Mr. Speaker, with your permission I wish to draw the attention of the House to a report headlined on the front page of The Cape Times today entitled “Petrol to go up on Friday”, in which it is stated that “the price of petrol and engine oils” is to be increased from 1 November.

In view of the implications for the industry and for the economy, I take this early opportunity to say that no such decision has been taken, and that there is no intention to allow the prices of petrol and engine oils to be increased from 1 November. The report to which I refer is therefore devoid of truth.

What happens in the future depends on cost escalations in relation to the formula agreed on with the oil companies.

Mr. Speaker, the entry of the hon. the Leader of the Opposition into this last major general debate of the session is always an event of special significance to me. I regret that the hon. the Leader of the Opposition, as he informed me, cannot be here this morning, but nevertheless it is my duty, before I deal with financial issues, to refer briefly to certain things which he mentioned in his speech. Mr. Speaker, when the hon. the Leader of the Opposition enters the last debate of the session, he usually does so because he is seeking one last opportunity to try to save what is still left of his party to save and to bring together the scattered remnants of an un-United Party. On this occasion he did not do this; it did not appear to be the case. Perhaps the hon. the Leader of the Opposition felt that even he, at this late stage in the life of that party, was not really able to do any more to bring them closer together.

It is quite clear that you are ready for retirement.

Sir, there is one important matter which the hon. the Leader of the Opposition emphasized in his speech, and to which I wish to refer for a moment. He said—

Sir, it goes without saying that I welcome this gesture on the part of the hon. the Leader of the Opposition, where he offers us co-operation on the part of the Opposition when it is a matter of the interests of South Africa, but you will pardon me if I asked why the hon. the Leader of the Opposition found it necessary to utter these fine words now. Is it not obviously the task of every patriotic Opposition to do everything in its power to co-operate with the Government when the interests of the country in question are involved? Why was it necessary for the hon. the Leader of the Opposition to make such a fine statement here in these times in which we are living? Was it perhaps necessary because the hon. the Leader of the Opposition realized that things were not what they ought to be within his own party?

It was to activate you.

Was it perhaps necessary because the hon. the Leader of the Opposition realized that winds were blowing, that there were trends in his party, of which he was beginning to be afraid; or was it perhaps because the hon. the Leader of the Opposition had listened to the whispers which one hears among the public that the United Party can no longer to such an extent be regarded as an insurance of security for the future of South Africa? In any event, Sir, I think the fact remains that it should not have been necessary for a Leader of the Opposition to give the assurance in the political sphere that he would co-operate with the Government in promoting the welfare and prosperity of the country. But before we proceed with this point—and I should like to accept his offer—it is necessary to pose a few questions, and the first question I want to pose is this: If it is true that the Opposition is now going to co-operate with the Government to ensure “inter-racial co-operation and goodwill and the security of South Africa”, how do we explain the speech made by the hon. member for Bryanston? Sir, there was no “goodwill” in that speech; there was no effort to achieve “inter-racial co-operation”; there was nothing to ensure the security of South Africa, for the entire speech which the hon. member made was an attempt to belittle South Africa in the eyes of the world. In these times in which we are fighting for our survival, when our Ambassador to the UN has to fight day and night with his back to the wall for the survival of those members as well as members on this side, a member of that party, which professes that it wishes to co-operate with the Government with a view to “inter-racial goodwill”, comes here and, as it were, says to the people outside: “Do not believe what that South African tells you; it is all untrue.”

He is a traitor.

Order! What did the hon. member say? I could not hear.

I said that he was a traitor.

The hon. member must withdraw the word “traitor”.

I withdraw it.

I want to make an appeal to hon. members to uphold the dignity of this House.

Mr. Speaker, it has been my personal experience in the past that while I had to fight for the interests of South Africa abroad, opposition elements in this country wrote: Do not pay any attention to the Minister of Finance of South Africa; he does not know what he is talking about; what he is working with are phantoms. Sir, history proved that I was right and that they were wrong. But for many years I felt the constraint and the restraints which were imposed on me in my work by members on the opposite side of the House. If hon. members on that side want co-operation—and I assume that they do—and if they are seeking “interracial harmony”, then I want to put this one question to them, which is of cardinal importance to all of us: Have hon. members on that side, during this session or in any previous sessions, ever acted in defence of the White man in this country? For, Sir, the White man is an important component in South Africa; the White man has contributed a great deal to this country, not only for himself but also for the Black man, for Africa and for the entire world. The White man elected all of us here. Sir, I ask you: Have hon. members on the opposite ever fought for the interests of the White man in South Africa?

Yes.

No, Sir, all that we heard from them in the past, particularly from hon. members who are now sitting in the backbenches there, was how the White man had failed to fulfil his duties. All we have ever heard was what the White man should do, or has not yet done for the other races in this country. But we hear very little about what the White man has in fact done and achieved for the other races in this country.

That is not fair.

No, Mr. Speaker, it is not fair that in debates here in Parliament we only hear about what the White man has to do and should do while we never hear about the rights the White man also has in his own country. Why is that so?

But the Government has to do it.

We are acting here as Whites of a White Government and in a White debating chamber. Yet no mention is ever made of what we are doing in favour of the Black man. We are simply blamed all the time for what we have supposedly not done, what we should have done, but did not do. Does this Government only have duties then, and no rights as the representative of the Whites? Do the non-Whites in South Africa only have rights and no duties? It so happens that Whites, when they are living in Australia, Britain, Holland or wherever they may be living, are good people, but as soon as they set foot on South African soil they are bad, they are the exploiters and the oppressors, and they are these things here in a country where the White man also want to subsist. Sir, the following question occurs to me: When are we going to hear something for the protection of the White man from that side, and when is it going to happen that, when I demand my right to speak for the White man, I will not be regarded as being a racist?

Everyone has discussed the interests of the Black man. That is quite correct, for they are also a component of South Africa. But if they have the right, then we also have the right to speak for the interests of the White man as also being an integral part of South Africa. The other day the hon. member for Turffontein mentioned a few examples of everything we have done for the Black man in this country—and our White population is not a large one. The people who never want to accord recognition to this, are engaged in a process of polarization, of polarization between that side and this side, of polarization between White man and Black man in the country. They are the people who say nothing about the rights of the White man, who spoil “inter-racial co-operation” in South Africa. I want to tell you that many of these people who have so much to say about humanity, who have so much to say about the rights of other people and so much to say about our attitude to the other races in South Africa and the other peoples—I know of many of those people who in their own homes and in their own professions and neighbourhoods treat the Black people with whom they come into contact in a way which is anything but humane. When we have to hear every day of petty little things that happened, and how these are then blazoned abroad against South Africa, we ask how many of those hon. members know, how many people in the world know, of the actions of a man of the calibre of Dr. Anton Rupert, who week after week and weekend after weekend, sent medical practitioners from the major cities of our country to the capitals of the surrounding Black states to perform operations there, to do medical work and perform acts of charity? How many know this? What does the world know about this? How many are aware and what does the world say to the fact that here, at a Cape Town hospital, at the heart centre, there are people arriving every week from various parts of the world to undergo heart operations, operations which only South Africa can perform? But those same people refuse to allow their football teams to play against us; they refuse to allow their tennis players to play against us, but they do not refuse to allow their patients to receive free hospital treatment and to undergo heart operations here. We are prepared to render those services out of our humanitarianism, but then we at least expect recognition for this. I think hon. members will agree with me that at least we deserve recognition for our deeds.

During the past week two speeches of tremendous significance were made as far as the politics of South Africa is concerned, and I expected the hon. members, after the statement by their Leader, to have had some comment to make on this as well. Firstly there was the speech made by Advocate Pik Botha in New York. With his back to the wall he was speaking for you on that side and for us on this side. But what treatment was accorded by that speech by most—I shall not say all the members—opposite? I would have thought that those hon. members, who are seeking international co-operation, would have stood up and would have praised Advocate Botha to a man, and would have told the world that they also support this man in his fight for South Africa.

We have already adopted a standpoint.

The second speech was that of the Prime Minister when he made last Wednesday in the Other Place, one of the greatest speeches a statesman has ever made in South Africa, a speech the reverberations of which will continue to be felt in South Africa and throughout the world. But listen now to what was said about this here—mere passing remarks. I had expected the Opposition, whose Leader had made a statement, to have risen and stated that they supported their Prime Minister, and that they would have done this dearly and incisively. Then I would have believed in them. Sir, we are a small White nation and we claim for ourselves the right to speak for ourselves without being called racists. We are a small nation, but if we were to analyse the contribution we are making to the non-Whites in financial and in other terms. I can state here that there is no other White country or nation on the face of the earth which is doing as much for the non-White races per head of the population as we are doing.

†Now, Sir, I want to return to the financial matters discussed in this debate. I first want to deal with the hon. member for Yeoville, who is the chief speaker of the Opposition on financial matters. That hon. member has made a number of positive suggestions. Altogether he has made so many suggestions that he will understand that it is not possible for me to reply to all of them. Some of these suggestions refer to matters which are already being pursued by the State. The hon. member must remember that it is impossible for any Government ever to achieve all its ends. Even the best Government finds that there are always things waiting to be done. It is easy for any Opposition in the debate to point out to the Government that this and this should still be done. But I appreciate the spirit in which the hon. gentleman has stated his case. We also believe—and we have said it for many decades already—that the safety and the security of our people in this country depend on the co-operation and the goodwill between the various races in this country. But our principles are different, Sir. We believe that the safety and the security of our people and goodwill and the co-operation between the races depend on the principle of separate development, separate development which decreases the possibilities of friction between the various nations and which allows every nation in this country to develop along its own lines. Progress has already been made in many of these matters and progress will continue to be made.

Now, coming to the financial matters, there are one or two things which I would like to discuss with the hon. gentleman. Inflation has been a topic in this debate, and rightly so, because it is a very important matter in our political set-up. But I strongly disagree with the hon. member for Yeoville and I still more strongly disagree with the hon. member for Constantia on the figures they have quoted in regard to inflation and the calculations they have presented to this House. The hon. member for Yeoville tells us that the inflation rate is 13,8% according to the latest figures and that if one looks at it more carefully, the annual rate appears to be about 20%. We have come to hear a new term in this House, a term I have never heard in this House before, i.e. “annualized inflation rate”.

Based on one month.

Yes, based on one month. The hon. member for Constantia went even further. He gave us an explanation of how high the inflation is calculated on an annual base. Sir, I have never heard any serious economist speaking about such an annualized base in regard to the index of inflation. What is an “annualized base”? In one case you will find that the inflation rate has jumped by 1%, since the previous month. You then multiply it by 12 and say the inflation rate is 12%! And if it should drop by 1% the next month that again is multiplied by 12 and he says the inflation has dropped by 6%. But when between December last year and January 1974 the figure dropped by, say, 3 points, they never said that inflation had gone down in South Africa. Never did they say that the rate of inflation has dropped in South Africa. This is not the way to calculate the rate of inflation. It is misleading and wrong. There are only two accepted ways of calculating the rate of inflation in a country. One of these is the method being adopted by the Bureau of Statistics of comparing figures for the same months in two successive years. My hon. colleague, the Minister of Economic Affairs, also referred to this matter yesterday. One can take a month this year and compare it with the same month last year. We then get, e.g. a figure for June 1973 and June 1974 of 11,2%, for July 1973 and July 1974 of 12%, for August 1973 and August 1974 of 13,2%, and for September 1973 and September 1974 of 13,8%. Where then does the 20% come from?

Projection. [Interjections.]

It is not a projection. There is another way of calculating inflation and that is to take the average rate of increase for one year and to compare it with the average rate for the previous year. One could therefore take the rate of inflation between June 1973 and June 1974 and compare it with the rate of inflation between June 1972 and June 1973. One compares one year with another. Why did hon. members not take the trouble to do that? That is scientific. What do we get then?

It requires work.

If we adopt that method we find that if we compare the period from January to January with that of the previous year, the rate of inflation was 9,6%, from February to February, 9,6%, March to March, 9,6%, April to April 9,6%, May to May 9,6%, June to June 9,7%, July to July, 9,8%, August to August 10,2% and September to September 10,6%. That is the latest figure. This is a perfectly legal and scientific way of calculating the rate of inflation. The hon. gentleman, however, prefer not to adopt this scientific method, they prefer the political method.

And you are not a politician.

I completely disagree with the hon. member for Yeoville on his way of calculating the rate of inflation. The hon. member also asked me if we could obtain statistics of unemployment among the Blacks. He is fully entitled to put that question. I can tell the hon. member that obtaining such statistics is one of the most difficult things on earth to do. We have always had statistics of the Blacks in the White areas but statistics of the Blacks in the homelands are practically impossible to obtain. The hon. member knows as well as I do that their social attitudes are different from those of the Whites.

Then you must not say that there is no unemployment.

We know for instance that in many Black countries, and in many parts of South Africa, it is not the man who works. The women and children have to till the fields and look after the animals. These men are technically unemployed. The hon. member must know that quite well in relation to the Transkei. He knows that in many instances when there is an increase in the Black man’s salary or wages, he simply works four days instead of five days. He knows about the enormous labour turnover among Blacks. He knows that there are many Black people who are on the unemployment register but who do not want to work. It is virtually impossible to calculate the unemployment figure for the whole Black population of this country. The closest figure I could get from the Department of Bantu Administration and Development was that a mere 3,7% of the workseekers in the White areas are unemployed. The other figure I have is from the hon. the Prime Minister’s Economic Advisory Council.

Three comma seven of what?

Of those persons seeking work, 3,7% could not be placed.

Three comma seven of what?

The other figure which is a tentative one from the hon. the Prime Minister’s Economic Advisory Council indicates that 5,6% of all employable Blacks are unemployed. That is a very low figure considering the circumstances.

Of the registered workers?

Of the economically productive people.

[Inaudible.]

The economically active people?

That is correct.

Why does the hon. the Minister of Labour predict that 60 000 new Blacks will enter the employment field in the homelands and 60 000 in the urban areas yearly?

Yes, more and more of them are born annually. There are always new people shifting out and new people coming in. It happens in every country. With a population …

What about the unemployed?

Just a moment, I shall come to that. Many of us who sit here know that there is hardly any unemployment among the Blacks in South Africa. For instance, we know how in the agricultural sector farmers are trying to get labour but are not always succeeding. My hon. friend, the Minister of Agriculture, can tell hon. members that one of the reasons for the milk crisis is that many people have given up dairy farming because of the labour situation in this country. When I talk about 5% or 6% unemployment among the Blacks, I wish to compare that figure with the figure in the United States of America. I have been told—the figures supplied to me are more or less correct—that for every 5% of unemployment in America—presently it is 5,8%—the percentage of Blacks under the age of 25 who are unemployed is 30%. In our case the Black unemployed figure is 5,6%.

They get unemployment benefits.

Well, they do get them but that is a different matter. The hon. member asked me about statistics.

Order! I should like to point out that when the Leader of the Opposition spoke I demanded a courteous hearing. Hon. members must now kindly reciprocate.

Thank you, Sir. I want to point out that apart from all these work-seekers there are half a million foreign workers employed in South Africa. If their place were to be taken by South African Black workers there would be no unemployment in South Africa at all. The hon. member for Yeoville suggested that we start a public works programme in order to give work to the Blacks who are not employed in industry or agriculture. It is a very good idea in theory, but this is not the time to do it because there is not that amount of unemployment. The hon. the Minister of Bantu Administration and Development, his deputies and the department are doing a good job. They are doing a great deal in respect of public works in the Bantu areas. I think that this money which the hon. member suggested we should use for public works in Bantu areas could have an inflationary effect because it would come from the State coffers. That money would only be marginally efficient and could be used better on another occasion.

The hon. gentleman talked about the improvement of labour. I agree with him that we should improve the quality of our labour. We have said this all along Not only have we said that the Government must do it but that the entrepreneurs, the businessmen should also do so because it is in their own interests. They have not done so, however in the past, because there has been a surplus of labour. When there was a surplus pool of labour nobody tried to improve the quality of labour. We as a Government have done something in regard to industrial training. We have given tax concessions to entrepreneurs and businessmen who have training programmes in their businesses. The hon. member knows that. We have improved Bantu education in this country and we have started with trade schools in and outside the Black homelands. I want to mention the figure—I know it will hurt—of the amount spent on Black education. In the year 1947-’48 the expenditure on Black education in South Africa by the U.P. Government was R9,8 million. In the last Budget the expenditure on Black education was not R9,8 million, but R 149,9 million. This indicates a tremendous increase in the expenditure on Black education and it speaks for itself.

The hon. member asked me about banking legislation. This is a very important point he has touched upon. I do not want to deal with these matters lightly; I just want to give my view in this regard. The hon. gentleman asked whether we should not think of some method of insuring deposits in South Africa such as is being done in other countries of the world. I know about this, but I can only mention that as far as I have been able to ascertain, there is no unanimity among banks about this proposal. Our banks do not agree on this matter. As the hon. gentleman knows, the insurance of deposits abroad applies mainly to small deposits. He said himself that it should apply to deposits up to a maximum of R10 000 or R20 000. In our case the smaller banks usually make use of much bigger deposits. Therefore this will not help them very much. The hon. member also spoke about the central banks and asked whether we could not find some way of going along with the EEC resolutions to help banks in their own countries when they get into difficulties, except for fraud, by them only guaranteeing the deposits of the banks. Am I right that the hon. member asked that?

I referred to the Basle resolution.

This resolution has been mentioned in the financial Press, but it has not been officially announced yet. I think it is something we could look at, but the circumstances in those countries are very different from ours and I do not think we need do that at this stage. Our banks are certainly not in that position. We have the Reserve Bank which not only will ward off any crisis in the banking system, but will do its best to safeguard deposits, particularly those of the small man.

I now want to come to my hon. friend from Constantia. The hon. member for Constantia, for whose person I have great respect, but economically we are incompatible. We are on different wavelengths, but strangely enough we sometimes cross. The hon. member spoke here at length and he did all he could in his speech to try to criticize and hammer the economy of South Africa. He tells us that inflation is due to structural defects in the economy of South Africa. He blames the inflationary situation completely on South African factors. Does the hon. member not know that there is also inflation in other parts of the world? Does he not know that in other parts of the world there are also structural difficulties and labour and industrial problems? However after hammering the South African economy for some time, criticizing it as strongly as he could, the hon. member made a most significant statement which completely baffled me. He said that the South African rand was a strong currency. Fancy that! I am happy to hear that, for so firmly does the hon. member believe in the rand that he actually blames the South African Government for “the reluctance of this Government to regard the rand as a strong currency”. Fancy that hon. member being a greater believer in the strength of the rand than I am. This is actually a question of the sceptic out-believing the believer. Does the hon. gentleman realize what that statement of his signifies? If he says clearly and firmly that the rand is a strong currency, he thereby implies that the economy of South Africa must be strong and sound because there cannot be a sound currency without a strong economy. There cannot be a strong economy without a strong currency. The rand as a currency is a mirror of economic strength because a currency is a reflection of the economic weakness or strength of a country. If the hon. member says that the rand is strong, he thereby admits that the economy of South Africa is strong. The hon. member cannot say that despite a weak economy the rand is strong because of gold. This House will remember that also in 1972 the hon. gentleman said the rand was strong in 1971 and that we should not have devalued in 1971; and at the time gold was not strong, since it was approximately $43 an ounce. And he cannot say that now because even with the high earnings for gold it only amounts to less than 10% of the national product. In other words, the strength of the rand which must be based on the strength of the economy, shows that the economy itself must be strong, particularly the industrial part of it. I wish to thank the hon. gentleman for what he said about the strength of the rand. In that we agree with him. There our currents cross again.

What were the arguments of the hon. gentleman? He said that the South African economy is not structured for growth. That is a far-reaching statement to make. He said that if we grow we first run into balance of payments problems and then into problems of accelerating inflation. I should say “well, well, well”! You did say that?

Do you deny it?

Yes, I deny it. As I say, if the South African economy is not structured for growth, where do we get a growth rate of 7% from in the social product and of a little more than 10% in the national product of this country? We have one of the strongest growth rates, if not the strongest in the entire world. Not withstanding the difficulties in which the world finds itself, South Africa still has the strongest growth rate outside the oil producing countries. Yet the hon. member says we are not structured for growth in this country. That really baffles me completely. I do not wish to say too much; I do not have much time. I want the hon. gentleman to read what a neutral person, not a member of the National Party, says. I refer to Prof. Hobart Houghton and what he wrote in Optima in 1973. I wish to make just a few quotes. He wrote—

He goes on to show that real income has increased three times and also how steel production and power production have increased. This is a document which points out the strength of the economy. Prof. Houghton concludes by saying—

Elsewhere in the article he refers to the “phenomenal growth of industry”. If a man like Prof. Houghton says this, we should take note of it. It is significant that he should say it and that it should appear in Optima, a publication that was under the editorship of the hon. member for Park-town and is not a National Party organ at all.

The hon. member spoke of the balance of payments problem and of inflation, as if South Africa is the only country with inflation and balance of payments problems. Do other countries not have balance of payments problems today? Has the hon. member read the report of the IMF? Has he seen in that report that balance of payments problems are found all over the world today? Other than the oil-producing and exporting countries, there is hardly a country that does not have a balance of payments problem today. This is a crucial point in the economy of today. Look at America, Britain, France, Italy or Denmark. In most countries of the world balance of payments problems are the order of the day. Yet the hon. gentleman singles us South Africans out as people with a balance of payments problem although we struggle least with this problem. One of the surprising aspects of his discussion of the whole balance of payments problem and of inflation is that he hardly mentioned the role played by oil.

I did mention oil.

Yes, he did mention it, but he never discussed oil as a factor in inflation. He did not point out that it is an extremely important factor in the balance of payments positions or nations. I think the hon. member must have seen this publication, one of the latest editions of World Financial Markets. We read—

Money is being drained away from other countries, they all are experiencing balance of payments problems and the hon. gentleman analyses the economics of South Africa, against this world background but never even speaks about the real problem of oil, a problem which we also have in South Africa. He does not even discuss the effect of oil on prices, inflation and the balance of payments. I should think that he should have taken this problem as one of the main factors of affecting the economy of our country and other countries of the world. I think he is busy with theoretical attacks on South Africa without coming to the real facts and by ignoring the factual position. Yes, the hon. gentleman is speaking about Hamlet without the ghost.

I come now to inflation. I do not want to emphasize that inflation is a bad thing. We know all the effects of inflation on the poorer and older people. We all know the evil effects of inflation. We all want to crush this demon of inflation. But, Sir, why does the hon. member present the position in this way, on the basis of the wrong figures, as if we are the only country really suffering from inflation? Then he takes Rhodesia and West Germany as examples with which to compare us. I think that the hon. gentleman would understand that I cannot discuss Rhodeisia’s problems here today. We cannot compare them. However, let us take Western Germany. Really, Sir, I feel flattered. The hon. gentleman thought so highly of the South African economy that he compared it with the strongest economy, viz. that of Western Germany. He says that we have a rate of inflation of 20%—although we say that we have a much lower rate—and that Germany has a rate of only 8%. It is true. Germany has a rate of 8%. I know that Germany is one of the strongest countries. I know that their low rate of inflation and their strong economy is due to the hard work and efficiency of their workers, their managers and to their export consciousness. However, it is completely wrong to compare South Africa with Germany on this particular aspect only, viz. the rate of inflation. Does the hon. gentleman know that Germany finds itself in extreme economic difficulties at the present moment? Does the hon. gentleman know that there is bankruptcy and insolvency, particularly the textile industry, the motor industry and the construction industry are in a very bad way in Germany. Does he know about the number of insolvencies? Does the hon. gentleman know that five economic institutes have recently predicted that in this winter there will be a million unemployed in Germany? I am not talking about immigrant labourers—I am talking of Germans. Lastly, does the hon. gentleman know that we have a growth rate of 7%, while Germany has a rate of only 1,5%? However, even if we have a higher rate of inflation, while costs are really not much higher than in Germany, we have a much higher rate of growth. I would prefer to go for growth. The hon. gentleman should know that banks have been failing in Germany. Does he remember the case of Herrstadt and the effect it had on the economy and the finance of the world? I think the hon. gentleman should think again before he compares South Africa with another country, or compares us in an unfavourable way with other countries. I think he should also show up the favourable aspects of our economy in relation to others.

Then we heard the hon. gentleman speaking about tariffs and industrial protection. It is an attitude I can understand. When I hear his voice, it reminds me of the voices we heard decades ago from that side of the House against industrial protection and against industrial development in South Africa. It reminds me of the voices we heard when we started Iscor and Sasol. It reminds me of the voices we heard when we spoke about a Foscor. It reminds me of the voices we heard from that side of the House when we advocated greater tariff protection for our industries in South Africa. Thank heaven we did not heed those voices because if we had listened to what they said, South Africa would not have had the industrial development of the magnitude that we have experienced in South Africa over the last quarter of a decade. We want industry and if we want industry we must protect it. We have to pay a price for it and protection is the price we have to pay. We want industry because we need the employment that industry provides. The hon. member for Yeoville has also said that we must create new opportunities for employment. We are all concerned about the growing number of work-seekers. And still the hon. gentleman disagrees with us in regard to tariff protection in this country.

*I come now to the last part of my speech and here I want to look far into the future. There is one question which I think I must pose, now that I have dealt with the arguments raised by hon. members opposite. The question is: What about tomorrow? What does the future hold for the economy of the world and for the economy of South Africa in particular? That question is being posed everywhere today. That question is being posed with a fear in many countries; people are looking to the future with fear. If we look around us we find a world filled with concern. Recently I spent a week in Washington on the occasion of the meetings of the World Bank and of the International Monetary Fund. They were the most sombre international financial meetings I have ever attended. Almost every speech was a speech of complaints by one country against another. There were complaints in regard to balances of payments, inflation, declining growth rates, etc. World prospects had seldom appeared so gloomy and so alarming as they did on that occasion. We ask ourselves what is going to happen in future. There are many people who say that at present we find ourselves in a position of stagnation, in which there is virtually no growth in the industrial countries, only a marked degree of inflation—stagflation or slumpflation. In some countries it is slumpflation, where the economy is declining and the inflation rate is rising. What does the future hold for us? One cannot go into all the possible replies to this question in detail. I want to refer to the fact that there are people who are saying that what is in store for the world today is the same that was in store for the world in 1929. 45 years ago. These people say that there is a depression such as the one which occurred in 1929 in store for us, and perhaps even a worse one than was experienced during that year and succeeding years. All over the world we read in books, newspapers, and periodicals the words of the prophets of doom, particularly in a country such as America, who say that the world economy is standing on the edge of an abyss and that we shall experience a depression as we have seldom experienced before. This appears to be the case because we are experiencing this tremendous inflation, inflation which countries and authorities throughout the world are trying their best to contain. We are now beginning to see the onerous effects of the containing of that inflation. What is more, we also have the oil question. I have already mentioned the figures. This oil crisis is perhaps the most important economic event which has occurred in the world during the past year. This crisis has made its prejudicial effects felt this year, and the position will only become worse. The question is simply: What lies in store for the world in the economic sphere? The prophets of doom tell us that the world is heading for a depression. It is not easy to see into the future. It is not easy to make predictions. One may possibly wish to venture a certain look into the future on economic grounds, but we do not know what can happen tomorrow. We do not know whether there could not perhaps be another Portugal and a Mozambique tomorrow. We do not know whether there could not perhaps be another oil crisis tomorrow or the day after. There are always these imponderables, these unexpected things which can happen in the economy. But let us exclude them for a moment. Sir, when I consider the future, I see the difficulties awaiting the world, perhaps us as well, for we are part of the world, but the one thing that I do want to say is that I do not think we are heading for a depression. I do not think that we are heading for a depression as was experienced in earlier years and during the period between the world wars. I do not think this because the world in which we are now living is different to the world of 45 years ago. We have now reached the stage where there is, for example, a tremendous fear of unemployment. People are afraid of the consequences of unemployment, the consequences such as social unrest and poverty, and Governments, particularly Governments under the influence of Lord Keynes, will do everything in their power to prevent large-scale unemployment and poverty and social unrest. Some of the Governments are even today taking the necessary steps in this regard. Certain Governments which have adopted stringent monetary measures to combat inflation, are today already relaxing those measures. This is happening in West Germany, in America, in England and in other countries. They are slowly pumping money into the economy again. Sir, I do not think that what happened in 1929 and afterwards will happen. I say that the world of today is different. At that time there was abundant food and abundant raw materials; today there is a shortage of food and a shortage of raw materials, and there are also more people who require those raw materials and that food. At this time in which we are living the trade unions are very strong; the trade unions will continue to make ever increasing demands, and the Governments will accede to them, because they are not strong enough to resist the excessive demands of trade unions. But we are better able to control inflation today than we were 45 years ago. What did the Government do in the depression of the thirties? They reduced the money in circulations they restricted credit. That is the wrong thing to do. In a time of depression one should not reduce the money in circulations; one should bring more money into circulation; one should grant more credit and proceed with more public works. That lesson we have learnt. With our political experience and economic knowledge and against our social background—there are many arguments I could mention,—I do not think that the world will find itself in a depression, but that the world will perhaps experience a recession and that there will be a drop in the economic growth rate. We are already seeing this. It is clear that difficulties may crop up for the world again next year, but I think that the nations will be able to cope with the problems which will arise, and that matters will subsequently resume their normal course.

In conclusion, Mr. Speaker, just a few words on South Africa. When I consider the world situation, then I just want to tell hon. members what I expect for South Africa: Next year the growth rate will perhaps slow down, but in the ensuing year I expect for South Africa prosperity as we have seldom experienced before in this country. I expect a revival in this country, and we must prepare ourselves to utilize that revival in the best way. Sir, I believe that the situation of South Africa in the economic and political sphere, and in the international sphere, will be better in future. I believe that we will be better able to control and contain our problems with the peoples here in South Africa. I believe that we in South Africa have the raw materials and the material resources, and that we also have the necessary intellectual resources. We have the people with the intellect who are able to lead. We have the manpower, which we must guide and strengthen and use to the best of our ability. We have what most nations want, our gold and our minerals and our situation here at the southernmost point of Africa, and we have the people. For that reason I want to say that we should do the best with what we have and with the means at our disposal, we should make the most of the opportunities awaiting us in future. There will still be greater prosperity in the years which lie ahead if we guide the economy correctly.

I conclude this debate with just this one sentence, that as far as the future of South Africa is concerned, I have profound confidence in my country and all I ask of you is that you share that confidence with me.

Motion agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

I want to say at once that the Bill that is at present before the House is a very comprehensive and highly technical document. To save time, I abbreviated the Second Reading speech I made in the Other Place, and I shall now submit this abbreviated speech to the House.

When my predecessor submitted proposals to this House during the 1973 parliamentary session for the substitution of the then existing Companies Act, 1926, by new legislation based on the recommendations of the Van Wyk de Vries Commission, the Government and all the interested groups it had consulted in the formulation of the new statutory proposals, fully realized that the envisaged new legislation would effect a number of fundamental changes to both our companies legislation and the established procedures and practices of our companies.

It was also clear that the practicability of many of the principles contained in the proposed new legislation could only be judged after the proposals had been tested in practice.

The proposed new legislation, therefore, makes provision for the appointment of a Standing Advisory Committee on the Companies Bill. This committee would consist of a broadly representative group of experts that would have to consider all proposals for amendments to the envisaged new legislation after it had been passed, and submit recommendations in this regard to the Government. It was also provided in the new legislation that clauses making provision for the establishment of the Standing Advisory Committee would come into operation even before the remainder of the new legislation took effect.

Parliament passed the envisaged new legislation last year and placed the Companies Act, 1973, on the Statute Book. Section 18 of that Act which makes provision for the establishment of the Standing Advisory Committee, came into operation on 13 July 1973, whereas the remainder of the Act took effect on 1 January 1974.

The Standing Advisory Committee, under the chairmanship of Mr. Justice Margo, proceeded to its business on 18 November 1973. Even at that stage the committee had before it a variety of proposals and representations from professional bodies for the urgent amendment of specific sections of the Companies Act, to which it had to give its attention. Since the commencement of its business the committee has received further requests for urgent amendments of the existing Act. It has referred all these proposals to its various sub-committees for detailed study. On the basis of the recommendations and proposals of its sub-committees, the Standing Advisory Committee submitted various recommendations for amendments to the existing Act. These recommendations are embodied in the Bill which has now been submitted to this House for approval.

The proposals in the Bill are of a highly technical nature. They were formulated by the Standing Advisory Committee, a committee consisting of a group of independent experts. However, all the amendments are aimed at eliminating problems which are already being experienced in the application of the existing legislation, and which have to be rectified urgently.

†The proposed changes to the Act which are embodied in the Bill now before this House, may be summarized as follows:

1. (i) Provision is made for amendments to the definitions relating to “controlling”, “holding” and “subsidiary companies”;
2. (ii) the existing restrictions on certain inter-company loans are removed;
3. (iii) subsidiary companies are allowed to remain members of the holding companies when they become subsidiaries;
4. (iv) certain doubts as to the methods of calculating the registration fees for new companies and annual duties for existing companies are removed;
5. (v) the fact that share premiums are subject to the provisions of the Act relating to the reduction of capital, is confirmed;
6. (vi) the definition of “a security” is simplified, whilst doubts as to the manner in which listed securities are transferred, are removed;
7. (vii) the publication of certain particulars of offers of shares and debentures to members of listed companies is permitted;
8. (viii) the doubt as to whether an existing company which was entitled to commence business under the repealed Act had to obtain a certificate to commence business under the 1973 Act, is removed;
9. (ix) members of private companies are allowed to vote at meetings, either personally, or by proxy;
10. (x) the method of determining the financial year of a company is simplified;
11. (xi) changes are being made to the accounting requirements of groups of companies while the position that directors do not sign the auditor’s report, is clarified;
12. (xii) wholly owned subsidiary companies are exempted from lodging interim reports;
13. (xiii) the Registrar is given power to exempt certain public companies from lodging annual financial statements, in respect of certain subsidiary companies, and to grant longer periods of extension to companies for sending provisional annual financial statements and interim reports to members; and, finally,
14. (xiv) provision is made for the Minister, in consultation with the Minister of Finance, to allow a different manner of payment for shares to persons resident outside the Republic, when a take-over offer for their shares is made and part of the consideration to be paid for the shares is in cash.

* Retrospective Effect of Amendments

The Bill provides that all the amendments shall apply with retrospective effect from 1 January 1974, except the amendment of section 76 of the Act in relation to share premium accounts, as contained in clause 5 of the Bill, which comes into operation on the date on which the Companies Act, 1974, is promulgated.

The reason for the latter proposal is that many companies made use of an apparent omission in the Act, and in consequence reduced their share premium accounts without complying with the provisions of the Act relating to the reduction of capital.

If this particular amendment were also to be made with retrospective effect, those companies will experience problems in recovering these amounts by which the share premium accounts were reduced.

I should like to emphasize that the proposed amendments are of an urgent nature. Companies, auditors, attorneys and others have experienced real problems in regard to the administration and interpretation of the Act, and this Bill should be regarded as an interim measure in order to overcome those problems.

Mr. Speaker, I think it is a very pleasant change to be in a quiet atmosphere and to be able to say to the hon. the Minister that this is a measure which we support and which we will be able to debate in a very quiet, reasonable and unemotional manner. Initially I want to say that we regard the principle of a standing committee as an extremely useful and important one. This standing committee will review the legislation and affected parties, particularly the organizations representing the professions will have access to this committee. I have no difficulty about the fact that we may have to amend the Act from time to time because I think experience has always taught us that whatever we have learnt in the past we can improve upon in the future. I think this is an extremely sound mechanism.

The second point I wish to make is that I think there is an increasing need to fit into the international community in regard to accounting practices. I think it is important that this should apply to company law generally. I think many principles of company law are in fact universal. The legislation in some countries may be more sophisticated than in others. There may also be the necessity to deal with particular local circumstances, particularly abuses, which are more prevalent in some countries than in others. Despite all this, I think we should try to keep in close contact with the company law development in countries from which our investments come in order to keep abreast of and fit into the international commercial community. It is true that our law is by reason of its origin largely based on English company law and that the laws of the other major Western countries are sometimes based on different principles. I have also said that local conditions vary. I think we can also learn from the developments in other countries, particularly from company law developments in the European Economic Community. I believe that we can learn quite a lot from them.

I think the office of the Registrar of Companies has had to carry an ever-increasing burden as a result of the new Act. While I pay tribute to the Registrar as an individual in respect of his co-operation particularly with the professions which do not have a word of criticism as far as that is concerned, I also believe the office is in need of staff. I believe that the Registrar will agree that delays can be costly to the professions and the commercial community. Assistance should be given to him because he is certainly not responsible for the delays which occur because he has to cope with this limited staff.

The Bill is quite clearly an interim measure only and more amending legislation will have to be forthcoming some of which I hope will be forthcoming next year. The criticism of it should not be based so much on what is in this Bill as on what is not in it. That is criticism which you, Mr. Speaker, will not permit in terms of the rules of the House. Therefore I shall not pass such criticism.

There are some matters which arise from the Bill to which I should like to draw the attention of hon. members. One of the particular matters which I believe the committee should pay attention to urgently is the need to distinguish between disclosures, formalities and reports between public and private companies. I think the burden of costs in respect of a small private company and the burden on staff, particularly in accountancy firms, is a very real one. I think the standing committee should give attention to this matter at a very early stage.

I now propose to deal with the individual provisions of this Bill. I want to deal specifically with the amendments of the definitions relating to controlling, holding and subsidiary companies. It seems that the need to distinguish between controlling and holding companies is falling away. The effect of the proposed amendments is that a subsidiary will now be a controlled company and a holding company a controlling company. Previously, an equity shareholding of 30% to 50% was the holding of a subsidiary and not of a controlled company. The concept of controlled and controlling companies was introduced in the 1973 Act in order to apply certain restrictive provisions of that Act. The holding and subsidiary concepts were introduced mainly to deal with financial reporting and disclosure problems. In view of the changes which are now being effected it appears to be unnecessary to continue to distinguish between the two. The issue, however, can freely be raised as to whether a public company should or should not give information in respect of another company in which it has a substantial holding. Group reports will no longer be required at all and any company in which the shareholding is between 30% and 50% is regarded as subsidiary if it does not control the board. In terms of the Fourth Schedule, clause 21(2)(b), a valuation of the shares must be given, or, in terms of clause 22, a statement of the company’s interest in the profits, share capital, etc., of the company in which it holds shares must be given. However, the question I want to pose to the hon. the Minister is whether, in fact, the alternative to complying with clause 21 (2)(b) or clause 22 should be open to a company where its holding in another company is a substantial one, whether the compliance with clause 22 should not become mandatory and whether clause 22 should not be extended to provide for certain further information which should be given. The Schedule can be amended by proclamation and will in any case require to be amended after this Bill has been passed. I believe that this matter should then be seriously considered.

There are a number of consequential amendments which arise most of which are contained in the Act. It is not necessary to deal with them individually. However, there are some which have been omitted. May I, for example, draw attention to the definition of shares and debentures of a company in section 229. There is a consequential amendment needed here which I hope may well be attended to next year.

I now turn to the question of intercompany loans. The existing provisions of section 37 have certainly created problems, in particular in respect of the operation of companies within a group. The free flow of money downwards is now permitted, while only the upward flow is restricted. The proposed amendment is, however, not entirely satisfactory. I should like to put some of the problems to the hon. the Minister.

Section 226 prohibits, except in limited circumstances, the making of loans by a company to directors, but section 37 now permits loans to companies controlled by the directors of the lending company. Secondly, the ability to lend within a group can have a prejudicial effect not only on the shareholders, not only on the minority shareholders, but also on the creditors of the company, particularly a company which has loaned its money to, say, a fellow-subsidiary where such a loan becomes irrecoverable. Take the recent example of the liquidation of a major company which had hundreds of subsidiaries and where money was lent between subsidiaries. Where a creditor has looked to a particular company to be paid, one finds that, in fact, all that that company has as an asset is a claim against another company which is unable to repay that loan because it has also got into financial difficulties. I believe this is a very real problem, not only from the point of view of protecting shareholders but also from the point of view of protecting creditors. A subsidiary can still lend to another subsidiary which can then use the proceeds of the loan to repay an existing indebtedness to the controlling company. The effect of this will be indirectly to channel funds to the controlling company. There is also the question of the need to obtain the unanimous consent of shareholders, and I believe this creates difficulties. If it is a wholly owned subsidiary there is, in fact, no problem and one does not really know why there should be consent at all. However, if it is not a wholly owned subsidiary should consideration not be given to the fact that such consent may be given by means of a special resolution which may be passed? If a minority shareholder then feels that he has been prejudiced as a result of this decision, he should have a remedy to apply to court. I suggest that this aspect receive the hon. the Minister’s attention. The Minister has indicated that some of the problems may be eliminated by requirements as to full disclosure and the placing of an onus on directors. While this may alleviate the problem, it would appear that further amendments beyond these contemplated by the hon. the Minister may be needed in order to close the loophole. The question may also be posed as to what the “carrying on business which includes the lending of money” means. I believe that whereas the old definition was too narrow it may well be that the present one is going to be too wide. In fact, one may have to look at this once again.

I do not want to waste time by commenting unnecessarily on clauses with which we agree. However, if I may refer to the question of the payment of an annual duty of R50, I would like to recommend to the hon. the Minister that this figure is too high for the smaller companies. I think it should in fact be reduced to R10 which would be the amount applicable to a company with a capital of R4 000. While it is a small point, it in fact involves an awful lot of people who have to pay money. I think that in the circumstances it is not desirable.

The amendment contained in clause 5 which amends section 76 of the Act is clearly necessary as there was an omission in this respect. I think that the question of retrospectivity is quite clearly also necessary in the particular circumstances. I may, however, point out that it might have put an end to this if it had been indicated at the time when the Bill was announced that it would become effective from the time that the Bill was tabled. Had this been done there would not have been many firms still making changes before the actual Act was promulgated. We could have closed the loophole a little earlier but, as the matter has now been concluded, we must just leave it as it is at present.

Yes, we must get the Bill through as quickly as possible.

Well, I am trying to help with that, Sir. It is, however, not clear to me—and perhaps the hon. the Minister can explain this—why the exemption that is extended to banking institutions in terms of this clause, is not also extended to insurance companies. I wonder whether the hon. the Minister will not deal with that because, with respect, I have never been able to follow that.

We then come to clauses 6 and 7 which amend sections 134 and 135 respectively. The effect of the amendment to section 135 will be to allow brokers’ transfers to be used to transfer lists of securities even if the transaction is not a stock exchange transaction. While this is clearly desirable for new issues and particularly in respect of the placing of shares, the amendment is so wide in its effect that it could in fact be abused despite the safeguard that the transfer form must bear the broker’s signature. I think this is something that should be looked at again.

Clause 8 amends section 157 of the main Act. This clause provides what an advertisement may contain to avoid being regarded as a prospectus. In other words, you may only put in certain information. If it contains more than that it must comply fully with the requirements of a prospectus. In the case of the proposed amendment suggested by the hon. the Minister it correctly states that in respect of a so-called rights issue where shares are listed on the Stock Exchange one should publicise the details as soon as possible. It seems, therefore, that in the case of a rights issue if any advertisement is published at all, it should not only contain the information which may be inserted, but also the information which is now to be contained in paragraph (f) in terms of which certain information “should” be published if any advertisement is published at all. At the moment the measure is purely permissive. I believe that if an advertisement in respect of a rights issue is published at all, it should be directive and not permissive that that information should be contained in it.

There is a large number of clauses regarding which I have no comment. I agree with the amendments and therefore I do not propose to deal with those clauses. I come then to clause 17 which amends section 293. This clause provides that the subsidiary must cause its financial statements in terms of section 286 to cover the same accounting period covered by its holding company or companies. A company may in terms of the Companies Act be a subsidiary of two companies in that one holding company holds more than half of the shares while another may control its board of directors. If one refers to the present Act we are amending, this clearly shows it to be so. It therefore would appear that a subsidiary company may in certain circumstances have to make two sets of accounts to comply with the requirements of both its holding companies. Whereas fortunately this is unlikely to happen frequently, I think in due course we may consider means of overcoming this particularly unnecessary preparation of accounts.

Clause 28 deals with the authority to extend the period for the filing of interim and provisional annual financial statements. I imagine that this is something the Registrar as well as the commercial community will welcome. It was obviously a necessary matter to be dealt with.

There is just one last point, namely the amendment contained in clause 30. The problems of dealing with non-resident shareholders are very real particularly if freely convertible currency cannot be used. The question of what, however, is equivalent treatment may be a matter of opinion, as I am sure the hon. the Minister will agree. The question may also arise whether a requisite majority of resident shareholders could compel non-resident shareholders to accept a so-called equivalent consideration which the non-residents would certainly not regard as equivalent because they might in fact have an adequate majority to bring these provisions into operation. I wonder whether in these circumstances it could not be considered, as a future amendment, that in fact there should be recourse to the courts if a non-resident shareholder considers that the so-called “equivalent treatment” is in fact prejudicial towards him.

We do not propose to move amendments in the Committee Stage, because we believe that the measure should go through quickly. We also believe that there will have to be amendments again shortly. We think these amendments are of such a technical nature that it would be unfair to debate them merely across the floor of the House. I think it would not be a desirable procedure to adopt. For that reason, we will not move amendments in the Committee Stage. We welcome the introduction of this measure and we will give it our support at all stages.

Mr. Speaker, I am very grateful for the attitude adopted by the Opposition towards this measure, for the fact that they will support the Bill, and particularly for the final remark made by the hon. member for Yeoville, to the effect that they will not propose any amendments. In my opinion we should thereby have derogated from the fine work done by this standing advisory committee. Referring to that committee, I may just mention that when the sub-committees or ad hoc committees meet all the members are present and at their posts. A majority decision is not taken. All matters are discussed and thrashed out until they are virtually perfect and a unanimous decision may be taken. When such experts operate in this way we may expect only the best. That is why I am very grateful for the attitude to this Bill adopted by the hon. Opposition.

I do not believe that there is a more important Act in South Africa than the Companies Act. If we consider that this is the Act that controls, plans and prescribes the entire economic and financial structure, we can form an idea of the importance of this Act. That, too, is why I am pleased that ample time is set aside by experts to go over this Act. No less than thirty sections are being amended and this is because of the fact that it has become apparent in practice that they cannot be applied. Those provisions were simply not of such a nature that directors of companies, auditors, and so on, could apply the Act as originally adopted.

One of the aims of this Bill is to provide for full and timely publication of information to be provided by the companies to their shareholders. However, it is also true that in 1973, in our attempt to make more information available, we went a little too far. I want to mention only one example. Whereas we wanted to provide so much information by means of reports and so on, we found that the following occurred in regard to reports that had to be submitted to the Registrar: Le us take three public companies, A, B and C. Say, for example, that B Limited controls 50 private companies and C Limited controls 60, in practice a common phenomenon today. In the past, no annual statements were submitted by private companies but now B Limited, besides its financial statements, must also submit statements for the 50 controlled subsidiaries under cover of a form, Cm 34. C Limited must do the same in respect of its 60 controlled private companies. But that is not all. B Limited and C Limited are also controlled subsidiaries of A Limited and therefore A Limited besides its own annual statements must also submit the annual statements of the 110 controlled subsidiaries. This is an indication of how impossibly complicated it can be. But what is more, the annual statements that are compiled these days, cost a lot of money. Many of them cost about R2 apiece. As a result this gives rise to extremely high and unnecessary expenses when these statements have to be submitted. I should also like to refer to another factor, namely the regulations in terms of section 15. We should take into account the time, stationery, stamp duties—this has disappeared to some extent—postal fees and other expenses involved in regard to these forms that are submitted to the Registrar’s office. I have referred to the enormous number of forms. Having kept my ears open among the businessmen and auditors of Pretoria, I have to ask myself the question: Is the control exercised by the office of the Registrar so effective that all forms do in fact have to be submitted? The hon. member also referred to private companies. There are aspects, that will in fact disappear, but I ask that the matter to which I have referred, enjoy the attention of both the Registrar and the standing advisory committee. Many of these forms can be simplified, too. The forms are prescribed by regulation. There are two forms to which I want to make specific reference. I refer in the first place to the old form C that is now actually known as form CM 23. That form has to be submitted annually and therefore the position is largely what it was in the past except that far more information has to be provided on form C and 23. Form CM 23, therefore, is twice as long as form C, which was itself a bulky form. Paragraph 5 of form CM 23 requires that details of all returns, special decisions, forms and notices submitted to the Registrar during the financial year, be indicated. There are other forms, too, and consequently it seems that there is unnecessary duplication of the information required in terms of paragraph 6 of form CM 23. In terms of paragraph 6, details must be provided in respect of the list of directorships, officials and auditors of the company. The information that must be contained therein however, is already provided by means of forms CM 27 and CM 29. Form CM 29 contains largely the same information and is submitted on the occasion of any change in regard to directors, officials or auditors. From CM 27 contains similar personal information concerning each director. I think that it would be as well if all these forms were to be looked at with a view to the possible elimination and simplification of some of them. I think that we are burdening the Registrar with so many forms that he is barely able to receive them, let alone attending to them properly. We cannot want to appoint more staff under existing circumstances. We must simplify to a greater extent so as to be able to exercise better control.

There is another aspect to which I also want to refer. In terms of section 306 the returns must be submitted to the Registrar within seven days. It is a fact that some companies are situated far from Pretoria and that such companies are not always in a position to send their returns in time to reach the Registrar within seven days. Such returns have to be sent through the post and we know that delays in the post may occur. If there are delays in the post this could involve the companies themselves being liable to fines. I want to make the suggestion that when the Act is amended next year—I think that there will be a number of amendments then—section 306 be amended to provide that the returns be handed in within seven days or posted before the expiry of seven days. The Post Office stamp must appear on them. It is not fair that if I have posted a document in time and a delay occurs causing the document to be received late, the Registrar is left with no choice but to fine me. I have done my duty by posting it in time; surely it cannot be expected of me to travel a hundred miles or more to submit the document personally. There are, therefore, certain matters that deserve attention.

On behalf of this side of the House, on behalf of our businessmen and financial institutions and, in particular, on behalf of the auditors’ profession of which, I, too, am a member, I want to convey my hearty thanks to the hon. Minister for the amendments effected on this occasion. The hon. the Minister need not hesitate to re-write the Act entirely next year if many amendments have to be effected. We shall accept that and I believe that we shall also have the support of the Opposition for anything of that kind. We must have a model Companies Act which may serve as an example to the rest of the world and which, apart from that, could also be put into practice in order that our economic life may be stimulated and the workings of our financial institutions facilitated thereby.

Mr. Speaker, I would like to agree with the hon. member for Sunnyside that this is obviously a very important Bill. I would also like to agree with the vast majority of the suggestions put forward by the hon. member for Yeoville. I do not think any point would be served by going over them again, but I would like to add three small ones which I would like to ask the hon. the Minister to look at. In the first instance I should like him to look at this question of the remaining restrictions on loans, which was also raised by the hon. member for Yeoville. Of course, Sir, I know that the hon. the Minister said in the Other Place that he hoped that this would be able to take place in as unrestricted a way as possible; that this was what he was aiming at and that he wanted to have time to test it out and that he would then look at it again. But, Mr. Speaker, this may on occasion produce problems. Then, Sir, I would like to ask either the hon. the Minister himself or the Standing Committee to look at clause 7, which provides that a security may be transferred by means of a securities transfer and a broker’s transfer form. It seems to me that there is an unnecessary degree of restraint here in the sense that this is restricted to stockbrokers. In the past, as the hon. the Minister will probably be aware, banks certainly have done this and this also applies to certain of the larger groups. As I gather, although I am not entirely confident about this, a certain charge may be payable if a security passes through a stockbroker’s office. While the sum is not large in certain transactions which might well not pass through the Stock Exchange, in other cases considerable charges which would not otherwise have been levied would be payable. I would just like to draw the hon. the Minister’s attention to this. Sir, in the following section, section 157, the amendments to which are set out in clause 8, there are two points that I would like to make. In the first place, we would like to welcome this amendment very much, because as I understand it this has the effect of reducing the risk period from the time of fixing the price and the rights issue. This is obviously something that people in business will welcome. But, Sir, I wonder whether the hon. the Minister would not ask the relevant committee to see whether the addition of the words “with or without rights of renunciation” in the second line of this subparagraph are necessary, because we are talking about a rights issue in this particular section, but as I understand it, it would exclude a rights issue to which rights of renunciation were or were not attached in terms of the present terminology, and I do not think that that is the intention. The other thing that I want to bring to the hon. the Minister’s attention is this: He will know that in the mining industry in particular although I think this also happens elsewhere, there are occasions where one company offers a rights issue to shareholders in the company’s holding company. Take the case of a new gold mine where three public companies own the shares of that particular gold mine. The gold-mining company itself may wish to make a rights issue to the shareholders of its own companies one tier further up. This is perhaps something which the hon. the Minister might look at, particularly in view of the gold mining expansion which we hope is going to come to this country and which will inevitably involve this kind of thing, because one tends to find this sort of thing in the case of mines in contiguous areas or where various blocks which may be held by separate groups are together, rather than in the case of quite new mines.

Sir, the last clause with which we have trouble is in fact the very last clause of this Bill, which amends section 314 and which has already been mentioned by the hon. member for Yeoville. We all understand the thrust of this thing, but I wonder whether the hon. the Minister can tell me what the meaning is in practice of the words “but in such a manner that all shareholders receive equivalent treatment” after the word “Republic”. I am afraid I do not really see the point of it. In fact, I think in one sense, in a practical sense, if the Bill were to give a right, as the hon. member for Yeoville has pointed out, to redress and adjust it, cannot the hon. the Minister again look at this clause, not now, because we are not proposing amendments, but in future, and consider whether it does not in effect read better with those words deleted.

Mr. Speaker, I want to express my appreciation for the measure of support which has been given to this important measure from all sides of the House. I think the discussion has been most constructive and it has certainly been of great value to me.

Quite a number of points and arguments have been raised here. I think hon. members will realize that it will be difficult for me at the moment to give clearcut decisions on most of these matters. But what I shall do, of course, is to pass on to the Advisory Committee as soon as possible all the points which have been raised here. The Registrar of Companies is here as well and he too will of course have a look at these, as will the department, so that we may give due consideration to any action that may be taken in regard to the recommendations and the suggestions which have been made here.

I want to be brief, Sir. As regards the staff of the office of the Registrar of Companies, it is true that there are problems on the lower levels of staff. More staff will have to be recruited. They are already doing this, and the Registrar of Companies assures me that good progress has been made in recruiting administrative staff for the companies’ office over the past year and particularly over the last few months. He feels that considerable improvements have already been made.

†But I take the point made by the hon. member for Yeoville. Obviously, if we are going to have an effective Companies Act, if our company law is to be properly transcribed and applied in practice, we must have a very smooth working administrative machine, and that is what we are certainly aiming at.

If I may comment on a few things now. I think the hon. member for Yeoville mentioned that he thought we should keep in very close touch with accounting procedures in the rest of the world. This is undoubtedly being done, and the board of the National Council of Chartered Accountants and its committees are, of course, also looking at this matter thoroughly. So I can assure the hon. member that this is being done. On the question of a distinction being made between disclosures and formalities as applied to private companies and public companies, it so happens that this matter has been referred to the committee again. The Registrar has been looking at this himself and I am informed it is receiving further attention at this moment by the Standing Advisory Committee. We can thereafter decide more carefully whether we should take this further.

As far as the annual duty is concerned, the hon. member for Yeoville feels it might be a little high, especially for small companies. I just want to refer to the fact that the hon. the Minister of Finance in his Budget Speech in 1973, last year, when the annual duty was increased to R50, stated that the intention was, in fact to prevent a proliferation of companies, especially a whole lot of small companies. I do not know whether this will effectively counteract that. However, it is a point we take, and this matter will be reconsidered. As far as the exemption under the share premium account provision, the exemption of insurance companies, is concerned, or let me rather say a non-exemption, where the banks in fact are exempted. I must say this is something I queried myself. It is a matter that we have referred back to the committee. I myself am really not quite clear on that. I have referred the matter back. The hon. member shares my difficulty. We shall see what information comes back and if necessary we shall introduce an amendment.

I think the hon. member for Yeoville wanted the provision in connection with advertisements in the case of rights issues to be mandatory, if I understood him correctly. Apparently this stems from a Stock Exchange requirement and I am informed that the amendment of the Companies Act is a necessary addition in order to legalize such advertisements. There again, those views of the hon. member will be conveyed to the committee. In a moment I shall come to clause 30 because it was also mentioned by the hon. member for Johannesburg North. He also raised the question of rights of renunciation.

As far as inter-company lending is concerned, on a downward basis, as the hon. member has pointed out, we say that we would like it to be as free as possible. It is so, in fact, but if one takes it on an upward basis from a controlled company to a controlling company, it is still restricted, particularly since it is stated that such a loan cannot be made unless all members agree to such a loan. The hon. member raised the question as to whether all members should have to agree. He asked whether there could not be a resolution by a majority of shareholders. That is something we can look at again. I think it was felt that in this case there ought to be a very effective precaution so that there could not be that kind of lending on an upward basis from a controlled company and that all shareholders should be involved in the decision. Where there is one shareholder, i.e. when it is a 100% subsidiary, it is a point as to whether that is not in fact, automatic. I take that point. We can look at that again. I think the hon. member for Johannesburg North also raised the question of inter-company lending. I also take note of his point.

*I want to thank the hon. member for Sunnyside sincerely for his support. As in the case of the hon. member for Yeoville and the hon. member for Johannesburg North, it is quite clear that he has made a thorough study of this measure. In fact, I know he has done so. I want to thank him too for his contribution.

The hon. member for Yeoville raised the question of the submission of reports and the proposed amendment in clause 23. Exemptions may now be granted by the Registrar in order to prevent duplication in the submission of reports.

†That exemption can be granted by the Registrar, and to prevent that kind of duplication in practice, he will obviously look at the matter.

*I think the hon. member for Sunnyside spoke of the forms required in terms of certain sections. This is of course the case. On the one hand we want effective control and adequate information on the activities of companies. That is quite clear. On the other hand, of course, one does not want to go too far. One should certainly try to simplify all the paper work, and I believe that was the hon. member’s argument. We shall consider the matter very thoroughly. We are constantly trying to simplify such procedures, and we are still working on the matter. I think I may say that the existing advisory committee, which is examining the matter very thoroughly, of course, feels that the information contained in the form which is filed will now be much more significant than before. This will greatly facilitate the investigator’s work. As I have said, I shall go into the matter further.

† I have already discussed the question of annual duty. The hon. member for Johannesburg North referred to the right of renunciation contained in clause 8. The intention is to make the provisions relating to the advertisement as wide as possible. We feel and the committee feels that the words “with right of renunciation” would be unduly restrictive. This matter has been looked at very carefully. Indeed, I may mention that the Chamber of Mines raised this issue with us as well. In other words, the insertion of the words “with the right of renunciation” in clause 8 is not acceptable at this stage since it would restrict the proposed advertisement to a particular type of offered shares, whereas in certain instances shares may be offered without the right of renunciation when particulars of the offer should still be advertised. It is a rather technical matter. In the light of the representations I have had from the Chamber of Mines, I am referring this question to the committee as well. It may well be that the committee feels that the view we are taking and the view the Registrar is taking is itself perhaps unduly restrictive, in which case we can consider taking the matter further.

I want to refer to the matter covered by clause 30 which was raised both by the hon. member for Yeoville and the hon. member for Johannesburg North. Perhaps if I read the notes which I have on this clause, it may clarify the issue. In terms of the existing provisions of the Act no takeover offer, including a cash offer, may be made unless it is made in the same terms to all shareholders of the company which is to be taken over. That, of course, is quite clear. In cases where the shareholders of such a company also include foreign shareholders, it means that an offer of cash for the latter’s shares would have to be made in terms of freely transferable bonds as otherwise the offer to these foreign shareholders would not comply with the provisions of the Act. Our exchange control regulations restrict cash payments to foreign shareholders except with the consent of the Reserve Bank. Such consent may more readily be given in cases where blocked rand instead of freely transferable rand are offered. Blocked rand may, however, be used for limited purposes only. This is one of the problems we have there. In other words, the offer of blocked rand for the shares held by foreign shareholders in a South African company would not be an offer in the same terms as a cash offer to the South African shareholders in the company. I think it should be pointed out that it is in the general interest of investors to be able to take advantage of certain take-over offers, and that the general investment climate should not be hampered by restrictions which are beyond the control of the Companies Act. The proposed amendment to section 314 makes provision for an equivalent form of payment or settlement of the cash consideration in respect of non-resident shareholders. I also want to say that in addition to these difficulties which have been mentioned there are further problems which could arise under the existing provisions of section 314. For instance, a shareholder and the offeree company could apply to a court to restrain the offer from proceeding on the grounds that it was illegal and therefore invalid, or an acceptor of the offer could withdraw his acceptance at any time, or a dissentient shareholder could oppose compulsory acquisition proceedings and by so doing invalidate the take-over which had already been declared unconditional in terms of the Act and had actually been put into effect. The Bill therefore provides for an amendment to section 314(2) of the Act which provides for the Minister in consultation with the Minister of Finance to approve alternative forms of payment or settlement to non-resident shareholders where cash is involved, as opposed to the manner in which payment for the shares is to be made to shareholders resident in the Republic. The hon. member for Johannesburg North says—I take his point—that a great deal depends on the meaning attached to the word “equivalent”. This is quite clear and therefore great care will have to be exercised to ensure that it is indeed an equivalent offer.

I think the hon. member for Yeoville is also concerned about the foreign shareholders or the minority shareholders and about whether their rights are adequately protected in such a case, arising out of an interpretation of what an equivalent offer is. It is a point which, I think, can again be looked at, and we shall do so.

*Mr. Speaker, I may not have replied to every point. I have tried to cover the most important points and I hope that what I have said may give some satisfaction to the members who raised the points. However, I want to make it quite clear that this measure is an interim measure, as the hon. member for Yeoville said, for it is not the final solution to a very great problem. However, we want to do everything in our power to draw up an effective Companies Act. I should like to avail myself of this opportunity to express my sincere thanks to the Registrar of Companies and his office and to the Department of Commerce as well for the good and hard work they have done in this regard, for this is really a complex matter. I think we took the right step by appointing an advisory committee of experts which is doing very thorough work for us, and I want to express my appreciation to the committee under the chairmanship of Mr. Justice Margo.

† I should like to add that, of course, the great problem one has with companies and company law in trying to ensure that one is giving adequate protection to the investor while at the same time giving adequate discretion to the managers and the directors of companies, is that a joint stock company introduced the notion of absentee ownership. It is quite a fascinating subject. On the one hand one has the shareholders and investors who are the owners while on the other hand there are, because these companies have become so large, so many owners in the form of shareholders, that quite early it became necessary to have specialized management, a board of directors and, of course, the executive and other levels of management. The whole problem here and, indeed, the art of trying to resolve this issue, is in fact how to give the shareholder and the investor sufficient protection as an investor while at the same time not hamstringing the manager and the director who have to take the day-to-day decisions.

And the creditor.

Undoubtedly the creditor as well. I think what we can say is that we undoubtedly see the problem very clearly, more and more clearly as we go along. We are doing our best to arrive at that happy day when we can say we feel that the stage has been reached in our company law where these matters have, indeed, a practical meaning and are effectively done. I do not think it will happen overnight for we still have a long way to go. However, I believe this measure will take us a long way. I should like to thank hon. members on both sides of the House for their very constructive attitude and I am sure we are on the right path in the way we are proceeding.

Motion agreed to.

Bill read a Second Time.

Committee Stage

Clause 7:

Mr. Chairman, the one point the hon. the Minister did not deal with concerns the proposed new paragraph (b)(i) of section 135(1) of the Act. The relevant paragraph says—

Would the hon. the Minister be prepared to give an assurance that he will simply look into this to establish the rationale as to why it can only be prepared by a stockbroker, since in the past banks and certain other institutions did this? Secondly, because I am somewhat suspicious of the stockbroking industry, would the hon. the Minister ascertain that no additional charge is going to be levied?

Mr. Chairman, I will certainly see to it that all points raised here are given the earliest possible consideration. I do not know whether the hon. member has my full Second Reading speech.

Yes. I have it.

If he has it, I need not refer to it but I can give him the assurance that we will take this matter further.

Clause agreed to.

House Resumed:

Bill reported without amendment.

Third Reading

Mr. Speaker, I move subject to Standing Order No. 49—

Mr. Speaker, I want to deal with just one very simple point. We have dealt with the provisions of the Bill and we have analysed some of the shortcomings which there are in the proposals presently before us. We have also indicated that at this stage we do not want to suggest any amendments because they should go to the advisory committee first. However, there is one matter which I think does require attention. I think it is necessary for this House to exercise the major function in the end of deciding what the legislation should be. It is a matter of public policy that the final say should be with this House and not with an advisory committee. For that reason I want to appeal to the hon. the Minister that, when he introduces company legislation in the future, he should consider introducing it at the beginning of the session and that we should appoint a Select Committee to deal with it so that the members of this House may contribute their talents such as they are to producing the best form of legislation. I do not say this in any carping spirit or to be unpleasant but because we suggested to the hon. the Minister this morning that the House should not be burdened with unnecessary amendments. I think it would be a desirable practice if we adopted that in the future because this is not a political matter or a matter which normally causes contentious disputes but a matter in respect of which all we seek to do is to produce the best possible legislation to serve our people. I would ask the hon. the Minister to give that his consideration when the next piece of legislation comes up as it surely will.

Mr. Speaker, I would like to say that I entirely agree that, of course, the final arbiter in this matter is Parliament. There can be no question about that There can be no question that, however valuable the work of the standing advisory committee or anybody else may be this is a matter for Parliament to decide on. There is no other way in which we can or would wish to deal with it. Whether we should necessarily submit amendments which come forth from whatever source to a Select Committee, is a matter for debate. What I certainly want to say to the hon. member is that, because of the absolute importance of Parliament in this matter, if important amendments do come forward, we will decide upon them as far as possible in discussion with the Opposition. This is not a political issue. We are trying to bring about a really effective measure because it affects our whole business life. We would certainly like to discuss these issues, and if there is a good case for submitting any specific amendment to a Select Committee, we could do so. I have certainly no feelings against that idea, but I think that there may well be cases where we could come forward with amendments which by their very nature, would not need to go to a Select Committee, in which case I think we would probably agree that it would not be necessary. I think we could leave the matter on that footing. We could have consultation on these matters. Let us reach the best possible approach in order to do the best we can in such an important matter. I hope that will satisfy the hon. member.

Motion agreed to.

Bill read a Third Time.

Before I call upon the next speaker, I must point out that the principle contained in this clause has already been discussed fully, and was accepted at the Second Reading. I allowed a certain amount of discussion of the principle during the Committee Stage, but I shall still allow one member from each Opposition party and one Government member to discuss the principle and, of course, allow the Minister to reply. After that the discussion shall be limited to the details of the clause only, i.e. in accordance with Standing Order No. 57.

Mr. Chairman, the hon. member for Rondebosch is proposing that clause 1, which embodies the proposed section 4A(1) and (2), should be amended by an insertion, so that section 4A(1)(a) shall read as follows—

What we should bear in mind here is that the proposed section 4A(l)(b) is also being affected by this insertion, in other words that it is now being sanctioned by law to indicate in advertisements that those who still have to undergo national service are not welcome to apply for employment. It is in fact being provided that there should be good reasons, but this is precisely what we do not want to have inserted in the Bill. This is the one thing we should not like to have, i.e. that employers will now be able to indicate in advertisements, circulars or application forms that persons who still have to undergo national service are not welcome to apply for employment.

Furthermore, the hon. member wants to omit the proposed section 4A(2), i.e. that it shall be presumed that the accused refused the application on the ground of such person’s liability to serve in the Defence Force. Now, I should like to point out that the proposed section 4A was drawn up by legal experts and not by politicians. The entire Bill was subsequently referred to a Select Committee, on which all three parties in this House were represented. After the representations and the submissions to the Select Committee had been taken into consideration, the proposed section 4A(l)(c) was omitted and one amendment was effected to the presumption clause, i.e. the insertion of the word “solely”. Now, one should perhaps glance briefly at what the objections to the proposed section 4A were. The main objections were actually directed at the proposed section 4A(l)(c), which was consequently omitted. In the presumption clause the lightest possible onus is now being placed on the employer. What the employer now has to do is to prove that he has not refused employment to an applicant who is liable for national service solely on the ground that the applicant is still so liable. Of course, there could also be other reasons for the application for employment having been turned down, and those reasons then have to be advanced by the employers. The employer does not have to prove that the fact that the applicant is still liable for national service played no part whatsoever in his decision. This being the position, it surprises one that the Progressive Party has proposed an amendment of this nature.

But they agreed to it in the Select Committee; the minutes of the Select Committee prove this.

In col. 1469, Hansard, 26 August 1974, the hon. member for Pinelands said the following—

We find that there are three parties that have representation in this House, and that, in consequence of the representations and submissions which were made to the Select Committee, the two major parties agree on clause 1. The question which then arises is who is really out of step now, who is devoted to party affiliations. One then asks oneself why this is the case. There is one thing we should not forget—in the case of the Progressive Party it is not a matter of politics as we understand it traditionally; in the case of the Progressive Party it actually means that party politics is synonymous with big money politics. We are now getting an example of this again in miniature. The emeritus clergyman piously says that we should rise above party politics, but what does the emeritus professor do to him? He shoots him down. He says that he does not pay much attention to such stories; he is not obedient to party politics in the way in which the hon. member for Pinelands made an appeal, for he has another brand of politics. He says he must look after the business concerns. We find even in the speech made by the leader of the Progressive Party that it does not deal with the interests of the people whom the hon. the Minister wants to protect.

The Progressive Party likes asking Ministers whether they have conducted a dialogue with the Black leaders in respect of legislation which they introduce. However, I am asking whether the Progressive Party conducted a dialogue with the young people of South Africa, whether they consulted any university or school and whether that which stemmed from such consultation was submitted to the Select Committee for consideration. [Interjections.] The Progressive Party is not interested in that, but when it comes to fine slogans and fine words, it is quick to say that the Progressive Party is the only home for the youth of South Africa. However, when this clashes with big money interests, they suddenly hide behind the small businessman, and we are able to see what is of primary and what is of secondary importance to them. Then the home of the young man is no longer with the Progressive Party. I challenge the Progressive Party to tell the young people of South Africa that the Minister of Defence would like to protect their interests by means of legislation, but the Progressive Party does not regard the interests of the youth as being so important that they have to be protected by means of legislation.

You are now talking nonsense.

I want to conclude by saying that the Progressive Party does not mind young people having to go from one house to another and from one address to another where they are unable to find employment because they are not protected under the Act, for in view of the fact that they are liable for national service people can refuse to employ them.

That is not true.

They do not mind if the young people are unemployed, but if these were to be Blacks, we would hear them screaming and howling for miles. With all due respect, Sir, this side of the House cannot support the proposed amendments, since we think that, under the circumstances, they are quite absurd.

Mr. Chairman, I listened to the debate for a long time last night and at this stage I want to ask whether I may not be permitted to participate in the discussions as well. [Interjections.] I had begun to get the impression that it was not my Bill. First of all, I want to say that I did not approach the Bill in any spirit of party political action. From the very first day I had only one object, i.e. to serve the interests of the South African Defence Force, and for that reason I said during my Second Reading speech that the Bill would be referred to a Select Committee as is customary with defence Bills. But even before that—and what I am saying is intended for the hon. member for Sea Point who asked questions here in this regard last night—I drew the attention of employers on numerous occasions in speeches in this House and in statements outside the House to the fact that Parliament did not introduce national service on the recommendation of this Government; national service was made compulsory as a result of the investigation of an impartial commission, and on the grounds of the report of that impartial commission this Parliament made national service compulsory. Sir, from this it surely follows that if one imposes a duty on one’s young people by way of a unanimous decision of this Parliament, those young people are entitled to protection. Last year, after certain things had come to my attention and I had made repeated appeals to the effect that we should accept the spirit of national service not only in respect of the obligations which rest with young people but also in respect of the obligations which employers have towards those young people, and after it had appeared that the reaction to the repeated appeals we had made in debates in this House, and also to those we had occasionally made outside, had not been altogether satisfactory, I sent a circular to all employers’ organizations in the country on 27 February 1973, in which I appealed to them to see to these matters. I just want to quote one or two of those paragraphs—

Sir, it is a very long letter and I cannot quote the entire letter here today, but in this letter I took up the entire question of national service with employers’ organizations. Sir, let me say at once that the reaction I received from all employers’ organizations was excellent. They reacted in a friendly and fine manner, and, our quarrel this morning is not with the Federated Chamber of Industries or the Chamber of Commerce or the Afrikaanse Sakekamer or with other large employers’ organizations. Our quarrel this morning is with individuals who do not want to abide by the rules; who do not want to abide by the rules to which their employers’ organizations subscribe. This is the first point I want to make very emphatically, that this legislation is being introduced to deal with those individuals who do not want to follow the golden rule which this Parliament has laid down and which employers’ organizations throughout the country have accepted. But the charge cannot be levelled at me that I did not contact the employers’ organizations. What is more, there are numerous employers’ organizations which not only reacted positively in their letters, but which also reacted positively in another way—for example, they voluntarily paid the full salaries of their employees while they had to do their national service. I have a long list in this regard and I have already published it. I have already expressed my personal appreciation in personal letters to those large companies. So I do not have any quarrel here with employers as such. My quarrel is with individuals who exploit the golden rule for their own benefit.

Oppenheimer.

No, let us not mention names here now, for there were fine gestures from all quarters. I went further and said—

In other words, I said that I was acting in the interests of the Defence Force. Is it not my duty to do so? Hon. members are now making a big fuss as though I were committing a crime by stepping into the breach for the Defence Force, but surely this is my task, and the day that I am no longer able to serve the interests of the Defence Force, it would be better for me to leave.

Now I want to go a step further. I then did a second thing: I referred this Bill to a Select Committee, of my own volition. The Government has a majority in this House and we could have forced it through if we had wanted to do so. But this is not the spirit in which we want to deal with defence legislation, for there are also sons of hon. members on the Opposition side who serve in the Defence Force, and family members.

Even perhaps a Progressive or two.

It is in that spirit that we want to build the Defence Force, rising above the differences which normally prevail here in the party-political sphere. Now the Select Committee, let me say so at once, has watered down this legislation. I am not saying this in a spirit of accusation. Clause I was in fact watered down by the Select Committee, in the first place by the omission of paragraph (c) with which they to a large extent satisfied the Chamber of Industries, for the Chamber of Industries informed us that that was in fact their basic objection. The Select Committee therefore yielded. But the legislation was also watered down in respect of two other points. In other words, this clause 1 came back from the Select Committee with less strength than it had when it was originally drawn up by the law advisers, the law advisers of the Department of Defence itself, in consultation with the State law advisers. Let me say here at once, Sir, I did not have any part in the drawing up of this clause. I told them to draw up a clause which would cover this problem we encounter, i.e. that young men complain to us, that we refer the matter to the police and that the police, on the basis of existing legislation, do not have enough grounds upon which to act because there are loopholes. But representations were addressed to me by young people who wrote to me and young people who came and consulted us. We saw that advertisements were appearing in newspapers in which misuse was being made of the loopholes which exist. In the third place there was the hon. member for Durban Point who has always adopted a proper standpoint on defence matters in this House. He made very strong representations that we should investigate this matter, and I assumed he was speaking on behalf of his party, and I still do. Now, what was the object of sending it to the Select Commit tee? It was to arrive at a formulation in a fine spirit at a round-table conference, a formulation which would afford the largest possible measure of satisfaction. I want to put a question to hon. members, but I am not doing so in a sermonizing spirit. Is the kind of display we have had here since last night really the kind of display we should have on matters concerning the South African Defence Force? Is this the motivation which should emanate from this House? Should we tell the young men that we are not prepared to protect them against exploitation? We have assigned a duty to them; we have imposed a burden on them. This House has imposed a burden on them; not the Minister. I did not introduce national service. This Parliament introduced national service. Now this Parliament, by means of this foolish kind of debating, is saying that it is not prepared to afford them the necessary protection when they want to do that which we have compelled them to do.

We did not say that.

No, I am not saying the hon. member said so. I am merely pointing out the implications. I want to put a question to the hon. members of the Progressive Party. The hon. members of the Progressive Party probably know that their political standpoint and my political standpoint are as far apart as the East is from the West. I do not blame them for that. They are entitled to adopt any standpoint as long as it is constitutional. However, my question to them is this: Do they want to approach Defence matters in a non-political spirit, or do they want to discuss Defence on a party-political basis? It is very important for us to get this reply at a very early stage. I want to tell hon. members why I am putting this question. I am not satisfied with this section either. The Select Committee has weakened it. There are, in addition, very serious misgivings in the ranks of the Defence Force, in connection with this section as it has now been formulated.

Furthermore, let me tell hon. members that if they want to approach this matter in a party-political spirit, I shall withdraw this section during the present debate. I shall then draft one which protects and satisfies the Defence Force. I am not threatening them now, but if those hon. members do, however, want to deal with the defence matters on a non-party-political basis, as the official Opposition has been doing up to the present, I am prepared to co-operate further. However, I cannot allow a mockery to be made of the Statute Book through this section by accepting the two proposals made by the hon. member for Rondebosch. To begin with, his first proposal is totally superfluous, and the second one renders the onus totally impossible. For that reason I do not intend accepting them.

What I am prepared to do is to withdraw this section and to get the employers together and draw up a section which I shall discuss with them. I shall point out to them this absolutely intolerable position which exists in the country due to the fact that there are certain unscrupulous persons who want to hide behind the Defence Force in order to safeguard their own financial interests, but who do not want to co-operate to enable the members of that Defence Force to perform their duties. That is why I am leaving it to those members to decide for themselves whether they want to co-operate on a non-party-political basis and on merit in future, or whether they also want to drag in Defence Force matters here on a party-political basis now. I could easily have gone further. There are also misgivings as to whether the words “solely”, which has been inserted by the hon. member for Durban Point, is not also weakening the section. I am prepared to accept the section in this form, although I am not altogether satisfied. In any event, I am going to consult the employers in future; I am going to get them together because we cannot tolerate an untenable position here. After I have spoken to them, we shall have another look at the section. However, I am making a serious appeal to hon. members this morning. On political grounds they can fight me as they wish. They can also fight me if they do not like me. However, they must not surrender the Defence Force to unscrupulous people in South Africa. The hon. members owe this to those young men who are compelled, in terms of an Act of this Parliament, to perform their task.

Mr. Chairman, I have listened to the hon. the Minister and I have also listened to the hon. member for Pretoria East. When the hon. member for Pretoria East began speaking, I really began to take courage, because it was the first time since we began discussing this specific amendment that anyone paid any specific attention to the motion we have moved. All the arguments—I have to say this to the hon. the Minister—are concerned with the principle and they seek to imply that we as a party, in our amendments, are opposed to the principle that national servicemen should be protected. That is not in my amendments at all. In fact, I said only last night that we accept this principle.

I just want to ask who is turning this into a party-political issue now. My amendments are stated here, but not one hon. member has yet given me a practical reason as to why they should be rejected. The hon. the Minister has just said that he rejected them, but he did not give any reason either. He fell back on the principle again, implying that we do not endorse the principle. Not once did we say that national servicemen should not be protected. The point we raised was that in terms of the legislation as it now reads, the practical possibility exists that we are going to come across absurdities. I want to mention a few test cases. These are practical questions and it is concerned precisely with the employers the hon. the Minister wants to call together and with whom he wants to have discussions. It is a matter of the practical daily functioning of a business or an organization that has to employ new people. It is not a matter of defence and the protection of national servicemen. Why do we now have to think back to it on this emotional level.

The hon. members who served with me in the Select Committee, to which the hon. the Minister referred, will bear me out, even though they are not members of my party, that I raised exactly the same objections on the Committee and that I did not receive satisfactory replies. On the Committee I did not for one moment say that this should not be done. I now want to mention the test cases to hon. members. Suppose a person has a specific business in which a vacancy exists. The vacancy is advertised. Two persons apply for the job. In all respects they have the same qualifications, the same experience and they are both suited to the specific vacancy. It is the case that the specific business has to appoint someone. The one difference between the two candidates is that one of them has to do military service in two weeks’ time and the other not. It is only reasonable that the businessman will prefer, under such circumstances, to appoint the other candidate. If he does this, he is guilty of an offence in terms of the legislation. Is this good legislation?

That is not true.

Of course it is true, because the person then tells him that he has to do military service. On this ground the person has to decide that he cannot, in the interests of his business, appoint the person. He has no intention of undermining the Defence Force and he has no intention of failing to protect national servicemen. I can mention another practical example. I spoke to people in the Public Service who have to employ young people in the service and asked whether they did not have practical problems. Their reply was that they did have problems. One person told me what they do. If a person applies for post A, in which he is really interested, he is appointed to post C because he has to do military service soon and post A is of such a nature that it cannot tolerate interrupted service for that period. This man is, therefore, being discriminated against because he has to do military service, but because special arrangements are made for him, once again it cannot be said that he is being discriminated against. The hon. member for Pretoria East said that if my amendment were to be accepted, paragraph (b) of subsection (1) would become nonsensical, because it would mean that a man could state this in an advertisement. I may just mention that the SABC placed exactly such an advertisement. Does that mean to say, however, that the SABC is unpatriotic?

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

Afternoon Sitting

Mr. Chairman, before the House adjourned for lunch, I was illustrating that my amendments are not concerned with the principle of this specific clause, but are concerned with many practical problems which arise from the implications of this clause. You have given a ruling according to which we cannot discuss the principle, but I can give the assurance that I did not for one moment discuss the principle and that I said from the beginning that we accept the principle. Hon. members on the opposite side of the House as well as hon. members of the United Party are constantly steering the discussion back to the principle.

However, it is not a matter of the principle, but one of the practical implications and problems. I have already outlined a few examples and I could perhaps put a final case to the Committee which we could bear in mind. I have referred to the problems in the Public Service and the SABC, and also to the problems of a person who advertises a certain post. In the latter case problems occur quite generally. An employer, for example, has someone in his service who has to undergo six months military training. He then has to appoint someone in that person’s place. He receives quite a number of applications for work and in the end he has to turn a few of these people away precisely because they still have to undergo their military training. Under these circumstances, he could not possibly appoint those people to a post which has become vacant precisely as a result of national service. These are practical problems.

It is not, as the hon. the Minister implies, that we want to play party-politics with this. In fact, if one considers the entire history of this clause, accusations of party-politics, to which the hon. the Minister referred, are not to be laid at the door of the Progressive Party, but at the door of the United Party in fact. Through the hon. member for Durban Point they went to the Minister and broached the subject with him. Because it was agreed to beforehand, between the ruling party and the official Opposition, we now have to keep quiet.

The hon. the Minister put a question to me, i.e. whether we are prepared to keep defence matters outside a party-political context. I think this is a reasonable question and I am quite prepared to answer “yes” to it. We are prepared to keep it out of the petty party-political context. However, then I in turn wish to put a question to the hon. the Minister. Surely it is not meant that when defence matters are raised in this House, that there is an undeclared acceptance and, that no one is allowed to open his mouth to ask a question about it. After all, these are reasonable amendments we are moving here. These amendments are trying to prevent the Defence Force from falling into discredit with employers.

Hon. members could now ask how this could happen. It could happen very easily. There are cases where young people could deliberately exploit this type of legislation and where employers would then have to appear in court although they took quite reasonable decisions. The onus probandi rests with them. What are they going to think of legislation of this kind and what attitude are they going to have in respect of defence matters? The point I want to make is that we have quite a few practical problems with this clause. There are other clauses in this Bill which could perhaps arouse feelings to a greater extent when we discuss them later on. However, we really cannot say that in respect of clause 1. I think I can say without contradiction that the reason for feelings running a little high during the discussion of this clause, is the fact that the hon. member for Durban Point has a vested interest in this. He broached this matter. When I was discussing the onus probandi, the hon. member for Pretoria East asked me: What about clause 4(2)?

The hon. member for Potchefstroom said that I have agreed with the amendment to this clause on the Select Committee. Surely, it is logical that if I move my first amendment, I cannot let the second stand. Judicially speaking it is nonsense to do that. It is also judicial nonsense that, if a person were not to employ another person for good reason, there could not be yet another provision stating that had he done so, he would be regarded as guilty when he appears in court. I only want to iron out this problem logically. When I referred to the hon. member for Pietermaritzburg South last night, I only did so to point out why I thought it was not such a contentious amendment. The hon. member for Pietermaritzburg South in an earlier speech of his, felt very strongly about this, but if he does not feel so strongly about it any more, I suppose he has every right not to.

†It seems to me like a case of “I have principles, but if the caucus does not like them, I have others”.

To sum up in reply to the hon. the Minister of Defence, I want to make the point quite clear that in the amendments we have moved here we have attempted, firstly, to make the principle applied in law more practical. This was the one major consideration. We wanted this kind of legislation to work smoothly. Secondly, our amendments are intended to prevent the case where the Defence Force could be discredited by employers. I am willing to listen to good arguments to the contrary, but they just have not been forthcoming up to now. [Time expired.]

Mr. Chairman, I do not want us to debate this matter back and forth for any length of time. I believe the Select Committee devoted attention to this for long enough. It seems to me we are now having a repetition of this. Must we appoint a Select Committee and then have a repetition of its deliberations in this House? In the first place, the Chamber of Industries is satisfied with the clause as it has now been formulated, and they are the largest employers. They are satisfied and it is recorded in writing that they are satisfied. They opposed paragraph (c) but now that paragraph (c) has been deleted by the Select Committee they are satisfied. The Select Committee went further and, on the motion of the hon. member for Durban Point, introduced the word “solely” which narrowed the clause even further. Now the hon. member suddenly wants to advocate that the Defence Force should not be brought into discredit. How can the Defence Force be brought into discredit if its people do their duty according to the decision of this Parliament? Is it only the national servicemen who are bound by this Parliament or is it the employers as well? Now the hon. member wants to exclude the employers from obligations which have been imposed on them by a decision of Parliament. What is more, the hon. member tried to hide behind a decision or advertisement of the SABC. It is precisely as a result of the SABC’s advertisement, inter alia, that it has been decided to proceed to these steps. The SABC is not being exempted as far as this matter is concerned. Nor is any Government department being exempted. If it has employed a national serviceman or a potential national serviceman and it really cannot manage without that employee at that stage, there is, in the final analysis, an exemption board to which it can apply for an extension of time. The exemption board is very reasonable in its decisions. A change could therefore be made. So, the machinery is there for accommodating employers if they are able to furnish real proof that they are being prejudiced. So the hon. member should not come along here with a lot of fallacious arguments. Surely there are other people who also know how all of this works. That is why I am telling the hon. member again that, if he wants to air his grievances against the United Party, this is not the place to do so. He can do so elsewhere. For that reason I regret that I cannot accept his amendment.

Mr. Chairman, I did not intend to speak on this clause but, having been present in this House yesterday evening and having listened further this afternoon, I request the privilege of addressing a few words to you. It seems to me that the hon. member for Rondebosch is attempting to backpedal from the attitude that was adopted by his leader, the hon. member for Sea Point, last night. I want to make it quite clear that that section of Sea Point which I represent and which forms part of the Green Point constituency, does not adopt the attitude expressed by the hon. member for Sea Point. The approach of the amendments that have been moved is quite simple and straightforward despite the fact that the hon. member for Rondebosch has tried to get away from the implications of his amendments, namely that the employers could be prejudiced or inconvenienced if they could not refuse employment to national servicemen. That is the simple issue of the amendments. There was not a word from either the hon. member for Sea Point or the hon. member for Rondebosch as regards the interests of the national servicemen when they spoke in this House. This clause, as amended by the Select Committee, ensures that a national serviceman may not be refused employment solely because of his commitment to national service. The examples which the hon. member for Rondebosch offered to us this afternoon are not examples of situations that cannot be dealt with under this clause as it is before us, amended by the Select Committee. In any event, as the hon. the Minister has pointed out, it was in fact the hon. member for Durban Point who during the last session raised the question of this advertisement which appeared on behalf of the SABC in regard to their employees. Now we have an amendment to the effect that employment of a national serviceman can be refused on “good and sufficient” grounds. I want to say that, as far as I and this side of the House are concerned, there can never be a good and sufficient reason why a national serviceman should be discriminated against in regard to his employment. I believe that to prefer the convenience of the employer to the interests of the national serviceman—this is a matter which already has been made clear in this debate—is not the intention of responsible employers, nor is it the intention of this side of the House to support any such attitude.

This amendment comes from a party which claims to have the support of youth. However, when it comes to the grind, when it comes to the test, there is not one word about the interests of the national serviceman. They do not care a damn about his interests. But they show great concern because some professional person or some businessman might be inconvenienced by the provisions of this clause. I am sure this is an attitude which will be noted in the country. It will be noted by those young men who have been discarded now that they voted for these members in April of this year. This evening the hon. member for Pinelands will be speaking in my constituency, at which occasion there will be a number of young people present. I hope possibly to be there to listen to him. I look forward to him saying tonight that national servicemen need not be employed if there is a good and sufficient reason why their applications should be refused by employers. A “good and sufficient” reason is that it will inconvenience the employer to have to have them on the staff when they are not available to him. I hope he will say it tonight …

However, I want to go a little bit further …

We never mentioned inconvenience.

… if the hon. member for Houghton will stop cackling here next to me. I believe that, as the Minister has said, he has dealt with employer organizations. I am hoping that in the interests of our Defence Force, in the circumstances which exist in our country, there will be certain further negotiations with employer organizations in order to provide for those dedicated men who volunteer for extended service in the Defence Force of our country. Attention should be given to their difficulties as regards leave. Many employers give them unpaid leave to attend to their national service in this way, and they do not have to forfeit their normal leave. Those are matters which I hope the hon. the Minister is taking into consideration when it comes to the attitude to be adopted towards national servicemen, so that job opportunities and, progress are not denied to those people who volunteer. If the members of the Progressive Party are not aware of the necessity for this, I would suggest that they should perhaps have a discussion with Major-General Webster, who can enlighten them on the problems which are being faced in this regard. I am sure Major-General Webster would be only too happy to meet them at some time to put the position clearly to them. However, I want to say that the opposition of the Progressive Party to this clause, and their two amendments, expose blatantly for all to see where the interest of the Progressive Party lies. I would like to say in conclusion that the Progressive Party reminds me of those people that crowd on to a station when a troop train is leaving; and when they wave goodbye to those who are going off to do a job of work, they say “Give them one for me”, and return to their businesses. This is the attitude of the Progressive Party.

Mr. Chairman, I think it is necessary, after that fighting speech from the hon. member for Green Point, to set the record straight. It is claimed that we have not said one single word for our young people, these people who have to go and do their national service. This is not so and I think it should be stressed that our attitude right from the start has been that we believe it to be wrong for national servicemen or prospective national servicemen to be discriminated against.

Except in a good cause.

We do not agree that they should be discriminated against. On this question of inconvenience, I should like to say that we do not regard inconvenience as a good and sufficient reason. Perhaps I can give this hon. member and other hon. members what I would consider to be a good reason why our amendment should be accepted. I have spent most of my life working in the building industry. In the building industry contractors employ people as and when they have work to do, i.e. when they obtain a contract. The traditional labour set-up in the building industry is such that a tradesman is signed on by a particular company when the company has work to do. A small contractor, for example, gets a house to build. He has to build the house in three months. He consequently advertises and signs on tradesmen to build that particular house. He signs on a bricklayer; he then finds, however, that the bricklayer is not going to be there because he has to do his military service. He therefore does not have a bricklayer to do that particular job which is probably only going to last for three or six months. This applies throughout the building industry. It also applies in many other walks of life. I would suggest that this is good and sufficient reason. This is a good, practical point that I would like the hon. the Minister to give his attention to. For example, would the board which grants exemptions in these cases, give a blanket exemption to industries such as the building industry which rely on labour for limited periods to do specific work? If a blanket exemption could be granted, the position would not be impossible. However, as the technicalities of the clause are interpreted at the moment, life would be virtually impossible for an employer in this field of operation, because he would not be able to get anything done. I would therefore urge the Minister, in the spirit in which we are advancing this criticism and requesting this amendment, to look at the practical difficulties which are such that we feel we cannot give our support to this. I say again to the hon. member for Green Point that party political speeches of the kind he has just produced … [Interjections.] … bear no relation at all to the factual situation of our approach. The statement that we have, at no time, said anything in support of the national servicemen, is erroneous to say the least. It is highly misleading and entirely incorrect. The attitude of my party is that there should be no discrimination against people who have to do their national service.

Mr. Chairman, when the hon. member for Orange Grove stood up he referred to a fighting speech by my hon. colleague, the member for Green Point. I want to say that at last we have had a little bit of fight from the Progressives in the person of the hon. member for Orange Grove. I must say that I welcome this sign of life from what I consider a moribund party. What have they achieved during this session? I know I am not allowed to pursue this matter any further, so I shall leave that question with my colleagues in this House. They know what has been achieved by this bunch of people here.

Their stars are fading.

I must now come to the hon. member for Rondebosch. He also made an attack a little earlier. [Interjections.] In a short while I shall come to what he said yesterday. However, I want to deal now with what he said a little earlier. He said that I had principles but that if the caucus did not like them, I had others. I want to say that I regard that as a personal attack and as a personal reflection on my own integrity. I did not take a point of order, because it is the kind of thing we have grown to expect from the members of that party and from that member in particular. Ever since they started, they have never played the ball. Their slogan has been: Play the man, not the ball. That is exactly what they are doing right now.

They do not sign the squash book! [Interjections.]

Sir, have they in any way discussed what is contained in this clause? I believe that the answer is no. All they have done has been to proceed with this sort of thing. They have shown that they are completely lacking in any principles at all because they have failed to apply any principles to the application of this section. Sir, let us deal now with what the hon. member for Rondebosch said last night. He quoted at length from a speech which I made a few weeks ago in this House, and I must say that I am flattered to feel that what I said then was so important that it warranted the attention of this hon. member. But I want to say that he has completely missed the point. As usual, he has only read a little bit without going into the whole matter. In exactly the same way as in the case of this particular clause and the amendment to this particular Act, the whole attitude of those hon. members has been coloured by what is written in this Bill; but they have not taken the trouble to do their homework and to go into the background and into the Act itself to find out what is contained in the Act and what exactly we are amending. They do not know Sir, because they have not taken the trouble to find out. They are too busy playing squash without putting their names into the book. Sir, what exactly did I say on 14 October? The hon. member quoted me quite correctly as having said—

Sir, what presumptions? What was the matter that I was dealing with? Did the hon. member take the trouble to go and have a look at the proclamation to which I referred and see to what exactly I was objecting? In this case we had a situation where an onus was placed on an accused person to prove that certain land was not land that belongs to the South African Bantu Trust. Sir, land which is handed over to the Trust is handed over in various ways and proclamation is eventually made.

Order! I think the hon. member is going too far now. He must come back to the details of this clause.

With respect, Mr. Chairman, I am dealing with the presumption raised in the new subsection (2) of section 4A, and I am comparing this presumption with another presumption to which I referred on 14 October. I request your indulgence to go ahead with this comparison because I was attacked on this particular issue.

The hon. member may proceed.

Sir, what is the position? In a court of law certain facts are adduced and from those facts a presumption is drawn which can be rebutted. But in the case which I mentioned on 14 October, how does an accused person prove that a piece of land does not in fact belong to the Trust? I submit, as I did on that occasion, that it is a simple matter for the State to produce a proclamation in terms of which the piece of land is handed over to the Trust, but it is not such a simple matter for the accused person to produce a similar proclamation saying that it does not belong to the Trust. Sir, let us compare that presumption with the presumption which is raised in this instance. In this instance certain facts are adduced in court, showing that a person who was liable for national service applied for a job, for which he was qualified—I presume that this is one of the facts which would have to be proved—and that for no other reason, as far as can be ascertained from the facts, other than the fact that he was liable to national service, the accused person refused to employ that person. Sir, I submit that in this case such a presumption is fair because the only person who has any knowledge whatsoever of the true reason as to why the application of that person was in fact rejected is the accused person himself, so you cannot compare the two cases. There is absolutely no comparison whatsoever between the two cases which I have mentioned. In the one case the accused person can have no way of rebutting the presumption which is raised against him, and in the other case the accused person is in fact the only person who has the special knowledge to be able to rebut the presumption. I believe that this presumption is quite fair; I believe that the provisions of this clause are quite fair. I believe that our young people must be protected from employers and I am one of those employers. I believe that they must be protected from unscrupulous employers who refuse to use their services. I will therefore support this Bill.

First amendment put and the Committee divided:

As fewer than fifteen members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F. van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Amendment declared negatived.

On the second amendment,

Question put: That the subsection stand part of the Clause,

Upon which the Committee divided:

As fewer than fifteen members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F. van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Question declared affirmed and amendment dropped.

Clause agreed to (Progressive Party dissenting).

Clause 3:

Mr. Chairman, I should like to move the amendment standing in my name, as follows—

What does the principal Act say in this regard? Over and above ordinary military service, this particular section of the Act enabled the Minister to call up people in the Citizen Force for special military service for a period not exceeding four months in the aggregate. As this particular clause stands now, the Minister may call up people for this kind of service, a special kind of service, for six months at a time over a period of 10 years. Theoretically, in terms of this clause, the Minister can in fact call a person up 19 times for six months at a time over a period of 10 years. The object of my amendment is to enable the Minister to call up people for such special service for a period not exceeding 12 months in the aggregate. In moving this amendment, I again want to make it quite clear that we support the principle embodied in this clause, i.e. that one can find special circumstances where the hon. the Minister should be able to call up people liable for service in the Citizen Force for extra duty, but that duty should not exceed 12 months in the aggregate. The reason why we say this is that the Minister already has, in the Defence Act in sections 91 and 92, powers of full mobilization. Section 91 applies to a situation of war in which the Minister can mobilize the entire army for special continuous service and section 92 empowers the Minister to bring about such mobilization in circumstances of national emergency or internal disorder, where the Minister is then able to mobilize fully all the available defences of this country. This clause as it stands now will in fact allow almost full mobilization without specifically stating the fact. If it is necessary for such full mobilization to take place, we feel it would obviously be in circumstances that could fall under either section 91 or section 92. So far it is not quite clear to me what these special circumstances would be that would enable the Minister, apart from conditions of war, internal disorder or a national emergency, to mobilize fully. However, we can understand that situations may be found in South Africa, South Africa being part of Africa and its problems, where extra or special service is necessary, and obviously this request does not originally stem from the Minister but also from the Defence Force and they make certain appeals in this regard. We want to concede the principle and move that the Minister be given such powers for a period of 12 months in respect of members of the Citizen Force. What would be the practical considerations? It is my conviction that the two major aspects that will determine the future stability and the potential for peaceful change in South Africa is the strength of the Defence Force and the way in which it will be able to mobilize the support of all the people on the one hand, and, on the other hand the way in which our …

Order! I do not think the hon. member should discuss the clause so widely. The hon. member must come back to the details of the clause.

The second point I wanted to make was that the economy is vitally important as well. Here we have a situation where the economy and the Defence Force have to depend on the same pool of labour. This is the point I want to make. Last year it was estimated that we had a shortage of 22 000 skilled White workers in our economy. When we withdraw people from their normal economic duties for long extended periods, it is vitally important that we do so with extreme care. This clause enables the hon. the Minister to do this over a period of 10 years. I am not talking about that particular Minister, because legislation is not concerned with an individual; it is not concerned with the reasonableness of the individual; it empowers a person, irrespective of who he is, to take certain actions. I am not denying that the hon. the Minister might be quite reasonable and not do this. The point is, however, that the legislation provides that over a period of 10 years he can mobilize people 19 times for six months at a time. This is what we want to warn against. Taken overall, this can have very serious implications for the economy. This then, is the one point that I wish to make. The counter-argument to it has not yet been pointed out to me. On the individual level it affects the ordinary individual’s career and introduces a certain element of uncertainty. He now knows that he can be called up over a period of 10 years for extra service of six months at a time.

You are discussing the principle which was discussed during the Second Reading debate.

No, I am not discussing the principle. I am dealing with the period during which the hon. the Minister wants special powers. This period of time is a detail of the principle. I am not denying the necessity for special powers. All I am asking is under which detailed circumstances these special powers will be applied. I am pointing out what the implications will be if our amendment is not accepted. I am therefore discussing detail and not principle. One of the implications I have tried to point out is that it introduces an element of uncertainty into the career of a person. Even though he has done his military service, he knows that he is still liable for extra service over a period of 10 years. We know exactly what the disruptive effect will be on the life of an ordinary individual if he is called up for such service.

*I can imagine that it will once again be argued that we are trying to subvert a principle and that we refuse to grant these powers to the hon. the Minister. However, I wish to object to that.

Wait until you hear the arguments.

Yes. The point that I wish to make, is that it could happen that the application of this type of clause could have implications for the economy on a general scale and that it could also have implications on an individual level.

You are repeating yourself.

It is very simple to see why I am making these points. This is a problem which arose in Portugal and Rhodesia where the same pool of labour must be used for military as well as economic purposes. It is a fact that while we are defending South Africa, we must create internal circumstances which can change the situation in such a way that we can depend on the loyalty of all these people to an increasing degree. This must be done by skilled people. This cannot be done by people who cannot contribute to the economy to the highest degree. For this reason we want to state that while this clause grants those powers to the hon. the Minister which are considerably more comprehensive than before, we must nevertheless insert the necessary qualification that we cannot get a situation of complete mobilization without calling it by its name.

Mr. Chairman, I do not think I need spend much time on this. If I were living in a dream world of theory, the ifs and buts of what might happen. I would be able to argue on this matter for a long time. But I take a simple point of view. As the clause was originally worded I might have had similar difficulties, but the Select Committee, in its wisdom, has recommended that if this power is exercised at all even over the call-up of one single man or one single unit, that fact will be reported to this Parliament. Unlike the Progressive Party, I believe in the parliamentary system. I believe that this Parliament is a sovereign body which has power over the Government. If this Parliament is kept aware of the use of an emergency power, I believe we are acting democratically. We have confidence that the Supreme Command of the Defence Force of South Africa are not the sort of clots that are going to keep on calling people up for 19½ periods of six months every ten years. It is so ridiculous that I do not think. I need argue the case. We believe that this power is an emergency power and that with the provision that Parliament is the watchdog and with our right as Parliament to supervise its application we believe this is a power which is justified in the circumstances in which South Africa finds itself. We therefore support the clause as it stands.

Mr. Chairman, I indicated during the Second Reading debate already that I was in favour of a provision of the nature of the one which the Select Committee inserted, viz. that a report must be submitted to Parliament. The hon. member for Durban Point said, quite rightly, that this was the guarantee that no irresponsible action would be taken. But, on the other hand, which Defence Force and which Minister who wishes to co-operate with a Defence Force, would be guilty of this sort of extreme action which the hon. member for Rondebosch has in mind and still think that he would retain the co-operation of his Defence Force? Surely this is quite absurd. In theory this House of Assembly has the right to cut the throat of the hon. member for Rondebosch, but we would never do that. What would we do without the hon. member here? We want him here, for he must help us to stay on the right track. But in theory we have the right to cut his throat. In theory one has the right to call up a unit, a part of a unit or a category of men in a particular unit every year, but surely one is not simply going to do this for fun, but because one’s military leaders tell one that this is necessary. In this way one could, for instance, need sappers or paratroopers. But now the hon. member for Rondebosch wants to restrict me. In terms of existing legislation I have the right to call up people for four months over and above their usual period of military service. The hon. member now wants to restrict me to a further four months only.

However, it may be necessary, in particular circumstances, to call the same category of people up three or four times. No Minister would if he could help it in any way, call up units or categories contrary to the advice of his military chiefs, to such an extent that the whole Defence Force turns against him. Only a fool would do that. Surely the Minister first asks the advice of his Defence Force chiefs and they tell him why they need certain people. The Minister does not sit there in his little ivory tower like a member of the Progressive Party and decide suddenly that he wants this, that or the other. His Defence Force leaders advise him. I am sorry, but I cannot accept the amendment moved by the hon. member for Rondebosch, for it would simply make my task impossible and would undermine the very principle which he said he supports, for he says he is also in favour of the principle. Then he argues on the basis of the limited manpower. For the very reason that we have limited manpower, we do not wish to mobilize easily. These are the ways thought of by the Defence Force leaders, and not me, for instance to use groups, categories or units more than once in order to prevent mobilization. This is the reason. I am sorry, but I cannot accept the amendment at all.

Amendment put and the Committee divided:

As fewer than 15 members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F. van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Amendment declared negatived.

Clause agreed to (Progressive Party dissenting).

Clause 5:

Mr. Chairman, I do not wish to repeat my arguments. I listened to the hon. the Minister of Defence, and all I can say is that I can quite understand the reasonableness of the hon. the Minister as a person in this regard, that he will not abuse the provisions. But I want to say once again that this is legislation, and legislation does not make provision for the personal preference of individuals. It may happen that there will be an unreasonable Minister within 20 years. Then this may cause problems. The other point which I wish to make—with that I will have finished—is that defence is a problem in all African countries.

In South Africa it is also a problem, and one which we must discuss. Therefore I shall not allow myself to be intimidated by this side or that side of the House when I wish to speak on defence. Just one last remark: The point made by the official Opposition that we do not care about the young people …

Mr. Chairman, on a point of order, may the hon. member say that this side of the House intimidates him?

Order! The hon. member may proceed.

Thank you, Mr. Chairman, It has been argued that we do not care about the young people. Here we have tried to indicate that we are arguing this very point. We are pleading here for the protection, to a certain degree, of the careers of young people. This is a concern which the hon. the Minister says is totally unnecessary. Nevertheless, we are not completely convinced, and I do not quite understand the arguments of the official Opposition.

Mr. Chairman, we have just had an amendment moved by a party which does not believe …

Order! No amendment has been moved.

With respect, Sir, the hon. member said he moved as an amendment …

No. He said he did not want to repeat his arguments.

Mr. Chairman, allow me now to move as an amendment—

Mr. Chairman, we now have an amendment moved by the clear-thinking representative of the Progressive Party, the party which does not believe in discrimination. What does it do? This House has just discussed and approved a provision which empowers the hon. the Minister of Defence to call up the Citizen Force for a period of six months at a time, when that is necessary in the interests of South Africa. These are the famous regiments of South Africa, the regiments which have gone down in the annals of history, regiments with proud names. These are regiments of the Citizen Force: the Dukes, the Highlanders, the Carbineers, the DLI and all the other famous regiments of South Africa.

What about the Air Force?

And the Air Force. Parliament has said that they shall be subject to this call-up. Now the Progressive Party wants to discriminate against those famous regiments by moving an amendment which places a limitation on the call up of commandos. They are prepared to protect the commandos from being called up, while the regiments of the Citizen Force of South Africa are not protected. This is their sort of non-discrimination, the attitude of the Progressive Party. I hope that the hon. member will have the sense now to stand up and ask permission to withdraw his amendment.

Mr. Chairman, I think the House will agree that that was a frivolous and almost ridiculous point to make.

Why?

Because hon. members must not assume that this Bill has gone through Parliament already. We have not had the Third Reading of this Bill yet. It may well be that Parliament does not approve of this Bill after all. Quite clearly, one continues to oppose and to try to amend clause after clause in the hope that these clauses are going to be improved thereby or to see whether in the end the Bill as a whole ought to be rejected. To suggest that there is a discrimination between the Citizen Force and the Commandos is quite nonsensical, because this Bill has not yet reached its final stage. All the famous ACF regiments which have earned the distinction to which the hon. member refers, have not earned the distinction under the provisions of this clause. They have earned that distinction under the section as it was, under the mobilization provision, in a war-time situation, or in terms of section 5 or section 3 which limited call-up to four months in the aggregate. Let us therefore note that if our Forces have acquired the fame throughout South Africa or the world, as they have, they have not done so as a result of the provision that has just been passed, but under the old dispensation. This would appear to indicate the very reason why we should maintain, if not the status quo, then a smaller amendment to the status quo—one that appears to be reasonable.

May I ask a question?

The hon. member may speak later on. The hon. Minister says that he would like to be able to call up members of the ACF in terms of the other clause, or members of the Commandos, for longer periods than an aggregate of four months at a time. We accept this. There may well be circumstances warranting this. However we believe that in terms of a person’s commitment to national service outside of mobilization, a 12 months’ period is an adequate one. Should the Minister wish to exceed that, should he feel that there is a national emergency or a state of war, there is a provision in the Act to achieve his purpose. One should listen to the Sunday afternoon programme over Radio South Africa. Nearly every message that comes over the air states: “Vasbyt. Min dae.” The young men count the days which are still left over. This is a very important matter. To young men in the service, the question of being able to determine how long they still have to serve is a very important factor. There are people in this House who have not served and they are not aware of this. The fact remains that knowledge of the length of service is an important factor in morale. One should know that one has got a defined period of service. Naturally, if there is a state of emergency or war, this House and the young people of South Africa will respond to the situation. In the ordinary course of events, we believe that the period of 12 months is quite adequate to meet the demands of the Defence Force chiefs and also ensure to that morale and the general equilibrium of society, economic and otherwise, are maintained. This suggestion is not being made to thwart the hon. the Minister. It is being made to see that a balance is, in fact, maintained, and to see that our ACF and Commando units are effective and are available. We believe that the amendment moved by the hon. member for Rondebosch is entirely adequate and appropriate for this purpose.

For commandos only.

Amendment put and the Committee divided:

As fewer than 15 members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F. van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Amendment declared negatived.

Clause agreed to (Progressive Party dissenting).

Clause 10:

Before I allow the hon. member for Durban Point to address the House, I wish to point out that the most important provision of this Bill is contained in this clause, and according to the practice of this House I shall not allow a lull discussion on the principle again, as it has already been accepted by the House at the Second Reading. However, I shall give one member of each party leave to raise his objection to the clause, but after that the debate will be limited to the details of the clause and the amendment.

Mr. Chairman, one would assume from what has appeared in the public Press that this was the only clause in this Bill. Important though this clause is, I wish to take this opportunity merely to emphasize that many of the clauses which we have just passed and which we will be dealing with after clause 10, are clauses which are of importance to those who are affected by them and which will bring benefits to very many people who are serving in the Forces, particularly those clauses which deal with pensions, etc. It is perhaps a pity in a way that this clause should have become an issue in itself which has overshadowed the rest of this measure.

Sir, we are dealing here with a clause which was discussed at length in the Second Reading debate and with which the United Party expressed its agreement in principle. But we expressed doubts as to the form in which it appeared before the House. The matter went to a Select Committee and there is before us now an amended clause 10. The subsection in dispute has been reworded. The effect of that re-wording is to introduce the concept of “intent” in the offence of inciting, advising or recommending a person to fail to perform the service for which he is liable. Now, I do not intend to deal at length with the principle. The views of this side of the House are known. We believe that every young South African, if he is medically fit, should play his part and should serve in the Defence Force of South Africa. Therefore the principle of making it an offence to incite a person, a principle which is accepted by this House, is one with which we in the United Party are in full agreement. The dispute is therefore not over the principle. The House has decided upon it and we accept and support that principle. We believe that it should be an offence and that anyone who commits that offence should be punished, should they incite or otherwise inspire a person to refuse to do the duty laid upon him by the law. The issue which has arisen is whether the clause as it is now before the House goes beyond this intent and affects the right of a minister of religion or a father of a son to discuss matters of conscience, matters of religion affecting peace, the killing of people, the bearing of arms and the participation in war. Our interpretation at Second Reading was that this would not affect that right. I do not intend to argue the case at length because I hope the hon. the Minister will deal with it as he dealt with it at Second Reading, but in more explicit terms. At Second Reading the hon. the Minister stated in response to an interjection that this Bill would not affect the right of a minister of a recognized religion preaching the tenets of peace or of nonviolence. That I accept; it is our interpretation of this measure as it is now worded. The measure refers to inciting to refuse to serve, and as we see it the definition of “service” includes both combatant and non-combatant service. You can serve in a combatant capacity or you can serve in a non-combatant capacity, but the concept of service in defence of South Africa includes both combatant and non-combatant service. Therefore a minister of religion who preaches, in terms of his interpretation of the Bible, that it is wrong to kill and wrong to take up arms would be, in our reading of this, entitled to say to a member of his congregation: You must serve, but when you report for duty, place your deep convictions, your personal religious convictions, before the authorities and ask that you may be allowed to serve in a non-combatant capacity. This is how we interpret the clause as it reads now, and I ask the hon. the Minister for the official version as he and his department see it. I ask him this so that it can be on record and there can be no question in regard to this matter. There are differences of legal interpretation. There are those whose legal interpretation is that it would not be permissible for a father to advise his son, or for a minister to advise a congregant in respect of non-combatant service. We believe that that right is essential, that you cannot interfere with a sincerely held religious belief, and that if this clause in fact did that, then we would be obliged to oppose it. But our interpretation is that it does not in fact prevent such advice being given.

Secondly, I think it is of importance to note that this clause is, in fact, a duplication in specific form of the general provisions of section 18 (2) of the Riotous Assemblies Act, which makes it in any event an offence to incite a person to commit a crime. To refuse to serve is an offence, and therefore to incite a person or to instigate a person not to serve and not to carry out his liability in terms of the Defence Act would be to incite him to commit a crime and would be punishable under section 18 (2) of the Riotous Assemblies Act. This clause now brings it into the ambit of the Defence Act as a specific, clear injunction tied to defence. Thirdly, it is an extension of the existing provision that it is an offence to incite a serving soldier to fail to do his duty, to fail to carry out his orders or to fail to perform whatever task is laid upon him in the Force. This extends the accepted principle of the offence of incitement, to those about to serve or liable to serve as well as those already in the service. Therefore, we accept and we shall support, and do support, the principle that those who seek to incite young South Africans to commit a crime, are themselves committing an offence and should be punished. However, we believe that this does not interfere with the religious rights of ministers of religion or parents advising their sons. I must admit that even in the Select Committee I was persuaded, that there was sufficient legal doubt about this matter to move an amendment in Select Committee. I had some doubts, but after further advice and further investigation by legal men more qualified than I, I am satisfied that this is the position. I shall say no more until we have heard the Minister in regard to that aspect.

Mr. Chairman, I move the following amendment:

My amendment seeks to make the punishment for the three kinds of offence which are created the same. At present the punishment for inciting a serving soldier to commit an offence, to refuse to carry out his duty, is a fine of R1 000 or imprisonment for a period of five years. I believe that money and time have changed in value since 1957 in any case. The purpose of my amendment is to make the punishment for all three offences in terms of this section the same, i.e. a fine of R5 000 or imprisonment for a period of six years, or both such fine and such imprisonment.

That is the maximum?

Yes, that is the maximum. Of course, this is a punishment which will be imposed by a court and we have always had confidence in the courts of South Africa and believe that the discretion in punishment should be left to them. Therefore, because of our attitude, we accept a maximum fine at the discretion of the courts. However, we believe the punishment should be the same, that the offence of inciting a soldier or a person liable to serve are both serious offences. Therefore, we suggest a serious punishment, a fine not exceeding R5 000 or imprisonment for a period not exceeding six years or both such fine and such imprisonment. We feel that this should be a sufficient deterrent to deter any person from committing this offence. [Time expired.]

Mr. Chairman, this is one of the most controversial clauses in this Bill. This became evident very soon after the Bill was introduced. In fact, I am quite sure that the hon. the Minister himself did not anticipate the public response which this particular clause evoked. More than anything else, this clause, I think, forced the whole problem of conscientious objection and a man’s willingness to defend his country to the forefront of debate in our country. I am sure that, given the very difficult times we live in, we would not have wanted this if we could have avoided it. As this clause now stands, it states that a person who, with intent, uses any language or does any act or thing in order to encourage, aid, incite, instigate, suggest to or otherwise cause another person liable for military service not to do such service, is guilty of an offence.

I think we must view this clause against the background of the existing Defence Act. We have a system of compulsory military service in which the Defence Force has wide-ranging powers to compel any person between the age of 12 and 65 years to do some or other form of military service. It is extremely unlikely that significant numbers of persons who are liable for military service will refuse to do such service. Under section 126A of the Defence Act clear penalties are specified for people who do refuse such service. In reply to a question the hon. the Minister said that for the period 1973 to mid-1974 181 persons out of approximately 20 000 to 25 000 trainees were sentenced in terms of the provisions of section 126A. This is the section which deals with people who refuse to do any form of military service. The vast majority of these individuals were Jehovah’s Witnesses Therefore it is obvious that only people who have deep personal moral convictions will have the courage of their convictions to stand up and say that they will not do military service. For that reason I argue that the Defence Force is under no threat from this area. There are, however, many groups and many individuals who feel that the existing Defence Act does not make adequate provision for different forms of conscientious objection. I am not saying that it is good or bad, but I am merely stating it as a fact. They have thus far without undue publicity discussed these issues without posing any threat to the military system of our society. With this clause they have now been pushed to the forefront. What are the provisions for conscientious objection in the Defence Act? Two provisions, namely sections 67 (3) and 97 (3), applying to times of peace and times of war respectively, specify clearly that any person who is a bona fide member of a recognized religious denomination, the tenents of which are such that he may not participate in war, may apply for exemption and may apply to do service in a non-combatant capacity. This privilege—it is not a right—may be given to such a person. Therefore I cannot quite understand how the hon. member for Durban Point can feel reasonably assured that other ministers of religion are not affected. The provisions for conscientious objection in the Defence Act cater in no way for the major denominations in this country. They do not cater for the Anglicans, for the Presbyterians, for the Dutch Reformed Church or for the Methodist Church …

What about the Doppers?

Not even for the Doppers. It does not apply to them either. In fact, a minister of the Anglican Church cannot counsel one of the members of his congregation to apply for non-combatant service simply because that person does not qualify for exemption in terms of the Defence Act. This was quite obviously stated by the Rev. Burnett at a meeting of the Anglican Church only last week where he made this point quite clear.

May I ask the hon. member a question? Does the hon. member accept that if this is the position, as he puts it, it has been an offence under the Riotous Assemblies Act all along and that it is not a new offence?

The question is whether this constitutes incitement. The question is whether, when a person who has deep religious convictions comes to a minister and asks him a question and the minister gives him advice from the Scriptures, it constitutes incitement. This is the real problem. I think this is what has suddenly come to the fore. Why? For what reason? Because of the introduction of this legislation and that is the point I am trying to make.

It does not change the situation.

The clause, as is evident from the memoranda sent to the Select Committee, will, if it is accepted—and I say it in all seriousness—simply stir up the feelings of such people as I have mentioned, i.e. those who have genuine religious convictions, and I am afraid that it will introduce a new and an unnecessary tension between Church and State. This is one of the problems which we have. I did not introduce this legislation and I desperately hope that this particular piece of legislation will be withdrawn because I am convinced that it is going to increase conflict in our society and that it is not going to decrease conflict. I am convinced that this kind of legislation is going to make the Defence Force a talking point rather than something which should mobilize the support and loyalty of the people of this country. As is quite clear from Hansard of 16 August 1974, this clause was motivated by the Hammanskraal resolution of the S.A. Council of Churches. We stated publicly at the time that we strongly disagreed with that resolution. We believe it would be completely counterproductive, however, to both the position of the Defence Force, harmonious Church-State relations and harmonious race relations in our country to go about it in this way to try to prevent people from discussing military matters. If ever there was a clause calculated to create the very conditions which it wants to prevent, it is this one. Let me give an example of a report which appeared in Rapport of 15 September 1974.

*This was a matter of a statement made by a Bantu clergyman in Windhoek on the question of what one should do if a member of your congregation became a terrorist. This also forms the headline to this report. The Rev. Kameta of the Lutheran Church in Windhoek wrote as follows (translation)—

He then stated that both these groups of people were entitled to his pastoral care. The point that I wish to make is that this type of statement also, strangely enough, falls within the ambit of this clause because this creates the debate on defence among people. For them this appends a question mark to the whole question of violence.

†We believe that we have to defend South Africa and that we must bring about peaceful changes. But we also believe that you cannot legislate a man into loyalty. Loyalty is not a political commodity that can be negotiated on public platforms. It is no use accusing another person of un-patriotism. You can only hope for his patriotism in response to crises in his society. This is an attempt to stifle discussion, which I think can be accommodated quite easily in our society. After the resolution was first taken and if nothing had happened after the initial reactions nobody would have spoken about it at all. Therefore, we strongly oppose this particular clause of the Bill and will definitely vote against it. [Time expired.]

Mr. Chairman, I think it is necessary for me to state this matter very clearly and with the utmost possible emphasis. Firstly I want to say that I accept the amendment of the hon. member for Durban Point. The object of the provision was to institute a severe maximum penalty specifically to emphasize the offence, i.e. so that no person would try in any way to prevent a member of the Defence Force from doing his rightful duty. That is why that penal provision was inserted. Whether the amount is R6 000, the amount originally proposed, or R5 000, which the hon. member proposed, consequently does not make much difference. I therefore accept the hon. member’s amendment. The hon. member also convinced me of the fact that equal amounts are mentioned in other legislation. Perhaps it is then correct to change this.

Let us just get our thoughts straight again. When the original Defence Amendment Bill was introduced here, there was no provision such as the one now contained in paragraph (c). One must remember that section 121(a) and (b) of the Defence Act has always been there. Here I have introduced, a Bill which did not contain this provision. What has occurred to motivate the insertion of something of this nature? The Hammanskraal meeting took place. Certain resolutions were adopted at Hammanskraal, resolutions which went very much further than the normal recognition of the conscientious objections and religious scruples of people who want no truck with the combatant aspect of military service. At Hammanskraal a long exposition was given of the reasons why those resolutions were adopted. For example, it was said that the meeting—

In other words, at Hammanskraal the member churches were called upon to advocate total opposition to military service. In previous debates—and I shall come back to that in a moment—I quoted how theologians pointed to this dangerous principle, a new principle being introduced in theology, a principle which creates, in effect, a theology of revolution. That is why section 121, as amended, has been brought before this House.

Today the hon. member for Rondebosch steered round that very carefully. He would have us understand that I simply got up one morning with a bee in my bonnet and suddenly started an argument with the churches. The existing Defence Act states very clearly that if a church entertains a certain religious belief which calls upon its members to abstain from violence on the grounds of honest theological considerations, those people can be given a choice of work in the Defence Force. Let me spell this out very clearly again. Such a person can make his choice known to his commanding officer. He can tell his commanding officer that his church does not allow him to serve in a combatant capacity and for that reason he is requesting to serve as a non-combatant. The commanding officer can then assign him to non-combatant duty in the unit. There is nothing in the Act which prohibits that. This is already the customary procedure. In fact, an individual does not even have to tell his commanding officer that he is bound by his church’s theological tenets. If he says that he truly has conscientious objections to serving in a combatant capacity, his commanding officer can assign him to a non-combatant post. Every unit has enough posts of that kind to which a person can be assigned. It is, therefore, already the customary procedure, apart from the provisions referring to the doctrines of various churches, to assign individuals, who come forward with real conscientious objections, to non-combatant posts. He need not necessarily be placed in the Surgeon-General’s division and neither does he necessarily have to serve in an administrative capacity at Head Office. His unit commander can use him in that unit in a non-combatant capacity. There is nothing in the Act to prevent that. In fact, that is the policy being adopted at present.

Do they receive training without weapons?

When I say “in a non-combatant capacity” I mean without weapons. That has always been the usual procedure in the Defence Force, and people have always been satisfied with that. A few years ago we had a furore about a small group of people who called themselves the Jehovah’s Witnesses, although not all Jehovah’s Witnesses adopt that attitude. I have letters here from Jehovah’s Witnesses who tell me that they disagree with other Jehovah’s Witnesses. Only last week I again had a letter from a very prominent Jehovah’s Witness telling me that he disagreed with other Jehovah’s Witnesses about this matter. The trouble with the Jehovah’s Witnesses was the fact that they did not even want to serve in a non-combatant capacity; they did not want to serve at all. However, we have come to an arrangement with them which works very satisfactorily at present, and relationships are improving in this respect.

I now come back to the resolution adopted at Hammanskraal. It was a resolution which, under the cloak religious scruples, was aimed at influencing people on a large scale to oppose military service. That is what it amounted to. In the Second Reading debate I adopted a standpoint in that regard. I remember that the hon. the Leader of the Opposition put a question to me. He said. “You are not making provision for people who really have conscientious objections.” I replied, “Yes”. Now the hon. member for Rondebosch says he thinks that even the Minister did not expect a reaction on such a large scale. Sir, that is true, but not in the sense in which he means it. I did not expect South Africa to express its opposition to the Hammanskraal resolution as strongly as it did. Sir, the shoe is on the other foot. The hon. member did not expect so much opposition to the Hammanskraal resolution. In the past few weeks a series of articles has been written and a number of speeches made, articles and speeches which have created very bad impressions. The impression has been created that we want to force people to serve in the Defence Force in a particular capacity in spite of their conscientious objections or religious convictions. The whole matter is so bound up with the principle of conscientious objection that the poor members of the public no longer knew how to stop the propaganda. Last Friday evening, however, in one of our large dailies, there was an unobtrusive article which I should like hon. members to consider. I wonder who noticed the article. It is an article written by a man who has only the very best of intentions as far as this matter is concerned, a man I personally have the utmost respect for because I know him very well. The person in question is the Rev. Eric Hymer, a man who was chaplain in the Defence Force for ten years before accepting a call to a congregation outside of the Defence Force. He is a man of high repute in the Defence Force today because of the influence he had on young people. I do not know what this former chaplain’s political convictions are. I never asked him. However, I know that he wrote this article, and I should like to quote a portion of it. He said—

As hon. members know, the resolution at Hammanskraal also stated that chaplains should no longer be paid by the Defence Force, but that they should preferably be paid by the respective churches. There is, therefore, the insinuation that we are using the chaplains for the wrong purposes. The article continues—

That is the evidence of a man who was a chaplain. He left the Defence Force voluntarily and he is still a friend of ours today. He had no ulterior motives. I fully accept his integrity. Here and there he may be wrong. I do not say that everything he says is right. I am saying, however, that here we have a man of integrity who says that national service is the Church’s last hope in South Africa. He served amongst these people for ten years and left the Defence Force voluntarily. He goes further and says that there is a handbook for chaplains in the Defence Force. He says that according to that handbook a clear image of the chaplain is presented, an image in terms of which he is entitled to act without ties within the Defence Force. Is it any wonder that the chaplains stood behind me to a man when a choice had to be made? They made the choice of their own free will. This is my answer to those who want to stand in for other people’s consciences. I say that the chaplains of the Defence Force and the Rev. Eric Hymer gave them the answer.

In the second place, section 121(c), inserted into the Principal Act by clause 10, as amended by the Select Committee, has been attenuated. However, I accept that. This new provision is aimed against undermining of the South African Defence Force, and therefore I am glad to give the assurance which the hon. member for Durban Point wants. The hon. member for Rondebosch spoke of the Anglican Church. This is one of our great and respected churches in this country. I should like to know why I must accept that responsibility when the Anglican Church itself is not prepared to amend its doctrine so that all its members reject the question of military service? They have recently had a meeting of the Synod, but I cannot recall that that Synod decided to change its doctrines so as to be actively opposed to all military service or participation in military affairs. Of course not; the whole history of the Anglican Church says otherwise, i.e. that in time of war the Church was on the side of those who, as they saw it, were waging war to bring about the kind of world order they wanted. Why must I take on a church’s responsibilities if the church itself does not change its doctrine? The hon. member for Rondebosch says there was wide-spread reaction; yes, there was. The N.G. Synod also sat and adopted a unanimous resolution to reject the Hammanskraal resolution and to support my standpoint. Sir, the Baptist Church Synod also met; the Baptists adopted a similar resolution and came to consult me. I have the highest regard for the way in which they came to discuss this matter with me. All this fuss that was created must have been created for other reasons. The question is whether we should not look into this matter a little deeper. I happen to have in my possession a document entitled “Spring, Summer, 1974, Cape Town: An Evaluation”, compiled by a number of people who have made a study of strategy, well-known people, who write regularly about matters of strategy and about military affairs: Robert Conquest, Brian Crozier, John Erichson, Joseph Godson, Gregory Crossman and Bernard Lewis—a whole string of writers in this field who are known to everyone interested in military affairs. They collaborated to write this article. Sir, in this article, amongst other things, they set out Russian strategy under the cloak of détente with the West and they say—

Sir, this is a very interesting document to read because it does not only deal with indirect military strategy against the West; it also deals with indirect strategy against the West in other fields. It is interesting that we have an organization in this country which probably is playing and has played a great role in this connection in recent times, i.e. Nusas. We know that the movement began throughout the world with conscientious objection; then it became a question of religious scruples and then objection to the “unjust societies”. That is not only the case in South Africa; it is also the case in other countries. Sir, Nusas set up a “commission on war”, and this commission on war later dissolved its ties with Nusas because it did not want to be too directly tied in with Nusas. The commission on war began to meddle in many things, amongst others defence force matters. I quote what it said—

It must have a slightly wider sphere of operations. We know that Nusas openly expressed itself in favour of arms boycotts against South Africa. It openly got itself involved in the so-called “unjust war” being waged in South Africa. This “commission on war” went further and received certain instructions on what to do, inter alia, the obtaining of “basic facts and figures of inequality related to defence; strength of the military forces; growth of military and defence budget related to development programmes; propaganda in Defence Force; independence of military vis-à-vis arms and equipment.” These were all aspects of the information it was to gather as proof that young people should not fight in this “unjust war”. I quote further—

In other words, here we have a whole broadly structured set-up which links up with the document I quoted to you about the people who carried out a strategic study, a document indicating that in South Africa we have also had a direct propaganda campaign, under the leadership of Nusas, against the so-called “unjust war” in South Africa. I say that there is only one purpose behind his action, i.e. to undermine the South African Defence Force. I want to refer to an issue of the Wits student newspaper—I do not want to quote very much from it—in which this process is continued. They are one of the groups being used to spread this propaganda.

And their own students turned against them.

Yes, their own students turned against them. But, Sir, those are the people we are dealing with, and they are the people against whom we are introducing this legislation. You will remember the fuss throughout the country when I said in the Second Reading debate that I am after certain people’s political blood. You will remember, Sir, how even-some of my friends in the Progressive Party kicked up a fuss saying that I am cruel enough to speak in terms of blood. No, Sir, one may no longer use this kind of language because one is then treading on the little angels’ toes. And there the six little angels are sitting.

No, seven.

Yes, but six are men and one is a woman. [Laughter.] Let me say with the greatest possible emphasis today that it is not the intention to use this legislation against people who have honest and sincere conscientious objections to taking up arms. The South African Defence Force has always treated those people in a decent and civilized way and we intend to continue to do so. Let me say that this legislation is aimed at people, whoever they may be, who try to undermine the South African Defence Force. We shall not allow our Defence Force to be turned into what other countries, to the detriment of their national self-respect, have allowed their Defence Forces to be turned into. I have very good reason to say that it is a false theology which is being introduced here. I have quoted to you what Prof. Heyns, one of the best known professors in the country, said in this connection. He also said (translation):

That is why he rejects it. He continues:

That is the judgment of a young theological scholar. He continues:

That is as far as I wish to quote Prof. Heyns. In the process, however, another important person also wrote an article and submitted a memorandum to the Select Committee. This person is Prof. Jac Muller, a respected theologian. His article was immediately pounced on because he warned against certain provisions in this clause and said that if those provisions were removed he would be satisfied with it. I now briefly want to quote Prof. Jac Muller’s standpoint. He said (translation):

His motive for wanting a certain amendment in clause 10—

That the Select Committee did. They clarified the intention in the Bill so that the clause now reads as follows:

Prof. Jac Muller, therefore, also distinguished between encouraging people, in bad faith, not to do their duty in the Defence Force and honest religious scruples and conscientious objections. I aver that we have satisfied him on this point. In the basis of this fact my answer is that all this fuss was unnecessary and, in the second place, that it was necessary for us to adopt a standpoint in opposition to attempts to undermine the S.A. Defence Force. In this respect it is, in my opinion, a good thing that we referred the matter to the Select Committee, and it is a good thing that we have reached agreement to a large extent. However, I would be neglecting my duty if I did not add that I have the utmost respect for the churches and their leaders. As in the past, we shall try to do everything in our power to deal with those persons, who really have conscientious objections, by making provision for them in a non-combat capacity. If the numbers get out of hand and it becomes clear to us that this is an attempt, under the cloak of religion, to get at the security of South Africa, let them be warned this afternoon that steps will be taken against them by means of legislation. In the interests of its churches, and in the interests of its stability, South Africa dare not allow its Defence Force to be undermined, no matter by whom. In that spirit I thank the official opposition for their standpoint, and I know that the majority of patriotic South Africans stand together as far as clause 10 is concerned.

Mr. Chairman, the interesting thing about the debate so far is that earlier on when we were discussing another amendment the point was made that the work had already been done in the Select Committee and that there was really no need for this party or for the hon. member for Rondebosch to bring in any further amendments. I find it interesting that the amendment which the hon. member for Durban Point moved has been accepted by the hon. the Minister even though it was turned down by the Select Committee. I am glad that it has been accepted and we shall support it because it is an improvement to the present clause. But it does strike me as a little odd that on the one hand when we are trying to present an honest response to a particular piece of legislation we are told that we must leave it to the Select Committee because they were appointed to do that and that we do not have to go over it all again. Yet in a very different sense something which the Select Committee themselves turned away from has now been accepted by the hon. the Minister. I am very grateful for that and we shall certainly support that because it is an improvement to the present clause.

We have listened very carefully to the hon. the Minister. I know the Rev. Erick Hymer very well. In fact he is a member of the Church to which I belong and a very dose colleague for whom I have only the greatest respect. I want to agree with everything the hon. the Minister said about that man and about his article. Mr. Hymer, however, would be amongst the first to acknowledge that there is …

Order! The hon. member cannot continue on those lines. The hon. member must come back to the details of this clause.

Mr. Chairman, with respect, I am trying to respond to the comments which have been made by the hon. the Minister.

I have already allowed two hon. members from the Opposition and one from the Government side to do that. The hon. member can raise that point during the Third Reading if he wants to, but I cannot allow any further discussion on it under this clause.

Thank you very much, Mr. Chairman, I shall do that. I want to come back then to the remarks which I think are very pertinent and to which the hon. the Minister has addressed himself and that is in regard to sections 67(3) and 97(3) of the Defence Act as it presently stands. Our concern has all along been that the provision made for the conscientious objector in South Africa is very limited and very circumscribed in relation to the present Act which we are amending. The whole debate that has been taking place in South Africa has direct relation to the provisions of the new section 121(c) as substituted by clause 10. It has of course been exacerbated by certain events which have taken place, but there is more to it than that. There is an existential aspect to this. That is that we have troops on the border, with people participating and people giving their lives whilst they are engaged in conflict. Naturally more and more people will give more and more thought as to their particular standpoint. As the Act stands, whether or not provisions are made on an individual basis, it is applicable to a very small number of people. Let us look at my own position which I want to make very clear. My own position—let me make it very clear—is that I am not a conscientious objector and, therefore, this is no special plea. However, I have the greatest respect for those who have taken this stand. The church which is essentially a peace-making body should always have the right to discuss matters of war, peace, violence and justice without any curtailment whatsoever. We believe as the clause originally stood that it was a curtailment. We believe that it has been improved by the Select Committee and that the amendment of the hon. member for Durban Point is a further improvement. We also believe that all the commotion and fuss that has been created has arisen not only out of Hammanskraal but out of this particular clause under discussion. It would be far better if this clause could have been omitted altogether.

Mr. Chairman, I feel obliged to enter the debate at this stage in order to reply briefly to what the hon. member for Rondebosch has said in the first place and to what the hon. member for Pinelands has said in the second place.

I want to deal with the hon. member for Pinelands first. This is not an existential thing we are dealing with; we are dealing with a real situation.

That is exactly what existential means.

We are dealing with a position that has a settled legal background. The hon. member says that as the Act stands it is very limited in respect of conscientious objectors. If he is referring to the section 67 situation, I can understand why when looking at it he would think that it was in fact limited only to those people, because only certain people are mentioned in section 67. But even the service rendered by people mentioned in section 67 is entirely at the discretion of the official in the army.

Does it say that?

That is what it says. Such person may, as far as it is practicable, be allotted to non-combatant service.

The whole of the case of the hon. member for Rondebosch is based on a wrong interpretation of the Act. He said that an Anglican could not advise somebody to apply for non-combatant service. That is not correct. He can advise someone to apply for non-combatant service, but he cannot advise him not to serve at all. In other words, he cannot advise to go along and say that he is going to do non-combatant service and nothing else. If he does that, he commits an offence. In terms of the Act it is an offence, and always has been an offence in terms of these provisions, to refuse to do military service. As the hon. member for Durban Point indicated, it has been an offence since 1956 to try to persuade someone or to incite him not to do his service.

Order! I think the hon. member is going too far. I allowed the hon. member for Rondebosch to put his case and to discuss the principle, but, as I told the Committee, I shall not allow every member to do the same.

I just want to indicate briefly, Sir, that the basis of that argument is not correct in law.

Order! I am afraid the hon. member is out of order. The hon. member must discuss only the details of this clause.

With great respect, Sir, I am dealing with the details of this clause and the meaning of it. I submit I should be entitled to do that.

The hon. member may proceed but he must abide by my ruling.

I shall do so, Sir. As I have indicated, this has always been an offence in terms of the Act. In 1972 the penalties for that offence were changed because there were so many people in a special category refusing to serve in the Defence Force. The penalty for refusing to serve was changed in the Act and became compulsory imprisonment for a minimum period of 12 months and up to 15 months. I want to put on record that the hon. member for Houghton supported that up to the hilt. She was very pleased in fact to see that provision altered.

Because I knew what was happening to those people before that.

That is right, but I am just having it put on record. There is no need to get excited. While that has been the situation, since 1956 we have had on the Statute Book the Riotous Assemblies Act which has the following provision in section 18(2):

1. (a) conspires with any other person to aid or procure the commission of or to commit; or
2. (b) incites, instigates, commands, or procures any other person to commit,

In other words, anyone who, as it is worded in this Act, instigates any other person to commit the offence of not doing his service can, if charged under that Act, be sentenced to 12 months’ imprisonment with out the option of a fine, and in fact must be imprisoned. If clause 10 is not approved by the Committee today, we will leave the authorities concerned no other option but to charge everyone in terms of the Riotous Assemblies Act and punish them according to that Act. I do not want to go any further but I want to put on record that the entire premise that has been advanced by the Progressive Party for opposing this clause is in fact false. The reasons given by the hon. member for Rondebosch have no ground whatsoever.

Mr. Chairman, much of the discussion is now centring around the assurances given by the hon. the Minister in relation to this clause. As far as the hon. member for Durban North is concerned, this is apparently of importance to him in voting for this clause; also so that the Riotous Assemblies Act will not be invoked. This seems to be contrary to the voting pattern that took place by the members of the United Party on the Select Committee. In the Select Committee they voted against this clause. I think I am correct in saying that.

We moved an amendment.

Yes, they moved an amendment and then, subsequently, when the amendment was defeated and was therefore not incorporated in this clause, the United Party voted against this clause in the Select Committee.

If you had been listening, I have explained why.

This is so but I want to say that the hon. member for Durban North gives a completely different reason. He says it is essential to have clause 10 accepted so that the Riotous Assemblies Act will not be invoked. I think that this is a completely fallacious argument to use when arguing in favour of this clause.

There are two points I want to make. The one concerns the amendment which has been accepted by the hon. the Minister, an amendment which reduces the penalty. This in itself is good but in no way does it change the substance of the clause. What is important in trying to find out what the intent of this clause is and how it will be applied in practice is the question of the Minister’s intentions. He did state what his intentions were and this apparently weighs very heavily with hon. members to the right of us. I want to make the point that the courts, the judiciary, do not take into account the intentions of an individual Minister nor do they refer to Hansard to take into account the intentions of this House. What they are left with is the Act as it has been accepted by this House which is then interpreted by the courts. However, the statement of the hon. the Minister is not a material factor when it comes to whether a person is going to be found guilty or not. To the extent that people are going to be tried, the assurance or the explanation the hon. the Minister has given is irrelevant. It is the wording or substance of the law that is relevant.

When one looks at the wording and substance of clause 10, two points require to be mentioned. Firstly, the actions which will be considered a criminal offence and on which a person can be found guilty, are not limited to incitement: The wording goes very much wider than that. Merely a suggestion, for instance, is included. If you challenge a person to think seriously about a certain subject, or if, as a minister of religion, you point out that there are certain alternatives, you are making yourself guilty of an offence. As a minister of religion you may say: “I believe it is important in terms of Christian ethics that you should consider alternatives A and B. I am not arguing in favour of A or B, but I am suggesting that it is important that you should consider both A and B.” This is what Christian teaching and the churches are doing constantly. They are presenting alternatives to people for serious consideration. If one of those alternatives happens to be the one which will cause an individual to become a conscientious objector, that person would fall foul of the law. The wording is not limited to incitement or even to instigation, although these are some of the words used. The clause provides for anything which could cause an individual to take that course of action.

With intent.

Yes of course, but one is always challenging. This is what religious teaching is about. You are not saying that he must do it, but you are putting to him certain alternatives for serious consideration on religious and ethical grounds. This is the point that the Rev. Jac Muller made. He made it very clear in his memorandum. He put it that the churches should be doing this kind of probing on a moral, ethical, religious basis. If the churches do that, in terms of legal opinion and not bland assurances, in terms of opinion which many members have received, they will fall foul of the law.

May I ask the hon. member a question?

The hon. member can come back into the debate.

The second point is the question that relates to service for which a person is liable or may become liable. All servicemen are liable or may become liable for combatant service. The fact that, because you may get an exemption if you happen to belong to recognized denomination which has as one of its tenets the refusal to participate in war, does not mean that you are not liable or may not become liable for military service. The Minister says that he will deal kindly and benignly with people who apply. However, this still does not mean, in terms of the law, that you may not become liable for service. The fact that the Minister may exempt an individual does not mean to say that the church can argue that that person should go and seek exemption, this is very clear from the legal opinions which we and other people have received. While it may be the intention to deal with people who in the Minister’s opinion want to undermine the defences of South Africa, we argue that by creating a confrontation, the hon. Minister might in fact be achieving the opposite objective. The application of this clause in practice is to cast the net so wide so as to interfere into whole ranges …

No.

This law will prevent the church in general from arguing along these lines. It will prevent the Jac Mullers and others from doing so. The Minister has said that he will not bring an action against them but this is not what the law says. This is merely an assurance on the part of the Minister. It will prevent individuals from arguing the case of pacifism. This issue has been argued for a long time. The practical effect is that, if a book by Donald Soper is sent from the United Kingdom to South Africa the possession and distribution of that book will be prohibited because it would mean distributing a book which says to people why they should embrace the philosophy of pacifism. It will prevent academic discussions from taking place on this subject, because at academic discussions …

Oh, please!

It is all very well to say “oh, please”. When you have an academic discussion, two sides of the argument are put. There are people who specifically say: “We put to you quite intentionally the arguments in favour of conscientious objection” and other people put their arguments against it. But once one puts the argument deliberately, even if it is in order to contrast two points of view, then in fact, one would fall foul of the law. So, this provision, as it stands at the moment, is acceptable to hon. gentlemen on the right of us on the basis of the assurances given by the Minister, although the assurances by the Minister are not valid in a court of law.

That is not true, and you ought to know it.

Legal opinions which have been given to us are that in terms of the law as it stands, the prospect—not the right—of serving in a non-combatant capacity is limited and that the net would be cast so wide as to invade a whole range of freedoms which at present obtain in South Africa.

Mr. Chairman, I do not intend to deal with the principle, but I take the strongest exception to the manner in which the hon. member for Sea Point tried to give a completely false impression of the motives of this side of the House. At no time did I indicate that we supported this measure because of the Minister’s assurances. I made that quite clear. If the hon. member had been listening when I spoke earlier, he would have heard me say that I had moved an amendment in the Select Committee. Subsequently, however, legal opinion convinced me that this was not necessary. Our support—and this must go clearly on record—is based on the fact that we are satisfied that this clause does not interfere with the right of a minister of religion or a parent to advise a person in respect of non-combatant service. It is an offence to advise such a person not to serve. The clause states specifically that the aim must be to advise a person “to refuse or fail to render any service”. If anyone advises a person “to refuse or fail to render service” then I want to see him go to goal, whether he be a minister of religion or a parent or anyone else, because he is inciting a person to break the law and refuse to serve his country. However, if a parent or a minister of religion advises a person to serve in a non-combatant capacity, that is permitted, as we understand it. We have obtained legal advice, we have gone into this matter and it is clear to us that the term “service” includes non-combatant service. That is the basis on which we support the measure, not on the basis of any assurances. The hon. the Minister has indicated that that is also his view. That is all. Our support is not based on assurances.

That is not what the law says.

My friend says “That is not what the law says”. The point has not been tested, so by what right does he say that he has the only legal opinion that is worth anything?

By divine right!

They are always the people with the divine right; they are the infallible ones. Our legal advice is to the effect that service is the wider concept which includes non-combatant service, and that is the basis on which we support this measure. This is the basis on which we have no objection to a Bill which is going to prevent a man inciting or advising somebody or advocating something with the intent of persuading a person to refuse or fail to serve. Opposition to this is, in fact, tacit support for legislation which will enable a man to advise or encourage a person to refuse or fail to serve. That is what opposition to this clause means. I do not want to take the matter any further, but I want to make it clear that our support is based on that clear, specific interpretation. I should, however, like to put the following point to the hon. the Minister. Because there are differences among legal people about this, I would like to ask the hon. Minister whether, if this legal difference is not resolved, this situation can be reviewed again to make it clear that the interpretation which both the Government and ourselves place on this clause is in fact the correct interpretation and that no amendment to the clause is necessary.

Mr. Chairman, we were having a fairly reasonable argument about this particular clause until the hon. member for Durban Point stood up and, of course, could not resist, when he found himself caught …

Until the hon. member for Sea Point …

I did not speak!

But the hon. member said …

Well, may I speak now? I have ten minutes. Does the hon. member mind? The hon. member may have his argument afterwards. He then had to bring his argument down to personal insults aimed at members of the Progressive Party with the not veiled innuendo that we, of course, are not patriotic. This is always the argument. When one does not have a proper argument, that sort of personal abuse is resorted to. As I understand the matter, there is a definite difference of legal opinion on the interpretation of this clause. That is one reason, presumably, why the hon. member took the trouble to move an amendment at the Select Committee.

That is correct. I said so.

Correct, and that was rejected. So now he has come back to ask the hon. the Minister to give him his personal assurances that the way in which he is now interpreting the clause is nevertheless the correct one. That depends entirely on how one reads the proposed new section 12 (c) inserted by this clause. The hon. member, when he read this clause, was very careful all the time to stop at the words “any service”. Sir, it is not “any service”; it is—

Sir, I want to know in terms of which section of the Defence Act one is liable for non-combatant duty. Surely it is only after one has declared oneself to be a conscientious objector or as a person belonging to a Church the tenet of which is conscientious objection that one may then ask to be employed in a non-combatant capacity. But the Act as it stands does not render anybody liable, as I read it, to non-combatant service. I may be wrong, Sir, but there is a difference of legal opinion on this.

Have you read 3(a)(b)?

I have read all these clauses.

And the definition of “service”?

Yes, I have read it. Sir, the hon. member for Durban North was talking about the Riotous Assemblies Act, but will he tell me whether this clause in its ambit does not go further in many ways than the relevant section in the Riotous Assemblies Act. People could in fact be charged under this Act who could not perhaps have been charged under the Riotous Assemblies Act. If he is right and I am wrong, I want to know why this clause was introduced at all and why the existing legislation is not sufficient.

Finally, Sir, I want to say that I agree 100% with the contention of the hon. member for Sea Point that the courts are not interested in the Minister’s interpretation of this clause. They are not interested in the arguments conducted across the floor of this House and they are not going to turn to Hansard in order to be able to implement the law; they are going to consider the exact wording of the Statute and nothing else. I do not agree with the hon. member for Rondebosch who, although he is objecting to this clause, has some faith, new member that he is, in the benign intentions of this hon. Minister. Sir, he does not know him as well as I do. I have had experience of this hon. Minister over the very question of conscientious objectors, and I have seen the “benign” way in which he has handled Jehovah’s Witnesses, with whom incidentally I have absolutely nothing in common.

Thank God for that.

Order! The hon. member must come back to the details of the clause.

I am replying to arguments which have in fact been advanced here. However, I will leave it at that. I would just remind this Committee of two things, and one is that we have had experience before of ministerial assurances. We have had experience of ministerial assurances for instance under the Terrorism Act which was only going to be used against terrorists in the bush. I say therefore that benign assurances from the hon. the Minister that he has no intention of using this Act and these powers widely …

Order! The hon. member is now discussing the principles of the Bill. She can do so at the Third Reading.

Sir, I have one final thing to say, and that is that if this clause were made retrospective to the forties it would be very interesting to see who would be going to goal and who would be paying the fines.

Amendment agreed to.

Clause, as amended, put and the Committee divided:

As fewer than 15 members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Clause, as amended, declared agreed to.

House Resumed:

Bill reported with amendments.

Report Stage taken without debate.

Third Reading

Mr.

Speaker, I move—

Mr. Speaker, I do not intend to repeat the arguments advanced in the Second Reading and in the Committee Stage. We are dealing here with a matter that affects feelings, that affects personal consciences, a very delicate matter in public life, and I deplore the fact that use has been made of this matter in this debate to cause strife and disputes and to try to arouse feelings. We are dealing here, not only with the security of South Africa and the strength of our armed forces, but with freedom of conscience. I am convinced that this Bill really does not in any way interfere with freedom of conscience.

Nonsense.

My hon. friend can say nonsense if he likes, but I am also convinced that if this Bill had not followed the events at Hammanskraal, if it had been introduced merely as an ordinary Bill, we should have heard a lot less about it. However, because it followed on the events at Hammanskraal it became news. If there is one thing that is food and drink to the Progressive Party, then it is newspaper headlines and the making of news.

Are you jealous?

No, I am not jealous, but I do try to be responsible when I am dealing with the security of South Africa. I repeat that, had this not been a matter which the Progressive Party thought would get headlines, we would have had a very different debate on it in this House.

That is true.

Nevertheless it is their right, and no one denies them that right, not only to oppose this Bill, not only to make fools of themselves if they wish to do so but it is their right to show South Africa where they stand on issues of this kind. Equally, it is the right of South Africa to judge where they stand and to act accordingly when the time comes, because I can say now with complete conviction that not one of those hon. members, not even the hon. member for Houghton, spoke for the youth of their constituencies in this debate. They did not reflect the views of young South Africa in regard to the responsibility for national service. I go further; I do not believe that they spoke for the views of the recognized members of the recognized churches in South Africa either. They did not speak for the Chamber of Industries; they spoke for themselves, the Progressive Party …

As usual.

…hoping to gain a little publicity and perhaps create a little incident. They hoped to embarrass us. Perhaps one might say we are getting a little thick-skinned these days, so we do not get embarrassed so easily.

Elsewhere too.

What we have done in this Bill, I believe, is the right thing. We have expressed our doubts where necessary; amendments have been introduced and we have accepted what we believe to be the correct interpretation of this measure by members within our own party. The hon. the Minister indicated that he would meet leaders of recognized churches in the near future. I should like to welcome that statement. I believe that that will do a great deal to clear away any smoke or dust which may exist and I welcome particularly the fact that the hon. the Minister on his own initiative has indicated his willingness and desire to talk to the churches about this and to talk to employers, as he has indicated, in regard to clause 1. I believe that only good can come out of those discussions. I also welcome the clear and unequivocal statement on the policy which is applied in practice in the Defence Force. We welcome the fact that a serviceman, even if he does not belong to a sect or a religion which prohibits participation in war, may apply and be given non-combatant service to perform. In case there was any doubt about it, I interjected while the hon. the Minister was speaking by asking: “En opleiding sonder wapens?” The hon. the Minister indicated that that was the policy and I should like it to be clearly on record. I understand that it is the policy that a person who performs non-combatant service is not issued with a rifle and is not even required to do basic rifle training. Such a person does the squad drill, the parade ground training and the disciplinary training, but is not required to train or exercise with arms. This again, I believe, will clear some of the doubts which have been expressed, because unfortunately many people have been misled by some of the propaganda and some of the things which have been written and said about the present situation which is quite divorced from this Fill. I think that the debate has helped to clear up much of that misunderstanding and we on this side of the House from the United Party shall support the Third Reading of this measure.

Mr. Speaker. I want to start by saying that personally I feel sorry that the new proposed section 121(c), as amended by clause 10, has been adopted. I should like to motivate this statement of mine. I am_ convinced that this kind of legislation will yet haunt this House. If we read the clause against the background against which it has been inserted, the question is whether the people who supported the resolution at Hammanskraal would have to go to prison, if need be for ten years, or whether they would have to be fined R10 000.

Six years.

I beg your pardon, that has now been amended but the question remains the same. This was the original primary factor. The hon. member for Durban Point is now trying to make out that legislation of this kind would have appeared in any event. The hon. the Minister told us again this afternoon that this legislation would never have been placed on the Statute Book if it had not been for the Hammanskraal declaration. The question the United Party must answer is whether those people are now to go to jail for that. This is a difficult question to answer in any situation in South Africa. It is an immensely difficult question for this Parliament to answer. Why? Because legislation that has to make specific provision for Hammanskraal goes far beyond that particular incident. This is unavoidable. The question of the conflict one creates in society now arises. Is the conflict that is created, beneficial to the Defence Force of South Africa or not? This, too, I should like to illustrate. The first point I want to raise to illustrate my point is the following: Say, for argument’s sake, one of the persons who were involved at Hammanskraal—allow me to remind the hon. Opposition that the greater majority of the persons present there were Black people—had to go to court as the result of this legislation being implemented.

They are not subject to it.

The hon. member states that they are not subject to if. Of course they are subject to it, because the legislation provides that any person who incites any other person shall be guilty of an offence. The legislation does not provide that any White person who incites another person shall be guilty of an offence. I referred earlier on to a Bantu clergyman. He, too, is a person who may be seen as someone who may incite another person. That legislation provides … [Interjections.] If the hon. members would give me a chance they will soon be able to reply to me on this point. I want to argue that if that person goes to court, whether he be White or non-White, then that could give rise to one of the biggest martyrdom court cases in the history of South Africa. I can give the assurance that that court case would unleash more dramatic feelings, tempers and emotions than the initial reaction to the Hammanskraal decisions. There is also another matter of particular importance, viz. that the entire question of Hammanskraal falls between White and Black politics in South Africa. This is the troublesome dilemma. The one thing which I want to prevent above all else, is that situations are created in which the greater majority of people in South Africa begin to doubt whether they should display loyalty in any way by means of defence. That is something one wants to prevent and it is incidents of this very nature that are going to be created by this very thing. After the Second Reading the official Opposition took fright, because they saw what had gone wrong. They tried to speak in the Select Committee, but did not do so. This amendment is an amendment by the Government. We may now study this amendment again as we did during the Second Reading debate. It is pointless the hon. member telling us that the people who have religious objections are well treated. We are dealing with the legislation and what the legislation specifically states. The legislation is very explicit, viz. that only under very circumscribed circumstances is provision made for religious objections. That is what the Act states at the moment. One might say that this is good or that it is not good, but I just want to refer to the fact that there are groups in society who feel that this is not adequate. The hon. member for Durban Point says that not one denomination agrees with this standpoint, and that not one denomination supports our particular standpoint. This is a blatant untruth. I want to refer to an article that appeared in The Argus of 21 October …

Order! Did the hon. member accuse the hon. member for Durban Point of a blatant untruth?

Yes.

The hon. member must withdraw the word “blatant”.

I withdraw it. On Monday, 21 October a report appeared in The Argus entitled “Anglican plea on service objectors”. In it is stated—

It is not I who say this. I am just trying to indicate that we have here a potential point of conflict. I do not know to what church the hon. member for Durban Point belongs, but if he belongs to this church, then I can assure him that it was his Synod that took this decision. This is merely to illustrate that this is a controversial matter and the major problem is how to deal with such a controversial matter. Does one try to deal with it by means of legislation that suppresses it or does one try to disparage it and behave as if it does not exist? Our very argument is that the initial reaction to Hammanskraal was sufficient indication that it was rejected by most people. If nothing had subsequently been said, I can give the assurance that there would have been no further problems. However, when this legislation appeared, groups and individuals in our society were involved which were as far removed from Hammanskraal as I am from the man in the moon, and they still feel upset about this. It is clear that they are still dissatisfied about this. Judging from the memoranda received by the Select Committee, many spoke about alternative forms of national service. In passing, I feel that there is merit in this matter. The hon. member for Piketberg also mentioned this matter during the debate on the Coloured Relations and Rehoboth Affairs Vote. He said at the time that he felt that national service should be instituted, in terms of which the Coloured population would have to help in the construction of houses. Requests of this kind came from a number of people who submitted memoranda.

They said that they were prepared to perform national service for South Africa, but not in a military capacity. There is a strong feeling that there should be different forms of national service. Here a limiting measure is being introduced once again which quite simply smothers discussion in this regard. Now one may no longer discuss the possibility of, perhaps, going to work in the homelands as a form of national service. If one’s feelings run too high during such a discussion, it could be said: “You are in fact engaged in encouraging people not to do military service.” That falls under this legislation. It stimulates more conflict than it solves.

The hon. member spoke about the Russion strategies. He referred to the way in which various forms of religion, and in addition the cloak of liberalism, were made use of. I want to say in all honesty that I have a great interest in any group that aims to bring about violent change in South Africa because I believe that force is not a solution to our problem. In fact, over the past ten years during which I have lectured at the Universities of Cape Town and Stellenbosch, one of the courses dealt specifically with violent theories and strategies for change. I do just want to make one remark about the Marxist strategy for change in South Africa. Such a Marxist strategy would proceed from the premise that a reactionary White Government would have to be in power. What does that premise mean?

A reactionary government is a government that, to an ever-increasing extent, tries to control the situation by means of legislation and the monopoly of power. A reactionary government is a government that tries to use its military arm to solve all the problems of society. To me it is a disturbing fact to see how much stress is laid on the discussion of military affairs alone, while the same amount of attention is not given to the internal development that must take place in South Africa. We cannot suppress conflict. We must accommodate it. If there are people who are dissatisfied, if there are people who are starting to question their loyalty in regard to our defence and in regard to South Africa, we cannot smother these people to death; they may perhaps be the majority of people in society. We must try to change circumstances so that those people will want to defend South Africa of their own free will and will come forward of themselves for this purpose. It has been proved throughout the world that there is no way of instilling loyalty in people with the aid of legislation and the implementation of coercive power. In fact, the more one makes use of coercive power to suppress conflict in society, the less one can depend on the support of all those members of society.

Mr. Speaker, I want to try to say shortly a few things I wanted to say but was unable to say in the Committee Stage because of the Chairman’s ruling that one could not at that stage speak directly on the principle of the Bill. I think it is helpful to look at the way in which we have moved through this and to see the background against which we have been discussing this in South Africa. There was much debate on the Second Reading of this Bill. We in these benches, because we believed that we would not be allowed to discuss or change the principle after that time, had to take a very definite stand to indicate our displeasure and our concern at several clauses of the Bill and, in particular the proposed new section 121(c). Then it went to the Select Committee and a lot of discussion took place there.

Plenty of opportunity was given for people to submit memoranda. Some of us had the opportunity to go carefully through those memoranda. There is no question about this. Anyone who has even looked at them will know something of the concern that exists in many parts of the land in this respect. It may well be that some of that concern has arisen as a result of a misconception. Nevertheless, there has been a great deal of concern, concern from a great number of young people who asked to speak to us or who wrote—as I am sure they sought to speak to others and to write to them—long letters and memoranda. They expressed their concern about this particular clause and this particular Bill. Arising from this, as a direct result of this whole question of doing service for one’s country, this debate began at a level of intensity which perhaps has never been known before. That was the point I was trying to make when I talk about its being existential.

What I meant was simply this: It is one thing to speak as armchair critics or academicians in relation to whether it is right to fight or not, and all the rest. It is very different when in a few days, months or years one is going to be called up to take one’s stand on the borders of one’s own country. Then people look again at their convictions. If they belong to a particular church, Christian or otherwise, or have some very deep feelings about the whole question of violence and non-violence, they of course will think more deeply about this than ever before. This is exactly what has been happening. I think a matter for very real, deep regret is that, whereas we have had many, many speeches and articles in support of the defence of one’s land—I have made my own position very clear in this regard—very rarely have we had any indication of the alternatives. Is the only way open to us to combat violence with violence? That is one of the contemporary debates throughout the world. It has been so for countless centuries and in particular within the Christian church. I tried to stress briefly during the Committee Stage that the church—there is nothing to be ashamed about this—as correctly understood in its teachings and writings is essentially a peace-making organization, whether it be between individuals, groups or individual and group.

But not a pacifist organization.

That may be right, but the literal words of Scripture are very much to the point, as I am sure that hon. member knows only too well. There are very many views that have been expressed about this question. However, down through the years, there have consistently been groups of people that have become known as “peace churches”, for example, the Mennonites and the Quakers. These people have very deeply held convictions—I am sure the hon. member would agree with that—based on their understanding of Scripture and their obedience to God. As a direct result, this has spilled over, not only in terms of so-called “peace churches”, but also of individuals and small groups within recognized, major denominations the world over. These are the kinds of people who have expressed their concern and have put it in writing. Synods have discussed it. It is quite true that various synods and conferences have made different decisions but that gives point to our very concern and argument that there is an uncertainty and an insecurity here, that they do not really understand what is at stake.

We know very well what is at stake.

I accept that there may well be groups in this country who will use every opportunity to undermine. I am not denying that. But the kinds of people we are talking about here are ordinary, decent, God-fearing people in this country who are very concerned …

But that has always been taken into account.

Yes, I appreciate that, but it does not dispel their own deep concern. There is no question about it. Only last week there was a conference in this city where speaker after speaker expressed dismay and concern about this particular clause. I know those people. They were not speaking against South Africa. I know their loyalty and commitment to this land. They are concerned about the causes of conflict which exist and not only conflict itself. There are among the so-called “peace churches” many people who are discussing the possibility not only of non-combatant service but also the possibility of service even outside that sphere. There are not many of these people, but there are some, and they are important because they are people. They are concerned about distinguishing between military service and national service.

In other words, they believe that every citizen, every person in the country has an obligation and a duty to serve his or her country. However, they disagree sometimes quite markedly, as to what form that service should take. Whilst I may not agree with many of these people, I want to make one point because they are not here to do so. I think we should have the highest regard for those small groups of people who are sufficiently concerned to be peacemakers. Their methods may not be your methods or my methods, but they are peacemakers nevertheless, people who are sufficiently concerned to assist, whether it be in housing or community development or in caring for or ministering to people.

It does not matter what avenue is chosen. That is what the debate ought to be focused on. That is what we ought to be concerned about. How do we neutralize the seeds of violence in the Southern African context and throughout the world? How do we take our stand against that violence? Not only with the gun, not only by meeting force with force, but by winning people, by giving them a stake. That is where the major part of the debate ought to be focused. How do we create a concern in South Africa so that people will be proud and ready to support this country in time of peace cr in time of war. That is where our real emphasis ought to lie, and that is why we are concerned about this clause.

Finally, much has been said about interpretation. I am not a lawyer. I cannot decide whether one or another group of lawyers is right, but I think it is a very serious situation when right at the end of the debate in the Committee Stage we have to hear an hon. member ask that if we are wrong in this, or if we are not sure about this, could we think about it again. We should be sure, and if we are not sure then we ought not to pass the clause. That is our contention and we stand by it. When one reads the Defence Act, one realizes why there are so many people in South Africa who believe that there is no way in which they can escape this kind of clause or this kind of punishment in the expression of their own beliefs.

Let them believe it.

The hon. member says: “Let them believe it.” These, however, are South African people. They have as much right to decent, fair, treatment as anyone else in this House. That has been our concern and that is why we regret that none of our amendments has been accepted.

Mr. Speaker, I shall be very brief. I think we have had a very interesting discussion this afternoon. One thing that emerges quite clearly is that the Progressive Party may have taken its decision on the Second Reading too hastily, perhaps because it would produce the most conflict and publicity. They adopted that attitude for whatever reason it was, and look at them today; what a sorry picture they are because they realize now that they made the wrong decision when they made their Second Reading decision. Sir, when you listen to the speeches made here today by those hon. gentlemen and lady, the one thing that emerges from it is that they have no single idea between them why as a party, for want of a better word, they are in fact opposed to this clause. I come to the hon. member for Rondebosch. He had to get up and say that he does not like it because he is their spokesman. As far as I could gather he was opposed to it apparently because you could not advise someone to apply for permission to serve as a non-combatant. The hon. member for Pinelands has quite a different approach to the whole thing. To him it is a matter of an understanding of the Scriptures, a matter of religious inclination and other such matters on which he is an expert, and I do not propose to cross swords with him about this sort of thing. But nevertheless he advanced a completely different reason from that advanced by his colleague.

Do you not propose rather to cross pens with him?

As my hon. colleague says, I have no intention of crossing pens with him, or crossing haloes with him; I suppose I could not do that because haloes are rather the prerogative of that hon. gentleman. Sir, the hon. member for Houghton had a quite different reason as well. Her reason was that there was some uncertainty as to the meaning of the words.

Of the legal interpretation. The hon. member for Durban Point agreed.

No, he did not say that he was uncertain; I will come back to that. As far as the hon. member for Sea Point is concerned, Sir, I do not know what his reason was, but he also uttered a lot of words which were different from the words uttered by his colleagues who spoke on this measure.

Before I go on let me state our attitude quite clearly. We in the United Party are satisfied as to what the law is; we are satisfied what in fact the Bill means and who will be affected and when. The hon. member for Durban Point asked the hon. Minister, if there was any uncertainty with regard to the point raised by the Progressive Party, to clarify the position. Sir, the hon. member for Durban Point said right at the beginning of the debate today, at an early stage, that our interpretation was in fact the interpretation which he was expounding, and he was honest and big enough to say that at the time of the sitting of the Select Committee he had doubts about this and that he has since then been satisfied that the position is as he stated it here this afternoon, and I do not think there is any question about that.

Sir, let me put it this way: So far as we are concerned, our attitude is that you should be allowed on religious grounds to advise someone that he should apply to the Army, when he does his service, to do non-combatant service. We believe that he should be entitled to do that. As we see the Bill and as we see the law, that is in fact the position now, and the Bill does not alter that situation one iota. In any event, Sir, even if we were wrong, which we are not, that is the practice and the custom for the very good reason that there are good reasons in any army for not having conscientious objectors in a combatant unit. That is in fact the practice and even if we were wrong, which we are not, there would not be any prosecution.

But, Sir, what the Bill does say is that if you advise someone not to serve at all because you are a conscientious objector, then you commit an offence and you will be punished for that offence. Sir, that is the issue, and what we have not heard from those hon. gentlemen and from the hon. lady over there in the whole of this debate is whether they are in favour of allowing people to encourage other people to commit the offence of not doing their service. What is the answer to that? That is the only issue that arises if you vote against clause 10. Sir, what is the answer on that issue of hon. members of the Progressive Party? Are they in favour of allowing people to advise other people to commit the offence of not doing their service? What is the answer?

You are in favour of sending them to goal.

Sir, the answer is that there is no answer even from the babbling member for Houghon. That is the issue, and that is why we can honestly and properly support the Third Reading of this Bill.

To begin with I want to express my thanks to the members of the Select Committee, who spent much of their time and attention preparing this measure for us. I want to express my sincere thanks to the chairman and the other members of that committee and I should also like to convey my sincere thanks to the officials who assisted there for the task they performed.

In the Committee Stage, the hon. member for Durban Point put a question to me concerning the matter of the legal view, the legal interpretation given. I can only give the assurances I do, not because I like to give assurances, but on the basis of advice I receive from the State’s legal advisers. Sir, how else is a Minister to act in this House other than to call in legal advisers after he has heard objections in regard to legislation, and ask them what their reply is. For this purpose I had at my disposal not only the legal advisers of the Department of Defence, but the State’s ordinary legal advisers also assisted in the drafting of this legislation. After all, it is natural for me to call in those people when I formulate a standpoint for the guidance of this House. Then the hon. member for Houghton comes along and, in passing, she is extremely insulting this afternoon, as we know her.

Why should I not be? How do you treat me?

She was extremely insulting to me because I adopted certain standpoints here. But, Sir, it does not matter to me in the slightest what the hon. member for Houghton thinks. In fact, it has never mattered to me.

That is mutual.

To tell the truth, the less notice one takes of her, the better. I choose to deal with responsible people on the other side of the House, such as the hon. member for Durban Point, who has through the years taken an interest in the Defence Force. I must deal with him because he is the official spokesman of the Opposition on this matter, and I must give him that assurance on the basis of the assurances I receive, not on the basis of my own interpretation but from those who are appointed by the State to advise me. Now in that regard I just want to say this. The question is asked: May a priest or a clergyman now go and talk to a man privately and, for example, objectively explain to him the advantages of pacifism and tell him that it is better not to use force? Of course, Sir, I am not going to detail policemen to keep an eye on these people. In any event, I do not have enough policemen to go peering through all the keyholes to see what priests are saying to their people and what fathers and mothers are saying to their sons. But what I do want to say, is that we shall soon see, as Germany saw when it provided for another kind of service for conscientious objectors and when the number of its conscientious objectors rose by tens of thousands in one year. Then it knew what was behind this and had then to take steps to combat these influences. We shall very soon find out whether the opinions being exchanged between priests or clergymen and young people and between parents and their children are honest, or whether it is in fact something else that has crept in under the guise of priestly garb. For that reason I am not going to appoint people to keep an eye on parents to see that they do not speak to their children. I expect our parents to encourage their children to serve, and I get the impression that there is a growing number of parents who are keen to have their children serve in the Defence Force.

At the same time this gives me the opportunity to reply to the hon. member for Orange Grove. Just to give an indication of the specious reasoning employed in this debate today, I now want to use him as example. When the hon. member eventually had no argument left, then he, too, stood up and said that he was in the building trade, and that as such he was very unhappy about clause 1 and that I should therefore not apply the restriction we are now imposing in terms of clause 1, to him. He presented a picture of the building trade to us according to which this whole industry would supposedly collapse in ruins. But all the time I am sitting here with a letter from the Master Builders and Allied Trades Association, who, in reply to a letter I wrote them, wrote the following—

But the hon. member brings in the building industry to support his ridiculous little arguments.

He is obviously not a master builder himself. [Interjections.]

Yes, obviously he is not a master builder. It is arguments of this kind that we have to deal with. The hon. member for Pinelands said: “To be a Black man in South Africa is to have the kiss of death.” He is the man who is now talking about peace. But when he told the Black people this, did he not take account of the fact that he might thereby provoke violence?

Mr. Speaker, on a point of personal explanation: Obviously the hon. the Minister was not in the House yesterday when I spoke to this. During a speech which I made yesterday I said, referring to the accusation which was made against me earlier, that I was quoting one from a group of young Black people who had used those words. Whether we agree with them or not, it seems to be necessary that we should understand that that is the attitude of some of the people with whom we have to deal in this country.

Sir, I am sorry, but really, that is not even a priestly excuse. [Interjections.] Even though the hon. member were to take 50 minutes to preach a sermon about this, he would convert no one. The fact is that he said in Pinelands, and was reported as having said, that: “To be a Black man in South Africa is to have the kiss of death.”

I did not say that.

I attacked him on this, but he only comes along with excuses now. Did he not think at the time about violence that could develop? In the second place: Is this not the kind of thing that is put before people to get them to refuse to fight for this “unjust society”?

Mr. Speaker, on a point of order, must the hon. the Minister not accept the word of the hon. member?

Order! No, the words in question were spoken outside this House.

The hon. member for Houghton had better take the matter up with the hon. member at a later stage. The hon. member for Pinelands went on to say that he was championing the “genuine” people, those who really and honestly intended to perform a different type of national service. However, in time of war it is a fact that whether one serves in a combatant capacity or in a non-combatant capacity in the Defence Force or performs another type of role, then one is engaged in a war effort. Does the hon. member, then, want to take the matter so far as to have those “genuine” people of his totally excluded from any participation? Does he want to tell me that a person nursing the wounded in a hospital, is not performing an act of charity? The hon. member who is so inclined to interject, must reply to this: Do people working in a hospital not perform an act of charity?

Of course.

But even that they must not do. They are so “genuine” that they should not even perform such acts of charity. A medical orderly must not do that kind of work. This, then, is the priestly example set by the hon. member. [Interjections.] He went on to say: “We must tell these people how we stem the seeds of violence.” I shall tell the hon. member “how we stem the seeds of violence”. In the first place we do so by saying that people who want to take one’s country by force, will be resisted by force; in the second place to tell the people: “You are not a wronged community; this country wants to uplift you”; and in the third place by doing what we are doing throughout the Defence Force, namely by telling our troops while they are under training, whether in a combatant or a non-combatant capacity, that war does not only mean conquest by force. That is why all our troops on the borders are motivated. If the hon. member had only taken a little interest, he would have known that our troops are received there with the greatest joy by the indigenous peoples and the local communities. Recently when the foreign newspapermen went to look for the so-called skeletons of people who had supposedly been killed by us in the Caprivi, the one outstanding feature of their visit was that all of them reported that the soldiers were received with applause where-ever they went. That we shall not hear from that hon. member. Not for a single moment shall we hear a word of pride from him concerning the young boys, Afrikaans and English speaking, who are today applauded by Black people in the Caprivi strip and on our borders. No, he wants to break their spirit. With what purpose does he want to do this? I want to ask the hon. member whose cause he is serving.

The devil’s.

Order! That hon. member must withdraw the words “the devil’s”.

Mr. Speaker, I withdraw it.

I must say that I did expect greater responsibility from that bench.

I say with emphasis that the troops of the S.A. Defence Force are not trained only to kill, but that they are all trained—and our officers receive instructions in this—to win people’s friendship and confidence. It is really time for us to start getting our facts straight when we talk about these matters.

The hon. member for Rondebosch came here and gave us a dissertation on how he thought this should take place. He states that there are various forms of national service. Of course we know that, because we debated this for days here before he was in the House. We decided that this was the best form after a commission of inquiry had investigated the matter. As we gained experience, we provided in the legislation that if we had too many of a particular professional group, we could utilize that professional group in other capacities. If, for example, we had too many medical practitioners to serve the Defence Force, we could use the balance for other purposes. If we had too many engineers, the Act provides that we may utilize them for other purposes. The hon. member should just go and read the Act. If the hon. member had taken a little more interest he would know that owing to South Africa’s limited manpower, we have insufficient infantry and other people to meet the needs of conventional and unconventional action. For that reason we are using women to fill certain posts and for that reason we are engaging Coloureds and Indians on a voluntary basis. What kind of dissertation is the hon. member trying to give us here, as if talking to a bunch of school children? The hon. member states that it is a reactionary Government that Marxism in South Africa wants. I have something else I want to quote to the hon. member. I want to read what the former British statesman, Sir Winston Churchill, said about the Marxist’s methods. He said—

Those, Sir, Winston Churchill said, are the methods of Communism. It seeks the kind of party of which the Progressive Party is one. It seeks the kind of party that is neither fish nor flesh. It wants a soft, jelly-like business in politics so that it may undermine a country and undermine the authority of the State in the name of freedom and democracy. Then it ascends the throne and kills them along with all the others. The hon. member should go and read his books. He wants to come and prescribe to us here, but he must not think that because he happens to come from a university, everyone sitting here is a layman in this field. The hon. member must take care what he tells us before speaking here. I want to conclude with the thought that this measure affords the South African Defence Force the opportunity to act flexibly and in accordance with the demands of the times in a modern way and to do the best for our country with our limited manpower without disturbing our economy. It affords us the opportunity of restricting conflict between employer and employee to a minimum. It affords us the opportunity of achieving a proper understanding between the churches and the Defence Force. [Interjections.] For heavens sake, if only the hon. member for Houghton would stop her cackling. This lovable hon. member for Houghton has never yet produced any fruit whatsoever as a result of this cackling. She is continually talking in this House as if she is the only one who has rights here; she makes herself ridiculous and the older she gets the more ridiculous she becomes. An old woman who is ridiculous, is truly ridiculous. As I have said, this legislation affords us the opportunity of establishing a proper relationship between the churches and the Defence Force. On the basis of our policy to date, we and our chaplains shall continue to maintain peace in the Defence Force as well, as regards the churches. However, this legislation also affords us the opportunity of dealing with people who want to meddle with South Africa’s security in the military sphere, whether there is peace or not. If hon. members would like to read anything in this regard, I should like to recommend to them the book “You can Trust the Communists” by Dr. Fred Schwartz. This book was really intended for America …

Well done, Harry!

It may be a cousin of the hon. member’s. This book, written for American conditions, together with that article which was compiled by various people and which I quoted here this afternoon, indicates to us that we are not free from danger when we make peace with countries. The attempts at making peace are developing in Africa and which I welcome, are in fact attempts arising out of fear for the politics of violence of communism. South Africa must remain stable and strong and not only in the economic sphere, but also in the sphere of domestic security and in the sphere of military security. Only then can South Africa weather the storms.

Question put,

Upon which the House divided:

As fewer than 15 members (viz. Dr. A. L. Boraine, Messrs. R. M. de Villiers, C. W. Eglin, R. J. Lorimer, Dr. F. van Z. Slabbert, Mrs. H. Suzman and Mr. G. H. Waddell) appeared on one side,

Question accordingly agreed to.

Bill read a Third Time.

Mr. Speaker, I move—

The amendments introduced by this Bill fall mainly into the following categories, namely—

1. (a) those which give effect to the Budget proposals;
2. (b) those which are occasioned by the new Companies Act;
3. (c) those appertaining to the introduction of PAYE in respect of companies in South-West Africa; and
4. (d) those which are designed either to close loopholes or to modernize the administrative machinery of the Income Tax Act.

As is customary a comprehensive explanatory memorandum has been made available to hon. members, and I shall deal only briefly with the more important measures contained in this Bill.

I would like to deal firstly with the amendments flowing from the Budget proposals of the hon. the Minister of Finance.

Rates of Tax

The rates of tax for the current year of assessment are laid down in the Schedule to the Bill. The basic rates for individuals and companies remain unchanged. The surcharge on the income tax levied on individuals is, however, being reduced from 10% to 5% while, in the case of companies, the loan levy imposed on the normal tax is being halved.

As a result of the decrease in the surcharge, the maximum marginal rate of normal tax payable by an individual on that portion of his taxable amount as exceeds R28 000, in the case of a married person, or R24 000 in the case of a person who is not married, will be 63% in respect of the 1975 tax year. This will afford a measure of relief to persons in the higher income categories, while those in the lower and middle income groups are afforded additional relief by increases in the various abatements.

Clause 5 of the Bill deals with the abatements, and in the explanatory memorandum a comparison is given of the existing and proposed abatements. Apart from the overall increase in the amounts of the abatements the following changes are introduced:

1. (a) Child abatement: The existing requirement for a parent to qualify for the abatement for a child over the age of 18 years but under 21 years or over the age of 18 years but under 26 years and who is a full-time student, is that the child should be wholly dependent on the taxpayer for his maintenance. The courts have on occasion held that the meaning of the word, “wholly”, in this regard means that the child should have no means, however small, with which he could maintain himself or contribute towards his maintenance. On a strict reading of the law a parent was therefore not entitled to an abatement for a child who finished his schooling or university training at the end of a calendar year and who worked for a month or possibly two months during a tax year ending the following February, notwithstanding that he might in fact have maintained that child for the greater part of the tax year. In other cases where the child received a bursary or worked during school or university holidays, this fact could have disqualified the parent for the abatement. The Secretary for Inland Revenue has, however, taken a broader view and laid down a maximum of R450 before refusing the abatement. Under the new provision the abatement will be granted if the child is wholly or partially dependent on the taxpayer and provided that the child himself is not liable for normal tax for the relevant tax year. As hon. members know, an unmarried person must, for the 1975 tax year, have an income in excess of R700 before becoming liable for income tax, and furthermore, bona fide bursaries are not regarded as income.
2. (b) Additional abatement given to persons over the age of 60 years: Apart from the fact that this abatement has been increased from R350 to R400, the existing provision whereby the abatement diminishes progressively from an income level of R1 500 for married or R1 000 for unmarried persons has now been withdrawn and the abatement will, as from the 1975 tax year, only diminish with the other abatements after an income level of R5 000 has been reached.
3. (c) Children born during the tax year: At present an abatement of R100 is given during the year of assessment during which a child or children is or are born, irrespective of the number of children born, and an additional R100 medical abatement is also allowed. For ease of administration these two abatements are now being amalgamated and a combined abatement of R200 will be allowed in respect of each child born during the year. This will mean additional relief in the case of multiple births and is, I think, a just reward for such parents.

Changes to other abatements have been clearly set out in the memorandum and 1 shall not comment on them any further.

Bantu Workers Training Allowance (Clause 14 of the Bill):

Hon. members will recall that my colleague, the Minister of Finance, announced in his Budget speech that, in order to encourage employers to train Bantu employees so as to make better use of their services, and thereby increase productivity with all its attendant advantages, the Government had decided to grant a tax concession as an incentive to employers. This concession is embodied in clause 14 of the Bill.

In essence the concession is that if an employer in the course of any trade—other than mining—carried on by him in the Republic has incurred training expenditure under a training scheme approved by the Secretary for Bantu Education, an allowance equal to 100% of such expenditure will, in addition to the ordinary deduction of the expenditure, be allowed as a deduction in the determination of his taxable income. In the case of a trade carried on in an economic development area the allowance will be up to 125% of the training expenses incurred, but such higher allowance will only be granted if, in the course of the trade, a process of manufacture or a process of a similar nature is carried on and, in addition to the training scheme being approved by the Secretary for Bantu Education, the Minister of Finance, having regard to all the circumstances of the case, has directed that it be given in a particular case.

The type of expenditure qualifying for the allowance is clearly enumerated in sub-paragraph 5 of the new section 11sept which is inserted in the Income Tax Act by clause 14 of this Bill and I shall not dwell thereon any further, except to say that expenditure of this nature incurred by an approved training scheme after 1 April 1974 will qualify for the allowance.

Machinery Initial and Investment allowances

Clause 15 of the Bill gives effect to the Budget proposal to increase the initial allowance on plant and machinery brought into use in a metropolitan area on or after 15 August 1974 from 15% to 25% and the investment allowance from 20% to 25%.

The maximum allowances for economic development areas is being increased correspondingly. The qualifying period for these allowances is also being extended for a further year from 30 June 1977 to 30 June 1978. The qualifying period for the allowances for buildings wherein a process of manufacture or a process of a similar nature is carried on, is similarly being extended for a further year.

Married women

Clause 19 of the Bill gives effect to the proposal to increase the deduction from the earnings of married women from R500 to R600 per year.

Mining taxation

Clause 28 gives effect to the concessions to the mining industry announced in the Budget. Subclause (1)(a) shortens the period during which the unredeemed capital expenditure of a mine—other than a gold mine—can be redeemed for tax purposes from thirty to five years.

I now wish to refer to the capital allowance of 10% which is to be given to new gold mines in terms of subclause (1)(c). Although it was announced that the increased allowance would be granted to new gold mines in respect of which leases were granted after 14 August 1974, it has now been decided to extend this concession to new gold mines in regard to which the decision to grant a mining lease was signified after 1 January 1974.

Amendments occasioned by the Companies Act, 1973:

Hon. members probably observed that a number of amendments contained in this Bill are occasioned by the changes in the company law brought about by the Companies Act, 1973, and that the opportunity has also been taken to introduce new definitions and to reword others relating to companies so as to bring out their meaning more clearly, while not effecting any material change in the tax law. The most important amendments flow from the provision in the Companies Act whereby a company’s share capital can be constituted by shares having no par value.

As hon. members know, the award of bonus shares—now called capitalization shares—can, in certain circumstances, be subjected to tax as constituting a dividend, the value of the dividend being the nominal value of such shares. Shares having no par value can also be awarded as a bonus, and it is therefore necessary to assign a value to them to put them on the same footing as shares having a par value. The meaning of “nominal value” has therefore been defined in clause 4(l)(k) of the Bill.

A further problem arises where a company whose capital consists of shares of no par value, increases its capital by transferring reserves or unappropriated profits to its stated capital, with or without the distribution of shares. If the transfer is accompanied by the distribution of shares, it constituted an award of a bonus, and where such bonus is regarded as a dividend, the shareholders can be taxed on the nominal value of the shares which they receive. A transfer without distribution cannot, however, be so taxed as the shareholders receive nothing; the transfer is a mere book entry. This creates a loophole for possible tax avoidance and also results in inequity in the treatment of shareholders holding shares with a par value and those whose shares have no par value.

The whole question of the treatment of capitalization shares has, therefore, been reviewed and the definition of “dividend” has been amended by clause 4(1) (e) of this Bill with a corresponding amendment of section 8(2) of the principal Act by clause 8 of this Bill.

The treatment of capitalization shares awarded prior to 1 January 1974, as well as capitalization preference shares issued at any time, remains unaltered, but those awarded on or after that date, and transfers to the stated capital account of a company, without distributions to shareholders, will henceforth, in broad terms, be treated as follows for tax purposes:

1. (a) The award of capitalization shares by a private company will no longer be regarded as a dividend as hitherto, provided the shares are equity shares and the company has not reduced its capital during the preceding ten years at a time when it had unappropriated profits available for distribution. This rule presently applies to public companies only.
2. (b) All companies with shares of no par value will be free to make transfers from unappropriated profits and reserves to stated capital without such transfers being regarded as dividends at that juncture.
3. (c) Where a company issues tax free capitalization shares or makes transfers from profits or reserves to capital, the relevant amounts will be deemed to be amounts available for distribution to shareholders as ordinary dividends. As long as the company does not reduce its capital, or is not liquidated, the amounts will not be regarded as dividends. If, however, capital is reduced or the company is liquidated, any repayments of capital to the shareholders will be deemed to be ordinary dividends in so far as the payments to shareholders do not exceed the amounts deemed to be dividends. In the case of liquidation dividends, the differentiation between capital and noncapital profits is retained.
4. (d) If a company should lose some of its paid-up share capital as a result of losses actually incurred, the amounts regarded as being available for distribution will, on liquidation or formal reduction of capital, be reduced.
5. (e) The position in regard to the issue of capitalization shares by public companies has also been amended. Whereas previously the company was taxed when it reduced its capital within 10 years after an issue of capitalization shares, on an amount equal to so much of the cash amount or value of assets awarded as did not exceed the nominal value of the capitalization shares, this rule has now been abolished in respect of the award of such shares after 31 December 1973. Awards of capitalization shares after that date, followed by a reduction in share capital or the liquidation of the company will, in the appropriate circumstances, lead to an amount being taxed as dividends in the hands of shareholders.

I now come to the exemptions. Clause 10 of the Bill introduces various new exemptions most of which are self-explanatory and I will confine my remarks to those introduced by subclause (1)(c). Hon. members will recall that when section 10(1)(o) of the Income Tax Act, in terms of which associations registered as companies in terms of a licence granted under section 21 of the Companies Act, 1926, were granted an automatic exemption from income tax, was deleted from the Act last year, it was explained in the course of the Second Reading address on the Income Tax Bill to this House that the amendment would only come into operation with effect from years of assessment ending on or after 1 January 1975, and that companies who were then enjoying this exemption would have to apply to the Department of Inland Revenue for exemption in terms of other existing provisions of the Income Tax Act.

During the recess the Department of Inland Revenue examined the memorandums and articles of association of companies registered under section 21 of the Companies Act and found that most of the companies qualified for exemption, either wholly or partially, under the existing provisions of section 10 of the Income Tax Act. There were, however, a number of organizations deserving of exemption from tax which would not be covered by section 10 as presently worded.

To meet these latter cases, new paragraphs are being introduced into section 10 of the principal Act and others amended.

The main requirements to qualify for exemption under the new section 10(1)(cB) are that the organization or body should have as its sole or principal object one of the nature set out in the various paragraphs of the new provision. In addition, its activities must be wholly or mainly directed to the furtherance of its objects; its constitution must debar the distribution of its profits to any person; and its constitution must provide that on winding up or liquidation the remaining funds are given or transferred to an organization with similar objects.

Special exemption is also provided in the new section 10(1)(cC) for organizations registered under the Companies Act, 1973, whose sole or principal object is to provide new dwelling houses for occupation by persons who are employees of any employer who is a member of such association or is associated with such employer, or to members of the general public.

To qualify for exemption, certain conditions must be met, for example, the sole or principal object must be actively pursued; the Secretary for Inland Revenue must be satisfied that the organization’s profits from housing are kept at a minimum having regard to its future needs; it must not carry on business not directly connected with its sole or principal object; and, in the case of organizations providing housing for the general public, the following further conditions are met—

1. (a) the directors must be independent persons who derive no remuneration for their services, and
2. (b) at least one of the directors must be nominated by the Minister of Community Development.

The first part of the exemption refers to special section 21 companies established by large employers to provide housing for their employees while the latter part of the exemption is designed to cater for those private organizations who provide housing at as low a cost as possible. Such organizations have, over a long period, rendered a valuable public service and previously enjoyed exemption from tax because of their being registered under section 21 of the Companies Act, 1926. It would be a disservice to the community if this exemption were not to be extended under the new provisions.

In regard to the full exemption now proposed under the new section 10(l)(cD) for amateur sporting associations I must explain, Mr. Speaker, that up to 31 December 1974 amateur sporting organizations licensed under section 21 of the repealed Companies Act, 1926, enjoy an automatic exemption from income tax while those not so registered pay tax on their investment income. As such organizations plough back their income into the sport they serve and must of necessity build up funds to provide for future capital and other non-recurrent expenditure, it seems unreasonable to tax them on their investment income. Provision is now being made for full exemption of any organization which satisfies the Secretary for Inland Revenue that it is an amateur sporting organization.

I can assure hon. members that all deserving associations, bodies or organizations which previously enjoyed exemption from income tax under the old provisions will continue to do so under the hew dispensation and only those mentioned in the Van Wyk de Vries Commission report as being apparent ordinary business undertakings doing business in competition with taxpayers will lose the tax exemption they previously enjoyed. All these exempted organizations will be required to submit annual income tax returns and copies of their annual accounts to enable receivers of revenue to satisfy themselves that the organizations are pursuing their sole or principal objects and that the other requirements of the Act are being met.

Shipping

Clause 17 of the Bill modernizes the provisions relating to allowances for ships—to bring them in line with the special circumstances prevailing in the ship-owning world. These amendments have been fully discussed with the interested bodies who welcome the new provisions.

Although the new provisions form a considerable part of the Bill, the principles contained therein relate to a particular trade, namely, shipping, and as they are not of general application I will not take up any more time of the House to go into more details.

PAYE—South-West Africa

A very important measure is introduced by clauses 20, 45, 46, 49 to 57 (inclusive), 62 and 68.

Mr. Speaker, I here refer to the machinery needed for the introduction of PAYE in regard to companies in South-West Africa.

When under the South-West Africa Affairs Act, 1969, the levying of tax on the incomes of companies in that territory was transferred to the Republic, the South-West African companies did not fall under the PAYE provisions relating to companies in the Republic. They continued to pay tax in arrear, i.e. they were assessed for tax after the close of their financial years on income earned during such a financial year. The reason for this was that PAYE was not in force in South-West Africa as regards individuals and it would have been anomalous to single out companies for different treatment.

The South-West Africa Administration is, with effect from 1 March 1975, introducing PAYE in the territory with regard to individuals and it is therefore appropriate that companies be similarly brought into the PAYE provisions of the Republic, but in their case the provisions will apply in respect of years of assessment ending on or after 1 April 1975.

As the change will entail the paying of tax during the year in which the income is earned as opposed to the present payment in arrear basis, it is necessary that some form of relief be given during the transition year to ease a company’s burden otherwise it could be called upon to pay two years’ tax in one year.

The form of relief is, as was the case when PAYE was introduced in the Republic, a “tax holiday” which, in most cases, will be the lesser of—

Provision has also been made for further relief in regard to companies which were in existence on 30 June 1968, i.e. at the time of the change over under the South-West African Affairs Act, which I have mentioned before, and whose years ended on a date falling before 30 June each year, as under the Income Tax Ordinance of South-West Africa, such companies had, previously, had their incomes “grossed up” to a year ended on 30 June following the closing dates of their accounts.

After 1 April 1975 all companies deriving income from a South-West African source will be required to pay provisional tax on such income at the times stipulated in the Fourth Schedule of the principal Act.

PAYE—Contract workers

Mr. Speaker, another amendment to the PAYE provisions relates to contract workers, i.e. those workers who are recruited by a personnel supplying agency and hired to an employer. The hiring employer does not pay the employee’s remuneration directly to him but pays the agency a lump sum according to its contract with the latter. The agency then pays the employee the salary it contracted to pay him. Both the agency and the hiring employer regard the employee as an independent contractor and fail to deduct PAYE from his remuneration. As the law is not quite clear in this regard, an amendment to the Fourth Schedule to the principal Act is introduced by clause 47(1)(c) of this Bill to put the matter beyond doubt and the personnel supplying agency will be required to deduct PAYE from the remuneration it pays the employee.

Gains from insurance policies

Mr. Speaker, my hon. colleague, the Minister of Finance, mentioned in his Budget speech that amendments would be introduced into the Income Tax Act to bring gains on all single premium endowment policies issued after 14 August 1974 into the taxation net. Clauses 63 to 68 of the Bill give effect to this proposal.

May I say, Sir, that the object is not to single out this form of investment—for that is what it is—for more onerous treatment than any other. The provisions of the Sixth Schedule to the principal Act are merely designed to ensure that the proceeds from this type of investment are, just like the proceeds from any other form of investment, subjected to income tax.

The provisions relating to the taxation of single premium endowment policies are of necessity rather complex as they have to meet a complex situation, but the crux of the matter is that, whereas previously the gains on maturity of a single premium endowment policy escaped tax if, for a period of ten years from the commencement date of the policy, it remained intact and no benefits were repaid under the policy, or loans made on the strength of the policy and some other conditions were met, the qualifying period of ten years has now been withdrawn in respect of policies, the proposals for which were made and accepted in writing on or before 14 August 1974.

An amendment has also been made in regard to the rate of tax of taxable gains. Whereas previously all such gains were subjected to tax at the average and not the marginal rate, this concession will—except as regards policies the proposals for which were made and accepted in writing on or before 14 August 1974—be restricted to gains in respect of maturity benefits payable after ten years, death benefits, or benefits payable on the final surrender of a policy after ten years. Benefits payable on partial surrenders will be taxed at ordinary marginal rates.

Mr. Speaker, manuscript copies of the Bill and explanatory memoranda were given to the financial groups of all parties some time ago as it is realized that taxation Bills are by nature complex and technical and I trust that they have been studied carefully. I make no apologies for the complexities of the Bill, as the situations the provisions have to meet in our increasingly sophisticated economy are themselves becoming more and more complex.

There are a few other amendments which are fully explained in the memorandum and I will not take up the time of the House by going into more detail thereon.

Mr. Speaker, may I start by saying that I appreciate the courtesy which has been extended to me not only by the hon. the Minister who is now in charge of this legislation but also by the hon. the Minister of Finance and by the Secretary for Inland Revenue, I think the extremely courteous and co-operative treatment in respect of a matter such as this should not go by without it being placed on record.

It is quite interesting to note that this Bill had a rather checkered history. It started off with the taxation announcements which were placed before us by the hon. the Minister of Finance. It was then followed by the Acting Minister of Finance in whose name this Bill appeared, namely Senator Horwood, and now it is the Minister of Tourism and Indian Affairs who is in charge of this Bill. It seems to me to be a hot potato which is being passed along. I wonder what the significance is of the fact that no one seems to want to hold on to this hot potato long enough to deal with it to the end.

The basic fiscal instruments which are available to the State can be used not only to create revenue for the State’s activities but also to combat inflation and to encourage growth and ensure general, sound economic conditions and an acceptable social policy. Taxation measures can be used to restrain or to stimulate spending and investment, but fiscal steps should not only be taken to remedy existing undesirable conditions and tendencies, but using the indicators which are available and the forecasting skills which are available to the Government, they should be used to anticipate undesirable conditions. The present taxation proposals are regarded by the United Party as not measuring up to the desirable standards in that the fiscal proposals, taken in the light of existing monetary policies, do not adequately act against inflation, do not take the steps required for growth to continue at a rate which in fact is adequate for South Africa’s social requirements and economic aspirations and do not apply in full measure the principles of equity and simplicity required for taxation proposals. They do not encourage savings adequately nor do they attract the marginal worker, nor do they act as sufficient incentive for productivity. For those reasons I wish to move as an amendment—

There are, of course, many proposals in this legislation of which we approve. In fact, there are many proposals we have asked for over many years and which my predecessor in this position, as well as other hon. members on this side, have asked for. We are not ungracious about the improvements which have been effected in the legislation and of which we approve, but there are many matters, perhaps more by omission than commission, which we feel should be rectified in order to meet fully the economic and social problems of South Africa. I propose, therefore, to deal with some of the individual matters in the Bill. Quite naturally, as the hon. the Minister has indicated, a Bill as complex and as lengthy as this, cannot be dealt with in detail by any one man. Other hon. members on this side will deal with other provisions. We will also deal with some of them at the Committee Stage so as not to duplicate discussion or debate.

The rates of taxation in respect of this particular Bill are set out in clause 1 and the schedule to the Bill. On the face of it is quite clear that there is a reduction in taxation, but what has not been taken into account and has been forgotten is that money has lost its purchasing power. Let us take the case of a man who has the same income as last year. If the tax remained the same, the amount of disposable income which he would have after he had paid income tax, would obviously buy less for him. The important thing is that the percentage of the tax reduction which is being given in this particular Bill, is less than the inflation rate. I do not want to advance the arguments again which I have had with the hon. the Minister of Economic Affairs and the hon. the Minister of Finance in regard to the rate of inflation, as to whether it is legitimate to take an annualized rate not based on just one month but based on a number of months and also taking trends into account. This is, by the way, a legitimate financial mechanism which unfortunately some hon. members on that side do not appear to be aware of. If I take their figures and use the lowest possible figure in respect of inflation—a figure slightly in excess of 10% which was mentioned by the hon. the Minister of Finance this morning—that figure is still considerably in excess of the concessions which have been made in this piece of legislation. In other words, if our incomes remain the same and if we take into account the most conservative inflation rate during this year, the average man who has not had an increase in pay is in fact substantially worse off. I can give an example. If we take an income of, say, R15 000—let us take the higher income group because they stand to gain the most from some of the steps that have been taken—we find that the average concession is only 4½%. If we take the actual concession in respect of taxation paid it is in fact less than 1%. Even if we assume that people’s salaries have been increased and that their incomes have been increased to some extent, there is still not an adequate concession given because the fact that they are also moving into a higher tax bracket is ignored. Every time one’s income increases one moves into a higher tax bracket. One then pays tax at an increasing rate and if one looks at the tables which are available one will see as one moves up how one’s tax rate goes up. The one indictment of this Bill therefore is that it takes away more available money, bearing in mind inflationary conditions, and leaves less disposable income to the ordinary man who has to pay tax. I think this is a very important factor, because it has to be taken into account in regard to social planning and in regard to the whole situation in South Africa in relation to tax and inflation.

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

Evening Sitting

Mr. Speaker, before the adjournment I was dealing with the issue that the revenue of the State in inflationary times will in fact increase without actual tax increases. The State can therefore even reduce taxation and still take more from the taxpayer because of the fact that logically incomes go up not only because of increasing productivity but also because of inflation. There is therefore what I think can be correctly termed a silent tax extractor. That is really what the effect is of inflation in times when taxation takes very much more than it would in normal circumstances. I think that this silent tax extractor should be stopped by introducing a system of indexation so that the public may see the real basis on which tax is being levied and may be aware of what in fact the authorities are taking from the taxpayer in these particular circumstances. This system of tax indexation is one which I think other members on this side of the House will talk about because it is a very important matter to look at under present economic circumstances.

The second matter I would like to touch on is the fact that the tax bulge which has existed for so many years still remains, although it has been ironed out a little. In order to remove the tax bulge that still remains I think the hon. the Minister might well under the circumstances consider introducing a flat rate of taxation in terms of which there are increasing rebates as we go down the income scale so that we get a far more equitable basis than the present sliding system in our taxation structure. If I may deal with rebates generally—the hon. the Minister paid some considerable attention to them—I want to say that we approve of the concessions that have been made but there is a number of matters to which I would like to draw the hon. the Minister’s attention. Firstly, why should abatements for children disappear as one’s income increases?

Are you talking about abatements or rebates?

We can use the term “rebates” as well because it is almost synonymous with “abatements”. I do not want to raise the issue that was recently raised in the United Kingdom by Sir Keith Joseph as to whether in fact that people who are better off should be encouraged to have more children because, actually, it is an economic and sociological fact that the lower income groups have more children than the higher income groups. It does seem to me that the people in the higher income groups should certainly get the same benefits that others do if they do have children. I think a very good case can be made out that the better off you are, the more children you should have rather than the reverse.

There is a second point I want to deal with in regard to children. Should the rebates or abatements, if you care to call them that, in respect of children in excess of two not be increased progressively as you go along? In the circumstances in which we exist, in this type of situation, I certainly would like to see one get a greater rebate and a greater benefit the more children one has, because there is little doubt that the financial burden which one has to bear increases as one goes along.

The abatements for insurance, provident funds and medical and dental expenses have now all been consolidated. Insurance receipts which have to be furnished by the taxpayer are normally for fairly large amounts. However, for medical, dental and particularly pharmaceutical expenses, the amounts are small, particularly if the taxpayer belongs to a medical benefit society where he pays a percentage of the amount only. There are going to be an awful lot of people keeping an awful lot of tiny receipts in order to try to make use of this benefit. On top of it all, there is going to be somebody in the tax office who is going to have to devote his time to going through them. Sir, with great respect, it seems to me that in order to save manpower, not only on the part of the taxpayer but on the part of the revenue authorities, we should have a fixed sum of money for which you can claim a rebate without having to furnish any receipts at all. I would suggest a basic amount of R150, for instance. I do not think there is anybody in the country who does not spend R150 per year on medical expenses for his family. I think that to go to all this trouble is really quite unnecessary in the circumstances.

There is another point which I would like to raise, and that is the social problem in regard to accommodation for aged people. In days gone by, the children had their parents stay with them in their homes. However, as circumstances have changed socially, there is an ever-increasing problem on the part of people who are aged and infirm to find somebody to look after them. They inevitably become a burden upon the State more and more. I wonder whether there should not be encouragement offered to those children who are prepared to have their aged and infirm parents with them in their homes and to look after them. I think there are very real strains and problems which are imposed on households in this connection. We shall move an amendment at the Committee Stage to the effect that those who exercise this social obligation should receive an additional rebate. I believe that there is a very strong case for the rebate to be doubled for people who exercise this responsibility towards their parents.

I also want to deal with the whole question of whether the rebates should in fact be reduced at all as one’s income rises. I believe that the expenses which are included in these items are much the same, irrespective of what one’s income group is. If the hon. the Minister will not abolish this provision altogether, so that one can continue to receive one’s rebates, irrespective of how much one earns, as it used to be in years gone by, will he not at least consider, instead of reducing the amount by R2 per R10 over R5 000, allowing it to be reduced by R1 per R10 over R5 000.

I would like to deal with another matter, viz. tax problems of individuals. I would like to make the following suggestion to the hon. the Minister: We talk very much about what is expected of our people in serving South Africa. We talk of national servicemen and of what is required of them. However, I would like to suggest today that the income which the national servicemen receives from the Defence Force should be exempt from income tax. I think this gesture by the authorities at this particular time would be more than appropriate. I may point out also that there are many young men who, while they study, not only do their military service, but work in vocations in order to assist with their own maintenance and their own education. In doing so, they do exceed the R700 level which is now prescribed. I think that even though they may still be partially dependent, if we could provide that this income be exempt from tax, it would mean a very small reduction in the revenue of the State but it would be a very big gesture which would be appreciated by the young people of South Africa. There is also the problem that when you include their income with that of their parents, abatements tend to fall away, as I have indicated. I think this would be an appropriate matter to deal with at this particular stage.

I would also like to talk for a moment about the question of savings. It is basic to our free enterprise society that savings should be encouraged. In fact, savings are needed in order to create new capital for production and in order to create a stable society. The Reserve Bank figures for the year ended 30 June 1974 indicate a drop of 32% in personal savings. It is quite clear that in inflationary times people save less because their disposable income is less. There is, furthermore, an encouragement to invest in aspects which are non-productive, which people seek in an endeavour to find a hedge against inflation. There are a number of solutions that can be offered for this problem. I have already spent some time, and so has my hon. colleague from Constantia, addressing the House on the necessity for having an inflation-proof bond in order to allow the small man to invest in something by which he can protect himself against inflation. He does not have sophisticated advice available to him and I think he needs to be protected. An index bond would be far better if the bond were geared to the consumer price index, in preference to dealing with it in the fashion in which it is dealt with in this piece of legislation. It is quite clear that taking any inflation figure, with a return of 8% one gets less money back than one initially put in. There is no doubt about that. As a matter of fact, the hon. the Minister of Finance, in one of his addresses to this House, made it very clear that that was the position. In these circumstances, I think the case for an index bond is virtually irrefutable. The second suggestion deals with a gold bond certificate which is issued at a price related to the present price of gold and which is redeemable at a price relative to the gold price prevailing when redemption takes place. Gold is an asset of South Africa, it belongs to South Africa and the only people not allowed to participate in dealings relating to this metal, except to buy shares which is a dangerous investment for the uninitiated and sometimes also for the sophisticated, are the people of South Africa. One cannot buy Kruger Rand, and yet the ordinary man in the street ought to be allowed to participate in the gold of South Africa. I am making a request for such a certificate.

There is a a third proposal I should like to make this evening. Today one allows a man to deduct from his income amounts which he invests in retirement annuities. One allows him to deduct amounts for his pension. We agree with all of this. However, he is not allowed to deduct money he invests in Government bond issues. This should be done in order to encourage saving. I think this is a flaw. I think that people who are prepared to invest in Government bond issues should be allowed to deduct these amounts from their gross incomes—these would be deductible in terms of section 11 of the Act—in the same manner as pension fund and retirement annuity fund amounts are deductible.

You can’t be serious.

If the hon. the Minister thinks I cannot be serious, let me tell him that if he wants to encourage saving, that is the way to do it. Let me give him a simple example. Why are my payments to an insurance company for a retirement annuity deductible, whilst if I want to be patriotic and not take out that retirement annuity fund, preferring to put the money into Government bonds, the amount is not deductible? With great respect, that is illogical. The Government would actually have the use of this money. In fact, the Government would be doing the country a service because such measures would be anti-inflationary since the money would be withdrawn from circulation in that form. The steps would therefore not only be anti-inflationary, but the Government would have the use of that money and also encourage saving, which is what is necessary in South Africa. Sir, even though the hon. the Deputy Minister says that I cannot be serious, I want to assure him that I am absolutely serious, and not only am I absolutely serious, but people with greater experience in finance than myself and the Acting hon. Minister in charge of this Bill have introduced this in other parts of the world, and they are serious and they are more sophisticated than the two of us are, so let us not show our inexperience in these matters by making facetious remarks. This is far too serious a matter for facetiousness.

Then let me deal with another matter and that is the question of housing, which is a very real problem to us. Sir, I asked, as you may remember, during the Budget debate for an amendment to section 11(c) of the Act, which is section 12(c) of this Bill, in order to allow the employer to deduct money spent on the housing of employees after 1 December of this year, and I am pleased that that amendment for which we asked has been incorporated in this Bill. But, Sir, there is more to it than this. I believe that the fiscal approach to the question of the cost of housing requires further examination. We presently have an incentive to employers to provide housing for their employees; we have a tax-saving building society scheme which is designed to encourage people to purchase homes and we also have an interest subsidy payable on certain mortgage bonds, with all of which we agree. But, Sir, we also asked that interest which is payable in respect of mortgages should be wholly or partly deductible for tax purposes, and the hon. the Minister of Finance in dealing with this said that he rejected it because it was discriminatory as some of the people concerned lived in rented accommodation and that others had already paid off their bond. Sir, I am prepared to accept the concept that there is discrimination against those who live in rented accommodation, and I will deal with that, if I may. I believe that those who live in rented accommodation, particularly flat-dwellers, are people who also require assistance. We have the Rents Act legislation which creates conflicting demands. The problem of the landlord is that his mortgage rates are increasing and that his costs are escalating while the tenant faces the prospect of ever-increasing rental. Should we not therefore make a concession to flat-dwellers, particularly the aged flat-dwellers and those who are in the low-income group, of whom I personally know many thousands? Sir, concessions in this regard, as the hon. the Acting Minister may or may not know, are given in many other countries, and they are given particularly to ensure that a tenant who occupies housing of a reasonable standard in other words not housing of a standard which is beyond his station of life, does not have to spend more than 25% of his income on rent. I personally know many pensioners and other aged who pay 25% and more of their income on rental and who are living on the breadline in respect of their other requirements. I believe, and we on this side believe, that a subsidy should be available to these people or, as we are concerned here particularly with tax, let me put it this way. We feel not that there should be a tax in respect of excess rental paid, but that for pensioners over the age of 60 years and for people who earn less than R5 000 a year there should be what has been called in America a reverse form of taxation, under which the State pays to these people, towards their rental, a reverse tax which is calculated in such a manner as to ensure that they do not spend more than 25% of their meagre income on housing.

Sir, the next matter that I would like to deal with is the position of the marginal worker. One of the recognized ways of fighting inflation is by increasing production without making further investment, to bring into employment the so-called marginal worker and also to encourage the present worker to work harder or to work longer hours. Sir, married women are in the category of marginal workers. They already have the necessary skill; money has been spent on training them, and that investment, while they do not work and make a contribution to the economy, can be said to be standing idle. Sir, the concessions which are granted to married women in this Bill are inadequate to attract women to work who do not have to work for economic reasons, and the probabilities are that the more skilled they are, the more likely they are for social reasons not to need to work, and I think that the incentive for them to work must be real. We would like to see married women taxed entirely separately in respect of their earned income. Sir, if this is not acceptable to the Government, then at least allow one-half of the amount they earn or R1 200, whichever is the greater, not to be included in the husband’s assessment. I believe that it should also be pointed out that the inclusion of married women’s income with their husbands’ quite clearly often has the effect of reducing his abatement where the income is over R5 000 per annum.

The second issue in this marginal worker matter relates to the increased productivity of people. The Franzsen Commission reported on this matter that in fact one can get greater production, and greater production in inflationary stages of the economy, by getting people to work more and encouraging them to work more. What can one do to encourage greater productivity? We all talk about it, but we do not make concrete suggestions. The suggestion which we want to make here is that if, in fact, workers are prepared to work harder, to work overtime and to work in excess of a recognized minimum of, say, 40 hours per week, they should only be taxed on half of the overtime pay. If one does that, one will encourage people to work, because their take-home pay will be greater and there will be every incentive to greater productivity in South Africa.

Whom are you quoting?

Let me go one step further by dealing with the question of averaging in taxation. Farmers are at present entitled to elect to average their income over a five-year period. The reasons for this are well known, and we agree with these reasons, but why is this concession not made available to other self-employed persons such as professional men? Why should they not have the same degree of choice? There are ups and downs in respect of professional men, as I am quite sure we all know, whether we practise at the Bar or elsewhere, whether we are attorneys, outside professionals or estate agents. We all know it. Why cannot we, in fact, in these professions have the same right to claim averaging as the farmers have? I should like to urge the hon. the Minister to give consideration to that particular aspect of the matter.

I should like now to deal with the question of education. We in South Africa can, I think draw our strength and our ability to resist many of the problems from being able, trained, skilled and from being highly educated. I have already spoken of what I regard as the plight of the middle classes in South Africa where the cost of higher education for their children is becoming an ever-increasing burden. I should like to put it to the hon. the Minister again whether amounts which are spent either on the education of his children after school—I am not talking about private school education; I am talking about post-school education—or on his own further education should not be deductible for tax purposes? The argument has been advanced that there is already the right to deduct donations which one makes to universities. But, with great respect, there is a tremendous difference between being able to deduct the amount which one donates to a university and the amount which one spends on the education of one’s own children or on one’s own further education. It is, with respect, illogical that when one can have deducted the amount which one donates for the general good, the amount which one spends on one’s own children cannot, in fact, be deducted. I should like to appeal to the hon. the Minister to give this matter his further attention.

May I now turn to the question of companies? I have dealt specifically with matters which affect the individual because I believe that those are matters which require our most urgent attention. I should like to deal with the question of companies in terms of the legislation which is before us. I have no complaints as far as the rate of tax is concerned. I think the rate of company taxation compares favourably with the rate of company taxation in most parts of the world. There are other countries in which the rate of taxation is more favourable but, on the other hand, there are many countries in which the rate of taxation is less favourable to companies than it is in South Africa. I have raised this question before in this House and I have had no answer to it. We could, in fact, attract very substantial capital to South Africa if we created a tax haven situation for off-shore companies. This will attract capital to South Africa. It will be no drain to us because it will attract capital. The structure of a tax haven company which is, in fact, owned by non-residents and in respect of which one can attract capital to South Africa, is such that I cannot understand why the Government does not consider it. It will not affect the interests of South African taxpayers. It will not affect the interests of people who in the normal course of event invest in shares in companies and in regard to which they must pay tax.

If, however, an examination is made of the situation in the so-called tax havens of the world it will show that millions of millions of rand can be attracted to a country by creating a tax structure particularly for these purposes. This is not a matter which puts us in a category as if something is wrong with us. Far from it: there are many countries in the world which are as reputable as we are who create attractive conditions for this kind of activity. Let me give hon. members one example with which I am familiar, namely the Netherlands. The Netherlands, a country which is supposed to have many socialist tendencies, has a structure of company taxation which attracts investors and capitalists from all over the world. It attracts revenue to the Netherlands, it attracts work to the Netherlands and there are invisible earnings from this kind of activity. I want to appeal to the hon. the Minister to give this matter some attention.

The second matter I want to deal with is the concept that many companies at the moment in South Africa are suffering from liquidity squeezes. Whichever way you care to look at it there is without doubt a shortage of money. It is part of the monetary policy of the Government to cause money and near-money to be contracted in order to use it as a weapon in the fight against inflation and in order to deal with the situation in respect of the balance of payments. Arguments on that score are not appropriate in this debate, but it is a fact that there is a shortage of money. One of the matters I wish to put to the hon. the Minister is whether, when the coffers of the exchequer, in other words our own coffers in the State are readily overflowing, we should not allow certain taxation to be deferred so as to create greater liquidity for companies in South Africa.

The concept of deferred taxation is one which would involve the extension of credit to companies to pay their tax. They would be required to pay interest on that extended credit and I would suggest that it should be at ordinary commercial rates. The money which they are allowed to defer should only be used for investment purposes and there should be no dividend increases while the amount of tax is owed. That concept involves no prejudice to the State and the liquidity situation would in fact be eased for many companies. At the same time investment would be encouraged, which would lead to greater production in South Africa. I do not think that this kind of incentive can be given to companies which are not productive and to investment companies and to companies of that sort, but you can ease the liquidity squeeze for companies which perhaps need assistance in this regard.

The second matter which I want to deal with which also has a bearing on the liquidity situation is undistributed profits tax. I have never been a champion of undistributed profits tax. There is a reason for it, namely to get people to declare dividends so that they should pay tax on them, but with great respect, in a time when there is a liquidity squeeze there is every reason why people should be allowed to retain the money and not declare dividends in this regard. I believe that undistributed profits tax should be suspended. If you do not suspend it the amount of 5% should at least be allowed to increase to 15% in respect of unpaid capital so that the Government could again assist in the easing of the liquidity squeeze.

The third point I wish to make relates to the training programme. We welcome this legislation. This side of the House has asked for these facilities for years and years. We have asked for greater training of Black people and we welcome it and we are pleased that these steps have been taken. Why must it only be in respect of the Black people though? Why not also in respect of Coloured and Indian people as well?

And the White people?

I have no objection if we do it for Whites, but there are many facilities for Whites who are trained. I do not want to discriminate against the Whites; I am prepared to have it for everybody. But I am prepared to accept that the Black people perhaps need it more than most at the moment. They need this encouragement. Why, however, must the other under-privileged people be left out? I should like to hear from the hon. the Minister why this concession cannot be given in respect of the other races. If the hon. member for Caledon will support me I am prepared to have it for all races. I recognize that the Black people need it perhaps more than anyone, but one needs only to look at the plight of the Coloured people and look at the plight of many of the Indian people. The hon. the Minister is familiar with the plight of the Indian people because I think he has familiarized himself with the problems of that portfolio which he now has. I think he will agree with me that there is ample scope for training in those areas as well.

I want to deal with another matter which relates to companies. I shall touch on it only very briefly, because my colleagues will deal with it in greater detail. I want to discuss depreciation allowances. I think there is every case in the world to be made out for the fact that one must apply modern inflation accounting techniques. If one is going to allow depreciation on a basis on which one expects people to replace machinery, one must in fact take replacement value into account. I do not think there can be any question about it. Other people will speak on this subject in detail, but I want to make a plea that we should adopt modern inflation accounting practices.

One last point I want to deal with is the question of non-residents’ investments in South Africa. We have made concessions to non-residents in respect of loan funds, but I do not think that this discretionary thing helps. In respect of new money which is lent to South Africans there should be no non-resident shareholder’s tax on interest at all. What happens in respect of overseas investments? People take the tax into account before they invest in any case. I know this from experience. I want to say that there is no point in it if we really want to encourage investment in South Africa of loan funds.

The second point I want to make is that I believe that it is more important to encourage equity investment in South Africa from overseas than to borrow money from overseas. I believe I am pleased that the hon. the Minister agreed with me—that we should make concessions to encourage this. In respect of new issues of share capital we should have another look at the non-resident shareholder’s tax on dividends. We should give guarantees in respect of new issues of shares that non-resident shareholder’s tax will not be imposed in respect of those particular shares for a period of time which can be stipulated. This would encourage investment. I want to say to the hon. the Minister that one of the matters I am terribly concerned about is the fact that there is encouragement on the fact of the hon. the Minister of Economic Affairs of people to borrow short term overseas now because of the present situation in respect of the balance of payments. The day of reckoning is however going to come when we will have to pay back that money. We hope that we will be better off then, but we might not be. I would rather have long-term equity investment in South Africa any time than loan investment and, in particular, short-term loan investment because that will show that the people concerned really want a stake in South Africa. The more people from overseas have a stake in South Africa, the more will these people want to see stability and good government in South Africa. I think this encouragement needs to be given.

There are many other matters which I want to touch on, but I think I will leave some for the Committee Stage. My colleagues will also deal with some of them. I will deal particularly with bonus shares during the Committee Stage, because I would like to deal with this particular topic on its own. What we need in South Africa in respect of our taxation is a policy which takes into account not only the present economic position in South Africa, but also the need to encourage growth in South Africa, the need to combat inflation and the need to give an incentive to people to work. One of the drawbacks is that over-taxation kills the incentive to work. Let me give an example. We are abolishing share incentive schemes for executives. These are people who should be encouraged to build, to create and to do something. I do not think we are going to make much money out of the abolition and that we are going to achieve very much by it. What we are doing is we are killing incentive when the most important thing in a community is to encourage people to work, to plan and to build. This incentive is missing to the extent to which we would like to see it in this particular piece of legislation. I am not running down the fact that steps have been taken in the right direction and I applaud the Government for it. I think there are many matters in this piece of legislation that we are very pleased to see, but there are not enough of them. There is not enough incentive given to our people.

There is one last point I do not want to forget. We have been asked by the hon. the Minister of Finance to say a bit more today about something we have spoken of throughout, namely the statements made by the Ambassador for South Africa to the United Nations and by the hon. the Prime Minister. I am ready to applaud all the statements which are designed to remove discrimination in South Africa. However, the consideration that arises is that it is not enough to talk about it, we must also act accordingly. One of the matters that relates to this piece of legislation and to all of our approaches to taxation is that there is still discrimination in South Africa based on colour in respect of taxation. I believe that in South Africa’s interests this must be removed. There should be an equitable system of taxation. There should be the same approach to taxation irrespective of what the colour is of your skin. I would like to ask the hon. the Minister whether he will agree to take the necessary steps to see to it that there is no discrimination in respect of taxation in South Africa.

Mr. Speaker, I am very grateful that the hon. member for Yeoville has finished speaking, for if he had continued speaking for an hour longer, we would have had to adjourn for there would no longer have been enough money in the country to pay our salaries, what with all the, concessions he wants to make and all the taxation he wants to give away. For he did not say a word to this House about where the revenue should come from in order to pay for all those concessions. The hon. member moved an amendment, and he rejects the Bill because the proposals contained therein “have insufficient regard for the economic and social problems of South Africa”. Apart from asking for just about every possible kind of tax concession and abolition here, he did not say a word about how and where the State should obtain its money. He did not advance any decent, constructive argument. I am very pleased the hon. member said his colleagues would discuss this matter further, for I believe they will expound more wisdom than that hon. member did.

I am going to examine quite a few of the matters which he mentioned. The first thing the hon. member complained about was that the concessions which are being made amount to only approximately 1%, while the inflation rate is far higher. In his opinion, apparently, the same percentage concessions ought to be made as the increase in the inflation rate. Since when was this a criterion? Is this an indication of the economic sense and knowledge of the hon. member, which is being demonstrated to the world here? After all, I know better. He should not stand there and make statements like that. Unfortunately, I cannot analyse all the points which the hon. member raised. He referred to all the receipts which the State has to go through. Surely the hon. member fills in his own income tax form, and therefore he knows that the public must keep their receipts, and that they are not to send them in except when requested to do so. Why does the hon. member not tell us that as well? That is after all the position. The hon. member then said special concessions ought to be made for people who look after their parents. When the day comes when the child who can afford to do so has to be paid to look after his own father and mother, I think life will not be worth living either. Where must the State get the money from? There are many old people today whose children are not caring for them, or who have no children at all. The State tries to the best of its ability to provide those people with money. Has the hon. member ever worked out what it would cost if all the concessions which he proposed here this evening were to be implemented? There was something else the hon. member said which I find very serious.

He cried out here: Gold belongs to South Africa; the man in the street must participate in it! Does the hon. member mean by that that the State should nationalize the goldmines, or what does he mean? [Interjections.] I should like the hon. member for Constantia to elaborate on this. What does that argument mean? How should the general public participate in gold? After all, the hon. member has the Budget in front of him. It is clearly stated there that the taxation derived from the gold mines amounts to R600 million. That is what the gold mines paid to the State in the form of taxation, and that money does after all go to the general public. Who else does it go to? Through that taxation of R600 million all the services, whether for social welfare and pensions or for defence, are financed. It does therefore go to the man in the street. What else happens to it? Who gets it? Where else does that R600 million go? The hon. member should really not tell us things which do not count for anything.

The hon. member went on to plead for a subsidy on rentals, but he did not want to say where all that money should come from. The hon. member also referred to the position of married women. I shall, at a later stage, have something more to say about married women. I come then to the theory of the hon. member that half of overtime payment should be exempted from tax. How on earth is anything of that nature going to be administered in this country? How is one able to say to a person: “I shall levy no tax on half your overtime”? How is one going to supervise this? No person will work anything but overtime then. How is one going to deal with this administratively? How will one be able to apply such a system? The hon. member should at least put forward practical suggestions, and not ideas which are entirely incapable of implementation.

The hon. member also said that the income of professional people should be spread over a period of five years, as in the case of farmers. I am also a professional person, of the kind to whom he was referring, and I think that what that hon. member said was an insult to professional people.

What is wrong with that? Tell us.

Any proper professional man who is worth his salt, earns more than R28 000.

You are talking nonsense. There are many who do not earn that much.

Then he is not worth his salt. That hon. member knows it. There are many different sectors. The income of every professional man who is worth his salt, will be more or less constant. I take my own profession as an example. One receives a specified income. How is it possible now for a sudden collapse to occur as far as one’s professional fees are concerned? Whether one is an advocate, an attorney, an auditor or a land-surveyor, we have too few workers in this country. There are too few skilled workers. There is a great demand for professional people. Such a collapse can only take place if there is not enough work for professional people in this country. Now I want to ask that hon. member: Show me one professional section in South Africa in which there is unemployment today, which is not at the peak of its production and is able to earn accordingly?

The hon. member raised a number of matters, but I just want to refer in addition to his last point, viz. the abolition of certain taxation, for example on the interest and dividends earned by foreign shareholders. Apparently, the hon. member has never heard of international income tax agreements. The income of people who have investments in South Africa, who receive dividends and interest which go overseas, is covered by an international income tax agreement entered into with the countries concerned. When we do not tax that money which goes overseas, it is taxed overseas. We therefore lose those taxes. However if we tax it here at 10%, as is in fact the case, those taxes are deducted in the other countries. Does the hon. member want to tell me that he does not know this?

You do not understand this matter; you do not understand it at all.

The hon. member said that. He advocated that. He also referred to other taxes which should be abolished, for example undistributed profits tax. Where should the income of the State come from then?

The hon. member referred only once to the Franzsen Commission report. Three of those reports were published. I want to ask the hon. member whether he has ever studied them. Each point which he touched upon here, was studied and thrashed out exhaustively by the Franzsen Commission. Let us take the tax on foreigners. In chapter 4 of the second report that matter was examined properly and thoroughly by that Commission, by professional people, men who knew what was happening in regard to tax structures in the world. I shall not let anyone tell me that that hon. member or I, or the two of us together, can tell them anything about taxation. After all, they have made a thorough study of the matter. The hon. member pretends that nothing is being done. If things are going so badly for us in this country because certain things are not happening in accordance with the wishes of that hon. member, the hon. member should take cognizance of certain statistics, and these I now want to quote to him. I now want to furnish him with a few figures in regard to the manufacturing industry. During the quarter ending on 30 June 1973, as well as during the corresponding quarter of 1974, the growth rate was 23% in respect of the sales. As far as the stocks are concerned, there was an increase of 28%. What more does the hon. member want? This is the growth which took place in the manufacturing industry. I can go further and point out to him a few figures relating to the building industry. In the period January to August 1973, as against the same period in 1974, the amount in respect of completed dwellings rose from R193 million to R247 million. The amount in respect of non-residential buildings rose from R89 million to R130 million. In this way I could continue to quote an entire series of figures with regard to all the sectors of our economic life. Let us consider sales in the wholesale sector. For August 1973, as against August 1974, the growth was 29,3%. In the period January to August 1973, as against the same period in 1974, the growth rate was 31,5%. Let me mention another example to him. I want to refer to motor vehicles. After all we had an oil crisis in this country—a world crisis which worked through to South Africa as well. The number of motor vehicles licensed from January to May during 1973 and 1974 respectively, remained approximately the same, viz. 91 000 in 1973 as against 90 000 this year. I also want to refer to tractors. We know that tractors are not easily obtainable in the world, and yet the number increased from 5 000 to 5 800. That is the growth which has occurred here. But the hon. member does not want to tell us anything about that.

I think it is a good thing that we take a look at income tax as such, that we take a look at the entire Bill as it is. After all, it is some time ago now that the hon. the Minister of Finance appointed this Standing Commission of Inquiry with regard to the Taxation Policy of the Republic. On that committee we have some of the finest brain-power in the world. They are the people who investigate the taxation structure of South Africa, and see how this may be improved or expanded. According to the Franzsen Report—I do not know whether the hon. member read it—the total amount of income tax which is being collected this year in this country amounts to R1 128 million. This is the direct tax on individuals, and this amount of money has been derived from only 8% of our population. If that hon. member now wants so many concessions to be made, we will simply have to find other sources of taxation. Taxation in this country is determined by the public, in this respect that they desire certain services, for example in regard to the infrastructure, and in regard to welfare, defence, health, and so on. If one desires those services, surely one has to pay for them. And there is no one in South Africa who is not prepared to pay. The terms of reference of this commission—I think it would be a good thing to examine these for just a moment—are as follows—

This is done continuously; not only sporadically—

The terms of reference of the commission extend even further. It also has to act in an advisory capacity in respect of international taxation agreements, and that is what the hon. member overlooked a moment ago—

These are the terms of reference of this commission. For the sake of the record I just want to mention this evening the names of the people serving on that commission. Apart from the senior officials of the Department of the Minister of Finance, people who have devoted their entire lives to income tax and who know all about income tax both here and overseas, we also have a prominent businessman who is chairman of the boards of directors of various public bodies, companies, as well as one of South Africa’s biggest building societies. Such a person should know something about taxation, our economy and other social problems. There is also a practising accountant, a university professor, a senior officer of the Reserve Bank and a prominent economist. Apart from that, commission, this House is, after all, always at liberty to come to the Minister with positive suggestions. One cannot merely make a plea for the sake of political gain here this evening. This was solely for political gain, and for no other reason. I do not know why the hon. member did it, for there is, after all, no election in the offing. When a person asks for tax rebates and concessions, one should also be able to say where the money should come from to be able to do this with. The hon. member had a great deal to say about how badly things were going. Inter alia, he also mentioned inflation. However, what is the situation in the world today? South Africa is today one of the countries with the lowest inflation rate. This is the country in which things are going so badly. A few years ago Japan was constantly being held up to us as a prosperous country, but its inflation rate at present is 21,9%, while South Africa’s inflation rate recently was only 9,7%. That is according to the Reserve Bank. The hon. member also referred to the growth rate, but I think we have a sound growth rate in this country. Let us consider the figures for 1963 and 1973. The real growth rate of the gross domestic product in South Africa then was 5,4%, in Britain it was 2,8% and in the U.S.A. 4%. West Germany’s figure was a little higher than ours, viz. 5,7%. We anticipate that South Africa’s growth rate this year will be between 6% and 7%, while that of Western Europe will be 1½%. Now the hon. member comes forward with his proposals, and maintains that things are not going very well for us in this country. We can continue in this way to indicate how well things are in fact going. I want to refer the hon. member to a body which is probably well-known internationally, which perhaps knows world conditions better than we do here in this country. I am referring to the South African Institute. I want to quote from a report what the president, Dr. Jan Marais, said (translation)—

Sir, this is how things are going for South Africa, and if it had not been for the sound income policy of this National Party Government, surely things would not have gone so well for our people. We have recently seen how investors from the United States who invested money here received 19,3% on their investments. This is most certainly something of which we may be proud.

Sir, the hon. member also referred to married women. We are frequently asked here for increased tax concessions in respect of the earnings of married women, but if increased concessions are to be made, the hon. member has to tell us where the money should come from. Sir, the Franzsen Commission went into the position of married women very thoroughly, and this matter is dealt with in detail in paragraph 109 up to paragraph 129. A comparison is drawn there between the position of married women in South Africa and that of married women in other countries; the matter is properly argued, and in paragraph 130 the Franzsen Commission comes forward with a well-considered proposal. Sir, this Franzsen Commission made a protracted study of this matter, and then came forward with this recommendation. We who are sitting here, who did not make that study, will surely not try to pretend that we know more about the matter than the Franzsen Commission. Sir, the recommendations of that commission were accepted in the 1970 tax year, and since then several changes have been effected. In this way for example the provision that the concession of R500 should gradually be reduced as soon as the taxable income of the couple exceeds R8 000, was deleted in the 1972 tax year, and in the 1975 tax year the concession of R500 was increased by 20%, and this matter is engaging the constant attention of the hon. the Minister and the department. Why does the hon. member try to create the impression that this matter is not receiving any attention?

Mr. Speaker, my time is running out. Here in South Africa, as hon. members know, married persons begin to pay tax when their income is R1 000 per annum, and on that they pay 9% tax. Their marginal scale is 33% when their income reaches R15 000; this is including the surcharge of 5%. But let us consider what the position is in England. In England the taxation tariff begins at 33 % on the first £4 500 (approximately R7 200). Here in South Africa the taxation tariff is only 33% when the taxable income reaches R15 000. Sir, on the next £500 income in England, the taxation rate rises to 38%, and then it rises to 83% on an income above £20 000, and to 98% on investment income above that amount. Sir, these figures indicate clearly that the taxation scale in South Africa is not as high as hon. members on that side pretend.

Mr. Speaker, in conclusion I just want to touch upon another matter. I think it is a good thing for us to express thanks and appreciation to the officials of the department for the work they are doing behind the scenes to improve the old assessment system. The officials have been working on this over the past few years. Five of our senior officers have visited Canada, America and Australia and studied the systems there, and this year they came forward with new tax returns for salary earners, and for provisional taxpayers, and, Sir, I just want to mention to you a few of the things which they envisaged with this. One of the aims was to effect a change—over of as much of the routine work of the clerks to the computer as possible. The computer today is doing a tremendous quantity of this work in the department. Sir, the officials in this department are not complaining that they have insufficient staff. There is an old saying that where there is a will there is a way, and this is what these officials are doing. They are sitting with a limited number of trained assessment staff, and those people are being used primarily for complicated tax assessments. Sir, a further aim is to eliminate the enormous number of files of salary earners which have to be kept. I do not know whether we realize it, but accommodation is a real problem in all our Government offices, and in this department in particular. This system which we are introducing, where each person can assess himself, and the assessment is simply checked, can mean a great deal to South Africa since a great deal of labour is saved and it will be possible to eliminate a great deal of unnecessary work so that our assessment officers could also do other work to the benefit of South Africa.

In conclusion, I just want to say that I think we should be grateful that we have a taxation system such as this one. The pressure of taxation is not too onerous, particularly if we bear in mind that the taxation bulge to which the hon. member for Yeoville referred, has been ironed out over the years and, in addition, that a balance is being maintained between direct and indirect taxation. The maximum taxation which the professional man in South Africa pays, is 63%. If we compare this with other countries such England, which I have just mentioned, where the taxation is up to 98%, we in South Africa are privileged. I want to ask the hon. the Minister who is acting as Minister of Finance, to convey our gratitude and tribute to the Minister of Finance and the department for having been able to make such great progress with this taxation system that we are able to give each race group in South Africa the best.

Mr. Speaker, I must say I find it a little depressing that a speaker with the economic talents of the hon. member for Sunnyside should be put in at the top of the batting list in a debate such as this one. [Interjections.]

He scored a duck!

I am aware of the fact that the other side of the House has tried out several members of opening batsmen in economic debates. [Interjections.] We had the hon. the Minister of Economic Affairs in the no-confidence debate, we had the hon. member for Paarl in one of the other debates, and I am looking forward to the time when we shall have the real opening batsman and that is the hon. member for Pietersburg. [Interjections.] The hon. member for Sunny side replied to a suggestion made by the hon. member for Yeoville in regard to gold-linked bonds or gold-linked investments. Clearly he does not understand what the hon. member for Yeoville was getting at. It does not mean that if one has gold link bond one has to nationalize the gold industry.

I did not refer to that.

It does not mean that if one wants to buy mealies one has to nationalize the farming industry. It does not mean that if one wants to buy a pair of shoes one has to nationalize the footwear industry. The hon. member also spoke of the Franzsen Commission. We on this side of the House appreciate the work of the Franzsen Commission. They did a magnificent job of work. The majority of the recommendations of that commission were ones with which we can agree, although we cannot agree with all of them. However, the Franzsen Commission was working at a time when inflation was not a major consideration.

What difference does that make?

Inflation makes a great difference to taxation principles, as I shall explain later on. The whole of the Franzsen Commission’s thinking was based on a baas of price stability. Now we have a basis of almost hyper-inflation which is an overriding economic consideration and which is a consideration that has to be taken into account in the tax structure. I shall refer to that in a few minutes’ time.

We are now dealing with a Bill which is going to provide the machinery for raising the sum of nearly R3 100 million in the current year. It is going to provide the machinery for raising approximately two-thirds of the revenue which will be spent by the Central and provincial Governments this year and it is going to provide more than R750 million more by way of taxation than was provided under the same headings last year. It is probably going to be responsible for transferring from the private sector to the public sector about one-sixth of the national income. For that reason I would say that by no stretch of imagination can this Bill be regarded as a technical Bill. It is a very important financial measure. It is an instrument of economic policy and it is an instrument that will have a great bearing on the performance of the economy, on the lives of the taxpayers, on their behaviour and on their productivity. Most of the money that will come from this measure will come from either individuals or from companies other than mining companies. It will come from those two categories of taxpayer in virtually equal proportions. I think it is very pertinent to ask the question whether this huge sum of money is being levied in such a way that it is going to do the least harm to the capacity of individuals and to the capacity of companies, to contribute to the national product by way of their own efforts, by way of their savings, by way of their investments, and so to raise the productivity of the economy, raise the standards of living of themselves and raise the standards of living of all of us in South Africa. I put it this way deliberately and I use the words “do the least harm” deliberately because I do regard taxation on this scale which transfers wealth from the private sector, which is the most productive sector, to the public sector, which by reason of its very nature is the least productive sector, as being harmful to productivity. I believe if you answer that question honestly, the answer must be “no”. For that reason we have moved this amendment.

Absolute nonsense! [Interjections.]

Get up and make a speech!

I hope the hon. economist from Vanderbijlpark will deal with these matters at a later stage. [Interjections.] I want to deal with some of the main reasons why income tax on individuals is causing difficulty and why similar problems are being caused by company tax. I should like to deal, first of all, with individuals.

I would like to expand on the theme which was started by the hon. member for Yeoville. The present tax scales make absolutely no allowance for the effects which inflation has on income. That is why I say inflation is an important factor in the tax situation. As incomes rise in monetary terms, and they do rise to meet the cost of living, they fall into higher income brackets which attract higher rates of taxation. In other words, if monetary incomes increase in line with the cost of living, because of the progressive tax rates, income tax takes a bigger bite of income. The taxpayer is therefore worse off in real terms.

May I ask the hon. member a question? Suppose there is a married man with an income of R3 000 per annum, with two children and an insurance and medical deduction of R150 per annum. How much less taxation would such a person pay in terms of this Bill than under the old Act? Thirty-one per cent. [Interjections.]

His income is worth 20% less.

Order!

I was pointing out the effect which the progressive rates of taxation have on taxpayers’ real income. [Interjections.]

Order! Hon. members are now being unreasonable with their interjections.

The escalating effect of these tax rates is accentuated by the fact that the abatement progressively disappears when taxable income exceeds R5 000 per year. That makes the progression steeper. I would like to give this House some examples of exactly what I mean and of the effect of progressive tax paid on real income. I am going to assume that there is an inflation rate of 13%, which is about what it was in September this year. If a taxpayer starts off with a taxable income of R5 000, just to keep pace with the 13% rate of inflation he needs a 16,8% increase in monetary income. If he starts off at R9 000 per year he needs a 17½% increase to keep pace with a 13% rate of inflation. At R14 000 he needs a 20% increase in his monetary income. At the top bracket of R28 000 he needs a 24% increase to keep pace with a 13% rate of inflation. In fact, he needs roughly a double rate of increase in income than the rate of inflation just to keep pace with inflation. In other words, income must rise much faster than the cost of living just to keep pace with the cost of living. This fact, and it is a fact, has two disastrous effects on the economy. The first is that it adds a fillip to the cost-push inflation, because it is a direct incentive for salaries and wages to rise faster than the cost of living. If that happens it is only adding progressively to the vicious circle of inflation and is only adding progressively to the fact that inflation feeds off itself. This is something which we just do not want to see happen. The second disastrous effect of this tax position is that this progressive rate of income tax acts as a disincentive as far as certain categories of taxpayers are concerned in regard to harder work. I refer particularly to people such as professional people who are in the R15 000 and upwards tax brackets. These people can afford to see their real incomes go down without their standard of living going down because they have a margin which they are saving. Their attitude is: Why earn more when you give a big slice of your increase to the Government? They would rather play golf in mid-week, like the Nat backbenchers!

Mr. Speaker, may I ask the hon. member a question? May I ask the hon. member whether the fact that there are only four members sitting in the Government benches directly opposite us indicates that they are interested in golf instead of this debate?

Do you think they are using their night clubs?

I think the answer to that question is that the hon. members opposite fall into the income bracket of which I have been speaking.

Vause, I do not know about your output, but your intake is large!

Mr. Speaker, this progressive tax scale is the reason why revenue on income tax is so buoyant. The Government is deriving benefit from the situation, from inflation. It has a vested interest in inflation. As the hon. member for Yeoville said, this is a secret tax extractor. The hon. member for Sunnyside in reply to the hon. member for Yeoville asked where the money is to come from. I want to say to the hon. member for Sunnyside that this is where the money comes from. As far as the Government is concerned inflation is a secret tax extractor. I believe that it is a matter of some urgency that something be done about this. The answer, as we have already indicated, lies in some form of indexing of taxable income. I believe that the simplest way of doing this would be to allow an abatement off the total taxable income of taxpayers, an abatement related closely to the rate of inflation so that, as monetary incomes go up, they will be abated back to real incomes. This would mean that any increase in taxable income, i.e. gross monetary income less the abatement which I suggest, would be an increase in real income. Increases in real income would warrant additional tax and justify the higher tax rates while increases in monetary income on the present basis do not justify this.

I would now like to come to the question of companies. Here again the present system of taxation is also harmful because it also takes no account of the inflationary situation. It takes no account of the need for inflationary accounting. It takes no account of the ravaging effect of inflation on cash flows in the long term when stocks, assets, plant and so forth have to be replaced at costs that is greater than their original coats. In addition, it takes no account of the fact that, while inflation may artificially boost profits in the short term, inflation is all the time weakening the ability of companies to maintain real productive capacity, real assets and real profits. A survey was recently done by Assocom of some of the leading distributing companies in this country. It showed that where monetary profits were reflecting an increase of R14 million in the year covered by the survey, in real terms, once the inflation factor had been applied to that R14 million, it had been reduced to a decrease of R1 million. That is the effect which inflation can have on real profits. I believe that this whole situation is adding to the problems of companies because inflation accounting has not been recognized by the Government in this legislation. In this day and age of inflation, it is absolutely essential in my view for companies to be putting away, by way of provisions and depreciations, sufficient to replace their assets, their stock, their plant and their buildings at replacement costs, and not to be penalized by taxation if they make those provisions. The present system of basing depreciation allowances on historical costs under inflationary conditions is an absolutely archaic one. I appreciate that in this legislation the investment allowances have been increased. That will help, but the investment allowance is still based on historical costs. For that reason, because there is such a big difference between the historical cost and the replacement cost, the investment allowance must have limited application. The position of companies is also aggravated by the fact that the loan levy which still applies to companies, although at a reduced rate from last year, takes a portion of their profits by way of cash. Whereas they need that cash on a building-up basis to replace assets, that cash is eventually returned to them five years or more later when it is worth very much less than it was when it was taken from them. I believe that the case for inflationary accounting is an absolutely unanswerable one; it is one which the Government should investigate very carefully.

Finally I should like to say something about the position of private companies. The position of private companies is even worse than the position of public companies because of the impact of undistributed profits tax. I believe, along with the hon. member for Yeoville, that this is a tax that we could well do without altogether. But that is not the plea I am going to make this evening.

You just want it suspended?

Yes. I believe that if the maximum rate of individual tax were to come down to what the Franzsen Commission recommended, namely 50%, then the need for undistributed profits tax would virtually fall away. I am not pleading for that at present. What I am pleading for are more liberal provisions in respect of private companies which are subject to undistributed profits tax to allow them to build up reserves in inflationary times. This is when they need their reserves. They also need to build up reserves to be able to expand. I think very often we lose sight of the fact that private companies are still the backbone of the business of this country. I believe that there are at least two respects in which the undistributed profits tax provisions should be relaxed. The first is that the reserves allowed to private companies should be increased above the present level which is R50 000 or 40% of share capital. Secondly, the amount allowed to be earned before the tax is applicable, should be increased above the 5% of share capital that is at present allowed. The 5% is a historical figure. Five per cent these days means nothing when you have interest rates running into double figures. I think it is important, particularly as far as private companies are concerned, to realize that the shareholders are heavily taxed people. The profits of their companies are taxed and then the dividends, which are paid out of the taxed profit and sometimes out of the taxed profits after undistributed profits tax has been paid, are also taxed in the hands of the shareholders.

They are lucky if they make any profit.

They are heavily taxed people. Therefore this is an area where tax relief, I think, could have very productive results.

Finally I should like to say that I think the biggest danger to the economy is a liquidity shortage. If we have bankruptcies on any large scale, the main reason for those bankruptcies is going to be a shortage of liquidity. As I have stated, the present system of income tax on individuals and companies in the inflationary situation through which we are going is causing the Government to drain off liquidity and this may have dire results on the economy of the country. I believe that it is a matter of urgency for the Government to take these matters into consideration and to take the necessary steps to deal with them. I have pleasure in supporting the amendment.

Mr. Speaker, the hon. member for Constantia made a very strange statement this evening, i.e. that paying tax is harmful. I think the hon. member’s words were “Paying taxes is harmful”. I think that is a terrible statement to have made. How can we carry on, in a capitalistic country like South Africa, if we do not pay taxes? In a capitalistic country the payment of taxes is a method for dividing up wealth. The expression “the sharing of wealth” is so frequently used. If the hon. member regards this as harmful, let me point out that the hon. member wants to set a course which I hope we shall pay no attention to.

Did he not say “painful”?

He used the word “harmful”.

He said “painful”, not “harmful”.

This question will be dealt with further, but I can point out to the hon. member for Constantia that as long as this Party is in power we shall ensure that taxes are collected in a fair and lawful manner. [Interjections.] This evening I do not want to waste my time on the hon. member for Constantia again, but I do want to point out to him that it is true that if companies do not have liquidity, they can go bankrupt. The position in South Africa, however, has always been such that at any given moment we could mobilize enough money—I do not want to go as far as to say always in abundance—to carry on with. What will promote bankruptcies in South Africa more than liquidity problems, are speeches such as the one the hon. member for Constantia made in the House, speeches in which the public are continuously being given a scare. The hon. the Minister of Finance also pointed that out this morning. Now I want to turn my attention to something else.

The hon. member for Yeoville made a very interesting speech. The first statement he made was that this Budget did not succeed in combating inflation and did not promote growth either. I want to say only one thing about this. This morning in this House the hon. the Minister spoke about South Africa’s position in respect of inflation. As the hon. the Minister did this morning, I also want to add something. With or without what the hon. member for Yeoville says, South Africa’s growth rate with this Budget will in time to come be one of the biggest in the Western world. That is as plain as a pikestaff, and no argument on the part of the hon. member will hold water. What I cannot understand is that the hon. member for Yeoville is so caught up in the problems of the higher income groups. He referred to the higher income groups and said that they did not get the benefits they should have got. He then made a statement which I found to be extraordinary. I do hope the hon. the Minister will not pay any attention to it. He said there should be tax relief for the higher income groups so that they could have more children. I think there are completely different reasons for this statement, If one has enough money one can have more children without tax concessions having to be made. I could give the hon. member a little more information about this in private. I agree with the hon. member for Yeoville and I can tell him that last year the hon. member for Vanderbijlpark made a strong plea for meeting medical funds halfway. We agree with that. We agree that something can be done in connection with flat tenants.

Why don’t you do it then?

However, I want to tell the hon. member one thing. There is one statement he made which I really hope the hon. the Minister will pay no attention to. The hon. member for Yeoville said that if there is a lack of liquidity, as the result of economic conditions, companies should be granted an extension for the payment of taxes. I want to ask the hon. the Minister never to pay any heed to this request. What one finds difficult to pay for today, will perhaps be even more difficult to pay for next year or in five or ten years’ time. I therefore ask that we pay more attention to levelling off the tax system, and I am saying this as a result of the experience of our farmers at present. Let us rather think along those lines. Deferring the payment of taxes, however, is not something we can give any serious attention to.

I now want to come to the proposal before the House. I do not often do this, but this evening I want to call in The Cape Times as my witness, the very same Cape Times to which the hon. member for Simonstown is so keen to refer and which he is so terribly fond of. The Cape Times said the following about this Budget: “This is a bonsella Budget welcomed by the man in the street, and that is a fact.” What hon. members say about this does not accord with the facts.

We have finished with the Budget.

The fact is that the man in the street welcomes this Bill because it contains benefits for him. Sir, here we have a record Budget of more than R6 000 million, and in spite of the concessions being made, to which I shall refer later, this Government could still place R200 million in the Equalization Fund. If we bear in mind that the pensions of social pensioners, the lowest income group in our South African economy, were increased by just under 40% from October last year to October this year, I think it is truly an achievement on the part of the Government.

Where does that stand in this Bill?

It does not, but it results from this Bill. The hon. member spoke of growth and non-growth, and I therefore think I have the right to mention this matter here. Sir, in this Budget the hon. the Minister has moved away from damping and control, as far as that is possible. With this Bill a climate is being created for sound, sustained and balanced economic development, but hon. members on that side of the House do not like that. I do not know why. Sir, this morning the hon. the Minister made it very clear to us that he would do nothing to harm the economy of South Africa. This evening the hon. member referred to the training of Black labour. Sir, that is specifically what this Government is encouraging. Hon. members of the Opposition are always saying that the Government does everything too late and is always doing too little, but I want to repeat what I said to them previously, i.e. that this Government does everything at exactly the right time. Sir, I want to give you an example. Take the Physical Planning Act, for example. Hon. members on that side say that with this Act we are strangling South Africa’s economy. Surely that is not true. And why is it not true? Because this Government, as I have said, always does the right thing at the right time. The Physical Planning Act provides that Black people cannot work in the metropolitan areas other than in a certain ratio, but what those hon. members are forgetting is that if double shifts have to be worked to increase production, additional Black labour will have to be permitted in the metropolitan areas. Where there is extra capacity in a factory, this Government has never refused to supply additional work forces. Sir, this Budget, this Government and this Act give us the opportunity to promote greater productivity. We are given the opportunity to ensure that there will be an extension of the infrastructure; this will ensure the strengthening of our balance of payments and attract foreign capital. Sir, I really think that we in South Africa have much to be thankful for in view of the position in which the South African economy finds itself at the present moment. With the acceptance of this Bill we can set forth to meet the future with great confidence. Sir, the hon. member for Constantia did not really want to answer a question in that connection from the hon. member for Vanderbijlpark, but I want to show you, Sir, what we in South Africa are doing for our people in the lower income groups. A person under 60 with two children and a taxable income of R3 000, will have his tax this year decreased by 31% after deduction of his medical costs and insurance premiums. Is that not something to be grateful for? If he earns R5 000. his tax is decreased by 14% this year; if he earns R10 000, his tax this year is decreased by 9% and if he earns R20 000 or more, his tax is decreased by 4½%. In other words, this National Government has looked after its people and helped the lower income groups in one way and the higher income groups in another way so that we can maintain our present position. We can continue along these lines. I do not want to deny hon. members on that side of the House the right to enjoy these sad tidings they bring, but I would just like them to look at these positive aspects as well. The hon. member advocates an interest subsidy for tenants. I am not arguing with him about that. Why did the hon. member not express his appreciation, in one and the same breath, for the adjustment in transfer duties which makes it possible for young newly married parents to obtain a house at a great saving and for young farmers to purchase land? No reference is made to that. I can be guilty of many things, but two things I never want to do. I do not want to speak for as long as the hon. member for Yeoville and I do not want to speak for as long as the hon. member for Constantia, because I do not believe that a financial debate is very pleasant to listen to.

What would young parents pay …

I just want to say …

Order! The hon. member for Durban Point must contain himself.

… that we appreciate the help being granted to farmers by way of subsidies to make it possible for them, with a view to increasing costs, to produce food so that we can be in the shape we are in, and I refer in particular to some members.

May I put a question to the hon. member? The hon. member referred to houses which young parents could purchase. Can he say what a young family would pay for a house today?

Is he going to be the agent?

It depends on how young they are. I can say, however, that I know what I am talking about. [Interjections.]

Order!

From about R12 000 to nearly R300 000, which hon. members in the Progressive Party … [Interjections.] That is quite irrelevant. I cannot tell you. [Interjections.] Our farmers, however, have obtained subsidies to the tune of R54,6 million. In addition, we look after all consumers. We only have to look at what subsidies on food amount to this year. On butter alone the subsidy has doubled. On bread it has more than doubled and on maize it has remained the same as a result of a change in the maize price. In this Bill this Government is making provision for the fact that we can give another R117 million to the consumers of South Africa. I want to tell the hon. the Minister, and through him the hon. the Minister of Finance, that we know that conditions in South Africa are difficult. That is true. But we shall continue in a responsible manner, unlike the hon. member for Constantia who wants to do away with taxes and the hon. member for Yeoville who comes along and just wants to give and give and give some more. The National Government will go ahead in a scientific way, as they do, and continue to look after the welfare of the inhabitants of South Africa, the Black people, the White people, the Brown people, yes everyone in the country.

Mr. Speaker, we have just heard what the hon. member for Smithfield has had to say. I do not know whether the hon. member read or paged through this Bill, but I should like to say that we had the privilege this morning of disposing of the Third Reading of the Appropriation Bill. I do not know whether the hon. member was here at the time. I do not know how I am to view the speech made by the, hon. member tonight: Is it a review of the Third Reading of the Appropriation Bill, or is it perhaps a Fourth Reading speech? The hon. member referred to subsidies, and while he was discussing them, as well as transfer duties, the housing question and the labour question, the idea occurred to me that he was perhaps dealing with a Fourth Reading of the Appropriation Bill.

Your leader referred to those things.

I should very much like to know whether the hon. member did perhaps page through the legislation so as to get an idea of what it deals with. I want to tell him that this Bill deals with income tax. We should very much like to hear from the hon. member what he has to say about the income tax proposals. It is a great pity that he has resumed his seat, for now we shall perhaps not hear that this year.

The hon. member for Sunnyside had a great deal to say tonight about the report of the Franzsen Commission. The hon. member said, inter alia, that he did not like the proposals made by the hon. member for Yeoville in regard to married women, as what was being proposed by the hon. member for Yeoville had many years previously been described as an absurdity in the report of the Franzsen Commission. He went on to say that if the hon. member for Yeoville had read through that report, he would not have come forward with such an absurd proposal. I should like to correct the hon. member for Sunnyside. The basis of the tax in respect of married women had already been adopted by the Government when the Franzsen Commission sat for the first time.

But surely that was what I said.

No, it had already been adopted before the commission started sitting.

I did say that.

No, the hon. member said that it had been done as a result of the report and that the hon. member for Yeoville had made an absurd proposal. The taxation proposal made at the time had been put forward by the Government in 1966, and at that stage the proposal was that R500 be deducted from the income of married women and that this would bring relief in the tax that had to be paid by the husband in respect of the joint income. The commission did go into the matter, but the hon. member should actually have read out paragraph 125, for then he would have seen why the commission had decided against adopting any other proposals in regard to married women. To us on this side of the House it is quite clear that circumstances in 1966 were quite different from those prevailing today. Similarly, circumstances relating to taxation are also different today, and so are the circumstances of the person working today. There is, in addition, another reason why people have to work. They have to work because the rate of inflation is so high, and they also have to work because there is a burden of taxation.

The rebate has been increased by 20%

That is one of the reasons why married women work today; in fact, I would say that this is one of the major reasons why married women have to work. If they did not work, there would not be an adequate joint income for supporting the family. I think this is the main reason why married women are working today. We on this side of the House feel that the time has in fact arrived now for there having to be a different basis for the taxation of married women. There should be a completely different basis, and that basis should be that the husband and the wife, although they are members of one family, nevertheless have separate incomes and should be taxed separately. When this proposal was made to the commission …

May I put a question to the hon. member?

I want to finish talking first. The hon. member can put his question once I have done so. This matter was put to the commission and they replied to it as follows (paragraph 125)—

This is the reason why the commission said they did not want to change it. But just consider what has happened in the meantime.

†Today we have quite a different set of circumstances. We have computers, which we did not have in 1966; we have microfilming and all the aids and ways in which to computerize tax calculations. Consequently, the argument which was used by the Franzsen Commission in 1967 is no longer valid. We on this side of the House believe that one should move with the times even if one happens to be the Nationalist Government. I would like to say to the hon. member for Sunnyside that he too, as a responsible member of the governing side in this House, should be prepared to move with the times and not be a stick-in-the-mud.

May I put a question to the hon. member now? Could the hon. member tell us whether, when married persons are assessed separately, they will be paying less in taxes? They will be paying exactly the same.

I shall reply to that question. Firstly, I want to say that the hon. member is an accountant and that different taxes are paid on different levels. To ask me now whether they will generally be paying the same in taxes is really an absurd question. Of course there will be cases where they will be paying exactly the same, but there will be many more cases where they will be paying considerably less. It stands to reason that this will be the case, for the basic structure of taxes would then be different.

†But I do not want to spend the whole evening talking to the hon. member for Sunnyside. I would like to say that I feel that this whole question of taxation of women generally needs a complete overhaul. I have said something about the married woman and I think the time is now ripe to introduce this innovation. Let us call it an innovation, although it is no longer an innovation in many other parts of the world but an established principle of taxation that a man’s wife should be taxed separately. This is an equitable system of taxation and an equitable principle. We believe that this matter could be gone into again. I am not for one moment suggesting that the hon. the Minister should move an amendment this evening saying that they will be taxed separately. All I would like from the hon. the Minister is an assurance that he will, as soon as may be, perhaps tomorrow morning, ask the department to go into the matter again. I believe that what the hon. member for Yeoville said earlier this evening is correct. When we can give the married woman a greater incentive, we will find that more work will be done and that the battle against inflation will be half won. I believe that in the situation in which South Africa finds itself today, it is worthwhile to give all the incentive we can to try to increase production, because if we can increase productivity sufficiently, I know we will be able to give inflation a death-blow eventually.

I have dealt with married women. I now want to turn to divorced women. It is most inequitable that when a woman becomes a widow, she is still regarded as a married person for the purposes of taxation, while the unfortunate woman who loses her husband through no fault of her own, for instance through divorce, is taxed as if she were a single person. I do not know what the reason for this differentiation is. I do not know whether there is a historical reason, whether she is being dealt with in this harsh manner because she is a divorced woman, or what the principle at stake is. I believe the time has arrived for us to go into this matter very fully and that, as regards taxation, we should deal with the divorced woman in exactly the same way that we deal with widowed women. I have a rather pathetic letter here. I do not want to read all of it, only one or two sentences to give an indication of how divorced women feel about this. This lady wrote to me as follows:

I think this is a matter we should go into. For the life of me, I do not think there is any income tax principle that should militate against an inquiry into this matter to see whether the divorcee cannot be dealt with in exactly the same way as the widow is.

Finally, there is another type of taxation that worries me greatly, a type of taxation that I find quite prevalent in my own constituency where there are a number of war veterans. As you know, Mr. Speaker, a war veteran’s pension is not taxable, but there are war veterans whose wives are in receipt of old-age pensions. Because the total income of the war veteran from his pension and his wife’s from her old-age pension is not sufficient to keep the wolf from the door, the war veteran talks on a part-time job and because he takes on a part-time job, he earns a taxable income. Because he has an income that is taxable, he has, when that income is accounted for to the Receiver of Revenue, to show the old-age pension of his wife as an income which accrues to the joint estate. He is then taxed on the old-age pension of his wife. That seems to me to be a horrible state of affairs. I do not believe that anyone who thought of alleviating tax in so far as a war veteran’s pension is concerned, could ever have contemplated that this state of affairs would arise. I think the hon. the Minister should give us an assurance some time during the course of this debate that he will look into this anomaly, which is what I believe it is. It is only because it occurs so frequently in my constituency that I am making this plea here. It was something of which I was completely unaware until I came into contact with actual cases. I know that these are cases which really deserve attention by the State. They are people of over 70 years and older, and they are finding it very hard to pay income tax on the old-age pension of one of the members of such a family. I sincerely hope that the hon. the Minister will look into the matter and that he will help to remove these anomalies.

Generally I would like to say that we on this side of the House do feel that the Government has been rather unimaginative in regard to this Income Tax Bill, and for that reason I would support the amendment.

Mr. Speaker, I think it should be difficult to be the wife of a U.P. supporter. One would have to have a knowledge of arithmetic. If one were the wife of the hon. member for Yeoville, one would be getting a rebate if one had children at home and did not go out to work. If one were the wife of the hon. member for Wynberg, one would have to go out to work in order that one might get a big allowance. In this session a great deal has been said about inflation. There are many of us who apparently know more about inflation than do the master-minds of the International Monetary Funds. However, there is one thing about which all of us know something, and that is what the cause of inflation is. Inflation is caused by unproductivity and by the fact that one does not save, or that one buys with money one has not yet earned. On that score we have in fact reached unanimity. However, nobody has ever been able to say how we are to tackle these two causes. The Government probably has its duty. It has introduced limited fiscal measures. The hon. member for Constantia said that by taxation “you transfer wealth from the private sector to the public sector”, and that one caused inflation in that way. He suggested that one caused inflation by drawing money out of the private sector. It does not matter whether not all that money is spent by the public sector, as does in fact happen in this Budget. However, that is his standpoint.

When the Budget was introduced originally, the hon. the Minister said that the object he had in mind was preserving economic stability as well as reducing the rate of inflation as far as possible. Secondly, his object was to alleviate the effects of inflation, especially on the less privileged members of the community. These are the objects he sought to achieve, and these are the objects embodied in this Bill. He said that in order to achieve the first objective the productivity of our labour force had to be enhanced. Now, we have in South Africa the unfortunate phenomenon that those members of the labour market whose qualifications are lowest are in fact the non-Whites. In our economic life reference is often made to discrimination against the non-Whites as such, but this morning the hon. the Minister of Finance pointed out once again that it was the duty and responsibility of every person in this country not to receive only but also to give. In doing so he said something I consider to be very important, and perhaps it is necessary to state this very clearly once more in other words. We must get away from the new idea of making a cry of the wage gap having to be narrowed summarily, without our adding that this should be accompanied by enhanced productivity.

Order! The hon. member must confine himself to the Bill.

What I am discussing, Sir, is specifically contained in this Bill. When the taxation proposals were introduced, mention was made of our labour having to be trained. In the Bill it is specially being provided that undertakings will qualify for tax abatements if they spend funds on the training of non-Whites. Furthermore, provision is also being made for the training of non-Whites by way of the establishment of training colleges, the first two of which will already be coming into operation at Soweto in January of next year. This is what is primarily envisaged by the Budget: To save and to enhance productivity.

The hon. member for Yeoville put forward a number of standpoints. In the first place, he said that investments in government securities should be deductible from one’s income just as is the case in respect of insurance premiums. This is perhaps a good idea for the man in the street, but when it comes from a person such as the hon. member for Yeoville, one cannot understand it. If there is one person on that side of the House who knows the difference between a life insurance policy and government securities, then it ought to be that hon. member. There is a vast difference, and one cannot compare the two with each other just like that.

He also said that in order to enhance productivity the money earned through overtime should be deductible for tax purposes. But will it not be those very overtime earnings which will reduce productivity? Will the person concerned not do as overtime the very work he should be doing during his normal working hours, and will the effects of that not perhaps be the opposite of what we envisage by way of these taxation proposals?

He went on to suggest that concessions be made to people paying rent, and that this be done to such an extent that they pay only 25% of their income as a rental and that the rest be paid by the State by way of a subsidy. However, he refrained from saying to what extent rentals were to be restricted. One finds, therefore, that what came from that side was no positive suggestion.

He also referred to indexing. One would have thought that, after the reply given by the hon. the Minister of Finance to the Second Reading debate on the Budget, he would at least have learned that indexing was not a measure against inflation, but that it was in fact an admission of our having lost the battle against inflation and having decided to live with inflation in future. The hon. member put it in such a way that he wanted to suggest to the taxpayer that it was the Government that was responsible for inflation and that the Government, by using disguised methods, did not want to tell the taxpayer to what extent he was suffering as a result of inflation. By way of indexing he was to be made aware that the taxes levied by the Government actually amounted to inflation caused by the Government. By way of this Income Tax Bill the Government is trying to do what has to be done by making use of fiscal measures. However, these will never be sufficient, unless the people who are really responsible for inflation do their share as well. If, in spite of all the tax concessions that are made and in spite of the salary increases, they persist in spending the money they receive, and even money they have not yet received, we shall never be able to get away from inflation. It is my considered opinion that this Bill provides all the means for maintaining a proper rate of growth and for making it possible to save. I therefore support this Bill very gladly.

Mr. Speaker, in supporting the amendment which the hon. member for Yeoville has moved, I would first like to answer the one query raised by the hon. member for Sunnyside. In opposing this amendment, he appealed to the House to answer the rhetorical question where the State would find the money to carry out some of the suggestions which the hon. member for Yeoville placed before the House to support what he called “the insufficient regard for the economic and social problems of South Africa”. If there is any piece of legislation that would interest the man in the street, from the poorest to the wealthiest, it is this Income Tax Bill. As the hon. member for Yeoville quite rightly pointed out—and on analysis I think one could quite rightly support him—the actual benefit passed on to the taxpayer in real money will probably not amount to more than 1%, if that, of the amount of taxation which the taxpayer will save. However, in a sophisticated economy with tremendous potential wealth, and the kind of economy which South Africa enjoys, it does not seem insuperably difficult for the hon. the Minister to consider very carefully many of the suggestions that have been made. Some of these suggestions have been made already in the Franzsen Commission report. Others have been placed before this House in the course of the session and a great many have been forthcoming from the hon. member for Yeoville as the result of his comprehensive analysis of some of the social and economic difficulties facing the taxpayer in this country. Therefore, with the kind of economy which South Africa is fortunate enough to possess, I do not see any problem in examining and to a great extent complying with all these proposals that have been made. In most countries of the world housing assistance to various strata in society, to accommodate those who need this housing, has always been a top priority policy. One finds this in the financially sophisticated society of the U.S.A. One finds it in Europe.

But it is being done in South Africa as well.

Yes, only to some extent. Unfortunately, however, we are very conservative in our whole approach. I well believe that the financial approach is normally what one could well expect it to be, i.e. of a conservative nature. I think, however, that we are in a position in this country to be able to meet these problems. I also think we can meet them effectively without a great deal of cost to the State. So I often wonder why, in the view of the man in the street, the Government makes niggardly concessions year after year with regard to some of these factors which in the social life of the community can play a very vital part and can relieve to a great extent some of the problems with which people are faced in the course of their normal social existence. For that reason I feel that these proposals could easily be considered without any financial embarrassment to the State.

The other point I should like to raise is that the hon. member for Sunnyside queried the fact that there would be any saving if married women were permitted to pay their income tax separately as married persons. I may refer him to a very excellent example given by an authority such as Silke whom I imagine the hon. member for Sunnyside, with his qualifications, would normally accept. He gives an easy example on page 428 of the 7th edition of his book, where he illustrates a saving of approximately 30% to 40% in the amount of taxation that would be payable. He takes a very simple example.

But if one has to have other taxation …

I am giving him an example, Sir, to illustrate to him that we should be encouraging married women to earn money and thereby to provide them with an incentive to enable them to play a part in the productive economy. This is something this country badly needs because as we know it is short of skilled labour. Already we have to make considerable concessions to the private sector to establish training systems so that we can introduce more and more trained semi-skilled labour into the market. We are ignoring and disregarding one of the most important factors in the productive life of our country, a factor which has been well made use of in other countries of the world. I refer to the fact that married women need an incentive in this rather sophisticated economy of ours to render that productive activity. They can only do that if they have the incentive and the advantage of the money they earn. At the moment all they are doing is burdening their husbands with additional taxation and helping their husbands to lose the rebates they would have had. Added to this there is the discomfort they undergo—and need not undergo—when increasing their earnings as a couple. I am very surprised that a man with the experience of the hon. member for Sunnyside should make such a foolish remark. I say that there is a great deal in the case that has been put up by this side of the House.

I should like to mention to the hon. the Minister one or two matters in the few minutes left to me. These matters concern the taxation proposals, which might perhaps be looked into again. I am thinking of the investment allowance on machinery and I would like to make a suggestion. I notice that in the Act we make provision for some allowances in respect of used machinery if the hon. the Minister is satisfied with regard to the circumstances which surround it. I am wondering whether we should not take into account machinery which is brought in from another country and used for the first time in this country, despite the fact that it is used machinery. I am thinking, for instance, of the case where the Cyril Lord organization brought their entire plant over to South Africa. The plant was not new but it was an entire established factory brought into this country. The position is that there may be other cases where an entire infrastructure could be brought into the country in order to establish an industry. Could the investment allowance not also be applicable in the case of this machinery used for the first time in the country? I should like to ask the hon. the Minister to give some thought to that.

Are you referring to imported used machinery only?

Yes, machinery brought into South Africa to be used here for the first time.

Imported machinery?

Yes, I am referring not to used machinery in South Africa which is reused, but to machinery brought in for the first time from outside the country to be used in this country to provide a satisfactory infrastructure for a local industry. I feel that this is something which should be considered in order to encourage, as the hon. member for Yeoville has rightly suggested, easier means of investment in South Africa.

The other thought, although it is rather a small one, is also quite interesting. The amendment to section 88 of the principal Act provides that if tax is to be refunded due to an assessment being altered on appeal or an adjustment being made on appeal, it should be refunded with interest at a rate of 7½% The interest in respect of a late payment of tax which is charged if the payment of tax is delayed, is not normally deductible from your expenses. I therefore wondered whether the interest which is then refunded on a repayment by virtue of a change of the assessment, should also not be excluded from a taxpayer’s income when returns are rendered. I am not terribly sure what is done in the departmental machine with regard to this particular question, but it is an issue which has been raised with me and I thought that I would bring it to the notice of the House.

I want to conclude by laying stress on the question of abatements. The abatements of a married man of, say, just over 60 who has no children, will completely disappear if he has an income of R16 000 per annum. The system of the removal of abatements, which has already been stressed, is something which I think should be looked at again because even though one might say that R16 000 per annum is a fair income, I should like to say that as this starts from R5 000 onwards, it becomes a diminishing benefit. It is really not then the benefit which the State thinks it is conceding to the taxpayer. I think there should be a complete revision of thinking on this matter. I do feel that that is something which should be considered.

With those few remarks I should like to say that I strongly support the amendment moved by this side of the House.

Mr. Speaker, we have been listening tonight to the hon. members on the other side of the House who, in actual fact, do not want taxes to be levied in any form whatever, and who, while they do not want to levy taxes, want there to be tax relief in respect of those cases where no taxes have been levied. This, in brief, is what the pleas made by the various hon. members amount to. Let us take one item as an example. The hon. member for Yeoville pleaded for children to be paid to look after their parents. Does the hon. member not know that an attendant’s allowance may be obtained by those persons living with pensioners—especially if the latter are in poor health? Does the hon. member want the State to pay other people to take care of any person who is 60 years or older or a pensioner? Please, the hon. member should not make statements of this kind here.

The hon. member referred to indexing. Indexing is one of the best-sounding words that can be used when reference is made to taxes or inflation. When one tells a person that his income is going to increase in proportion to the increase in costs and that his earnings will increase as commodities become more expensive, what would the case be the moment when the cost of commodities decrease? I want to know from the hon. member what method he would use to make the worker understand that his earning power is going to be reduced.