become unsuitable. Then I want to ask the Minister what is the intention of sub-section (d) of Clause 9, which is as follows—
The old Act does not contain that provision. Is the effect that whereas a person who received a pension went to England or elsewhere did not pay income tax except in the country in which he was residing, now he will have to pay income tax both here and in the country in which he lives? If that is so I want to be sure of the facts before I indulge in any comment on it, but if it is so, a grave injustice is being done to this class of person. Early in the session I asked the Minister if there was any truth in the rumour, published in the Government official organ at Pretoria, that a law would be passed compelling pensioners to reside in this country, and the Minister said there was no such intention, and at a later stage he said that such a proposal would be grossly anomalous and unfair. Does this not partake of the same principles because these people come here under definite contract?
The hon. member has indicated what he intends, and it would be more convenient to discuss the matter in committee.
I hope the Minister will tell us what he thinks in this regard. I am sorry my friends on the Labour benches are not here, because I was going to suggest another improvement in the Act which. I think, would have had the cordial support of the Labour party. It is a curious filing, when a measure is under discussion, which is going to cast any burdens on the people, the Labour party represent, that there are only two members of that party in the House at the moment. I am sorry the hon. member for Troyeville (Mr. Kentridge) and the hon. member for Benoni (Mr. Madeley) are not here, because I, was going to invite their support to an amendment I was going to make. If the Minister will turn to the definition of dependents in section 72, he will find a dependent is defined as follows—
The definition is far too narrow, and I ask the Minister to accept an amendment widening that definition. There is a large class of dependents who do not come under this category. Even members of this House Will have had experience of eases where a sister, a married sister deserted by her husband, a sister who is left a widow or an infirm brother, are left as de pendents, but they do not come under these two categories. When you are taxing the people you cut down this definition of dependency to an unreasonable and indefensible degree, but if it comes to a question of granting pensions and finding dependents for the purpose of granting relief a wider definition is accepted. In the Workmen’s Compensation Act there is a definition of dependents which includes as dependents, in relation to the deceased workman, such members of the workman’s family as were wholly or in part dependent on the wages of the worker at the time of the accident causing his death. The definition includes son, daughter, stepdaughter, stepson, father’s mother or father, stepfathers and so on. If it is fair to saddle an employer with liability to compensate a dependent, and you define a dependent in these wide terms, surely it is fair to accept a similar wide definition in this other case. We do the same in regard to the War Pensions Act. In the War Pensions Act we define a dependent in extremely wide terms, and we give relief where their actual dependency was proved, no matter what the circumstances were. If the taxpayer has dependents, and can prove dependency, then he should be entitled to the £30 abatement, and I hope in committee the Minister will accept an amendment on these hues. I am speaking under a disadvantage because this Act has come at the tail end of an unprecedented heavy session: it is an Act of 72 clauses with a large schedule, occupying 59 pages of print, and has been given to us at two days’ notice. I imagined we were only going to have a short amending Act, judging by the discussion in the Committee of Ways and Means. I did not understand we were going to have a consolidating Act, repealing the existing Act, and, therefore, I don’t think the Minister has been quite fair in this matter. If it had been a short amending Act, no legitimate exception could have been taken, but when we find on cur table, added to the already enormous bulk of draft legislation we have had to consider, a consolidating Act of this nature which brings within the purview of this House the whole of our income tax legislation, and invites us to amend it where necessary, then I think we ought to have had greater notice. If the Minister takes the second reading this afternoon, I ask him to allow a longer period to elapse before the committee stage.
The hon. member for Benoni (Mr. Madeley) is always very honest in his expression. He gladdened my heart a few moments ago when he mentioned a lady in England who was wearing diamonds to the value of £250,000. I wish, in the interests of this country, all millionaires wives would wear diamonds to the value of because it would give a stimulus to the mining industry of this country, and allow us to employ more white men. I have not yet risen to the exalted position of the hon. member for Troyeville (Mr. Kentridge), who speaks for the majority of the members sitting on that side of the House and the masses outside this House. I am endeavouring in my humble way to protect the diamond mining industry, and I am just like the voice crying in the wilderness. The hon. member for Troyeville has pictured a state of affairs which would arise if people in this country, having an income of over £5,000, were to be deprived by the State of the surplus. He must labour under the hallucination that this is the only country in the world. There are other countries where these people can live, and there are a large number of people in the world with large incomes who are living in countries that tax the individual as little as possible. They have gone away from then own countries because they cannot bear to pay the taxation.
Jersey and other parts. I dread to think what would become of this country if the policy enunciated by the hon. member for Troyeville is carried out If you deprive all the wealthy people of their wealth—and that is what it would amount to—there would be no necessity for a colour bar nor for a minimum wage Bill, nor a conciliation Act. Almost everyone in this country would be reduced to one level, and the white man in this country under those conditions would have to work for the same wage as the natives are getting to-day. If you take capital out of this country, what is going to become of it? That is the state of affairs that would come about if you took capital away from South Africa. Hon. members have complained very bitterly of the flat rate of 2s. 6d. in the £ which has been imposed in this Bill. How much greater grievance then must I have when a mining company, instead of paying that rate, has to pay 3s. in the £. My indignation should be raised about 20 per cent. above the indignation of those who pay 2s. 6d. Now I would like to call the attention of the Minister of Finance to Clause 12 of this Bill, which states that no deductions shall be made on incomes carried to any reserve fund or capitalized in any way. Under the existing Act I think the Commissioner of Inland Revenue has several times, or at any rate he has the power, to impose a dividend tax on any amounts set aside for reserve if, in his opinion, the same is in excess of the companies’ legitimate requirements. I think that is perfectly fair, because if a reserve fund is created in any company that reserve fund is not kept in a box locked up, but it is invested in gilt-edged securities, and it earns an income and on that earned income it will pay a 15 per cent. income tax every year. I will take a company like De Beers. I must apologize for using the name of De Beers so often, but I can concentrate my thoughts more upon the subject, because I am better acquainted with that company than I am with any other. We will say that over a period of ten years the De Beers Company sets aside £100,000 a year, which is not an exorbitant amount. At the end of ten years that fund. £1,000,000, would earn at the rate of five percent. £50,000 a year. On that £50,000 a year the State would derive £7,500 per annum. According to this clause in the Bill, companies that create reserve funds will have to pay doubly, because if, instead of paying that money to reserve fund, they distribute it to shareholders in all parts of the world, it will be non-existent, and the State will get nothing.
The shareholders will get it.
Yes, but they don’t live in this country. You must remember that the State is far and away the largest shareholder in all the mining companies in South Africa, and it is just as much to the interest of the State as it is to the interest of the shareholders that these companies should be in a strong financial position and in a secure condition. If they paid out all their earnings in dividends they might, in a bad year or a year of difficulties, or a set-back, be earning nothing, and the country would be getting nothing, and it is, therefore, to the interests of the State as it is to the interests of the shareholders that a reasonable reserve—not a reserve to deprive the State of its revenue by way of taxation—should be set aside for a rainy day, because the Government is a sleeping partner in all these companies, and the State has much more interest in the long life and progress and earning powers of these companies than the biggest shareholder. I look upon this clause as a tax upon prudence. I have not yet heard any Minister—I am not referring only to the present Minister of Finance whom I presume I may call my hon. friend—I have never heard any real reason given by any Minister for differentiating between mining companies and industrial companies. Under this Bill a mining company will have to pay 15 per cent. oil, its profits, while industrials will pay 12½, Mining. I think everybody will admit, is highly speculative, while industrials, not always, but as a rule, are safe and sound. The only reason I have ever heard for imposing additional taxation upon mining companies was when I put a question to a friend of mine, who is a very careful man, and who only puts his money into gilt-edged securities—Government stocks. He said that people who would be so foolish as to put their money into highly, risky undertakings like mining should be more heavily taxed than the careful man. This Bill provides no deduction for a person who derives his whole income from mining companies. If a man derives £800 a year from mining shares, the State derives from him £120 per annum. The same income of the same man from mortgages, loans, rents, or ordinary business would have to pay about £15 per year. This is manifestly unfair and inequitable. And yet this is a mining country! There is no provision in this Bill allowing a taxpayer to deduct from his total assessment the 3s. in the £ paid by mining companies in which he is a shareholder. This certainly should be provided. Take, for instance, a man who has put his money exclusively in mining. Under this Bill in a certain event, he will pay 10s. in the £, when the Act itself provides that no person shall pay more than the maximum tax of 7s. in the £. As the 3s. will be deducted from shareholders at its source, he will have to pay 10s. in the £ on his income. In England it is quite different as the hon. member for Cape Town (Gardens) (Mr. Coulter) mentioned. If a taxpayer pays more than be should pay under the ordinary income tax, that amount is returned to him and, under no conditions does he pay more on his income tax than he would under ordinary conditions, no matter from what source he derives his income. I do not see why you should differentiate between diamond-mining and other companies. After all, the diamond mines saved South Africa from impending ruin 50 years back, and now we are being rewarded with hostile and vexatious enactments and heavy differential taxation. From what I have heard in this House, one is almost led to think that some members, if it were possible—I do not include the Minister—would delight in extracting from the shareholders of diamond mining companies more in taxation than they actually receive in dividends.
I think the hon. member for Troyeville (Mr. Kentridge) sounded a very righteous note which has struck right home in the arguments this afternoon. There is no doubt we are not satisfied on these benches with the incidence of this taxation, and we are perfectly within our rights in expressing the views of those we represent and expressing the hope that it will be remedied by and by. It is the incidence of the taxation that is wrong. We have put our views forward perfectly clearly, and taunts and jeers from the opposite side leave us perfectly unmoved, because they know, as we know, that we are perfectly prepared to make sacrifices, and those we represent are prepared to do so, to get free from the dominance we existed under for many years. We are perfectly content to keep this Government in power so as to show we require some change in this country. The hon. member for Bezuidenhout (Mr. Blackwell) has taunted us with soap-box oratory. I return the compliment by saying that he is always mounted on the cash box. There is this about the soap-box, that it does represent the people as a whole, but the man who speaks from the cash box represents a small but very powerful influence, which is certainly not an influence which makes for the prosperity of this country. There have been taunts with regard to Russia and Bolshevism and socialism. Let hon. members opposite remember that Russia has gone through its blood bath simply because no notice had been taken of the demands of the people in regard to their desperate condition. The lesson of France in the great revolution, the lesson of the Russian revolution, all teach the same lesson of the danger of despising the wants of the community and imagining it will always be possible to ignore them. I think it is Tennyson who puts it so clearly—
Glaring at one who nods and sleeps beside a slowly dying fire.
I am glad that someone like the hon. member for Troyeville (Mr. Kentridge) is not afraid to bring out from time to time a clear warning of the danger which has resulted in such disaster in other countries. It is the question of the adjustment of taxation in which we feel such an interest. It is all very well to talk of taxation of those best able to bear it being confiscation of wealth. So far as that is concerned all taxation is confiscation. Indeed taxation is the appropriation of that portion of the product which is required for government. This brings me to a fact which the hon. member for Beaconsfield (Col. Sir David Harris) might well take to heart. It is this. If you have on the one side the people who have nothing but their wants, and who have also the power to vote, and on the other side those who are possessing themselves of the assets of the country, then there is going to be an inevitable conflict, and those who have the votes are going to take from those who have the assets. When you talk about confiscation it is the confiscation of what people earn by these vested interests that is really confiscation. If this country had gone about business in a sensible way we should have required very little taxation. If we had stuck to our mineral wealth and had kept the assets of the country for the State there would have been very little taxation: but these assets have passed away into other hands, and these big interests are able to secure the brains of other people to defend those assets. It is because of that position we have all this unrest with regard to the burden of taxation. Those who have possessed themselves of the assets must be prepared to pay the major portion of taxation in a country like this. Otherwise they will find the rest of the country saying—
It may sound Bolshevistic, but the taunt will not frighten the great proletariat. Unless it is made sure that those who have secured the wealth of production pay their fair share of the burden there will be an uprising of trouble in time which can only be prevented by wise legislation. It is because of that unsound condition in this country that we have the present difficulty. There is always talk of scaring away capital. We have created our own in South Africa, and it is being taken away at the rate of £17,000,000 a year—the excess of exports over imports. The hon. member for Beaconsfield (Col. Sir David Harris), fitly representing a great corporation, should realize that he, like many others, and vastly to their credit, came here with empty pockets. I think there is a little book in the library which gives an interesting account of the early career of the hon. gentleman, when he took a lively interest in a certain class of the population of Cape Town, and on some festive occasion he may choose to tell us whether this book is well and truly written.
It was in 1872, when I was a boy. There is a little bit of exaggeration in detail, but it is true in fact.
Well, members can read for themselves; the hon. gentleman represents a large class in this country who talk of wealth that has been made as if they made it, and of capital as if they had introduced it. But fewmen have introduced capital into South Africa; so that the wealth we are now asking to be taxed is wealth that was first of all in South Africa, and has been further created by the energies and industry of others, and there have been fortunate ones who have managed to grasp the results of this common labour. But while members opposite congratulate the Minister on being orthodox and therefore entirely satisfactory to them, they must be prepared to find that things will not stay where they are, there will have to be bigger exemptions in regard to the working classes and a heavier load put on those who can bear it. What is not brought out clearly, and should be brought out clearly, is that what we fail to hold in this country goes to a great and greater extent overseas. It is an arguable proposition as to how much goes overseas; but that we are exporting £17,000,000 above our imports shows there is a steady abstraction of wealth, and if you have anything to do with companies you will find that not only is a large amount paid in dividends directly overseas, but a number of people overseas collect their dividends here, and that is nut down as dividends retained in the country, but it is not so. I hope the Minister will take pains to advertise properly and thoroughly and continuously that the amount of taxation we put on oversea capital here is deducted from income tax paid in England. That brings out juridly the whole question of our being stopped from allowing the Transvaal Provincial Council to tax the profits of gold mines. The amount that we took off the profits of the gold companies was merely picked up in England, because as it was deducted from the dividends and profits in this country there was a rebate allowed on the other side. Why then should not we take it? We are building up this country for the benefit of the empire at large as well as for our own advantage, and therefore we should keep steadily in view, in regard to this taxation, that it is no burden on shareholders on the other side, because They get a rebate from their own Government in regard to this imposition. The question of weakening the vested reserves of these companies leaves one quite cold. Like the company represented by the hon. member for Beaconsfield, concealing in every possible way their profits—
That is not true. The De Beers company do not conceal their profits. You concealed something in connection with the Roberts Victor.
I am surprised that the hon. member is still so sensitive and thin-skinned.
I sit here as a director of De Beers and will not allow you to say what is incorrect. You stated that we were concealing our profits.
I am satisfied that amongst others De Beers Company has concealed profits. Does anyone suppose that in writing the whole of the vast and valuable equipment of De Beers down to £1 that the company is not concealing profits? I know the hon. member may say this fact has been published, but it is a deft concealment of profits, just as it is when companies issue two shares for one and so double their nominal capital to conceal the fact that they have made very big profits. This is a common practice, and has become so common that the suggested Act for public directors I hope will come into practice, so that the outside public may know what concealment of profits goes en. I wish the Minister to realize that while we are going back from this Parliament to support this Government through thick and thin, we are not satisfied in regard to the incidence of taxation in his income tax provisions, that we are going to press still for what we want, and are not to be deterred by taunts from the other side that we are socialists and bolshevics or anything of that kind. We know the people we represent and we are going to stand by and support the Government in their pathway of reform whilst they carry out the desires of the people.
I shall not detain the House long. I know that everything has already been decided upon, but I only wish to make an observation with reference to what the hon. member for Bezuidenhout has said. He criticized the Minister for coming to the House with a consolidated Bill. I congratulate the Minister on it and hope that this will always be done in the future in amending legislation, because we shall not know later where we are if there are so many Acts on the same subject. We are not all lawyers to be able to understand it. The Minister has set a good example in consolidating all the income tax Acts. Everybody is interested in it and wants to understand them thoroughly. The hon. member for Troyeville (Mr. Kentridge) and the hon. member for Pretoria (West (Mr. Hay) criticized him that he did not go far enough in giving a report to the people. I should like to see an income tax again which begins at £50. It must not be a high tax, but it will make everybody feel that he contributes something to the burdens of the State. I should like to be clear on this point, because I know that use will again be made of it to say that I want to tax the poor people more severely. The farmer does not, e.g., keep good account of his expenditure, and if there is such a small amount on which one has to pay tax it will encourage people to keep proper books or notes. The hon. member for Pretoria (West) has said that taxes would not be required if the Government took possession of all the natural riches of the country for the State. I am glad that the Government is not inspired with that spirit of forfeiting everything. The hon. member is always hammering on the mines. He wants everything to be taken away from the owners. I do not wish the Government to lose just as much as the hon. member did who ventured to manage a mine. I should be sorry if the Government had that experience. Then there is something else. I should like the forms to be made more simple, especially for the people who do not earn £300 a year. I have poor people on my farm who do not make that, but the form is so complicated that they have to go to an attorney to prepare it. It costs them £1 or even more. Would it not be possible to send a form to those people that they can sign before a justice of the peace that they do not make £300? I cannot point out what solution could be found, but the Minister really should give his attention to the matter. The people who have to pay the income tax can more or less manage to fill in the forms, but it is very difficult for those who have no obligation to pay.
I wish to express my regret that the Minister has brought in an amendment which will give the farmer the option of paying income tax either on a cash or a stock basis. This is a step backward and is an implication that a farmer is not able to keep books. I am convinced that any farmer who will come under the taxation clause is more than able to keep the books required to render a correct return of his transactions. Even if the farmer takes advantage of the option he will have to keep a return to show what he has spent and what he has received. This option clause is a mistake, and is a distinct disadvantage and detriment to the farmer. Take a man who under the cash basis shows an income of 1,000 a year. He will have to pay on that irrespective of any losses that he may have incurred during that year. Many farmers may really have a debit and may have lost sums amounting to £500 or more. Many farmers’ incomes may have been remarkably good during the past 12 months owing to the high price of wool, but at the same time they have suffered enormous losses of stock. I think it is very clear that a farmer who under the optional clause will pay on £1,000 a year, would pay only on £500 if he adopted the other system. A farmer is very much better off under the balance-sheet system.
He is not forced in the matter.
The plea as to the difficulties of farmers keeping books is really a ridiculous one, and is an insult to the intelligence of the ordinary farmer who is quite able to keep a return of his stock. The forms are not difficult to fill in. If farmers were offered a premium for doing so, they would very soon find no difficulty in filling in the forms. The gravest objection to the option clause is that it will encourage the farmers to overstock and to hang on to their stock, because if they sell then they will have to pay additional income tax. The overstocking of our farms is the bane of agriculture. The evils we suffer from during droughts are largely due to overstocking. During the last drought I saw the farm of a man who carefully understocks, and he lost very little, or nothing at all. But the farmers who maintained their stock up to the full grazing capacities of their farms had enormous losses. The optional clause will encourage a man to keep stock, whereas we should encourage him to sell it. I refer to New Zealand and compare it with this country.
I have allowed the hon. member to go into detail. I think the clause could be more conveniently discussed in Committee.
Then I will just protest against this optional clause and speak further on the matter in Committee.
The hon. member for Cape Town (Central) (Mr. Jagger) has complained at the late introduction of this Bill. I do not think it is the first time we have had an income tax Bill or an important financial measure introduced at the end of the session. We have been very busy and have had important measures before the House during the five months that we have been sitting. It had to come up on a resolution of the Committee of Ways and Means on which the taxation proposals have been discussed. We would have liked to have given the House more time but it was impossible to do so. I am surprised the hon. member for Bezuidenhout (Mr. Blackwell) thought that I should take the course of amending the existing legislation in the ordinary way.
I did not interrupt the hon. member for Vrededorp (Dr. Visser), but now the Minister has made the same statement may I say to the Minister my complaint is not that it is a consolidating Bill but that we should have had more time to consider it.
The hon. member suggested I should have adopted the course of merely amending the Bill.
I said I thought that was what you were going to do.
That would not have been a satisfactory way to deal with it.
I am not complaining. I only thought we should have had more time.
The idea of having legislation in early is a counsel of perfection that we have never had in the past. As far as the general principles of the Bill are concerned hon. members are discussing the same points raised in the Committee of Ways and Means and which were decided in the House. Members have attacked the resolution of the Government to differentiate between companies and individuals, that is to tax companies heavier than the ordinary individual. It is a well known principle which exists in our legislation and we shall not be able to get away from it. You have it generally accepted in this company that mining companies are taxed differently from individuals and different from other companies. I don’t think it is an unfair way to deal with companies to treat them as different entities. Really we are not raising the taxes on companies through the combination of the two taxes. They remain the same, but now we practically rope in the private companies and treat them as ordinary companies, whereas formerly they occupied a privileged position. The present position has become untenable. Taxation is being evaded wholesale and why should not a private company be treated the same as other companies? Then the question has been raised of debenture interest. That has been threshed out. I admitted it was an unsatisfactory feature of the legislation that we had to resort to the method of disallowing the deduction of debenture interest for income tax purposes but it is because the department has found that so many debenture holders, being resident abroad, it is impossible to get them into the income tax net unless you put the onus on the companies. We don’t tax the holders of debentures separately as such, but we say the companies will not be able to deduct this from the tax they pay. They may recover the tax from the debenture holders if they like or they may not. If they don’t then the debenture holder is not taxed at all. If they do, they are entitled to deduct the 2s. 6d. from the debenture holder. The question has been raised that by doing this we are frightening capital away. If the companies think that is so they need not deduct the tax. Hon. members have suggested we should introduce a system of refund which obtains in England. I have asked the department to tell me if it would be possible to do it in this country and they say the expense and trouble connected with the whole thing is such that it would not be possible to do so. They find it difficult to work it in England and if we try to do it here we might just as well let the debenture holders go scot tree.
What would be the trouble?
I am informed the administrative difficulties would be great and the relative expense would be disproportionate to the money we would get from the whole thing.
What about the debentures of public bodies?
I am surprised at that question from the member for Caledon. If he had read the Bill he would have seen that municipalities are not liable to income tax. It only applies to trading concerns. In the case of debenture interest payable by municipalities the debenture interest would be taxed in the hands of the recipients. The municipality would not pay the tax.
I am speaking of the man who holds the debentures.
He would pay the ordinary taxation and not the 2s. 6d.
Because it is taxed in the hands of the recipient. We tell the companies that they will not get a refund but can deduct it from the debenture holder. In the case of mortgage bonds you can get hold of the recipient and tax him.
Supposing the municipal debenture holder lives oversea?
There are very few.
That is our difficulty. We must try and get them, if we can. Probably there are some of them who would escape. The hon. member for Cape Town (Central) has pointed out that we were introducing a principle of taxing the separate incomes of minor children in the hands of the parents where trusts have been created, and that we make no provision for recovery from the trustee. We can deal with that in the Bill. Where the thing is done for the purpose of evading the tax, the fattier himself is the trustee. That is the difficulty. If it is a separate trustee, the tax can be recovered from that trustee. Then the question has been raised as to whether the preference which we propose to give to the Government in connection with income tax is fair and reasonable. That is a provision which is made in the existing legislation, and, after all, I think it is a generally accepted principle that the interests of the State or the Crown should, generally, be preferred to those of the individual. It would have another effect if your Income Tax Department knew that there would be a risk of insolvency, and of the tax being irrecoverable. They would, perhaps, not be so inclined to treat the income taxpayer leniently. Then the hon. member for Cape Town (Gardens) (Mr. Coulter) has raised a question in regard to the new provision appearing in section 18 of the Bill where we now decide to levy a tax in connection with profits earned on goods sold in this country by agents of foreign firms. I am glad to see that the hon. member for Cape Town (Central) (Mr. Jagger) does not agree with the hon. member—that he thinks it is a wise provision to make, and that we should tax these people. The hon. member for Cape Town (Central) has pointed out that it is a provision which has existed in the New Zealand legislation since 1916. I do not think the question of retaliation on goods sent from this country has ever arisen so far as New Zealand is concerned. The hon. member for Cape Town (Gardens) is also against the principle of taxing bonus shares. Let me point out to him that these bonus share distributions are really profits made by the companies. If they were distributed in the shape of cash, they would be taxed, but because they are distributed in this manner, they escape taxation. Why should they escape taxation, because they are distributed in this manner?
The courts have held that they are capital distributions.
Of course that is true, but that is why we have brought in this legislation to rope them in. I am afraid I won’t be able to re-open the assessments already made, as suggested by the hon. member, in the Cases where trading losses are being set off in regard to the payment of super-tax. It has been pointed out that we are now removing an anomaly which has existed in previous legislation, but I am afraid it will be impossible now to make refunds of tax levied under previous legislation. The farmers’ option has been dealt with by several members, and I do not think I need waste much time in regard to that. After all, it is an option. If a farmer thinks he is going to be worse off, as is suggested by certain hon. members, he need not avail himself of that option, but there are apparently many of them who think that this is a real concession. If the hon. member for Queenstown. (Mr. Moffat) and others of his friends who keep books want to continue on the existing method, they are welcome to do so. It is a concession that we are giving, and one that will not be a hardship upon any class of farmers. The hon. member for Bezuidenhout (Mr. Blackwell) raised the question of compelling pensioners to live in the Union. He referred to what I said in a previous debate. I am not departing from that principle at all. The section of the Act referred to by him appears in the existing Act. It was introduced by Act 45 of 1920. It has always been held that pensions arising from Union sources were taxable, but afterwards some doubts arose as to pensions arising from funds invested overseas, and that is why this has been put specially in the Act. The hon. member has raised the question of extending the definition of dependent. We can consider that when the Bill is dealt with in committee. Many hon. members are trying to get various concessions, as it were but we will have to consider the effect of all these concessions on the revenue. I just wish to say a few words in regard to points raised by several members on the Labour benches. The hon. member for Troyeville (Mr. Kentridge) expressed his disappointment that I had not seen my way clear to raise the abatement from £300, and several members have supported him. As I have said on a previous occasion, this matter will have to be dealt with on its merits, and I will give it proper consideration next year. But I did not see my way clear to accede to that request this year, because, if I had done so, I would merely have had to shift the burden on to other classes of taxpayers. Let me remind him that even if we tax the few rich men in this country out of existence, you would not get the money you wanted. You would have to put the burden on many people whom even my hon. friend would not describe as “idle rich.” You would have to put a considerably increased burden on the people just above the border line, just above the £500. If the financial position improves we shall consider the matter next year of increasing this abatement. Let me refer in passing to what has been stated by the hon. member for Benoni (Mr. Madeley). He wants to put the matter on the basis of our election pledges, of my election pledges. Let me at once tell him I have never given a pledge like this. I have never known this was one of the pledges of the party. I must consider the matter on its merits when it arises again. As far as I am concerned, and as far as the party in the Free State is Concerned, no such pledge has been given. I have now dealt with all the important points that have been raised, and I hope the second reading will now be passed, and then we can deal with any additional points that are raised in committee stage.
Motion put and agreed to.
Bill read a second time; House to go into committee on Friday
Second Order read; House to resume in committee of supply.
House in Committee:
[Progress reported on 7th inst.; Estimates of Expenditure from the Consolidated Revenue Fund [U.G. 3—’25], had been agreed to without amendment.]
Railways and Harbours Estimates [U.G. 9—’25].
On Head 1, “General Charges,” £350,109.
While the general estimates provide for an amount of £26,000,000. the railway estimates provide for £25,000,000 I trust, therefore, the Minister will not think badly of me if, in order to give me an opportunity of making a few remarks, I move the reduction of his salary by £5. The Minister claimed in his budget speech that, after wiping out his deficit, there was an estimated available balance of £160,000. If we followed the railway “Bulletin,” we would come to the conclusion that that is a very conservative estimate, and I think if certain methods of dealing with revenue are changed as I suggest they should be, there would be an available balance in the neighbourhood of £1,000,000, instead of £160,000. The estimates include £162,000 contributions to pension fund, an increase of £78,300; also £100,000 contribution to the superannuation fund of 1912, and £250,000 contribution to reduction of interest-bearing capital—a total increase of £428,300. The first two items need not be discussed now, but I wish at a later stage to deal with the item of £250,000, and to ask the Minister whether he is satisfied that by merely placing this item on the estimates, he is within the four corners of the South Africa Act. I think what is necessary will be an amendment of that Act before we can deal with that item. The Minister’s estimate is, to my mind, very conservative. Let me deal, in the first place, with the traffic. In 1910 we conveyed 12,414,839 tons of goods and 33,000,000 passengers in round figures. Last year the tonnage in goods increased to 22,000,000 and the number of passengers increased to 65,000,000. That is an increase of 83 per cent. in goods and 96 per cent. in passengers. The revenue remitted since 1920 by the late Government was £2,433,250 in respect of Coal rates; £1,356,000 in respect of goods rates, and £500,000 in respect of passenger fares, or a total of £4.289,250, but we must remember that, with all that great amount of reduction in rates, we still are to-day 33 per cent. above the pre-war level. The whole of the industries of the Union are dependent on cheap transportation, and that matter should have grave consideration, the Minister told us during his budget speech that much still remains to be done to lighten the burden of the cost of railway transport upon the whole community, and that we were all agreed on the vital importance of cheap rates for agricultural produce and the requirements of the agricultural industry. Unfortunately, he closed by stating that it was solely a question of an opportune moment for making such reductions. I do not know what he meant by an opportune moment. When you have a very substantial surplus, surely that is an opportune moment for making reductions. The Minister told us that what they were doing was perfectly reasonable, and he compared the rates on agricultural produce with the rates ruling in England. Apparently he forgot that there are other than agricultural industries in South Africa, and if he compared the rates on other than agricultural produce he would find that our rates are considerably higher than many rates on the other side of the water. He has promised reduction in rates amounting to only £500,000, but I feel that under present circumstances, he could very comfortably reduce the rates by at least £1,000,000. During the office of the late Government from 1921 onwards—when we had that famous sword of Damocles hanging over our heads in the shape of heavy deficits—the Government reduced rates by no less than £4,000,000. That reduction was not only on agriculture, but also on matters very closely allied to agriculture, such as live stock and fertilizers. The late Government also reduced rates on coal, building material and so on. In spite of this reduction and the heavy deficit of over £1,250,000 exclusive of the £2,000,000 used from the renewals fund, they reduced the rates by £4,000,000. The Minister came into office with a deficit of only £770,000 and with traffic earnings going up by leaps and bounds. On March 31st last, there was an estimated surplus of £1,200,000. In other words, after paying off the deficit of £770,000, a surplus of £430,000. That is eminently satisfactory, and we are very pleased to find that our country is in such a satisfactory state. But why, when the previous Government in the face of very great difficulties was able to reduce the rates by £4,000,000, cannot this Government with improving trade to help it reduce rates by more than the paltry £500,000. It appears to me that the policy of reducing rates is solely a business one. It certainly is eminently satisfactory. The Minister has increased the staff by 3,668, but that was only possible because of greater traffic, and increased traffic is only obtained by having reasonably low rates. The greater the reduction in rates the greater will be the impetus to trade and production. We must not forget that this is a country of vast distances, and unless the rates are brought down to the lowest level, trade or industries will not be encouraged, because rates now are so high that it is almost impossible to trade between one district and another. The late Government recognized—as a business Government would recognize—that only with cheap transport could the country really go ahead. The Minister will find if he studies the publication I previously refer to, that the Royal Commission which sat in New South Wales, enunciated the very principle enunciated in our Act of Union. They say that railways should be so worked and so managed that the gross receipts should not be more than sufficient to cover the working expenses, reserves and interest on capital, including sinking fund and that, in the event of any surplus, it is to be devoted to reductions of rates and fares. If the Minister looks at the South Africa Act he will find section 127 says—
That I understand was the Minister’s policy when he was sitting on this side of the House. I remember him strongly enunciating that policy and while a great reduction was being made by the past Government I heard him, from this side of the House, crying out for further reductions and reminding the House that unless we reduced to the lowest level the farmer would be the sufferer. The hon. Minister has had an opportunity of following in the good foot-steps of the hon. member for Cape Town (Central) (Mr. Jagger) in bringing down the railway rates. I cannot understand why he has not done it. He has missed a golden opportunity. No one objects to the praiseworthy desire of the Minister to have a contented service, and, to prove this, those who represented this side of the House on the select committee were with him in his endeavours to get a contented service so far as pensions were concerned, and we gave him every possible assistance. We quite agree there should be a contented service, and we agree that unless you had contentment throughout the whole service in such a big service as the railways and harbours you could never make a success of it. Notwithstanding the arrangements made in regard to the betterment of pensions he is still in a position to reduce the railway rates. The Minister claimed that before he could reduce the rates he had to deal with the ordinary pension fund, and the superannuation fund, and said he had to spend £160.000 on what he called his civilized labour policy. If the Minister had stuck, in his application, to the definition he gave during the election we, on this side of the House, would have been satisfied, but he has departed from this definition, and has come to the view that there are degrees of civilization. In his election definition he classified civilized labour as labour by Europeans and coloured men, but now he says that so far as coloured men are concerned there are degrees of civilization and he leaves his friends on the cross benches in the lurch when he departs from their views and says lower wages will be sufficient for the coloured people, and that equal pay for equal work does not hold as between coloured and Europeans.
Business suspended at 6 p.m. and resumed at 8.5 p.m.
At the adjournment I made a statement which the Minister rather seemed to challenge, and I want to say to him that the statements I made in regard to what he said on a previous occasion are in no way made with the idea of scoring a debating point. What I understood him to say was that whereas his civilized labour policy, taking the docks, for example—
I would like to ask the hon. member (Maj. G. B. van Zyl) what the policy is that he is discussing.
I am discussing now the increased expenditure which we are asked to vote, £160,000, for civilized labour.
The hon. member must confine himself, of course, to the original question that he wished to discuss. I understood it to be railway rates. There must be some definite policy.
If you allow me to discuss the railway rates, I must discuss the amount which is being spent by the Minister to show, as I intend to show, that he is spending money in ways which will prevent him from bringing down the railway rates as we expect him to do. But I am not confining myself to railway rates only. I moved to reduce the Minister’s salary so as to discuss his policy generally.
The hon. member says—His policy generally, but I am afraid it must be more definitely described. I do not wish to stop the hon. member, but I do not think it is fair to the committee when there are so many other hon. members who wish to speak that on hon. member should have the privilege of speaking for 40 minutes when there are so many other hon. members who wish to speak, unless he adheres to the rule. The rule says—
It must be “specifically and bona fide challenged.”
Must it be only one point of policy?
It is rule 104 (3), is it not? Is your ruling that under this rule, where a member takes advantage of this and seeks to obtain the advantages of the 40 minutes’ rule, he is confined to one definite point of policy only? He cannot say—
I do not think it is fair to the committee, I think it is an abuse of the rule.
May I remind you that the other evening I moved to reduce the salary of the Minister of Justice and I raised three different points?
Perhaps I should have stopped the hon. member.
That may be, but, with respect, we should know where we stand in regard to this. We have always understood when we made a general attack on Ministerial policy under a vote, if that attack ranges itself under totally separated headings, we could do it. That has been the practice up to this session. The points I raised were totally unconnected with each other.
If they were unconnected I should not have allowed the hon. member to proceed.
They were. The first point was the release of prisoners, the second was Afrikander born, and the third was the Minister’s reference to local option. If that practice is to be departed from, it would be a very serious interpretation of this rule.
†The CHAIRMAN Perhaps I allowed the hon. member for Bezuidenhout too much latitude last time. Points raised cannot be unconnected, they must be connected, and they must all be relative to one question of policy, one question only.
In discussing the policy of the railways surely everything is a carrying service? Any light which can be thrown on the rates is surely relevant to the discussion.
Yes, if you only deal with the rates.
I do not wish to question your ruling in any way, Mr. Chairman, but I cannot possibly read from this subsection anything which supports your ruling—
It does not mean one particular point in his policy. It is futile for me to attempt to show that the railway rates should be reduced unless I can do it on several points. There are many points. Take the renewals fund. Take the £100,000 which the Minister is putting on the estimates every year from the revenue to pay off the deficit. Unless I can bring up all these points it is futile for me to attempt to show that the railway rates would be reduced.
Let the hon. member just tell me what the question is he wishes to discuss. If I see I can connect them I will allow the hon. member to proceed. What is the question of policy?
I am trying to make it. I am trying to show that there are certain amounts taken out of the railway profits which should not be taken out, and the result of that policy has been to keep down the profits of the railways and therefore has prevented the railway rates from being reduced.
As the hon. member connects his remarks with the railway rates he can proceed.
On a point of order, Mr. Chairman, has not any ordinary member of this Committee on a question of this sort the right to discuss the whole of the railway policy from a to z?
Yes, in ten minutes’ speeches. My objection is—perhaps the hon. member was not here when I mentioned it—I felt it was not fair to other hon. members that one hon. member should take 40 minutes in discussing various points. He would then be privileged as against the others, and I pointed out how the rule read.
But I thought he was privileged to speak for forty minutes and no other member can speak for more than ten minutes. It is the privilege of two hon. members to move a reduction of the Minister’s salary for the purpose of taking a longer time to discuss policy. The section reads that where the Minister’s salary is specifically and bona fide challenged on a question of policy and amendments are proposed, the movers shall be entitled to speak for not more than 40 minutes. It does not limit the hon. member in his 40 minutes’ speech any more than it limits the other hon. members in their ten minutes’ speeches.
The salary must be specifically challenged on a question of policy. The arguments must all be connected with and converge upon one point.
This is a very important ruling of yours, Mr. Chairman, and I hope the Committee will not take it amiss if we try to ascertain exactly what your ruling involves, because it does, in my humble opinion, raise a very important point. Does it mean that you may only raise one definite point of policy and that I was traversing beyond the scope of the ruling for instance the other night, when I raised three entirely unconnected points and that you should have ruled me out of order? If that is so—I hope I will not be taken as being disrespectful to the Chair—I think we should obtain Mr. Speaker’s ruling on that point. I do not know whether this point has ever come up before, but if other speakers of the Committee are likely to have that ruling laid down to them by you, I think it is right we should get Mr. Speaker’s ruling. With your permission and with the permission of the Committee, I should like to move that Mr. Speaker’s ruling be obtained.
The hon. member is now moving on a hypothetical case. I said the hon. member for Cane Town (Harbour) (Maj. G. B. van Zyl) could continue, but if I found that he spoke on various disconnected points I should have to stop him.
I realize I cannot move to obtain Mr. Speaker’s ruling until you stop the hon. member, but I would like you to realize that if that is your ruling we would like it confirmed by Mr. Speaker.
As I was saying when we adjourned, I questioned the Minister’s so-called civilized labour policy and I stated that what he said at election time was not consistent with what he was doing now. For example, he was giving coloured men a lesser salary than Europeans and he stated that there were different degrees of civilization and that was why he did it. Also the Minister in regard to this policy of civilized labour challenged us when we said the coloured men were making room for Europeans. It is quite impossible for an ordinary member to give a list as suggested by the Minister. We must depend on information submitted. The Minister made a definite statement that no coloured man has been treated in that way. Is that correct? The Minister now says “no,” but if he looks at Hansard I think he will find he made that definite statement.
If you will give me specific cases I will deal with them.
I have received information of seven cases, the names of the parties I shall give to the Minister privately. In the first case a coloured employee was discharged at Klipplaat on October 12, 1924, and his place was taken by a European. The second case was at Willowmore on November 3, 1924, and his place was taken by a European. The third case was of a man discharged on November 4. 1924, and his place was also taken by a European. The next case was of one discharged from cottage 29 with the one mentioned in the second case, and his place was taken by a European. The next was discharged at Klipplaat, on the 7th April, 1925, and his place taken by a European. The Rev. Mr. September reported the first four cases together with sixteen native cases, to the Divisional Superintendent, Port Elizabeth on the 10th November, 1924, and up to the present has had no satisfactory reply. Then the next case was of two coloured men discharged from the harbour works at Mossel Bay, and then places taken by Europeans, and there was another similar case on the Klipplaat line. It is difficult for us to get all the cases; but these have been reported to me without my making specific inquiry in regard to the matter. And I think the Minister should support his stated policy and see that no coloured men are displaced to make way for Europeans. He should make searching inquiry into the matter. Then in regard to the renewals fund, here we find that very large sums have been taken from time to time from the profits of the railway so as to pay for new goods. We know very well, that there are certain specific funds for specific purposes created in the railway department. You have the betterment fund, to provide for minor improvements and additions. Then you have the renewals fund established to provide for the cost of material and labour utilized in actual replacement of railway assets and this replacement takes place even where you have spent additional sums, perhaps, more particularly when you have, say, an engine of an increased size or type replacing an old engine. But there was no idea when this fund was established of charging this fund with the cost of new goods when the old goods are not scrapped, or of ignoring the present value of the old goods or of departing from the principal of using moneys of this fund for anything but replacement. From 1912 to 1923 the charge for new rolling stock met from revenue amounted to £12.478.011 as compared with 1,371,711 the recorded value of the rolling stock actually withdrawn from service during that period. That is a difference of over £11,000,000. There is a further expenditure on new rolling stock charged to the fund during the year under review of £523.321 while the recorded value of the stock withdrawn was £62,067. The position therefore is that in twelve years £13,001,322 has been spent from revenue on renewals while £1,433,778 was the actual value of the stock withdrawn.
Was there no depreciation in the meantime?
Yes, but provision is made for it. The depreciation must have been taken into account because the actual value of the stock withdrawn—not the cost price—was £1,400,000. This year there was a charge of £146,349 representing part of the cost of 78 electric locomotives for the Natal line. That amount is charged to the profits on the railway. The total cost of the locomotives was £927,655, and this sum although originally provided for in the capital estimates is now actually financed out of the revenue of the railways. The charge against the fund this year also includes an amount of £257,178, part of the estimated cost of importing and erecting 1,003 specially designed grain wagons. These are not replacing anything and should not be charged to the renewal fund. This principle is now very much further extended and we find that a new dredger which is purchased at a cost of £85,012 is being charged to this fund also, that is, is paid from revenue. The administration has seldom had to provide depreciation to cover the full original cost of these articles and we feel, and must feel, that there is a certain scrap or sale value in each case. We have the example of the “Penguin,” 15 years old, sold a little while ago, for £25,000, and the “Kate,” 22 years old, sold for £8,500, and yet in the cases quoted, no such items are brought into account, and the whole charge for the new boat is being charged to the renewal fund. The position summarized is that there is an estimated surplus for 1926 of £430,000. Contribution to pension funds in excess of previous contributions, £78,300, contributions to super fund to decrease arrears £100,000, contribution to reduction of interest-bearing capital £250,000, renewals fund, part cost of electric locomotives £146,349; part of the cost of the grain wagons £257,000; the new dredger £85,000 odd; a total of £1,346,839. If we consider the Minister’s somewhat conservative estimate and the amount of £300,000 which it is going to cost the administration to provide the £ for £ contribution for pensions there is on that showing alone a clear £1,000,000 available for reduction in railway rates. Take the item for £250,000. I am not sure whether the Minister stated that he was going to introduce a Bill in regard to this item but I would like to draw his attention to section 127, of the South Africa Act which I have already quoted and which bears on the subject. If he looks at section 128 he will see that the railway board may establish a fund out of railway and harbour revenue to be used for maintaining uniformity of rates notwithstanding fluctuations in traffic. Here we are going to use £250,000 out of revenue in reduction of an amount of loan money and thus reduce, for the next year, the profits on the railways by this amount again. Let me put it to the Minister this way: If all these items I have referred to were taken into account the Minister would have a surplus of almost a million. That means that he will be able to reduce the rates, a matter for which the country is crying out. We who live at the coast, are not selfish, and we feel that people up-country should have a much better opportunity of benefiting by lower railway rates than they do at present, and if our finances were carried on as they should be the up-country people should benefit by at least a million pounds. I would like next to call attention to the method of carrying on the finances. The chief spending power in the railway department is his only critic. The chief man who does the spending comes before the Select Committee to justify that spending; but I suggest that the accounting officer should be responsible to the public for the expenditure of all moneys in connection with the railways, and to justify that expenditure, I move—
I shall be glad if the Minister will make a statement showing the financial position. The June “Bulletin” contained no financial statement.
It is published in the “Gazette.”
We have been looking for it lately in the “General Manager’s Bulletin.” The railway board winds up its annual report, which is dated April 22nd, as follows—
Is the Minister in a position to give us that information? I should also like to know what is the position in regard to the electrification of the Wynberg line.
I want to put it to the Minister that the chief spending officer is his own critic. Our railways and harbours spend from revenue about £25,000,000 and from loan funds about £7,000,000 a year. A Royal Commission which sat in New South Wales recommended what the chief accountant’s responsibility should be enlarged; that the work of the traffic auditor’s branch should be merged in his department, and that he should assume direct control over all the branch accountants. The general manager of the South African Railways, who does all the spending for the department, is the only man who gives evidence before the Select Committee on Railways in regard to all the spending. He comes there and we are allowed to criticize but only on the information received from him. I am not saying a word against the general manager but I criticize the system. We have an accountant, and he should be there to be criticized and he should be responsible that the money is spent in accordance with the Acts of Parliament. The question is a very important one and the matter has been considered in other countries. I would like to refer the Minister to a very good article by the President of the Southern Pacific Railway of the United States, who says that the accounting officer should be a man standing alone with no one at the head of him. We had a case a little while ago where the accounting officer was unable to stop certain expenditure, because after he had made his report he was told that the expenditure had been agreed to by the Railway Board. He should be in a position to report to Parliament in a case like that. The president of the Southern Pacific Company says—
The president of the Southern Pacific said that on one occasion when he was an accounting officer a previous president had given instructions to certain buyers to purchase certain automobiles for railway purposes. The president agreed to the purchase because it showed on the figures that it was a paying proposition. When the accountant went into the matter he found no allowance had been made for depreciation, insurance and many other little matters, and he came to the conclusion it would be a non-paying proposition. Only because he had the power to go to a higher authority than the general manager or president, was he able to stop that transaction. I think we should have the same position here. The accounting officer should be free, on his own, to carry out the instructions of the general manager when they are within the four corners of the law, but he should have the right to say, where any movement is made that is not for the benefit of the railways, to a higher authority than the general manager, that he objects to it. I wish to refer also to a matter which may have some bearing on this. Last year the department gave instructions for certain printing. £26,936 was spent with the Government printers, and £37,006 with private firms, and the strange part is that with regard to the private firms more than half the amount was spent without any tender first being had. £10,000 went to a Johannesburg firm and £9,000 to a Pretoria firm. In all £19,545. I hope the Minister will enquire into this more particularly because the Government printers were not full up with work at that period. A system which enables that sort of thing to be done should be changed as soon as possible, and if the accounting officer gets the power which I suggest we shall have a better position. In a case like that he could approach the Minister or the railway board and the position could be rectified at once. I also want to ask the Minister with regard to the Railways and Harbour Brigade. I asked the Minister of Defence, and he admitted that he could not appreciate the position. If the Minister looks into it he will find on page 22 of the Auditor-General’s report, a very interesting statement—
That is another little expense that might be avoided. The report also refers to a staff major whose salary is £569 per annum which is being paid out of the brigade funds. There are also two orderly room sergeants, one at Cape Town and one at Johannesburg, paid by the department of defence, and in addition there are the following part-time officers. Two adjutants at £200 a year each, four instructors at £50 a year each and four at £30 a year each. The point on which I wish to get information from the Minister is this. Regarding the appointment of the brigade major he is appointed as a railway official for the purposes of leave, travelling facilities, etc., but he is paid from the defence Vote. [Time expired.]
According to the report of the Railway Board at the end of December, 1924, there was a surplus, after paying off the deficit, of £166,791. In view of the satisfactory position of the railways at that date and at the present, it is indeed disappointing to note that the Minister of Railways has not seen his way clear to reduce railway rates on the primary products of this country.
I have not reduced them?
No, not sufficiently reduced them. I submit it is absolutely essential if the farmers are to progress that we should have cheap railway rates for farming products, and the farmers in the country are disappointed to note that their anticipations of reductions have not been realized. We understood when the Minister of Railways came into power, from promises which he made, that we should immediately have a new era as far as railway rates were concerned on farmers’ products, but unfortunately that anticipation has not been reached. He has not delivered the goods. Apart from the farmers’ products I want to deal with the railway rates on coal. In 1914 the railway rate on bunkering coal was 6s. 8d., and in 1925 it was 15s., exactly 125 per cent. over and above the pre-war rate. I think the Minister of Railways will admit that the coal industry in South Africa to-day is a very important factor so far as the railways are concerned, but unfortunately the railway administration nave seen fit to use the coal industry as a medium of swelling their revenue receipts. The coal industry is not in a flourishing position. They are up against many difficulties and owing to world competition they find it most difficult to compete in the export trade. So far as the bunkering trade is concerned there has been no appreciable expansion since 1914. If a reduction is made of the bunkering coal taken by the steamers which come to Durban to carry the export coal, the Minister, I feel certain, will find that there has been that normal expansion in the bunkering trade which we all expected. The export trade is one difficult to maintain owing to the fact that we have to compete in the world’s market in the coal industry. We have, to compete against Welsh and Japanese coal, and they have a great advantage over us. For instance, Welsh coal has a 15 per cent. greater calorific value and a shorter distance for transport to the steamer, and in addition a cheaper rate on the steamers carrying coal to the east. To-day the revenue earned in coal carried by the railways is 50 per cent. of the total of the railway traffic of the Union. It will, therefore, be seen that the coal industry is one of vital importance in so far as the future prosperity of the railways is concerned. I do hope that the Minister will take into consideration the very appreciable and very high rates which bunker coal has to pay to-day. I think it would be only fair if the Minister softened his heart a little as far as the coal industry is concerned and showed them some consideration in reducing the coal rate which the hon. member for Cape Town (Central) (Mr. Jagger) has raised to 125 per cent. over prewar rates.
You are wrong there. I never raised the coal rates; I brought them down.
There is no other commodity in South Africa to-day which is paying more than 40 per cent. above the pre-war rates. I hope the Minister will consider the matter very carefully, because the prosperity of the coal industry depends very largely on our bunker and export coal. Some of the coal mines are only paying 3d. per ton profit, and one of the coal mines in Natal only paid 1½d. per ton profit last year. That will indicate what a very narrow margin these coal mines have, which is due very largely to the heavy impost which the railways are making on the coal industry.
I have listened very carefully to the hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) and, although I do not agree with many of the points that he raised, I must say that I think some close investigation is necessary with regard to the various funds connected with the Administration. In my opinion this watertight system of holding up large sums of money in various funds is apt to cause a great deal of confusion, and it certainly confuses the mind of the average person both inside and outside this House. It is possible under this system of watertight compartments with regard to funds that you have large sums of money locked up so to speak. The system is liable to abuse. I notice that particularly in regard to the renewals fund. What does seem to me of importance, as one who is interested in the welfare of the railway workers is that if it is true that you have large sums standing in these various funds which are not actually used as required and used for legitimate purposes, there is the permanent danger that this will act very materially on the railwaymen’s pay and conditions generally, and also affect the question of reduction of railway rates and fares. For instance, if you want to give every railway man in this country, whether native, coloured, or white, a living wage, which you are not doing to-day, hon. members will say—
This statement says—
We know that there are commitments against the fund, we must recognize that, but, in spite of these commitments, if it is true that you are always going to have a permanent large balance in your renewal fund which you really speaking never use, then, of course, it will be held up to the public that the railways are not paying or that there is only a small surplus, whereas, as a matter of fact, you have a much larger surplus than appears in any of your financial years. The matter is of so much importance as far as the railwaymen are concerned that hon. members should take more interest in the general position of the railways. In spite of this write back, they were able to pay £2,000,000, out of this fund and they still have a balance of two and a quarter millions to three millions to be added. If that is so, I think we should go into this matter from the railway workers’ point of view. Then there are other funds. There is the general insurance fund. The credit balance of that insurance fund has increased in five years by 100 per cent., viz., from £420,000 as at 31st March, 1920, to over £800,000 as at 31st March, 1925. Therefore, you have £800,000 lying in that fund and the calls on the fund are very low. Why should not that money be made available? You could undoubtedly reduce your rates and you could also give—what I am very much more concerned about—every railway worker a living wage which at the present time, I claim, is not being paid. I do not wish to be unfair to the Minister. I know that generally speaking, he has done very good work in connection with the railways, but I meet daily men who have been employed on these railways, Europeans and coloured men who are doing responsible work—shunters and the like—and to-day these men are not receiving what hon. members here, I am sure, will regard as a living wage, and there is still a great deal to be done so far as the lower grades are concerned—you cannot blame the individual perhaps for not having risen to a higher grade than a shunter or a porter. He may have been handicapped from an educational point of view. The fact remains that these men are on a very small scale of pay. These men, after 30 or 40 years’ service, have not been able to put anything by. We do not say that these men should be paid high wages, but we do expect that they shall be paid a living wage. I always feel that the bigger men, the £1,000, £800 or £500 men can look after themselves, but the great bulk of your railway servants, the very large majority of them, are on very small pay, and something should be done for them. If hon. members knew the pay of the porter who works on the station platform or the shunter who risks his life daily they would be surprised to find how small that pay is and how it is possible for these men to keep body and soul together and maintain their homes I do not know. If you keep these large sums of money and do not use them for the purposes for which they are required, then it is not fair to the railway staff and the country generally. Another matter is the report of the Railway Workshop Commission, in which it is stated that repairs are costing too much. I know the Minister has appointed various committees to go into the question of piece work. No decision has been taken in these matters, and I want to point out to the Minister that, in regard to the piece work system, I have had evidence that you will never know what your present system is costing you. For instance, certain expensive machinery was imported from England recently under a guarantee to do a certain amount of work. This is a specimen of the work which is turned out. The machine was spoilt for days and days, although it is doing the work now, and it costs a considerable sum for repairs to that particular machine. The fact that repairs are costing so much is not the fault of our workmen; it is due to something wrong with your system and your supervision. They just want proper supervision and you will get the work done. It is not a new thing; it has gone on for many years. [Time expired.]
Might I ask the Minister if he would make a statement to which I think both the committee and the country are looking forward. Perhaps he would be good enough to inform us as to whether he has filled that important vacancy on the railway board. I am perfectly certain that a statement made by the Minister would still the palpitations of many hearts.
You seem to be interested.
No, I have no leanings that way, but many hearts are earnestly looking forward to the Minister’s decision. Rumour has it that it is a dark horse which has come past the post in this particular case. Under the circumstances, perhaps, it would be advisable if the Minister would take the committee into his confidence and let us know who has received the preferment to this very important post. I am perfectly certain it would still a good deal of agitation, because, as my hon. friend knows, there have been palpitations of many hearts in this direction, and it is only his duty to still those palpitations by making a statement to the committee at the earliest possible opportunity.
There is no question that before next year the Minister will have to seriously consider the reduction of coal rates. I am not asking for that reduction to take place now but I quite recognize, in view of what is taking place in Europe to-day, that South Africa will have to reduce coal rates if we are to retain the connection the industry holds today. I would also like to take the opportunity of putting in a plea in connection with the insufficient passenger accommodation at the Durban railway station. I am quite aware that Johannesburg, Cape Town, and other stations require additional accommodation, but the fact remains that at Durban the accommodation has been inadequate for many years. There is another matter to which I would like to call the Minister’s attention, and that is the necessity for an increase in the number of deep-water berths at Durban. The present berths are very often inadequate for ships coming into the port. I do not wish to enlarge upon the subject, but I hope the Minister will make a note of these items and give them his serious attention.
Speaking from the Labour benches, I want to say that we, on these benches, at any rate expect before reductions of rates are given to the commercial classes of this country, that the wages of employees, and the conditions of employees will be bettered in comparison with what they are to-day. We had it pointed out to us by the hon. member for Cape Town (Harbour) (Maj. G. B. van Zyl) that, under a recent administration £4,000,000 was given away in reduction of rates. The result of that is that the hon. member sits on that side of the House to-day instead of this, and I trust the Minister will take warning from that. I do not want him to get the impression that everything in the garden is lovely. There are still lots of grievances. There are the standard rates of pay which were reduced and should be put back. Then there is the question of the eight-hour day. Practically every British dominion, except South Africa, has an eight-hour day for the staff, and in some dominions they have a 44-hour week. Until we have got this, I hold we have no money to spend in reduction of rates. The hon. member for Durban (Stamford Hill) (Mr. Lennox) pointed out that something might happen in connection with the coal trade in Europe, and that European coal may compete with South African coal at low rates. That is what we on the Labour benches have preached for a long time. What is going to happen is that the miners in England are going to get less wages than at present, unless they are successful in holding up the country. Their present wages are starvation wages, but they are going to be reduced, to compete with our miners, and then our miners’ wages are going to be reduced, and the railwaymen are going to be asked to take lower wages to carry the coal at cheaper rates. It is the same old vicious circle, and I hope South Africa will stand out against it.
I think the hon. member who spoke last is revolving in another vicious circle. He seems to forget that the primary object of the railway is to carry traffic, and if the traffic is choked off by high rates the railway employees will not benefit.
The railway runs for the benefit of the people of the Country.
Exactly, but the railwaymen are paid out of the traffic on the railways, and if he shoves up expenses to such an extent as to choke traffic that will not assist towards the improvement of the condition of the workers. The men’s wages have to be paid out of something, and they have to be paid out of the traffic. It is all very well to threaten the Minister, but the one thing the railway needs is reduced rates and increased traffic. I do not say that’ the men must suffer to do that. There is a possible policy between these two which will be to the benefit of the men and of the public as well, and that is by doing all you possibly can to reduce railway rates, to encourage industries in this country, and improve traffic. What is the use of taxing ourselves as we are doing in our customs tariff, to encourage industries, and promote employment, if industry and production are going to be strangled by high railway rates? We are undoing with the one hand what we are doing with the other. I hope the Minister will not listen to the last speaker, but will bring sound common-sense to bear on the matter. I would not have mentioned the Johannesburg station, but for the remarks of the hon. member behind me. We know how quick the Natal members are in getting in first, and I hope the Minister will not forget a longstanding promise, and that the Johannesburg station will be on the loan programme this year. It really is a scandal. Then, in regard to the electrification policy, when are we going to get from the Minister a statement of the expenditure on the electrification programme in Natal? We have seen various statements from which it would appear that the original estimates have been very largely exceeded. This is a new experiment in South Africa, and I think before we plunge any further into the matter. Parliament should know what the total capital outlay is going to be, and to what extent electric working is going to be profitable; whether the reduction in working expenses, owing to electrification, is going to be sufficient to justify the enormous capital laid out in introducing it. I think we should know that before we proceed further with electrification schemes. Let us have a full statement, and not have some hundreds of thousands spent on engines stowed away in a renewals fund. Let us know where we are; before going further. It is perfectly clear that for the amount of money spent on this electrification scheme, a very large amount of new ordinary track could have been built. I sympathize with what has been said by some hon. members with regard to these various funds. There seems to be a tendency to create all sorts of funds in order to stow away profits. That is what they are really. I am not prepared to prove by chapter and verse, but from the reports of the Railway Committee and the auditor-general, the renewals and depreciation fund is being used to provide what is really new capital expenditure. It may be a perfectly good policy to spend money out of revenue in improving your capital assets, but let us know where we are. The fund should be strictly confined to its proper purpose. It does not follow that you cannot ever buy new stock out of the renewals fund. You must, but let the purchases be strictly commensurate with what is the proper rate of depreciation and renewal on the administration’s stock, and do not let us use that fund as a kind of underhand way of increasing our capital account, or, if we are going to do that, let us have it fairly before us. Take the proposal of the Minister to spend a quarter of a million from revenue to reduce the interest-bearing capital. Under what power does the Minister do that? There is certainly no authority in the South Africa Act. How is he going to do it? Is he going to hand the quarter of a million to the treasury, and borrow a like amount for the purposes of the administration? Surely he will not do anything so futile as that. Is he going to buy new stock with it, or spend it for purchasing capital assets? If so, it ought to come under the depreciation and renewals fund. How is this money going to be spent? I say the principle is wrong. The capital account of the Railway and Harbour Administration is amply provided for by the expenditure on maintenance; that is in keeping assets up to a proper standard of efficiency, and by the expenditure on renewals and depreciation, which provides for stock going out of use, becoming obsolete, or having to be scrapped for one reason or another. The money he is taking out of renewals and depreciation should be used to keep the capital assets of the railway and harbour fund at a proper standard of efficiency up to date, and that being so, there is no reason whatever for taking out of revenue any amount for reducing his interest-bearing capital. I hold that this amount ought to have been regarded as profit, and ought to be used either for reducing rates, or improving conditions, whichever the Government think most urgent. It is quite out of place, and beyond the power the Minister possesses under the Railway Charter. What is the nature of this mission which the hon. member for Pretoria (North) (Mr. Oost) has been sent on? Is it a diplomatic one? Has he gone to treat with the Great Powers, the League of Nations or to establish relations with the Soviet Government, or is it a commercial mission? What is it?
A joy ride.
What are his qualifications? [Time expired.]
I want to assure the Minister that the people outside are very thankful for the lowering of the railway rates which he has effected. Hon. members opposite now pretend that the Minister is strongly opposed to a reduction in railway rates, but that is one of the first things that he did as Minister of Railways. We know moreover that the Minister is in favour of a further reduction as soon as circumstances permit. I would however like to concur a little with the hon. members opposite in asking for a reduction in rates with regard to certain things. I would like in the first place to urge the Minister to reduce the carriage of grain bags. The rates for grain bags are very high. Just to mention an instance in my constituency. The tariff from Durban to Ladybrand for grain bags is 63d. per 100 lbs. Last year the Ladybrand cooperative society ordered a quantity of 330 bales and it had to pay the railways about £660. I wish in this connection to refer to the difference between the carriage on grain bags and other agricultural appliances. The carriage on other appliances is much less because it is only 41d. per 100 lbs. while we should remember that the other agricultural appliances take up much more room than grain bags which are usually packed in bales of 300 lbs. and take up much less room in comparison with other agricultural appliances. The farmers’ association has asked me to urge the Minister to reduce the rate for grain bags as soon as possible. Then just another matter which is of great importance to my constituency and that is the high railway rate on building stone. There is in Ladybrand a fairish industry in building stone. Recently the municipality who quarries it there entered into a contract for a Government building in Pretoria to deliver about 10,000 cubic feet. The carriage was no less than £500 an almost prohibitive price for that industry. The orphanage in Ladybrand, e.g., has just been built of this stone and the principal building (for 40 children) and two additional buildings have all been built of this stone. A large number of our poor people there get work from the municipality for the dressing of the stone, but it is very difficult for the industry to get contracts from a distance because the railway rates are so prohibitively high and I hope that the Minister will also take this point into consideration and reduce the tariff for building stone as soon as possible.
South Africa is not, as many other countries are, blessed with navigable rivers and waterways which by their cheap transport signify so much to the prosperity and well-being of a country. Here we have to rely on the railways. Here, we have the means of providing cheap transport if we make judicious use of our native and coloured labour. We have only to give rein to our imaginations to realize how restricted our railway system would be but for the cheap coloured and black labour employed in their construction. Now, however, instead of endeavouring to avail ourselves of that means of cheapening transport, we are building up a very dear system. Hon. members opposite are asking the Minister for cheaper railway rates, yet at the same time they are insisting on staffing the railways with the most expensive labour we can possible get. We are deliberately building up a system of dear transport. We are displacing natives by Europeans at a much higher wage. The Minister is in a quandary, being faced with the great problem of unemployment, it is very natural that he should try to find work on the railways for as many whites as possible. There is another side to this question. Dear railway transport means the strangling of the industries we are endeavouring to create. What is the use of establishing industries and farm colonies unless they can be given cheap transport? It is a hopeless proposition. So long as we employ expensive labour on the railways the running expenses must likewise be great and, consequently, the rates must also be high. It has been urged that the railway employees should be the State’s first consideration, I maintain that the taxpayers are the first consideration. Our railway employees should be fairly paid but to say that our railways exist for the benefit of the railway employees is putting the cart before the horse and wrongly stating the case. You might equally apply that argument to every branch of the service, the post office, the civil service and the defence force. Cheap fares on the railway are not going to benefit the rich people only but the poor people up country.
Are you convinced native labour is more economical than white labour?
I have tried to carry our friend’s mind back to the time when the railways were started in this country if it had not been for the cheap native labour our railroads would not have made the same progress. At the present time we have 40,000 white employees on railways built up for them on the cheap black labour we utilized. The same applies to the mines and everywhere, our civilized standards of wages are based upon the native labour underlying it. So long as we have a supply of cheap black and coloured labour it will enable us to develop our industries and find employment for a large number of people who would otherwise be out of employment. It is the first duty of the Government to consider the taxpayer of the country. I know in the past some railway Ministers have taken credit to themselves for having a surplus on the railways. I don’t think we should regard the railways as a money-making concern. They should be run at the cheapest most reasonable cost. A departure from that, means the singling out of the inland people for special taxation. They are the chief contributors towards the railway revenue and it is unfair to that section that they should be singled out for special unfavourable treatment.
Several members have urged the Minister to reduce the railway rates. I have already asked for something in that connection which the Minister could not grant and therefore I will just try something else. Children under three years travel free on the railway. Between 3 and 12 they pay half price. Usually it is the necessitous people who have the large families with the result that the children practically never have the privilege to make a little journey. Therefore I want to ask the Minister if he cannot reduce the fares for children between 3 and 13 years. It will be a concession to those people with large families and more use will be made of the railway.
I want to raise the question of season tickets on the railway. It is a very important question for the working people. The Minister might take this opportunity of giving an answer to the question as to whether the time has arrived when instead of issuing an ordinary season ticket he will issue a ticket for those going to their work in the morning which shall be available for six days of the week and not available on Saturdays and Sundays. Cannot that be arranged? The Minister knows the whole subject and he might give a declaration to-night as to whether he has arrived at a decision on that matter. There is another matter. I am strongly in favour of an eight hours’ day, and I want to raise this question on behalf of those workers at Port Elizabeth and East London who have to work on the sea. The work of unloading steamers is very heavy work, and I would like to see their hours made an average of eight hours per day for the month, and that they should not be employed 10 or 12 hours a day. It is not reasonable. A good deal has been said about the workers on the railway and cheaper running. I submit the true perspective is to equitably weigh up what is a reasonable living wage for the worker and see that he gets that wage. I suppose that the general manager is the lowest paid general manager of railways in the world for the work he has to do. You have very few highly paid officials in connection with your railways. I submit that, having regard to the climatic conditions and everything else, you cannot call the engine drivers highly paid for the work they have to do. You must have an equitable basis for these things. Another thing is that, where you want to assist everybody in connection with railways as far as you can, you cannot afford to assist anybody at the expense of an underpaid working staff. That is not just or equitable. You can meet the men with equitable wages and at the same time not have high rates. Take the quantity of mealies that has to be brought down. These mealies should be able to be carried at very low rates, because you carry them in bulk, and the lowest possible rates for the produce of the country should be given, but that lowest possible rate should not be at the sacrifice of the stomachs of the men who have to run your railways. I want, to say a word for the coloured man. I hold in my hand papers from a man who was discharged from the railways. He has excellent testimonials. He could not understand why they could not give him a job on the railways. He has what is known as—
I say that for this man there should be found some place on the railways. You cannot run your railways without giving the coloured man an opportunity of employment there. This man cannot get anything on the railways, and he is simply put out because of his colour. There seems to be a sort of colour prejudice running through the railways of late. The coloured man exists, and, if there had been no Europeans, there would have been no coloured men. We have got to face that issue. I hope that the Minister will give these points that I have brought under his notice his very careful and sympathetic consideration.
The hon. member for Aliwal (Mr. Sephton) has a grievance against the Government because the Government employs the white boys, if I understood him correctly. I regret very much to hear from an hon. member of this House that he objects to the action of the Minister in this respect. I can assure the Minister that the policy is welcomed by the public outside. It is the duty of the Government to provide work for our young lads. The position in the past was a very said one. Lads who had passed their matric were walking about the streets without being able to find work, and I am accordingly very sorry that a member should get up in the House and complain about the action of the Government. I must really say that I am disappointed at the member for Aliwal. The reason I have got up is that I feel it is also my duty to remind the Minister of the fact that the factories in the interior have a very bad time trying to compete with the factories at the coast, and to urge the Minister to do something for the reduction of the railway rates for the factories, and I am specially thinking of vehicle factories. In my village there is such a factory, and people complain that they cannot compete with the factories at the coast because the railway rates are so high. Then another matter. I referred to it last year, and this year, when we have such a large mealie harvest, I feel that I must again call attention to it that every year we have great difficulty to get the mealies removed from our station. I hope the Minister has made provision this year for the carriage of the mealies. I know that he has done much, and I hope that in the future it will not be again necessary for the mealies to remain accumulated on the station. Farmers have in consequence lost thousands of pounds because there were not enough trucks. I am thankful for what the Minister has done, but I hope that he will still further reduce the rates. I only further want to refer to the high rates for the carriage of grain bags. The farmers in the north more particularly experience this. They must pay 2d. per bag for a bale of 300 bags from Durban, and it is not even so far as to us. It presses heavily on the farmers and I hope that the Minister will see his way to do something in that respect.
I could wish for no better introduction to the point that I want to bring to the notice of the Minister than what the hon. member for Heilbron (Mr. M. L. Malan) has said just before me. The hon. member said that it was the duty of the Government to supply work for the young sons of South Africa. I see down on the estimates that provision has been made for a larger expenditure for increasing the staff by about £170,000 and over and above this provision is made for almost £70,000 for what the Minister here calls “expenses for the utilization of civilized labour.” It is certainly a praiseworthy step of the Minister to in both cases make such large amounts available for more work and therefore for payment of more unemployed white employees. I, however, wish to say something in connection with the taking into the service of young people from the outside districts. I should like the Minister to consider the great difficulty in employing people who come from outside. A feeling exists amongst the public as if the Department of Railways and Harbours was surrounded by a kind of encircling wall, a sort of kraal or preserve where only young people are employed who have relatives amongst the existing staff. I need not say that that would be regrettable if it is so. Take the public service. It would be regrettable if it were laid down that only sons of officials could be employed in the service and that children of other sections of the population have no chance. Therefore I hope that the Minister will go into this objection and will see to it that no privileges are given to any particular class in the department of railways. Just to point out how little chance there is for young people from outside districts being appointed I have here an application from a young man of 19 years who has passed standard six and then wrote that he was anxious to be appointed to the railway service. He says in his letter that he was prepared to tackle any work, pupil, shoemaker or any other work. As far as I know he is a careful young man of industrious parents, and just the proper kind for our railways, but the answers to his application do not appear to me to be satisfactory. I read answer No. 1—
That is answer No. 1. It is in order and is the usual answer; in it is further said that “at the moment” there is no vacancy for him. But a little later comes answer No. 2—as hon. members will see, there is an increase in the answers—
The third letter, a little later, reads as follows—
There is, therefore, an ascending scale in the refusal. In the end he is told that there is no hope of his ever getting into the railway service. It therefore looks a little as if there was a sort of wall round the department, and I regret it if it is so. But the Minister takes great interest in his staff I expect that he will also see that such a thing does not take place. Then I want to say a word in connection with the item of £96,000 for stations and buildings. The hon. member for Yeoville (Mr. Duncan) has spoken about a new station for Johannesburg. I do not wish to speak about large stations, but only about certain waiting rooms or shelters at halts. There are various halts where there is no convenience for passengers who have to wait a long time to shelter there in rain, storm or wind, and such shelters or waiting rooms only cost the railway, I should say, about £40 or £50. I therefore hope that the Minister will make provision for such waiting rooms for passengers, where goods delivered at night can also be sheltered and protected against rain.
I must congratulate the Minister, especially on his policy of manufacturing the needs of South Africa in South Africa, Also to ask the Minister if he will keep in mind what happened in 1922. when the coal miners went on strike in England, the late Minister of Railways lowered his rate on the recommendation of the coal mine owners to such an extent then that at the present time the railways are carrying coal for export from Hattingspruit to Durban at £3 1s. 11d. per. 11 ton truck. On the other hand, for consumption in Durban the price for the same weight of truck is £6 6s., and for bunker, £7 7s. 2d. I do not wish to have a repetition of this Government allowing the coal mine owners in this country to beat the mine workers in England. I would like the Minister to keep that point before him and if a crisis does happen that he will stand firm, and we will see that the railways are not run at a loss for the benefit of the mine owners to break the strike in England if one should occur.
It is always said that agriculture is the backbone of the country but agriculture has often to be satisfied with words and without deeds. There is a matter of importance to us, namely fertilizers. We are grateful for the concession that kraal dung is carried at a lower rate. But there is another fertilizer which we use on a large scale, namely agricultural lime. Before the tariff on kraal manure was reduced the tariff for it was little less different from the tariff on agricultural lime. For distances up to 400 miles the difference was small and for longer distances there was no difference. Now that the tariff on kraal manure has been reduced the difference is astonishingly large and the price of kraal manure has on the contrary risen as against the price for agricultural lime. In 1921 this lime cost 21s. per ton and kraal manure 30s. per ton. Now that the tariff on kraal manure has been reduced the price agricultural lime is the same and the price of kraal manure is 2s. 6d. more per ton. We who use much agricultural lime cannot understand why the one should be carried cheaper than the other. To this I wish to add that the weight of agricultural lime is such that the full capacity of the truck can be used which is not the case with kraal manure. I hope that the Minister will take the whole matter into consideration. I ask this with confidence because there are countries in the world where fertilizers are carried quite free. With us the exception is this that we must pay for the fertilizers, and I think that they ought to be carried as cheaply as possible because the rates will pay well when the produce comes to the railways. I do not know whether I shall be in order to discuss now the report of the departmental commission with regard to railway workshops.
That falls under the loan estimates, but the hon. member can discuss it now.
A few points appear in the report of the commission which are not quite clear to me and I think that we should now air our feelings about them. The commission came to two conclusions. The first is that it is not economically in our interests to extend the railway workshops. If this happens then it must not occur at the existing workshops in the Union but they must be centralized at one or two places. They mention quite a number of factors which must guide us in the choice of those suitable places. The first is the scale of wages, then the situation for the transport of materials, etc., the situation for distribution of the finished product, housing and suitable ground. The commission then goes further and says that the Cape Peninsula and Northern Natal are proper places for such workshops. We see that the money which has to be spent on them is a collosal amount. As one of those who takes great interest in the workshops at Pretoria I just wish to express my opinion on this matter. Two factors which we must not lose sight of are the central situation and then the material which has to be used. Bloemfontein and Pretoria are central places. Then we come to fuel. I do not know what fuel there is in the Cape Peninsula but the fuel near Pretoria is cheap and plentiful. Then we have iron ore there and also the chrome deposits which recently was discovered along with the platinum and all such ores are there within reach of the central workshops which can be erected there. I therefore do not see what argument we can have in favour of the workshops being taken away from Pretoria? I also feel in addition that when the development of the interior is stopped that it will be to the detriment of the coastal area. When the interior develops we may expect that the coastal areas will enjoy their natural development, therefore I want to raise my voice against such an alteration as is here proposed.
I should like to supplement the remarks of the hon. member for Yeoville (Mr. Duncan) with reference to the hon. member for Pretoria (North) (Mr. Oost). The hon. member whom we have—
I hope it is only for a while, but as his itinerary is in his own discretion, I fear it will be many a long day, at three guineas per day, before we see him back. I am sorry the Minister is one of those who must take some responsibility for having appointed this gentleman to this extraordinary mission. The hon. gentleman is turned loose on Europe to wander where he wishes, and we have to follow up and pay the expenses. I was intrigued by the manner in which the Minister told us of the patriotic motive which inspired the hon. member to represent us in Europe. It was not as if we had forced this appointment upon him, no, he “voluntarily understood,” so his self-abnegation was described, to attend the British Empire exhibition for the purpose of assisting in publicity work. As an ambassador for South Africa, I can only describe the hon. gentleman as grotesque, I do not refer to his appearance, but to his qualifications. It is bordering on the farcical to seriously ask us to assent to the appointment of the hon. member for Pretoria (North) on a mission of this sort. He is to make inquiries and investigations in Great Britain and on the Continent for the benefit of agricultural and industrial communities, with a view to extending the marketing of South African products overseas. I wonder what particular product he knows most about. I can think of nothing except such a modest product as snuff or something of that kind. Here we are appointing an hon. gentleman who knows nothing, as far as I can ascertain, about any product in South Africa that he can impart with any advantage to people overseas. The extraordinary position is that the Agricultural Committee are saddled with the blame of this gentleman’s appointment. How’ did they discover him—the agricultural committee of the British Empire Exhibition? One would very much like to know how they found him out. There must be some connecting link.
Why don’t you address them and ask them?
I am coming to the Minister’s share in the crime. The Minister was guilty to this extent that the hon. member is to be paid the three guineas per day, and the railway is to assist from the publicity vote. I have too much respect for the Minister’s business ability to believe that he had anything to do with initiating this appointment or with the discovery of the hon. member’s transcendent ability to assist the agricultural and industrial communities of South Africa, by his mission overseas, but if the Minister has any information on that point, and he would impart to us the secret of how this hon. gentleman was discovered by the agricultural committee, we should be much relieved. We fear there may be similar discoveries of latent talent, and similar missions for other gentlemen who are qualified in the same way. When he was chosen where was the principle of—
This gentleman was only recently naturalized as a British subject of the Union. He has only quite recently become able to enjoy the privilege of citizenship in this country. And where was the new principle, enunciated quite recently, of preference to the Afrikander born? Certainly that seems to have been in the background when our hon. friend was chosen or “voluntarily undertook” to attend at the British Empire Exhibition for a small consideration to advise a thirsting public upon the wonders of South Africa. I think the Minister has been extremely generous in allowing this hon. member to prepare himself for this mission by travelling up and down the land at the rate of £2 0s. 6d. per diem, apparently equipping himself for this wonderful mission which most of us look upon with admiration amounting to envy. There is no information as to how this gentleman was chosen or on what principle his qualifications were judged, and really how it came about. I think the general public would be interested to know precisely how these things are done. Did the hon. member write to the committee and say he would be going, because it seems to me that his voluntary undertaking was not in itself sufficient, especially as it was conditioned by the important stipulation that they must advance him the full amount of his steamship and rail fares. He seems to have been moved to voluntarily undertake this mission subject to the very important reservation that they should pay his fares, and three guineas per day. Can the Minister tell us whether there is any agreement as to the amount of time he is to put in in the service of South Africa, whether he is on piece-work, whether he may be providing so many pamphlets per month or whether there is any sort of limitation to his talents? Because the Minister’s previous reply to my question constitutes a very bare statement. We are only told he voluntarily undertook this mission, and there is no information really as to what we are to get in return. There is no quid pro quo here I am afraid. He is allowed to go forth, and in due season we shall welcome him back again from the exhibition and cheerfully pay the piper. I actually had some difficulty in finding out finally that he was to receive this all too-insufficient remuneration of £3 3s. per day and, perhaps, we could now be told how it was arrived at, whether it is the customary sum to pay, and how his duties are to be co-ordinated with those of the Trades Commissioner and with the representative of the Union Government, Capt. Lane, whose duties at Wembley are clearly defined.
Are you satisfied with his appointment?
Yes, I am entirely satisfied.
What does he know about South Africa? You might tell us.
I think Capt. Lane’s long experience in Government appointments has well equipped him for work of this sort. The difference in popularity, if there is one, is this: That the hon. member for Pretoria (North) (Mr. Oost) seems to be one who knows a good deal about the “holy flame of independence,” and Capt. Lane apparently knows nothing about that, and fails in that very important qualification. Capt. Lane, I take it, it still a member of the civil service, and the Public Service Commission, or whoever is responsible for his choice must have approved of it. He has spent 20 years in important public posts in South Africa. [Time expired.]
I just want to bring one matter to the notice of the hon. Minister which is felt very strongly about in the country, namely new appointments in the railway service, and the way in which they are made. I am very glad to be able to say that we are under the impression that, as regards posts in the railway service, the Minister and the administration give the preference to South African boys, something which possibly did not occur in the past. It is desirable that our boys should be given the preference in the service in our own country. I feel convinced that the Minister will carry out that principle, but what we feel is that certain irregularities occur in the appointments which cause dissatisfaction. Appointments up to a salary of £600 remain with the general manager, but it goes without saying that he cannot give his personal attention to all the appointments, and he thus delegates it to the divisional superintendents who are established at various centres such as Cape Town, Bloemfontein, Pretoria, Johannesburg and other large places, and it is now strongly felt that the applicant from the places where the superintendent lives are preferred above the applicants who, for instance, make an application from the “platteland.” The applicant is usually told that his application will be considered. But I know of cases where the applicant never again heard about the matter. There must, in the meantime, have been vacancies; but they get no reply simply because they have not been taken into consideration inasmuch as the appointments go to the places where the superintendents live. I shall be very glad if the Minister will alter this condition of things. I know the Minister will tell me that the appointments are usually so made that the people commence as ordinary labourers at a few shillings per day—a salary on which a man from the countryside cannot exist—but there are surely higher posts for which applications are asked, and the platteland has just as much claim to the appointment as the people of the towns where the superintendent lives. Then there is another matter. The officials in the higher appointments are not people who were born in South Africa. I have nothing against them as such, but it looks as if there is no opening for our own sons in the higher appointments. The Minister must give our boys the opportunity of qualifying themselves abroad or wherever necessary for the higher administrative work. I know of two persons who went to Germany to study railway administration, and then went to America who have in vain applied to our railways for appointments. They are sons of the soil, but they were told that there were no vacancies. I want the Minister, as is done in the agricultural department, to even give bursaries to the young men to go and qualify themselves for railway service. If he cannot do that, then he must at least employ those who go abroad on their own account to study and qualify themselves so that, subsequently our own sons will be in the higher appointments which is not the Case to-day, with the result that in many of the offices today we cannot be attended to in our own language.
I listened with great interest to the remarks of the hon. member for Heilbron (Mr. M. L. Malan), who spoke in favour of the unemployment of civilized labour on the railways. Most of us on this side of the House are in favour of this experiment, but it struck me, as showing how blind hon. members opposite are to facts that, in the same breath in which he demanded the employment of white labour, he also demanded a string of decreases in railway rates. Don’t let us blind ourselves to the fact that if we go in for this experiment of civilized labour—and I am not against it—hon. members must stop asking for lower rates. You cannot have your cake and eat it. The man who is going to pay for the employment of civilized labour is the farmer, through higher railway rates I would like further information about the appointment of the hon. member for Pretoria District (North) (Mr. Oost), who was going to Holland to visit his relatives, and who was going to make a health trip quite independant of this patriotic act of his. What disturbs me is that only recently another flagrant case of the same sort took place in another place. The chairman of the Provincial Executive Council was going overseas on a holiday—
The hon. member should not refer to this. He may use it as an argument.
But the hon. member was offering his services at £3 3s. 0d. a day to buy copy-books for the schools. I also see by today’s paper that the hon. member for Zoutpansberg (Mr. Pirow) has gone to Moscow with Mr. Pienaar in an aeroplane. I would like to know at whose expense the hon. member for Zoutspansberg has gone to Moscow.
There won’t be £40 in tips in it.
£3 3s. 0d. a day is better than £40 in tips. I asked the Minister of Railways if the hon. member—
The hon. member cannot discuss what a private member is doing overseas. It has nothing to do with this vote.
I am asking a question as to whether the hon. member is travelling at the Government’s expense.
I do not want to interrupt the hon. member, but this has nothing to do with this vote.
With submission, sir, I am asking the Minister of Railways, yes or no, has the hon. member for Zoutpansberg gone at the Government’s expense on this joy ride to Moscow?
What have I got to do with it?
The hon. Minister can say yes or no if it is so. I am not surprised at Mr. Pienaar going to Moscow, it is in the natural order of things in these days. I suppose the expense will come from the publicity vote of the railways. Let me come back to the hon. member for Pretoria (North) (Mr. Oost). When the South African party Government voted £50,000 for the Government exhibition at Wembley, the hon. member for Pretoria (North) indulged in a violent tirade against it in his paper “Ons Vaderland”. He wrote an article, this hon. member who is acting as our plenipotentiary to persuade the British people to buy our articles, he wrote an article, and I ask hon. members to listen to this—
I would like to know whether a consignment of stirrup irons has gone with the hon. member for Pretoria (North)) and whether, with these, he is going to persuade the British public to buy our produce. He goes to Wembley as our ambassador, hopelessly prejudiced against Wembley and its doings, and as one who has written articles protesting against the South African Government for contributing to Wembley, and yet he is the man singled out to represent us. Surely if that is not a scandal, then the word “scandal” has no meaning.
Why do you go for him when he is not present?
I suppose the hon. gentleman (Mr. W. B. de Villiers) is in his sober senses when he makes that remark.
The hon. member must withdraw that.
What must I withdraw? I did not say whether he is or is not.
The hon. member insinuated.
I must withdraw that he is in his sober senses? I withdraw that statement, but I doubt whether the hon. member over there is serious when he makes a statement like that.
Why didn’t you attack him when he was here?
He ought to be here; that is what we are objecting to. I am not attacking the hon. member for Pretoria (North). He would have been a fool if he had not taken this when it was offered to him. I am attacking the Minister of Railways and the Government for this scandal, because it is a scandal. If the Minister had gone out of his way to find a man whose appointment would be an insult to the British purchasing public, the hon. member for Pretoria (North) is that man. They could not have made a worse appointment. I some times wonder whether this appointment was not made with the deliberate intention of injuring feeling, because I can only say that it is the one appointment best calculated to achieve that object. [Time expired].
I would like to supplement the curiosity of the hon. gentlemen on this side of the House who are discussing this appointment of the hon. member for Pretoria (North). They are anxious for information and I am equally anxious to know something too. I would like to know whether the hon. member for Pretoria (North) is on what these people call a mission of persuasion with a stirrup-iron and a leather, or on his honeymoon, and whether there is any possibility—whether history is likely to repeat itself—of his being able to purchase furniture at the Union Government’s expense. It would be most interesting to know whether he is to use his persuasive powers in order that he may obtain a soul mate at the expense of the Union Government. Is there to be a special item on the accountancy side of the ledger, that the hon. member for Pretoria (North) shall be kept within a limit of £40 for tips? Has he taken a typist also at the Union Government’s expense? May we have a photograph of the typist? All these things, in order that we may arrive at a just estimate of the position, are items of the most important information. There are one or two other things I want to know from the Minister. Evidently that is by way of a legacy. There are other legacies, too. My hon. friend brought up a most important matter in regard to this differentiation in the carrying rates on various commodities, and one really does stand aghast. I suppose the Minister has not yet had an opportunity of thoroughly going into an examination of the position. This legacy was left to him by the hon. member for Cape Town (Central) (Mr. Jagger), a gentleman for whom I have the very highest regard. Of course one some times certainly takes leave to criticise his former actions and to determine as the result of them never to let him have the opportunity again. There are some remarkable contrasts in the carriage rates of coal. My hon. friend referred to it and he has spied out the land correctly. He came to the conclusion, and I join with him, that my hon. friend was in alliance with those who tried to break the coal strike in England. Oh no! He is a virtuous fellow, the hon. member for Cape Town (Central) (Mr. Jagger). You see my hon. friend the Minister for Railways is an innocent person, not ignorant in mental capacity, but not quite up to all the dodges of the hon. member. There are so many and devious ways in which he has tried these little dodges on that it is very difficult for a man, however brilliant, to keep up with the hon. gentleman. Let us look at the figures. Here we have 11 tons of coal for bunkering conveyed to durban at £7 3s. 2d.; 11 tons for export at £3 1s. 11d.; and 11 tons for the consumption of the citizens of Durban at £6 6s. The hon. member for Port Elizabeth (Central) (Col. D. Reitz) was arguing in opposition to my hon. friend the hon. member for Heilbron (Mr. M. L. Malan) when he was joining issue with the hon. member for Aliwal (Mr. Sephton) on the question of the employment of our South African youths; and he said you cannot have it both ways; because my hon. friend dared to ask for a reduction in carriage of the commodities necessary for the people. He omitted to tell the committee that there are more factors than one behind this position. We have to examine the position fairly and squarely before we can arrive at a just estimate. If £7 3s. 2d. is an economic carrying rate—that is a word which wraps itself round the soul of the hon. member for Cape Town (Central)—then £3 1s. 11d. is not an economic rate. In short, if one is right the other means the railway is carrying coal at a loss. At a loss what for? To get rid of one of our most important assets at the expense of the citizens, because if £3 1s. 11d. is an economic carrying rate then you are charging the citizens of Durban for their own consumption twice that rate for a commodity which is theirs by right. Take groceries. This is a question of capacity. An 11-ton truck of groceries is carried for £182 8s. 4d. Cement is carried for £15 13s. 6d., that is about a twelfth of the cost of carrying groceries for the poor man. That is one of the factors you have to take into consideration before you dare to charge my hon. friend over there with not having the right to ask for a reduction in the carriage of necessary commodities, and at the same time to demand that you should employ the manhood of the country in that carrying capacity. [Time expired.]
I want to say a few words about the late arrival of the trains from Pietersburg to Messina. The hon. member for Zoutpansberg (Mr. Pirow) is not here to-night, but I take an interest in that part, and it deserves attention, because it has a good future. I have had experience of the miserable train service there. I have not talked to the officials on the train about it but I thought that I would bring it to the notice of the Miniser. On one occasion when the train I was on arrived at Schoemansdal from Pietersburg it was three hours late. The hon. member for Pietersburg will certainly support me in my complaint. He has possibly also received complaints in the matter. There are usually many passengers for Messina and other stations, and these have to wait at Zoutpansberg and arrive there in the dark, late at night. The passengers have then further to go on donkey carts, often about three or four miles to get home. I fortunately did not detrain in that dangerous part, and did not have far to go, but I am speaking on behalf of the people there. The return journey was the same. We should have reached Pietersburg at six o’clock, then wait three hours to catch another train to Pretoria. We arrived at 10 o’clock, and the mail train for Pretoria had already left. Instead of arriving at Johannesburg at 9 o’clock I arrived at 2 o’clock in the afternoon. At large centres and on long distance lines the service is regular, but we must also think a little of the people in the back veld who live there in unhealthy and dangerous parts, where there are still many lions and other wild animals. Then I have also found that there are at the halts some of the old tin huts of nine by sixteen foot for waiting rooms. That is not sufficient provision. If women have to wait there it is very unsatisfactory. There are often kaffirs in them, and some times also sacks, etc. I think an alteration should be made. Then I also just want to tell the Minister that the people are grateful that provision has been made for a motor service to carry the cream to the station. But at some of the stations they find on arrival quite a number of natives there, and then there is no shelter for them against the rain. I hope the Minister will meet the people.
I just want to draw the attention of the Minister and of the administration to the fact that for years there has been a shortage in trucks for the carriage of fruit, and I understand that the railway department has been waiting for two years on sketches for proper trucks for that transport. Must we wait further for that until next year? For years there have been no trucks for the carriage of fruit. This year 50 cattle trucks were specially prepared to carry fruit, and it is therefore urgently necessary that attention should be given to this matter. Then I still wish to bring to the notice of the Minister that the examination the boys have to pass to get into the railway service is very difficult for some boys on the platteland. There is often no opportunity to qualify in standard seven, which is the requirement. Some schools only go to standard five, and this therefore excludes the children from the platteland from the opportunity of entering the service.
I would like to ask a question in connection with the commercial evening classes which are conducted for the benefit of working people, whose children have not been able to obtain sufficient education at school to enable them to enter business life. They attend these private classes in order to learn shorthand, typewriting and bookkeeping, and such like subjects. Many of these institutions are privately run, so that the railway concession given to ordinary students is not extended to their pupils, although these schools perform a work which should really be carried out by the State. There is one such school at Wynberg, which is turning out young men and women well qualified in the subjects which they are taught, but they are very much hampered by the fact that no travelling concessions are given to the students. The very poorest people attend classes of this kind, and some times the fact that these railway concessions are not given prevents a parent sending his child to these schools.
I know the Minister is anxious to get the vote through, and we want to help him. I want to impress on the Minister that we have had a good many late nights lately, and many members of the House are tired. I ask him, therefore, to accept the motion to report progress and ask leave to sit again.
I think we might go on until 11.
There are one or two points I want to bring to the notice of the Minister, but before doing so I want to congratulate him on having earned the golden opinion of the men he employs. There is a feeling among the workmen that at all events there is an effort on the part of those in authority at last to give them a square deal. It is reflected in efficiency. The policy of the department is showing good results. It is what we have advocated in this corner that if you treat men well and build up a good atmosphere between the men and the controller of the industry it makes for efficiency and good temper and everything goes well. I congratulate the Minister on the present niche he fills in the hearts of the men he controls. I want him to still further cement the good feeling. The question brought up by the hon. member for Three Rivers (Mr. D. M. Brown), is one I want to support, and it is a matter that is going to be endorsed by other members. The realization has been brought home that there is a necessity for introducing a system that exists in other parts of the world, and that is one journey each way at the special rate for work people. I hope the Minister is listening.
The hon. member must address himself to the Chair.
Yes, sir. I wish to do that, but I want the Minister to hear what I say. My duty to my constituents makes it incumbent upon me to ask him to listen to my remarks. I am loth to interrupt any conversation that is more interesting to him than my speech. If he would consult with his heads of department it would be an easy matter to introduce. You have the experiences of other railway systems, and if he will do this he will be rendering a good service to the industries of the country. I speak for the Rand. There is a tremendous travelling workaday public there going to and from work, morning and evening, and they require it instead of a season ticket on which they waste a lot of their money. I don’t think the railways want to make money that way. Thousands a day are travelling on the Reef and they must be supplemented considerably in the Cape and elsewhere, and under the circumstances I think the time has arrived when the Minister might consider the introduction of workmen’s tickets. Then comes the good old hoary annual, the question of ships. This House passed a resolution unanimously, strange to relate, too, in the absence of the hon. member for Cape Town (Central) (Mr. Jagger)—
I confess the Minister accepted it grudgingly, but I think the force of circumstances will combine to cause him to seriously think about it. When the Minister replies I hope he will tell me what he is doing in the matter of acquiring more ships. The value of them has been demonstrated for railway purposes and in the general carrying capacity of the country I would recommend the Minister to get hold of the report which has been prepared by Mr. Preston. He will find that there has been tremendous interlocking in regard to the control of the ship-carrying trade of the world. I would like to know what the Minister pro poses to do about this. Then there is the question of the eight hours’ day. That principle should be applied to every man engaged on the railways, even in the capacity of a gate-keeper, where men have to work twelve hours a day. In view of the experience of the world that an eight hours day is sufficiently long for any man to work, whatever capacity he may be engaged in, I would suggest to the Minister that he should now turn his attention to the desirability of instituting the eight hours day. I want to impress upon him that he must not approach this question with the idea of seeing what excuses or arguments he can bring to bear against the introduction of the eight hours day, but that he should turn his attention seriously to all the arguments that he can find which bear in the direction of inducing him to agree that an eight hours day is a desirable thing. [Time expired.]
On the motion of the Minister of Railways and Harbours it was agreed to report progress and ask leave to sit again.
Progress reported; House to resume in Committee to-morrow.
House adjourned at