Mr. Speaker, I move—

1. (1) That the House at its rising on Friday, 1 April, adjourn until Tuesday, 12 April; and
2. (2) that from Monday, 18 April, the hours of sitting on Mondays shall be:

14h15 to 18h30

20h00 to 22h30.

Agreed to.

Mr. Speaker, before the adjournment of this debate last Wednesday I had paid tribute to the Railways in respect of two matters. I want now to refer to three others before returning to the budget itself. Firstly, I want to associate this side of the House with the tribute paid to Mr. Scheffel, the designer of the high-stability bogie, which won for him the Shell Prize for Industrial Design and the gold medal of the Associated Scientific and Technical Societies of South Africa. The only omission I find, is that I cannot trace any record in the report of the General Manager of the Railways or in the speech by the hon. the Minister of any award by the Railways of a material kind. The Railways used to, and the Post Office still does, make monetary awards for discoveries or inventions of value to the department, and I would like to suggest that this, like the “dolos”, is one of those occasions when the Railways should not just congratulate in words, but should, in a tangible way, make an award to this outstanding inventor.

Hear! Hear!

Then I want to refer to the general manager himself, Mr. Loubser, a man who has won a number of a wards. One was for being among the top five businessmen of the year. Then he was awarded an honorary professorship, and I am sure he would not mind being referred to sometimes as the absent-minded professor. He was also awarded the William Agnew award by the IME in London, for a paper he delivered. Thirdly, I refer to him for the part he and the department have played in interstate relationships, something which justifies the theme which we took some three years ago, the theme of the part which the S.A. Railways could play in detente and in building up good relations with neighbouring States. This, too, is a tribute which I pay with sincerity.

What a pity, Mr. Speaker, that men of such calibre have to work under a Government which apparently has only one ability, and that is to convert problems into crises. [Interjections.] I intend to deal with that in greater detail during the course of my speech.

Now, in a serious vein, too, before I get to the detail of the budget. The hon. the Minister mentioned that the name of the department was to be changed from S.A. Railways and Harbours, and I would seriously urge him to consider a different name from the one he suggested. He suggested that the name be changed into the Department of Transport Administration. I believe “transportation” is the correct description, and not “transport”. Transportation is the act of conveying things, of transporting things and that description belongs much more to this department, a department which transports by rail, by road, by air and by pipeline. I therefore believe that one should then change the name of the Department of Transport to imply more a co-ordinating and controlling task than a task of actually transporting, because the Department of Transport, in fact, does not transport. It controls transport, but it does not itself transport.

Turning to the budget, it will be no surprise to the hon. the Minister that we are going to reject this budget. [Interjections.] I immediately want to move the following amendment—

There is an old joke, Mr. Speaker, a joke about a certain kind of motor-car which was described as an accident on wheels, looking for somewhere to happen. I would describe this budget and the Railway Administration as an “economic disaster on rails, waiting for a time to happen”. Unfortunately that time is now, in this budget. It is a time that has come about as a result of the Government’s own unique expertise in converting economic difficulties into financial crises and disasters. That is what has happened. It is a time of economic stringency, but as a result of the Government, of which that hon. Minister is a member and with which he shares joint responsibility, economic stringency has been converted into a critical state of affairs for our country. Any pretence that there is no economic crisis in South Africa has been blown sky-high by the very budget which we are debating here today. I see that neither the hon. the Minister of Finance nor the hon. the Minister of Economic Affairs are here. I do not blame them. [Interjections.]

The hon. the Minister of Economic Affairs is here. There he sits at the back! [Interjections.]

Ah, I see. [Interjections.] The hon. the Minister of Economic Affairs is here in camouflage. I do not blame the hon. the Minister for blushing, when I think of the soothing syrup which that hon. Minister has spread around, the self-satisfaction and complacency which he and his colleague, the Minister of Finance, have exhibited when they have claimed that inflation is curbed. They said inflation was down to 10% and that it was under control; a nice, happy state of affairs. However, when it comes to the Government’s own business enterprise, the Railways, what happens to that 10% claim? What is the reality when it comes to that Government business, compared with the soothing syrup, the honey, which the hon. the Minister of Economic Affairs spreads over all the rough patches when he says that inflation is under control and it is down to 10%? When we look at this budget we find the Railways in difficulty despite an economy campaign, despite the fact that they are living, to a large extent, on suppliers’ credit in their capital purchases, despite the fact that my information is that many contractors have to wait for their money—they do not get paid when they would normally be paid. Apart from that the budget shows that the Railways are living in hope of better times. However, what is the economic reality? In his budget speech on Wednesday, the hon. the Minister—and I relate this now to the 10% increase—said—

However, all we hear about from the Government is the 10%. Then we find these words of the hon. the Minister—

That is the reality. This hiding behind the consumer price index of 10% is no true reflection of the situation in South Africa. Let me now look at what the General Manager had to say in his annual report for 1975-’76—

He continues further on—

That is no longer news!

This is no longer news, but it remains true all the same. The hard, cold facts show that our economy is reacting contrary to what the normal economic reaction ought to be. The difference is due to the economic policy of the Government. [Interjections.] For what other reason do we find a different type of economic reaction than that which can be expected and that usually follows on conditions of a low growth rate which we are experiencing? Because of the Government and its policy our economy is reacting in a completely different way. [Interjections.]

†The pity is that all our warnings, all the pleas and the advice, have been ignored—not just that of the Opposition, but of all the authoritative voices of South Africa’s economy, Assocom, FCI, Die Handels-instituut, Dr. Wassenaar. You name them, they have all criticized the economic policy, direction and control of this Government. With this budget we are today reaping the bitter fruits. All these warnings, pleas and the advice have been voices crying in the wilderness. If I may switch my metaphor, I can say that the chickens have come home to roost on that hon. Minister’s shoulders and on his department.

Vultures; not chickens.

I want to remind the House of some of the recurrent warnings. I am sorry that the hon. the Minister of Community Development is not here, because I would have called him as witness. There are two voices that have given the same advice to the Government. One was the hon. the Minister of Community Development and the other myself. They may not accept my warnings, but one would expect that they would accept the warnings of one of their Ministers of their own Government, but obviously they do not listen to each other. We both warned that one could not impose uneconomic social services on a business undertaking without compensation and then expect it to operate profitably. For years we have warned the Government that one could not demand that the Railways provide uneconomic services to the people of South Africa in the interest of South Africa and not compensate them for that service. The principle is accepted by the Government. The Railways get a little subsidy on suburban train fares to Bantu resettlement areas. They also get an export subsidy. But they do not touch the heart of the matter. Now it is of course too late and we find that while it used to be 20% and was gradually reduced to 16%, this year 14,7% of the traffic is having to carry 85,3% of the load. 14,7% consist of high-rated traffic and this has to make up for the 85,3% of low-rated traffic, of which much is for social and uneconomic services. That is one of the factors that has led to the situation.

The other is the crippling financial charges. I do not want to deal with them in detail— one of my colleagues will do so—but 44% of the R600 million increase in this budget is for financial charges: depreciation, interest rates and funds. Only over recent years has thought been given to redemption, to a realistic life estimate of assets and a realistic rate of depreciation. This year the hon. the Minister is asking for an increase of 20% in depreciation to fund some R50 million from revenue into capital. It is not as though the hon. the Minister is not advised. He has a planning department, of which he is justly proud. It has four different sections: a planning council, under which falls physical planning; there is a statistics section, data processing and administration. I do not believe that with all these resources his planning department did not advise him of the difficult times that were coming. Either they did not advise him— which I will be surprised about—or they did advise him. If they did advise him, he did nothing about taking advantage of that advice to plan for lean times. Instead he has let it go on and on until he has to come to us today to ask for R344 million extra from tariffs.

One of the answers we gave long ago was to do away with the politically appointed commissioners. We then suggested an advisory council which could advise the hon. the Minister. I took it further during the additional appropriation debate this year and proposed the creation of a board of directors on which Railways management would serve and to which could be added the help and the advice of people from the private sector, people who for instance would be experts in marketing, public relations, personnel management, practical economics and engineering. I do not say there is no managerial ability in the Railways. There is, in fact, a lot of managerial ability, but that ability has to operate within the establishment, within the confines of rules and regulations of Government. They are not free as in any other business; they have to operate and apply their abilities with a rigid conformity to Government policy. In any business one has a management committee and a board of directors. We have got the management, but lack the board of directors. We only have a Cabinet and a Minister who, apparently, cannot provide that additional control which is required at board level. Therefore I believe there should be an intermediate advisory authority which will be free of the restrictions of Government thinking and Government control.

In all fairness, I should like to acknowledge that now that we are in a crisis, the Railways are reacting correctly in many respects. They have cut the capital budget by 20%, by R200 million, this year. But that is not the full picture. The capital budget is cut by R200 million in the Brown Book, but that represents the equivalent of something like R350 million to R400 million which is eliminated from the actual services we could have expected. In the first place, one has to take into account the escalation of costs. If the figures I have quoted, from the hon. the Minister’s own speech, are anything to go by, inter alia, anything from 40% to 60% for steel and items like that, and one takes the normal growth which one would expect within the national pattern, I suggest that it is nearer to R350 million to R400 million of work which will not be done this year and not merely the cold R200 million which is shown in the Brown Book. This, however, is a correct step, and I am not going to criticize unfairly. What is wrong with it, is that it has come far too late. It has come after a spending spree when capital expenditure increased over a period of five years by almost double, from R2 900 million to R5 500 million from 1972 to 1977. So this has come too late.

The second correct step was—as the department has done—to cut down on staff, overtime and Sunday time. Despite these savings there is still an increase of 27% in revenue expenditure. Heaven knows what it would have been had there not been an economy campaign if, after there has been this campaign, there is still an increase of 27%.

Who pays the price for this? First of all, it is the Railway staff whose budget this is. The hon. the Minister himself has acknowledged that there has been an increase of 32,7% in the consumer price index since the pay rise of 1976. Since then there has been one increase of 10%, which means that every Railway staff member has not only had his wages frozen, but has had them reduced in their effective value. Not only has his wages been reduced effectively in value, but they have also been reduced in overtime, because hundreds if not thousands of Railwaymen could not live on their basic pay. There are thousands whose basic pay is in the region of R200 to R220 per month. The only way they could survive was by using their overtime take-home pay. That has now been cut by R3,7 million. I am therefore correct in saying that the price that the Railwayman is paying is not just a freezing of his wages; it is a reduction in his effective wage. When you have a wage-fix you should have a price-fix with it. Here we find the Railwaymen having had a wage-fix without a price-fix to compensate. So, whereas wages are fixed, prices continue to go up. They are the first people who have to pay the bill.

Others who have to pay are the Railway pensioners. Last year there was a welcome increase, but since then there has been only the 2% standard increase. Working people can possibly help themselves. They get their normal increments. They get promotion to new grades and their salaries go up in the normal course of work. The pensioner, however, does not have that opportunity. He is limited to the 2% annual increase, and when one bears in mind the rate at which the cost of living has increased, one realizes that the pensioner cannot survive. Particularly those with incomes of R200 a month and less cannot maintain themselves, and a worker earning the same salary cannot bring up a family. A further price which the workers are having to pay is an actual reduction in the funds available for housing.

But, Sir, if that is what they are paying, what about the people of South Africa? Last year, when the tariff increases amounted to R200 million, we warned that it would escalate to nearer R400 million, because of the normal profit motive. That represented an increase in tariffs of 11,2%. The Minister claimed that that meant only a 1% primary increase on the economy as a whole. He stuck to that. In fact, I think his figures were wrong; I think it was actually 1,3%, but I shall not argue. By now the argument that we had in this House has become history. I leave the buying public, and the housewife in particular, to judge what happened to the cost of living as a result of that increase. The 1% was just a joke. Every time there is a price rise, railway rates are given as one of the reasons for the increase. The Minister, in his speech, made reference to certain increases. Every one of those items in respect of which there was an increase is controlled by his Government. Electricity is controlled by his Government, and so are coal prices, fuel prices and steel prices. His Government therefore has control over the prices that he has to pay. In the private sector prices have gone up, and each time the justification has been the increased railway rates. Now, Sir, we are not dealing with R200 million this year. We are now dealing with R344 million. Just in case the hon. the Minister wants to argue about this, I brought my “giant” computer along with me. I am not going to have any quibbles over decimal points this time. I may say that I do not have 232 staff members working on this computer. I spent only R20 on this computer, and not an increased R5 million on data processing, as the hon. the Minister has done. R344 million is 74% more than the increase of R200 million last year. I do not think the hon. the Minister will dispute that. It is 74% more, but the hon. the Minister blandly says that this is going to lead to a primary increase of only 1,2%. Last year R200 million led to an increase of 1%, and now he says that R344 million will mean an increase of 1,2%. This is a case of basic arithmetic, Mr. Speaker. Working on a GDP of R26 000 odd million and a Railway budget of R2 600 000, it means, as I work it out, that the Railways’ budget comprises 10,6% of the GDP. Does the hon. the Minister of Economic Affairs dispute that? No. I have worked on a 2% growth rate since the last available figures, which were those for December 1975. If the Railways constitute 10,6% of the GDP and their tariffs have gone up by 14,6%, then I make that a primary increase of 1,54%. By the time that you have taken your normal profit margins of 15%, 25% or 50%, bearing in mind that there are three tiers, viz., the manufacturer, the wholesaler and the retailer, and that most items travel not just once by rail, but some of them up to five times, viz. from the ore to the primary metal to the container to the filled container to the wholesaler and then to the retailer, you can have an imposition of railage increases up to five times for one item. I am taking it at a bare minimum when I say that the R344 million is going to be at least R700 million. I challenge any hon. member on the other side to dispute that the people of South Africa will be paying R700 million more this year … on about five million families that works out at R140 per year per family. [Interjections.] They do not like that argument and I accept it. Let us work it out on a family income of R100 per month. It means that on the primary 1,54% increase it would be R18 but by the time it has escalated, and I am taking a round figure of 3%, it means R36 per year. To a person with an income of R200 per month it means R72 per year. A person with an income of R500 per month would pay R180 and a person with a monthly income of R1 000 would have to pay an extra R360 per year. If anyone can show that on a primary source increase of R344 million, 1,5% is not going to become 3% by the time it hits the consumer, then he is living in a dream world.

This does not only apply to the consumer in general but there are the farmers for whom this is going to be critical in respect of fertilizers, livestock and seed. I do not have time to deal with this aspect. Other hon. members will do so, but I want to say that this will be a critical increase for the farmers of South Africa.

For the commuters, who are the lowest income group, with the least cushion, these increases are going to push many thousands more below the bread-line, below the minimum survival line which has been worked out for urban townships. Where there was already a large proportion below that minimum subsistence level the extra rail fare is going to push thousands and thousands more below this level.

The Government’s plaintive cry is that they have no option. There were options, but it is too late for many of them now. [Interjections.] I have named one already and that is capital, which has doubled over the last five years. Interest charges have gone up even more, far more than the capital.

Then I want to say a few words about containerization. I do not have the time at my disposal to give the details, but just in road equipment, in mechanical horses and trailers, the Government has spent R24 million last year and this year. In Durban there are R7,3 million’s worth of mechanical horses and trailers. And in Durban there is a private haulier organization which has worked in the harbour for 100 years and which has all the equipment. It has 200 mechanical horses and 200 trailers suitable for containers and it would cost them a total of R600 000 to make up the additional trailers. But because the Government is determined to have its own little empire and to exclude them from the harbour, the Government are now spending in Durban alone R7,3 million on equipment to replace R3,8 million’s worth of private enterprise equipment, which is now going to become redundant. One can argue till one is blue in the face. It has been to the hon. the Prime Minister and it has been to the Cabinet, but that hon. Minister will not budge and imposes an unnecessary R7 million, which means an additional loss to the Government of R750 000 in licences, excise tax and fuel tax in Durban alone. 309 horses and 660 trailers have already been delivered and are sitting on blocks while D-day for containerization is only in July this year. However, equipment was already being delivered and put on blocks since May and June last year, waiting for July of this year. Is that planning?

The last point I have time to make on this is that, while the Government’s estimates, made when they first placed their orders, have all been reduced now, they are still going ahead with their purchases and the stuff is still pouring in.

Sir, time has beaten me and there are other matters which I shall have to deal with in the Committee Stage, but finally I should like to make an appeal for a non-departmental inquiry to be made into the situation of our Airways staff in South Africa. I want to tell the hon. the Minister that, whether he knows it or not—he will not admit to knowing it—there is seething dissatisfaction at all levels from the pilots right down to the ground staff. Is he aware that Airways ground staff, who after a few years are entitled to 35 days leave per year, are not allowed to take more than 14 days if it means overtime to replace them while they are away, and that the total ground staff at most of the airports are limited to 14 days leave and simply have to accumulate the other 21 days? Is he aware of the difference in the benefits and privileges enjoyed by our pilots and those of other airlines? Is he aware of the load placed on cabin crew? I believe the time has come not for a departmental inquiry, not for a whitewashing inquiry, but for an independent inquiry into the whole question of staff morale and staff problems in what is the pride of our transportation system, the S.A. Airways.

I conclude by saying that this budget has been summed up best by Rapport yesterday with a picture of South Africa flattened in bed and the caption: “I feel as though I have been run over by a train”. Boy, oh boy! When this budget hits the public, it is not going to be a train that ran over South Africa—it is going to be a steam-roller that flattened South Africa.

Mr. Speaker, what is very interesting and typical of the hon. member for Durban Point is that he did not discuss the amendment he moved. The amendment states that the budget “will result in increased inflation”. He did not discuss that. He stated that this would “lead to higher production and living costs”. As far as this is concerned, he spoke about his little machine and dwelt briefly on the cost of living. He did not touch on “erosion of standards of living” or “increased unemployment and social insecurity” at all, nor did he give an example of the latter. I had expected him to refer to the railway worker in this regard as well.

Mr. Speaker, I should like to associate myself with the hon. member’s praise of the General Manager, Mr. Meredith and Mr. Scheffel in connection with their achievement and the distinctions and decorations they have received. I should just like to add that it must be a contented staff and senior officials to have achieved such success in their work. We are particularly grateful for this and we want to express our gratitude to them and the confidence that this contentment will continue and lead to greater achievements.

The hon. member for Durban Point also referred, inter alia, to the intervention of the authorities and the building up of its own empire with the regard to the South African Railways in opposition to the interests of an existing haulier in Durban who supposedly possesses all the cartage plant. That anyone could be so naïve as to state such a standpoint in this House! The fortunate haulier who is so well-equipped has not, I take it, provided that equipment out of a sense of luxury, but, being a good businessman, is fully employed. Nor I can see how such a good businessman could simply take over all the other work of the Railways with a wave of his magic wand without additional investments, etc. I repeat: Such naïve arguments belong in the United Party caucus chambers. If the administration had not accepted the stocks which, according to the hon. member, are now being delivered in such large quantities before the appointed time, I predict that next year we would have heard the same hon. member asking: “Why did you not plan in time? The cost of these things has now increased by 20%; just see what you could have saved the country.” We know the hon. member’s methods in this connection. They achieve nothing. While the hon. member was speaking, I asked myself: I wonder: on behalf of which party is he speaking—the one that is still to be born, the one that is dead or the one that still exists on the basis of a “working arrangement”? It is of the greatest importance to know this.

Recently, when I was on my farm inspecting my cattle, I joined Simon, my chief Bantu servant, in a pipe at the kraal gate, when we had finished counting and inspecting the cattle. He said to me: “Oubaas, tell me now, this working arrangement business in Johannesburg, what does it mean?” I asked him what he meant. He replied: “No, Oubaas, they had a dance in Eloff Street and said that with the new working arrangement they wanted to take over Johannesburg with Jolly Jive and wanted to make everyone happy, share all the businesses and have everyone live together in Houghton. But, Oubaas”, he said, “that contract, I do not believe in it.” I asked him why not. He replied: “Oubaas, it is like lightning; before you see it, it is gone. Oubaas, I do not believe in that thing; it will not work, nor will it bring rain to this country. I think I prefer to stay with this contract where I can see the cattle near my house and where I can see the grass growing when it rains.” [Interjections.] We, too, have seen a few flashes of lightning coming from a small cloud, one aimed at the Government and the other at the Administration. Not one of these flashes made contact. That is why neither of these flashes will bring rain, either.

You are on the wrong track.

That hon. member has never been on a track.

I now want to turn to positive matters. Since the Railways built the first short railway line in Durban in 1860 to convey passengers and goods, it has begun to play an integral role in the economy of South Africa. Towards the end of the 19th century, when it had to convey capital goods and consumer goods from the harbours to the diamond fields at Kimberley, and later to the gold fields of the Transvaal, it developed further. In the thirties and forties—the so-called agricultural years—it conveyed agricultural goods to the consumer areas and to the harbours and became an indivisible part of the economic machine of South Africa. The climatic conditions make it possible to produce various products in various parts of our country and those products have also to be conveyed to the harbours for export, in order to earn foreign exchange. Furthermore, the products have also to be conveyed to the various consumer areas in the country. In this process the Railways has operated in accordance with the value principle and the principle of cross-subsidization as far as its rates policy is concerned. Gradually the Railways has moved away from the value principle and closer to a cost structure. This is the matter about which the hon. member for Durban Point wanted to make a statement, a statement which, in the end, he never made.

The expansion that has taken place in South Africa since then in the fields of mining, agriculture, commerce and industry has been astronomical. There has been extremely rapid growth and transport facilities have had to be established continually in order to serve the country’s unceasing economic development. The increase in tonnage conveyed by the Railways over the past 12 years has been phenomenal. In 1964, about 90 million tons were conveyed, in contrast to about 130 million tons of goods and minerals in 1976. Tonnage alone, however, is not a criterion by which to judge the performance of the Railways. It ought to be mentioned that the net tonnage per kilometre has increased from about 42 milliard in 1936 to 60 milliard in 1973 and to 69 milliard in 1976. This represents an increase of 64%.

During the Additional Appropriation debate we heard here that the Administration’s one great deficiency was that it was supposedly not abreast of the new and modern budgeting techniques and that it was not in a position to evaluate or apply them. The budget of this same Administration—and this must be seen against the background of incredibly rapid development of industries—was only 3,1% out this year, notwithstanding the domestic trade recession, unforeseen price increases and the inflation problem. In the world of general commerce it is accepted that a budget that is 5% out is a good budget, and one that is 3% out is a perfect budget. Mr. Speaker, this is the Administration whose organization is under discussion in this House today. If the goods conveyed by the Administration over the past financial year were to be piled up in a single heap, the heap would be as big as 115 Carlton Centres—a little bigger than the old Jewish tower of Babel. Furthermore, over the past financial year railway passengers have undertaken 36 million journeys on main line trains and 607 million journeys on suburban services. In order to fulfil its role as a transporter, facilities, in the form of people and capital, are required. Capital is being invested at a very high rate to improve and modernize the rail and harbour facilities so that the demand for transport services may be met. In 1976, R225 million was spent as against more than R1 000 million in the financial year 1975-’76.

Where is the capital to be got from?

Out of your pocket.

That has already been discussed; the hon. member is behind the times. In contrast to other enterprises that convey goods or people, the Railways can only make use of its own transport channels. By the end of 1976 the total track distance was 33 million kilometres, more than 10 600 km of which was electrified. If all these railway lines were to be laid end to end, one would be able to travel about three-quarters of the way around the earth. All these railway lines are controlled and operated by the Administration of the Railways.

The number of locomotives has more than doubled over the past 12 years. In 1964 there were 651 electrical units as against 1 528 in 1976. In 1964 there were 168 diesel electric units compared with 973 by the end of 1976. The Railways has a total of more than 4 500 locomotives in service. If one takes into account the fact that some of these locomotives cost more than R1 million apiece, one forms some idea of the capital investment in this vast organization. Furthermore, the number of revenue-earning wagons increased from 114 000 in 1964 to 117 000 in 1976. When this party took over from the UP there were not enough trucks to convey the goods and there was insufficient money to pay the officials’ salaries. The hon. member for Durban North knows that. Now they want to complain. [Interjections.]

The Railways not only has a transportation function, it also has a stimulation function in the economy of South Africa. Over the past financial year the Railways has spent no less than R607 million on purchases on the local market. Its electricity account for traction purposes alone amounted to R36 million. The latest increase in the electricity rates will cost the Railways an additional R14 million this year. The Administration’s operating and capital budgets for the financial year 1976-’77 amounts to more than R3 000 million, whereas the Railways has already invested more than R4 700 million in pipelines, road transport, air services, railway lines etc. Apart from the Railways’ direct purchases on the South African market, its officials, comprising a quarter of a million people with a salary vote of R1 million per annum has a tremendous impact on the South African economy. As remuneration for the service it provides the Railways received a mere R920 million in 1975-’76. The maintenance of both the national infrastructure and stimulating of the national economic growth takes place within the limits represented by the two major restricting factors on the Railways. That is what the hon. member for Durban Point failed to bear in mind in the criticism he expressed, and it must be emphasized for the sake of fairness. The South African Railways has carried out its activities without the subsidies required by similar transport services in other countries of the world. Here are a few examples: Germany, with R3 000 million in 1974; France, with more than R1 400 million in 1975; Italy, with more than R900 million in 1975 and Britain, with more than R600 million in 1975.

Here the public pays it instead of the Government.

The hon. member has a choice. If he does not want to operate in accordance with the present policy of the Administration of the Railways, he can choose whether he wants to recover this subsidy from the Treasury, i.e. by way of increased tax, or allow this policy to be rationalized further so as to cause the public and the taxpayer as little expense as possible. In the second instance, the Railways is obliged by our constitution to balance its results of working. Profits and losses in one year must be made good the following year. A cost-balanced system of tariffs will therefore have no influence on the total revenue over the long term. At the moment the Railways relies on cross-subsidization among services to counteract deficits. The results of working for 1975-’76 reflect this principle. Viewed on a sector basis, the implementation of cost-based tariffs has a serious influence on agriculture, mining, forestry and the fertilizer industry, but a favourable influence on the industrial sector in general, because for the most part, the industrial sector is already cost-carrying.

To further illustrate what I have just said here, I want to point out that the net results of working in regard to the various services for the years 1975-’76 are as follows: Railways, minus R190 million—a socialized service; harbours, plus R57 million; airways, minus R2 million; pipelines, plus R83 million; all services, minus R52 million; passengers, minus R191 million; coal, minus R12 million; livestock, minus R12 million; catering and bedding, minus R10 million; road transport services, minus R11 million; goods, plus R26 million; and grain elevators, plus R2 million. This represents a net minus amount of R190 million. These data provide incontrovertible evidence that the burden on the socioeconomic services still rests too heavily on the Railways and that the balance between high-rated and low-rated traffic is not yet sufficiently balanced. Furthermore, it is equally true and important that this ratio cannot be altered too rapidly without further ado, because this would result in too many shocks. I want to mention a few figures to support this statement. In 1974, the ratio between high and low-rated traffic conveyed by the Railways, expressed in tonnage, was 20% high-rated and 80% low-rated. The 20% high-rated traffic yielded 52% of the revenue, whereas the 80% low-rated traffic yielded 48% of the revenue. In 1975, the revenue from high-rated traffic amounted to R19 million, viz. 50%. The revenue from low-rated traffic was R81 million, representing a percentage of 50%. In 1976, high-rated traffic represented 17% of the total traffic and yielded 46% of the total revenue. 83% of the total traffic was made up of low-rated traffic, which yielded 53% of the total revenue. The subsidization of the lower rates by the higher rates is and continues to be excessively high.

The Railways has also had the problem that the airways have had a difficult time of it due to increased fuel prices and longer distances which have had to be travelled around the horn of Africa. However it has been able to hold its own and was able to do better than its rivals. But all this notwithstanding, there are certain divisions of the Railways which still show heavy losses on low-rated traffic. In this regard I have in mind the conveyance of livestock, for example, which showed a deficit of R12 million in the last financial year, notwithstanding the fact that the rate was increased on two occasions. The conveyance of coal showed a deficit of R12 million and the socialized suburban passenger services showed a deficit of R93 million, with a subsidy of R26 million.

However, there are encouraging signs that the process of rationalizations is beginning to pay dividends. I make this statement because last year, 75% of all traffic was conveyed at a loss whereas this year the percentage has been brought down to 57%. This has been possible in these difficult times due to the policy of rationalization. The conveyance of agricultural products, however, is still subsidized by the Railways up to 78% and the conveyance of mining products up to 74%. Agriculture, mining and certain industrial sectors will take note with great appreciation of the sound and rational policy of the Railway Administration in contrast to the wild ad hoc standpoints of the hon. member for Durban Point.

Over the past two years, price increases have made a strong impact on the Railways. The price of steel has increased by 25,1% to an amount of R40 million; the price of coal by 48,8% to an amount of R7 million; the price of electricity by 62,4% to an amount of R36 million; the price of fuel by 32,2% to an amount of R17 million and the drop in traffic has caused a loss of a further R60 million, viz. a negative amount of R160 million. In spite of this, the Railways is continuing, with confidence, insight and the careful implementation of a well-thought-out long-term policy, to provide the country with a national service.

A great deal is expected of the Railways and heavy demands are made on them, and notwithstanding all the problems they are saddled with, they have come forward with positive measures, measures such as capital savings—from the original R956 million this has been reduced to R630 million. We are sorry that major works and undertakings such as Bellville-Mitchell’s Plain and the Mabopane systems have to suffer and be postponed as a result. We deplore this, but it is essential, and the Railways has had the courage to take the decision. A saving of R72 million has been effected by postponing a large number of betterment works. A further R20 million has been saved with regard to expenditure on rolling stock. R32 million has been saved with regard to stock supplies, which have been reduced to R21 million to provide for the increase in the cost of aircraft parts, permanent way material, locomotive and other parts. Due to these cuts the savings in interest amount to R25 million. Based on an index figure of 1 000 for the year 1950, the productivity rate for the year 1962-’63 is a little more than 1 200, as far as the Railways staff are concerned. The equivalent figure for the year 1974-’75 is 1 800. This represents an average increase in production, without any significant increase in staff, of 2,1% over a period of 13 years. Sir, I challenge the hon. member for Durban Point to give me another example in South African industry which can compare with this. This increase has been consistent over a period of 13 years. It attests to enthusiasm, conviction and dedication. Sir, there is nothing wrong with the policy of the Railways or with its staff.

Sir, the time has come for us to tell each other that it is pointless to attack the Government or the Railways. We should rather avoid this kind of thing. I quote from a report in Die Vaderland—

Sir, is this due to Government policy or to poor administration of the Railways? Here is another example of this kind of heading—

The time has come for us to tell the children of South Africa that although we are not experiencing a crisis, we must wake up. Perhaps we should eat a little less caviar and a little more porridge; perhaps we should gad about a little less and do our own work a little more; perhaps we should develop more of a national pride and sense of responsibility, so that we may realize that we as a people are called upon to make a national sacrifice in the interests of our own continued survival and in the interests of our own national security, and in the interests of the happiness of our children. This national sacrifice must be a savings in the cost of living of between 20% and 30%. We must forget about apologies concerning inflation, cost increases and unemployment and accept the responsibility of telling our wives and children that we have a task and a calling, not to criticize, but to prove that we can still make the sacrifice which the times demand of us.

Mr. Speaker, I listened to the hon. member for Witwatersberg with a sense of unreality. When he started off, it was fairly apparent that for some time he was going to do the wise thing and not talk about the tariff increases at all. If I had been in his position, I would not have liked to talk about the tariff increases either. Then, Sir, he went on to talk about caviar. Does he realize how many people in South Africa are suffering at the moment? Caviar is far beyond their ken. He might have had a lot of caviar in the past, but the ordinary people of South Africa, with whom he is obviously not in touch, have no idea of caviar and they have not had any idea of caviar for a long time. His calls for a little less caviar I therefore find most extraordinary. He is totally out of touch. He started off his speech by giving us an elementary history lesson, and then went on to a rather naïve lesson in elementary economics. Then he got on to the subject of subsidies and said that we did not have to subsidize our railways. Mr. Speaker, what does he think the pipelines are doing? What does he think the harbours are doing? They are subsidizing the Railways. What does he think the ordinary man in the street is doing? Then there are the pipeline profits. In this regard, what does he think the motorist is doing? The motorists are subsidizing the Railways. He might remember too that I have in the past put forward the viewpoint that it would in fact be more healthy to subsidize the Railways from the general rates fund. I have said that it is not the Railways’ task to subsidize other parts of the economy. I do not, however, believe that the priorities that the Railways exercises when it does use these hidden subsidies and when it does subsidize under the lap, as it were, are the right priorities. I would in fact like to see subsidies come from the general rates fund, because then people would have to stand in line, the amount subsidized would have to take its turn and there would be a greater degree of scrutiny, so that one would see whether or not subsidies like this were justified at all.

In assessing this budget presented by the hon. the Minister, I am afraid that we in these benches regard it as a total disaster. It is a budget to disaster. It is very difficult to find any redeeming feature at all in a picture of what can only be described as unmitigated gloom. Last year at this time we were subjected to an across the board tariff increase averaging 11,2%. A few months later, on 1 September, we were again faced with an average increase of 9,4%. In the midst of what is supposed to be a major campaign against inflation, one would have thought that a more than 20% increase, which is much more than the inflation rate, would have been adequate to cope with the rising costs. But no, Sir, anyone who believed that this was the case was living in a fool’s paradise because here we are for the third time in just over 12 months having to face up to another revision of tariffs involving a 14,6% average increase. Sir, if this is not galloping inflation I do not know what is. It is the sort of inflation that could well travel on our new train at 208 km/h, because that is about the rate that it is going. The hon. the Minister devoted a considerable portion of his budget speech to describing the cut-backs and savings that have taken place in his department. He told us of his dedication towards stringent economy. The regrettable thing about these pious sentiments is that the hon. the Minister does not really know what they mean. In the portion of his speech which he named “campaign against inflation” he told us of the steep rise in the cost of such items as steel, coal, fuel and electricity. He told us that, based on the present level of consumption, these increases mean additional expenditure to the department of the order of R100 million per annum. This is a large sum of money. I think we should talk about this R100 million. It might well be a reasonable figure, I do not know, because I am unable to assess that from the documents before us. Last year we were told that the expenditure for the financial year 1976-’77 on railways, harbours, pipelines and airways was likely to be R2 122 000 000 and in terms of the revised estimates submitted to us earlier this session this amount had increased to R2 214 000 000. Now we are told that for the coming year expenditure is estimated at R2 673 082 000. This represents an increase of over R459 million in operating expenditure. What price the R100 million increase for steel, coal, fuel and electricity? What about the other R359 million? Take out these items—which are certainly those items which are most subject to inflationary pressures— and we come to another R359 million. Even if it is taken on its own, it is more than the national inflation rate. That is without these major items, and in spite of the hon. the Minister’s so-called savings. It is quite obvious to the meanest intelligence that something far more serious is happening in the Railways. To me it is quite unbelievable that the hon. the Minister has dared to come to the country at this stage and deal this crippling blow to our economy, for it is a crippling blow, Sir. We are in the midst of a serious economic recession. We are faced with a desperate situation as rising unemployment threatens the relative stability of our society. Inevitably, this rise in transport costs makes certain that unemployment levels will rise in 1977. The high inflation rate means a lower growth rate, or possibly no growth at all, which is now on the cards. This means more unemployment. One can only shudder when one considers what this will do to the cost of living. I would like to say to the hon. the Minister that if he really believes that the influence on the economy will amount to 1,2% he is deluding himself. The hon. member for Durban Point did a little arithmetic with the help of his giant calculator and certainly, Sir, his guess is as good as mine, but it certainly does not come anywhere near 1,2%. I was intrigued by the phraseology the hon. the Minister used when he produced this unlikely statistic. He told us: “The adjustments were therefore planned in such a manner that they will have a minimal influence on the economy in general.” This is obviously the sort of planning the hon. the Minister indulges in. I do not really know what he means by this. Perhaps he will tell us what he means by it. I think that, actually, he is talking absolute nonsense. However, I do notice that he hedges his bets because he speaks of the “primary influence” being estimated at only 1,2%.

He has not paid me my year’s free meat yet either.

You were wrong.

South Africa is not only interested in primary influences, but also in secondary and other influences. These influences are going to have a monstrous effect on the economy and, certainly, it will be far more than the 1,2% he spoke of.

Right away we shall see increases in basic commodities such as coal, petrol and steel. Inevitably, trailing after this, there will be increases in the price of meat and other foodstuffs. I shudder to think what is going to happen to our cost of living. Certainly we are going to have to face a further general lowering of the standard of living. The farmer’s position is weakened. The industrialist’s position is weakened. Our exports become less competitive. I see that the General Secretary of the Trade Union Council of South Africa, Mr. Arthur Grobbelaar, is quoted as saying: “The hon. the Minister must have an economic death-wish.” He could not have put it better, because no budget could have done more damage to the economy of South Africa than this one.

This is a panic budget and one of its most disappointing aspects is that the policy of reducing the gap between high and low rates and aligning rates more closely to costs in accordance with the recommendations of the Schumann Commission has progressed very little indeed. The hon. member for Witwatersberg tried to tell us differently but in fact the hon. the Minister admitted as much in his speech. However, there are certain areas in which the hon. the Minister is following this policy through so fast that it appears to be his intention to kill off the industries concerned. He is not doing it on a gradual basis at all; he is most inconsistent in this.

Let us, by way of example, take the plight of the stock farmers. We all know that livestock has been carried for years at uneconomic rates. Certainly, it would be wise to bring this up gradually to a healthy economic rate.

What is a “healthy economic rate”?

The stock farmer has had to face increases amounting to 354% in the last four years. Is this fair? This is a cost the farmer will have to carry because I believe that the consumer cannot and will not carry it. Consumer resistance is being built up in this respect. When a section of the farming community is being knocked like this, one wonders whether this Government ever thinks of co-ordination and planning. The hon. the Minister’s colleague, the hon. the Minister of Agriculture, is busily engaged in centralizing abattoir operations in this country which involves sending livestock over greater distances which gives rise to a greater use of transport facilities and of the Railways. Why did the hon. the Minister not tell his colleague that he dislikes carrying livestock because it is uneconomic? He should have suggested that smaller, local abattoirs would be more sensible, because carrying frozen or chilled meat is more economic and the more sensible thing to do. The farmer would benefit and the consumer would benefit, but we do not appear to think like that at all. We do not appear to co-ordinate in this way at all.

I have been saying that for years.

Well, Sir, the hon. the Minister is not having very much success. There appears to be virtually no co-operation and co-ordination at all. The total result will be almost a death blow to this farming operation, the meat industry, while millions of rand are just being poured down the drain.

The hon. the Minister is killing the prosperity of all farmers. Price rises come so thick and fast that farmers today just cannot cope. I should think that it would be wise of the hon. the Minister to be very careful in respect of how he treats the farming community. Over the years the majority of that community have given their support to this Government, but most of them must today be wondering why. Their patience with this sort of bungling incompetence is wearing very thin. One wonders, too, what the voters of Durbanville and on the Witwatersrand, who supported the Nationalist Party, are thinking now in the face of these tariff increases, on top of the increased sales tax and the increases in the price of beer, alcohol and tobacco introduced by the hon. the Minister of Finance.

One could go on all day with instances of this sort, but there is one area that cannot be allowed to go without comment and this concerns the commuter train service fare increases. White commuters are having to shell out money that they can ill afford and the position of many Black commuters is even more desperate because it comes down to a matter of basic survival. People who are living on an income that barely allows them to keep body and soul together just cannot afford these increases. I believe that the hon. the Minister has opened up the risk of considerable racial unrest. I can only hope that he has been in communication with the hon. the Minister of Finance and that we will see the introduction of a subsidy to cover these rises. It has always been my contention, and in this respect I support the hon. the Minister, that it should not be the responsibility of his department to stand the cost of social subsidies. This does not mean that they should not be paid. They should come out of general revenue. I have a feeling that this hon. Minister may have been in contact with his colleague, the hon. the Minister of Finance, but that he has been turned down. I want to warn the hon. the Minister that if this is so, he and his Government are doing a very dangerous thing. I hope he has heard what moderate Black people are saying about these increases. Mr. Sam Motsuenyane, president of the African Bank, has been quoted as saying—

Mr. Makhaya, the Deputy Mayor of Soweto, in expressing his shock at the increases, is quoted as saying—

That is a very pertinent question: “Where will they find the money?”

What is your suggestion?

I am coming to that. Many Black people in the townships at present cannot survive without welfare assistance. With higher food prices the spectre of starvation is already present in many homes. If this Government continues to increase the burden on these people, it is creating the sort of conditions where unrest will flourish and communism will appear to be attractive. I believe that this Government is making a fertile field for the growth of communism and it is endangering the security of this country.

The hon. the Minister chose his words very carefully in his budget speech and tried to give us the “soft sell”, but nothing he could say could hide the stark facts and it becomes apparent that the situation within the Railways is very serious indeed. Continually increasing transport costs are a millstone around the neck of our economy and we just cannot afford to continue in this way. The distances that have to be covered are vast and our prosperity depends on our being able to run economic transport services.

I sometimes wonder whether a little more competition would not have some effect. Let us take, for example, the situation of our Airways. Faced with the latest increase we now have to pay one of the highest mileage rates in the world for the privilege of travelling on S.A. Airways. I see that this year we are budgeting for a R22 million deficit. Any traveller has no alternative at all; he has to travel by S.A. Airways. Perhaps the time has come where a little competition should be allowed. Perhaps the time has come when competition should not only be allowed, but welcomed. I believe that the stranglehold which the Administration has on air services should be broken. Free enterprise should have the opportunity to compete. I am absolutely certain that the result would be lower air fares and better service. The Railways themselves are working towards a situation of freer competition, with road services coming more into the picture and getting away from a monopolistic situation. Why should we not break the monopoly of S.A. Airways? All this monopoly is bringing us is a R22 million deficit. There is a tremendous amount of Government capital being tied up, so the taxpayer has to bear the load. Why not free the taxpayer of this responsibility? Over the years, as fares have gone higher and higher, passenger comfort has deteriorated. Passengers hardly complained when they were squeezed into smaller seats with less leg room. They hardly complained at the deteriorating standards of meals supplied—one gets a little bit tired of beans and carrots all the time. They hardly complained at having to wait longer for baggage, at the continual delays or at information counters which do not give out information. They have to take it or leave it. Competition is a very healthy thing and this is the point of what I am saying. It is conducive to efficiency and to economy. At the same time I believe, and I have said so on many occasions in the past, that the time has come for the Airways to be taken away from the Railways and Harbours Administration and that a new separate department should be created. This transport empire which we have has become too unwieldly. I do not believe that this is a good thing for efficiency. The hon. the Minister has raised the question of having a new all-embracing name for the S.A. Railways and Harbours, because this name is not fully descriptive of the various services handled by the department.

I do not think we should have a new name. We should split many of the services into different departments. Not only should Airways go off on their own, but Harbours should fall under a Ministry of Marine. This is an old argument. This hon. Minister and I have had it before. I know that in the past he disagreed, but faced with the tremendous detrimental effect of a budget like this, I think it is very important for the hon. the Minister to rethink his old attitude, because that is just not working. Let us forget about these new names. The time has come to be completely honest with this hon. Minister. His department is failing to produce the efficient service we need at the most economical price. In a way I feel sorry for this hon. Minister, but more sorry for the General Manager and his staff. They are saddled with a legacy of the past, involving an unbelievably complicated system of financing, going far back in history, and which can never be anything else but inefficient. I think that the time has come to cut through this mass of out-dated machinery, and almost, to start afresh. A new concept of transport services should be brought about, a concept involving, inter alia, the separation of departments. This could be the excuse and the time for doing away with the anachronistic mechanisms with which our present Railways and Harbours Administration is forced to function. The question that still remains, is whether or not this hon. Minister is big enough to bring about this new situation. This is a question which only he can answer.

Another matter which, I believe, needs an overhaul, is the whole question of parliamentary scrutiny. Regrettably, I do not believe that this Parliament is in the position adequately to scrutinize the affairs and the policies of the Railways Administration. The Select Committee on Railways and Harbours examines the accounts of the Administration well in arrears, but in no way does Parliament have any real say or influence on the selection of priorities of capital expenditure. Parliament is just not in a situation where it can be well enough informed. We do not know whether the priorities are correct. We frequently believe that they are not correct. Parliament has to reply on the hon. the Minister, and frankly, I believe that he already has too much on his plate. No one man can handle adequately such a diverse organization.

I believe that this applies to the General Manager and his Administration as well. We are being asked to appropriate the enormous sum of R3 621 million in this Bill. The huge size of this sum, I think, is an indication of the huge size of the organization which we are talking about. This organization has become unwieldy, and, with the best management in the world—and I believe we have very fine management—it would be virtually an impossibility to give adequate attention to each and every one of the hundreds of different facets presented to the Administration. I am absolutely sure that such a split would enable undivided specialist attention to be given, with, consequently, improved efficiency.

I must urge the hon. the Minister to try and be objective in this. I believe that, if he takes the bull by the horns and urges this on his hon. colleagues in the Cabinet, his name could go down as the hon. the Minister who had the courage to carry out major surgery, thereby ensuring the healthy survival of an ailing patient with some healthy offspring.

There is another matter which, I believe, should be drawn to the attention of the public. That is the matter of the pipelines, a matter which I have already discussed in brief. I know that the hon. the Minister has had to do a tremendous amount of juggling in order to balance the books. The tremendous profit he is making on pipelines, I believe, is wrong. This year the estimated expenditure on running pipelines will be approximately R28 million, while the estimated revenue will be in the region of R139 million. This gives a working surplus of R111 million. This is rank profiteering, Mr. Speaker. It amounts to a selective taxation of inland motorists, in particular. The inclusion of the pipeline operation in the operations of the S.A. Railways and Harbours is, of course, a very convenient situation. Unfair profits enable them to come somewhere near balancing their books. The Republic of South Africa Constitution Act (Act No. 32 of 1961) states in section 103(2)(a)—

In other words, it says the Railways should not make a profit. The Constitution Act says the Railways should not make a profit. If this provision were applied to the pipelines operating on their own, it would be highly embarrassing for the hon. the Minister. Profiteering would have to cease immediately. You know, Sir, it is the poor motorist who always gets the short end of the stick. This budget is certainly a staggering blow, not only to motorists, but inevitably to car manufacturers as well.

What about the passengers and the livestock that you were pleading for?

We are coming to the passengers just now. If one takes the recent sales tax increase into consideration as well as more costly steel and other components as a result of this budget, new cars will at the end of the year cost something in the region of 15% more than they do at present. If we add this to an inevitable increase in the cost of petrol it will put motoring beyond the pockets of many. Of course, the only alternative to going by car will be to go by train or air at hugely increased costs, which I suppose is all money in the pocket of the department. I have a vain hope that the hon. the Minister has some sort of conscience about excessive pipeline profits, but regrettably I do not think he has.

There are also the very fat working profits coming from harbours which the hon. the Minister must find very useful indeed. Presumably much additional profitable business will be obtained on lines to Richards Bay and Saldanha. I will be very interested to hear from the hon. the Minister what sort of bargain was obtained in the purchase of the Saldanha/Sishen line and the Saldanha Bay harbour. R650 million is a huge sum of money and it will be most interesting for the House to have details of the actual assets purchased and the value which has been put on them. All we can do is hope that it is not a bad bargain and that the hon. the Minister has not been at the receiving end of some tough bargaining by Iscor to the detriment of the Administration to help Iscor along with the problems they are experiencing at the moment. I think this is a very serious matter and that we need assurances on this.

I would also like assurances about something else. This has to do with staff wages and salaries. It is quite apparent from reports in the Press that very shortly the Railways’ staff organizations are going to be knocking on the door of the hon. the Minister with wage demands. I must say that I have every sympathy with these demands. Overtime has been cut, we are told that productivity has been increased and people leaving the service are not being replaced. Presumably, then, Railway staff are having to work harder. What sort of reward do they get for this? Is the hon. the Minister going to give consideration to wage increases? If he is, how is he going to finance it? This, of course, is the crunch. I hope he has no intention of further tariff increases in this event, because the economy just cannot take that. The hon. the Minister laughs, because I know exactly what he is going to say. He is going to say: “How do you expect me to give wage increases when you do not want me to increase the tariffs?” That is why we want somebody who is a little more efficient than this hon. Minister at his job. The money has to be found by making further economies elsewhere in the department. I regret to say that the hon. the Minister’s protestations on economy do not ring altogether true. Why is it, when all these economies that he spoke about in his speech have taken place, that he still has a record budget which has increased in size by a greater percentage than the national inflation rate? This, frankly, does not sound like economy to me, although I must say that it appears that in the field of capital expenditure at last it seems to be getting home to the hon. the Minister that you cannot spend money that you do not have. This is a lesson which has come very hard to the hon. the Minister. We are still living with the legacy of profligate over-spending in the past. The result is many of the difficulties now being experienced by the Administration, particularly in the field of short-term high-interest loan capital which obviously had to be used to finance this spending. Unfortunately the day of reckoning always comes and with this budget it certainly has come with a vengeance.

I would be interested to know from the hon. the Minister just what sort of loans we are getting at the moment. Are we able to get medium or long term loans? If so, what rate of interest are we paying on them? Alternatively, are we saddling ourselves with more short-term high-interest loans and getting ourselves into further trouble? I can see signs of the pruning knife being used a little bit in the compilation of the estimates, but I do not believe that it has had yet been adequate. I should like to make one, probably vain, request to the hon. the Minister concerning the additional appropriation next year. I thought that the additional appropriation we had at the beginning of this session was disgraceful. It indicated inadequate budgeting, to say the least. One never knows, when one looks at estimates like these, whether they have any meaning at all, judging by the size of the additional appropriation. There are errors in much of the budgeting, all involved with a juggling of the books to present the best possible picture. All in all this is a thoroughly bad and unfortunate budget. It is a panic budget and will do immense harm to our struggling economy. Certainly the hon. the Minister will get no bouquets from members on these benches. We shall support the amendment of the hon. member for Durban Point.

Mr. Speaker, firstly I just want to correct a few matters in the arguments of the hon. member for Durban Point. He wants this House to believe that the additional appropriation amounts to R600 million. If he has another look at the books, I think he will find that it is R535 million and not R600 million. The hon. member tells us that a 27,1% increase is being asked for here. If we take into account that the additional appropriation amounted to R2 279 million and that an amount of R2 814 million is being requested here, one sees that this represents a difference of R535 million. The percentage increase is therefore not 27% but only 23%. I want to straighten out a few more matters for the hon. member. He agrees that in this budget provision is being made for R52,3 million for the Sinking Fund to defray capital loans. It has never been used for that purpose. If he agrees in principle, he must surely not cry about the increase in the additional expenditure. If we do not take that into account, the increase in expenditure would only be 21%. He wants the country to believe, however, that the increase is 27% instead of 21%. The hon. member made another statement here. He made a terrible song and dance about the increase in the coal price, but in the same breath he quoted Dr. Wassenaar and said we should listen to him. Dr. Wassenaar, however, is specifically one of those individuals who says that we poke our noses into price control too often. If he wants to criticize coal and fuel prices, he must not call on Dr. Wassenaar as a witness in the debate. He contradicts himself. He refers to the Capital Account and says we have been on a “spending spree” the past five years.

Hear, hear!

That hon. member says: “Hear, hear!” I think he should consult earlier volumes of Hansard. Three days ago that same hon. member, the hon. member for Durban Point, criticized the hon. the Minister of Transport because the amount voted in the Brown Book was not spent. He then said we were spending too slowly. Now that hon. member says: “Hear, hear!” With all due respect I want to say that I cannot understand these people. [Interjections.]

I should like to come back to the budget. I first just wanted to put a few matters straight in connection with allegations made here for the purpose of twisting things round a little. Before I come to the budget, however, I should like to associate myself with those who congratulated Mr. Scheffel for the design and the discovery of the bogie. For me it is not so much a question of the high speeds that have been achieved with it. That, of course, is also extremely important, because speed means that in future we shall have quicker services. What is of the utmost importance to me, however, is the resultant saving in permanent way and rolling stock maintenance because it is claimed that future wear and tear will be much less than in the past. That is of the utmost importance. Then I also want to mention another achievement that we cannot allow to pass unnoticed, and here I am referring to what happened on the first day of this financial year, i.e. the official opening of Richards Bay. It was a privilege to have been present when the harbour was opened for the first time, when the first trainload of coal arrived there and the first coal was loaded, coal which is earning foreign exchange for South Africa. It is expected that even this year Richards Bay will be handling 3 million tons of coal and that by the year 1980 it will be earning R900 million in foreign exchange. That is important for South Africa and we may not let is pass unnoticed.

I want to express my utmost appreciation to the Railway men and women of South Africa for their sacrifices in these times of inflation and difficult economic conditions. Those people and, in particular, their staff associations who kept a cool head, did some level-headed thinking, joined the S.A. Railways’ administration round the conference table, concluded agreements and did not come along with wage demands, are patriots who are really performing a nation-wide service. Here we can only record our utmost thanks and appreciation to them. In spite of unfavourable conditions, their productivity increased by 2,1% in the past few years. If one bears in mind that during the past year 119 million tons of revenue-earning goods traffic and 642 million revenue-earning passenger journeys were dealt with, it is remarkable that only twelve accidents took place in which people were killed and seriously injured: six in which people were killed and six in which people were seriously injured. Of the 42 people involved in fatal accidents, 37 died in one accident, and we are sorry about that. However, it does illustrate the efficiency of the S.A. Railways under difficult circumstances. The fact that more than a million goods trains ran during the year and that only 0,6% could not run because of a shortage of staff, shortages as a result of leave or congestion on certain sections because of derailments, attests to efficiency, coordination, sound administration and sound planning.

I want to come back to the budget which was made to look so ridiculous by the hon. member for Orange Grove and the hon. member for Durban Point. What does a ridiculous budget actually look like? The budget before us has to be weighed up against this year’s budget. We expect the Railways to furnish an additional amount of R31 million in revenue—1,4% more than the amount voted in the budget. Now the Railways is asking for an additional R69 million on expenditure which means a difference of 3,7%. Is that what a ridiculous budget looks like? Show me a better one. To value or condemn this budget, it must be weighed up against last year’s budget. The hon. member for Durban Point—he is not in the House at the moment—can be very ridiculous when it comes to figures. Hon. members will remember that during the Second Reading debate of the additional appropriation, the hon. member referred to the item “Maintenance of Permanent Ways”, for which an amount of R240 million was budgeted and for which an additional amount of R13 million was requested, i.e. 5,5% extra. Of that R13 million, R1,2 million is for salaries. In comparison with salaries in the original budget it is 4,4%. Do hon. members know what percentage that hon. member gave us across the floor of the House? 9% and 91%; not 4,4% and 5,3%. The hon. member calculates what percentage R1,2 million is of R13 million and does not weigh up one salary item against another. That is the hon. member who does his calculations with the aid of a little machine, the man who condemned the Railway budget on television last year. I want to request SATV never again ask someone, who can murder figures like that, to comment on a budget. It is absolutely scandalous.

The hon. member for Orange Grove referred to the increase in running costs. The Railways is requesting an additional R535 million for that purpose. Everyone agrees about rates; no one wants increased rates. I myself do not like it, but if one cannot save on expenditure, I should like to know where the difference is to come from.

From revenue!

I am speaking of the expenditure of R535 million that must be found over and above that of last year’s budget. That budget was right on target, as I have already told hon. members. That is why we can compare this budget with that one. Let us look at where the R535 million comes from. One of the main expenditure items is administrative charges, i.e. head No. 1. Under that head an additional amount of R17 million is being requested. R16 million of that represents additional salaries. It represents the salaries of the executive officers, the staff at the head office and the data processing staff—all highly paid people. There was a 10% increase in salaries, which only covered a portion of the year. This year, however, provision must be made for a full 12 months. Provision must also be made for notch increases, and under these circumstances I claim that the R16 million of the R535 million we are requesting is reasonable, or do hon. members think the Railways should reduce salaries or pay people off? That is surely the only alternative if one wants to have a saving in that respect.

Let us have a look at head No. 2: “Maintenance of Permanent Way and Works”. Here the Railways is requesting an additional amount of R68 million. That is quite a hefty sum, but let us analyse the R68 million. If we do so, we find that salaries constitute R6 million of the amount and that the expenditure on the permanent way is R15 million. However, what does the expenditure on the permanent way involve? It involves the maintenance of the permanent way, and one must bear in mind that there are more than 22 400 km of railway line in South Africa, 174 tunnels and more than 10 000 bridges, not to mention the other works. One must also bear in mind that all those works must be maintained, and with the escalation of prices in mind I want to claim that R15 million for maintenance over so broad a field is not too much to ask. Included in this amount is an amount of R6 million, one of R2 million for other expenditure and an amount of R6 million for rails. We all know that the price of steel has increased by 25%. It is therefore a reasonable figure. I have now indicated how R35 million of the R68 million is going to be spent. Is there anyone—1 challenge them to do so—who can suggest a saving on this R35 million, because then we could reduce the rates accordingly.

Let us turn to a third very important expenditure head, i.e. “Maintenance of Rolling Stock.” What additional amount is being requested under this head? An additional amount of R54 million is being requested. What does this amount involve? R7 million of this is for the wages of people who must do maintenance work, and no one wants to argue about that because no one wants to pay these people less and no one wants to pay them off. The expenditure on rolling stock amounts to R34 million. What does the maintenance of rolling stock involve? If one bears in mind that we have more than 2 000 steam locomotives, 975 diesel locomotives, more than 1 500 electric locomotives, more than 9 000 coaching stock units and 177 000 goods stock units, one can realize the extent of the work involved in just maintaining that rolling stock. Then I have not yet included everything. We must also remember that in the past year there has been an increase in rolling stock. The Railways has now taken over the Sishen/Saldanha railway line and this line is 861 km long. Traction must be provided for this line, and additional traction must also be provided for the Richards Bay scheme. Therefore one must also expect provision to be made for those projects, over and above the normal growth and the allowances for the escalation of prices.

Let us now look at head No. 4: “Motive Power Operating Expenses.” Here the Railways is asking for R58 million, and amount necessitated by coal price increases amounting to R1 million; oil and fuel, R21 million, etc. Mr. Speaker, since there has been an extensive increase in the activities of the Railways, provision must also be made for an increased traction system, and we are all aware of the price increases there have been. An increase in the price of electricity has entailed additional expenditure of R14 million. As the hon. member for Witwatersberg said, there was an increase of 62,4%, something which was beyond the control of the South African Railways. I do not think any hon. member in this House can find fault with that unless we decide to have the trains stand still. Let us go further and look at the salaries and wages of drivers and drivers’ assistants. Their wages amount to R10 an additional million. Surely we do not want to tamper with that.

The Opposition says we must increase the amount.

Yes, the Opposition says we must increase it, and then we also have to make provision for that additional expenditure. I have now dealt with R46 million of the total amount of R58 million. For the sake of interest I want to mention that the increase in the costs under this specific head was 29,8% between 1975 and 1976. I therefore think that what is being requested here is very reasonable. It goes to prove that in all spheres the Railways is cutting down and saving. We have asked for additional money for traction, it is true, but we must remember that this year the Railways expects to transport at least 5,6% more goods. The Railways also expects to transport more passengers and to transport 50% more coal. What is more, trains do not simply run downhill all the time. They must be pulled in some or other way.

It is only the UP that goes downhill.

Yes, that is true. I now want to refer to something else, i.e. ore. We must make provision for ore, and it is expected that we shall be exporting 15 million tons of ore in the coming year. I consequently do not think anyone can accuse us of being unreasonable if the Railways requests this ount under this head. I also want to refer to the Head No. 5: “Traffic and Vehicle Running Expenses.” To use a railway term, that is an “out-stations” matter. Under this head an additional amount of R55 million is needed, with R38 million going for salaries and R2 million for lighting and heating. The salaries are for station masters, shunters, train marshallers and yard staff. Surely one does not want to curtail their salaries. On the contrary, Sir, there is still a staff shortage in the station foremen and shunter categories, and therefore we should actually have expected the amount to be greater. There is, for example, a small amount under the head “Cartage Services”. I now come to “Depreciation” in terms of which a great deal more is now being requested. An additional amount of R68 million is being requested, but surely no responsible member of this House can expect us to decrease the R68 million. To make provision for that in terms of the existing formulas would mean that the Renewals Fund would soon be completely exhausted and that it would not be possible to replace any of the existing assets; not one. It is therefore a good thing that we have made provision for the escalation of prices to the tune of an additional 20%. For the information of the hon. member for Orange Grove, who worked out his “operational costs”, I want to say that he neglected to include these figures in his calculation. What is depreciation? It is, to a certain extent, a guarantee for capital expenditure. We surely cannot change the formula. I do not think anyone would suggest that the formula for aircraft, in terms of which that asset must be replaced within a period of eight years, should be reduced or that the period for rolling stock should be increased to more than 20 years. Included in this amount is a portion of the R17 million which is ploughed back into the Renewals Fund, an amount borrowed from that fund in 1971-’72.

I now come to another very important expenditure item, something which is beyond the control of the S.A. Railways, i.e. interest on capital, for which an additional R77 million is being requested. Can we expect anything but an increase in that amount? One thinks of the take-over of the Sishen/Saldanha project and everything that involves. In that respect surely provision must also be made for the depreciation of assets. Hon. members cannot argue about that.

In the Sinking Fund provision is made for an additional R52 million, specifically to reduce foreign capital loans. I actually want to request an increase in that amount. The Railways must eventually create for itself a capital development fund. I know that certain people say: “Why must the present generation pay for the future?” I cannot agree with that because if we carry on like this the burden of interest will become increasingly greater. An hon. member asked what the burden of interest actually is. The total burden of interest on the entire industry is R447 million or 15,8%, whilst previously it varied between 12,8% and 14,8% of revenue. As a result of the escalation in prices it has, of course, increased.

I now want to come to another important item. It is strange that the hon. gentleman opposite did not spot this. Apparently they did not do their homework, because otherwise they would have hammered away at it. Let me consequently do that for them. I am referring to the Betterment Fund. Provision is being made here for an additional R25 million. I know hon. members opposite will throw their arms in the air and say: “Yes, but in the additional estimates you took R25 million out of that fund.” That is so, but if the Railways had not done that, it would have had to make provision, by way of this House, for additional increases in rates in order to find the R25 million as well.

But you are not afraid of increasing rates.

If one is positive, argues soundly and does not allow oneself to be led by the nose, one does not have to be afraid.

If we look at the airways we see a depreciation increase of R17 million, and in respect of interest on capital an increase of R9 million. Thus I come to an amount of R42 million. We must expect it to be higher. In the past year we have added three SPs and the Airbus aircraft to our fleet. In the Brown Book provision was made last year for R145 million for capital works. This year there will be R145 million less spent on the capital account for the airways than was the case last year. That is the reason for the increase.

In the case of our harbours there is an increase of R38 million, depreciation accounting for R7,3 million and interest on capital for R26 million. This is specifically because of expansion and the take-over of the Sishen-Saldanha project. This year we shall be spending R81 million less on the Richards Bay harbour than we spent last year. We must consequently expect the amount to increase.

In respect of our pipelines there is an increase of R11 million, depreciation accounting for approximately half the amount and interest on capital for the other half. There, too, we asked for an additional R9 million for capital expenditure.

If we make a few quick calculations, we find that the few amounts I have mentioned here add up to R486 million of the R535 million. I want to ask the hon. member opposite to come forward with suggestions for curtailing that amount of R535 million. If they can do so, we ask the Minister to reduce the increases in rates accordingly.

Let me go further. The expenditure in this budget amounts to R2 814 million, of which R600 million, according to the hon. member for Durban Point, is the additional amount. However, that is only R535 million. The hon. member would do well to take another look at the figures. R1 070 million of that is for the staff. Is there any hon. member who claims that the Railways should reduce its staff? The other day the hon. the Minister said that in the space of two months the Railways had reduced its staff, and on that occasion the hon. member for Durban Point made a great song and dance about that reduction. The reduction was not as a result of people being dismissed; it was the result of people leaving the service and not being replaced. In respect of depreciation on all services, provision is being made for R279 million, which is only 4,6%. An amount of R80 million is being requested for the Betterments Fund; R448 million for interest on capital; R6 million for the Sinking Fund; and R83 million, and this is very important, for the Superannuation Fund, an amount annually paid into the Pension Fund. The Railways contributes R2,40 for every rand paid in by a railway official. The amount for the Sick Fund is R21 million.

Here I have now very clearly pointed to expenditure of R2 049 million from the total of R2 814 million. This is direct expenditure. With the Administration having decided upon a certain number of workers to be employed, this is the amount that must be paid to the Superannuation Fund, the amount that must be paid to the Sick Fund and the amount available for leave bonus payments. That expenditure item cannot be changed. Once the burden of capital has been calculated and the interests payments determined, one can go blue in the face, but that amount must be paid. Once the depreciation has been calculated according to a fixed formula, unless the formula is changed the amount cannot be reduced. The Betterment Fund can, to a certain extent, be changed, but we all want to see more capital development financed from the Betterment Fund. No one, therefore, wants to reduce this.

The Sinking Fund is fixed in terms of the Constitution. If we want to run the Railways in any way other than as a business undertaking, our Constitution will have to be changed.

Sir, it is with the utmost confidence that I support this budget. I want to say straight out that I am not afraid to go to the voters of Vanderbijlpark with this budget. At a report-back meeting last year I warned the people of my constituency that they must realize that the existing trends and the prevailing economic situation are international phenomena and that they must consequently expect rates to increase.

Do they believe you?

We speak in honest and straightforward terms to our people, but because that side of the House is making promises and misleading the people, their numbers have decreased from 36 to 30 since last year. I am not pessimistic or melancholic. Quite the reverse, in fact. Every one dollar increase in the gold price means R20 million per year for South Africa. Not only does this bring us foreign exchange to improve the balance of payments; it also means revenue in the form of taxation of the gold mines.

With the commencement of the Richards Bay and Saldanha Bay services, which will export an increasing amount of coal and ore, we shall be earning foreign exchange, and when we earn that foreign exchange and our balance of payments consequently improves, our local economy will get rolling that much faster. Since we have already abolished import deposits, and when we relax import control so that we can import more and obtain more high-rated traffic, I see a fine future for the Railways.

Mr. Speaker, the hon. member for Vanderbijlpark spent his 30 minutes talking about the individual heads and items of the budget. I do not intend to comment on that. I would like to use the time available to me to look at the overall financial position of the Railways. Before I do that, however, I would like to say to the hon. member for Vanderbijlpark that business experience has shown that companies or governments go bankrupt when they have too high a gearing, i.e. when they rely too heavily on loan funds. Another guide to stability is the cash flow to debt or loan ratio. When the ratio starts to drop, as has happened with the S.A. Railways in the past year, the company or organization starts to go bankrupt. If it is in the private sector, such as Glen Anil, the Government has seen fit not to go to its rescue, but let it crash. In the case of the S.A. Railways, which I am the first to admit is an extremely important part of our economy, we cannot allow it to crash; so rather we have to bail it out, and this is exactly what this budget is doing. This budget is asking the taxpayer and consumer in South Africa to contribute R344 million this year to bail out the Railways. I intend to show that this is, in my opinion, mainly the result of bad management and of bad planning on the part of the Railways. However, before I go on to that, I would like to associate myself with the words of congratulations which have been expressed by certain hon. members on this side to those people in the Administration who have won awards during the past year. I believe that this is a tremendous achievement on the part of our engineers, of our technicians and our technologists, and I would like to compliment them on this.

However, Mr. Speaker, I regret most deeply that I cannot congratulate the hon. the Minister on his budget.

I am profoundly surprised!

This budget, and the hon. the Minister’s budget speech, made last Wednesday, reveal, I believe, a shocking state of affairs, not only in the economic planning of the Railways, but also in the way that this Government is handling and planning the entire South African economy. I do not believe there is a single hon. member on that side of the House who can deny that, at this time in our history, South Africa is facing a very serious economic crisis. We are suffering as a result of the high inflation rates, a growing recession, increasing unemployment, and on the horizon we see darkening clouds of misery and—let us hope not, though it might also occur—unrest. Therefore I believe that it is only right and that it is only responsible for any hon. member of this House to ask the question: What is causing this situation?

Hon. members on that side of the House have—not only in this debate, but also in others—found all sorts of excuses. However, the basic cause of the present financial situation in South Africa is this Government’s fiscal policy. It is the hon. Ministers of this Government who are responsible for the biggest budgets in the country, such as that of the Railways, a budget which, as we have heard, is approaching R4 billion. It is these hon. Ministers who are wrecking the money system of South Africa today. I believe, and I believe that we must accept it, that it is a major duty of government to safeguard the integrity of our money system. It is a major duty of the Government to safeguard the integrity of our economy upon which, not only the welfare and the well-being of our people rest, but also the very security of the State of South Africa. The State is responsible for our money system. No one else. Therefore, when considering this particular budget, I believe that there is only one consideration which is relevant today, and that is the possible effect that this budget will have on the South African economy. I believe that this budget—and there is no doubt about it—is going to add fuel to inflation, and, in so doing, it is going to rob still more from our consumers in order to pay for the Government’s mismanagement. It is going to delay an upswing in the economy. It is going to plunge the economy into a deeper recession than that which we are experiencing at present. It is going to increase unemployment and it is going to lower living standards.

Tell us what you would have done!

Mr. Speaker, I want to ask that hon. member to just listen for a moment and stop interrupting. Then he will hear what is wrong with this Government’s fiscal policy. I do not believe that I am alone in these thoughts. Here I have a copy of The Citizen of Thursday last week, where, under a heading “Shocker Budget from Railways” we find that people like Mr. Raymond Parsons, executive director of the Association of Chambers of Commerce, say that this budget will further increase unemployment in South Africa and that the standard of living of South Africans will drop even still further. There is the director of the Consumer Council, Mr. Johann Verheem, who describes the rise in railway tariffs as “a substantial blow to consumers”.

If these quotes are not enough for hon. members on that side of the House, I can also quote the vice-president of the Afrikaanse Handelsinstituut, Mr. A. J. van Wyk, who expressed his shock at the air and rail cost increases—the second in the past six months. Mr. Van Wyk is quoted as saying—

That means that as a result of this budget we are now going to see another round of increases in consumer items. Having said that, I would like to quote another person who is reported in this issue of The Citizen, the General Manager of the Railways, Mr. Loubser. Referring to these increases he said—

Mr. Loubser then made some other comments. I want to make it quite clear right here and now that I believe that no responsible South African can disagree with those sentiments expressed by the General Manager. We on this side agree that South Africa needs an expanding transport infrastructure, but we disagree entirely that the present state of economic chaos that we now see in the Railways was unavoidable. We disagree entirely with some of the reasons which have been given by both the hon. the Minister and the General Manager as being the basic cause for the economic plight of the Railways. In his budget speech the hon. the Minister referred to the rise of various indices and also to the increases which occurred in the prices of steel, coal, fuel and electricity since April 1976. He then stated—

In the statement to The Citizen the General Manager had this to say—

Why did these increases in price hit the Railways unexpectedly? Is there no co ordination between the various State-owned corporations providing the various infrastructural services i.e. corporations such as Iscor, which is steel, Sasol, which is fuel, Escom, which is power and the Railways itself? Are Iscor, Sasol and Escom now going to try to justify the new price increases, which have already been hinted at, as a result of this budget speech last Wednesday? Will we hear them saying that the increases in railway tariffs have hit them unexpectedly? This is the chaos into which the Government has thrown the South African economy. Let us face it; these Government departments have got themselves into a vicious circle, I believe, of empire building. Each department is trying to outdo the other. There is plenty of evidence of this. One just has to look at the fiasco over who should build and who should own the Sishen/Saldanha project. Iscor won that and I am sure that we can look at the Hansards and hear the history behind this. Iscor won that, but now they have pulled out and the Railways have taken over, having to pay a massive capital amount of R650 million. The hon. the Minister is trying to put the blame on the various people such as Iscor and so on who have put up the price of steel, fuel and electricity. He says that they are the culprits who have forced him to raise the tariffs, because, after all, they have cost him an additional R100 million. I want to be completely blunt with the hon. the Minister and tell him to stop trying to mislead the hon. members of this House and also the public. After all, we are not a bunch of fools standing on this side of the House. Would it not have been more honest had the hon. the Minister rather said this: “Look, gentlemen, the oil and coal industry, along with Escom, have raised the fuel and power bill of the Railways by some R46,7 million which is 21,7% more than last year. Because I am not replacing as many of my locos and other rolling stock as I would have liked, my maintenance bill for this equipment is going to be much higher than otherwise would have been the case. When this is coupled with the inflation in the prices of the materials and supplies of the Railways, it means an increase of another R147 million, which is 30,5% more than last year.” He could have gone on further to say: “These two items, gentlemen, total R194 million, which I agree is high, but which I feel could have been handled under normal circumstances.” He could then have been honest with us by saying: “But you see, gentlemen, what is really knocking me for a loop, is the extra 46,4% I have had to pay in interest on the huge capital loans which I so unwisely have taken out over the past few years, along with the higher depreciation charges I am now faced with. Then, of course, there is the extra R52 million which I have had to place into the Net Revenue Appropriation Account in order to establish a special Sinking Fund to finance this excessive capital spending of mine.” He could then have concluded by saying: “I hate to say it, gentlemen, but this extra 46,4% in finance charges is costing us R270 million, which, when combined with an increase of 14,9% in salaries, which totals R139 million, adds up to a massive total of R409 million. You see, this is what is killing the Railways at the present time and this is what has forced me to put up my tariffs.” [Interjections.] That is why I say that the hon. the Minister and also the General Manager, in his statement to the Press, have not been fair to the public.

I want to make it quite clear that this situation certainly did not catch me unexpectedly. In fact, last year I devoted almost my entire speech predicting exactly this. I devoted it to this matter of the excessive Government capital expenditure. What reply did I get from the hon. members on that side of the House? I should like to mention what the hon. member for Klip River said. He said that I should know better, and that if there had been a radical cut-back in capital expenditure on Railway infrastructure, many private companies would have gone bankrupt. That is what he said to me. I should now like to ask him a question. The Railways did not cut their capital expenditure last year, but has that reduced the number of companies that have gone bankrupt this year? We have had some of the biggest financial failures in the history of South Africa in the past year.

I want yet again to make it quite clear to the hon. the Minister, so that it is beyond any shadow of a doubt, that I do not for one minute suggest that the Railways should not ensure a sufficient transport infrastructure for South Africa. I believe that this must keep pace with the economic needs of the country as a whole, but I believe that the relevant point is the one I put to the hon. the Minister last year when I questioned the soundness of his planning and his economic studies in respect of his capital expenditure programme. In his reply the hon. the Minister—if hon. members are interested, it is to be found in col. 2825 of last year’s Hansard—went to great lengths, as has been done in the House again today, to tell the House about all his different planning committeees. In this and last year’s budget debates I have spent much of my time on this matter of the capital budget, which is one of the biggest in the country. Last year’s was R1 000 million, which is almost as big as the total Defence budget. Such expenditure of the nation’s capital resources on a service operation must never—and I want to stress it—be allowed to jeopardize the position of the overall growth of our nation’s economy. To do this is in my opinion an economic crime against our nation, of which I believe the hon. the Minister is now guilty. In fact, last year I studied the economic development programme for the 1974-’79 period, a programme which is released by the office of the Economic Adviser to the Prime Minister. On page 64 there was a table which set out the plan for the requirements of capital formation in the various main branches of production, in order to achieve the desired growth rate for South Africa. I referred to it in last year’s debate. At that time I warned that the Railways’ capital budget was far too high, that it was destroying the economic development programme laid down by the Prime Minister’s adviser, and that this capital expenditure was taking from the public sector much-needed funds which were required to build a balanced economy in South Africa. I regret to say that the hon. the Minister paid no attention at all to that. In the closing stages of the Third Reading debate I rose and asked him the following (Hansard, Vol. 61, col. 3079)—

The hon. the Minister’s answer was—

That is what was said, but so much for the consultation between these two departments. We find that the whole economic development programme, at this stage, is a farce. My advice to the hon. the Prime Minister is to close the whole lot down and save the country some money. That was the position last year. I have dwelt on this for some time, because I believe it is relevant today, in the light of this year’s budget and in the light of what the hon. the Minister said on Wednesday. What did the hon. the Minister say? In the first place he said that the capital budget was being reduced by R200 million, which was 20%. I should like to say to the hon. the Minister: Thank goodness for small mercies! As a result of this reduction of 20% many projects now have to be delayed and, no doubt, there are many people in the private sector who have been involved in these projects and who are now going to find themselves getting hurt. I regret this deeply, but I believe it is one of the prices that our nation now has to pay for the Government’s mismanagement and for placing its priorities in the wrong direction. To these people I should, however, like to say this: Let us be thankful and let us take comfort that this reduction in spending is going to result in R200 million less in debts being roped around the necks of the consumers of South Africa and the South African taxpayers. Already the Railways is paying R444,5 million in interest alone, R266 million on depreciation and another R141 million on other capital charges, which makes up a total of R852 million, or 30,3% of the total expenditure which is to be defrayed from revenue. I do not believe we want any more capital or finance charges as far as the S.A. Railways is concerned.

Secondly, if there is any section of the hon. the Minister’s budget speech which, I believe, totally vindicates the stand which I took in regard to this matter last year, it is the section which appears on page 3 of the hon. the Minister’s speech in which he says the following—

1. (1) a more meticulous application and following up of economic evaluation studies in respect of all new capital projects;
2. (2) the pruning of capital expenditure on the basis of a set plan with export projects taking the highest priority …

At last, when the chickens have come home to roost, we find the hon. the Minister now starting to see the light. I want to know from the hon. the Minister what his planning departments and all his economists have been doing in the past. Exactly what have they been doing? If I may be permitted to say this—and I believe I stand here and say this as a loyal and a patriotic South African—may I be so bold as to ask the hon. the Minister at this stage and in this time of crisis in the economy to now give instructions to all these planning departments to take out their sharp pencils and to ruthlessly cut out every bit of non-essential capital spending in the Railway budget. I believe the hon. the Minister should instruct his General Manager to use all the technological and professional know-how which I know this Administration possesses in the form of its manpower, to remove the fat and to trim and tune our transport services to become an economic winner for South Africa and not to be the enormous economic loser which it now is. The Administration must accept the fact that it is, in the present time, a heavy economic burden to South Africa. Heaven knows, in this critical time of our history we cannot afford any extravagant, unnecessary and wasteful spending. Therefore I believe it is a duty of every one of us to bring the particular situation into line. After all, is this not exactly what the hon. Ministers on that side of the House have been imploring every person in the private sector to do? Most of all, we do not need any additional capacity at the present time. This is the point I want to make to every hon. member on that side of the House.

That is wonderful wisdom.

All right, the hon. Minister says that is wonderful wisdom. In order to justify that statement, let me say that I believe that that statement is surely proved by the General Manager’s report. On page 5 there is a graph which shows the real transport capacity of the Railways Administration and the real gross domestic product of South Africa. If one studies this graph one will see that it clearly shows that for the past four years or so the real transport capacity of the Railways is running eight to nine index points ahead of the real GDP. This was not the case in the 10 years prior to this period. This graph alone shows that the Railways have grossly overspent on capital expenditure and that it now has a tremendous surplus capacity. This is surely the result of this massive capital expenditure over the past few years on the part of the Railways. It is also an indication that South Africa is now grossly over-capitalized as far as its transport infrastructure is concerned relative to the economy as a whole, and I want to stress, “relative to the economy as a whole”.

In conclusion, may I say that if we are to be loyal and patriotic to South Africa we must ensure that this over-capitalization does not bankrupt South Africa as, I believe, at the present time it threatens to do. The problem that is facing every financial organization in the private sector today is a lack of capital and high capital charges. One of the main reasons, as I have sought to prove in this debate, is this tremendous capital expenditure, not only on the part of the South African Railways, but also on the part of Iscor, Sasol and Escom. Who is bearing the brunt of this? The taxpayers and the poor people outside are bearing the brunt of this. Fuel is going up by 4 cents per litre to pay for the capital expenditure on Sasol 2, and so it goes on. One thing makes me shudder when I read the hon. the Minister’s report and that is that he says that he is going to introduce inflation accounting into his budget. That is what he said, although I forget the page number of his speech on which it is said. Once one starts introducing inflation budgeting into one’s business, one has then accepted a high rate of inflation as a fact of life. A high rate of inflation means that the people are being robbed, and this Government is wrecking the money system of South Africa.

Mr. Speaker, I think the Opposition will excuse me if I say—and I am putting it mildly—that their arguments in this debate have really been irrelevant up to this stage. They are still criticising a budget which they expect to be introduced at a different level. Up to now they have not succeeded in putting a finger on one weakness in this budget. They have only tried to create a certain atmosphere by means of exaggerations and a few skilful wrong deductions. I was particularly sorry for the hon. member for Durban Point today. I was watching the clock, and he marked time for 17 minutes before referring in any way to the Railway Budget. The hon. member for Amanzimtoti referred to the burden of interest which is so crippling and I shall refer to that at a later stage.

The question I ask myself is: By what criterion should one test the Railways? I believe that the test one should apply is whether the Railways is efficient, in other words, whether it has done its work. Has the Railways remained stagnant or has it grown in the process? Has there been poor administration in the Railways, has there been maladministration? I want to tell you, Sir, that physically speaking, the Railways has had the best year in its history. The Railways has modernized, created new infrastructure and grown by 9,2%. If one adds coal, the growth amounts to almost 12%. It has conveyed all its tendered freight. In the process it has had spare capacity. Fewer trains have done more work. There has been an increase of between 5% and 7% in the volume of traffic. Notwithstanding this the Railways has succeeded in conveying all its freight, whether on land or in the air. What is remarkable is that there is a far stronger spirit of optimism in the Railways today, that there is a greater certainty in the direction the Railways is taking. With its own more extensive financing it is coming back to the old South African financial discipline. With its greater orientation towards business and its movement towards freer competition, the Railways is today displaying a refreshing vitality. By its proposed change in title it is creating the expectation of a greater decentralization which will involve greater autonomy for its various sectors, which is something we have advocated on a number of occasions. Overall there is sound policy, there is outstanding management and there is a stable staff in the Railways from top to bottom. Now I want to concede that there are factors which have had an impact on the Railways, factors over which it has had no control. These have already been spelt out; in fact, thus far the whole debate has been concerned with them. The first one spelt out for us was that R100 million in increased costs since April 1976. Now the hon. member for Amanzimtoti sneers that this was not unexpected. He asks: “But was this increase unexpected?” Of course this increase was unexpected in the sense that formerly, these bodies drew their capital from foreign sources. That capital was substantially reduced. In other words, whereas the normal increase in the prices of these commodities would be 15%, it now varies between an increase of 25% in the case of steel to an increase of 62% in the case of electricity because these bodies also have to be financed from operating capital. There are the increasing costs of social services to which reference has been made. There is the tremendous burden of interest, which the hon. member for Amanzimtoti also mentioned. Fourthly, there is the State’s success in curbing imports, which has had its detrimental influence on the conveyance of higher rated traffic, which in turn has resulted in a substantial loss of revenue for the Railways. This was a further reason. If, then, one peels off all the varnish of Opposition criticism that has been applied thus far, this budget is probably best summarized in the concluding paragraph of a very good leading article on this matter published in Die Burger of 10 March. I shall only read you the concluding paragraph—

If, then, the Railways, has to accept the challenges of a freer competitive situation, it must necessarily be allowed to become business-orientated. If not, it must be subsidized by the State. I can say that in view of the enormous government subsidies received by railway systems in the rest of the world, our railway system is certainly one of the few that is still making money. In other words, we therefore have to accept that State subsidies for our railways in this country are out of the question. That, basically, is why it is essential that the ratio of our loan capital to self-generated capital must be dramatically improved. Secondly, the Railways must be put in a position to utilize to the maximum the capital in the various funds at its disposal. The Railways has today a steadily growing portfolio of foreign loans, but to ensure its rightful share from that source, to increase its own negotiating capacity in this connection, it is essential for there to be a favourable ratio between self-generated capital and loan capital. Right at the start of his budget speech the hon. the Minister laid down certain guidelines for dealing with specific problems. Let me just quote—

Then the Minister mentions 4 guidelines of which I want to read only the third—

I want to dwell for a moment on this third guideline, because the question of the burden of interest has become one of the Opposition’s main points of attack and because it is of such cardinal importance that an organization of the magnitude of the Railways should be liquid at all times in order to be able to adopt a flexible financial policy. At the moment the Railways has an annual burden of interest exceeding R400 million. Whereas other expenses can be pruned in relation to the drop in revenue, whereas a few capital projects which may not be profitable can be postponed, the burden of interest is unfortunately a fixed cost item lacking the same flexibility, and as a result it can give rise to serious liquidity problems for any organization.

It is being freely said that loans granted by the State 40 to 50 years ago should be written off at this stage. I believe that this statement is based on the assumption that interest is still being paid on assets that have become unserviceable and have been written off. This is not true, after all. During the lifetime of any asset, adequate moneys are made available from revenue to replace that asset at the end of its economic life. Those assets which were brought in 40 to 50 years ago were replaced a long time ago. Essentially, this is the whole intention behind the Renewals Fund. With the present high rate of inflation it has become necessary to increase the contributions to the General Renewals Fund by 20% and to provide for the higher replacement cost. This involves an additional burden on revenue of R50 million per annum. I think the hon. the Minister displayed great self-control in the sense that to wipe out the calculated difference in levels at one stroke would have involved an increase of about 51%.

Having said all this, the fact still remains, however, that the Railways’ level of loan fund obligations is too high. The impression gained may well be that there is already a high degree of self-financing in the Railways today, but if one were to look at an analysis of the expected total gross investment, it becomes clear that the contrary is true. For example, in the financial year 1976-’77, 26,9% of the total gross investment came from revenue. Of this 26,9%, 17,5% was deposited in the Renewals Fund and, as I said earlier, is used purely to replace existing assets. In other words, that can be left out of the reckoning for the purposes of self-financing. When this is deducted, only a small balance of about 9,4% remains. Furthermore, in 1976-’77, 7,1% was deposited in the Betterment Fund which is also, in fact, used partly for replacement purposes. A very large percentage of the Betterment Fund is devoted to relaying the permanent way. For example, whereas previously a lower grade of rail was laid, a heavier rail is now being used. Better fastening has been done, better sleepers are being used, better packing is being done, etc. Now the Minister is putting forward the policy of a greater degree of self-financing, for which he is budgeting R52 million under the Reserve Account of the Sinking Fund. Now I cannot understand why the hon. the Minister should be attacked for doing precisely what the Opposition has asked for in this connection. The percentage of the Railways’ own funds in the expected total gross investment is therefore being increased as a result from 26,9% in the previous financial year to 28,2% in the present financial year. At the same time there is a reduction in the percentage of the Betterment Fund from 7,1% to 4,9%. There is also a drop in the Renewals Fund from 17,5% to 15,6%. In the Sinking Fund—and this is important—there is in fact an increase from 0,2% in the previous financial year to 5,4% in the present financial year. It is this very aspect that demonstrates the definitive direction in which the Railways now wishes to move in terms of the Minister’s policy.

If the Renewals Fund is again left out of the reckoning because it is used for replacement purposes, then there is a gratifying increase, but this leaves us with only about 13% self-generated funds out of the expected gross investment. I said at the outset that the Railways was moving towards a freer competitive situation in the field of transport, that it had to compete for foreign loans and that as a result it was essential for it to maintain a more favourable ratio of self-generated capital to loan capital. There are only two methods which the hon. the Minister can adopt to achieve this. The first would be for him to write off some of his existing loans, and by so doing create a predetermined optimum ratio of loan capital to self-generated capital. To be able to maintain that ratio would entail his introducing simultaneously a planned programme of self-financing, or else that ratio will again become disturbed in the future. It would also result in further rates increases. To write off those loans without further ado—which would probably have been the easiest way out for the Railways—would have involved a tremendous burden of debt for the State. It would necessarily have entailed the State recovering it elsewhere. This is something which I really cannot foresee the Minister of Finance wanting to do under the prevailing circumstances.

However, the hon. the Minister of Transport adopted the second method of creating a more favourable ratio. To start with, in this budget he is taking R52 million from revenue and putting it into the Reserve Account of the Sinking Fund for the financing of certain capital works. While conceding that this is still a very small percentage, we can nevertheless deduce that this at least puts the Railways on the road to an optimum ratio. As times improve—and we know that times will improve—this amount can of course be increased progressively.

The optimum ratio, as set by the private sector, between self-generated capital and loan capital is something in the region of 50-50. However, it would take the Railways a very long time to reach this goal, if it ever could be reached. I am speaking under correction, but I think that the Franzsen commission set the percentage of self-generated financing at 34% as being a sound ratio for the repayment of interest. I believe that this is probably the target which the Railways, too, would strive to attain with regard to the ratio between self-generated capital and loan capital. Of course, this method initially places an additional burden on the Railway consumer in the form of increased rates, although the effect would be limited. The great advantage of cheaper capital must eventually affect the liquidity position to such an extent that there will be greater stability in respect of rates because the Railways will be in a position to be more flexible in its rate adjustments. Since the hon. the Minister has been so sensible as to start moving in the direction of self-financing, we trust that next year he will be able to transfer an even larger amount to enable us to reach that optimum ratio which the Railways is in fact striving to attain, at as early a stage as possible. As far as this interest burden is concerned, a solution must be found for the Railways and a greater deal of flexibility in its financial policy must be achieved. Apart from the method of self-financing, in his budget speech the hon. the Minister also mentioned a further method whereby capital could be obtained. This was by utilizing the funds at its disposal for itself; in other words, an integrated Budget.

At the moment the administration has at its disposal a very large variety of funds, among which are the Loan Fund, the Betterment Fund, the Renewals Fund, the Rates, Equalization Fund, the Insurance Fund, aid funds, the Reserve Account of the Sinking Fund and a Capital Credit Fund. The administration must make maximum use of its own funds. This will mean that these funds will have to be freely, but of course very circumspectly, appropriated for the financing of capital projects, irrespective of whether they represent replacement, betterment or new investments. It will only be possible to finance capital works approved in the Brown Book from these sources. I believe that this method will afford the administration a far greater degree of flexibility in regard to the appropriation of its funds, funds which have up to now been effectively frozen in separate compartments and could not be utilized for anything other than the specific purpose for which they were in fact earmarked. This appropriation must necessarily bring about a substantial improvement in the liquidity position without materially affecting the economy of the country.

It will also mean that whereas out of the expected total gross investment in the financial year 1977-’78, a maximum of approximately 13% would come from self-generated funds, that percentage could of course show a reasonable increase. We wish the Administration every success in this regard.

I hope that in my argument thus far I have proved the statement that in terms of the policy propounded by the hon. the Minister in his budget speech, the Railways has succeeded in striving towards a realistic and sound financing policy and that in the process it is moving towards a greater degree of business orientation. However, all this would be to no avail if the Administration had to get by without effective top management. Now, I read a number of possibilities into the hon. the Minister’s announcement of the proposed change in title of the Railways Administration. I could not think of a better title than that proposed by the hon. the Minister, although at this stage that name is still a little awkward to say. In my opinion, however, a new title will enable the Railways to create a co-ordinating directorate, a directorate the subdivisions of which will have a greater degree of autonomy without being in competition with each other. In our country, with its relatively small economically active population, and with the vast extent of its transport services, we cannot afford to have mutual competition—particularly in view of the present shortage of capital and the tremendously costly infrastructure. How are we to encourage and develop long-distance passenger services on the one hand, and at the same time encourage greater use of the airways on the other? These aspects will simply have to be regulated on a financially co-ordinated basis in order to bring about sound distribution of transport across the whole spectrum. I do want to make the inference that each of these more autonomous sections under the directorate will have to be accountable for its own finances. Each section will know exactly what its profits or losses are. At the moment this is the responsibility of one man, the general manager, and I think that in view of the growth that has taken place in the Railways this has become too much work for one man.

The hon. the Minister holds out the prospect that top and senior management officials will be given more appropriate titles in correspondence with overseas and accepted business usage. Incidentally, I note in the December 1976 edition of Rail International that they describe the general manager of the S.A. Railways as “Director-General, South African Railways and Harbours”. I like that title because it is better understood internationally and is the title generally used overseas. The hon. member for Rosettenville will remember that he and I conducted discussions in Bonn with the Director-General of the German Bund transport ministry, if I may be permitted to translate the title freely in this way. Because the chief executive officer of the Railways today constitutes an indispensable link with the international capital markets, it is essential for him to carry a title which will have the correct status value in those circles. Since I am dealing with this matter, I am sure the hon. the Minister will not object if I continue with this “name game”, since I have been advocating this system for so long and devoted so much of my speech to it only last year. Under the Director-General—if that name were to be accepted—one could have two deputy Directors-General and under them, chief directors of the various autonomous sections. I have in mind for example a Chief Director, Airways, Chief Director, Harbours and Chief Director, Railways who would co-ordinate the commercial and operating side. One thinks in terms of a Chief Director, Services, who could co-ordinate the Police, Sick Fund and Catering and Services, and one thinks in terms of a Chief Director, Technical Services, who would be able to co-ordinate all the design work for Airways, Railways and Harbours.

In conclusion, this gives me the opportunity to discuss my hardy annual. We in these benches and the Opposition can differ on many things, but there is one matter on we cannot differ, namely our opinion that the Railways has a most outstanding top management. That is why it is so gratifying to hear in the budget speech that the management development programme, in terms of which senior officials are evaluated and developed, is still making satisfactory progress. Those of us who have dealt with them from time to time are aware of the quality of the young men in the management today. At the same time, we are aware of the great challenges faced by the Railways in its shift towards greater business orientation and free competition. That is why I want to plead once again today that we should not simply rub our hands together in satisfaction at the idealistic young men we have in the service of the Railways, but that we should do something more to retain those young men in the top management. That is the reason for the change in name and the possibility this creates for a re-organization of the top structure. We now have the opportunity to afford those officials, including the General Manager, a more appropriate status. Let us also, then, avail ourselves of the opportunity to look at their salary structure, because in the course of time they have lagged a long way behind the private sector and the State corporations, as I showed in detail last year. If I were now to be asked rather to make a plea for the ordinary railwaymen whose wage packets, according to the hon. member for Durban Point, have dwindled in size due to rising costs, my reply is that it is surely the quality of the top management that will determine the size of that wage packet of the ordinary railway worker. What is more, even if they have not yet succeeded in making that wage packet more bulky in this stage, the hon. the Minister and his top management can still give the railwaymen the assurance today that no-one will be discharged due to the present economic climate. That is how Die Burger expressed it in an article. This speaks volumes for the Railways as the biggest employer in the country.

Mr. Speaker, in many respects the hon. member for Tygervallei delivered a constructive speech. I just want to react to a few points. Firstly he said that as regards the Railways, he felt that the organization had done its job. I do not want to argue with him as to whether the Railways has done its job or not. I believe that the hon. member is right. However, this is not the only question which must be asked. There is an accompanying question which is just as important and this is whether the Railways did its job and, if so, at what price. It is just as important that one should not only do one’s job, but also do it at a price which the country can afford. The hon. member also referred to the capital position and I shall return to that.

Firstly I want to put the standpoint of my hon. colleagues on this side of the House as regards the Railways. For us the Railways remains an organization which plays a key role in the transport industry of South Africa. Not only does it play a role in the transport industry; it also plays an extremely important role in the economy as a whole. Firstly it is probably one of the biggest employers in South Africa today, both directly and indirectly. Secondly, as regards the economy as such, transport remains an important part of the whole production process. As such we consider the Railways to be an organization which plays a key role in South Africa. If the Railways is to keep on playing that role, we must see that this organization remains sound. When it is found that something must be done to keep the Railways a sound organization, the hon. the Minister can count on our supporting him in this regard at all times.

There is a second argument which I want to mention and this is that the Railways can never act in isolation. As regards the Railways, the hon. the Minister and his colleagues cannot act in isolation. Whatever the hon. the Minister does, affects his colleagues, the country in general and the colleagues of the hon. gentlemen on the opposite side of the House. The Railways remains a Government instrument and remains the responsibility of the entire Cabinet.

Now I want to deal with the things which are bothering me. Against this background and in the extremely delicate economic atmosphere in which we are living today, this remains an extremely difficult question for me to answer, and that is the question why the hon. gentleman is asking South Africa to pay for an additional rates hike of R344 million at this difficult stage. I have paged through the books and it is the largest rates hike to date. One asks oneself how a situation can develop where the hon. the Minister of Transport has to turn to the people of South Africa and say that he has to push up the rates because the steel price has gone up while the steel producers say that they have to raise the price of steel because the transport costs have gone up. How can we explain that the hon. the Minister, together with his colleagues in the Cabinet, can say that he increased the rates because the price of fuel rose, knowing that it was one of his colleagues who was responsible for the increase in the price of fuel? How can the hon. the Minister say that he is increasing tariffs because the price of coal rose, while the coal producer alleges that he is increasing his price because the Railway rates went up? We have a vicious circle here, because everyone is always blaming someone else and in the whole process no-one appears to be guilty. It seems to me as if the hon. the Minister is in the unfortunate position today where he has to provide the answers. I feel—and I say this with respect—that the hon. the Minister is in the position where, as Minister and member of the Cabinet, he has to accept co-responsibility for all the circumstances which led to the considerable increase in the Railway rates. In the times in which we are living, how can the hon. the Minister allow expenditure to increase by the incredible figure of 2,3%, from R2 279 million to R2 814 million? Only last year we all thought that it was a great increase when the figure was 18,5%, but this year it is almost 5% more. One asks oneself: How could the hon. the Minister allow something like this? I have studied the figures to the best of my ability and find that the position of the Railways is such that I really do not have an answer to the problem at the moment. I do not know what the hon. the Minister could have done to avoid the increase of tariffs. However, I do know that the hon. the Minister and hon. members on that side of the House can make as many calculations as they wish and can argue as they please, but the increase of R344 million in tariffs will spread through the entire economy and while it starts off at 14,6% today, it will ultimately end up on the consumers’ plate not at 15% or 20%, but at 50%, as a result of the consequences which the increase in tariffs are going to have on the rest of the economy.

Having said all this, we must bear in mind that the cost of living is rising; there is no argument for this, and I am pleased to see that the hon. the Minister did not try to argue about the effect which the increased rates are going to have on the cost of living of our people and on the economy. We must bear in mind that the Railways staff did not receive an increase. The hon. the Minister himself said that the Railways staff are in the position that they are receiving 18% less than they should receive in order to barely keep pace with the anti-inflation campaign. Of course we are very grateful for the sacrifice which these people are making, but they have not received anything yet and in spite of that the hon. the Minister increases the rates to the extent he has.

There is nothing left in the Rates Equalization Fund, and if the hon. the Minister wants to compensate the staff, there is only one step which he can take and that is to increase the rates again. The Railway worker, like the public, cannot possibly continue in this way and they will not be able to bear the burden of today’s cost of living for very much longer. At some time or other the hon. the Minister and his colleagues will have to increase the salaries of these people and then I foresee another bitter day for the consumer in South Africa.

These are no new problems the Railways is struggling with because we have been confronted with the inherent problems of the Railways over the years and have discussed them. However, nothing has been done about them. The report of the Schumann Commission appeared as long ago as 1962. These specific matters were referred to at that time already, but absolutely nothing is done about it. Over the years we have said that the Railways could no longer continue to provide socio-economic services at uneconomic rates. But we are still doing so today. Nothing is done about it. How long will we have to put up with such tremendous rates increases? The time has come for the services which are being provided at uneconomic rates to be quantified so that we may know what they include. Over the years we have spoken about the tremendous interest charges, and at the moment these amount to R400 million. But still nothing is being done about it. For years the Railways have been saying that there should be a cost orientation as far as rates are concerned, but we are progressing at a snail’s pace in this matter, too, and simply do not come to the point where we receive a proper answer.

As far as I am concerned, the Railways is a business organization. I do not see any sentiment in it, and it is actually a pity that politicians are involved in the matter because here one is dealing with pounds, shillings and pence and also with a tremendous number of people who work for the Railways. If the Railways is a business undertaking, I should like to use the last few minutes of my time to tell the hon. the Minister that there are things which must be done immediately if we at least want to have security about the position of the Railways. The hon. the Minister and his colleagues must no longer come and tell this hon. House that the Railways has to provide socio-economic services at uneconomic rates. Those services must be provided, but the hon. the Minister must quantify those services so that the House knows what they involve. In this way we will be able to know what amount is involved in these services and in this way we will know what socio-economic services this business undertaking is rendering to South Africa at unprofitable rates, with its staff which is suffering today. This is the first thing that we must know, and the second piece of information we must immediately …

All this information is available.

Let the hon. member for Parow tell us what the extent of the socio-economic services is which are being provided at uneconomic rates.

[Inaudible.]

No, I do not want to know what; I know what services they are. I want the hon. member to quantify them for me. We want to know how many millions of rands it amounts to per year.

R200 million is being spent on passenger services alone.

Mr. Speaker, with all due respect, the hon. member stutters too much. He does not have the figure. Secondly the Railways must look at its auxiliary services immediately. Every auxiliary service must be examined, and where an auxiliary service is not profitable, something must be done about it. Take road transport services for instance. This service has been carrying on for years now and millions and millions of rands have been invested in it. But it is only now and again that this service shows a profit. Nearly every year this service is provided at a loss. Can we carry on like this? Cannot this service be shifted on to the private sector for them to undertake? If this cannot be done, what are the problems which are being experienced? As far as the Airways is concerned, I do not consider this service to be an auxiliary service. It is a service which was begun by the Railways itself, and it is a wonderful service. It is one of the services which pays for itself, but this year we find that the hon. the Minister is budgeting for a colossal deficit of R22 million. Where does the fault lie, and what is going wrong with a service which ought to be entirely under control? It is not a small sum which is involved here, and I think that these services must all be examined with a fine-tooth comb. Then we come to the catering services, and approximately R11 million is invested in this service. This service shows an annual gross profit of R5 million, but at the end of the year there is no net profit, but a net loss of R2 million. There must be something amiss somewhere because the Railways does not have to bear such immense losses. Thirdly, as far as staff is concerned, I am one of those who is not afraid to talk about the staff. The Railways has a vast staff. Tens of thousands of people who work there are highly responsible officers, but as in every large organization, one also has one’s dead wood here. Since we are now experiencing uncertain economic times, the Railways must act courageously and get rid of all that dead wood for the Railways cannot afford to carry it. Every Railway worker who is worth his salt will agree with me that this must be done. That is the third thing I would do: I would go through my staff with a fine-tooth comb and get rid of all the dead wood until an efficient staff remains, rather too few than too many, but they must be people who are properly trained and properly paid.

In the fourth place I would also subject the question of overtime to close scrutiny. Overtime is expensive time. I would declare war on any unjustifiable overtime in the organization. The hon. the Minister knows that he can save here. He has saved a few million rand during the past few months. I think that war must be declared on any unjustifiable overtime in the S.A. Railways because we cannot afford it any longer.

In the fifth place, I would go through my capital position with a fine-tooth comb and cut it to the bone, especially in the times in which we are living. We cannot afford to squander capital at this juncture.

My sixth point is that I agree with self-financing in principle. I should like to see self-financing, but why begin with R52 million? Now that we have the gravest problems—why does the hon. the Minister want to begin now? He could have begun five years ago. He could have begun the day after tomorrow or next year. However, I think it is a mistake to take R52 million from the Revenue Fund now in an attempt to start self-financing.

My seventh point is in regard to depreciation. Depreciation has increased considerably. Normally I would not have had any objection, but I think that it is the wrong time to introduce these high figures now. Depreciation must also be cut to the bone because we are going through difficult times and hopefully this will prevent exorbitant rates increases. In the eighth place I want to argue that we have the necessary staff and all the necessary talent at our disposal. I want a system which I can lay before the House, a system according to which we can see that the rates of the Railways are cost-orientated and in terms of which we can know what it will cost the country. However, I do not want things to be as they are now. Everyone is talking about it, but nobody knows what it is. If we could change to a properly cost-orientated rate, what would it cost South Africa? We must be able to see this before we discuss these concepts.

In the ninth place I want to say, with the greatest respect to the hon. gentlemen, who have served for very long, that we can no longer have a body like the Railways and Harbours Board. I want to add that I have nothing against these gentlemen. They do a job which is certainly necessary. The question which comes to mind, is whether it is so necessary that they should be a financial burden to us? I think that another position must be contrived for these people and at this stage we may as well get rid of them.

My tenth and final point is that I think that the whole problem is that the Railways is riding on the back of the harbours. They are also riding on the back of the pipelines. This is forever clouding the issue. If the people of South Africa know how enormous the losses of the Railways are, they will change their whole attitude towards the organization and will realize in the first place that we are dealing with an extremely necessary instrument, an instrument which has great problems. Then we might also get the Government to do its share. We can no longer continue to have a situation in which the one is riding upon the back of the other. I think that the hon. the Minister must devise a plan and this can perhaps be incorporated in the new name. Every department will then stand on its own feet and the Railways will also stand on its own feet in an attempt to establish the responsibility of every department. As regards the new name, I agree with the hon. the Minister that there are problems. I do not want to argue with him about this. However, if we want to change the name now, it may cost a pretty substantial amount. I am thinking merely of the letterheads which will have to be changed and of all the name plates and the thousands of names which will have to be changed. It will cost a considerable amount I want to tell the hon. the Minister that I am very much in agreement with him about the fact that the name should be changed. I am even prepared to accept his proposal, but, with a view to our economic condition, I want to request him to see to it that the Railways demonstrates to South Africa that it is prepared to curtail its costs. The hon. the Minister must please not change the name now. He must wait until the fine weather has driven the clouds away, and then we will happily discuss the name-change.

Mr. Speaker, a few days ago a prominent member of the UP, an hon. member who sits on the other side of the House, travelled with me on an aeroplane en route from Port Elizabeth to Cape Town. We were discussing the political situation in the country and he said to me: “You know, Jannie, it is very easy for me to sit in the Opposition benches. I am very sorry for you sitting on the other side. I make six to seven speeches a day and I can say what I like. I can level as much criticism as I like because I know we shall never be called upon to govern the country.” This afternoon I tvant to deal with two hon. members in this House. One is the hon. member for Durban Point and the other is the hon. member for Maitland. After the hon. member for Maitland left the antiquated UP, I must say that he surprised me this afternoon. He surprised me in the sense that in my opinion, he acted very irresponsibly in the House this afternoon. I have been sitting in the House for 12 years now, and have followed the hon. member for Maitland time and again in various Railway debates. He said a few things this afternoon which were beyond my comprehension. The hon. member is probably forming a new party. Apparently he does not realize it. I understand that the chairman of the UP in my constituency has joined his party. They will therefore have to look for a candidate to oppose me in the next election.

You may lose.

In his speech, the hon. member referred to the hon. member for Tygervallei. I just want to say in passing that as far as the financial aspects of this budget are concerned, the criticism which came from the opposite side of the House has been effectively replied to. The hon. member for Witwatersberg, the hon. member for Tygervallei and the hon. member for Vanderbijlpark have all replied to it. I have nothing to add to what they have said. The criticism which has come from the other side of the House thus far has not been based on facts. I shall prove it. The arguments which have come from the other side of the House, have been shaky. I must honestly say that I had expected a bigger song and dance about the raising of rates than I heard this afternoon.

What did the hon. member for Maitland say? With reference to the hon. member for Tygervallei, he said that the railways had done a job, but he added: “At what price?” What does he mean by that?

Just what I said.

If he is objecting to the price; if he is objecting to the expenditure and if he is objecting indirectly to the way in which the S.A. Railways are run, he must tell us at what price his still-born party would run the Railways. I want to concede that he pointed out various items, but apparently he has not done his homework. I want to compliment the hon. Minister of Transport on this budget [Interjections.] Yes, I want to compliment him and I shall tell the hon. members over there why. The hon. the Minister of Transport has done precisely what Minister Sturrock advocated in this House in 1944—I shall come to that presently. I want to be fair to the hon. member for Maitland. He said the hon. the Minister had to save more, and cut down more. However, in this budget, expenditure on capital works alone has been cut by R326 million.

Postponed.

Call it what you like. What is postponement if not pruning and saving? It is simply done later on. There is a saving of R266 million from all the funds. Hon. members will find this on pages 44 to 45 and on pages 60 to 62 of the Railway Budget. This has already been done. What more must be done to keep the costs as low as possible? Just one thing! We must be fair and face facts. The hon. the Minister and the General Manager of the S.A. Railways will therefore have to cut down on staff and the hon. member for Maitland advocated this indirectly.

He advocated it directly.

That is correct.

The hon. the Chief Whip says “directly”. Now that I have given this due consideration, I, too, think that he advocated it directly.

You can say it if you like.

Yes, I shall say it in my constituency. Mr. Speaker, the hon. member said “ou hout”—old wood—and when someone interrupted him …

Dead wood.

Yes, then he said that the dead wood in the Railway had to be cut away.

Is there none?

Who is that “dead wood” and who is the “old wood” in the S.A. Railways? If the hon. member speaks of “old wood” and “dead wood”, it can mean only one thing, viz. the senior officials in the S.A. Railways, people who, down the years, have played their part in the Railway Administration and in keeping the wheels turning. A person who entered the service in March cannot be old wood or dead wood in April. It is the senior officials that they want to get rid of. Why? They do not have the courage of their convictions to say that they want to get rid of the ordinary worker in the Railways, because the latter are in the majority, after all. Nor do they have the courage of their conviction to say that the Railways ought to get rid of the junior officials, because they are still joining the Railways daily; not to mention the senior officials. This is just to direct the spotlight away from the heads a little. I therefore say to the hon. member for Maitland that the charge he made here this afternoon is a very serious one. I hope and trust that the hon. member will see his way clear—he is welcome in Uitenhage; the hon. member for Newton Park, too, knows he is very welcome in Uitenhage—to going there and stating on a public platform that they want to get rid of the old wood. If he does this, I shall come back to this House with the biggest majority you have ever seen in your life, Sir.

The hon. member for Maitland made a third mistake. I should greatly appreciate it if the hon. member for Maitland would do his homework in future before he speaks in this House. He said that he had gone through the entire budget and that he was unable to trace any rates increases larger than the one which the hon. Minister has just announced. I now want to ask the hon. member whether he has read the United Party’s 1944 budget?

How many years ago was that?

If he refers to it, he will see that the United Party raised the rate for the transport of petrol by 60%.

Those were wartime measures.

Next time he must do his homework. The hon. member for Maitland said nothing about the shortage of manpower this afternoon. Nor did he tell us his solution to the problem. After all, he knows that there is a shortage of manpower, but now that he is in that newly-founded party, he is keeping quiet. Of course, I think that it should be cast in his teeth. On 10 March 1975 the hon. member for Maitland said the following in this House and I quote: (Hansard, Vol. 55, col. 2223)—

That was the number of vacancies which existed at that time. In the same column he went on to say—

I ask the hon. member for Maitland whether he still says this this afternoon?

Of course!

He still says so this afternoon. The solution that party offers is that every vacancy in the South African Railways be filled by non-Whites. That is clear to us.

Now I should like to say something about what the hon. member for Durban Point said. I have listened to exaggerations in this House many times before—and I know the hon. member for Durban Point very well—but I really did not expect him to be guilty of so much exaggeration, exaggeration which bears no relation whatsoever to the facts. I want to be fair to the hon. member for Durban Point. He made the following statement at the very beginning of his speech, and I just want to make sure that I understood him correctly. I am quoting from the Eastern Province Herald of 10 March. This stemmed from what the hon. member said in his introductory speech, after the hon. the Minister had introduced his budget. Of course, this is a newspaper to which I give little credence. I therefore want to ascertain from the hon. member whether it is in fact true. I am quoting from that newspaper—the subject is the raising of rates—as follows—

That is right.

In other words, according to the hon. member for Durban Point, the increases which have just been announced will result in three things: Famine, unemployment, and a threat to State security. [Interjections.] If this is true, I must mention that from 1940 until the present day—I have all the figures at my disposal—the Railways tariffs have been increased repeatedly.

Yes, but not as it is being done now!

They have been increased repeatedly and I have never yet witnessed unemployment, famine and a threat to State security in this country as a result. All I have experienced, is famine on the part of the Opposition. I grant them that. [Interjections.] The hon. member for Durban Point made a second statement.

A second point!

Yes, the hon. member for Klip River says: “A second point.” I do not know how many points the hon. member for Durban Point has. [Interjections.] By implication, the hon. member for Durban Point made an extremely serious charge here this afternoon, a charge against the General Manager of the Railways and against every official in the service of the S.A. Railways; particularly against those officials whose task is planning. According to the hon. member for Durban Point, those senior officials are the old wood that must be cut away. [Interjections.] That is what he said. I think the hon. member should at least have the decency to listen to me. I listened very carefully to him. [Interjections.]

You did not listen properly!

The hon. member for Durban Point said people had to be called in from the private sector to assist in the planning of the S.A. Railways. Now what does this mean? [Interjections.] It means only one thing.

He wants to call in Dr. Wassenaar!

Yes, he can call in Dr. Wassenaar if he wants to. What does this mean? It means that the officials who are at present in control of planning—and they are the senior officials—are unqualified for their task. Why does the hon. member not say so?

You definitely did not listen!

Mr. Speaker, I listened very diligently to the hon. member. I have been listening to him for the past 12 years. I have been listening to him ever since I came to this House and even before I came here, and the hon. member knows what I think of him. [Interjections.] Apart from the fact that he cast a serious aspersion on the senior officials of the Railway Administration, the hon. member for Durban Point also cast an aspersion on Railway workers as a whole.

But now you are really exaggerating!

You are already holding an election in Uitenhage!

Election in Uitenhage? Mr. Speaker, the sooner that election comes, the better. [Interjections.] The hon. member for Durban Point said the railwayman—the average railwayman that is—cannot live on his present salary unless he receives overtime payment.

Those are people in certain grades.

The hon. member said nothing about certain grades this afternoon. He was speaking about the railwayman in general, the railwayman who, according to his salary scale, is entitled to payment for overtime. On 3 August 1970 the hon. member for Durban Point said the following in this House, in answer to the hon. member for Koedoespoort, and I quote (Hansard, Vol. 29, col. 923)—

Who said so?

The hon. member for Durban Point said so. The hon. member for Maitland need not be concerned. It is not he who spoke this time. [Interjections.] In other words, 85% of the Railway officials in the service of the Railway Administration today, are underpaid.

That is about right!

85% of them are underpaid.

That is correct!

The hon. member for Maitland says: “That is correct.”

18%.

I now want to know which officials in the service of the S.A. Railways are paid the right salary. And now those hon. members must answer me.

All of them are underpaid by 18%.

Which officials in the service of the S.A. Railways, according to the hon. Opposition, are paid the right salary?

They are all paid 18% too little.

Not one of them, because they want to get rid of the dead wood. [Interjections.] It is very easy for the hon. members of the Opposition to stand up here this afternoon and criticize, but what does their own record look like? Mr. Speaker, you know their record just as well as I do. It is a very old record, but a true one. When the NP took over the Railway Administration in 1948, it inherited it with a bankrupt estate of approximately £609 000. [Interjections.] Of course it was £609 000. During the last four years of UP rule, they were threatened by a shortfall of approximately R2 760 000 per annum. [Interjections.]

That is very little, man! [Interjections.]

No, that was the annual deficit.

Per minute, man! Make it per minute. [Interjections.]

I want to refer anyone who has the interests of the Railways at heart and is prepared to stand up in this House and criticize the Railways to the 1976 South African Bulletin of Statistics, paragraph 17.4. I shall not quote the statistics because I do not want to bore hon. members. Hon. members must read the statistics. They will find that under NP rule, the Railways went from strength to strength. No decline took place in any year. Rates were raised in various years. At one period rates were not raised for five years. We shall not hear that mentioned, however. At that time the economic situation in the country was favourable. There were years when the economic situation was not favourable. The rates then had to be raised. However, if one goes into the fine detail of the statistics of the South African Railways, one will find that under NP rule, the Railways went from strength to strength every year. Under NP rule there was only growth; no decline. The Railways met the demands made upon them and the Railways kept abreast of the development of the country. Moreover, the planning of the Railways under NP rule was sound and correct. Why? Because the NP Government is still running the Railways in accordance with the provisions of the Constitution of the Republic of South Africa.

Before I quote the constitution, however, I want to quote what Minister F. C. Sturrock said on 7 March 1944. He said precisely the opposite of what all the hon. members on that side of the House have said so far. The then Minister of Railways and Harbours said (Hansard, Vol. 48, col. 2635)—

This is what the hon. the Minister has done; nothing more and nothing less. What does the Constitution of the Republic of South Africa say? The Constitution says (Act No. 32 of 1961, section 103)—

1. (1) The Railways, ports and harbours of the Republic shall be administered on business principles …
2. (2) (a) So far as may be, the total earnings of the railways, ports and harbours, shall be not more than are sufficient to meet the necessary outlays …

That, briefly, is what this side of the House wants to do with this budget and I can therefore see no justification for any criticism whatsoever in connection with the raising of rates. The hon. the Minister has simply acted in accordance with the policy and the principles laid down in order to exploit the service of the South African Railways.

Mr. Speaker, I sometimes wonder how relevant it is for hon. members to speak about what happened in 1940. [Interjections.] It is about as relevant to this budget as it would be for the Springbok rugby selectors who want to select a team to play against the All Blacks to spend the whole time talking about the achievements of Cecil John Rhodes when he played centre for Villagers or of Paul Kruger as full-back for Diggers. What is much more serious to me, is that the hon. member tried to make out that everything was normal. It is apparently quite normal for the hon. member for Uitenhage that since March last year until the present, i.e. within a period of twelve months, there were three rates increases, one of 11,2%, one of 9,4% and one 14,6%. If one adds this up, it amounts to 35,2%. Of course the result is accumulative and therefore it is actually far more. If the hon. member believes that rates increases of this kind are normal, it is proof of the fact that the hon. member is unfit to represent a constituency like Uitenhage.

†It is an absolutely sobering thought when one realizes that the budget under discussion concerns an amount of money far in excess of what was required to run the whole country, not only the Railways, a matter six or seven years ago. The total expenditure just for services for this financial year is estimated at R2 814,4 million. Seven years ago the total budget of the hon. the Minister of Finance—Revenue as well as Loan Account—amounted to only R2 608,7 million. Something is seriously wrong with the economy of the country when such a state of affairs is allowed to develop. Over the past six or seven years we have had a terrific and unprecedented increase in expenditure. It is mainly due to the inflationary conditions which exist in the country. South Africa must obviously hold some sort of record—which will soon find its way in the Guinness Book of Records—for maintaining a sustained high rate of inflation.

It will also be in the Ripley’s “Believe it or not”.

Correct. The South African Railways with its ¼ million employees is one of the largest employers of labour in South Africa. It is the largest business undertaking. It operates in a field of the economy where, if wrong decisions are taken, fuel is added to the fire of inflation. It is unfortunate that this budget should like its predecessors be bound to feed inflation in South Africa.

*Let us consider for a moment what its effect on the economy will be. It is not necessary for me to dwell on this. The hon. the Minister referred to the primary effect, of 1,2%, which the rates increases will have. I am pleased that he used the word “primary”, but what is actually involved here? What is actually involved is what the overall and secondary effect will be. When the economy is suddenly confronted with rates increases such as these, following so closely on the heels of other increased tariffs, it is the green light for overall price increases. The Railways Administration has now made certain tables available for our information, which were also published in the newspapers. In this regard we find tables covering a long series of articles from canned vegetables to dairy products and barbed wire. It is set out very precisely what the increase per kilogram will be to the third decimal figure. At first glance it seems very little if a commodity’s price rises by 0,439 cents per kilogram, but in practice there is no such thing as 0,439 cents. Today there is no longer such a thing as a half cent even. We can say what we like and we can make appeals to the Government to keep a watchful eye on general price increases, but the hon. the Minister must realize, and he should have realized this before he increased the rates, that he has in reality declared an open season for tremendous increases in the cost of living in South Africa. One of the tragedies is that, although many are going to fall victim to the increased rates, one of the first victims is going to be the Railways itself.

In this regard I want to return to what the hon. the Minister, quite correctly, said in his speech. If one reads the reports of the General Manager of the Railways, one finds that he refers repeatedly to the increase in the price of fuel, power, steel and coal, and that these are the factors that are constantly upsetting the calculations. Surely it is very clear that with an increase of 22,7% in the price of coal, the price of electricity will rise, and that coal and electricity are factors which in turn have an effect on steel production. So the spiral continues. What must be realized, however, is that the Railways is itself placing obstacles in the way of its own progress. I want to attempt to demonstrate this here, particularly with reference to the increase on high-rated goods.

We have already been informed that there was a decrease of 3% in the tonnage of high-rated goods last year. The decrease was of such a nature that the Railways in reality handled a smaller volume than in 1974, for in 1975-’76 there was only a 2,5% increase in respect of volume. No railway system in the world can hope to be managed on a profitable basis if a disparity exists between the volume of low and high-rated goods. The economic viability of a railway system depends primarily on the success it achieves in attracting and continuing to convey high-rated goods. On page 19 of the annual report one finds that although high-rated goods never comprised more than 20% of the tonnage volume during the past ten years, these goods regularly succeeded in earning approximately 50% of the total revenue. As a result of the economic situation in which the country finds itself, we know that this is going to diminish. It is being predicted that it is only going to be approximately 14%. But with the increase of 20% in rates we are going to find that a certain measure of consumer resistance will be built up. When rates become unrealistic, consumer resistance is built up. The hon. the Minister may argue that it will not help railway consumers to build up a consumer resistance because the Railways is a monopoly and as such it has a guaranteed consumer clientele. Basically that is correct but there is nevertheless a large area …

That is not entirely correct.

I am pleased the hon. the Minister admits that it is not entirely correct. There is a large area in which people, in the case of unrealistic rates, turn their backs on the Railways and seek other alternatives. What worries me particularly is the fact that unrealistic rates could give rise to the unnecessary or untimely cessation of certain economic activities. For example when a business undertaking finds that it cannot absorb the increases itself, it may become active in alternative directions in which it is perhaps not dependent on the Railways. If one takes that into consideration it is very difficult to establish precisely where the ray of hope in this dark tunnel is through which the Railways is moving at present.

I am not going to elaborate on harbour services and pipelines, because we know that the Railways has an assured income from these sources. That is all security the Railways has.

†I now want to come to the question of delayed projects. I accept the fact that economic circumstances contributed to the difficulties of the Railways Administration in raising loans and that these and other factors resulted in the decision to delay a number of projects. However, we must consider it from the point of view that the hon. the Minister mentioned some 15 specific projects in his speech. I quite agree with the hon. member for Amanzimtoti that, as far as a large part of our capital development is concerned, we must be prepared to do without it. Unfortunately, a number of social services are included amongst these projects. The hon. the Minister also conceded—and I am glad he did so—that he was aware of the fact that when these works were ultimately carried out, they would probably cost more. I have no quarrel with the hon. the Minister about that as I think he is right. There is also a definite need to curtail capital expenditure. What worries me, however, is that I am not so sure that the Government realizes the full consequences of these emergency steps that they are forced to take. Having taken these decisions there is now a far greater urgency as far as the whole Cabinet is concerned—and this is where the corporate responsibility of the hon. the Minister comes in—to see that an economic recovery in South Africa takes place as soon as possible. That recovery must be remarkable and spectacular, otherwise there will be a tragic accumulation of delayed projects, which will not only add to our economic problems, but also to our social and political problems.

*I come now to the question of staff and productivity. One of the most effective methods of curbing the expenditure of an enterprise is of course to ensure that the staff is as productive as possible. The hon. the Minister demonstrated to us in his Second Reading speech that a high level of productivity was being maintained on the Railways. He said that the amount of goods and coal traffic had increased by 9% in 1976 while the number of staff had only increased by 2,6%. Does this really prove that a high level of productivity was maintained? What scientific proof is there that, if one has an increase of 9% in the goods and coal traffic, 2,6% additional staff and not perhaps 2% is required? How labour intensive is the conveyance of coal which is loaded in bulk form into wagons? In any case, we ought to know one thing and that is that an increase in tonnage of, say, 9,2% does not necessarily mean that one is going to need 9,2% more trains. In fact, the hon. the Minister mentioned specifically in his second reading speech that in 1975-’76, for example, 130 million tons were conveyed with fewer trains than were used to convey 110 million tons in 1970-’71. It was therefore said in the speech that although one had had an increase of 20% in the volume of traffic, fewer trains were required to convey that volume of goods. I believe it is in the interests of the Railways

That is productivity.

One cannot compare the figures in this way. On the one hand the hon. the Minister is saying that because the tonnage has increased, the Railways had to use more staff and that only 2,6% more staff was required. On the other hand, however, the hon. the Minister says that although the tonnage increased, the Railways used fewer trains with which to convey it.

The trains were longer.

The number of staff therefore does not necessarily have a bearing on each wagon loaded with coal for surely one cannot say that more staff was required for each ton of coal loaded. In any case, I am not in a position to say whether an increased productivity is being maintained, but I do believe that the hon. the Minister must find another basis on which to calculate productivity. What worries me, however, is that an excessively large percentage of the Railways staff works for the Railways for a relatively short period only. If one accepts that the productivity of a person who is learning his job cannot of necessity be as great as it will be when he has been doing his work for some time, and if it is also accepted that an undertaking is constantly training new workers to do their jobs, then productivity must suffer. On the basis of these two statements I should like us to take cognizance of another matter. From the reply to a question I put earlier this year, it appeared that in 1976 the Railways employed 25 179 Whites. The total White staff is approximately 113 000, which means that more than 21% of the White staff of the Railways, or one out of every five Railway officials, has only had a year’s experience or less of railway work. Surely this is an excessively high percentage, when one is actually striving to achieve enhanced productivity. It means that one out of every five had to be employed during 1976, and someone therefore had to teach them the type of work they had to do. During the year under discussion the Railways lost 22 000 Whites as workers. Of this number 2 804 died or retired on pension. Fewer than 2 000—1 922 to be precise—were discharged from the service, while 17 172 resigned of their own accord, in other words 77% of those who left the service. This is an excessively high percentage. To my mind this figure is surprisingly high, particularly taking if one takes into consideration that work opportunities are becoming scarcer and scarcer today. This is an aspect to which the hon. the Minister and the Administration will have to give attention if they are aiming at increased productivity.

Mr. Speaker, the hon. member for Durban Central who has just resumed his seat, touched on a potpourri of matters.

Only three.

Sir, I am not going to allow myself to be led astray by following him into his maze. There are more important things that we can say about the Railways.

The hon. member for Durban Point today congratulated certain railwaymen on their achievements and on awards they had received. I should like to associate myself with that. The hon. member forgot one thing, however, and that was an award to the UP for the poorest performance of the year, including their performance in this debate. The criticism levelled by the hon. members of the Opposition in this Railway debate was indeed weak. Sir, they are kicking up a row about higher rates but they cannot fault the Railways Administration because it is fundamentally sound. They cannot get away from the fact that the Railways manages its affairs in such a way that no criticism of it holds water. However, I do not think things are going nearly as badly for the Railways as they are for the UP. It is true that the Railways has temporary troubles, but on its last calamitous road the UP can no longer turn back. Last year the hon. member for Durban Point spoke here about the “blackest budget in the history of the Railways”. The hon. member said: “Shock waves will spread into every corner of South Africa.” He was no less a prophet of doom this year. They tell me that an unskilful stoker is the cause of the steam engine making black smoke and that he is penalized whenever his engine makes black smoke. The hon. member for Durban Point emitted a great many puffs of black smoke here today. After all, we know that this is a sign of political clumsiness.

Mr. Speaker, I want to tell the hon. members of the Opposition that they have committed one deadly sin in this debate, namely, telling only half of the story. They are conveniently keeping quiet about the other half. The economic problems the Railways are experiencing, are, after all, not due to internal factors alone. Surely it is not only this Government and this Minister that are responsible for them? After all, we all know that our trading partners have been wrestling with a serious recession for the past few years and that in some cases this has assumed the proportions of a depression. Countries are having to cope with economic recessions and with unemployment on a larger scale than has been the case for decades and which, time and again, conjures up the spectre of 1933. Some countries in the world have been hovering on the brink of economic bankruptcy. After all, we cannot prevent those things from making themselves felt here as well. After all, we are no longer a little country which can retreat into its shell when the world is experiencing economic storms. We have become part of the greater world economy, the western economies in particular. We cannot detach ourselves from them after all, nor do we want to do so. When our trading friends have a hard time, so do we, and when they prosper, we prosper too and we benefit by it.

To brush aside the economic problems of our country and the Railways superficially by placing the blame for them on the shoulders of the Government, as the hon. members of the Opposition are doing, constitutes extreme deceitfulness and petty politicking. Do the hon. members of the Opposition not know that the weal and woe of our economy—and this goes for the economies of other countries as well—depends on the weal and woe of one’s trading partners and of the greater outside world with which one is associated? Do they not know that political events in those countries with which one is associated, also have an effect on one’s own country? The events in Angola, Mozambique and Rhodesia most certainly have not promoted the confidence of investors and lending banks in the stability of our sub-continent. The shock-waves which hit our neighbouring states, have reached our country as well. We could not avoid this. It created uncertainty, which was aggravated by the riots which we had here. One wonders whether we should have been able to hold our own under these conditions if the Government had not kept our economy as sound and as strong as it is. The hon. member for Durban Point must not speak of the “economic shambles” of the Government. He must thank the Government for the economic vision and far-sightedness which it displayed in making our country’s economy so sound and strong that it can resist the economic shocks which we are experiencing today.

Today the Railways is faced with economic problems, not because its financial affairs are not handled properly, but because external factors, factors over which we have no control, are for the most part responsible for this state of affairs. I shall prove this. After all, we know that international trade has declined as a result of the recessionary conditions prevailing in the world. We know, after all, that the revenue of our harbours has been affected as a result of diminishing world trade. We know that fewer ships call at our ports. Every morning when we drive to Cape Town our eyes stray at random to Table Bay harbour to see how many ships are lying there, because the more ships there are, the better a sign it is that business is being done. After all, we know that the volume of international air traffic has declined as a result of the world-wide recession. As a result, other international airlines are deep in the red. However, it was in South Africa’s interest, and our balance of payments position made it a matter of urgent necessity, that we stimulate our exports immediately and limit our imports. As a result of our efforts, our exports increased, something for which we are very grateful, and our imports diminished, for which we are also grateful. All this was not so beneficial to the Railways, however. When the Railways carries goods for export, it does so at a low, uneconomic rate so that those goods may be marketed abroad as cheaply and as competitively as possible. When imports decline, it means that the profitable high-rated traffic to our country declines as well. In other words, the wings of the goose that lays the golden eggs for the Railways, are clipped. In this way, the Railways makes a very important contribution to the improvement of our country’s balance of payments, although this is not directly to its own advantage.

South Africa has also been hard hit by other external factors. Because the Railways constitutes such a large and important part of our economy, it cannot escape this. We have been dealt twofold blows from abroad. Every time we get well into our stride, our apple cart is upset by what happens aboard, things such as devaluation and revaluation, which immediately have their effect on us as well. Since 1973 there has been one increase after another in the price of oil. This has caused our oil bill to increase from R225 million to R1 100 million. This has taken a heavy toll of the Railways as well because the Railways’ oil bill, too, has skyrocketed. Since 1973, the Railways’ fuel bill alone has increased by nearly 200%. In the year 1973-’74 the Railways’ oil bill was R37 million. In the year 1974-’75, it was R90 million—an increase of 141,5%. In 1975-’76 it rose further to R109 million, which represents a further increase of 20,37%. According to estimates, the oil bill for 1976-’77 will increase by a further 33,1% to R145,5 million. Surely this shows us to what extent the Railways has been adversely affected by factors beyond its control, by external factors.

These repeated increases in the price of fuel are also adversely affecting the S.A. Airways in particular, because a full 25% of its expenditure goes on fuel. This is a large slice of the cake and an important reason why S.A. Airways has shown a loss for the first time since 1973. But this loss of R750 000 is still negligible in comparison with the losses of other airlines in the world. All the airlines are suffering these days. KLM’s losses since 1974 already amount to $30 million. I could mention more such cases. What I actually want to impress upon hon. members is the fact that foreign factors—the rising prices of fuel, the aircraft we import and the components the Railways has to import to keep the wheels turning—were the cause of S.A. Airways’ five sustained profits of the past few years being transformed into a deficit. Why are the Opposition so blind to these hard facts in their debating? Why do they not mention this, too, when they kick up a fuss here and vent their spleen about high rates?

How are we to pay the higher expenditure? How are we to finance the expenditure if rates are not increased? It was not only we who were hard hit by the oil price; our trading friends, too, were hard hit. Together with the recessionary conditions which this helped to create, it also put a spanner in the works as far as capital formation was concerned. It consumed loan capital because countries had to use that capital to pay for their more expensive oil. The upshot of this, in turn, was that the badly needed capital that our Railways required for the major and ambitious schemes it was undertaking, dried up on the world markets. For that reason, the Railways is now obliged to try and find capital from its own sources and to follow a policy of a greater degree of self-financing. This is a sound development, but it also places a greater financial burden on the shoulders of the Railways, particularly in these difficult times.

We must remember that the Railways, with all its ramifications, is the heart of the infrastructure of this country. It is therefore a very effective barometer of the general economic state of affairs as well. If the economic upswing which we had all expected had come in time, the Railways would have been in a stronger position today, but the upswing did not come, again as a result of external factors over which we have no control. What exactly are these factors? Among them, is the slow economic recovery of the important Western industrial countries, our trading partners. If that recovery does not take place, we too are affected. In addition, there was a sharp drop in the price of gold. Fortunately, however, there is now a flickering of recovery. We also have to contend with inflation running into two figures and continual balance of payments problems which have impoverished our trading partners.

Nor must we lose sight of the fact that the recessionary conditions abroad as well as at home, are coupled with a higher rate of inflation. If inflation has hit large undertakings hard in South Africa, it has dealt the Railways a double blow, because the Railways is not only the largest transport organization in South Africa; it is also the biggest employer, one of the biggest spenders of capital as well as one of the biggest buyers of consumer goods in the country. It is therefore extremely vulnerable to inflation. Apart from domestic inflation which has caused the price of steel, coal and electricity to rise periodically, foreign inflation, or imported inflation, has also placed a very heavy burden on the Railways. The prices of steel and coal have risen and this has placed an additional burden on the Railways of approximately R100 million. Imported inflation, too, has made a tremendous contribution to higher costs. For example, there are the more expensive imported capital goods such as aeroplanes and their components, the components of locomotives and of rolling stock. Those prices have rocketed and the Railways had to pay for this. I just want to mention one example of this. A Jumbo jet from the Boeing stable cost R16 million in 1972. Today a similar aeroplane costs R23 million, i.e. a rise of R7 million. South African Airways has no alternative but to buy those aeroplanes. Is this the result of “mismanagement of the financial scheme in South Africa”, as the hon. member for Durban Point put it? The hon. member is very wide of the mark when he makes such statements. The fact that the prices of essential imported goods have shot up, is a consequence of unchecked inflation abroad. The Railways had to import, however, because the Railways plays a key role in the fast-developing transport system of a growing country like South Africa.

The hon. member for Durban Point says we should do as the British have done. We should go and look for the best brains in South Africa and ask them to manage the affairs of the Railways. I want to tell the hon. member that he is making a big mistake if he wants us to follow the example of the British Railways. Is the hon. member unaware of the critical position the British Railways are in? If we consult International Railways Statistics, we see that the British Railways suffers losses running into hundreds of millions annually, despite heavy subsidies they receive from the British Government. Last year they received a subsidy of R4 milliard from the British Government but not even this helped them. In spite of that, the British Railways had to raise its rates and fares by 50%. In addition, it had to cut down on capital projects and staff. There are other countries as well which find themselves in the same sorry plight. West Germany subsidizes its Railways by approximately R3 milliard. France subsidizes its railways by R1 500 million and the Netherlands by R300 million. All these railway systems show tremendous losses. The German Railways had a deficit of R925 million. Not everything can be attributed to poor administration. Are all the railway systems of the world so poorly administered? No, it is the effect of recession and of inflation on transport world-wide which has had such an adverse effect on South Africa as well. No country has been able to escape it, and that includes South Africa. What does this demonstrate to us for the purpose of this debate?