I move—

This Bill does not have a principle running right through it. It contains a number of legislative proposals which have only been linked together in so far as they all in one way or another affect the Consolidated Revenue Funds or the Railway Funds. A Bill of this kind can, therefore, only be dealt with clause by clause, and as hon. members know, a White Paper has been laid on the Table of the House which deals with this Bill in that way. This White Paper practically takes the place of a second reading speech, and in any case it is perhaps more appropriate to have the discussion of a Bill of this kind principally during the Committee stage. I therefore do not propose to repeat now what appears in the White Paper, or to make an ordinary second reading speech. I shall merely refer to the main principles contained in this Bill and where necessary I can give further information in replying to the second reading debate, or when we deal with the various clauses in the Committee stage. Clauses 1 and 2 give effect to the Budget proposals in regard to the surpluses on general estimates and also on the Railway Estimates. The proposals were announced in the Budget speeches in regard to the application of surpluses. In regard to Clause 1, I wish to say only this. In the Budget speech a probable surplus for the year which ended on the 31st March, 1944, estimated at about £270,000 was mentioned, and it was said that our proposal would be to transfer that amount to Loan Account in order partly to cover our pound for pound contribution to the Governor-General’s Fund, but I added that if the surplus were bigger, we would transfer the larger amount to Loan Funds until we had covered the whole amount of those contributions. Hon. members will see that what we are doing here is to propose transfer into Loan Account of a sum of £452,000 which is the total amount of the pound for pound contribution to the Governor-General’s Fund. That therefore means that our surplus is larger than we had originally estimated. As a matter of fact, the Estimate now is round about £2,000,000. Of that amount £452,000 is expended in this way and the balance will then be available for the items appearing on the Supplementary Estimates of Expenditure insofar as they are not mentioned in the Budget Speech. My intention is, in dealing with the Appropriation Bill in Another Place, to supply revised figures of the Budgetary position in consequence of the increased surplus for last year and the supplementary expenditure which we propose to undertake this year. Clause 3 of this Bill contains the Government’s proposal in regard to the Gold Realisation Fund, and the increased wages to native mine workers. The Rt. Hon. the Prime Minister a few months ago explained the Government’s policy in regard to this matter. Subsequently I also made a long speech on the subject and the matter was further discussed in Committee of Supply. I do not propose therefore at this stage to say any more about the matter. Then there are two clauses in this Bill which deal with our general financing procedure. First of all I want to refer to Clause 4. As hon. members know the Government is authorised in certain circumstances to give guarantees to the Land Bank and to the Reserve Bank for the financing on behalf of the State of certain agricultural and commercial activities. The Government, however, cannot, if in terms of such a guarantee money is paid in, pay over that money without Parliamentary appropriation. As a result it sometimes happens that interest accrues against us while we actually have the money available in the Exchequer. This clause will give us the right, as a temporary measure pending the passing of the Appropriation Act, to use that money. I also want to refer to Clause 17 of this Bill. It deals with the fund for unforeseen expenditure in respect of which we can draw by way of special authorities. Originally that fund was fixed at £300,000 but in those days our total expenditure from Revenue and Loan Accounts was £20,000,000. In 1934 the fund was increased to £500,000. In those days our total expenditure from Revenue and Loan Accounts was £47,000,000. Today, apart from Defence, which we can regard as a transitory matter, our expenditure amounts to £80,000,000 a year. It seems reasonable therefore to increase the amount in this fund, and, especially so, in view of subsequent developments which have become necessary. I have referred to the needs which have arisen in the course of the year in connection with subsidies, especially for agricultural products and also in respect of some other activities. Let us see what has happened in the past three years. We had to decide to provide subsidies to a considerable amount in respect of the fixing of the price of bread. We had to find a large amount of money for that, pending Parliamentary approval. That expenditure could not have been foreseen. With a view to eventualities of that kind, the Governor-General must have greater powers than he has today. Then there are two clauses in the Bill which affect the provinces. I refer in the first place to Clause 9. A Government Notice, dated 1924, provides that Provincial Councillors shall only be paid for three years after the date of their election, but in terms of the Constitution Provincial Councillors are entitled to sit for three years after the first meeting of the Provincial Council. I appears therefore that there are Provincial Councillors who have been paid for more than three years, and there has been an extension of the term of Provincial Councils to five years and even to seven years, and consequently the payment made to Provincial Councillors has been illegal. I notice several hon. members here who are now members of this House, who have illegally received their Provincial Council allowances. To help them out of their difficulties and also to help others out of their difficulties, and also in order to carry out the clear intentions of the law when it was passed, we are now proposing this validating provision and I hope hon. members will have no objection to it. Possibly the hon. member for Winburg (Mr. Swart) will also have some objection to the next clause I want to mention, but I really hope he will assist me in getting it passed. I am referring to Clause 26 which relates to the subsidy payable to the Province of the Free State. As hon. members know the subsidy is calculated on the basis of school attendance, on the average number of children attending the school. In the Free State of latter years there has been a falling off in the number of children attending school, but steps have been taken from time to time to stabilise the Free State subsidy on the minimum basis, which is that of 1936. The last period in respect of which this stabilisation has taken place has now passed and unless we do something now the Free State will have to lose many thousands of pounds a year. I assume, therefore, that the hon. member will be willing to assist us there. As hon. members know the whole question of the financial relations with the provinces is to be discussed and pending the arrangement to be arrived at, we propose to extend the period.

Which discussion are you referring to?

The hon. member is aware of the fact that the Corbett Commission Report has now been published and it has been arranged to call a meeting with the Provinces towards the end of June to discuss the whole question of financial relations, with that report as our background. All that remains now is for me to refer to Clauses 27 and 28. They deal with the tax on co-operative societies. Protests have been registered from various sides— premature protests, against the proposals in view of the fact that these protests were made before the people, who protested, knew what the proposals which were to be introduced were going to be. These two clauses are the result of discussion between my Department and the Department of Agriculture, and the Department of Economic Development. The proposal is to tax co-operative trading societies. The amendment which is proposed here practically speaking affects only the co-operative trading societies. All co-operative agricultural societies will, as in the past, be exempt from certain trading licences, and in addition to that from income tax, except in respect of income derived either from, their invesments or from dealings with non-members. This exemption will continue and the exemption from income tax will also continue as in the past for these so-called special co-operative farmers’ societies. We are dealing here only with co-operative trading societies. They will, if this proposal is accepted, be taxable, but those whose business with non-members is no greater than is necessary for the achievement of their object, will still be exempted in respect of trading licences, and in the assessment of their taxable income the amount paid out to members by way of bonus will be deducted to a value of 10 per cent. of the business transacted with them. That, then, will be the position of those co-operative trading societies which principally transact business with their own members. A co-operative trading concern can be regarded as a company whose main object is to transact business with its own members, but to a certain extent one cannot get away from the fact that such a company will also transact business with people who are not members. To a certain extent it is necessary, in order to achieve its main objects, that that kind of business shall be transacted, and it is for that reason that it is proposed to meet concerns of that kind, but where such a co-operative trading concern exceeds the limits of that concession, the exemption from taxation means unfair competition with ordinary trade, and it is also unfair towards the general taxpayer who as a result of such exemption has to contribute more in a different way. We therefore propose to restrict the unfair competition in regard to co-operative trading concerns which to a large extent transact their business with non-members.

Why is that part of the business which they transact with their members taxed?

The business they do with members is exempted to the extent that they issue a bonus not exceeding 10 per cent. That surely is a fair arrangement and it is such that the real object of co-operation will continue to be encouraged to the same extent as in the past.

Does not the Co-operative Act provide that they are not to pay more than 8 per cent.?

I am speaking about bonuses. This Bill deals with bonuses. I want to say again that taken as a whole this proposal is fair and reasonable and I hope it will be accepted in that spirit. For the rest this Bill can be dealt with mainly clause by clause. I have merely made these few general remarks in regard to the principal provisions of the measure now before the House.

I am afraid this Bill, which is generally known as the “Omnibus Bill” has become a sort of necessary evil. We cannot get away from it. But none the less I want to express the hope that where great principles are at stake, and in this Bill important principles are involved in regard to several matters, we shall see to it that such questions of principle will in future be dealt with in separate Bills. My reason for saying that is this—that if one wants to object to questions of principle in a Bill such as this one is prevented by the rules of the House from proposing amendments to the effect that the second reading shall only be passed if the objectionable provisions are removed from the Bill. In this particular instance most of the provisions are necessary and we have no great objection to them, but there is one great question of principle which affects a matter of public financial procedure which I consider should have been contained in a separate Bill. I am referring to Clause 3 of the Bill which concerns the payment to the Mines of a certain amount from Loan Funds, which is to be used as a subsidy for their native labourers. This is a question of such importance that we cannot possibly vote for it. We feel it is a matter of principle but still we are prevented by the rules of the House from moving an amendment that we are not prepared from accepting the second reading unless this particular clause is deleted. I do not want the House or the country to be under any misapprehension. We shall vote for the second reading but we do not agree with what is contained in Clause 3. If in the circumstances we vote for the second reading, it should be understood that we are only voting for it subject to this qualification that we are definitely opposed to this provision. From a financial point of view this particular provision is an astounding one. I do not know whether all hon. members realise what we are doing here. We are taking an amount from Loan Funds here, we are raiding our Loan Funds and we are taking the money and giving it to a particular industry for a particular purpose, namely, the subsidising of a special class of its labourers. It is an unheard-of procedure and I do not think there is a precedent for it to be found anywhere. The nearest precedent the Minister can point to is when Mr. Burton was Minister of Finance, and made a raid in 1924 on the Redemption Fund to make the ordinary Revenue Account balance. We know what the result was. It undoubtedly was one of the nails in the coffin of the Government in 1924. This unsound violation of public financial policy, to take money from Loan Funds for ordinary purposes and especially if it is taken for a private industry is alarming. But however astounding the provision itself may be, even more astounding and more alarming is the fact that it comes from our present Minister of Finance who in the past has given evidence of a fairly sensitive conscience regarding public finance. How he can reconcile this with his conscience in regard to public finance, how he can reconcile his making such a proposal has caused me a lot of worry and speculation. I have tried to find the reasons for the Minister’s conscience having become so calloused that he is prepared to do a thing like this. After having discussed the matter with other people, the following explanation was given to me, which perhaps may be the right one. It is this—that as a result of the Minister’s injudicious and unscientific taxation measures commerce and industry have become estranged from him. He has incurred the displeasure of commerce and industry. He has lost their support in his competition for the Premiership. Those people who in the past supported the Minister of Finance to a certain extent are so upset at his taxation policy that they are no longer prepared to support him, and they transferred their support to another candidate.

Do you mean the Leader of the Opposition?

I don’t want to penalise anyone if he shows signs of common sense.

You people are now courting Hoggenheimer.

But you people have married him—how can we court another man’s wife.

Yes, but there will first have to be a divorce before a marriage can take place. The Minister of Finance has lost the support of those people. Diplomacy plays a big part in the struggle for life— the search for allies. Now that the Minister of Finance can no longer rely upon the one type of ally, now that they have been estranged from him he has to look for new allies. He knows that he is not going to find any allies in agriculture. Agriculture is not greatly enamoured of the Minister of Finance, consequently all that is left is the mining industry. But we know that if we look for an ally in the political sphere, we have to give something in return for that ally’s support, and at any rate an ally wants certain signs of friendship and sympathy. It is noteworthy that the Minister of Finance this year has not imposed any additional tax on the mines, and not only has he not imposed any new tax on them, but on top of that he is now taking £1,800,000 out of Loan Funds, and then he tells them : “Now here is a present for you.” I think the mines would be guilty of gross ingratitude if they didn’t do what they are doing now and that is to shout a little less loudly: “Colin is our man”. They are apparently transferring their allegiance, although not entirely— apparently they are a bit estranged from their former favourite the Minister of Justice—I am afraid the stock of the Minister of Justice has gone down a bit as a result of the diplomatic and tactful attitude of the Minister of Finance. That is almost the only explanation one can give of the change in policy on the part of the Minister of Finance for the hardening of his conscience in regard to public finance. We know that the Minister of Finance said that this money from the Gold Realisation Fund was of such incidental character that it should come under the Loan Account, and that is why under the 1940 Act it was paid into Loan Account. Now, as I have said, it is being used for a particular industry, as a subsidy for the increased cost of production caused by the increased wages to mine natives. But this action on the part of the Minister does not only affect the Loan Funds; it also has an important effect on the Revenue Account. The money is in the first place taken out of Loan Funds which means that for the capital requirements of the war and for other purposes we shall now have to borrow £1,800,000 more than would otherwise have been the case. That means that as far as revenue account is concerned we shall after the first year, when this system comes into operation have to pay £54,000 more in interest on our capital as a result of the fact that this money has been taken out of Loan Funds. Not only shall we now have to pay this £54,000 more, but we shall have to continue paying it right through every year as a result of this raid on our Loan Funds. We shall every year have to pay an additional £54,000 interest on our public debt. It is a tremendous tax which we are going to impose on ourselves, and for what purpose are we doing it? To give the mining companies a subsidy for the purpose of paying an increase in native wages. The Minister of Finance will now tell us that the position is such that in any case he would have given the mines 70 per cent. of the increased production costs by way of reduction of taxation. I know he will say that in terms of the formula, the mining companies in respect of every £100 of the increased production costs get back practically £70 in the form of reduced taxation. But let us study the implications of that contention. This £1,800,000 is taken out of Loan Funds, and it amounts to this that £450,000 is given direct to the mines as a subsidy, and that £1,350,000 is transferred to Revenue Account because the reduction of taxation on the mines which would have been caused by the incresaed production costs is compensated thereby. This effect is the same as if this amount had been paid out of Loan Account into the Revenue Account to compensate for the reduced income of the gold mines. Although the result is that 70 per cent. of this amount, practically speaking, is paid into Revenue Account, the Minister none the less felt in 1940 that it is an amount which does not belong to Revenue Account and which should be paid into Loan Account. That is what he did in 1940, but the result of what he is doing now is that 70 per cent. of this amount is being paid into Revenue Account. The further implication is this, that whereas the mines normally would have borne 30 per cent. of the increased production costs themselves, and the State 70 per cent., the Minister of Finance now sees to it that the State pays the full 100 per cent. If the Minister’s contention is correct, then we have this position that while the State already have returned 70 per cent. of this amount to the mines on account of reduced taxation, as a result of increased production costs, the Minister of Finance now gives them the full 100 per cent. What right has he to do so? We are fully justified in saying that the 70 per cent. is a very substantial subsidy for increased production costs—and that being so why then make it 100 per cent. Is the farming industry or industry generally being treated on the same basis if their production costs go up? Do those industries get a 70 per cent. contribution from the State by way of reduced taxation? Has a formula been worked out for agriculture so that if production costs go up the State pro rata reduces the taxes to an extent of 70 per cent. of the increased production costs? Yet the Minister goes even further than that, and he is prepared to make that 70 per cent., 100 per cent. The third implication is this. This subsidy is alleged to be granted for the sake of the mines which are threatening to close down. I notice that Wit. Deep, which threatens to close down, last year made a profit of £112,000. But not only is this assistance now to be given to that class of mine—it is to be given to all mines in respect of native workers. It therefore also applies to the mines which even with their increased costs of production give great profits and have paid big dividends. What is going to be the effect if this subsidy is now paid to them? The result will be that their profits will be swollen still more and that their dividends will be increased pro rata. Is it for an object such as that that the Minister of Finance is prepared to make a raid on the Loan Funds? There is no precedent to such a raid. The idea of a raid on Loan Funds is bad enough, but if it is made for the purpose of discrimination in favour of a particular industry then it is something against which one’s sense of fairness rebels. We cannot allow it to pass without protest. We objected to it on a previous occasion and we are again going to oppose it with all the means at our disposal. Dealing as we are with such an important matter here it would have been no more than right if the Minister of Finance had inserted this provision in a special Bill so that we could have fought the principle on the second reading, condemned it and voted against it. Now there is another provision with which I will deal for a moment. I may say that other hon. members will refer to other aspects of the Bill. I wish to deal with Clauses 27 and 28 of the measure now before us. The position is that co-operative societies at the moment are divided into two classes—closed societies and the other class. There is a distinction between the two. The distinction in regard to trading societies is based on the principle that it is left to the Registrar to decide whether the business which such a society conducts with its members is sufficiently large to enable it to answer its purpose. The first criticism on that point is the same criticism which I have voiced before, namely, the wide powers that are given here to the Registrar. The difficulty is that these trading societies are now going to be in a position of uncertainty. The society will not know how it is being classified. It is not laid down in the Act. It is left to the Registrar and he can act as he deems fit. No measure is laid down. As it is stated in England, equity depends on the size of the Chancellor’s foot. Every chancellor can decide on his own measure. In trade and commerce particularly people want to have some certainty and security. One wants to know beforehand how one is going to be classified—whether one is going to be classified as a closed society or otherwise. It would have been better if a definite percentage had been inserted here—if the clause had read that trading societies whose business with members exceeds 50 per cent. would be regarded as closed societies. If that had been done one could have at once decided how such a society was to be classified and it would not have been left to the whim of the Registrar. We cannot leave such decisions to the arbitrary findings of a member of the Public Service and leave it to him to decide where the line shall be drawn. And if it is necessary for a degree of elasticity to be given, I should have said that it would have been sounder if we had provided that the Registrar could use his discretion within certain limits. The Minister can say that it depends on the nature of the business—whether it is a certain type of trading society or a different type. He cannot draw a definite fixed line. But then again I would have said that the Registrar should be given discretion to limit it to within 5 percent. but not in the way he can do it now. Éven if 99 per cent. of the total business of the trading society is with its own members, he still has the right to say that it is not a closed society. We are continually faced with this new despotism of officials. Matters which should be decided by Parliament are more and more entrusted to officials and there is an increasing tendency on the part of the Government to have more and more of the work which should be dealt with by Parliament done behind closed doors by departmental heads. I say that these matters must be laid down by Parliament itself and should not be delegated to departmental officials for them to act arbitrarily and without anyone having the right of appeal from the discretion exercised by the Registrar. To give such rights to an official is merely an expansion of the despotism of officials which we are suffering from in this country. Another objection I have is this—or rather it is not so much an objection—we all agree with the Minister that ordinary trade must be protected against unfair competition. That is a principle which we feel is fully justified. On the other hand however, the Minister must also bear in mind that the co-operative form of trade is a form which to a large extent excludes personal and private profit, The concern is not the property of just one man—it belongs to a number of people, and it is a very sound tendency in our economic life to spread the risks and the benefits connected with trade over a large number of people. It is a sound principle and one does not want to detract from it. Under the law the profits of any co-operative society on its share capital are limited to 8 per cent.—

Then he goes on—

I should like to support the remarks of the hon. member for Fauresmith (Dr. Dönges) in connection with Clauses 27 and 28 of this Bill. I am very sorry that the Minister, at this late stage, is introducing provisions whereby the co-operative system, if it is not dealt a serious blow, will at any rate be curbed. In earlier years we noticed that the trade in our country was largely in the hands of our English-speaking fellow Afrikaners, but unfortunately of recent years the trade has systematically fallen into the hands of the unsettled section of our nation, the Jews and the Asiatics. It was correctly felt that the Afrikaans-speaking people were also entitled to a share of the trade, and the best means of promoting that was by means of the co-operative system. That system undoubtedly had a very good effect. I am thinking of my constituency, for example, where a co-operative society was established six or seven years ago. Even poor people bought shares. The society was established and expanded, and today it has ten or twelve businesses in the Western Transvaal. The opposition was very strong, but because the societies possessed great purchasing power, they systematically got hold of the trade. I am afraid, however, that this action on the part of the Minister will cause a set-back to that excellent system. Instead

then there is the second group of companies which also handles products, but which, with the permission of the Registrar, does more extensive business. Then there is another group of companies which confine themselves exclusively to the provision of necessities to their members for farming purposes. They supply any article which can be regarded as a farming commodity. But there are trading companies which handle the same articles. They are registered under the Act of 1933, and they handle anything from farming requirements to groceries. Such a company is taxable in respect of the profits it makes on business transacted with non-members. I want to put this question to the Minister of Finance. Why should there be differentiation amongst the farmers? If the farmer is a member of a closed company, and he buys his implements through that company, the profits are not taxable; but if he is a member of a trading company which handles the same articles, the profits made on these articles are taxable, as well as his share in the company. We know from which quarter the pressure has come. I have realised in the past that private companies, privately-owned companies, are somewhat jealous of the co-operative companies. But I want to draw the Minister’s attention to the fact that in those companies the shareholders and the directors of the company get all the benefits of the company. When their final statements are drawn up, every director receives £1,000 or even £1,250 by way of fees. They can write off items of that description before they actually become liable to taxation. But what is the position in the case of a co-operative trading company? I have years of experience of co-operative trading companies, and as a director I have never got more than bare travelling and subsistence expenses. The Co-operative Societies Act provides that the director of such a company occupies an honorary position. In applying this provision the Minister of Finance is hitting the people who have organised and grouped together, and who decided to trade amongst themselves; and because they decided to trade amongst themselves and not to accept any compensation for their services, the Minister is now placing these co-operative trading societies in this position that in actual fact they will be taxable to a greater degree, pro rata, than ordinary private individuals and companies. I want to associate myself with what the hon. member for Fauresmith (Dr. Dönges) said, namely, that the Minister should incorporate a provision into this Bill to the effect that a co-operative trading company which transacts less than 50 per cent. of its business with non-members, should be declared to be a closed society, and that such a trading society should then receive the full privileges of a co-operative society. In that way he would prevent the greater portion of the business from being transacted with non-members. The application of the provisions of this Bill to co-operative trading companies will not exclude competition. The traders will come up against stronger competition. I know that type of business. I know how it is done and I know what would happen. Knowing that a great portion of the money which they take from their members will have to be paid over to the Minister of Finance, it is to be expected that the directors of such a company will deliberately take a low percentage of profit on the various articles so that they will not have to pay this money to the Minister. The result will be that we will cut our percentage of profit still further, and the traders will be dissatisfied. This is not the cure. It will not help. It will cause keener competition, and it will give the Minister of Finance more trouble. The Minister has received a memorandum from the Chamber of Commerce. We have seen it. There is a tendency in this country on the part of trade to kill the co-operative societies. They will have as little success in that direction as they would have if they tried to touch the moon. The co-operative society system has come to stay. We know our business, we know how to arrange it. Do you know what they are doing? I should like the Minister of Finance to know it, since he is now taxing the co-operative companies. By means of the control measures and by means of the war measures, commerce is trying to deprive the co-operative societies of a portion of their turnover. This business was always done before the war by those co-operative trading companies, and they will continue to do it after the war, but commerce wants to make use of the war circumstances to kill the co-operative societies. I hope the Minister of Finance will not lend himself to it. We have to compete with commerce today, and we have to contest every inch. I want to give the Minister of Finance the assurance that this tax may temporarily satisfy trade, but eventually they will pay for it. The other point which I want to bring to the notice of the Minister is that of the dividends. I have said that the co-operative trading companies are not allowed to pay directors’ fees. The directors occupy honorary positions, and the dividends are limited to 8 per cent. If the Minister of Finance now decides to tax these companies like the other companies, he will be placing them on an equal footing. Give the co-operative trading companies an opportunity too of writing off certain items, of paying bonuses, and of paying unlimited interest on the capital investments. If the Minister of Finance does not do that, I can give him the assurance that what we have predicted here may actually take place. We know the methods of commerce, and we know just what would happen. I hope the Minister will consider this matter. At present we are paying taxes on that portion of the business which is transacted with non-members. We want it laid down in the Act that any company, whose business with non-members is less than 50 per cent., will be regarded as a closed company. Everyone would then know what the position is, and every company would know that if it exceeded a certain percentage, it would be subject to taxation, but not otherwise.

I should like to avail myself of this opportunity to express my gratitude and appreciation to the Minister of Finance and his department for their assistance and for concessions which have been made to an institution with which I am connected, especially as far as the provisions of this Bill are concerned. This has eliminated an insurmountable difficulty which stood in the way of the conversion of that undertaking. On behalf of this institution I want to express my appreciation to him and his department. I do not want to repeat what has already been said, but there are a few minor points which I want to mention, because I regard them as being of far-reaching importance in our financial life. Various hon. members have already referred to the effect of Clauses 27 and 28 on the co-operative system. I want to assure the Minister at once that I appreciate the difficult position in which he finds himself. For practical purposes he is in between two millstones as far as those provisions are concerned; he is being pressed from three sides actually, and I take it that it is as a result of that pressure that he incorporated this provision into the Bill. In the present circumstances he is compelled to seek as much revenue as possible for his war expenditure. I think he is overestimating the revenue possibilities of the source which he wants to develop in this case. It will yield only a small contribution, because as the hon. member for Kroonstad (Mr. A. Steyn) has indicated, the co-operative societies have means at their disposal to reduce their profits. That must be very clear to the Minister. The factor which is accepted outside the House as the cause of this provision, is the pressure which organised trade brought to bear on the Minister. We know that of recent years determined propaganda has been set afoot, at least by organised trade, against the organised co-operative system as such because it was felt that the co-operative societies were receiving preferential treatment. The Government received two memoranda in connection with this case, the first in November last year, and the second in March of this year. These memoranda emanated from organised trade. I have not yet seen their contents, and I can only speak of their effect, as reported in messages from agriculture. Since organised trade is making an attack upon co-operative trade, it affects a fundamental principle which is of particular significance to us. This fundamental principle is that the co-operative organisations, as far as trade is concerned, represent the obvious means of uplifting the economically weaker section of the population. I want to emphasise that the co-operative system is the correct means of restoring and rehabilitating the weaker section of the population. That has been the experience. The most obvious case is the system which came into existence in Germany in 1848, which, as history teaches us, accomplished wonders. But it is not only in Germany that it accomplished wonders. In other parts of the world, too, the co-operative system is used to assist in the building up of the economically weaker section, and it is therefore in the interests of the State that this co-operative system should not be oppressed. On the contrary, it is significant and valuable that it should be encouraged to assist and to rehabilitate the economically weaker section. Since this Bill leaves a certain amount of discretion in the hands of the Registrar, it again places the Minister in a difficult position. In the first place, he realises that if an organisation is conducted on co-operative lines, where this system is practically unjustifiable, and that organisation then proceeds to trade with non-members to the extent of more than 50 per cent., this form is perhaps not justified; and there he has to take into account the protection of ordinary commerce. The State should, however, encourage the continued existence of the co-operative society in the interests of the economically weaker section. I feel that in its present form, in leaving the discretion to the Registrar, a particularly difficult duty is being placed on the Registrar. One Registrar may regard a certain basis as reasonable, and another Registrar will have another basis. In one case a certain percentage may appear to be reasonable, and in another case the Registrar may be of opinion that it is an unreasonable percentage. I therefore want to support the hon. member for Fauresmith (Dr. Dönges) in his request that a definite basis should be laid down in this Bill. That is, I think, a fair request. Apart from the economic factors, there are other inherent factors in the co-operative system which we should not oppress, but which we ought to encourage. I am referring to the sense of independence which is born out of it; the fact that the co-operative society governs itself, that everyone in the co-operative society stands on an equal footing, whether they have one share or a hundred. It promotes a sense of independence amongst our people, and the most important factor is that under the co-operative system the shareholders themselves are expected to find the capital for the business, and because the finding of capital is such an important matter, it promotes a sense of thrift amongst the weaker people. It would be a pity if this compulsion to find the capital of the co-operative society which encourages a sense of thrift, were removed. The Minister probably saw the letter which appeared in one of the newspapers yesterday, in which the same matter was raised. It is not an Afrikaans newspaper. In that newspaper the danger to company trading is emphasised; it is emphasised that if effect is given to the principle which is now being incorporated into this Bill, the position may become very dangerous. In that case it would be logical to fix the prices, and the Minister would definitely hesitate to do so. I hope he will give the country the assurance that this step which he is now taking will not oppress organised trade. I hope it will be stated very plainly that this action on his part has not been forced on him by pressure from organised trade; in the second place, that he will not in any way injure the principle of co-operative societies; that the Act itself will determine when a co-operative society will be closed and when it will not be closed. With reference to Clause 5, I do not want to repeat what was said by the hon. member for Fauresmith, but I do want to make these few observations. The hon. Minister stated on a previous occasion that this contribution would only be in respect of this year. Indeed, it could not be otherwise, because the Act only makes provision for one year. Certain questions arise out of the fact that the decision of the Government departs from the recommendations of the Lansdowne Commission. In the first instance provision is now being made for an increase of wages on the shift basis, while the Lansdowne Commission recommended an increase in the cost of living allowance, also per shift; but the basis of the Lansdowne recommendation was not the inadequate remuneration of the natives, but the basis was the increased cost of living. In the present form of the Bill, it is not on the basis proposed by the Lansdowne Commission; but it is an announcement to the world that the wage per shift is insufficient, and that means that whereas the scale of the Lansdowne Commission would have been a sliding scale, based on the rise or fall of the cost of living, under this resolution it really means a new basis which would then have the effect of being permanent. I take it that that is right. Since the Minister stated on a previous occasion that this would only be a temporary measure, the question arises what the position will be in the future? This House definitely cannot accept the proposition that the State should accept the responsibility in the future of financing an industry in respect of its working costs. There is a second principle which flows from this, and I am grateful that the State, quite correctly, is now going to point out to the mining industry that they acted wrongly in not paying overtime and Sunday time. According to the Lansdowne report these people worked on Sundays on the ordinary basis of pay, and I take it the State will now see to it that provision is made in the future for overtime and Sunday time. But all this involves the implication that the expenditure of the mines will be higher, and since the attitude of the mines in the past has been that they can only exist on the basis of the cheapest working costs, the question arises what steps the Government should take in the future to ensure that these needs of the natives are provided for, without the State assuming the responsibility for it.

I should like to associate myself with the hon. member for Fauresmith (Dr. Dönges). I think there are certain provisions in this Bill which could have been more appropriately incorporated into a separate Bill, especially these provisions in connection with the various agricultural co-operative societies. In trying to ascertain the legal position, it is necessary to have a separate Bill. If we want to find out, for example, what the legal position is, we have to go to the Finance Act of this year. We want to express the hope, therefore, that in future the Minister will not incorporate provisions into this Act which could more appropriately be embodied in a separate Bill. I want to confine myself more particularly to the subsidy to the mining industry. I want to confine myself to that aspect, more particularly, because I am of opinion that one of the most dangerous principles in South Africa is being created in financing the labour forces of a certain industry; there is the danger that when one begins with A. it will later have to be extended to B. and C.; and so it will go on. There is the danger that other industries may later Say that their profits are not large enough, that they will then come to the State and ask for their labour forces to be subsidised. There was a time when the farming industry farmed at enormous losses. That was during the depression years. Today, since the price of the various products has been fixed on a definite basis, the farmers cannot get higher prices, even though the price of farming requirements rises, and even though labour costs rise. We are not finding any fault with that, because it is a sound principle to prevent costs of living from rising, but labour costs have risen, and when the State finances the labour forces of the mining industry, the farming industry has as much right to say that the State should also finance farm labour. The Minister may say that they have assisted the farmers by means of rent subsidies from 1933 up to the present, but I want to point out to the Minister that as a result of an act on the part of the State, the mining industry received much greater contributions in those years than the farmers received. I want to refer to a speech of the Acting Minister of Defence in column 1204, Volume 21, 1933 Hansard—

And then the Acting Minister of Finance of that time calculates that the abandonment of gold gave the mines an extra profit of £19,000,000 in respect of that one year, and as the price of gold rose and the premiums increased, the contribution became greater. Here we have an industry, therefore, which made an enormous profit as far back as 1933, and now we are taking a sum out of loan or redemption moneys in order to subsidise this industry. We say that if the farming community was assisted by means of this rent subsidy, the mining industry was assisted to a much greater extent by an act of the State; and since the Government is today giving a subsidy to this industry in respect of its labour forces, we predict that other industries will ask the same concession. I want to associate myself with the hon. member for Fauresmith (Dr. Dönges), where he said that we shall vote for the second reading of this Bill, having regard to the good provisions contained in it; but we are definitely opposed to Clause 3, and if we vote for the second reading, the reproach should not be levelled against us, as happened previously, that by doing so we voted for the principle of Clause 3. As far as agricultural co-operative societies are concerned, I do not want to say that it is an unsound principle that they are taxed in certain cases, but we want to ask the Minister to follow up the suggestions of the hon. member for Fauresmith and other hon. members. It is quite wrong to leave it to the discretion of the Registrar to say who should have a licence and who should not have a licence. It is much better to lay it down in the Act. Every co-operative society, or trading company will then know who is entitled to a licence and who should not have a licence. It would facilitate the work of the Registrar. I hope the Minister will follow up the sound suggestions of this side.

I should like to protest with the hon. member for Fauresmith (Dr. Dönges) against this form of legislation. It has apparently become customary to introduce a Bill of this kind, a Bill which deals with all sorts of matters. I believe 23 different matters are dealt with in this Bill. Some of them are not important. In my opinion some of them could have been included in an ordinary Finance Bill, but a great number of these proposals ought to be in separate Bills. I can well imagine that it is easier for the Minister to bundle everything together into one Bill, instead of making provision for those matters in ten or twenty separate Bills; but it is not fair to incorporate them all into one Bill. It makes it almost impossible for any person who does not constantly work with these laws to find out which Act has been amended and which Act has not been amended. That is one complaint. But the greatest complaint is that provision is being made here in connection with co-operative societies, something which should not have been brought in here at all. The Minister now proposes to tax the co-operative societies which, up to the present, have been exempted from taxation. I believe that certain co-operative shops are prepared to bear this taxation. In this connection an amendment would be required to protect the K.W.V., for example.

I shall do that in the Committee stage.

We are grateful to the Minister for that concession, and for his undertaking to make provision for it. But this Bill deals with insurance, co-operative societies, provincial subsidies, provincial assistance; certain sections of the legislation are repealed; it deals with irrigation schemes, with the post office, with the Estate Act, the registration of businesses, the remuneration of members of the Permanent Force, and of married women of the Permanent Force in certain cases; it deals with customs duties, the reduction of the purchase price of holdings, with the powers of the Governor-General, with the subsidy for native wages in the mines, ánd the spending of surpluses. I have only mentioned a few of the matters which have been included under this Bill. Many of these things are extremely important. One cannot discuss these matters properly, and I do not think the Minister acted reasonably. There is one point on which no one has spoken up to the present, and that is in connection with the writing-off of the outstanding debts on holdings at Buchuberg. I am not against the writing-off of these debts. I would not mind if every penny were written off, but I am opposed to leaving it in the hands of the Minister. He will decide how much and what should be written off. In a matter of this kind it should not be left to the Minister to decide in whose favour debt will be written off. He is only human, as we all are, and he has his likes and dislikes. When a settler approaches him, he will not be infallible, because he is human, but will be subject to influences, and the result will be that there will be differentiation. This is a matter which should not be left to his discretion. It is not a sound policy. I think where debts are to be written off it should not depend on the discretion of the Minister. He may say that the Land Board will be called in to discuss the matter, but in my short lifetime I have seen a great deal of injustice, even by commissions. If a commission knows what the Minister’s wish is, it would sometimes only be too anxious to satisfy the Minister. The members of the commission are appointed by his grace, and would be prepared to help him and to find reasons in support of the differentiation. I think if debts have to be written off, it should be left to an impartial body to control these things. If it is not left to Parliament, it should be some other impartial body in connection with which the Minister has no say. The procedure which the Minister wants to adopt in this case will lead to many difficulties. I can well imagine people complaining that in the case of Tom a greater amount was written off than in the case of Dick; and we would have lengthy discussions in this House, and the Minister will advance arguments to show why the differentiation was made. I am strongly opposed to the manner in which these debts are proposed to be written off. Let them write off everything; well and good; but let everyone be treated on the same footing. It should not be left to the discretion of one man. As has been said, we have been placed in a difficult position. There are certain provisions in this Bill of which we approve, and for which we must vote. Then again there are certain provisions which are wrong. I am now compelled to vote for the second reading, and to discuss all these subjects in the Committee stage. If the important subjects had been embodied in separate Bills, it would have afforded us a better opportunity of discussing these matters thoroughly.

I want to associate myself with the hon. member for Swellendam (Mr. S. E. Warren) and express the hope that if the Minister again drafts similar legislation, he will omit contentious clauses. I am thinking of Clause 3, which is very contentious and which contains a very dangerous precedent. As far as I know, the State has never made available money to subsidise the wages paid in any industry. In this Bill the Minister is making this important concession to the mines, and we hear nothing from the other side of the House. Whenever anything is done for the farmers, they say that the farmers are spoonfed. Here we have one of the most far-reaching principles, and one of the most dangerous principles incorporated into a general Bill, which creates a very dangerous precedent for the future. It will always be quoted as an example that when certain mines experienced difficulties, the Government came to their assistance and subsidised their wages. Other industries will in the future ask to be subsidised, and the Minister will then have to find some excuse or other. It is quite clear that the Chamber of Mines brought pressure to bear on the Minister to lay down such a dangerous precedent. Then there is another matter in connection with Clause 6.

It would be better to discuss that in the Committee stage, when the Minister concerned can be present.

I hope the Minister will be able to submit a scheme which can be acted upon. As drafted at present, it is too wide. The manner in which debt is to be written off should be described in greater detail.

I should like to ask the Minister why compensation in connection with the floods at Christiana, was not incorporated into this measure? Is this not the proper place?

That falls under the supplementary estimates.

With regard to this item of £1,800,000 in respect of a subsidy to mine natives, an enormous sum which was really intended to be deposited into loan funds is being taken here and used by the State to subsidise the wages of the natives of this great and powerful gold mining industry. The reason which the Minister gave was that in numerous cases the mines were in a critical financial position, and that while production costs were rising, the price of gold was fixed. That is also the type of argument which was advanced by the chairman of the Chamber of Mines in his last annual report. According to him the price of gold has been fixed, and the costs of the mining industry are steadily rising. He referred to other industries which, when their costs of production rose, increased the price of their products. I should like to point out, however, that it is not correct to say that the price of gold is stable; the price is constantly rising. But the position is that we are not making use of the rise in the price of gold. That is why it is necessary to withhold this huge sum from Loan Funds and to pay it to the mines. On a previous occasion, when I discussed this point, the Minister adopted the attitude that it was not possible for us to sell our gold to India, for example. He stated that the higher price which was being obtained in India was a black market price. According to a Sapa message which we received three days ago, the position is as follows—

There is a big demand for gold in India, which has been known in the past as the hoarder of gold. The price of gold increased, and gold flowed out of the country. But India is again hoarding gold, and since we can now obtain an increased price for our gold in India, I should like to know whether we cannot make greater use of the Union’s market. When I spoke on this question on a previous occasion, the Minister of Finance said that we could not possibly sell all our gold to India, because we would not be able to handle such a large quantity of rupees. The Minister of Economic Development stated in the Senate the other day, however, that we were importing goods from India to the value of £8,000,000. Surely it cannot be argued that we cannot deliver gold to India to that value.

It is being done.

I am glad to hear that, and if that is done we can eliminate this subsidy from Loan Funds.

I shall explain the position in a moment.

It is a matter of great importance. The Federal Reserve Bank of America, at the price of 280s. per ounce, made a profit of practically £4,000,000 in one day on the quantities which it sold. I am glad that the Minister is giving his attention to this. It is also in our interests that we should not bind ourselves to a long term price, since the price of gold will increase more and more as a result of the general inflationary tendency. I also notice that the Minister of Economic Development said that we were buying goods to the value of £12,000,000 from the South American states. We know that there is a higher market price for gold in those states, and we hope that the Minister of Finance will give his attention to that as well. Then there is this further point in connection with the question of co-operative societies. I want to make a serious appeal to the Minister of Finance not to take any step which will retard the development of co-operative societies in this country. We know that in the past the State did everything in its power to encourage co-operative societies, with the result that large and powerful cooperative societies came into existence in this country. This is the time when we should do everything in our power to see to it that they are properly consolidated, and we should not place obstacles in their way. One of the problems of South Africa in general and of the farmer in particular, is the high prices which he has to pay for his requirements. This high cost structure has been emphasised and underlined by commission after commission. The co-operative movement which enables the farmer to buy his machinery and requirements direct, is one of the best methods of keeping production costs low. I want to make an appeal to the Minister of Finance, therefore, carefully to reconsider this matter, and to remember that it is not only a question of the little money which he will derive from this tax, but that it is a question which may affect the cost structure of the farming industry in the future.

In the first instance, I want to express my appreciation to the hon. member for Fauresmith (Dr. Dönges) for his attitute towards this Bill, with the exception perhaps of Clause 3, and the spirit in which he approached and discussed the Bill. It was the spirit of the Parliamentarian, and that is the spirit which we want to cultivate in debating financial questions; at any rate, where it does not directly affect party political questions. He and other hon. members referred to the nature of this legislation. It is undoubtedly true that here we have proposed legal provisions which cover a wide field, and that we propose to amend a large number of existing legal provisions. But principally we are dealing with questions which are only of State administrative significance, and the difficulty which my hon. friend, the hon. member for Swellendam (Mr. S. E. Warren) raised as an attorney, is not as serious as he wanted to make us believe. Then I also want to point out that the scope of this Bill is not nearly as wide as it was fourteen or fifteen years ago. Considerable limitations have been brought about in the scope of this Bill. Originally it was regarded as a Bill in which any matter could be placed. This Bill is now definitely limited to matters affecting the Consolidated Revenue Fund and the Railways and Harbours Fund. It is now merely a Finance Bill, while in the past it was definitely an Omnibus Bill. I also appreciate the difficulty in which my hon. friend finds himself, since he would like to vote against one principle contained in the Bill, but not against the second reading of the Bill itself. I can appreciate that. But that is something which we also find in connection with other legislation. In connection with the specific matter which he raised, he can take it, however, that hon. members on the other side very clearly put their position on a previous occasion, and they have done so again, so that there can be no misunderstanding’ in regard to their attitude. As far as that is concerned, I want to point out that we could not really have done it in any other way, because the legal provision which we are amending in connection with the Gold Realisation Fund, is contained in a previous Finance Act. In the first instance, this matter was dealt with in the Finance Act of 1940, and in this Bill we are amending that provision. Perhaps we should not have done so. But that is the position today.

The same Minister was responsible for it.

That is correct, but I am explaining why we are introducing this amendment in the Finance Bill, because it amends a provision in a previous Finance Act. My hon. friend also referred to Clause 17, in which provision is made for more elasticity in connection with special warrants. I am glad that he looks at the matter in the same light that we do, and I want to give him the assurance that it is not the intention to encourage departments to spend money lavishly.

Is the position not that large sums are asked for for locust eradication, and that those sums are later used for other purposes?

No, I am coming to that point. Let me say this before I come to that, that the hon. member correctly stated that elasticity in connection with these special warrants enabled us to strengthen Parliamentary control. In that connection I want to say this, that if we do not obtain this elasticity, then, with the very Object of removing possible difficulties as far as the Treasury is concerned, there will be a tendency on the part of departments to ask for larger amounts than they need. Let me use the example of locusts. Because there is a danger of our requiring perhaps £250,000 during any one year for locust extermination, there will be a tendency to ask for the full amount of £250,000 every year, while we are voting only the minimum amount today, knowing that if we get into difficulties we can meet the position by means of special warrants. The fact that there is more elasticity gives the Treasury power to get a greater hold on the department. If we voted £250,000 every year to the Department of Agriculture for locust eradication although the full amount may be used only once in five years, there is the danger that that Department which annually saves, say, £150,000 of that money, will be inclined to use the £150,000 for other purposes by way of virement. My hon. friend is therefore quite correct in saying that this amendment is necessary to strengthen parliamentary control, and I give him the assurance that it will only be used in that spirit. Now I come to the proposals in connection with the co-operative societies to which he and other hon. members referred. I want to give the hon. member for Ceres (Dr. Stals) the assurance immediately that this proposal is not being made as a result of pressure recently brought to bear on the Government by organised trade. He referred to the resolutions of organised commerce, one taken at the recent conference, and also to a memorandum which was issued in December. Let me point out that what we are doing here is the result of investigations which were made into this matter by a joint departmental committee which was appointed almost a year ago, long before these things were set in motion. It was as a result of the findings of that departmental committee, on which the Department of Economic Development, the Department of Agriculture and Forestry and my own Department of Inland Revenue were represented, that this step was taken. Then I just want to say this, although it is not really necessary to say it, that we are certainly not against co-operative societies. It is not our intention to limit the co-operative movement. The Government’s policy is to encourage the co-operative societies. That is a sound principle. It is still our policy to encourage co-operative societies. In any event these resolutions do not affect the agricultural co-operative societies at all. As far as the closed trading co-operative societies are concerned, where they trade with their own members, they will still get these concessions. But the present position in this connection surely goes further, a good deal further, than was actually intended by the concessions which were granted in the first instances to these commercial co-operative societies, and what we are moving here is something which is demanded by the facts as a result of the activities of those bodies. The hon. member for Fauresmith and also other hon. members, raised the question of the classification of the closed and open co-operative societies in that connection. My hon. friend stated that it would be better if we could lay down a definite line, instead of leaving the classification in the hands of the Registrar of Co-operative Societies. I concede that, but I think it will be clear to everyone that it is very difficult to lav down a fixed line ; that a great deal depends on the nature of the business; and although we are placing this power in the hands of the Registrar of Co-operative Societies, I hope hon. members will not lose sight of the fact that the official who will exercise this discretion will not be a Treasury official; he will have no interest in the question of taxation. I think that is something which should not be lost sight of.

But surely it is the general principle.

I realise that.

Will you be prepared to consider amendments during the Committee stage?

I shall give further consideration to it, but I cannot see how we can lay down a fixed line in this Bill. My hon. friend also wants greater concessions to be granted to the commercial co-operative societies than we propose in this Bill. He wants to make the 10 per cent. bonus concession applicable to both sections of commercial co-operative societies, and he also wants to exempt the closed co-operative societies entirely from taxation as far as business with their own members is concerned. I think my hon. friend is going too far in that direction; he may think that I am going too far in the other direction. But after the manner in which this matter was sifted by the Committee to which I referred, where they considered every possible proposition in connection with this matter, I am of opinion that their proposal is reasonable and fair.

Was the committee unanimous on that point?

Yes, ultimately they were unanimous in regard to what is proposed in this Bill.

Did the Registrar also agree with it?

Yes, these legal provisions were laid down on a basis of agreement. In the first instance the committee was not completely unanimous, but the original proposal was considerably watered down in order to obtain that unanimity. I hope, therefore, that we will test out those proposals, and see how they work. Then I come to the question which was raised here in connection with Clause 3, the question of the Gold Realisation Fund. I shall not go into the far-reaching statement which my hon. friend made in connection with my action in this matter; it is not my action; it is the action of the Government as a whole. Let me try to put the matter in its true perspective. I want to take my hon. friend back to 1939. In 1939 the gold price was suddenly increased. My predecessor who was still Minister of Finance at that time, laid down as an immediate step that the full increase in the gold price should be paid into the Treasury.

What was the price?

It was then 168s. It very soon became apparent that that could not be regarded as other than a temporary arrangement, and in my first budget I had that proposal of my predecessor replaced by another basis of taxation, the intention of which was to attain the same final object; in other words, the intention of the proposals in regard to the changed formula of the special contribution in my estimates of 1940 was that the mines would make no profit as a result of the increased gold price.

And if their production costs increase?

Yes; that takes us a little out of our way but eventually their production costs increased and their pre-war profits declined. My object was to see to it that they made no additional profits, but instead of that, as a result of increased costs of production in the first instance, and in the second instance as a result of increased taxation, they not only made no more profits, but their pre-war standard of profit was considerably reduced. We made that arrangement, but immediately after that arrangement had been made it appeared to be possible to make a new arrangement in connection with the sale of gold. When we made that arrangement the price at which gold was sold was 168s., but the gold mines had to pay certain realisation costs, which amounted to approximately 3s. per ounce. As a result of that new arrangement which was made in connection with the sale of gold, the full amount of 168s. became available. If therefore we had allowed the gold mines at that stage to receive the full price of gold, we would not have achieved our object, namely, that they should make no extra profits, and the arrangement was therefore made that although the mines should not be called upon to pay those realisation costs, they would not get anything more for their gold, and that the amount of the realisation costs, on the basis which was in force at that time, would simply be paid into the Treasury.

Highway robbery.

My hon. friend behind me says it is highway robbery. I would rather have described it as a windfall which the Treasury got, and because it was of a temporary nature, because it was a windfall, we simply paid it over into our loan account. In the normal course of events it was not really an amount which should have appeared on the loan account. It was nothing but a complementary tax.

If it was a complementary tax, why was it not placed on the revenue account?

By that time we had framed our estimates. It came towards the end of the Session, and we then decided not to place it on revenue account.

Why was it not placed on revenue account the following year?

It would probably have been better if at that time we had allowed the mines to get the full price of gold after the first year, and if we made them pay a higher tax. In any event, what we did was to retain that money and it has therefore always been regarded as part of the production costs of the mines. It has always been taken into account as part of the production costs.

Because we took that, we did not tax them with the equivalent amount.

We did not know how long this was going to last, and that was why we dealt with it in this way. It was something which was regarded as production costs, although it did not actually concern the production costs. Today it is necessary for them to incur additional production costs, and it seems to me to be no more than reasonable to make that money available. The object of this proposal is not to increase their profits, but to keep their production costs on the same basis, and there is a very great difference, because it has an effect on the paying limit of the mines. If wé had not followed this course, and we had told them to find the extra amount, it would have meant increased production costs to the mines; in that case they would still have had to pay the realisation costs, as well as increased wages. That would have meant an increase of the paying limit; it would have meant a reduction of 70 per cent. in the amount derived from taxation, but it would also have meant an increase of the paying limit; it would have meant that some of the lower grade mines within the near future would no longer have been payable, but it would also have meant that a certain quantity of the low grade ore in all the mines would have been placed under the paying limit. In other words, that low grade ore which is a national asset, out of which we have to draw taxation in the future, would then have been placed under the paying limit, and we would ultimately have lost much more than the reduced taxation.

This subsidy is also being paid to mines which do not work low grade ore.

There may be a few mines which do not work low grade ore, but practically all the mines work low grade ore as well as high grade ore.

What guarantee have you got that they will continue to work low grade ore and not only high grade ore?

In the interests of the mines themselves. My hon. friend asks what guarantee we have that the mines will continue to work low grade ore. Especially during the past four years the same question might have been put, namely, what guarantee we had that the mines would not work a higher grade of ore; but during the past four years the grade of ore which has been worked has not been higher. In the first instance a lower grade was worked. Latterly a slightly higher grade has been worked of necessity, but the level today is still lower than it was four years ago. There we have the guarantee. I think if we look at the matter in that light we will realise that the proposal we are making here is not an unreasonable one, and that it will be in the interests of the community and in the interests of the State as a whole. Then there is one further question to which I want to refer. I just want to tell the hon. member for Gezina (Dr. Swanepoel) that the arrangement in connection with the sale of gold in India is now in operation. I referred to that agreement a few weeks ago, and it has happened that where we bought various goods in India during the past few weeks we got the benefit of the higher price of gold in India, and those purchases were therefore made at a lower price. But, of course, it does not represent an advantage to the mines.

How was it made possible?

I explained the whole matter a few weeks ago. The fact is that we have now got that benefit, and the people who will derive benefit from it will be the consumers on the whole, and as a result of the fact that we are now getting the benefit of the increased price for our gold in India, it will be possible for us to combat the inflation which we partially import from India.

Motion put and agreed to.

Bill read a second time; House to go into Committee on the Bill on 1st June.

I move—

Mr. Speaker, this Bill, the House will perhaps be glad to learn, is the last of our taxation measures to be submitted to the House this Session. As far as the specific increase of existing taxation is concerned, this Bill does not contain a great deal. We have already approved of all the substantive portions of the budget proposals for raising additional money; but as I explained on a previous occasion, the only increase which we propose in respect of the incidence of the taxation of incomes is in regard to the supertax, and that is therefore the only one of our budget proposals which is dealt with in this Bill. But, as I have also explained on a previous occasion, it is by a convention of our constitution, necessary each year to re-enact the rates of income taxation whether changed or not; and such re-enactment will be found to be contained in Section 1 of this Bill. We dealt with the matter in Committee of Ways and Means, and we now embody the resolution passed in Committee of Ways and Means in this Bill. Section 1 of this Bill, as far as the rates therein prescribed are concerned, are exactly the same as Section 1 of the Bill which was passed last year. The only change, the change to which I have referred in regard to the taxation of incomes, is in respect of the amount of the supertax rebate. Hitherto, Mr. Speaker, in respect of supertax there has been a rebate of £240. Now, by Section 4 of this Bill we shall reduce that rebate for the present year of assessment to £210, that means this, that all supertax payers with a taxable income of more than £2,000 will pay an extra £30 in that regard, apart from the 15 per cent surcharge. At the same time, Mr. Speaker, the new Section 30 (c) of the Income Tax Act which it is proposed to insert into that Act, by Clause 5 of this Bill, will reduce the lower limit of supertax from £2,000 to £1,775. That reduction will bring us in £400,000 in a full year, and £240,000 in the current year. 1 think 1 am correct in saying that was one of the taxation proposals not criticised in the earlier stage. It was, I think, regarded as a reasonable proposal, so far as it went anyhow ….

What will the 15 per cent. surcharge be?

The figure I have given includes the effect of the surcharge.

But I mean the normal tax as well.

I am afraid I do not carry that figure with me. If my hon. friend will look at the abstract of revenue estimates he may get the figure there. It is part of the income tax today and the surcharge would be included. Apart from taxation, this Bill deals with certain other matters in the existing law. In the first place it gives effect to the proposals foreshadowed in the budget speech in respect of the taxation of incomes from farming operations. I dealt fully with that matter in the budget speech. I then explained the necessity for making certain changes in that regard, and I described how certain taxpayers have been evading taxation in respect of profits, or income from business or professional activities, by setting off against the income derived by them from such sources the losses incurred by them in farming operations, which is either in the nature of a sideline or taken up for tax evasion. To deal with that situation I indicated three proposals in the budget speech which are now set forth in more detail in this Bill. They will be found in Clause 3 of the Bill. In the first place we deal with companies which engage in farming operations, and we propose that a company that commenced or recommenced farming operations on or after 1st July, 1943, will in future be required to submit its return on a stock basis. It will not have the benefit the individual farmer has of putting in a return on a cash basis. There is no reason whatever why a company, which must keep books, should not put in a return on a stock basis. Nor is there any reason why the company should have the benefit, that the individual farmer has, in respect of a standard allowance in assessing the value of his stock. The individual farmer will, however, continue to have the advantage he has hitherto enjoyed in that regard. He will be able to choose whether to submit his returns on a stock or a cash basis.

That is discrimination against the company.

Yes, but I think it is justifiable discrimination. The reason why we give the farmer the option is that many farmers do not keep books in the ordinary way, but that cannot be said of any company. As far as the individual farmer on the cash basis is concerned, we propose to limit the reduction in respect of stock purchased by him in any one year to the amount of the gross income derived by him from farming operations for that year. It will be quite obvious that where that is not done today it is possible for the man for whom farming is merely a sideline to buy stock well in excess of his income from farming operations in order to set off that apparent farming loss against his profit from other sources, trading or otherwise. What we propose, then, is that no such farmer who submits his return on the cash basis will be allowed to claim a reduction in respect of stock purchased larger than his gross income from farming operations. If in fact he has purchased more he will be allowed to carry over the balance to be settled against income in a subsequent year, in that way spreading it over. So it makes no difference to a bona fide farmer, but it does mean that the man who has taken up farming as a sideline will not be able to make use of this loophole in order to wipe out the income derived from other sources during the year ….

What about the bona fide farmer?

It will not affect his position.

Supposing he has a balance over?

That will be carried over when the taxation is assessed. This will not affect that position at all.

Ought not you to have something to meet a case like that?

We cannot argue this across the floor of the House. It does not seem to me that that proposal affects the position. We propose to limit the amount the farmer may deduct in respect of capital expenditure to an amount which does not exceed 20 per cent. of his gross income from farming operations during the year. There again we are trying to get at those people who tried to eliminate their income from other sources by putting large amounts of money into what are not always necessary capital improvements.

Do you include the bona fide farmer?

If my hon. friend will tell me how to define the bona fide farmer, I shall be much happier about that. It does not seem to me that this proposal is unreasonable as far as the bona fide farmer is concerned. It makes ample provision as far as he is concerned. But it is in the interests of the community, and in the interests of the bona fide farmer, that the activities of these gentry to whom I have been referring should be curbed. I think my hon. friends will realise that. The point will no doubt be made that as far as stock purchases are concerned we allow a carry over to the following year, but as far as capital expenditure goes we do not propose to allow the surplus over the 20 per cent. to be carried over to the following year. There is very good reason for that. The reason is that these capital improvements ultimately become a capital accrual, and when the property is ultimately disposed of the man is not liable to taxation on his capital accruals. When then you are giving him an amount representing 20 per cent. of his gross income for the year to build up his farm in that way, you are going as far as reasonably may be done. The position in regard to stock is different. Here there is no question of capital accrual at all. In respect of the other proposals, I do not intend to delay the House very much, the more so as they are set out in the White Paper. One or two clauses have been introduced for the purposes of clarification and simplification. Clause 2, sub-sections (a) and (b) deal more logically than does the existing law with the taxation of companies. Clause 8 makes a small rectification in regard to the imposition of the non-resident shareholder’s tax. Then Clauses 5 and 6 clear up certain points in regard to the taxation of private companies. Clause 6 deals with the criterion which is used in the determination of a company as a public company, namely, the substantive interest of the general public in the company. We intend, in these clauses, to make it quite clear that that substantive interest of the general public in the company must be an interest as shareholders in that company, and not an interest in any other form, not an interest as debenture holders or as shareholders in a holding company. Thereby I think we can give effect to what was our intention. Then there are provisions to deal with certain anomalies and hardships. Clause 2 (c) will exempt from dual taxation the incomes of Government officials who are employed in foreign countries, and whose incomes are liable to income tax under the law of the country in which they are residing. Clause 9 removes a possible double incidence of taxation in respect of the non-resident shareholder’s tax. Clause 10 will remove certain minor anomalies in regard to the undistributed profits tax. I do not propose to say more about that now. Clause 11 makes it clear when treble tax is imposed the taxpayer should get the benefit, as was originally intended, of three times the rebate to which he is entitled in his particular case. Those are the main points dealt with in this Bill.

Business suspended at 1.0 p.m. and resumed at 2.20 p.m.

I want to make use of this opportunity once again to explain the attitude of this side of the House in connection with the taxation proposals which are contained in this Bill. I do not want to deal with the excess profits tax at this stage, nor do I again want to raise the question of the Minister’s failure to tax share speculation. I shall tentatively leave those two matters. With regard to the normal income tax, I want to make the point once again in connection with hospital and medical expenses. This is a matter which we raised in the House last year, and the Minister promised that in view of the fact that our scale of taxation is a fairly steep one, he would consider the question during the recess of applying the system of Canada, with a view to granting relief in respect of hospital and medical expenses. The Minister stated this year that Canada’s system on the basis of our income tax would not afford great relief. In the case of a person with an income of £600 who spends £40 on hospital and medical expenses, it would in our case only mean approximately 15s. But it still does not detract from the importance of the principle that where a person is suddenly faced with expenditure of that nature it should be taken into consideration as far as income tax is concerned. If the Minister wants to justify his failure on the ground that the relief would not amount to a great deal in the case of our taxpayers, we on this side would have no objection if he made the concession more liberal than it is in Canada. Make it worth while then. Then I want to refer to the injustice which is being done towards the lower income groups—the groups of £400 and lower—who are called upon to pay, not only direct taxation but who have to pay indirect taxation as well. In the past we have pointed out that these people are faced with a falling purchasing power of the £ on the one hand, and the rising costs of living on the other hand. They find it very difficult to keep body and soul together. In his reply the Minister drew a comparison between the taxes which are paid by these groups in South Africa and the taxation in other countries. He made a comparison with the lower income groups in New Zealand and Canada, and his conclusion was that the lower income groups in South Africa had no reason to complain about their taxes. We then asked whether the Minister had included indirect taxation in his comparison, because in our opinion it is worthless to draw a comparison between any two countries if we only take into consideration the direct taxation. If the comparison is to be of any value, the total burden of taxation in respect of the various groups should be taken into consideration. We do not even know what our own total burden of taxation is, and such a comparison cannot possibly be made therefore. I again want to point out to the Minister that indirect taxation has risen enormously during the war period. Customs and excise duties have risen from £3,000,000 in 1939-’40 to an amount of £12,750,000 in respect of the year 1944-’45—an increase of more than 300 per cent. It is not a fair comparison unless we take into consideration the total burden of taxation. But there is a further reason why we cannot make such a comparison, and that is because we must take into consideration the increase in the cost of living. In New Zealand it has been approximately 13 per cent.; in Canada approximately 19 per cent., and in South Africa, according to the latest figures it is more than 29 per cent. In countries like Canada and New Zealand the rising cost of living has been counteracted to a certain extent by food subsidies. In Canada that required an amount of 200,000,000 dollars, a sum equivalent to between £40,000,000 and £50,000,000 per annum of the taxation revenue. That money was taken out of taxation revenue in order to keep the cost of living low, with the result that the low income groups, although they paid a good deal more by way of direct taxation, received additional benefits out of that taxation by means of a food subsidy. In comparison with South Africa, therefore, they benefit from the high taxation to the extent of the amount which is paid by way of a food subsidy in order to keep the cost of living low. I just want to read to the Minister what the position is in Canada. According to the journal of the Parliaments of the Empire of November, the Minister of Finance in Canada said—

That was the position in Canada. In that period of approximately eighteen months the cost of living rose by only 1.5 per cent. in Canada—

It shows how successful the system in Canada was. They achieved that by the payment of this subsidy. He goes on to say—

After the comparison which the Minister sought to draw between the direct taxation which is being paid by our low income groups in South Africa, and the direct taxation which is paid by the low income groups in Canada. I just want to ask him also to bear in mind that the taxes which are being paid by the low income groups in Canada are aimed also at keeping the cost of living lower. In South Africa we have not succeeded in doing that. Our latest figure is 29 per cent. and it is still rising. At the beginning of 1941 the figure was 5 per cent.; at the beginning of 1942 it was 13 per cent; at the beginning of 1943 at was 21.1 per cent.; at the beginning of 1944 it was 26.4 per cent. and the latest figure is 29.2 per cent. It will be seen that the cost of living is still rising steadily, and very often it is the people at the lower end of the scale, the low income groups, who are affected most. They are not all in positions where they get a cost of living allowance. The employees do get it, but the people who are not employees— and that applies to a great proportion of them—the people who draw pensions, the people who live on annuities, the people who live on interest on capital—the cost of living of all those people has risen by the very high figure of almost 30 per cent., and there is nothing to compensate them for it. If therefore one draws a comparison between the low income groups in this country and the low income groups in other countries, that is a factor which one must take into account. But there is also a third factor which one has to take into account, and that is that in other countries, especially in New Zealand, the benefits of social security are much more advanced than in South Africa. I know that a special levy is imposed in respect of social security in New Zealand, but as far as I know that levy is not sufficient to cover the costs of social security. A portion of it still has to come out of ordinary taxation, and the lower income groups therefore get a portion of their social security benefits from the taxes which they are called upon to pay. These comparisons which the Minister tried to make with other countries do not at all affect the position in which the lower income groups find themselves; and once again I want to make an appeal on behalf of and a plea for the lower income groups, that the Minister, since he has now increased the indirect taxation to such an extent, should exempt them from the direct taxes which they are called upon to pay. The other point is in connection with the 15 per cent. levy which is being imposed on ordinary and supertax. We feel—and this also applies to the taxes which are imposed on the lower income groups—that if those taxes are imposed as an anti-inflationary measure, if they are levied in order to withdraw that money from circulation, that money could be set aside in the form of compulsory savings. It should not be used for ordinary expenditure. We say that the expenditure can be covered either by a tax on share speculation or, alternatively, the expenditure can be reduced. In most countries of the world there has been a reduction in the war expenditure. In our opinion a great deal of money can be saved on our war expenditure without curtailing our war effort in any way. But the Government apparently does not intend to make use of our assistance in that connection. They still refuse to comply with our request that a commission be appointed, which could also sit during the recess, with a view to preventing unnecessary waste of money on our war effort. They still refuse to do that. We are not even given an opportunity—I do not know whether the Minister will still do so— of discussing the report of the Select Committee on Public Accounts.

The hon. member must not go into that matter now.

I just want to mention it. We say that this money is not necessary for expenditure. If it is considered necessary to withdraw that money from circulation as an anti-inflationary measure, our attitude is that that money should be set aside in the form of compulsory savings, that it should be deposited into an industrial development fund, and that that industrial development fund should be used after the war for the development of our industries, thereby giving the people a share in the industrial development of this country in the form of letters of credit or ordinary shares. We know that a great deal of capital will be required after the war. We also know that there is a strong possibility that overseas countries will be prepared to invest their capital in our industries. We know that there ought to be sufficient capital here. One need only look at the money which is available today for investment in various forms. If that money is not put to use it will increase the inflationary tendency, and if it is necessary to withdraw that money from circulation in an effort to prevent inflation, it should be invested in the form of compulsory savings; and when I speak of compulsory savings, it should be effective compulsory saving, not in the form in which we have it today. At the moment it is only saved for eleven months; thereafter it can be converted into cash, and the inflationary tendency is once again given impetus. We ask that that money should be set aside for industrial development after the war. It will then be national capital. It will be national capital which will then be used for the development of our industries in this country. If it is compulsory savings, it will not be necessary for the State to pay interest on it until after the war, when it can be invested with a view to industrial development. We feel that since the Planning Council in one of its reports recently referred to the big capital which will be required for our industrial development after the war, this is a constructive proposal which can kill quite a few birds with one stone. We can withdraw from circulation the money which is in circulation today and which is promoting inflation; at the same time we can create a fund which can be used after the war for the development of our own industries. Instead of that money being expended on unnecessary articles and promoting the inflationary tendency, as is the case today, we can put a stop to it in this way and at the same time usefully devote it to industrial development in this country after the war. Up to the present we may not have put this proposal in very great detail, perhaps not as fully as I put today. This proposal has been made already, but as far as I am able to ascertain, the hon. Minister has not yet replied to it. There is a further matter to which I just want to draw attention and that is in connection with the sale of our gold. The Minister told me on a previous occasion that negotiations were in progress, and he announced today that those negotiations had succeeded to such an extent that in future we shall be able to pay for our imported goods from India with our own gold at the market price which is being paid for gold in India. I believe our imports amount to approximately £7,000,000 per annum. In any event it was £7,000,000 last year. If we can get this increased price for our gold, it means that we would be able to buy £7,000,000 worth of goods for approximately £4,000,000, and we would therefore make a profit of £3,000,000 on it. That is a very favourable trend, and I am glad it has been obtained. But in that connection a few questions arise.

The wholesalers will score.

We will definitely benefit. One of the questions which arises is this. Who will benefit from the sale of that gold? Will the State derive the benefit, or will it allow this benefit to pass on the owners of the gold, the gold mines, or the wholesalers, the importers? I should like to know what the position is in that respect.

He said that the wholesalers would get the benefit.

I do not see why the wholesalers should necessarily get the benefit. It is the gold of the Reserve Bank which is sold in that country, and there is no reason why the wholesalers should obtain the price which we get for our gold overseas when settling our accounts. It is not necessary that it should go to the wholesalers, and I should like to know what the position is in that connection. That is one question which arises. Another question is this. Latterly ho effort has been made, also in respect of the past period, to obtain a portion of the profits which were made by the Bank of England on the sale of our gold. The Minister stated on a previous occasion that we ought not to “cash in” on the temporarily high price which was being obtained. But we feel that if the Bank of England can “cash in” on that temporarily high price, why should we not have a share in the windfall of which the Minister spoke? There are still a number of questions which have not yet been answered. On a previous occasion, when the House went into Committee of Ways and Means I put these questions, but it was later felt that they were not quite in order. I want to repeat those questions now. But before doing so I just want to point out to the Minister that on a previous occasion he did not reply to the points of substance in our arguments. He put up his own skittles and proceeded to knock them down with very great success, but unfortunately those arguments are not the arguments which this side of the House advanced, and his dramatic knocking down of those skittles had no more than debating value; it was of no actual value. He made the point that the suggestion came from the hon. member for George (Mr. Werth) that we should simply sell our whole gold output to India for rupees. That was not the suggestion. But let me put the correct position to the Minister again. There were two points which we wanted to make at that time. The first was that if we sold gold at a fixed price to England and England then sold it at a profit, we were entitled to a share of the profit, in the same way as under the wool agreement. We sell wool to England at a fixed price, but there is a provision in the agreement that if it is later found that England made a profit on the sale of the wool which we sold to her at a fixed price, we will be entitled to 50 per cent. of the profit. That was the one point we made. Cannot it be arranged that we will share the profit which is made by England on the sale of our gold, on the same lines as under the wool agreement? But the other argument which we advanced was this. If we import goods from India and South America, where higher prices rule than is paid for our gold by England, why cannot we use our gold to make up the balance?. The Minister said that it was now in order as far as our purchases in India were concerned. In future we will get the benefit. But what about our imports from South America to the value of £13,000,000? Why cannot we get the same benefits there as we will now get in connection with our imports from India? That is another question which we put, and the Minister did not reply to it.

In connection with which item is the hon. member raising this?

In connection with the tax on the gold mines. But I shall not dwell oh it much longer. We feel that the question of a stable gold price is of very great importance to us in South Africa. We do not want to be tossed about on the waves of a very uncertain price sea. But at the same time we feel that if we have a stable gold price, it should be stable for the whole world, not only for South Africa. The position should not be that other people, as soon as they get hold of our gold, will not in any way be bound by any price fixation. That is not the way to obtain world stability. If we have to sell our gold at a stable price, there should be an arrangement that as long as we are bound other countries will also be bound as far as gold is concerned, so that they will not be allowed to sell at a higher price unless they are prepared to pay us a higher price as well. We want price stability, but then it must be general stability. But that is not the only reason why we want a world price for gold. We also want it to be the highest possible price which we can get in that connection. I notice in the latest issue of the “Mining and Industrial Magazine,” on page 44, that it is said that the gold producing countries want three things, namely, a price as high as possible for the metal, a stable price and the assurance that the demand for gold will continue. That is what we on this side also feel. Fortunately, as far as the third point is concerned, the development in the world today is of such a nature that it would seem as though we have a measure of certainty in regard to that point. I do not want to go into details at this stage. In any event, we have no control of it, but I do think our Government should see to it that a stable price is obtained; but that it will be as high a price as possible and that it will apply to the whole world. According to the latest news, the sales in India have taken place on an even greater scale at high prices, and that is a matter which deserves the attention of the Government. I hope the Minister will deal, in his reply, with the few points which I have mentioned in connection with the price of gold. Then I come to another point in the Bill. I want to compare Clauses 3 and 10. Clause 10 provides relief. It is a taxation relief clause. It provides relief in connection with taxation on unpaid profits, and it relates more particularly to companies whose business is in the Union as well as outside the Union. Relief is granted to those companies. These are companies which also transact business outside the Union, and we know that the majority of companies which transact business in South Africa as well as overseas, are companies engaged on war production. We know, according to the reports of the Select Committee on Public Accounts, that latterly they have made great profits. I am thinking more particularly of the manufacture of tyres, on which enormous profits were made, and similar companies. They are now being given relief. Compare that with Clause 3, which relates to farming. In that respect no relief is being given. As far as agriculture is concerned the taxation burden is being increased. There is to be no possible loophole in the future, either for the bona fide farmer or any other type of farmer.

The screw is being tightened. The Minister says that he cannot give any definition of a bona fide farmer. He says that he cannot distinguish the professional man who farms from an ordinary farmer. The danger under Clause 3 is that the Minister will throw out the baby with the bath water. His object is praiseworthy, namely, to catch people who try to evade taxation under the cloak of farming. We agree with that, but we submit that by doing so the Minister is also going to punish the bona fide farmer.

In what respect?

If one cannot distinguish between the bona fide farmer and the professional man, as the Minister stated, and one wants to catch the professional man under Clause 3, it stands to reason that one is also going to catch the bona fide farmer.

How can it affect the bona farmer in practice?

If the hon. member can give me an assurance that the professional man will not be caught under Clauce 3, then there is something in his argument, because the Minister says that he cannot draw a distinction. This is not a measure of relief, but one which imposes a heavier burden.

Can you distinguish between the two?

If I am called in to do so, I do not doubt it.

Suggest a plan.

It can be done easily. I just want to say that under the Rent Subsidy Act a distinction is drawn. In any event, that is not the point I wish to make. My point is that the position of the farming population is being detrimentally affected. Other hon. members will discuss this, but I just want to lay the foundation for the discussion by indicating in broad terms what the position of the farming community is, what the financial position of agriculture is in the structure of our whole economy. The total gross income derived from farming, according to the calculation of Messrs. De Swardt and Du Plessis, is £60,678,000. That is the gross income derived from farming. I may say that I am now referring to a particularly well-founded article in “Farming in South Africa.” That is the total agricultural production. From that must be deducted the native agricultural production of £8,477,000, and the production on holdings of less than one morgen (they are not regarded as farmers) of £1,136,000, making a total of £9,613,000 to be deducted. The production of the European farmers in South Africa is then £51,065,000. But according to the calculation of these two gentlemen, the cash wages which are being paid by the farming community amounts to £17,600,000, and the cash costs of production amount to £15,608,000. The production expenditure of the European farmers therefore amounts to £33,208,000, and if we deduct this from the production of the European farmers, amounting to £51,065,000, we arrive at a nett income of £17,857,000 per annum for the European farmers in South Africa. From that one has to deduct interest on mortgage bonds and borrowed money, which is put by these two gentlemen at £3,340,000. There then remains a balance of £14,517,000.

How many farmers are there?

Approximately 100,000 European farmers. That includes owners, lessees, farmers who farm on a share basis and bywoners. According to this report, there are approximately 100,000 European farmers. These are the figures which were taken from the census. It works out to an average income of £145 per European farmer’s family. It will be seen that this section of our community is on a very low income level. The income per head is certainly one of the lowest of any group. We say therefore that any attempt or measure which seeks further to undermine the equilibrium and financial power of the farmers, even though it is in the very distant future, should be looked upon with very great suspicion by the House, and if there is any doubt, it should be decided in favour of the European farming community of South Africa. I do not want to go into details at this stage, but once again bring this position to the notice of hon. members. When we plead for the farmers, those figures should be taken into consideration. There may be rich individual farmers, but these figures which I mentioned do not even take into account the capital which has been invested in farming. This £14,000,000 on the basis of 3 per cent. means that the farmers do not make any profit if £500,000,000 has been invested in land values in this country. I do not know what the figure is in respect of the value of agricultural land which is occupied by Europeans.

Four hundred million pounds.

Well, at 3½ per cent. it would only give us the £14,500,000 which is available. In pleading for the agricultural community, therefore, we are pleading for people who need assistance. If we expect those people to produce, we should not deprive them of their means of production. We should not tie their hands by means of taxation proposals, such as those which have been submitted to us by the Minister, measures which will make it impossible for them to exercise their calling on a profitable basis. We feel, therefore, that this proposal of the Minister does not take into account the facts which I mentioned. We say that he ought to give relief to bona fide farmers, people who do not derive the greatest portion of their income from other businesses.

I do not intend detaining the House for any length of time. I merely want to point out that according to the reconstruction committee of the Agricultural and Forestry Department the value of the land held by European farmers is £300,000,000; the value of the stock, etc., is £107,000,000, and the value of implements and all the rest of it £20,000,000, so that the investment of European farmers in agriculture is £427,000,000, which according to what the hon. member has just told us means that the average income of each family is £147 per year. There are of course rich farmers, people who have inherited a lot of money and there are others who were poor to begin with and who later became wealthy as a result of their farming operations. Those people, however, are in a small minority. In some parts of the country farmers are fairly independent in spite of all the difficulties imposed upon them by the Government.

Do you believe that?

Of course I do. We know that the representatives of the farmers opposite are bound hand and foot and cannot do anything. They can see what is going on in regard to the consumers who are appointed to the Control Boards but they are powerless to stop it, and so they have to try and defend it against their own convictions.

I must ask the hon. member to come back to the Bill.

It is palpable that as far as this Government is concerned we have reason to be nervous of what may happen to agriculture. If the Government can avoid doing it, it will not stir a finger to assist the agriculturists, and whenever any changes are effected we are entitled to be suspicious. The Minister of Finance in his budget speech said that he was working out a plan to stop and to draw into his net those wealthy people who were making money in the towns and who bought farms to evade their taxes. We know that there are lots of people in the towns who have a great deal to say in support of the Government but whenever they can evade taxation they do so. But the Minister in this Bill simply includes all farmers. In his budget speech the Minister didn’t say a word about including all farmers. Now he is including them all and the benefit they are supposed to receive is that the wealthy folk in the towns will not find it so easy to compete with them and to force up the values of land. That is supposed to be the benefit they are going to derive as a result of what the Minister proposes here. How many people are there doing that sort of thing? There are very few of them and I welcome their participation in farming. If more townsmen took an interest in the farming industry they would realise the difficulties with which the farmer has to contend. They would realise how dependent he is on the weather and on other factors. But I repeat that we are suspicious of the changes which are being introduced and it is patent to me that the farmer is going to be affected.

How?

The hon. member is a cattle farmer, and if he buys cattle the amount of his purchases can be deducted every year until the whole of the purchase price has been deducted. If a wine farmer builds a cellar costing him £1,000, or if he spends £1,000 on the planting of vines or trees, he is allowed to deduct only 20 per cent. in one year from his gross revenue. That is all he is allowed to deduct. I have no objection to the Minister’s limiting people in a specific year to a certain percentage, but at any rate give those people the opportunity next year, also to deduct that percentage or bring it up to the full revenue of the farmer. Why must the farmer, if he makes improvements, only be allowed to deduct 20 per cent. of his gross revenue in one year? The Minister argues that the farm is being improved and that if the farmer eventually sells the farm he gets his money back, and he will not have paid income tax on that money.

If your scheme is adopted the business man will not be affected.

Let me tell the hon. member how the business man is going to be brought in under this scheme—even how he is made to pay. If a farmer builds a cellar on his farm or if he plants vines or trees, we know perfectly well that if he sells his farm at some future time, say after ten years, he does not get back the money he has spent on these improvements. That is the position and every farmer knows it. Over all these years the capital profit on a farm has not been subject to taxation if the farm was sold. In some cases a change has been effected as a war measure. The improvements however have always been looked upon as part of the capital. Now the Minister says that his object is to catch companies and wealthy people who buy farms with the object of evading taxation and he sees no way of doing it by any other means. He simply has to bring them all in and the farmers have to be satisfied because business men are now kept out of farming and the farmer will not have to put up with their competition. Hon. members opposite are not satisfied. They may say that they are satisfied if they like, but I am not satisfied. One could easily distinguish between the farmers whose incomes chiefly depend on farming, and other people, the major part of whose incomes are derived from ordinary business. We know that the Land Bank asks for that information and a distinction is made in respect of interest subsidy.

But surely there are people who get the interest subsidy although the major part of their income is derived from another source?

Then it is illegal.

That may be.

I have been dealing with these matters for a long time and I know what I am talking about. I know of one case where two brothers have a hotel, and because the profits made on this hotel was £20 more than what was made out of the farm, they did not get the subsidy.

Would you call that type of man a bona fide farmer?

Yes, he is a bona fide farmer. Anyone who engages in farming, or has farming done on his account, is a bona fide farmer. This is not a question of bona fide or mala fide, the question at issue here is the nature of the man’s occupation. If the major part of his income is derived from farming, we regard him as a farmer. If the major part of his revenue is derived from business, then he is not a farmer. The Minister is now trying to catch those people who are investing their excess profits in farms with the object of selling those farms again after the war. Let me tell the Minister that during the last war I knew an instance of a farmer who, in order to avoid paying heavy taxes, bought mules on a large scale. After the war was over he sold those mules again, but he lost so much on them that it would have paid him better to have paid his taxes. The farmer is always being caught. If he buys stock he gets an abatement. If he sells his stock he has to pay again. I have no objection to the Minister’s applying this percentage and to the farmer’s being allowed to make reduction year after year until the cost of the improvements has been entirely deducted. But I also say that the Minister must distinguish between the practising farmer and the business man, and he can only do so if he takes as his basis the source from which the man derives most of his income. The percentage which the Minister lavs down is also too small. Why doesn’t he fix it in such a manner that the farmer can deduct 50 per cent. from his gross income one year, and 50 per cent the next year? Here we definitely have a case of the Minister depriving people of these privileges. In the past they had the advantage of being allowed to deduct the value of their improvements. The Minister is now taking that advantage away from the farmers because he wants to catch some people who have been evading paying income tax. The farmer used to have the right to deduct everything he spent on improvements, but now he is limited to 20 per cent. on the gross income of his farm. The Minister should accept that proposal. It was the practice for years. He should accept the proposal if he wants to catch those people. He need not defend them. As far as I am concerned, I feel that if a man wants to evade his tax and wants to be dishonest, the authorities have the right to take all they can get from him. That is only fair. But if you restrict a bona fide farmer—a man who makes his living out of his farm—in this way, then I say it is unfair. I want to ask the Minister to work out some other amendment under which he will be able to catch those people. As far as the wine farmers or the fruit farmers are concerned, they have to have their sheds. The wine farmer has to have a cellar, and if he puts it up in one year, he is allowed only a 20 per cent. abatement. If a wine farmer puts up a cellar for the manufacture of good wine, his income goes up considerably. Where the man who produces distilling wine gets £4 for his wine, the man who produces table wine gets £7 to £13. It means that his income is higher and that he is able to pay more income tax. If he hasn’t got the cellar he hasn’t got the income. Besides, it is a privilege which the farmer has enjoyed since the days when income tax was first introduced, and now after many years, he is to be deprived of that privilege. Why? Simply because other people, about 50 or 60 of them in the whole country, people who want to speculate, are not paying taxation. Why must everybody suffer because of them? The Minister must not take it amiss if I feel that it is only an excuse to force the practising farmer to pay more taxation. I feel that the Minister holds the same opinion as many other people, that the farmer is contributing too small a proportion of the country’s taxes. The farmer simply hasn’t got the money, and if the Minister is unwilling to help these people, he will have to face the consequences. This proposal of his seems to be very unfair. We deprive these people of their privileges, and the Minister has no right to do so.

I think everyone on this side of the House feels that special consideration must be given to the farmer in connection with income tax, but up to now the consideration which has been given to him has been of such a nature that it is really beyond what is fair. The Minister has now come forward after many years of exemption as far as the farmers are concerned and has limited the amount of money which they can pay from income on capital expenditure, but whatever figure he had decided to limit that to would not have been acceptable to the other side. If he had accepted the 50 per cent. which the hon. member for Swellendam (Mr. S. E. Warren) suggested they would have come along and said: “No, you must exempt us to the extent of 100 per cent. on our capital expenditure.” But the position of the farmer is this, that he gets practically everything—if he is a good farmer—free. He gets his living free, he gets his food free, he pays nothing in the way of rent …

It must be wonderful to be a farmer.

You apparently know nothing about farming.

The essentials of life he produces himself and in that way he is in a very advantageous position as compared with the townsman. I think the consideration given to the farmer is a fair one, and one which will commend itself to the farmers themselves. Farmers have actually said to me that they regarded the exemptions given to them as far in excess of what is just, and I think we in the towns have always taken the same view. This proposal of the Minister is one which holds the balance fairly. But I should like to say a few words in connection with what the hon. member for Fauresmith (Dr. Dönges) said about our income tax. He argued that our income tax was too high because of the fact that the cost of living in this country was a high one in comparison with other countries, but he didn’t quote any figures to justify that argument, and it seems to me that unless you quote figures, and unless you know the purchasing value of the currency of other countries, it is impossible to base anything on an argument of that character. But if we compare the proportion of income tax in this country with that in other countries we at once see how fortunate we are in South Africa. I shall give a few figures to illustrate that. Here in South Africa a married man without children, on an income of £500, including his provincial tax and savings levy, pays just under £23. In Australia he pays £137.

Direct or indirect?

Direct. In the United Kingdom he pays £156. In New Zealand he pays £118. In Canada he pays £80 plus £50 compulsory war levy.

That is why we are in South Africa.

It means that he has to find actually £130 out of his £500, and in the United States of America he pays approximately £45. So that as far as South Africa is concerned, in comparison with the richest and least taxed country, the United States, we pay approximately half of what they pay there. If we consider that and if we consider what a man who earns £500 per year can enjoy in this country in comparison with the other countries, then it must be admitted that we are very fortunate and that the comforts which we can enjoy here are much greater than the comforts the man can enjoy in America, for instance, where he cannot even have servants.

Why don’t you compare the total burden of taxation and not only one form of taxation?

This £23 includes all the direct taxes.

I say the total burden of taxation.

We are talking about income tax. These other countries have other forms of taxation too.

I may have more shillings than you may have pounds.

If you are talking about income tax it is no use bringing in other taxes; we know what our income tax connotes and what the income tax of other countries connotes, and when you start talking airily about the cost of living in this country, and the cost of living in other countries, you are in a morass and you are talking in a circle. It seems to me that on the basis of our income tax for us to suggest that we are unduly taxed is simply an exaggeration of facts and is a cry with the object of creating antipathy against the Government.

One would almost say that the hon. member for Pretoria (City) (Mr. Davis) who has just spoken is a stranger from Jerusalem. He said that we only pay £23 in taxation on an income of £500. Let me disillusion him and tell him about a few other taxes which we pay in addition to this direct tax. The farmer pays every possible tax. He has to pay Customs Duties on all his clothes from his hat to his boots. He pays taxes on all his farming requisites; he pay transfer duties; he pays dog tax; he pays wheel tax; he pays motor tax; he pays income tax; he pays loan tax; he pays war tax; he pays a land tax if he sells his land.

What does he live on?

He pays supertax. He pays personal tax; he pays transfer duties; he pays excise duty; he pays tobacco tax; he pays a tax on his cigarettes; he pays succession duties; and he pays estate duty; and I haven’t mentioned them all yet. Let me give the hon. member a text; he will find this text in the Bible.

Is it in the Old Testament?

I think it is in the Old Testament too. The text reads as follows—

I should like to say to the hon. member that the farmers get three things free, namely, the sun, the rain—when it does rain—and the air he breathes. I should like to appeal to the Minister in connection with this 20 per cent. abatement on improvements on the farm. I agree with the previous speaker that the improvements which the farmer effects are not capital investments. Every farmer worthy of his salt spends money on the land to bring about improvements. If he makes a dam and if he irrigates his land, it means that the grain that he grows, the lucerne or the fodder he grows, produce revenue which is an asset to the Government; if he puts up a shed he does so in order to house his stock during the winter season, and with the object of getting more milk. Any farmer who is worth his salt does not sit on his stoep—he makes improvements in order to increase his income and, from that point of view, I hope that the Minister will consider our representations. I hope the Minister will realise that it is a matter of importance that he should not regard improvements as capital investments, but as the type of investment which a farmer would make when putting his money into cattle and stock. Those improvements eventually produce profits and on those profits he has to pay taxes.

I should like to say at once that although we are not going to vote against the second reading of this Bill we want to follow the same course as we followed this morning. We support this Bill with this qualification that we are opposed to the provisions of Clause 37 (d). Among hon. members on the other side, the hon. member for Port Elizabeth (District) (Mr. Hayward) and I believe also the hon. member for Rustenburg (Mr. J. M. Conradie) asked why the farmer was now in a worse position than that in which he was before.

I didn’t ask it.

I am glad to hear it. I differ from the hon. member for Ladybrand (Mr. J. N. le Roux) in regard to his contention that the money the farmer invests in improvements does not constitute capital. I would like to ask the Minister whether, if a man makes £1,000 and he invests it, he taxes 80 per cent. of the capital. No, he taxes the interest on the capital.

He taxes the money which is earned. The money is taxed before it is invested.

If he puts it into improvements for the development of his farm and for the purpose of getting a better income, the Minister takes 80 per cent. of the farmer’s capital and he taxes it. I bought a farm two years ago. That farm has to be developed. At the moment I cannot get enough out of the farm to finance its cultivation and to make it productive. I therefore have to take the capital I have and invest that in the farm. I have to buy jackal-proof fencing; I have to build dams, windmills; I have to make boreholes, and I have to use my capital to develop the farm.

That is not taxed.

The Minister is only allowing an abatement of 20 per cent. The hon. member should read Clause 37. 20 per cent. is exempted Assuming my gross return is £2.000. I am allowed to deduct only £400 even if I spend the whole of the £2,000 in improvements. Am I not investing my capital? Does the Minister do the same thing if a man wants to invest his capital and draw interest? The position is even more peculiar than that. If I undertake erosion work the Government assists me with a 33 per cent subsidy. There the Government admits that we have to develop the farm and have to help to combat soil erosion, so it assists us to the tune of 33 per cent. But perhaps I have spent 50 per cent. of my income on combating soil erosion, or perhaps 60 per cent. of what I have got out of the land. I am allowed to deduct only 20 per cent. and the balance is taxed. The Government subsidises boreholes, and silos and dams and dipping tanks. But if I make boreholes and build dipping tanks I can deduct only 20 per cent. My constituency is a very widespread one and the farms have to be fenced off with jackal-proof fencing. When war broke out the farmers were on the point of doing so. A man is unable to farm today unless he is jackal-proofed. But now they have to wait until the wire is available no matter what the cost may be, because if a man doesn’t fence he cannot continue his farming activities. The Minister is now going to tax the capital which we are investing in wire. Some people borrow from the Land Bank to fence their farms, and the Minister taxes that money, and now hon. members ask what a bona fide farmer is. In his budget speech the Minister repeatedly used the term “bona fide farmer” so it is a recognised term. And the Farmers’ Relief Act No. 48 of 1935, contains the following definition of people who may be assisted under the Act—

It is therefore not an unsurpassable difficulty. I agree with the Minister that we must catch those people who are not actual farmers and are out to evade the law. But I ask the Minister to meet us in this case. If we move an amendment with the object of catching those people, will hon. members opposite assist us? If a man derives all his income, or the main part of his income from farming he should be exempt and his capital should not be taxed. We know that at the meeting of the Cape Agricultural Union three years ago it was stated that 80 per cent. of the farmers were mortgaged up to 80 per cent. of the value of their land. A very heavy mortgage burden rests on the farmers. And now the farmer tries to develop his farm in order to increase his income and thus to pay off this mortgage burden. He takes up loans with the State to fence off his farm and to develop it. The farmers have got into a diffcult position owing to the fact that they have not been able to work their holdings properly and owing to the lack of an adequate return on their products. We contend that the farmers should be assisted to develop so that they can increase their income. Some people hold the view that farmers should be entirely exempt from taxation because they do pioneering work and should be given the opportunity of developing their land. We would like to assist the Minister in catching those he wants to catch, but we want him to assist us so that the practising farmers will not be affected.

When we are dealing with the taxation of farmers, we find that a large proportion of hon. members opposite like to give the impression that all the farmers are rich. One hon. member said that the farmers get everything for nothing. Only recently an English-speaking farmer said to me that there was no profit in farming and that all the farm supplied one with was a home. That is the experience of a very large proportion of our farming community. But let me quote, not what I say, but what is stated in “Farming in South Africa” of the 14th August, 1943. This emanates from the Division of Economy and Marketing and the article is one written by Messrs. De Swardt and Du Plessis, and this is what they say—

Here we have the results of a scientific investigation which records that 35 per cent. of the population, the farming community of South Africa, does not even have 13 per cent. of the national income. It goes to confirm our experience that farming does not produce great profits. I would like to say a few words about the 20 per cent. which the Minister proposes to allow as a deduction, in respect of improvements, from the farmer’s income. The Minister assumes that all farmers are rich and have a big income. If a man has a big income and if he can deduct 20 per cent. he may perhaps be able to go in for fairly extensive improvements on his farm. But the great majority of the farmers are small farmers. If we remember that about 50 per cent. of the gross income is sunk into expenditure we find that a farmer with an income of £500 can only deduct £100, but his real nett income—his profit— is only £250. To a farmer who has an income of £1,000 it means that his nett income is only about £500 after deduction of 50 per cent. for expenditure, and he is allowed to deduct only £200 for improvements. Let me point out that everything is so expensive today that if a farmer wants to go in for expansion those amounts must be exceeded. Fencing wire is tremendously expensive and so is everything else, and the farmer has to make improvements continually if he wants to make a living, and if he is allowed only such a small amount for improvements it will be to the detriment of the country as a whole, because the less the farmer can spend on this farm in respect of developments the smaller will the national income be. The farmer has to make provision for ensilage arid for dipping tanks; he has to put up sheds if he wants to increase his income, and I say, therefore, that the Minister is not allowing’ sufficient’ for improvements particularly where the smaller farmers are concerned.

The Minister is going to handicap the farmers very severely and I would like to appeal to him at any rate as far as the practising farmers are concerned not to make the first £1,000 subject to this extra tax. It would be a concession to that section of the farmers who need it most.

Mr. Speaker, one can understand that if there are to be any limitations or restrictions imposed in the case of the taxation of the farmer, there is likely to be a considerable protest raised, no matter what the effect of that restriction is likely to be. It is interesting that the restriction on this occasion is raised because there is developing a growing opposition to certain persons in business engaging in farming. It is rather interesting that the reason for this change in the Income Tax Act has arisen because of that fact. We have seen a reference to such a development in the report of the Meat Commission, and the Minister made reference to it in his Budget Speech, and when he did so I rather wondered how he intended to approach this subject. We now know how he is approaching it because we have the Bill before us. Mr. Speaker, the farmer, even with these limitations, is in a very happy position as far as income tax is concerned as compared with the industrialist in business in the town; he is in a very happy position, taxation has never worried him at all. My friends over there laugh, but let me tell them of my experience in this House yesterday when I had a visit from a farmer in the Midlands of the Cape, near Graaff-Reinet. He has developed from farming into a certain industry. He came to see me yesterday because he is concerned about the enormous amount of tax he is paying in connection with his industrial undertaking. This man was first and foremost a farmer, and he told me yesterday that he had come to the conclusion that the best thing that he can do is to sell his industrial undertaking for what he can get and invest the money and go back to farming. He said he would do that because when he was just a farmer he was successful and never paid any taxes.

He might not be successful again.

That is pure fiction.

That may be very strange, but truth is sometimes stranger than fiction, and that is the truth. The fact is that the farmer in this country, from the income tax point of view, is exceptionally well situated; he gets more than favoured nation treatment from the country, and one begins to ask oneself whether this farming taxation is altogether sound, I have grave doubts about it myself. The farmer can spend money on capital improvements, and it is how objected to that only an amount of 20 per cent. will be allowed him as expenditure for income tax. The hon. member who has just sat down was telling us about the small farmer, but the small farmer pays no tax, even under this scheme. Take the man who has an income of £500 and who has spent £100 on capital improvements. What does a tax on £480 mean to him? A farmer with two or more children will pay no tax. Then what about the big farmer? One knows many big farmers who are doing remarkably well, they must be coining a tremendous amount of money and paying little taxation.

How can you say so?

I have in mind for example H. L. Hall and Son, Ltd., in the Eastern Transvaal.

A company.

What is the difference between a company and an individual?

A very great difference, it depends on the amount of capital invested. A company may have £100,000 invested, while the individual may have only a few hundreds or thousands.

Of course there is relativity about it, but you may have a small company as well as a big one. The Minister now seeks to create a distinction as between the individual and the company, and I think that is an unfortunate distinction.

You ought to tax the accountants, they must be making a lot of money.

I don’t know anything about that.

Auditors.

I am not an auditor in case you are thinking I am.

Whatever you are you must be making a lot of money.

The Minister is now seeking to make a clear distinction between the company and the individual in farming. I think that is a pity, it is only another step in the discriminatory measures that have been placed on our Statute Book in recent years. Whenever such measures have been put on the Statute Book I have raised my voice in protest, and I do so again. In the case of an individual he is to be given the option of being assessed in one of two different ways, and he is given a chance of being considerably relieved of taxation or of escaping taxation. Whereas in the case of a company that is to be denied. To my way of thinking this is completely wrong. With regard to company taxation I do hope that during the recess the Minister is going to pay close attention to the whole question of company taxation. In 1941, when he changed the basis of taxing compagnies, the Minister continued to draw a distinction between public and private companies, and then provided that the profits of a private company were to be apportioned amongst the shareholders. Since that date in 1941 we have had amendments to the Act each year because of the introduction of this feature. We have had amendments in two directions. First of all there is the method of defining a public company, so that all other companies fall into the category of private companies. In Section 6 of this Bill, there is another attempt to add to the definition of public company in order to tighten up the definition. Secondly we find that in Clause 7 of this Bill there is an amendment with regard to the apportionment of profits. We shall go on from year to year adding amendments. We find now that there are a large number of instances in which the Commissioner may elect not to apportion profits, and the whole position is becoming confused in the extreme. The system of apportioning profits of a private company is creating much dissatisfaction. Last year, for example, we modified the procedure with regard to apportioning profits. Up to then preferent dividends had to be apportioned to the preferent shareholders. Last year, by amendment, the Commissioner was given the right, in certain cases, to tax the company in respect of preferent dividends. The result is this, that the amount of the tax now is apportioned to the shareholders and they are taxed on an amount which they can never receive. That is creating dissatisfaction. A similar state of affairs is coming about from this Bill, where, in the case of a company which has different classes of shares, the profits on certain shares may be taxed in the hands of the company and the balance apportioned to the shareholders. Companies can only pay in dividends a portion of their profits, and the shareholders are being held liable for the tax on the share of the whole of the profits. It means that where your apportionment may be, for example, taking a percentage basis, £100, the dividends you receive may only be 30 per cent. or 40 per cent., and yet the tax is based on 100 per cent. It means that many individuals are as a consequence called upon to pay more in taxation than they receive in dividends, and the effect of that is to create a capital depreciation in share values. One hears that due to this system people are selling their shares at a low price, because they find themselves in the position of paying taxes to a greater amount than they receive in dividends, in other words, they are paying more than 20s. in the pound in taxation. The principle of apportioning profits is in theory sound, but in practice it does not work out in that way. It does not work out in the same way as does the allocation of profits in a partnership where the total profits are apportioned between the partners and each partner is actually credited with his entire share and becomes the owner of that amount. In the case of the company there is a great difference. The individual shareholder has no become rather hopeless. There is, however, a claim whatever to his share of the undivided profits of the company, he is not credited with that amount as a partner is. All he gets is the dividend, which is paid to him, and if he is a minority shareholder his voice is of little value at a shareholders’ meeting in protest. I say, Sir, that as a result of experience under the Act in the last two or three years the position has much more simple way of dealing with this matter, and I want to make a suggestion to the Minister for his serious consideration. I want to suggest that in future there should be no distinction drawn between companies as to whether they are public or private. A company is a company, and the profits of a company should be taxed in this simple manner. The amount of profit paid as dividends should be taxed in the hands of the recipient shareholder, who receives the amount of money, and can therefore afford to pay the tax on that amount; he is not then embarrassed. The balance of the profits, which is undistributed and which remains in the hands of the company, should be taxed in the hands of the company, which has the relative funds with which to pay the tax. That is a simple procedure, Sir, and it would enable us to shorten our statutes to a considerable extent and to bring about a reasonable method for the payment of income tax, because no person will then be asked to pay more in taxes than he has received by way of dividends. There is one qualification which may be necessary and that is again quite simple. The portion of the undistributed profits, which is retained by the company, may perhaps require to be taxed on a variable scale, having regard to the percentage of profit, which the company pays away in dividends. Where the percentage in dividends is high or big the rate of tax should be correspondingly lower, and where the rate of distribution is relatively low or small the rate should be higher. Such a procedure becomes necessary because if the company pays a small amount in dividends, the amount which will be recoverable from the shareholder in normal and super tax will be relatively small and vice versa. This question of company taxation is a very vital issue. I think it is quite wrong to discriminate against companies in the way we are doing. The system of operating by means of limited liability companies is one which is in force throughout the world. The limited liability company has been a tremendous blessing in the development of this and other countries. It has enabled people, who otherwise could not get together, to pool their resources for the establishment of business. It is a good process. It has enabled tremendous employment to be given. Development has depended in no small way on the development of the limited liability company, and I think it is high time that in our taxation of companies we get down to a system which can be described as reasonably equitable. Let us get away from many of the problems which we have today, many of the inequities which we have. I have cited a few already. I have cited others in previous years. Why should, for example, the losses of a private company not be apportioned if the profits are apportioned? The losses of a partnership are apportioned in the same way that the profits are, but in our legislation there is a distinction drawn. The profits of a company are apportioned but the losses are not and there is no suitable explanation for that. If it is fair and right to tax profits, it is fair and right, and it is an admitted principle underlying our income tax statutes that losses should be allowed. Why create such a distinction? We shall have the opportunity during this recess of considering much. We are very pleased that the Minister has extended an invitation for the formation of a body to bring forward recommendations with regard to taxation, and I was very pleased to hear him say recently in reply to me in this House that his invitation has been accepted. I just want to ask him to give careful consideration, particularly to matters appertaining to company taxation, when recommendations are brought forward to him, and I have no doubt that in respect of the subject, which I have been discussing, recommendations will be brought forward.

The hon. member for Gordonia (Mr. J. H. Conradie), who sits behind me, is a very good friend of mine, and he has promised to listen to me while I am speaking, and I am, therefore, sure of at least having one more man listening to me than the last speaker had. One matter in which we, as farmers, are particularly interested in in this Bill is this question of the 20 per cent. For a number of years the farmers have been allowed to deduct from their taxable income that part of their income which they reinvest in their business for purposes of development. But the position now is that the Minister proposes that, apart from the purchase of stock, the farmer is to be allowed only 20 per cent. of the money he reinvests free from taxation. This will of course affect detrimentally a large number of farmers. I can quite realise why the Minister has made this proposal. Apparently, if pressure wasn’t brought to bear on him by his own party to tax the farmer, he has in any case had so much support from his followers that he has decided to impose this heavier income tax on the farmers. We have the example of the hon. member for Pretoria (City) (Mr. Davis) and of the hon. member who has just spoken (Mr. Bell). In the first part of his speech— to which some people did listen—he insisted that the attitude adopted by the Minister was not only correct, but that he should go a good deal further into the taxes which he is imposing on the farmers. I had thought that hon. members opposite, who pretend to be such great friends of the farmers would have reacted to the statements that the farmers were being let off too lightly, and that some hon. members would have denied that contention and said that the taxes on the farmers were too heavy. Surely we can expect a sort of balance. But it seems to me that those who do not applaud the increase in taxation, silently accept it, or half-silently— as the hon. member for Rustenburg (Mr. J. M. Conradie) is doing. He is perfectly satisfied. Now let me make this suggestion to him. He will have to report to his constituents at Rustenburg one of these days. Let him take the hon. member for Pretoria (City) with him, and let the hon. member for Pretoria (City) tell the farmers what he has told us. Surely the hon. member for Rustenburg has no wish to be dishonest with his constituents. He is not going to tell the farmers that the Government has done this, that and the other for them when when it is not so. He is going to tell his constituents what his party stands for. Let him take the hon. member for Pretoria (City) with him so that that hon. member can put forward the attitude of the townsman as against that of the farmer. He can now tell the hon. member for Rustenburg exactly what the hon. member for Rustenburg tells him. The hon. member for Rustenburg says: “I am not concerned what the hon. member for Pretoria (City) says.” Then the hon. member for Pretoria (City) can say: “Neither I nor anyone else takes any notice of what the hon. member for Rustenburg says.”

You’d better make a joke.

And do you want me to go to his constituency as well?

Yes, that would be an excellent idea. But don’t let hon. members select people with a fine-comb to go to the various constituencies. Let them put all the names in a hat and draw one out, and if they do that they will, as the Hottentot says, get a fine mix-up.

Do you want members from this side of the House to go with members opposite to their constituencies?

Yes, that would be an excellent idea. The hon. the Minister can come with me then and wear his coolie fez and I can assure him that, if he does so, they will apply practical segregation to him at once. And now let me come back to this 20 per cent. The farmers have had this right or this privilege for a long time, but the Minister has suddenly decided to step in and deprive the farmers of this right or privilege, whichever you may want to call it. As far as I am able to understand it the reason why he wants to do so is so that he can check the increasing number of people, who are not really farmers but who want to invest money in farming to get out of paying their ordinary income tax. Let me tell the Minister that if that is what he is trying to do he will receive whole-hearted support from the farmers, but we do not think that this is the correct way of doing it. He will get support, because those of us who are farming comparatively close to large business centres where you get a lot of rich people, in the Western Province and the Midlands for instance, and, I understand, also in the North, have no time for people who come from Cape Town and Port Elizabeth and who buy farms in our area, not for the purpose of farming, but in order to get out of paying income tax. We take no pleasure in those people and we do not benefit from their participation in farming. They buy those farms and the first effect of their presence there is to drive the ordinary farmer from his farm, and my view is that people who want to farm should be the type of people who want to make their living out of farming. I don’t like people who want to farm as a sideline. I don’t like the idea of business men buying farms outside to invest their money in farming or to have some country place to go to. I want the man who owns the farm to make his living out of the land. These people come from the towns and not only do they drive those people off the farm, but they force up the price of land. That is what has happened in the Western Province and in Port Elizabeth. These people are quite willing to pay a lot of money for those farms so that they can invest their money there because what they lose in the extra price they pay, they make up in the amount they save in income tax. Now let me put this question to the Minister. If he is honest in his intention to check those people, why doesn’t he do the same thing in regard to the purchase of cattle and stock. Even greater speculation is going on in regard to the purchase of cattle and stock. You have your rich men and even rich companies in certain parts of the lowveld, for instance, who have bought up land cheaply and they invest their profits in cattle, and those people who invest their big profits in cattle do not come under these particular provisions which the Minister has proposed. They stay as they are, or at least they are limited only to the amount of the return. They are five times better off than the agriculturists.

But still that man makes his money out of the cattle.

Does not the man make his money out of the land? And does he not have to undergo great hardship to make money out of the soil? The hon. member for Rustenburg makes his money out of the soil.

Out of oranges.

Well that is out of the soil. The hon. member over there makes his money out of sheep. Why should the hon. member for Port Elizabeth (District) (Mr. Hayward) have an advantage over the hon. member for Rustenburg. Both of them have to work very hard. I almost think the hon. member for Rustenburg as an agriculturist has to work harder. If you want to tax these people why do you not tax them all on an equal basis? If the object of this clause is to catch the townsman who goes to the rural districts to invest his money there, if the object is to check that man, why then doesn’t the Minister deal with the cattle farmer and the agriculturist on the same basis? That is a question to which we should like an answer. The general opinion is—I don’t say it is my opinion—but the general opinion held by people is this—yes, that the people who invest a lot of money in cattle belong to the rich class. They are the big companies on which the Minister depends for taxation purposes, and he does not want to be as hard on those people as on the poor agriculturist who is the most humble of farmers, and that is why these people are given all these advantages. You can catch that man on the 100 per cent., but if it is more than 100 per cent. he can carry over the extra money to the next year or the year after. In that case it is 100 per cent. and we are limited to 20 per cent. I am pleading on behalf of the hon. member for Rustenburg. He is now beginning to realise it. There are other means of preventing those townsfolk from taking their profits and losing them in farming. It is very easy to find some other means. The definition of a farmer has been given. We have findings given by the courts as to what is a practising farmer and what is not. If the hon. member for Pretoria (East) (Mr. Clark) were to buy a farm outside town tomorrow would you call him a farmer, if he simply had the farm there as an extra—as a sideline? It is not difficult to get a definition of a farmer. A farmer is a man whose main interests are in farming. One can usually get a definition of a farmer but I don’t know that the Minister wants one. I was speaking in general terms when I started, but I am now going to speak as an agriculturist. Why are we agriculturists treated on a different basis to the cattle farmers? Why is the cattle farmer completely exempted as far as his reduction is concerned, while the agriculturist is exempted only to the extent of 20 per cent.? Why is the cattle farmer allowed to transfer any additional amount above 20 per cent. to next year for taxation purposes, and why are we not allowed to do the same thing? Why this discrimination against us? Does not the Minister know that the question of the relationship of the value of land to invested capital of a fully developed farm in the case of agriculture usually is such that the value of the land in relation to the total is very much lower than it is in the case of the cattle farmer? To give an instance, in cattle farming you often have developed land on which the value is greater than the number of cattle running on that land. But in regard to agricultural land it is nearly always the other way round. Take a vineyard. Land valuators have laid down what the relationship is between the value of vine land as such and the value of the land if vines had been planted and are bearing. It has been agreed that the price—I am now talking of pre-war days, because conditions today are abnormal—that the price of vine land is between £20 and £40 per morgen, according to its quality, while the same land, if it is planted with vines which are in full fruit, is between £60 and £100. In other words the increase in the value of the land is twice as much as what the land was worth without vines. A vine may be an extreme example, but as far as orchards are concerned the same position prevails, if not to quite such a degree. One also gets the same distinction as far as grain farms are concerned. You have the land which is uncultivated and the land which is cultivated. I mention these factors because as far as agriculture is concerned it is more essential for a farmer to reinvest his income in his farm if he wants to develop it. Why then this discrimination against the agriculturist? If there has to be distinction it should be in favour of the agriculturist as against the cattle farmer. I am against this proposal both for the agriculturist and the cattle farmer, but what aggravates the position is that that section of the farming community which finds it most necessary to reinvest its income in the soil, to bring the soil to the highest degree of productivity, is detrimentally affected by this tax. I intend proposing an amendment and so will the hon. member for Gordonia (Mr. J. H. Conradie) and the object is, while we are unable to save the position, at any rate to improve it to a certain extent. I am going to propose that as far as the 20 per cent. is concerned the agriculturist will be treated on the same basis as the cattle farmer in Clause 3 (6) (b). I intend moving a proviso at the end of 3 (7) so that it will be identical to Clause 3 (b) (b)—in other words I want to place the agriculturist in the identical position in which the cattle farmer is. We shall hand in those amendments so that they may appear on the Order Paper and I hope the Minister will give them his serious attention. I am afraid it is too late to do anything with regard to the exemption which the farmers have enjoyed in the past, but must try to save from the wreck what remains to be saved.

Fortunately politics do not play any part in this discussion on agritural matters. Until I became a member of this House I made my living entirely out of farming. Today I also draw the princely amount of £700 as a Parliamentary salary, and I am now beginning to realise that the townsman, who is not allowed to deduct anything from his income, is hard hit by these taxes. I am, for instance, not allowed to deduct anything from my £700 for the expenses I had in my election, nor am I allowed to deduct anything for my subsistence in Cape Town. The arguments we now hear are first of all that 100 per cent. is allowed in respect of cattle which farmers have bought. That deduction is now limited to the amount which the farmer or the company receives in the course of the year out of sales. If we consider the speculation which has been going on during the last few years for the purpose of evading taxation, the Government is justified, from every point of view, in making this particular provision. Big business men have invested money and have been looking for ways and means to evade their taxes. I don’t want to go into details, but 15 per cent., and more, which should have been paid in taxation has been saved by them and has been invested in farming. But what is more, they have also created serious evils by causing shortages at a time when our herds were at their weakest, when the supplies offered were poor, and when there were big demands from convoys passing our coasts—and they caused those shortages, by keeping their cattle off the market and thus aggravating our difficulties. But more than that. Farms became overstocked, the soil was trampled out and soil erosion was actually being fostered thereby. There is considerable difference of opinion about the stock position? Let me tell the hon. member for Humansdorp (Mr. Sauer) that I think he has completely missed the point about the two bases. The man who is on a cattle basis can set off what he has purchased during the year against what he has at the end of the year, and this provision applies more particularly to the man who is on a cash basis. The man who pays his income tax on the basis of his cattle returns will eventually be caught. Now take the other side. Take a man who has got an orange orchard. When he sells his crop, he doesn’t sell his trees with his crop. He only sells his product, and, similarly, when I sell my wool, I do not sell my sheep with my wool. Of course if I sell my sheep I turn over my capital into something else. Before 1929 the position was that the farmer could not deduct improvements he had made to his property. In 1929 provision was made in Clause 14 of the Act allowing the farmer to deduct expenses in connection with the building of dips, tanks, dams, water furrows, boreholes, pumping appliances fencing, the destruction of noxious weeds, soil erosion, the erection of buildings for specific farming purposes, and also the laying out of vineyards and fruit trees. In other words, the Act made provision under which capital improvements could be deducted. Now let me come back to what the hon. member for Calvinia (Mr. Luttig) said. He told us that at a Congress a statement had been made that a large proportion of the farmers’ property was taxed up to 80 per cent. Objections are now raised to the farmer only being allowed to deduct 20 per cent. for improvements. Before 1929 they were not allowed to deduct anything. Our farmers are very ingenious, so they manage to get past that provision. They may have a dam which cost them £5 to construct, and that dam is washed away, and they spend £50 to rebuild the dam; so £50 is put down as a deduction for repairs to the dam. That amount was deducted. Their water furrow may have been in poor condition, and it was strengthened and that was charged up too. Now let me ask the hon. member for Calvinia, when he says that a large part of the farmers’ property is taxed up to 80 per cent., whether it is in the farmers’ interest, to invest a large proportion of their income in improvements every year. It definitely is not in the interest of the farmer to put back a large proportion into the soil. To a certain extent improvements have been made, but it is an incontrovertible fact that the man who makes sensible arrangements for the reinvestment of his capital in the land, becomes financially strong.

It is not an incontrovertible fact. It may be your opinion.

The hon. member for Swellendam (Mr. S. E. Warren) complained the other day about a settler in his constituency having gone ahead to such an extent that he—the settler—could have bought him out. It shows that we have farmers who haven’t done so badly. I say that it is not in the interest of the farmer to reinvest everything he makes in his land. If he has an income of £1,000—and we should remember that that is gross income—then it is perfectly fair to say that he should be allowed to use £200 for improvements which can be written off. If we take the assessments of farmers for income tax purposes we find that a farmer who has a gross income of £1,000 rarely has a bigger nett income than £350. The balance will be expenditure in connection with his farming activities and I therefore feel that the amount provided by the Minister, namely 20 per cent. is a reasonable one. If he wants to increase it to 25 per cent. we on this side of the House will raise no objection. I say emphatically that this change in the income tax assessments will have the general approval of this side of the House and of the great majority of the people outside if they study the merits of the case dispassionately.

The last few years have proved to us that agriculture is our greatest national asset. In days gone by a large section of the population was not favourably disposed towards farming, but in these days of war we realise that the farmers are doing a great national work by producing food for the nation. I represent a constituency which is on the very threshold of its development, and the provisions of this Bill, especially those in regard to the 20 per cent. are going to handicap that development. I cannot agree with the hon. member for Port Elizabeth (District) (Mr. Hayward). Possibly the part of the country he represents has been fully developed and stabilised. This Bill will have a restraining effect on the development of the soil of the country. I, as a farmer’s son, know what my father has done to develop his farms. He said that he wasn’t going to buy any shares because the 18 inches top layer of his soil was the gold mine which he had to develop. Here, in the Western Province especially, that is the spirit which is inborn in us and that self-same spirit is now beginning to take a hold in those parts of the country which I represent. Some people evade their taxes. It is the Government supporters particularly, who so eagerly voted for our participation in the war—they are the people who do not want to pay taxes and in order to secure their future they make investments in competition with the farmers. We are quite satisfied for those people to be taxed. When the Minister made the budget speech he devoted a full paragraph to this question but he did not tell the people that he was going to deprive the farmers of those privileges. Let me quote what the Minister said. He started by saying this—

Then he offered an excuse for the bona fide farmer—

We fully agree with this opinion—

When the Minister of Finance made this speech he gave us to understand that an attempt would be made to discriminate between the bona fide farmers and those who indulge in malpractices to invest their cash. There was no intention at that stage, judging by the statement of the Minister of Finance, to apply this to the bona fide farmer. The hon. member for Calvinia (Mr. Luttig) has told us that already there is legislation in existence in this connection. Act No. 48 of 1935 contains the definition of farmer. If the Minister of Finance studies the income tax cases he will find that there are decisions given by the courts in regard to this question. Those decisions could have served him as a guide. But the Minister now wants to deprive the farmers of these privileges, and we on this side of the House are going to move an amendment aiming at the exclusion of the bona fide farmers, i.e. the people whose main income is derived from farming—we are going to propose that the 20 per cent. shall not be applicable to them. There are a number of farmers’ associations in the Western Province. Last week-end I got into touch with a number of prominent men belonging to those farmers’ associations. They are all supporters of the Minister of Finance but they are not well disposed towards this measure. At Stellenbosch an important Farmers’ Association, of which the hon. member for Hottentots-Holland (Mr. Carinus) is a member, has decided to send a resolution to the Winter Rainfall Area Congress, which, I believe, is to be held at Stellenbosch, and the hon. member for Hottentots-Holland supported that resolution. He said that he was going to fight this provision with all the strength in his body—with every vein in his body. I am sorry he isn’t here now to do so. The farmers feel very strongly on this subject and I hope the Minister will give his favourable consideration to our amendment. I have given it to him so that he can study it before we reach it tomorrow. Now there is another question upon which I feel ill at ease. The hon. member for Port Elizabeth (District) made the remark that the farmers were very ingenious and that, in the past, they had evaded paying their taxes by returnin £50 for income tax purposes if they had built a dam which had cost them £5. The hon. member’s remarks constitute an allegation of dishonesty against the farming community. If there is anyone who should prevent such dishonesty taking place it is the Minister’s department. It ill becomes the hon. member to get up here, when he may perhaps know of a few cases, and to slander the whole farming community by accusing them of being crafty, ingenious and sharp in evading their taxes. In our amendment we are asking for the same abatement which we asked for in our motion last year, viz. that if a bona fide farmer has a £3,000 bond on his farm his instalments in conection with that bond should be considered for abatement for income tax purposes. The Minister knows what our argument has always been; if the farmer had taken out an identical amount in Union Loan Certificates he would have paid no income tax on that amount. It is a capital investment to secure one’s future, and that is why the State should show him the same consideration. I also hope the Minister will consider this matter between today and tomorrow and I hope he will be able tomorrow to meet our requests in this connection.

I wish to associate myself with the previous speakers. We appreciate the difficulties which the Minister has with speculators and with others who evade their taxes, and we appreciate how difficult it is for him to lay hold of these people and to make it impassible for them to get away with the amount of money they have at their disposal and on which they do not want to pay the State its legitimate share. But the principle contained in this Bill is wrong. The Minister must try and find some other way. He should not try to deprive bona fide farmers of these privileges which they have always had in making a living out of their farming activities without having any share in industries or business out of which they could have made additional money. The Minister should not at this stage deprive bona fide farmers of privileges simply because he wants to tax the man who has made money out of business and who wants to hide it in farming. I think it is an injustice, and I do not think there is any need for me to argue that the provisions are going to have a serious effect on the practising farmer. The Minister has perhaps lost sight of the fact that the practising farmer, especially agricultural, has invested a lot of capital in implements and in all the other apparatus which he needs for production of food, and in respect of which he gets no abatement. If he buys implements which he absolutely needs for his production he gets no abatement on these goods. So far he has always had the privilege of building ensilage stores and such things on the farm, and to get an abatement on his income tax in respect of these, but that privilege is now being taken away from him to a very large extent. And now the Minister steps in and says : “Look here now, I am going to allow you 20 per cent. and I am going to limit you to 20 per cent.” Let us look at the position. I have a farm and I have a few sons. I am not giving up my dwelling house to my children while I am still needing it. I have to provide for my sons on a bare piece of ground. I have to make it possible for him to build his own home there. I have to assist him. What happens? You cannot get away from the fact that even if I have to run myself into debt to affect these improvements, they are still subject to taxation. That is why it is clear to me that the principle contained in this clause is wrong. I have never yet advocated that people should be allowed to evade taxation either in one way or another. We have to pay our taxes, but we must see to it that we do not impose our taxes in such a manner that they always hit the one group and that is the farming population. Another matter I want to refer to is that which the hon. member for Gordonia (Mr. J. H. Conradie) drew attention to in his concluding remarks. It is a matter which I have raised on a previous debate, and I want to emphasise it again. Hon. members have often spoken here about the farmers’ bonds. There is a lot of money in circulation today and we are all making more money than we have made before. We frankly admit it. But I ask that the farmer should be given the opportunity to pay off his old debts so that he can have his land free and become entirely independent. The agricultural organisations throughout the country and the agricultural unions of the Free State, Cape and the Transvaal, have repeatedly approached the Minister on this subject and it is in the interests of the continuance of the food production in this country that he should assist the farmer in such a manner that he will be able to survive the difficult times ahead of us, and that in those difficult times he will be able to produce the necessary requirements of this country.

I want to congratulate the Minister on the fact that he is making an attempt to lay hold of the people who are today trying to evade payment of their legitimate taxes. At the same time we feel that the 20 per cent. which is allowed in this Bill is very unreasonable. In my constituency there are people who grow trees, and there are wattle-bark farmers. Those people have to work very hard, and they have to go to a lot of trouble to develop their plantations. They need boreholes and they have to wait almost 7 years before they get any return from their money. They start growing their plantations on credit and now they are not even to be allowed to charge up all the improvements which they have effected. Under this Bill the Minister only allows them to deduct 20 per cent. We feel that these people must be assisted until such time as they can assist themselves. When those people start today they start by incurring a debt. They have to invest the whole of their capital in laying out their plantations and it take 7 years before they get any return. That is the position in regard to the farmers who grow wattle plantations. The timber farmer does not have to wait such a long time. We ask for the whole amount invested in improvements to be deducted from their income. We feel that 20 per cent. is not enough. I should like the Minister to consider this matter. This doesn’t apply to just one farmer, but there are hundreds of farmers in the same position. Some of these men have just started. What prospects have they got if today they have to invest all their capital in their plantations, put up their houses, effect improvements and then have the right to deduct only 20 per cent. We feel that if the Minister allows the bona fide farmer to deduct the whole amount he has spent on improvements he will be doing justice to those people. I want to appeal to the Minister to accept the amendment which we are proposing, an injustice is being done to the bona fide farmer. Let me put it this way. When I speak of the bona fide farmer I mean the man who makes his living exclusively out of farming. I am not talking about people who do part-time farming and who invest money in farming for the purpose of evading taxation. The farmer is the backbone of the country, and you only allow him 20 per cent. I ask what the position is going to be. It means that he is being taxed more than any other section of the population because the farmer’s expenses are higher than those of any other individual. If he is allowed to deduct only 20 per cent. from his gross income for improvements, it becomes almost impossible for him to continue his farming and that surely is an injustice to the farmer.

The hon. member for Fauresmith (Dr. Dönges) to begin with raised a number of points of a general nature, which, as a matter of fact, have already been dealt with in this House. He first of all referred to the question of an exemption being granted for income tax purposes for medical and hospital expenditure. In that regard I can only repeat what I said before. I pointed to two things. I drew a comparison between the position here and in Canada, and in that regard I want to repeat what I said before that our scale of taxation, in comparison with the Canadian scale, is so much lower that we really would not be able to find adequate reasons to introduct that system here. The second point I mention is this. That this question of concessions in regard to medical and hospital expenditure is one which has to be dealt with as part of our National Health Services, and not as part of our taxation system. In the second place the hon. member referred to the position of the lower income group. I pointed out on a previous occasion that the direct tax which is paid by our lower income group is considerably less than what is paid in other countries like South Africa—in other parts of the British Commonwealth of Nations, at least. The hon. member for Pretoria (City) (Mr. Davis) quoted certain figures in that connection today. He cited the case of a married man with an income of £500 per year who in South Africa pays about £25, but who in other parts of the British Commonwealth pays £100 or more. The hon. member for Fauresmith mentioned two points in this connection. He said that the indirect taxation had not been mentioned by the hon. member for Pretoria (City). I did not draw any specific comparison in regard to indirect taxation, but I think I am right in saying that the indirect taxation in those other countries is no less than it is in South Africa. My hon. friend also made the further point that our cost of living has gone up to a greater extent than it has done in any other country of the British Commonwealth with the exception of Great Britain. That is so, and that does apply to this subject, but the effect of those two considerations can, in any case, not be such as to make up for the big difference which exists today in regard to direct taxation. In the third instance the hon. member referred to the 15 per cent. surcharge on income tax and he suggested that we should regard this as part of a compulsory savings tax, the yield from which would then afterwards be available for industrial development. As far as industrial development is concerned we have so far found all the necessary funds from our loan account, for the iron and steel factory and also the Industrial Development Corporation, and this will probably be done without our imposing any special taxation. In regard to the surcharge itself I do not know how at this stage we should be able to do without it. My hon. friend may say: “Reduce your Defence expenditure.” As a matter of fact he did say so when the matter was debated under another heading on another occasion, but meanwhile the House has passed the Defence Vote.

We would not object if you saved something on that Vote.

That money has been voted and we therefore have to find the money by way of taxation. The hon. member also asked me a question about the sale of gold in India. He wants to know who will benefit by that. Well, it will not be to the benefit of the gold mine proprietors, nor will it be to the benefit of the wholesalers. The benefits will be derived principally through the purchases which the State makes in India.

What about other imports?

I don’t know whether other imports are in any way substantial—I think they are very trivial. Our intention is to apply those profits for the benefit of the consumer and in that way combat the inflation imported from India. I think my hon. friend will agree with me that that is the right course to pursue. The details of the system have not yet been worked out.

Do you mean that these goods will be imported more cheaply?

Yes, I do not know what the system is going to be, but it will be such as to promote the interest of the consumer by combating the inflation imported from India. As far as the general question of gold is concerned I am not going to repeat all I have said before. Apparently I did not satisfy my hon. friend then, and that being so it is unlikely that I shall be able to satisfy him now. We have made this agreement with the Bank of England regarding the sale of our gold for the duration of the war. That agreement was very definitely advantageous to us, not only directly, but also indirectly, so it would ill become us now to ask what has become of the gold we have sold, the gold for which we have been paid in terms of the agreement. It would ill become us to ask what profits the Bank of England has made on that gold. Apart from that, I want to say that price stability in regard to gold is to our advantage. It is not to our advantage to try and make profits out of temporary price fluctuations. I now come to the principal question which is being discussed in this debate, viz., the proposals contained in Clause 3 regarding the income tax payable by farmers.

May I ask what the position is in regard to imports from South America?

As I have said before I have no knowledge about some of our gold having been sold above the standard price in South America. I made special enquiries from the Deputy-Governor of the Reserve Bank and he has no further information on that subject either. I can see no reason for our gold being sold in South America at a higher price.

America sells it there at a higher price than 35 dollars.

I do not know whether it is our gold or whether that profit is being made on our gold. Now let me come to the question of income tax payable by farmers. I am sorry the hon. members for Swellendam (Mr. S. E. Warren) and Gordonia (Mr. J. H. Conradie) apparently thought that I had given the impression in my Budget speech that in regard to this concession in connection with capital expenditure our proposals would only apply to people who are not bona fide farmers. It was certainly not my intention to create that impression. I said that we would apply measures of such a character that while we would make adequate concessions to the bona fide farmer the other man would be caught, and to our mind 20 per cent. is adequate. I do not agree with the hon. member’s contention that we shall be doing an injustice to the farmer in this respect. We admit that the farmer’s production is most important as far as the country is concerned. We take due notice of the point referred to here in regard to that aspect of the matter, but we believe, on the other hand, that while the farmer is exempted in respect of 20 per cent. of his gross income—not his profits—this is an adequate concession. He is allowed to deduct 20 per cent. before any expenditure is deducted. I think that especially to the small farmer this is a fair concession and I cannot see how any objections can be made to it. The hon. member for Swellendam asks why any amount above 20 per cent. cannot be carried over to the next year in the same way as we are doing in regard to the concession for cattle. The reply is that you are dealing here with capital improvements which increase the value of the farm. The position in regard to cattle and stock is different. The farmer will eventually pay on his stock. There is a distinction between the cattle which is sold and the cellar which the man puts up. The cellar will constitute a permanent improvement and will increase the value of the farm, but if the farmer eventually sells his cattle and his stock he has to pay income tax on that. That is the difference between the agriculturist and the stock farmer. The hon. member for Calvinia (Mr. Luttig) drew a comparison between the man who earned his money and invested it for the interest, and the farmer who earned his money and invested it in his farm. The man who earns his money and invests it on interest has, before he invests a penny on interest, paid income tax on the amount, but the farmer only pays income tax on the amount he saves, less 20 per cent. of the gross income on his farm for the year. Consequently the farmer is not worse off than that man, but better off.

Do you admit that you are claiming more money from the farmer as a result of this change?

I admit that while in the past the farmer could put everything against his income he can now only place 20 per cent. of the gross amount against his income, but I say that the farmer is still in a favoured position. Any other person who saves money has first of all to pay income tax on every penny he earns. But the farmer can improve his capital position for the future with the money he makes without paying income tax on 20 per cent. of every year’s gross income. He continues to be in a favoured position at the expense of the general taxpayer. He can improve his capital position at the expense of the general taxpayer although not to the same extent as in the past. The concession as far as the farmer is concerned is a reasonable one.

†The hon. member for Houghton (Mr. Bell) raised the question of discrimination, as proposed in the clause which I have been discussing, between the individual farmer and the company. I see no alternative to that discrimination. Either it means that you will have to allow the companies to go on as they are at present, permitting them to continue to make use of the present loophole, or to deprive all farmers of the option they have at present of choosing a stock basis or a cash basis. I think that would not be reasonable. I do not think the House would accept the idea that the individual farmer should not be allowed to continue his present option; and on the other hand seeing that the companies have found what has been a profitable source of taxation evasion, you have to take it from them. The hon. member for Houghton raised the general question of the taxation of companies and expressed the hope that I will give consideration to the subject during the recess. I think I have already said I will give consideration to that matter, but I do not think that such consideration will mean the abandonment of the method of taxation of private companies as we accepted it some years ago. That principle, as my friend indicated, is a sound principle.

Theoretically.

In other words, the hon. member implied there have been some hardships in practice which we sought to mitigate this year. There is, of course, a differentiation between the private company and the public company. I think my hon. friend agrees with me that we should seek to eliminate that differentiation rather along the lines of making the income of all companies taxable, either in the hands of the shareholders, of partly in the hands of the shareholders and partly in the hands of the company. That will require a lot of study. I shall look forward to the contribution the committee appointed by the commercial and industrial interests will be able to render. I shall give all the thought and consideration I can to that and other aspects of the complicated general taxation problem. That, Mr. Speaker, I think is all that need be said now in regard to the Bill, and I hope the House will be prepared to read it a second time.

Motion put and agreed to.

Bill read a second time; House to go into Committee on the Bill on 1st June.

I move—

The introduction of this Bill is intended to pave the way for a fresh start in the campaign for building houses in South Africa. The Bill itself cannot produce houses. But it makes provision for the creation of new machinery which, after most careful consideration, the Government considers necessary to cope with a situation which, for a number of reasons, has become acute. On the 14th December, 1943, the Minister of Economic Development and I appointed a Committee to report upon the feasibility of establishing a National Housing Corporation. That Committee consisted of the following persons: Dr. H. J. van Eck, chairman; J Calder (Trades and Labour Council) ; J. S. Cleland Sir Edward Thornton, W. A. J. Day, Dr. E. J. Hamlin, and T. P. Stratten It must be explained that Messrs. Stratten, Calder and Day were invited to join the Committee on account of their association with Munitions Production, and in view of the fact that it seemed that the housing programme might well provide opportunities, even if limited, to convert war plant to civilian ends, namely, for the purpose of the construction of baths, locks, etc. It is conceivable that in future it may be found practicable in South Africa to manufacture a number of articles essential for the construction of houses, articles which hitherto we have been in the habit of importing from overseas. It is quite clear that in planning for the future housing programme in South Africa, there has to be the closest cooperation between the Ministry of Welfare and the Ministry of Economic Development. It is my colleague’s task, the task of the Minister of Economic Development, to help to pave the way for the translation of our war-time industries to a peace-time economy, and in that task there will be fruitful ground for exploring opportunities of helping in a housing campaign. The Minister of Economic Development and I were at that time considering the possibility of establishing a Housing Corporation for a number of reasons. It was quite obvious that there was at that time, just as there is now, a great shortage of houses in South Africa, apart from the prevalence of deplorable slum conditions in many of the congested areas of the Union. The existing financial arrangements with the local authorities appeared to have broken down; and it was clear that we had to take stock of the position and attempt to make a new start in housing in South Africa. We were aware at that time that Canada had embarked upon the experiment of establishing a Housing Corporation, which itself built houses. The Van Eck Committee, however, was not confined merely to the question of whether we should establish a Housing Corporation, but was asked to advise the Government generally on the whole problem. In order to understand the position with which we are now faced, it is necessary to go back a few years. What has become known as the State sub-economic housing system was first launched in April, 1930. The Government of the day then agreed to lend money to local authorities for the purpose of building houses for letting to the lower income groups, and the rate of interest was fixed at 3 per cent. This rate was subsequently reduced to 2 per cent. with effect from 1st April, 1934, with a further reduction to ¾ per cent. from 1st March, 1936. The latter rate, namely, ¾ per cent. for loans for sub-economic houses, obtains at the present time. The original condition attaching to these loans required that the local authority should bear a loss on the scheme equal to the Government’s loss in advancing the money at the sub-economic rate of interest, namely, a loss of 2 per cent., 1½ per cent. and 2½ per cent. on schemes financed out of loans bearing interest at 3 per cent., 2 per cent. and ¾ per cent. respectively. The rates paid by the Government were respectively, 5 per cent. 3½ per cent. and 3½ per cent. In other words, when the sub-economic scheme started money was lent to these local authorities at 3 per cent. and they had to incur a loss of 2 per cent. in fixing rentals for the lower income groups. Now money is lent to the local authorities at ¾ per cent. and the local authorities must incur a loss of 1¼ per cent. on the capital cost of the scheme. When the ¾ per cent. loan was first introduced, however, the local authorities in 1936 were first of all bound to incur a loss of at least 2½ per cent., but, as an incentive to the local authorities to press forward with their building programme, the Treasury, in November, 1936, agreed to a modification of the conditions in relation to the schemes financed out of the ¾ per cent. loans so as to permit a rental being fixed at a figure involving the local authority in a loss equal to one-half of that incurred by the Government, namely, one-half of 2½ per cent., or 1¼ per cent. From November, 1936, onwards, the condition of the ¾ per cent. loans was that the local authorities should lose a minimum of 1¼ per cent., the loss being intended to enable a reduced scale of rents being applied. By the end of 1943, a total sum of £7,931,217 was issued to local authorities in respect of sub-economic housing. Of this sum £192,316 bears interest at 3 per cent., £166,569 at 2 per cent. and the balance of £7,572,332 at ¾ per cent. Nearly five years ago, when the war began, the Government was committed to an expenditure of £13,000,000 in respect of sub-economic housing. That sum has been progressively increased, despite the magnitude of war-time commitments, until it reached the figure of £23,000,000. By the end of 1943 271 schemes for loans, totalling £12,677,309, were approved. To this sum must also be added a sum of £804,472, representing loans granted out of sub-economic funds for the purpose of acquiring slum properties in Cape Town, Johannesburg, Steynsburg and Kingwilliamstown, and for the purchase of land in other places.

What about construction?

I am coming to that. I want to give the House this afternoon a full picture of the position at the present time, and I will give the figures which the hon. member requires. The balance of £9,518,219 remaining over out of the total commitment of £23,000,000 has been fully allocated, or provisionally allocated, to different local authorities for the proposed schemes. The following are examples of this allocation :

These figures mean this, that there was a balance of £9,000,000 available to be allocated to those local authorities who applied to the Central Housing Board for loans. Applications have been received from the centres I have mentioned, and the amounts I have read out have already been allocated. This does not mean that these moneys have already been paid out, but it means that the Government has indicated its approval of lending these local authorities these sums in respect of housing schemes to be established by them. Despite these commitments, however, despite the allocations, and despite the approval of loans, the houses that we need are not being built. Let me illustrate this by figures. On the 31st March, 1944, the position in regard to sub-economic housing was as follows : 18,660 houses had been completed (890 during the nine months 1st August, 1943, to the 31st March, 1944); 2,821 were under construction; and 17,832 had been approved by the Central Housing Board but construction had not yet commenced. These are the figures the hon. member wants. Now it should not be inferred from these figures that the Government has been so preoccupied with the task of carrying on the war effort that it has been oblivious of the needs of housing. A closer analysis of available statistics negatives any such premature assumption, and shows that, while in the nine pre-war years 8,523 sub-economic houses were built, 10,137 of such dwellings were completed during the four years of war. The biggest advance so far in any one year was in 1939, when 4,418 houses were built. Subeconomic schemes were then obviously getting under way and finding favour with local authorities. In 1940 an additional 1,434 buildings were completed. That year saw the completion of many of the larger schemes undertaken in previous years. Uncertainty as to the future, however, resulted in hesitation of the part of local authorities in embarking on further schemes. But notwithstanding the circumstances arising from the war, the position regarding materials was still fairly satisfactory, permitting of an increased rate of construction, and, in 1941, 2,590 houses were built. In 1942 and 1943, a further 2,713 and 2,510 houses were added, respectively. During these two years progress was retarded, owing to the need for meeting the needs of the Department of Defence. Increased building costs now became noticeable, and had the effect of discouraging local authorities from embarking on new schemes, while shortages in building materials increased the difficulties. Since the 1st July, 1943, only 890 sub-economic houses were built up to the 31st March, 1944. Increased costs and building material shortages became acute during this period, and local authorities intimated to the Government that they were no longer able to limit their losses to l¼ per cent. Some, in fact, have alleged that their losses on existing schemes are as much as 3 per cent. to 5 per cent., and it is claimed by the United Municipal Executive that, unless an alteration is made in the present basis of financial assistance rendered by the Government, most local authorities will be unable to proceed with the building of houses for our lower income groups. That, then, was the situation which faced the Government when the Van Eck Committee was appointed in December, 1943. At the end of February, 1944, the Committee submitted its report. In it is stated that it is satisfied that a grave and unprecedented urban housing shortage exists, which it places at 150,000 houses, including flats. Probably three-quarters of the shortage is for non-European dwellings. The Committee also points out that, in the post-war years, the Union will have to embark on an extensive urban and periurban housing programme—so extensive, that the development of a number of new and satellite towns has to be envisaged. Without committing itself to any specific figures, and while stating that, obviously, building operations will have to follow the actual demand as manifested in the ensuing years, the Committee considers that an estimated additional 140,000 European and 150,000 nonEuropean houses up to 1955 may be taken as a useful indication of the magnitude of the housing needs that population growth and further urbanisation may occasion. This housing programme must obviously conform to the general pattern of the economy, and it is this fact which makes proper regional planning so important. Moreover, for aesthetic and utilitarian reasons, modern methods of town-planning must be employed. For both these purposes, effective machinery will have to be created. The present Bill is an attempt to pave the way for the creation of that machinery. Before referring to its main provisions, I should like to indicate to the House some of the planning necessary for undertaking this tremendous constructive task of abolishing the slums and housing all sections of the people. In the consideration of this planning, I have been helped and guided, not only by the members of the existing Housing Board and the officials of the Public Health Department, but also by the recently appointed Director of Housing, Dr. E. J. Hamlin, City Engineer of Johannesburg. The Government has been fortunate in securing the services of the latter official, on temporary loan from the City Council of Johannesburg, and I should like to take this opportunity of expressing the Government’s appreciation to that Council for so readily meeting my request for Dr. Hamlin. The first necessity for a national planning authority is a statistical department or section. It should form the best possible estimates of the number and size of families, both at the present time and for thirty or forty years ahead; of the number of existing houses that are below certain definite standards of fitness; and of the rents which the families can pay. From these estimates (which it would obtain through such agencies as local authorities, the Department of Social Welfare, as well as from its own trained investigators), it could provide the data for a housing programme, scientifically worked out to meet the real needs of the population. The second necessity, in the interests of satisfactory and economical housing and building construction generally, is a building research organisation. This organisation must serve as a clearing house for the vast amount of information on building methods, building materials and the sociological aspects of housing made available by overseas research and, in various instances, by local experience and research. The organisation should, where necessary, supplement this information by its own researches and experimentation. Thirdly, there is the need for regional planning on a national scale, and the co-ordination of town-planning schemes throughout the country. This last necessity does not necessarily imply that centralised control of townplanning activities should take the place of the supervision at present exercised by Provincial Townships Boards. But it does mean that a national planning authority should take the necessary steps to ensure proper co-ordination of town-planning in the Union as a whole.

What does that mean?

Perhaps, when I deal with the functions of the Housing Commission, I can go into that more fully. Shortly, however, it means that at the present time those Provinces which have Provincial Township Boards are working on their own without any liaison or co-operation with other planning authorities. It is very desirable to have some central, coordinating planning authority that can keep its eye on the future of building construction in South Africa as a whole, and have regard to all the elements which must enter into the question.

The one to be subservient to the other.

It is possible to have one central authority which has jurisdiction over the whole country, or it is conceivable to continue with the existing system of having Provincial planning authorities, with a central department to co-ordinate the work as a whole. The Van Eck Committee gave consideration to the need for establishing a National Housing Corporation for these various purposes, and it came to the conclusion that it would not result in a satisfactory solution, in relation to the other agencies connected with housing. A signal defect is that the formation of a National Housing Corporation will no doubt evoke the antagonism of private enterprise and of local authorities; notwithstanding all protestations to the contrary, they will fear that their legitimate functions will be usurped by the new Corporation. Furthermore, such a Corporation does not seem essential for the purpose of expediting progress; the establishment of an entirely new Corporation, which must necessarily take quite a long while to find its feet, may actually be a retarding factor. In the circumstances, the Government has considered it far sounder that the scope and activities of the Central Housing Board be extended, and placed under a new body, to be known as the National Housing and Planning Commission. Section 11 of the Bill provides for the establishment of this National Housing and Planning Commission. It is to be a body Corporate with 10 members; there will be a Chairman, and a Deputy-Chairman who will be the Director of Housing; there will be an architect or a sanitary engineer with knowledge of or experience in municipal affairs. The intention is that where the Director of Housing is a civil engineer we should appoint an architect as one of the additional members. If the Director of Housing happens to be an architect, one would seek the services of an engineer. One member must be a medical officer possessing the qualifications mentioned in the Public Health Act in sub-section (2) of section 12. One member shall be a barrister or an attorney. And then I come to an innovation. Three members shall be persons having a general knowledge of or experience in local government administration, one of whom shall have special knowledge of rural housing conditions. The two remaining members are left to the discretion of the Minister of Welfare and Demobilisation. I may inform the House, however, that it is the present intention of the Government that these two vacancies should be filled, one by a person representing the Ministry of Economic Development in order that that side of our planning may be adequately represented on the Commission, and the other appointment, it is considered at present, should be that of the Deputy-Building Controller. As long as there is a Building Controller, as long as there are building restrictions in the Union, it is essential for any planning, it is essential for any progress, that the Commission will have to work in the closest collaboration with the Controller of Building; and, in consultation with my colleague, the Minister of Public Works, who, as the House knows, is the Building Controller, we have thought that probably the wisest course is to appoint as a member of the Commission the Deputy-Controller of Building. Section 11 deals with the personnel of the Commission and it deals with the powers of the Commission. If hon. members will refer to the Bill itself, they will see set out clearly the powers of the Commission and they will observe that it is specially provided that the Commission will have to have regard to housing conditions in rural areas. Representations were made to me by members on this side of the House emphasising that in our planning we should have regard to the rural aspect of the housing problem, so special provisions have been incorporated in the Bill directing the Commission to have regard to rural housing conditions as well as to conditions in urban areas. And the Bill provides that one of the members of the Commission representing local government interests shall be a person who has special knowledge of conditions in the rural areas.

What do you mean by rural areas? Small villages or farms?

I mean the conditions in the small towns of the Platteland—conditions there are entirely different from those in the cities where you have your masses of population. I am not referring specifically to housing on farms, although that is not excluded from the jurisdiction of the Commission, and no doubt the Commission will have to pay attention to that aspect of the problem.

That is a very important aspect too.

Yes, very important. Then I come to Section 12 which makes provision for the appointment of a Director of Housing. He will be the chief executive officer of the Housing Commission and he will have at his disposal a trained staff of technical officials, all falling under a Division of Housing in the Department of Public Health. Let me make this clear. The Housing Commission will be the policy-making body. Apart from the Chairman and the Director of Housing, its members will not be full-time but part-time members. They will meet at regular intervals to work out policy and decide on policy matters for the country as a whole. The Commission will be assisted by a set of technical officials who will be under the direction and control of the Director of Housing, in a Division of Housing under the Public Health Department. I hope hon. members will follow the set-up. There will be this Division of Housing in the Department of Public Health with the Director at its head. He will have his technical officials—his draftsmen, his architects, his statisticians, etc. The Division of Housing will be divided into various groups. There will be a general administrative section, an architectural branch, a statistical branch, a research branch, a regional town planning branch, etc., and that organisation will do the executive work of the Commission. It will also collect the data necessary for the Commission. The members of the Commission themselves will not have to do this technical work. One of the defects of the Housing Board, one of the reasons why the Housing Board has met with a number of difficulties, is the fact that in the past it has not had sufficient technical staff to meet the needs of the Board itself. Many members of the Board are technical persons, persons with technical qualifications, and they have not only had to do the policy-making, but also the actual technical work connected with the Board’s activities. Members of the Board have had to draw diagrams, check plans, etc., as well as draft policy. The two functions should be clearly divorced. Under the new National Housing scheme the Commision will be free to devote their minds to matters of policy, and technical matters will be dealt with by the technical staff. Then there is another innovation so far as housing practice is concerned, that is, the appointment of a National Housing Council. That is provided for in Section 15 of the Bill. It will be seen that this advisory body is to be set up. It will be representative of a wide range of interests concerned with housing in South Africa. It will meet probably once a year and will, it is hoped, make available a forum for the discussion and constructive examination of housing matters in the country as a whole. I shall look forward to much help from the Council, and I hope we shall be able to collect, as members of that Council, people who are experienced in various spheres of public life and enable them to make their contribution towards housing plarming in South Africa in the future. I have, up to now, dealt with the machinery to be set up by this Bill to enable a fresh start to be made with housing in South Africa, i.e. the National Housing and Planning Commission and the National Advisory Council. I hope sincerely that the Housing Commission will introduce a new stimulus and drive into housing activities. But immediately there arises the question: “What part will local authorities play in this new plan? And what part will the provinces play?” Fear has been expressed by the United Municipal Executive that the Government wishes to step in and usurp all the functions of local authorities hitherto exercised by local authorities. That fear is unfounded. The Government is determined to do its share in the re-housing of our people. It realises that the greatness of a nation is determined by the character of its people, and that the environment of dirty streets, and ugly homes with bad air and bad drainage, not only undermines the health of the occupants, but robs, them of pride, honour and hope, and is thus the surest road towards national degeneracy. Progress in South Africa will be determined largely by the economic standards and quality of the homes of our people, and both these factors will be determined by the environment in which we compel them to live. Put in another way, the problem before us is largely a problem of ridding our social organism of radiating centres of depravity and disease. In the past many of our local authorities have played a conspicuous part in assisting the Government of the day to deal with the housing problem. If it had not been for the war, many more houses would have been built. And, so far as the future is concerned, there is no reason to doubt that, given proper encouragement and control by the Government, the local authorities can effectively deal with the building of new houses. It is universally agreed that private enterprise cannot re-house the lower paid worker, except by a disastrous lowering of the standard of housing. It must, therefore, be recognised that the responsibility for their re-housing will fall on the local authority. This fact is accepted by the Government. And it is prepared, as a matter of policy, not to deprive local authorities of control of housing or ownership of assets, subject to this one fundamental proviso, namely, that the local authorities get on with the job.

And if they don’t?

Failure to do that must involve Government action, and the Housing Commission is empowered to step in and build itself. Power is given to the Housing Commission to build itself, and that is a power which the Government, through the Commission, will have to use if we find that local authorities do not act and do what they are asked to do, namely, build houses for those who need them. It is not contemplated that such action will be taken except where local authorities blatantly refuse to shoulder obligations which they can fulfil and, secondly, where it is clear that a local authority is financially unable to build. It may be found—I have no doubt, that there are cases of small, weak local authorities in small platteland areas, which cannot do more than they do now.

That doesn’t only apply to the smallest.

Well, Sir, it is a matter of investigation and for determination, but there may be local authorities which, quite honestly, cannot proceed with building because they have not the financial resources to do so. I visualise the possibility of this Commission stepping in there and relieving the situation in that way.

Does that apply to the platteland as well?

Yes, the whole spirit of this Bill is that its application should not only be to the urban areas, but to the platteland as well. If we accept that as the basis of our partnership with the local authorities we must then ask: “What, then, is necessary to enable the local authorities to embark upon building on a large scale?” According to the United Municipal Executive the answer to this question is the provision of a more liberal basis of financial assistance. After careful consideration of the representations made, the Government has decided upon two matters of principle. First of all, that it is prepared to alter the existing basis of financial assistance to one under which it agrees to advance loans on a two-to-one ratio of responsibility for losses on national housing. The second principle to which the Government is committed is the principle of introducing differential rents in the administration of these national housing schemes. I refer to “national houses.” I do that deliberately, because I feel that the time has come in South Africa for us to get away from the term “sub-economic” housing. That term carries in the minds of some a stigma, whereas no stigma should attach to the fact that certain sections of the community have to be assisted by the State or the local authorities in the matter of housing. So the Government is terming this new scheme the National Housing Scheme. We want to get away from the idea that the provision of facilities for houses can be considered a stigma on any section. That offer of a ratio of loss of two-to-one by the Government and the local authorities has been formally made to the local authorities.

Who will be the local authority on the platteland?

In most cases they are the municipalities. In the Cape Province, in addition to the municipalities there are the divisional councils. In the Transvaal, and it may be in Natal, the local authority may be the Health Board or the Peri-urban Areas Committee. In the Free State there are no divisional councils, and, in respect of the peri-urban areas there, the Commission may have to step in itself or make arrangements with the Provincial Administration. The local authorities, through the United Municipal Executive, have made a counter offer. They ask that the losses of local authorities on housing schemes be limited to 1¼ per cent. They argue that unless there is a limitation of loss, there will always be uncertainty as to what the local authority has committed its ratepayers. The local authorities, through the Association of of Municipal Treasurers and Accountants, have submitted certain figures to the Government. I have had them analysed and these figures are interesting. I regret having to weary the House with figures, but they are essential for an understanding of the attitude that the Government has adopted. These figures, which have been given to me by the Association of Municipal Treasurers, show that the five larger municipalities in the Union, namely, Cape Town, Durban, Johannesburg, Port Elizabeth and Pretoria have invested to date, in sub-economic housing, a sum of £5,324,410. One Association has analysed the losses on the present financial basis—the Government loss is £133,110 and the local authorities’ loss is £163,058. The total loss per annum is £296,168. In other words, the ratio of Government loss to local authorities’ loss at present, on their figures, is 0.82 to 1.0, the Government loss being less than the local authorities’ loss. If we introduced the two to one ratio the Government loss would be £197,446 and the local authorities £98,722. It would result in a saving to the local authorities of 39.5 per cent. They have asked us to go further and to limit their loss to 1¼ per cent. Under this proposal of the United Municipal Executive the Government loss would be £229,612 and the local authorities’ loss £66,556 per annum. This represents a saving to the local authorities of 59.2 per cent. on the present loss. That is the position in regard to past expenditure. These five local authorities have also indicated that they would be willing, over a course of years, to embark upon a capital expenditure of £67,335,110, and these figures have also been analysed. If the existing financial system were to be continued, the annual loss when all that money has been expended would be £1,683,372 to the Government and £2,291,909 to the local authorities, a total of £3,975,281 per annum. Under the two to one ratio proposal of the Government, the loss to the Government would be £2,650,188, while the loss incurred by the local authorities would be reduced to £1,325,093. It would reduce the local authorities’ loss by nearly £1,000,000 per annum. That is under our proposal. I have examined what the loss would be if we limited the local authorities loss to 2 per cent., and I find that the annual loss to the local authorities would be £1,346,698. Under our proposed two to one ratio the local authorities’ loss would be £1,325,093; in other words something just short of 2 per cent. On the figures submitted by the local authorities, therefore, the application of the two to one ratio would mean that their annual loss would be limited to just under 2 per cent. The local authorities are entitled to charge rates against the schemes, and they are doing so. In Cape Town the rate levied is 5d. in the £ plus water. In Durban it is 7d. on land and 3½d. on improvements, an average approximately of 5d. in the £; they charge it as against the scheme. In Johannesburg the rate is 6d. on land, 1d. for roads, plus special charges for water, etc., and the average is at least 5d. in the £, not counting water. At Port Elizabeth the rate levied is 4¾d. on land and improvements, plus water, plus sanitation, altogether 7d. in the £. For Pretoria the rate is 7d. on land and l½d. on improvements, plus water, etc., equalling 5d. in the £. In other words, in four of these cities the rates average 5d. in the £ and in one, Port Elizabeth, it is 7d. in the £. The rate of 5d. in the £ works out at approximately 2.1 per cent. If we apply the two to one ratio the local authorities’ losses will be limited to less than 2 per cent. Their figures show that. But these figures I have quoted in respect of rates show that, if we apply the two to one ratio, their loss will be less than the rates. If, on the other hand, we allow them to limit their losses to 1¼ per cent., the position with regard to Cape Town, Durban and Pretoria will be that the Government will be bearing all losses on the schemes and paying 40 per cent. of the rates, while in Port Elizabeth the Government would have to pay 57 per cent. of the rates. That is what it comes to on the figures as submitted to the Government. And, after considering these figures, the Government felt it would not be wise to limit the losses to per cent., but that it should rather apply the proposed two-to-one ratio. Here is a very good example of the danger of limiting the loss to the local authorities. Hon. members will remember the attempts made under the Addison Act in Great Britain to embark upon a great housing drive in the early nineteen twenties. Dr. Addison, Minister of Health, who was desperate about getting a move on and impatient of further delay, ultimately agreed that whatever the loss on the construction of houses for the working classes, no part of it beyond the product of a rate of 1d. should fall on the local authorities. And, in Sir E. D. Simon’s book, “The Anti-Slum Campaign,” he shows how that attempt broke down because the liability of the local authorities was limited. He says—

Sir E. D. Simon goes on to say that one lesson to be drawn from the Addison Act is as regards the subsidy. The assumption by the Government of the responsibility for all loss beyond a fixed amount was in glaring contradiction to the first recognised principle of a grant-in-aid, that at least some proportion of the cost should be borne by the local authority which is responsible for the administration. He stated further—

There is no doubt that if one limits the loss a great deal of the incentive to efficiency goes. I have discussed the figures quoted by me with the City Treasurer of Cape Town, and his view is that the reasoning which I have given to the House this afternoon is fallacious. He says that it is dangerous to argue on figures of this sort unless one knows the conditions being applied in every town in the Union. These figures have been compiled from the figures submitted by the Association of Municipal Treasurers. I am prepared to admit that they may be susceptible of certain explanations. But, Sir, the City Treasurer of Cape Town, having gone into the figures, has informed me that with a two-to-one ratio of losses, with differential renting, and by the strict application of a formula suggested by him, he estimates that the Cape Town Municipality will be enabled to house wage earners with incomes upward of 20s. per week, namely, probably 50 per cent. of the poorer classes, and, at the same time, limit its loss to 11 per cent. on capital cost. In other words, the City Treasurer of Cape Town feels that, by accepting the Government’s offer of a two-to-one ratio, by applying differential renting, and by applying an accepted formula of what can be charged to rates and what can be charged to a scheme, Cape Town under this scheme can house all its poorer citizens earning more than 20s. a week and limit its loss to 1¼ per cent. Under this scheme he estimates that they will be able to house 50 per cent. of the poorer classes, in other words an increase of 100 per cent. over what they now can do. But he says they will not be able to house those groups earning less than 20s. a week. One hopes we shall reach the day when a person earning less than 20s. a week will be unknown. 50 per cent. of the people in need of housing in Cape Town—the vast majority coloureds— are said to fall within that category. We shall have to apply our minds to that problem, and I shall deal with that in a moment. But it is clear that the Government’s offer to accept two-thirds of the capital losses on housing schemes is a definite advance, however much it may be contended that the analysis of the Treasurer’s figures is fallacious. And that offer will have retrospective effect. If the local authorities wish to convert existing sub-economic schemes to national housing schemes they will be permitted to do so, and the Government has decided to adhere to its offer. I want to express the hope that local authorities will co-operate in giving this new scheme a thorough try-out. There is nothing to prevent local authorities proceeding forthwith with schemes already approved by the Housing Board, or in process of formulation. The Director of Housing has prepared a circular which is to be sent out to local authorities, in which it is intimated that, after consultation with the Deputy-Controller of Building, it is considered possible to be able to embark on a national housing building programme of £8,000,000 within the next twelve months. I am not making any promises as to the number of houses to be built, except to say that our goal should be the maximum possible consistent with available labour and building material resources. The National Housing and Planning Commission will be there to give the required help and guidance to the local authorities. Provision for bulk buying is made in this Bill, and the Commission will find ways and means of cheapening building schemes. There seems no reason whatever why this new offer should not be given a fair trial, and, in the meanwhile, we can deal during the recess with the question of the lowest income groups. I want, before I conclude, to refer briefly to the question of differential renting. The Bill gives the Minister of Welfare and Demobilisation power to apply a system of differential renting to any scheme, and he may do that upon a recommendation of the Commission, after the Commission has consulted the local authority concerned. I think the House will agree with me that rent relief should be given only to those who need it and only for as long as they need it. The adoption of this principle implies that these rents are to vary, not as heretofore only according to the type of house, but, in addition or instead, according to the tenant’s ability to pay. I think experience has shown that the failure to help those most in need has been mainly due to the system under which subsidies up to the present have been almost universally used to provide flat-rate abatements of rent, which take no account of the financial position of the prospective tenants, save that their incomes should be below certain prescribed maxima. This unscientific, and, in some cases, extravagant use of subsidies has resulted in the provision of subsidised houses (for that is what, in effect, sub-economic houses are) for numbers of persons who can well afford to pay economic rents, while at the same time failing to offer, to those whose need is greatest, houses at rents within their capacity to pay. The following figures have been abstracted from official publications, indicating the numbers of Europeans in South Africa classified in various wage levels: Income group up to £50 per annum—Number of families, 13,006; number of dependents, 43,252; percentage of European population, 2.86. From £50 to £100—number of families, 22,872; number of dependents, 79,924; percentage of European population, 5.28. From £100 to £150—number of families, 31,425; number of dependents, 115,945; percentage of European population, 7.67. From £150 to £200—number of families, 29,934; number of dependents, 110,531; percentage of European population, 7.31. The above figures relate only to European population in urban areas. The House may well imagine what the position is in regard to non-Europeans in such areas. I understand that some local authorities are hesitant about introducing a system of differential rents, for fear of administrative difficulties. The existence and age of children, are, however, the most easily ascertained of all factors, owing to the help which can be given in doubtful cases by the Registrar of Births, and by the education authority. The existence of adult dependents and the extent of their dependency may be less easy, but that it is not insuperable has been proved by the administration of the War Pensions Act and military allowances for dependents. The amount of the family income, including that of the supplementary wage-earners, and the subsequent variations are certainly more difficult to ascertain. The principle of enquiring into means, however, in connection with eligibility for relief, has been necessarily adopted in so many branches of public administration, that its application is one with which all local authorities are familiar. It is required as a condition of help, in all the cases quoted, in which dependents’ allowances are given, and, in addition, in connection with old age pensions and a wide range of welfare services. In Great Britain, where differential renting has been tried in places such as Birmingham, Gloucester, Lincoln, Northampton, Norwich, Preston, Bolton and York, rents are commonly reviewed once a quarter, although such frequent revision seems unnecessary and must increase the administrative cost of the scheme. Reports on the working of these schemes have been favourable, and comment has been made on the honesty of tenants in reporting changes in income and on the fact that “the trouble which was expected from people not in receipt of rent relief grumbling because other people paid a less rent has not been experienced.” In any event, all rents could be fixed at similar amounts, and individual abatements made. At the recent meeting of the United Municipal Executive in Pretoria, on the 1st May, 1944, many delegates, including the Mayor of Cape Town, maintained that the Housing problem in the Union could never be settled until a system of differential rents was introduced. I hope this system will be given a fair and adequate trial. Now, Sir, in connection with our new plans, there is the question of home-ownership which must be taken into consideration. There is no reason whatever why the tenant of a national house, whose income improves, should not convert his tenancy into ownership, and that is expressly contemplated and will be provided for. I visualise the man, whose economic position improves, not being turned out of his house but being able to become the owner of it.

Owner of a subeconomic house?

We do not want to call them sub-economic because assistance is given. There have been cases where a man has lived in a house, known as a sub-economic house, and his income has increased from £16 a month to £25 a month, and he has been compelled to go out because he is now earning more than the maximum allowed. I know of a case in which a man has refused promotion because he did not want to be turned out of his house. We want to get rid of that instability. If these people want to remain there, let them do so, and, if they are in a position to pay a higher rent, they should do so, because that enables us to deal with the lower income groups. Then there is the group which is said still cannot be dealt with under the present scheme. Well, Sir, we shall have to examine the scheme in operation. I am prepared to discuss this aspect of the problem during the recess with the representatives of the United Municipal Executive. We can discuss the possibility of dealing with these groups by special means. I am not committing the Government to anything tonight, but quite obviously that aspect of the problem has to be dealt with and will be dealt with. Finally, let me say this, that in formulating its housing policy, the Government must necessarily relate it to other aspects of social security. There is the question of food. In our national housing schemes we shall have to see that there are provided depots for protective foodstuffs, so that the people who come into these schemes can benefit from other social security provisions. It has been found in practice in Great Britain that, where persons have been removed from slums and placed under better conditions, the death rate has increased. Why? Not because the housing schemes were not good, but because the tenants, through moving into these new schemes, were paying a higher rent and could not afford to buy sufficient food. And so, in applying our minds to this great problem do not let us forget that equally important question of food, and that planning for food and nutrition has to go side by side with planning for housing. We are setting out on a new phase of housing history in this country. At the start of this pilgrimage, I make a call to all to help in this great task of nation-building. I move, Sir.

The scope of the problem which the Minister seeks to solve by means of the legislation which he introduced this evening, is enormous. The Minister referred to the fact that a large section of the population had very meagre incomes, and he particularly drew attention to the urban areas. I want to show that on more than one occasion we have pointed out in this House— and I hope the hon. member for Houghton (Mr. Bell) will listen to this—that it is often said that the farmers receive many benefits, but when it comes to housing we find that the housing scheme aims at giving a subsidy to the people of the cities, to the extent of 98 per cent., in favour of—I am not going to say of the poor people in the cities—but of the industrialists and commercialists, and those people who earn their living in the urban areas—the moneyed section of the population. It is a subsidy to that section of the population, and the Minister proposes, if necessary, to use up to £15,000,000 for that purpose in one year. It is almost a direct subsidy to the moneyed section of the population. There is no stigma attached to a sub-economic house to those people who live in it. The stigma which is attached to it is a stigma on the moneyed section of the population, the commercialists and the industrialists and the people who make sufficient money to make a living in the cities by making use of that section of the population whom we find it necessary to establish in sub-economic houses. I want to make that clear first of all, so that we can get away from the idea that this scheme is being called into being in the first place for the sake of the poorer people. It is a subsidy to the moneyed people. Since that is so, we ask ourselves how the costs involved should be divided. We saw at once that there was a very strong reaction on the part of the municipalities. The municipalities are always afraid that they will be called upon to pay too much. Well, I sympathise with any municipality which finds it difficult to balance its budget, but it is the moneyed people in the municipality who will derive benefit from this scheme. The poor people, it is true, are assisted directly, but that is only because their services are needed by the moneyed people for whom they work. It is quite correct, therefore, that the cost should be divided between the local authorities, the provinces, and the Central Government. But if that is so one should immediately give attention to that section of the country which does not fall under local authorities in this sense, that those authorities have not got the power to impose taxes. The Minister is going to create peri-urban authorities in the Transvaal. They will be local authorities, but they Will not have the power to levy taxes. In the Cape the municipality is faced with a big problem, of course, but we find on the other hand that the Cape Divisional Council has an enormous population for whom it has to make provision. It is a local authority which has the power of levying taxes. Nevertheless the problem in such a divisional council area is a problem which we also find in other parts, especially in the Transvaal, and partly also in Natal. It is a serious problem, to which we should give our attention. There is no local authority which has the right to levy taxes; and what is going to happen? In those areas the commission will be asked to undertake that work with the direct support of the Central Government, while in the Cape the local authority, for the same class of area, will have to bear a portion of the costs, the Province a portion of the costs, and the Central Government its portion. In any event, this is a minor matter, which the Minister will be able to solve in some way or other. We are dealing here with legislation which creates machinery which looks very fine on paper, but the Minister correctly said that the machinery does not build the house; the machinery is merely the preparatory work. It is involved machinery. It is machinery of which we have no experience, and it is machinery which will have to be tested. I am afraid that we shall have many disappointments. I am afraid that we shall have to bring about changes in the future. In any event the provision which is being made here does not go into great detail, and the Department which is now being created will largely have to find its own way, draft its own plans and create its own machinery to build the houses. The problem is a very great one; the conditions are deplorable, and we are very concerned about the fact that there is apparently no possibility of doing something in the near future, or at any rate something on a large scale. But we should so constitute the commission that, in the first place, it will be able to make plans—that is quite correct; in the second place, the commission should be able to do research work—that is also necessary. But we want to issue a warning against one thing, and that is the possibility of research taking the place of action. Research should not take the place of action. Research should be accompanied by action. A third big danger is this: We are dealing here with a comprehensive scheme which will require a great deal of expenditure, and without referring to any class of person or any class of contractor, I want to issue a warning this evening that after the difficulties which were experienced in connection with war contracts, the difficulties in connection with building contracts under this scheme will be one of the most dangerous sources of—well, what shall we call it? The Minister himself gave an example of what happened in Great Britain, and the danger is really very great; we should therefore warn the commission which is appointed, from the very beginning, that all the plans which they make, all the officials whom they employ, should be of a quality and standard which will be incorruptible. They must be people who are imbued with pride in the fact that they have anything to do with this scheme. No one should be able to bribe them to commit any malpractices.

They should also have sense enough to know when anyone tries to cheat them.

My hon. friend says that they should have enough sense not to allow themselves to be cheated I do not want to say much in regard to the advisory council. An advisory council which sits once a year will not be of much significance. Possibly, if the advisory council could convene a sort of congress every year, of the provincial and local authorities, the council might be able to render a real service, but my experience of a council which meets once a year, is that such a council has no power to ensure that its advice or its proposals in any respect are carried out. The commission is a different matter. The commission will also be a part time body. The director will be a full time official, and the officials who are appointed under him will also be full time. I want to emphasise that we should set the machinery in motion as soon as possible. The war may still last for years. What has been our experience in this country? We notice that luxury houses are sometimes built in places like Hermanus, where the people live only for two months in the year, and we notice that farmers find it difficult to get permits to construct a small place of one or two rooms for their employees. Under the permit system it is almost impossible for the farmer today to have a house built.

We may have to restrict the issue of permits.

That is what I am asking for. The Minister gave some sort of assurance that the commission would also devote its attention to the platteland needs. There was a time about twelve years ago when the Government, by means of a £50 subsidy, made provision for the construction of houses on farms. I do not want to ask for a subsidy, but that every possible assistance should be given to the farmer to enable him to build houses for his employees. This is an important part of the scheme, because if we do not make the housing conditions on the farms attractive, the conditions in the cities will only be aggravated. That is something to which immediate attention should be given. There is a danger that we may build too many houses later on It should be coupled with opportunities for employment in every area, before we allow more houses to be constructed in any particular area, thereby attracting people to that area. Today we are attracting more natives to this part of the country than can be employed here. Since we are now starting with one leg of these important services, we should also make provision to ensure that the houses are carefully constructed in those areas where they are needed. Then the Minister referred to differential house rents. I am in favour of limiting the rent to a fixed percentage of the income, where the income is £25 per month. It is said that in any event it should not be more than one-fifth of the income. But let us take the figure of one-fifth as a basis. Then it can be arranged in such a way that it will be the duty of the social workers in the sub-economic housing schemes to keep a record of the income of the lower income groups. It should then be arranged on that basis. The losses may be greater in the initial stages, but the authorities will get more from the people as their incomes increase. That can be linked up with the purchase of the plot. No one will be able to own a plot or buy a plot until such time as he pays the full rental; in other words, until such time as he reaches the stage where he can pay the full rental on an economic basis. When he has progressed to such an extent that he can pay the economic rental, and he then wants to become the owner of the house, it may be quite in order. I visualise great difficulties in connection with such places as Epping Garden Village. Then we should also provide that when the place is resold, it will fall into the hands of the right people. It seems to me that anyone who buys a house should only be allowed to dispose of it to his family, or otherwise he should resell it to the local authority, which will take into account the improvements which he brought about. The loan fund can be used either by the commission itself, or it can be administered by the provinces. It is not quite clear to me where the commision will come into the picture. Will it only come into the picture where the local authority does not do so, or will it function in the native territories, for example? In the Transvaal, if the commission is going to act in the peri-urban areas, we should be careful because we would then be giving certain privileges to one province which would make the other provinces dissatisfied. The taxation burden should be the same in all the provinces. I am glad that the Minister mentioned the number of houses which are required. The Minister spoke of more than 100,000; and the plans seem to be on a sufficiently large scale. The Minister is accustomed to talking of big plans. I think eighteen months ago he spoke of 30,000 houses which he wanted to build within twelve months. I am only pointing out the danger that our optimism may sometimes prejudice the case. It is much better to try to take active steps as soon as possible. I do not want to go into any further details. The necessity for the construction of houses is clear to everyone. The method by which we propose to do it, as I have shown, is the method of subsidisation of a certain section of the population—it will practically mean that the whole population will be subsidised more particularly the moneyed people. Do not run away with the idea that it is the poor people who are being subsidised. We are also doing it for the rich people. Because that is so, everyone ought to be satisfied to pay taxes to meet the costs. It is merely a question of how to apportion it. I personally am satisfied with the apportionment proposed by the Minister, whereby the Central Government will bear twice as much loss as the provinces. I want to conclude by saying that since we have created the machinery, let us make a start with the work as soon as possible.

I do not propose to hold up the House very long. I am sure the country will heartily welcome this additional effort on the part of the Government to combat the social evils which are existing in our country. That this will constitute a Union-wide movement against overcrowding and squalor is the expectation of us all. The Minister has given us a great deal of detail. He has referred to the wages position. In connection with movements against the giant evils described as “want, disease, ignorance, idleness and squalor,” it is clear that concerted action will be necessary for us to deal satisfactorily with the question of a minimum wage in order to build upon a sure and satisfactory foundation. I think the Minister, the Provincial authorities, and the Municipal authorities are to be congratulated upon having achieved a very considerable degree of unanimity in connection with the Housing Amendment Bill. The Minister in his speech, however, did not refer to the question of Clause 9. Statements have appeared in the Press in regard to Clause 9, and municipalities such as Johannesburg have made representations to the Minister which I hope he will deal with in his reply. Those representations indicate that the withdrawal of the clause will severely hamper and delay the acquisition by local authorities of land for housing. The Minister has full particulars in regard to those representations, and I would leave the matter to his judgment. It is obvious that subsidised housing is in the main, if not altogether, a national responsibility. The causes of large movements of our population are national, due often to fluctuations in industrial activities, or some other economic movement; and according to the Minister’s speech the principle has been accepted by the Government that the national housing question, or what we used to refer to as the sub-economic housing question, is mainly, if not altogether, a national matter, and one in which the Central Government should bear the major portion of any loss incurred in connection therewith.

They should bear all the loss.

There is a good deal to be said in favour of that argument; but the Minister has given an exposition of the reasons which have caused the housing authorities in Britain to suggest that in a scheme of this kind there should be some reasonable economic safeguard. The Minister has indicated the serious lack of housing in South Africa, and it is sufficient to make the matter one of urgent importance in view of the great leeway to be made up. I think the lines on which the Minister has proceeded, in his consultations with the other authorities concerned, will bear fruit in a closer and more whole-hearted co-operation in this national endeavour. The hon. member for Stellenbosch (Dr. Bremer) has pointed out that this Bill provides merely for machinery; but the machinery is, I think, calculated to remove the present impedimenta to the progress of national housing in South Africa, provided the financial arrangements which the Minister will make are accepted by the local authorities. It is true, Sir that the larger cities in South Africa have indicated a fair amount of agreement with the Minister’s proposals; but I do support the contention which has been submitted to the House from the other side that the poorer municipalities should receive far more consideration from the Government in view of their limited resources. I think we may accept as a cardinal principle of this Bill, that there is no intention in the functioning of the Housing Commission, to Interfere with the local autonomy in the various urban areas, subject to the indispensable condition that the final responsibility for national housing shall rest with the Government. From the standpoint of social welfare, the principle of differential rents for national housing is one that is praiseworthy and of first class importance. It is not a new principle. I quote from the League of Nations Bulletin, 1939—

I do want to emphasise this particular feature, that in England the subsidy or reduction is based upon the number of children in the family, indicating that in that country the value of the child is set first and foremost in national considerations affecting housing. In Denmark large families enjoy rent reductions of 30 per cent. to 40 per cent. respectively for families of thre to four children; and 50 per cent. to families with five or more. In Sweden the same principle is in force. And I do, Sir, want again to represent to the Minister that in framing regulations regarding differential renting he shall not only have regard to the family income, but to the number of children forming such families. These children are entitled to the most comfortable housing that the nation can provide under the scheme. And, Sir, in connection with the matter of subsidy in relation to children, any additional loss that may be incurred should be a direct burden upon the national exchequer and not upon the local authorities. There is a matter to which the Minister has not yet referred, and that is the transport from and to townships established a distance away from the work of their inhabitants; some places are a considerable distance away involving not only much time, the time involved from the township to the city, but also expenditure in relation to fares. It is therefore a matter for consideration as to whether some maximum distance should not be considered by the Commission which the Minister is appointing; and secondly, that representations should be made to the Railway Administration so that the fares may be brought within the compass of the incomes of the dwellers in the townships; and further, that any loss involved in the early stages in the working of the railways connecting the township with the city, should be the responsibility of the Central Government, at any rate to a considerable extent. The same applies to the institution of a bus service. I think that this question of transport, the time involved and the cost to the dweller in the townships, is one worthy of the Minister’s earnest consideration. In conclusion, I think it cannot be stressed too much that in the framing of regulations, and in the enunciation of principles connected with our national housing scheme, we should always see that the basis of such considerations shall be the responsibility of the nation as a whole for the people who will be housed in the national scheme contemplated in this Bill.

I move—

I second.

Agreed to.

Debate adjourned; to be resumed on 1st June.

I notice in the definition of “nurse” that it also includes male nurses. In the English text there is no difficulty, because this called the Nursing Bill. I should like the Minister to explain this.

In connection with the point which the hon. member has just raised, I want to point out that wherever “nurse” is referred to, the word “verpleger” (male nurse) is also used. In English there is no difficulty, but in Afrikaans there might be confusion. I take it that this Bill does not only relate to female nurses.

That is explained in the interpretation.

I had not thought of that previously. Can the Minister give me the assurance that “verpleegster” (female nurse) includes both males and females?

I am quite prepared to consider that point when I come to the short title. There may be something in what the hon. member says, but I do not think it is necessary to deal with it in the definition at all.

Clause put and agreed to.

On Clause 3,

I move the amendments standing in my name on the Order Paper—

1. (e) one person appointed by the administrator of each province;

This amendment, Sir, which I am asking the Committee to make is the result of representations which were made by the Provinces. The four Administrators have contended that it is right that there should be one representative of each Province on the Nursing Council. These representations were made to me through the Administrator of the Cape, and I considered the question carefully in conjunction with the promoters of the Bill. At one time it was suggested that we might be able to meet the position by allowing the Provinces to have representatives in an advisory capacity, but without voting rights. The Provinces, however, indicated that it was essential their representatives should have voting rights. It, was then agreed, in order to preserve the balance of the Council and the majority which should be in favour of the nurses, that the Council should be increased by eight, from 16 to 24. Of that eight four will be representatives of the Provinces and the other four would represent the nurses. There will be three nurses and one midwife added to the Council. Following upon that increase in the number of the Council it was necessary to increase the quorum from seven to nine.

I think it is one of the most important amendments in the Bill, to bring this board into contact with the Provincial Administrations which will have to provide all the money. I support the amendment.

Provision is made here for a council which has extensive powers to control the whole profession of nursing, to ensure discipline, and to look after the general interests of the nurses. Our policy on this side is that members of boards of this nature should be bilingual, because only then the members of the board are fully capable of carrying out the duties connected with the board. I therefore move the following amendment—

The Minister appoints certain officials to the board, and we take it for granted that they will be bilingual. Then a number of nurses and midwives are elected. People who follow that profession ought to be bilingual so that they will be able to serve both sections of the community, especially when serving on such a board. The appeal which was made by the nurses is now being confirmed, and they are given powers which they have not had previously. In that case, the State has the right to make certain demands. We say that they should have the right to elect whoever they please, but the people who are elected ought to be qualified. They are not qualified unless they are qualified in both official languages, which will enable them to do their work properly. They have to apply discipline to all sections of the community, and they should therefore be in a position to understand the proceedings in both official languages. There ought to be no question of holding the proceedings only in English or only in Afrikaans, because certain members do not understand the second language.

I am sorry, but I cannot accept this amendment. I fully agree with the hon. member ….

But why are you afraid to do something about it?

… that it would be desirable for all members of this board to be bilingual. But as far as I know, it has never been laid down in our country that bilingualism is compulsory. There is no such provision in the Act dealing with doctors, the Medical, Dental and Pharmacy Act of 1928. I think it would be impracticable and that it would not work in practice. It is quite a different matter when dealing with an official like the Registrar. During the second reading debate the hon. member for Stellenbosch (Dr. Bremer) suggested that he would move that the Registrar should be bilingual. That is an entirely different matter, and I said that I was willing to accept such an amendment. But when we come to the members of this board the position is different. The majority of them are elected. It is not only the Minister who is concerned with the election of the members of this board. As I have said, the majority of them are elected, and we cannot prescribe to bodies and individuals whom they should elect. It is true that it is desirable that the members of this board should be bilingual but I do not agree that we ought to accept the principle of compulsory bilingualism. This Bill makes provision for equality for both official languages. I am sorry, but I cannot accept this amendment.

I should like to support the amendment of the hon. member for Winburg (Mr. Swart). I want to point out to the Minister that his last argument, namely, that a portion of the members of the Board are elected, is not of good value. There will be thousands of nurses in the country, and there will definitely be seven, nine or ten amongst them who are fully bilingual, and who would be suitable to serve on this Board. If we make it compulsory, the members would have to elect bilingual people. They would have no option. It is because we do not impose that obligation that we find people who are not prepared to learn Afrikaans or English. The argument of the Minister does not hold water, and if we do not impose this obligation we will constantly be faced with the same difficulties. Then I also want to point out that this Board will have to deal with the syllabi of the nurses, which will be drawn up in both English and Afrikaans. It will be concerned with training schools for nurses. It will have to exercise supervision of the nurses. There are thousands of Afrikaans-speaking nurses who write their examinations in Afrikaans, and this Board would control all these matters. We cannot allow the Bill to pass in its present form. We must remember that this Board has extensive powers. It can suspend and reprimand nurses, and it has the power to hear appeals. If all the members are not fully bilingual, it will be necessary to use the services of an interpreter, and as we explained on another occasion, it is impossible to grasp the full significance of the witness’ evidence when it is given through the medium of an interpreter, with the result that the nurse concerned may be prejudiced. I want to urge this very strongly. Then there is a further point. Can the Minister tell us whether Europeans only will serve on this Board or whether it will be a mixed Board? Can the Minister say whether it will be possible for coloured persons, or even natives, to serve on this Board?

That depends on the nurses.

If the Minister cannot give that assurance, I want to move a further amendment. [Quorum.] I want to ask the Minister whether he will guarantee that this Board will remain a European Board. It is a very important Board which will have to exercise supervision over Europeans, and we cannot allow coloured persons to serve on the Board. I wish to move this further amendment—

Then I want to point out that we on this side stand for the principle of separateness. Where we deal with coloured persons or natives we stand for the principle of guardianship. I believe coloured nurses may later come on to the Board. We should not allow them to serve on the same Board as Europeans. The principle of separateness is observed in this House and in the Other Place. Why cannot we give effect to it in this connection?

I think they are raising bogeys on the other side now. When hon. members talk about bilingualism on a council like this, I ask: “Is it necessary”? It is a council which is elected in the same way as a Town Council. The bulk of these members will be elected members, and surely you should allow the electors to choose their own people.

We are granting them a charter here.

When you talk about coloured people on this Board, is it likely that white nurses will elect coloured people on to the Council? It is a bogey entirely.

I should like to deal with the second point raised by the hon. member for Christiana (Mr. Brink). But before doing so, may I make this appeal to my friends over there. The viewpoint of the hon. member for Winburg (Mr. Swart) and those with him is well known to the House and the country—and I appreciate his attitude—but I should appeal to hon. members not to allow this question, which is capable of giving rise to warm emotions and feelings, to delay the Bill.

Do you agree with the hon. member for Mowbray (Capt. Hare) that it is unnecessary that they should be bilingual?

I think it is highly desirable that they should be bilingual, but I do not think it is advisable, at this stage at any rate, to press this amendment, having regard to the fact that the Medical, Dental and Pharmacy Act makes no provision to that effect.

That is 16 years old.

I agree with the hon. member’s sentiment—but it is merely a matter of degree and I think we can agree to differ on this issue without debating it at any great length. With regard to the hon. member for Christiana, he has suggested the introduction of a colour bar. Again there is no similar provision in the Medical, Dental and Pharmacy Act. It depends entirely on the members of the Association. They will have to elect their own members.

Give them a lead.

We can trust them to do what they consider best in the interests of the country as a whole, and I do not think we should have provision for a colour bar in this Bill. I hope my hon. friend will not press it.

The hon. member for Mowbray (Capt. Hare) is one of those members who is continually talking about the way in which we should build up the nation, but he always pleads for the English-speaking section only. He is one of the members who feels that we ought to have private schools in this country, because the pupils of those schools come from a chosen community. The hon. member has no sympathy for this country.

He is bilingual.

How is he bilingual?

Better than you expect.

I have known the hon. member for Mowbray for a long time, and I know what happens in the Cape Hospital Board. When an Afrikaans doctor is tried and he prefers to have the proceedings in Afrikaans, it is not allowed because the members of the board cannot understand Afrikaans. It then becomes necessary to appoint an interpreter. The hon. member voted for bilingualism the other day, but when we want to apply that policy in practice, he says that we are raising bogeys. In this case the nurses are asking the State for a charter, and Parliament is in a position to demand that the members of the board should be bilingual. The hon. member says that the hon. member for Mowbray is bilingual. If I spoke English as he speaks Afrikaans, it would be said that I am uneducated, that I am illiterate. When an Afrikaans-speaking person does not use the English language correctly it is said that he is not educated. If the hon. member for Mowbray wants to take part in the functions of the State in the future, he will have to be fully bilingual. We on this side insist that members of every board which is appointed by the Government in the future must be bilingual in order to avoid this position, that an Afrikaans-speaking person, when appearing before the board, is compelled to use a language in which he is not at home. That is what we expect, and if hon. members on the other side want to build up the nation, they should not confine it to lip service only. We want bilingual members on the board, because in that way we would give effect to the spirit which will prevail in South Africa in the future. If there are people who did not learn Afrikaans because they despised the Afrikaans language, let them be penalised. It is their own fault. In the past we were penalised. We say that the Englishman must not expect to be given preference today. I am very glad that the hon. member for Mowbray spoke. He is one of those people who continually talks about right and justice, but when we want to carry out the policy of bilingualism in practice, he says it is not necessary to have bilingual members. We know what happens in the Cape Hospital Board. There are matrons under his board who refuse to allow the nurses to speak Afrikaans. He can shake his head as much as he likes, but that is the truth. In Cape Town there are hospitals where the Afrikaans nurses are not allowed to use their own language. The hon. member can protest until he is blue in the face, but the Afrikaans-speaking people know what goes on in the Cape hospitals. They know that on the occasion of the appointment of a matron in the Groote Schuur Hospital, we had to put up a terrific fight in order to have a bilingual matron appointed. Eventually a matron was appointed who was more or less bilingual. She does her work well, and she is sympathetic towards the Afrikaans nurses, but there are other matrons in the Cape Peninsula who do not evince that sympathy towards the Afrikaansspeaking nurses. The hon. member is the last person to talk. We demand in the interests of the nation that there should be bilingual members on this board.

It is deplorable that 34 years after Union was brought about, we should still have to discuss the question of bilingualism in this House.

Shame!

If that hon. member says “shame” he is only speaking for himself, because he as an Afrikaans-speaking person, who cannot express himself properly in the English language, is not fully bilingual.

Can you judge his bilingualism?

This is an important matter. Public health is a matter which demands a greater measure of public attention from day to day. We feel that every person has the right, the poorest as well as the richest, to have his health and his own personal welfare attended to. In the whole of the Union of South Africa, as far as I am aware, we have three large hospitals where nurses have the right to receive training through the medium of the Afrikaans language, that is in Pretoria, Bloemfontein and Groote Schuur Hospital.

And Krugersdorp.

That is a small hospital. May I emphasise the fact that the greater majority of the nurses are Afrikaansspeaking. We are not discussing the political aspect of this matter alone; we say that the Afrikaans-speaking people have the right to receive training through the medium of the language which they understand best. These nurses, as far as I am aware, are not allowed to receive their training in the hospitals through the medium of Afrikaans. There is a limitation as far as examination papers are concerned; there is a limitation as far as the text books at their disposal are concerned, and there is a regrettable shortcoming as far as lecturers in the Afrikaans language are concerned. I want to make a specific statement, and I can support it. I want to say that in the Groote Schuur Hospital no Afrikaans-speaking nurse may address an English-speaking sister in Afrikaans. It is prohibited.

That is not correct.

The nurses say it; no young nurse dare draw up her report in the Afrikaans language if the sister is English-speaking. This is the same Groote Schuur Hospital in connection with which it is alleged that the question of Afrikaans is unduly emphasised. The other day a terrible charge was made against the superintendent, namely, that he was a racialist. He is an Afrikaner. In the same hospital, the nurses have not got the right to address English-speaking sisters in Afrikaans, or to use Afrikaans in connection with their work. In the Groote Schuur hospital the nurses are supposed to receive training through the medium of Afrikaans. There are a few lectures in Afrikaans, but I challenge the Minister to prove that I am wrong in saying that the nurses in the Groote Schuur Hospital are prohibited from using the Afrikaans language in the theatres in connection with their work. This is one of the three hospitals where the nurses are supposed to be trained through the medium of Afrikaans. These are the only three hospitals of that kind in the country. This is not a political matter, but a national matter. As a backbencher, I want to tell the Government, with all due respect, that they maintain that they advocate a policy of bilingualism in South Africa; they adopt pretty-sounding motions, but when it comes to the actual test, they are found wanting. Here we have a council on which 16 members have to be appointed. It is not an ordinary council, it is a court which has the right to suspend individuals, fine them, and strike their names off the register. The least we have the right to demand, therefore, is surely that the members of such a board should be bilingual. There is no reason why that should not be the case. Hon. members on the Government side have the audacity to suggest that the Opposition favours a policy of unilingualism. We advocate bilingualism, but the Government side does not want to give effect to it. If you are sincere in your protestations, you should see to it that every member of that council is bilingual. Thirty-four years after Union we still have to fight for bilingualism. Here we have a body to which it is proposed to give statutory rights. The people appointed to that body should be qualified, and in order to be qualified they must be bilingual because the greater majority—I have underlined that—of the members of the Nurses’ Association are Afrikaans-speaking. If hon. members want to make the charge against us that this demand for bilingualism on our part is nothing but political propaganda, we feel that it only goes to show their weakness. It is the cackling of a hen which cannot lay an egg; it is abortive. This matter of bilingualism, if the Government is sincere, ought no longer to be an issue. In that case, they ought not to oppose us. I am in favour of bilingualism. I said the other day what my experience was in connection with this matter thirty years ago. Now, at last, they come along and say that they want to introduce bilingualism, but when we want to give effect to the policy of bilingualism, they oppose us on every point.

That is not true.

The hon. member for Orange Grove (Mr. Waring) can go back to Johannesburg and then come back to Cape Town again, but we shall fight the Government on every point as far as this question is concerned; if you are sincere you ought to admit that our claim is a very fair one. A leading member of the House told me that he lay in hospital overseas and that he knew what it was to be seriously ill in a country, not knowing the language of that country. My mind goes back 30 years ago to the days when my mother—and who is not proud of his mother—lay in a hospital in Cape Town, unable to understand a single word. [Time limit.]

I want to put this question to the Minister in all seriousness: do you take this matter of bilingualism seriously? You have fought an election over the matter. It is a matter of principle, over which you have fought an election. But what is now happening here during this Session? First of all we had the case of the Board of Trade and Industries. In that case the Minister came along with the excuse that persons with technical qualifications are required on the Board. Then we come to the appointment of a board in connection with the employment of returned soldiers. Once more we tried to test the sincerity of the Government supporters in respect of the principle of bilingualism. Once more they refused to face bilingualism in practice. But what happened? Two members of the Government side, the hon. member for Vryheid (Dr. Steenkamp) and the hon. member for Woodstock (Mr. Russell), come along and say that as members of the Government Party they are obliged to tell their own members that they are paying lip service to a principle. Now we come to the appointment of a Nursing Council. In the first instance mention was made of technical difficulties, in the second case the Minister of Labour said that there might be certain officers who had come from overseas who might not be able to understand Afrikaans so well. In the third case now before us, we have to deal with a profession in which one would expect that every person in that profession would be bilingual. Who are the people who are being elected to that council? The excuse offered is that one could not dictate to that association whom they should elect to represent them. Who are the people who have to elect the representatives? There are three classes of nurses, whom one would reasonably expect to be bilingual. The hon. member who spoke just now referred to a member of this House who had experience in foreign countries of what it is to be a patient in a hospital where the people cannot understand one. I had the same experience in Italy. I had to lie in a hospital there for ten days and I could not speak a. word of Italian. I can only say that never before in my life have I had such an experience as I had during those ten days. I had to indicate by gestures everything I needed. This council is to be elected by nurses and one would expect them to be proficient in both languages but here the Minister comes along now and he is not prepared to accept this amendment. I must say frankly that we have now given up all hope for the Government party and not only we, but the people will be convinced of the fact more and more that we have merely had beautiful promises fine words, in connection with bilingualism, and that the concern of the Government party over bilingualism was nothing else but political hypocrisy.

The hon. member may not say that. He must withdraw it.

I withdraw “political hypocrisy” and I will put it thus that we had to do with a definite political game. Now we know where we stand. After this the hon. members can no longer go to the country, they cannot go to their constituents any longer and claim that they are the people who stand for bilingualism. They have now been exposed. And they should not blame us if we point out to the country what their attitude is. The hon. member over there shakes his head. He realises that his political nudity has been revealed, that the political game has been exposed. In this instance, in connection with the hospitals, one at least expects the principle of bilingualism to be recognised.

We sat until after midnight last night and we wish to discuss this matter thoroughly. I feel that we will have to sit for a long time in order to discuss this matter and I therefore wish to move—

It is clear that we will not be able to finish on Saturday, largely on account of the attitude adopted by the Government and of its refusal to meet the reasonable demands of this side of the House. In this instance we have to deal with a most serious matter and I therefore move that we do now report progress.

Upon which the Committe divided:

Ayes—16 :

Brink, W. D.

Conradie, J. H.

Dönges, T. E.

Haywood, J. J.

Klopper, H. J.

Louw, E. H.

Ludiek, A. I.

Luttig, P. J. H.

Nel, M. D. C. de W.

Serfontein, J. J.

Steyn, A.

Swanepoel, S. J.

Swart, C. R.

Van Niekerk, J. G. W.

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

Noes 43 :

Abbott, C. B. M.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bekker, H. J.

Bodenstein, H. A. S.

Bosman, L. P.

Bowker, T. B.

Cilliers, S. A.

Clark, C. W.

Conradie, J. M.

De Kock, P. H.

De Wet, P. J.

Du Toit, R. J.

Fawcett, R. M.

Gluckman, H.

Hare, W. D.

Hayward, G. N.

Hofmeyr, J. H.

Hopf, F.

Johnson, H. A.

Lawrence, H. G.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Pieterse, E. P.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Strauss, J. G. N.

Tighy, S. J.

Ueckermann. K.

Van den Berg, M. J.

Van der Byl, P.

Van der Merwe, H.

Van Onselen, W. S.

Visser, H. J.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Tellers: R. E. Bell and J. W. Higgerty.

Motion accordingly negatived.

I wish to move the following amendment—

This council consists of quite a number of members some of whom are elected and some of whom are appointed by the Minister. We assume that two officials on the council will be bilingual. Then two members are also appointed by the Minister to represent the nurses who are not registered. In order to put the standpoint of the Government to the test I am therefore proposing in my amendment that the two persons appointed by the Minister should be bilingual.

I regret that I am unable to accept this amendment.

Are you then hopeless?

No, I am taking up the same attitude adopted by Gen. Hertzog in 1937 when a similar matter was raised in connection with the Broadcasting Bill.

Don’t you want to make any progress?

Gen. Hertzog was a great champion of the rights of the Afrikaans language and as an English-speaking person I think that I can follow his example. I want to repeat that it is most desirable that these two members of the council should be bilingual and I will do my best to appoint bilingual persons. But there is a difference between the principle of bilingualism and a provision in the Act making certain qualifications compulsory. I agree as far as the desirability is concerned.

But not in principle.

I accept in principle that bilingualism is desirable and I will do my best to apply that principle in practice. I will do that, but why should it be made compulsory in the Act?

Is the policy not laid down in our statutes?

It is not always essential to lay down the policy in an Act. The principle of equality of language rights is laid down in the South Africa Act. That is the great principle, not the principle of compulsory bilingualism, but equality of both languages.

That is a new interpretation.

That is the interpretation of Gen. Hertzog. In connection with the Broadcasting Board a similar amendment was moved at the time in the Committee stage of the Bill and Gen. Hertzog took up the same attitude as the one I am adopting now. He refused to accept an amendment to make bilingualism compulsory for members of the Broadcasting Board. I do not want to go further than Gen. Hertzog. I do not think that I could follow a better example than he as far as language rights are concerned. I agree that the members should be bilingual and I will do my best to achieve that in practice.

May I just tell the Minister that I am very disappointed that he is not prepared to accept this amendment, because this amendment is really a test of their sincerity. The Minister states that he accepts the fact that the entire House should be properly bilingual. I agree that the attorneys have a free choice; the doctors select whom they like; but here you have exactly the same. Let the people choose whom they like, but when it comes to an appointment to be made by the Government, let them appoint bilingual persons. The Government has in this case a very wide choice which stretches over the whole Union. It is outrageous to tell us that the Minister cannot select two persons in the whole Union who are bilingual. It is a reflection on the nurses or the Government is not, sincere.

You knew what I did in connection with the Medical Council.

We know, but why not accept the reasonable amendment? Here the Minister has a wide choice over the whole Union and he can certainly obtain bilingual persons over the whole Union. We ask now that the Minister must undertake to find bilingual persons. We take the Government at his word. He is serious as regards bilingualism. If he is in earnest what right has he to refuse to accept that amendment where sixteen persons have to serve on the board of whom only two are appointed by the Government. The other persons are not appointed by the Government. We ask that these two persons should be bilingual. We know that the board has to do with all the nurses of which the majority is Afrikaans-speaking. It is therefore only fair to expect that those two members should be bilingual. If the Minister is not prepared to accept this amendment, I am really speechless.

I am afraid that the Minister’s reference to the Medical Council was not a happy one. The then Minister gave us very clearly to understand that it was not meant to be a home for disappointed politicians. The two members whom he appointed at that time were Advocate Douglass and Mr. Willy Rood. When the five years had expired those two members were again appointed. When the third period of five years had passed and the present Minister had to make the appointment he again appointed Advocate Douglass but not Mr. Rood. He appointed a person who had lost a party-nomination in the election. He appointed in the place of Mr. Willy Rood, Mr. Friedlander who had been a member of this House and who had not obtained the nomination at the party-election. If we were to leave it to the Minister you will see what can happen here. In this case he departed from the original principle that in the case of a council such as the Medical Council parties must not be considered but the interests of the country. Here he must make two appointments and deliberately he overlooks someone whom he had appointed five years before. I would like to know why he made this appointment. I want to go further than that. If the nurses want a public charter, then they must acquiesce in the general principle of bilingualism. I want to go much further than the hon. member for Pietersburg (Mr. Naudé). I say all the members ought to be bilingual. That is the amendment of the hon. member for Winburg (Mr. Swart) and I want to support that amendment. It surprises me that the Minister is not even prepared to accept the amendment of the hon. member for Pietersburg. The amendment only asks that two out of the 16 persons should be bilingual.

I hope everyone will be bilingual.

Of what use is it?

Though we may have complete confidence in the present Minister—and that confidence is not justified by his appointments to the Medical Council—but suppose that the Minister was a good Minister and would see to it that all of the 16 members are bilingual, then I still say, what assurance have we that his successor will do it? If there is any authenticity in their assertion that they desire bilingual citizens in a bilingual country, then the Minister must at least accept the proposal of the hon. member for Pietersburg. If the Government is honest, and if it is not hypocritical, it will accept the amendment of the hon. member. I repeat that if these persons ask for a public charter, they must acquiesce in the demands of the country and they must say: “We do not only want bilingual citizens for a bilingual country but we also want bilingual council members.” That is the logical consequence, if there is any honesty and sincerity with the Government. They are busy doing lip-service to the question of bilingualism but when it comes to the practice, they refuse to carry that policy into effect.

“It is all in my eye.”

It may be that what the hon. member for Beaufort West (Mr. Louw) says is correct. I want to say to the Government that it is this action which will be a test of their sincerity and honesty in their protestations of bilingual citizens for a bilingual country. If that is necessary, then it is much more necessary to have bilingual members in a body which has control over nurses of whom the majority are Afrikaansspeaking. The Government ought to accept this amendment of the hon. member for Winburg. Where the nurses here ask for the protection of Parliament—they do not want a private body—they come here and want a special public charter; and the minimum requirement is that they will acquiesce in what is apparently the policy of the Government, and that is to have bilingual citizens for a bilingual country. It will be a test of the sincerity of the Government. It is a test to see whether the Minister is prepared to make that principle of bilingualism a reality in the country and whether it is not merely a theoretical thing which is written on paper. If the Government continues with this position of saying on the one hand that they are in favour of bilingualism and refusing to establish the conditions for bilingualism, then I say that it is a sign of insincerity, and I repeat that the best way to obtain bilingualism in this country is by saying that no person will be considered educated unless he is bilingual and that no person can have any aspirations for any post of importance either in the civil or profession life of South Africa unless he is bilingual. If the Government is really in earnest, it will lay that down and then you will have a bilingual South Africa within one generation, but as long as they are not prepared to do this, they must not blame the nation if they say that those protestations of bilingual citizens for a bilingual country are merely hypocrisy on their part.

The hon. member may not say that it is hypocrisy. He must withdraw.

I do not say that it is hypocrisy on the part of the Minister, but on the part of the people who advocate it. It is hypocrisy if they do not want to apply it.

We regard it as a very serious matter and that is why I proposed the amendment. Now I want to refer to another matter. I want to put the question to the Minister. He stated here that it is very desirable that there should be bilingual people and he said that he would do his best, etc. As the Act is at present there will only be two out of the sixteen members who the Minister will not appoint. I am now speaking of the first board. In the case of the first board only two members will not be appointed by the Minister. He will appoint the official of the Department of Public Health. He will appoint the official of the Department of Hygiene; he will also appoint the first representatives of the nurses. Only two members of that board will not be appointed by him, namely, the representatives of the Medical Council. If he states that he adopts this principle of bilingualism, I ask him to give us the assurance that all the persons who are appointed by him on that board will be bilingual persons. He can now set an example. In the case of the first board he can see that only bilingual persons are appointed on the board. There the power is in his hands. It is his responsibility. I repeat that, except in the case of the two doctors, all’ the members will be appointed on his responsibility and by him on his own initiative without the advice of any other person. I now ask him to get up and to give the House the assurance that all the persons he will appoint will be bilingual, then we will see whether what he says today agrees with what he says tomorrow.

I am standing up not only to give my support to the extremely reasonable amendment of the hon. member for Pietersburg (Mr. Naudé), but also to support the amendment of the hon. member for Winburg (Mr. Swart). I fully agree with the hon. member for Winburg. Here you have the test and I am very sorry that, since this matter concerns the nurses, we should now be discussing it in this atmosphere. We are all fully in favour of this legislation being adopted in order to ensure that that section of our people, the nurses who are sacrificing so much for us, should receive their due. The hon. Minister has been trying to tell us what Gen. Hertzog said and did and refused to do in 1936. This is not 1936. The Minister is a member, and a strong supporter, of the Government. He is a member of the Cabinet and they have announced a policy of bilingualism. The hon. Minister himself exerts himself to speak the second language in this House, and he is succeeding quite well in that. How then can he refuse to give the assurance that he will at least see that the persons nominated and appointed by him will be bilingual. There is no excuse for that. The Minister cannot come with the excuse that such persons are not to be had and that they are not available. We know that the Minister can turn around and can mention a number of bilingual people for appointment to the council. However, this is a test of the sincerity of this Government in connection with the policy of bilingualism as regards both sections of the people. They have gallantly announced that policy here, but we now have every reason to doubt whether their assertions that we should now be bilingual, were honestly intended. The Afrikaans-speaking people have exerted themselves to become bilingual. There is no unilingual member on this side of the House, but when we come along and ask the Minister to apply it in practice, and in connection with nurses at that, and he refuses, how can we go on believing that the Government is really sincere in its intention to obtain bilingualism in this country?

I referred to the case of my aged mother who lay here in hospital 30 years ago while nobody could understand her language. Now, after all these years, when we plead for bilingualism we are being opposed by the Government. The Minister has referred to the Act of Union which provides for bilingualism. What on earth is there to induce the Government to oppose us whenever we insist upon bilingualism? If the members on the Government benches are sincere as regards bilingualism and dual medium schools and want to make South Africa a bilingual country, why should they oppose us whenever we argue in favour of bilingualism? I am going to make a very strong statement, but I know that I have facts to substantiate it. I say that these persons, the representatives of the nurses who are to be appointed to this council of sixteen members, are all dead old unilingual fossils. The whole idea of the Government is to safeguard the interests of these fossils and to have them remain on this council of sixteen. I say it is scandalous. If the Minister wants to assert, that sufficient bilingual nurses cannot be found these days to be appointed to this council, then I am astounded. Then I can only say that the Government is not aware of the competence of the bilingual nurses in South Africa. In fact, with a few exceptions, you can say that any’ qualified person in South Africa is bilingual. To put it differently, in practically every walk of life you will find that the bilingual person is the person who is qualified. When we were recently discussing the Board of Trade and Industries, I pointed out that the only person among the five members who have been appointed who is really qualified is the bilingual person, and the rest are without qualifications. Is that what the Minister has in mind? I do not think he will assert that there are not sufficient competent bilingual nurses to be appointed to these positions. It is inconceivable. It is shocking that the Minister is not prepared to accept the amendment of the hon. member for Pietersburg (Mr. Naudé). Here we have a council of sixteen members. The present Government says that it stands for a 50-50 policy.

First amendment proposed by the Minister of Welfare and Demobilisation put and agreed to.

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

Ayes—18 :

Bremer, K.

Brink, W. D.

Conradie, J. H.

Dönges, T. E.

Erasmus, H. S.

Haywood, J. J.

Klopper, H. J.

Louw, E. H.

Ludiek, A. I.

Luttig, P. J. H.

Nel, M. D. C. de W.

Serfontein, J. J.

Steyn, A.

Swanepoel, S. J.

Swart, C. R.

Van Niekerk, J. G. W.

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

Noes—43 :

Abbott, C. B. M.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bekker, H. J.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, L. P.

Bowker, T. B.

Cilliers, S. A.

Conradie, J. M.

De Koek, P. H.

De Wet, H. C.

Ludiek, A. I.

Du Toit, A. C.

Du Toit, R. J.

Fawcett, R. M.

Gluckman, H.

Hare, W. D.

Hayward, G. N.

Hofmeyr, J. H.

Hopf, F.

Johnson, H. A.

Lawrence, H. G.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Pieterse, E. P.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Strauss, J. G. N.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Visser, H. J.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Tellers: J. W. Higgerty and W. B. Humphreys.

Amendment accordingly negatived.

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

Ayes—17 :

Bremer, K.

Brink, W. D.

Conradie, J. H.

Dönges, T. E.

Haywood, J. J.

Klopper, H. J.

Louw, E. H.

Ludiek, A. I.

Luttig, P J. H.

Nel, M. D. C. de W.

Serfontein, J. J.

Steyn, A.

Swanepoel, S. J.

Swart, C. R.

Van Niekerk, J. G. W.

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

Noes— 42 :

Abbott, C. B. M.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bekker, H. J.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, L. P.

Bowker, T. B.

Cilliers, S. A.

Conradie, J. M.

De Kock, P. H.

De Wet, P. J.

Du Toit, A. C.

Du Toit, R. J.

Fawcett, R. M.

Gluckman, H.

Hare, W. D.

Hayward, G. N.

Hofmeyr, J. H.

Hopf, F.

Johnson, H. A.

Lawrence, H. G.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Pieterse, E. P.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Strauss, J. G. N.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Van Onselen, W. S.

Visser, H. J.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Tellers: J. W. Higgerty and W. B. Humphreys.

Amendment accordingly negatived.

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

Ayes—17 :

Bremer, K.

Brink, W. D.

Conradie, J. H.

Dönges, T. E.

Haywood, J. J.

Klopper, H. J.

Louw, E. H.

Ludiek, A. I.

Luttig, P. J H.

Nel, M. D. C. de W.

Serfontein, J. J.

Steyn, A.

Swanepoel, S. J.

Swart, C. R.

Van Niekerk, J. G. W.

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

Noes—42 :

Abbott, C. B. M.

Alexander, M.

Allen, F. B.

Ballinger, V. M. L.

Bawden, W.

Bekker, H. J.

Bell, R. E.

Bodenstein, H. A. S.

Bosman, L. P.

Bowker, T. B.

Cilliers, S. A.

Conradie, J. M.

De Kock, P. H.

De Wet, P. J.

Du Toit, A. C.

Du Toit, R. J.

Fawcett, R. M.

Gluckman, H.

Hare, W. D.

Hayward, G. N.

Hofmeyr, J. H.

Hopf, F.

Johnson, H. A.

Lawrence, H. G.

McLean, J.

Maré, F. J.

Miles-Cadman, C. F.

Mushet, J. W.

Pieterse, E. P.

Robertson, R. B.

Shearer, O. L.

Shearer, V. L.

Strauss, J. G. N.

Ueckermann, K.

Van der Merwe, H.

Van Niekerk, H. J. L.

Visser, H. J.

Waring, F. W.

Warren, C. M.

Waterson, S. F.

Tellers: J. W. Higgerty and W. B. Humphreys.

Amendment accordingly negatived.

Remaining amendments proposed by the Minister of Welfare and Demobilisation put and agreed to.

Clause, as amended, put and agreed to.

On Clause 4,

I move the amendment standing in my name—

The effect of this amendment will be to enable the Council to prescribe conditions for removing the names of registered nurses from the register. The clause, as it stands, affords no means for a registered member having her name removed from the register unless disciplinary action is taken against her. This allows any registered member to make application for her name to be removed. The second part of the amendment substitutes for the words “any appeal,” “any application.” Under the Medical, Dental and Pharmacy Act there is provision made for application to the Court arising out of the proceedings which may be taken against a member of the Association. As the same procedure is being taken over in this Bill it is necessary to use the same words, namely “application” and not “appeal.” It is a legal drafting amendment.

Amendment put and agreed to to.

Clause, as amended, put and agreed to.

On Clause 5,

I move the amendment in my name as printed. This Sir, is merely a drafting amendment—

Agreed to.

On Clause 5,

I propose the following amendment—

(c) is not a Union National.

That would mean that nobody would be appointed unless he is a Union national. I hope the Minister will accept it.

Yes, I shall accept that.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 8,

I move the following amendment—

This provides for an increase in the quorum from seven to nine. It is consequential on increasing the membership of the Council.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 9, On the motion of the Minister of Welfare and Demobilisation, an amendment was made in the Afrikaans version which did not occur in the English version.

Clause, as amended, put and agreed to.

On Clause 10,

I want to move—

I am prepared to accept that.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

On Clause 11,

I would like to draw attention to Clause 11 (5). It appears to me as if this is a very drastic regulation. It amounts to this that if anybody is qualified to be a nurse then such person is not allowed to practice unless she is registered. It means that nobody except a person whose name appears on this register can practice. I refer to this in view of Part III where it is stated that such person must be a member of the association referred to.

May I just point out to the hon. member that that is the fundamental principle of the Bill as accepted at the second reading.

Clause put and agreed to.

On Clause 12,

I move—

Agreed to.

Clause, as amended, put and agreed to.

On Clause 13,

The association which is being established here appears to me to be very important. It appears to me that the principle of bilingualism should in this case also be maintained. This association will have to draft regulations, collect money and manage. It will be very desirable that this association be so managed that there will be no suspicion. Initially the association will be in the hands of the South African Trained Nurses’ Association. We have learned here from the hon. member for Gezina (Dr. Swanepoel) that it is a body consisting of a number of fossils, almost all of them imported matrons. For two years they will have the association in their hands. They will see to it that their spiritual companions are appointed and it appears to me that this association will have an English orientation. We know that the principle of the Bill is compulsory registration. The majority of the nurses are Afrikaans-speaking and this body will have to be administered very carefully, and I am not in favour of it being placed in the hands of a body which in the past has done everything on an English basis. These nurses are now being compelled to become members of that association. I would like to hear what the Minister will do to prevent those dangers. Just to draw a parallel; I think the Minister is aware of the history of the schism in football in the Western Province. He knows that the two sections have now separated. One is in favour of the war and the other is anti-war. Here the same may happen unless the association is so constituted that everyone is able to retain her identity in that body and to live in accordance therewith; she must be able to express her Afrikaans soul there. It is a statutory body and if not administered on a proper basis it will become a fiasco.

I do not think the hon. member need have any fear in regard to this matter. These provisions have been asked for by the nursing profession as a whole— both by the English and the Afrikaansspeaking sections. It is not a question of merely one section asking for these provisions. Hon. members know from their own experience how representations have come from all parts of the country. I entirely agree that in running the Association, just as in running the Council, regard will have to be had to both sections of the community, Afrikaans as well as English-speaking. That is axiomatic. But I do hope that my hon. friend and others will not fall into the danger of trying to look for possible points of friction—not Intentionally, but in their eagerness to ensure that the rights of one section are maintained and safeguarded— they must not go too far, and by concentrations on niceties, miss the essentials. We are legislating for a service which is essential to the country as a whole—the aim is service to the country. I appeal to my hon. friend not to be nervous, not to look around and, by a process of microscopic inspection, seek to find possible sources of friction. I think his fears are unnecessary, and I am certain that the aim of this Association is to work in the interests of both sections.

When we come to this matter, raised here by the hon. member for Christiana (Mr. Brink) I want to ask why must we, as soon as we come to the question of bilingualism, talk of a matter requiring microscopic investigation. If we, after all these years, 34 years after Union, still have to talk about microscopic investigation into bilingualism then I feel that you would rule me out of order if I express myself as I feel, but I will only say that it is a scandal. The hon. member for Christiana raised the matter about the bilingualism of the members; and whether hon. members opposite like it or not the fact is that we have persons here who are in this body who are almost fossils. They are persons who in the language of hon. members opposite speak a third language; people who for all we know have not had the training at present required of nurses. I know what I am saying when I say that those persons are not only going to serve on this association but also on that board. We take exception to the Minister’s statement, when we refer to bilingualism that it required microscopic investigation. If there is one skilled institution where it is necessary that our trained persons should be bilingual then it is the nurses’ institutions and if the trained nurses are to be bilingual then it is even more the position that the body organising those people should consist of bilingual members. If I am allowed my own choice then I will continue until the sun rises tomorrow morning and longer. We are in favour of a new status for nurses but we say that the new status requires that there should be bilingualism. I want to go so far as to say that anybody in South Africa who is not bilingual is an unqualified person. If the Government is really in favour of bilingualism and has as its aim to make South Africa bilingual then this organisation and this board must be bilingual. We will be out-voted by the Government majority but I say to the Government that we will fight on this principle of bilingualism to the last.

I would like to help the Minister in this respect. I want to point out that Clause 19 (2) provides that where regulations are drafted by the association they are to be approved by the Minister. If the Minister will now only promise us a few things we may perhaps make progress. Will he undertake that one of the regulations will be that the minutes will be kept in both languages? Will he give the assurance? Then there is another matter which is not concerned with bilingualism. There are also the male nurses. Will provision be made that the men will also be represented on the management?

The provision exists.

Then there is a third question; is the Minister going to make provision that the funds will not be used for example for political purposes or war purposes but only for the nurses? I want to be quite sure that the funds will not be used in a wrong manner.

It does not fall under this.

Under Part III, Clause 13, I want to draw attention to the position of the South African Trained Nurses’ Association. As late as the 2nd of May I received a letter from them. The letter had been written to me in good Afrikaans but they enclosed a brochure of what the new organisation represents. It is all in English. There is no word of Afrikaans in the brochure.

What is the point of the hon. member?

The matter of bilingualism. It is proposed here that the members of the S.A. Trained Nurses’ Association should be bilingual.

It appears to me that it has nothing to do with this. Is it the point of the hon. member that every member of that association should be bilingual?

We are here concerned with the constitution of a body consisting of ten members.

We are now discussing Clause 13.

Clause put and agreed to.

On Clause 17,

These members of the organisation referred to in these clauses should be bilingual. I believe they are mostly bilingual, but I want to repeat that it is apparently the intention of this legislation to retain the old unilingual fossils in the positions and to make of them concrete figures in future. We have no objection against English. Should unilingual Afrikaansspeaking persons be appointed I would object as much, but we demand that the principle of bilingualism in this important organisation be accepted.

I agree with the hon. member for Gezina. It is a very important matter for the Afrikaans-speaking people. He has rightly said that we are now going to make permanent an old body of fossils, a small number of persons who practically know no Afrikaans. They will still continue for two years and will of course exercise their influence to continue in that way in future.

Clause put and agreed to.

On Clause 18,

I move—

Provided that the Association may by resolution of an absolute majority of its members move the said office to any other place.

Agreed to.

Clause, as amended, put and agreed to.

On Clause 19,

I move—

I want to speak about Clause 19 (2). There the Minister is given the right to approve or reject the regulations drafted by the association and it will depend upon him what the spirit of the association is going to be. We anticipate that the association will during the first two years be English but the Minister can exercise his influence to effect a change. I now desire to put a few pertinent questions to him : Is he going to lay down that the minutes shall be kept in Afrikaans or English? The Minister has referred to the equality of the two languages. Is he going to lay down the principle in the association? Will he provide that in the discussions equal rights will be afforded Afrikaans and English? Will he provide that the funds can only be applied in the interests of nurses and not for political or semi-political purposes?

There is another important point and that is that this association will practically lay down what training nurses in South Africa will have to get. The association practically also determines the direction for the putting of questions and what textbooks are to be prescribed. The hon. member for Stellenbosch (Dr. Bremer) assures me that the questions drafted in Afrikaans are at present thoroughly revised and that there has been an improvement. But as regards textbooks the position in respect of Afrikaans is very weak. According to my information the persons who have to draw up the textbooks are nominated by the Trained Nurses’ Association and they are all of them inefficient in the second official language, Afrikaans. Therefore it is necessary that the Minister take steps to see that the principle of bilingualism be accepted. 75 per cent. to 80 per cent. of the nurses are Afrikaans-speaking and the textbooks should be available for training in Afrikaans. Where the Trained Nurses’ Association is mainly responsible I want to ask the Minister to devote attention to the matter.

I fear my hon. friend is under a misapprehension. The Nurses’ Association has nothing to do with the textbooks. He perhaps has in mind the Medical Council. The Medical Council sees to it that the questions are drafted in both Afrikaans and English so that the nurse has a choice in which language she wants to sit for her examination. The Medical Council also does not draft textbooks. That is done by private teachers and we cannot connect this matter with the association. I agree that the Nurses Association must in all respects deal with the interests of the Afrikaansspeaking nurses in a similar manner as with the interests of the English-speaking nurses. In regard to English textbooks the position is that the textbooks are issued in England. In South Africa we have to issue them in Afrikaans and that has been done by persons who had an eye to economic benefit or because they wanted to do something for the cause. If the hon. member considers that the Medical Council must do more to encourage it then it is a matter which we can take to heart. This board which is now appointed under the Bill will have to see to it that the best textbooks are drafted in Afrikaans and are made available. I fully agree with the hon. member when he says that in the past we did not perhaps have what we should have had. I only want to point out that this matter cannot be connected with the Nurses’ Association.

Amendments put and agreed to.

Clause, as amended, put and agreed to.

On Clause 20,

I move—

Agreed to.

Clause, as amended, put and agreed to.

On Clause 21,

I move—

Agreed to.

Clause, as amended, put and agreed to.

On Clause 22,

I move—

Agreed to.

Clause, as amended, put and agreed to.

The remaining Clause and the Title having been agreed to,

HOUSE RESUMED :