Mr. Speaker, I move—

As hon. members are aware, the Government decided some time ago that the railway line built by Iscor between Sishen and Saldanha Bay should be a multi-purpose line operated and owned by Iscor.

Due to the growing transport requirements of the mining industry in the northern and north-Western Cape, it has become evident that a great deal of the expected ore traffic from other bodies will have to be diverted to the Sishen-Saldanha Bay railway line. However, it was never intended that Iscor should develop a second general rail transport system by way of the exploitation of the Sishen-Saldanha Bay project, and in the interests of the country it was agreed that the Sishen-Saldanha Bay transport scheme should be taken over by the Railways. Jurisdiction over the harbour was transferred to the Railways in terms of the Saldanha Bay Harbour Acquisition and Equipment Act of 1976.

The project will be taken over by the Railways at cost, and the railway line, subject to volume guarantees, will be operated as a public line, chiefly for the conveyance of bulk traffic.

It is the intention that official transfer of the scheme will take place on 1 April 1977.

The aim of this Bill is to give statutory effect to the take-over of the scheme.

Mr. Speaker, it is with regret that I hear that the introduction of this Bill has been preceded, so I am told, by a derailment on this particular line, which has led to some 24 new trucks being derailed and the holding up of traffic on the line. I hope that nobody has been injured in the derailment and that there is no lasting damage. I ask the hon. the Minister, who has introduced this Bill in such brief terms, whether he could perhaps give the House some information on this. I believe it is relevant to the measure now before us. As a matter of fact, one would have expected him, as the hon. the Minister of Transport, to have informed the House on this in introducing this Bill.

The hon. the Minister has been so cursory in the introduction of this measure that I have tried to work out a way in which I can explain to hon. members on that side of the House, particularly hon. members in the back benches and those who supported the 1973 Bill so enthusiastically, exactly what has happened which has led up to this Bill. I thought the terms in which the hon. the Minister spoke, would be above the understanding of those hon. members who had been so enthusiastic. So I have tried to put it in simple terms. I see it rather like a fairy story, with a happy ending of course.

Once upon a time there were two brothers. There was elder brother Benny, who had a nice big train set, and there was younger brother Laurie, who was a little jealous of this train set. Benny would not let him play with his train set. So Laurie asked Benny: “Please brother Benny, will you not build me a little train set, just a little one which I can play with all by myself?” However, Benny did not want to know his little brother’s troubles and said: “No, brother Laurie, I am not going to give you your train set.” So brother Laurie went to big daddy John and said to him: “Big daddy John, please can I have a train set?” However, Benny came along and said: “No daddy, do not buy him a train set; it is going to cost too much money.” [Interjections.] Laurie replied: “No, it is only going to cost R400 million.” So big daddy said: “All right, my son Laurie, I shall give you your train set.” Big brother Ben then said: “No way. This is not going to cost R400 million. This is going to cost at least R600 million.” But big daddy John had a lot of money and said: “Okay, Laurie, you can have your train.” So he built him his own train set.

Time went by, and in due course, big brother Ben became bored with playing trains and took up a new game—also a board game, but instead of being b-o-r-e-d, it was b-o-a-r-d. He started sending things on trains from other areas to other places. When he got bored with trains, he gave his train set to younger brother Laurie, who was then happy. But in the process little brother Chris inherited the little train set. [Interjections.] Then big brother Laurie became jealous of little Chris having a train set all of his own. Consequently, he decided that he ought to have this too. He went to big daddy John and asked him: “Can I have the little train set?” And so the happy ending is that we have this Bill before the House today and everybody, including especially Uncle Jacobus, is happy today—particularly Uncle Kobus who for a long time has had his eye on this little train set. [Interjections.]

Mr. Speaker, I hope that those hon. members on that side who so enthusiastically opposed the UP when we said in 1973 that this line should have been built by the Railways, under the control of the Railways, by the direction of the Railways, will now join with us and say: “Thank you; you told us so.”

A suitable amendment, were it allowed, would be to insert before the word “now” the words “as advised four years ago by the UP”. [Interjections.] Obviously we will support this measure. We will support it because it was our idea and because it is what we said long ago. However, there are three aspects which I want to deal with in serious vein before supporting the Bill.

The first is of course why this was not done in the first place. I ask the hon. the Minister to explain why he, as Minister of Economic Affairs at that time, insisted on this line being built by Iscor instead of accepting the advice of the Railways and leaving the running of transport to the department of the Government which knew how to run and co-ordinate transport and which would have made a better job of it. Then I want to know why the hon. the Minister has not said anything about the viability of the line under Iscor. I suggest that the cold hard facts are that the House did not have the right information when it was told that this line would operate economically and profitably under the management of Iscor, and that, in fact, it is only through outside private traffic that this line can become an economic, viable proposition. That is why the Government has to take it over.

Another aspect is one of contempt of Parliament. There was contempt of Parliament inasmuch as we are today being asked to pass a Bill authorizing the purchase of the Sishen-Saldanha project, whereas last week this House had already voted in the Railway budget an amount of R70 million for the purchase of the project before it was authorized to make the purchase. In that budget it was indicated to the House and to South Africa that prior to the budget, R545 million had already been expended on the project. Yet we have not yet passed this Bill. I want the hon. the Minister to explain how he justifies asking Parliament for money and indicating an expenditure of money which we are only now being asked to authorize. I believe this is something on which the hon. the Minister owes Parliament an explanation. The explanation the hon. the Minister gave with regard to the R545 million was that the amount was simply in respect of bonds that had been taken over. I now ask him specifically what those bonds are. How many bonds are there? What is the value of each? What is the interest rate payable on each of them? From what date have the Railways been paying the interest? I ask this because in the additional appropriation this House voted R15 million to cover losses on this particular railway line. Now, if Iscor were showing losses, after all the glowing stories we heard, all the justification for Iscor building the line because it would be so economic and valuable—and those members supported it—why should the Railways have had to subsidize it by R15 million for a part of a year? It is going to cost R35 million in losses and that is not counting the losses that may come from the 24-truck derailment today. For this reason I think I am justified in saying that we support this Bill because we told the Government it should have been done in the first place. Therefore, we are now glad to support a measure which proves just how right we were.

Mr. Speaker, personally, I find it an extraordinary experience to see my friend, the hon. member for Durban Point, in the role of jester this afternoon. This is very significant because we are all aware that after the crises in the ranks of that side of the House, they need a little entertainment.

You just tell us about the derailed trucks.

I do not know whether I can congratulate the hon. member on his success in that regard. We are grateful to hear that the Opposition supports this Bill due to the strategic value of the Sishen-Saldanha line and of the harbour connected to it because in the long term, this may be a very useful and significant substitute for gold. As in the case of Richards Bay, we view it as very important long term strategic planning on the part of the authorities. I do not begrudge the Opposition the bit of satisfaction and pleasure it gives them to think that it was supposed to be their original recommendation. I can clearly remember the then Minister declaring in this House that the issue was one of finance and agreements between Iscor and the Japanese. Due to the factors relevant to the situation as it stood at that time, the then Minister felt that without such loans, he was unable to accept the responsibility for such a large undertaking, an undertaking that would place such a heavy financial burden on the Railways whereas Iscor was prepared to do it. The norm applied here, however, was whether it was in the national interest. I concede to the hon. member that in a certain sense, all of us felt it would really be undesirable and impractical to have two parallel transport systems. There were practical considerations, however, to which reference has already been made in this House and which the hon. member conveniently tried to avoid. We know, however, that the initiative and the practical implementation of the idea came from this side of the House. That is enough for us. The project is now a fait accompli and they, and all of us, will enjoy the benefits of this as time goes by. I want to express my appreciation to the hon. member for his amusing efforts. This is how I know him. He is at his most interesting when he speaks with his tongue in his cheek, as he did this afternoon. We support the hon. the Minister wholeheartedly in this regard.

Mr. Speaker, I have listened to the hon. member for Witwatersberg with interest. He says all the credit for the Sishen-Saldanha railway line must go to that side of the House. We are quite happy to give them all the credit for the Sishen-Saldanha railway line. Up to now it has not amounted to very much. Indeed, there may not be any credit at all. Naturally, we hope that in the future the Sishen-Saldanha railway line will earn for this country the export earnings which that side of the House has been extolling for a number of years. We honestly hope that they will be proved right. But let there be no mistake about it that it is not a normal viable enterprise as understood in areas where other disciplines prevail. I hope the hon. member for Witwatersberg or the hon. the Minister will tell us whether it is the Railways, Iscor or the Government which was wrong, because after a whole series of contortions, which have gone on about the management of this railway line and the management of the facilities at Sishen-Saldanha, logic has finally prevailed. Let me at least exclude this hon. Minister and his predecessor from the illogical contortions which this Government has gone through. I can quote the hon. the Minister himself, from Hansard of 23 February 1977, col. 2063, where he said—

What is the point? The point is that either Iscor was wrong or the Government was wrong. The Railways at least have been consistent in saying that the line should have fallen within their management. Be that as it may; it is no use crying over spilt milk.

The question which is now before the House is contained in the first clause of the Bill, the proposal of the S.A. Railways and Harbours to take over the Sishen-Saldanha railway line for the amount of R650 million. I hope that when the hon. the Minister replies he will indicate what the total cost of this project is to the S.A. Railways. As I understand it, the hon. the Minister used the figure of R640 million on 23 February. The amount now given is R650 million. On top of that, one has to take the annual deficit over the next three years—the hon. the Minister himself gave us the information—which will be R15 million, R15 million and R5 million. Will the hon. the Minister tell us whether the total cost for the takeover by the South African Railways is R675 million or R685 million? We in this House and the general public are entitled to ask this question on the assumption that the S.A. Railways are going to take over the line for one of the two figures and I think we should know whether it is a reasonable purchase from both points of view. Both Iscor and the Railways are, in the end, paid for by the general public.

The first question the general public will want to know is whether this is the end of the expenditure by the Railways, and what I mean by that is whether the Sishen-Saldanha railway line is fully compatible with the railway lines as operated by the S.A. Railways elsewhere in the country, i.e. can the Sishen-Saldanha railway line in every way be integrated with the other railway lines operated by the S.A. Railways? I should think that the Railways are going to have to spend further sums of money so that the Sishen-Saldanha system can become fully compatible. In that connection I should like to ask the hon. the Minister to go back to 12 March 1975, when one of his colleagues said the following (Hansard, Vol. 55, col. 2382)—

The hon. the Minister himself again said on 23 February this year (Hansard, col. 2062)—

I hope the hon. the Minister will tell us whether it is, in fact, compatible or whether it is going to cost the S.A. Railways more money to fit it into their normal requirements and system of functioning.

I now come to the next question I should like to ask. The Railways have agreed to pick up a deficit of R35 million over the next three years. I think the hon. the Minister should tell us whether that is the total anticipated loss. I would presume, in view of his remark that there are going to be only three trains per day from Iscor, that the losses will in fact be much heavier than that. Therefore I hope the hon. the Minister will tell us what the total anticipated loss in each of those three years will be. Furthermore, Sir, will he tell us what happens when those three years come to an end? A great deal has been made of the fact that the private sector will now export down this line. What happens if, at the end of three years, the volume of private sector traffic has not grown to the point where the line breaks even, given the Railways’ normal requirements for amortization? Is the residual deficit to be picked up by Iscor, and if so, for how long? Is it an indefinite guarantee that, until the line gets on to a viable basis, any further losses will be picked up by Iscor, and if so, will Iscor pay a cash payment to the SAR or do the Railways simple anticipate that after three years they will increase the tariffs on the line to Iscor alone? On the other hand, do they intend increasing tariffs in the case of all the people who use the line in order to ensure that it will become a viable proposition?

There are two further points I should like to raise. In the first place, the hon. the Minister will recall that the question of voting money for the Sishen-Saldanha line first came up on 14 August 1974, during the budget speech of the then Minister of Finance. On that occasion the then Minister said the following (Hansard, Vol. 50, col. 647)—

What the then Minister of Finance was saying in effect was that this House should vote money raised from the general taxpayers to Iscor in order to build the Sishen-Saldanha railway line. Will the hon. the Minister now tell me whether, when he takes over this line on 23 February, he will do so at the total cost to Iscor? If that is so, I am sure the hon. the Minister will explain why it is that he is taking it over at the total cost, as opposed to something less. If he does take over the line at the total estimated cost, then it will mean that Iscor will be receiving that amount twice. The first time, in 1974, the money was voted from the general public, and now they will be paid out by the Railways. I hope the hon. the Minister will answer that.

Finally, I want to say that on 21 March I asked the hon. the Minister the following question: “What is the total debt obligation for which the SAR and H will become responsible as a result of the take-over of the Saldanha-Sishen line from Iscor?” He replied as follows—

Before I go on to the second part of the reply, I should like to ask the hon. the Minister to tell us whether this infers or creates the presumption that further loans are to be raised. In other words, bearing in mind the total sum of R675 million, and the fact that R450 million has been raised in foreign loans, will some portion of the balance of R225 million still be raised in foreign loans? If so, I would like that confirmed by the hon. the Minister and, if possible, I would like him to give us a figure. The hon. the Minister went on in his reply to say the following—

Mr. Speaker, this Government is extraordinarily sensitive about divulging even the broadest of information relating to the question of loans. It will not be lost on the general public that both these corporations are financed by money from the general taxpayers. They are therefore entitled to have some information, even if it is broad information, as opposed to a total blanket silence.

Mr. Speaker, we have asked these questions and I hope the hon. the Minister will answer them. We shall naturally support this Bill because, as in the case of the UP, it has always been clear to us that this was the logical home for the management and the ownership of the line.

Mr. Speaker, the words of the hon. member who has just sat down, indicated clearly that he was a stranger in Jerusalem. He is asking the hon. the Minister whether the eventual amount required for the take-over of this line could perhaps amount of R675 million. We know that at one stage the hon. member insinuated in this House that the take-over could amount to as much as R1 000 million. He received a reply to that from the hon. the Minister. After all, we had the budget in front of us. While I am referring to it, I want to point out to the hon. member for Durban Point, who says that we are making a laughing-stock of Parliament and treating it with contempt by coming and asking for money now whereas we have already had the budget, that he, as well as the hon. member for Johannesburg North, ought to have looked at the budget we had before us. I happen to have the capital programme of that budget in front of me and there, under the head in question, 1B “Purchase and equip the Sishen-Saldanha railway line” it states very emphatically: “Subject to approval of the Railway Purchase Bill”. Is it stated there for no purpose? I really cannot understand the hon. member. If the facts are given to him and it is expressly stated that R70 million is needed for the coming year, that the costs already incurred amount to R545 million and that in future, a further R35 million will be spent—a total amount of R650 million—what more does the hon. member want? His attention is drawn to the fact that it is subject to the acceptance of the Bill before us today. I cannot understand it. After all, it is not going to affect the expenditure of the Rail ways immediately. What has been asked for, is R70 million for the extension of the harbour. The Minister said once that the loans would be ceded over a period to be agreed upon. The Railways would then take over the loans. I really do not know why the hon. member for Johannesburg North is so worried. The whole question of Iscor loans was recently dealt with in a report in Die Transvaler, when Dr. Tommie Mulder made a statement as to how the capital expenditure had been incurred up to that stage. Consequently, there is nothing sinister about this.

After all, this line was built primarily for exporting Iscor ore. Since then, however, it has been accepted that the railway line will be operated on a multi-purpose basis. Requests have been received from other mines in the North-Western Cape to export ore as well. The line was basically and primarily designed for exporting ore. The hon. member for Johannesburg North is asking how much is still to be spent on the line. Of course some money will have to be spent on the line in future because it only has a few loop-lines. If it is now to be made multi-purpose and is to be used for other traffic, stations and other similar facilities will have to be established. After all, it would be foolish to incur that capital expenditure just for the sake of having a castle there.

I really cannot understand the hon. members. The hon. member for Johannesburg North is making an even bigger fool of himself by saying that the R15 million that has been appropriated for the loss on the line for the first year ought now to be added on to the capital expenditure. Surely operating expenditure is not added to capital expenditure? What is at issue is the operating expenditure, which is something completely different. The hon. the Minister has told the House that losses on this line are expected in the first few years. On the other hand, we must still surely expect that when the line shows a profit, this will serve as compensation and will be applied towards recovering the money initially contributed towards the operation of the line.

The hon. member asked whether rates would be increased in due course in order to make the line profitable. What a foolish question to ask! One expects a question like that from a Std. 6 child, but really not from a member of the House of Assembly. How can one expect that the rates will never be increased in future? Just as any operating expenditure increases as costs rise, so in future, the rates will have to be reviewed as operating costs rise. How can one give a guarantee that will be valid ad infinitum? Surely one cannot do this? The fact that that line was built in record time and that the Railways can take it over today, is an achievement. We must be grateful that this is the position. We need not be despondent about this. After all, this is an achievement we need not be pessimistic about. On the contrary. We ought to be grateful that the line was built in the short space of two years, that more than 3 million tons of ore have already been exported since September and that 202-truck trains are running. One looks forward to taking over something like this. This is an asset that one would like to have in one’s possession. For that reason, it is a great privilege for me to support the Second Reading of this Bill.

Mr. Speaker, one could of course conduct a long debate on the question as to who deserves the credit for this railway line. I do not intend doing that, however, except to say that my colleagues and I are grateful that the decision was made this year that the Railways were to take over the line. I believe that in the final analysis, the credit for this belongs to South Africa. I think there are few lines in South Africa that have been built within such a short space of time. As far as I am concerned, the line will always remain a monument to the competence of Iscor as far as the construction of the line is concerned.

Of course one finds the matter interesting. It is a wonderful undertaking that has been established in the national interest. Nevertheless, there are questions that give rise to problems. Firstly, I am rather sorry that the hon. the Minister has perhaps not used the opportunity to formulate the capital position repeatedly and perhaps to give all the figures that have already been given in the House but which, for the sake of orderliness, could perhaps have been summarized in one speech.

Secondly, I have a problem as regards the losses that are being suffered. The hon. the Minister began by telling us that the line had been laid in the national interest. No-one would want to argue with him about the fact that we are dealing here with a project which really is in the national interest. I ask myself whether the Railways would have undertaken anything of the kind if it had been purely a business transaction. It seems to me that the answer to that is “no”. As a business organization and a transport organization, the Railways ought not to undertaken a matter of this nature when it knows in advance that it could suffer a loss of R35 million over a term of three years.

Much has been said in this House about the so-called socio-economic services and the additional fact that the Railways are expected to provide these services in the national interest and to carry the losses involved, with all that this entails for the Railways. I think this railway line bears eloquent testimony to the fact that this is being done again. The Railways is stepping in and taking over a tremendous project, albeit at a loss. It seems to me that the State could not expect the Railways to carry the loss of R35 million. Someone else had to do it. I am speaking of the first three years now. We do not know yet whether it will yield any profits after the first three years. I should like to see this concern lifted out of the red and made profitable as soon as possible. Once again we are dealing with a socio-economic service here, certainly as far as the first three years are concerned. I am sorry that the hon. the Minister did not put his foot down and say: “I shall take it over with great pleasure in the interests of South Africa, but since the Railways is a transport business that has nothing to do with social services, I insist that the losses suffered in the first few years, are to be borne by the State and not by the Railways.” That is the only objection I have.

In conclusion, may I say once again that I find it particularly pleasant to see that this line is eventually where it belongs, namely with the Railways of South Africa.

Mr. Speaker, the hon. member for Durban Point began, as he put it, by telling a fairy tale here. All I did in that regard was to write in my notes “jealous, jealous, jealous”, adding a few exclamation marks. The hon. member for Durban Point is indeed jealous.

Why should I be?

Why is the hon. member jealous? Because another great monument to the NP Government has been built

Try again!

I have been informed of the derailment, but my information is still very limited. In passing, I might just say that the official take-over of the line will only take place on 1 April. Consequently the information is still to be made available by Iscor.

That is a significant day in April.

Yes, but we opened Richards Bay harbour on 1 April as well. Has the hon. member anything to say about that? [Interjections.] According to the information at my disposal, damage was caused to the line due to floods near Loeriesfontein and a derailment took place in which 35 loaded waggons were derailed. At the moment a deviation is being built and the prospects are that the railway line will be open to traffic again this evening. No-one was injured in the process.

I do not intend writing a book, but I could write a book about the progress we have made in regard to this railway line and harbour. I assume that what is taking place here today will be the last chapter in that book. At the time it was my responsibility as Minister of Economic Affairs when it was decided on in the first instance. I want to disillusion the hon. member for Durban Point and other hon. members today. The documentary proof exists. The first submission I made to the Cabinet as Minister of Economic Affairs was a proposal that this railway line be built and operated by the Railways.

Who talked you out of it? [Interjections.]

That was my initial proposal and hon. members will realize that to decide on a matter such as this, one of the biggest projects of its nature ever undertaken in the history of South Africa, one has to display a little entrepreneuring spirit. One has to have courage; one has to have faith in such a scheme. All the different facets and facts were debated, inter alia, the possibility that such a scheme may lack viability. It was eventually decided—and this was a joint decision; consensus was reached on the matter in the Cabinet—that in view of Port Elizabeth’s export, etc., the railway line would be built by Iscor and it would be a single-purpose railway line.

The hon. member for Durban Point maintains that at times we provided incorrect information to this House. I do not believe that this was ever the case. If one listened to what the hon. member for Johannesburg North quoted, the picture would become so clear that anyone could understand it. What he quoted there were the facts which I, and others, provided here. There is nothing wrong with that.

Questions have also been asked in connection with loans, and I think I want to rectify this matter right at the outset. During the discussion of the Railway budget I said that it was not practice to make known all the details relating to loans, viz. who the money lenders are, the banks involved, the interest rates, etc.

You need not mention any names, only details of the loans and the interest rates.

There is a great variety of loans, and I am quite willing to provide details of the hon. member, but I do not think it is fitting for us to discuss details of those loans in this House.

May I ask what the total amount is?

I shall reply to the hon. member in a moment. We are still in the process of taking over and we are still negotiating in this connection. The hon. member for Vanderbijlpark has already referred to the Brown Book. Hon. members can see that in the Brown Book we have asked for an amount of R65 million for the take-over of the Sishen-Saldanha railway line. Hon. members will find this under head No. 1B on page 3. In the next column it can be seen that the estimated expenditure already incurred up to 31 March this year—in other words until the end of next week—amounts to R545 million. Furthermore, a cash sum of R70 million is being requested for the following financial year. The final column reflects the amount to be spent during the years subsequent to next year. This is an amount of R35 million. The total still remains R650 million.

Out of the amount of R545 million which has been mentioned—I have stated this here on a number of occasions—an amount of approximately R450 million represents loans negotiated by Iscor for the financing of this project. Those loans are being taken over by the Railways Administration. There were lengthy negotiations, negotiations which, I trust, are now almost finalized. When a debtor takes over a loan, it is surely at least fitting, if not essential, to negotiate with the bank or the body which made the loan available. Those negotiations have taken place. The amount of the loans comes to approximately R450 million. Furthermore, Iscor itself has deposited, out of its own funds, a cash sum equal to the difference between R545 million and R450 million. This represents R95 million. The Railways has undertaken to repay that R95 million to Iscor—this is apart from the takeover of the loans. This is why a total amount of R454 million is indicated in the second column, an amount which represents the estimated expenditure up to the end of March this year.

However, I want to stress once again that I do not like the charge that has been made, that we are not acting correctly or that we are not making all the information available to Parliament timeously. On a previous occasion I asked the hon. member how else he thought it should be done. Provision is made in the Brown Book for the provision of these funds. At the bottom of page 3 we have written what the hon. member for Vanderbijlpark quoted earlier—

This is the Bill at present before the House. These amounts are subject to the approval of this Bill and are therefore not voted before this Bill is agreed to. They have not yet been finally voted. Surely that is what it amounts to. What I should like to know is how the hon. member wants to change it, if he is dissatisfied with the procedure adopted.

The Bill should have been piloted through first.

Now the hon. member for Durban Point wants to know from what date the Railways pays interest. The interest forms part of the whole scheme. The date on which the Railways will begin to pay interest has not been determined. As the hon. member ought to know, in a scheme of this nature the interest is added to the capital until the project comes into operation. From the time the project comes into operation, the payment of interest is an item of expenditure. If the Railways has taken over all the obligations from Iscor, this also means that the Railways has taken over the interest payments that fall due from time to time.

The hon. member now wants to know why the Railways has to carry part of the losses. I have already explained that this is part of the agreement because the financial aspects were very important to both the Railways and Iscor. It goes without saying, too, that one cannot expect a project of this nature to be a paying proposition from the first day and one has therefore to expect the project not to be a paying one for perhaps one, two, three or more years—I do not know exactly how long. The quantity of ore which Iscor can sell abroad and which has to be conveyed by railway line to be loaded into the ships will determine whether the scheme will be a paying one or not. That is why we undertook as part of the agreement to carry a part of the losses. This is not an obligation incurred by the Railways which will entail a permanent loss for them, but is merely a financial arrangement providing that during the first two years the Railways will carry R15 million of possible losses, a further R5 million in the third year and nothing after that.

In other words, what this amounts to is that if the losses come to more than the R15 million per annum in the first two years, Iscor will be responsible for the losses. If there are still further losses in the third year after the Railways’ contribution of R5 million has been used, Iscor will be responsible for them. In other words, this is in fact a guaranteed railway line.

However, the guarantee does not lie in the fact that Iscor guarantees the Railways that they will pay off costs, but we have calculated what the costs of the interest, redemption, operation, etc. of the railway line are going to be and Iscor has told the Railways that according to their calculations they are going to export a certain quantity—say 17 million tons of ore—per annum, and taking into account this quantity of ore the Railways has calculated the freightage per ton from Sishen to Saldanha. According to our calculations this will yield a revenue which will pay the total cost of the Railway’s interest, redemption and operation. What this amounts to, therefore, is that the Railways in fact has a guarantee from Iscor. Iscor guarantees the quantities and in accordance therewith we have been able to calculate an agreed rate per ton which will cover the Railways’ costs in connection with the railway line. As I have already said, the Railways will be compensated for the R15 million for the first two years and the R5 million for the third year, by way of adjustment of rates. Consequently this will not represent a permanent loss for the Railways. I think I have replied to all the questions put by the hon. member for Durban Point.

May I ask the hon. the Minister where the interest is shown that is being paid on this expenditure?

The interest and the operating costs are all included in the White Book in the estimated operating costs of the Railways. The operating costs and interest of the Sishen-Saldanha project are also included there.

The hon. member for Johannesburg North said that someone was wrong. I do not know who was wrong when, or who the hon. member thinks was wrong at some stage. It was initially decided that this would be a single-purpose railway line. As time went on it became evident that many more people, private bodies, were very desirous of using the Sishen-Saldanha line for export purposes. It was then decided that it would be a multi-purpose line. It was then decided that the Railways should take over the line. This is the process of development which took place. I should not like to make predictions at this stage, but according to the information at my disposal concerning expected contracts from Iscor, contracts for the export of ore, it is possible that in the coming financial year, 1977-’78, the possibility exists, in all probability, that it will be possible to break even with regard to the costs involved in operating the railway line. I do not want to give a definite undertaking, but the prospects are exceptionally good. To the degree that we succeed in obtaining traffic from other private exporters, in the nature of the matter this scheme will become more viable and it ought to be possible even to reduce the rate per ton. Hon. members have also put questions to me concerning the expenditure of funds.

I want to start by saying to the hon. member for Johannesburg North that if he reads the Bill, he will see that it provides for an amount not exceeding R650 million. In other words, it can be less but not more. That is why I said here on a previous occasion that as nearly as we have been able to calculate it thus far, it would appear that the total cost involved in rounding off and completing this scheme as was to have been done by Iscor, will be approximately R643 million. I have already said this here on a previous occasion. That is in accordance with our most careful calculations. Not all that money has yet been spent. That is why it is stated in the Brown Book that only R545 million will be appropriated up to the end of March. The balance, R70 million, is to be spent in the coming financial year, because the project has not yet been fully completed. Subsequently an additional R35 million will be spent. It goes without saying that as the amount of traffic increases we shall have to increase the capacity of the railway line by building more loops, purchasing locomotives and rolling stock, etc. This goes without saying. But the capacity of the railway line can be increased at little cost.

The hon. member asked me whether the railway line and everything that went with it was comparable to those of the S.A. Railways. I cannot say that they are entirely comparable. Indeed, I can only say what he has already quoted, namely that there was consultation between Iscor and the Railways throughout with regard to the building of the railway line, I know of a number of matters in regard to which there was not total unanimity. At that period it was Iscor’s railway line. For example, there was an argument about the axle load. Iscor thought that the axle load could be higher than the Railways calculated it should be, taking all security measures into account. There were occasional arguments concerning the locomotive power, but all in all, I think that we can come to the conclusion that the line is as nearly comparable as possible with that of the S.A. Railways and that we shall experience no material problems in this connection.

I have already spoken about the losses and said that Iscor will have to make up the deficits. We do not expect any losses, but if there are any, Iscor will have to make them up. I have already explained to the hon. member that what we are undertaking, we are undertaking at cost, because the hon. member also wanted me to tell him whether the Railways would have to negotiate additional loans. My reply to him is “yes”, because I am asking for R70 million in the Brown Book this year, and that is made up of loans. If I were to spend an additional R35 million next year, as envisaged in the Brown Book, I should also have to request this by way of further loans to be able to complete the scheme.

†Would the hon. member like to ask a question?

Mr. Speaker, could the hon. the Minister tell me whether the supply voltage to the locomotives on the Sishen-Saldanha railway line is the same as the supply voltage on a normal South African railway line?

At the moment the railway line has not yet been electrified. That is the part of the work on the railway line that has yet to be completed. I cannot speak with certainty, but I think there are differences in respect of the locomotives ordered for the scheme by Iscor. But this ought not to cause us any difficulties and may be utilized to great advantage. I have not the slightest doubt on that score.

The hon. member for Maitland wants to know whether the Railways would undertake anything of the kind. I think the hon. member’s question has already been answered. The standpoint of the Railways nowadays is that we build new railway lines on guaranteed terms where private bodies request it. Those are more or less the circumstances under which we are taking over the railway line, although it is perhaps somewhat more complicated. In other words, if Iscor had furnished guarantees acceptable to us so that the Railways could build and operate the railway line, the Railways would in any event have done so. I think that in the course of my explanation I have now replied to all the hon. member’s questions.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 1:

Mr. Chairman, the hon. the Minister said, in his reply in relation to the clause, that we should not ask for the details of every single loan. But what we are entitled to ask—because it impinges on the Railways in the future—is whether the hon. the Minister has an average rate of interest in mind. If one looks at the figure of R450 million in loans and if one applies 10% to that, one gets R45 million, at the lower end of the scale, to which one still has to add the deficit, which will bring the amount up to R60 million. If one takes the higher end of the scale, in the sense that there is no income flowing in and one has a deficit, and one takes the R650 million, the deficit will, if taken at 10%, be R80 million. If one was to assume that the rate of interest at the higher end of the scale would be 14%, it would bring the total annual deficit of the Railways up to an amount of R96 million in the first two years. That is a lot of money for the Railways and it might well lead to implications in different directions for the Railway budget. Therefore I should like to ask the hon. the Minister whether he can give us a cross-section of the average rate of interest on those loans, so that we can work out for ourselves what the annual deficit for the Railways is likely to be.

Mr. Chairman, I still think that we do not understand each other. The only deficit for the Railways will be the sum of R15 million during this financial year and during the coming financial year, and an amount of R5 million in the year thereafter. That will be the only part of the loss for which the S.A. Railways will be responsible. Irrespective of what the interest is going to be, if there are further losses, Iscor will have to bear those losses and not the S.A.R. As far as the interest is concerned, I unfortunately do not have those details at my disposal at the present moment. I am, however, quite prepared to discuss the matter with the hon. member in private and to give him the information which he would like to have.

Mr. Chairman, may I just get this clear? Is the hon. the Minister saying to us that the annual deficit of R15 million anticipated for this year is after payment of interest on the loan?

Yes.

Clause agreed to.

Clause 3:

Mr. Chairman, the hon. the Minister said in his reply to the Second Reading that the payments come into force on 1 April. Am I correct?

No. The official take-over is supposedly on 1 April.

This clause states—

When I objected to the hon. the Minister asking Parliament for money and showing money as expended on the estimates before we had authorized the take-over, the Minister tried to pooh-pooh it. He said: “Oh, no. This only really works from 1 April, and we have a week in which to pay it.” Yet this clause makes it retrospective to 1 July 1976.

Well that proves my case.

No, it proves my case. The hon. the Minister has in fact committed and spent moneys before being authorized to do so by Parliament. That is all I said. That is the gravamen of my charge, i.e. that the Minister took Parliament for granted. He treated it as though it were a rubber stamp. He committed expenditure before this Parliament had authorized him to do so. That was my claim and that is exactly what is now confirmed.

Mr. Chairman, I want to say to the hon. member that in the Brown Book we asked for the appropriation of money, subject to the passing of this Bill. However, we have been negotiating this take-over since October last year. Sir, surely I cannot come to Parliament and ask for an amount of R650 million if I have not yet negotiated anything. Surely I must know that the possibility exists that we shall come to an agreement concerning the take-over of this line by the Railways. The negotiations took place during that time, and we indicate in the Brown Book that we have already entered into certain obligations, subject to the passing of this Bill by Parliament. Now we are giving it retrospective effect in order to legalize all the negotiations and actions.

Have the loans been transferred to the name of the Railways?

I cannot say at this moment whether there has been an official transfer and whether the Railways are simply accepting the responsibilities for the future; I think that the latter possibility is what will most probably happen.

Clause agreed to.

House Resumed:

Bill reported without amendment.

Bill read a Third Time.

Mr. Speaker, I move—

As hon. members know, the Exchequer and Audit Act, 1956, was substituted by the Exchequer and Audit Act, 1975, which came into operation on 1 April 1976. Because the latter Act, basically, pertains only to matters affecting the Exchequer and the State Revenue Fund, a separate Bill was introduced in the House of Assembly during 1976 in which those provisions of the Exchequer and Audit Act, 1956, pertaining to the finances and accounts of the Railway Administration and other related matters were incorporated. This legislation was also to have come into operation on 1 April 1976. Since certain aspects emerged which had to be cleared up, however, the Bill was withdrawn and as an interim measure Parliament passed a Bill in terms of which the provisions of the Exchequer and Audit Act, 1956, remained fundamentally applicable to the Railway and Harbour Administration.

The aspects that had to be cleared up have now been finalized and the proposed Bill has to come into operation on 1 April 1977.

As will be noted from the explanatory memorandum, the Bill is based on the Exchequer and Audit Act, 1975, in which statutory authority, with certain modifications, is given to the principles underlying the existing financial system.

In the main the Bill comprises the consolidation and updating of those sections of the Exchequer and Audit Act, 1956, which pertained only to the Railway and Harbour Fund, as well as to those which were applicable to both the Railway and Harbour Fund and the State Revenue Fund.

The provisions of the Railways and Harbours Loans Act, 1973, which are being repealed, and certain unconnected sections which were included in Finance Acts and which are similarly being repealed, are also included in the Bill. The opportunity is also being taken to adapt and amend certain existing statutory provisions with a view to modernization and, in some cases, the elimination of provisions which are obsolete and have served their purpose. Certain administrative procedures are being streamlined and, where necessary, brought into line with those applicable to the Treasury.

The implications of the various clauses are explained in the explanatory memorandum and I shall consequently comment only briefly on them.

Clauses 2 and 3 refer to the various accounts which the Railway Administration keeps in its books and the main bank account of the Administration at the Reserve Bank.

The provisions in clause 4 deal with the appropriation of moneys from the Railway and Harbour Fund and the form in which the Railway and Harbour estimates shall be submitted to Parliament. Although the Minister of Transport shall determine, in terms of this clause, the form in which estimates are submitted to Parliament—section 4 of the Exchequer and Audit Act, 1975, confers similar powers on the Minister of Finance as far as the estimates of the State are concerned— hon. members may rest assured that no material alterations will be made to the form in which the Railway and Harbour estimates are submitted without the approval of the Select Committee on Railways and Harbours.

Clause 5 refers to the duration of an Appropriation Act, the expenditure of moneys and the accounting of ordinary as well as unforeseen or excess expenditure, while provision is made in clause 6 for the utilization of savings in certain circumstances. In this context I want to point out that the annual Railways and Harbours Act empowers the Minister to authorize the utilization of a saving under one head of expenditure to meet excess expenditure under another head in the same schedule to the Act, subject to the proviso however that the amount of a head appearing in “Column 2” of the schedules may not be exceeded and that savings thereon may not be utilized for any purpose other than that for which the moneys are made available. The provisions contained in clause 6 provide standing authority to this end, thus eliminating the necessity to make annual provision in this regard. The restrictions which exist at present on the utilization of savings under certain heads are at the same time being relaxed to such an extent that possible savings which may occur on amounts in “Column 2” of schedule 1 to a Appropriation Act may be utilized for other purposes in conformity with the course of action which applies in respect of savings on other provisions.

I come now to clause 7. In terms of the provisions of section 47 of the Exchequer and Audit Act, 1956, the State President has the power, within specified limits, to authorize, by means of the issue of special warrants, the withdrawal from the Railway and Harbour Fund of moneys which have not been appropriated by Parliament. The moneys which are thus made available must be voted by Parliament during the next ensuing session; particulars of such warrants must be furnished by the Auditor-General for tabling in Parliament.

In terms of the clause under discussion the State President’s special warrants for unforeseen expenditure are being abolished and the Minister is being empowered, pending parliamentary approval, to withdraw moneys from the fund. In this regard I want to emphasize that the Minister is responsible to account to Parliament for the utilization of such moneys and that the State President should not therefore be involved in matters of this nature. Since moneys which will be made available by way of the proposed ministerial authorization have to be included in an Appropriation Act for formal appropriation there will be sufficient opportunity for the matter to be discussed. Similar provision has been made in the Exchequer and Audit Act, 1975.

The statements of the Auditor-General pertaining to warrants did not really serve any purpose and therefore no provision is being made for this in the Bill.

In terms of section 47 of the 1956 Act the amount which may drawn during any financial year by way of special warrants was limited to R1 million. In accordance with a recommendation of the Select Committee on Railways and Harbours, 1974, this amount is being increased to 1% of the total amount provided for in the current Appropriation Act or Part Appropriation Act.

†Apart from re-enacting the provisions of the Exchequer and Audit Act, 1956, in regard to the opening of bank accounts by the department, clause 8 empowers the Administration to arrange temporary short-term loans by way of overdraft to meet anticipated temporary shortages such as when the transfer of moneys abroad is restricted, exceptional payments have to be made, or abnormal fluctuations in exchange rates occur.

The purpose of clauses 9 to 12, 15 and 22 is to re-enact the provisions of certain sections of the Exchequer and Audit Act, 1956, relative to the department’s accounting system, the requisition of capital sums from the Treasury and the investment of working balances.

The duties and powers of the Auditor-General are set out in clause 13 and the exact wording of the Exchequer and Audit Act, 1975, is used. As all the legal provisions relating to the powers and duties of the Auditor-General in regard to the audit of the Administration’s accounts are included in this Bill, the corresponding provisions in the Exchequer and Audit Act, 1975, require to be deleted. The necessary provision is made in clause 27.

I shall now deal with clause 14. Section 2(1) of the Finance Act, 1934, determines the amount of capital invested in the Railways and Harbours at the establishment of Union in 1910 and also the rate of interest payable thereon; in terms of section 17 of the Second Finance Act, 1966, this capital was converted into non-interest-bearing capital with effect from 1 April 1967, from which date an annual contribution equal to the interest thereon became payable into the Sinking Fund for the redemption of railway capital. Clause 14 replaces and consolidates the aforementioned legislation, which is repealed by the Exchequer and Audit Act, 1975.

The purpose of clauses 16 and 17 is to re-enact the provisions of the Railways and Harbours Loans Act, 1973. Provision is also made in clause 16 for the General Manager to delegate his signing powers and for the appointment of agents to buy and sell securities in connection with the raising of loans when necessary, whilst clause 17 provides for guarantees by the Government in respect of any liability of the Administration.

Clause 18 envisages the elimination of deficiencies in previous legislation which did not clearly define or adequately provide for the concept of unauthorized expenditure.

Clause 19 deals with the procedure to be followed in recovering a loss caused by carelessness or neglect of duty on the part of a person who is or was in the employ of the Railway Administration. The procedure set out in this clause conforms to a corresponding provision in the Exchequer and Audit Act, 1975, and provides, inter alia, for the head or subhead of the Railway department in which the servant concerned is or was employed, to be charged with the responsibility of taking surcharge action. The existing right of appeal or recourse to a competent court of law is retained and the Auditor-General will be able to examine all cases of loss or damage after disposal and report thereon to Parliament at his discretion.

The provisions of clause 20 are similar to those of section 36(1) of the Exchequer and Audit Act, 1975, and permit of heads of departments disposing of detailed discussions in cases where the law requires the Minister to consult with the Minister of Finance, unless otherwise directed.

The purpose of clause 21 is to give statutory authority to regulations and instructions on financial matters which have been and may be issued by the department. Similar provision is made in the Exchequer and Audit Act, 1975.

Clause 23 provides for the transfer of certain moneys from the Staff Guarantee Fund to the Benevolent Fund and re-enacts the provisions of section 34 of the Finance Act, 1945, which is being repealed.

Clause 24 provides standing authority for the use of moneys from the Railway and Harbour Fund to finance unforeseen excesses in the value of stocks over the capital appropriation in respect of the Working Capital Account. The need for seeking parliamentary authority annually to cover temporary excesses therefore falls away.

In terms of section 99 of the Republic of South Africa Constitution Act, 1961, only the revenue raised and received from the administration of the railway services shall be paid into the Railway and Harbour Fund. The fund is charged, however, by means of the annual Railways and Harbours Appropriation Acts, with the sums of money required for revenue services as well as for capital and betterment services, and as the latter services are partly financed from loan moneys borrowed from the Treasury or other sources, such moneys should obviously be credited to the Railway and Harbour Fund in the first instance. The purpose of clause 25 is to put the matter right and to provide for a clear definition of “revenue”.

The provisions proposed in clauses 26, 28 and 29 are of a consequential or routine nature and do not require elucidation.

Mr. Speaker, I think it is advisable to state what my attitude in the Committee Stage will be to the different amendments which appear on the Order Paper. Looking at these amendments, I find that there is an amendment to be proposed in clause 2, on page 6. The amendment which the hon. member for Durban Point proposes to move is to omit “keeps the accounts of several” in line 34, and to substitute these words by “shall keep the accounts of any”. In other words, where we provide at the moment that the Administration keeps the accounts …

It does not provide, it is simply a statement of fact.

The hon. member suggests that we should make it “shall keep”. I think that is the most important aspect of this amendment. If one looks at the beginning of this clause, one will see that subsection (1) states—

I think it was also the intention that these accounts shall be kept, and in the circumstances I shall not have any objection to this amendment.

Should we rather not deal with these in the Committee Stage?

I think that if I state my attitude now it will be much easier for hon. members to deal with these matters at a later stage.

The hon. member for Constantia has given notice of an amendment he proposes to move to clause 4, viz., on page 8, in line 13, to omit “but” and to substitute “after consultation with the Auditor-General and”. I really do not think this will be proper, and I will not be able to accept this amendment. However, I think we could discuss it in detail during the Committee Stage.

The hon. member for Durban Point has given notice of an amendment he intends to move, also to clause 4, viz., on page 8, in line 23, to omit “may” and to substitute it by “shall”. I am prepared to accept that amendment, although I may say at this stage that this document is not absolutely necessary

The Green Book?

That is the Green Book. It is not absolutely necessary for the purposes of the estimates, and so in the circumstances we thought the clause should read as it is at the present moment. Nevertheless, we do intend to carry on with this Green Book, and in the circumstances I am prepared to allow “may” to be changed to “shall”.

The hon. member for Constantia has given notice of an amendment he intends to move to clause 6, viz., on page 8, in line 56, to omit all the words after “exceeded” up to and including “schedule” in line 60. If necessary, we can also discuss that more extensively during the Committee Stage, though I may say at this stage that I would prefer this portion of the clause not to be deleted, and in the circumstances I do not believe I will be able to accept this amendment.

Notice has also been given of an amendment to clause 7. There, the hon. member for Durban Point intends moving an amendment to add, on page 10, in line 20, after “Parliament” the words “and shall be identified as having been so authorized.” It has been our intention, all along, to do so, and so I have no objection to those words being inserted if the hon. member will feel happier to have them in.

Finally, the hon. member for Constantia has given notice of his intention to move an amendment to clause 18, to which he wants to add a subsection (4), reading as follows—

I must admit that a similar subsection exists in the Exchequer and Audit Act of 1975. In the circumstances I have some difficulty in finding an argument against this. Nevertheless, I am not altogether happy with the wording of that proposed subsection. I am prepared to accept it, but I would like hon. members to reconsider whether it is fair and reasonable to place such an obligation on the shoulders of the Administration with regard to the collection of moneys of that kind from members of its staff. I am not altogether sure whether it is such a good amendment. However, there is a similar section in the Exchequer and Audit Act of 1975, and in the circumstances—if the hon. member for Constantia feels there is a good reason why it should be there—I will be prepared to accept his amendment.

*Last but not least, the hon. member for Maitland had certain problems in regard to clause 18(3). According to him the clause in its present form creates the impression that Parliament should simply accept it as a fait accompli. He then proposed an amendment to me which I unfortunately could not accept. However, we have discussed and reached a consensus on the matter, and I have placed an amendment on the Order Paper which I believe will solve the problems of the hon. member for Maitland.

Mr. Speaker, I thank the hon. Minister for his introductory speech, for the explanation he furnished and for his reaction to the amendments that will possibly be moved. I listened with interest to the hon. the Minister’s reference to certain aspects of last year’s Bill that had to be cleared up. I can assure him that if that Bill had been introduced last year, he would have found our attitude to be quite different to what it is today. I am glad to be able to say that we shall support the Second Reading of the Bill but that we shall move various amendments in the Committee Stage. The “small points” that had to be cleared up were actually very important matters, deeply affecting auditing principles, and I am very glad to see that they have been cleared up in this way in the Bill.

The hon. the Minister also said that the principles underlying the existing financial system are being retained. That is true in the majority of cases, but the one in clause 6 is an exception. It is not my intention, at this stage in the debate, to discuss other particulars; I shall chiefly confine myself to clause 6 and the basic deviation from one of the most important underlying principles of Railway financing.

I do not think it is necessary for me to have to refer now to other matters, because those are matters we can discuss in the Committee Stage. The specific deviation from the present system, i.e. the granting of power to the Minister in respect of savings on column 2 items is, however, an important change which I feel we cannot support.

†The position is that column 2 items refer largely to the funds. They are capital items. The White Paper, No. 8 of 1977, refers specifically to the funds and says: “… all of which are subject to fluctuation.” That is not correct; it is a very small minority of these funds which are subject to fluctuation. Most of them are statutory funds and they are there for a specific purpose. They are part of the financial structure of the Railways and are particularly designed to give control and to prevent money allocated for one particular purpose being used willy-nilly for another purpose. That is why there has always been this limitation on the transfer of savings in column 2 to expenditure under column 1. I am going to be supported in this argument by a financial “fundi” who knows much more about the bookkeeping side than I do. Therefore I will deal only with the principle of parliamentary control as such over expenditure which we as Parliament vote for the use of the department. If this provision goes through as it is, I believe that we will be making a mockery of the whole object of the budget, because the Minister will be presenting to us a picture of anticipated expenditure, when in point of fact by manipulating savings—and I use this in the literal sense, not in any evil sense—he can create for himself vast sums of money designed for capital expenditure and use it on column 1 items, on revenue expenditure.

Willy-nilly?

Willy-nilly if he wants to. I do not say he will, but it can be done. We would be authorizing that to be done. Let us take the Renewals Fund or the Betterment Fund as examples. That money is voted particularly for the purpose of building up capital from revenue to be available for renewing items which have to be renewed, or for improving items and for dealing with the inflated cost of items which have to be purchased.

During the Railway debate we particularly discussed this issue. The hon. the Minister made a major point of the new system which he envisages, a system of financing a greater proportion of capital expenditure from revenue. This year we voted an increase of 20% on contributions to the Renewals Fund. We voted a lump sum to the Betterment Fund, from revenue to capital, for the specific purpose of strengthening these funds for capital use. Now, within one week, the hon. the Minister seeks an authority to release the money put into those funds so that he can spend it on column 1 items, which are revenue items of a completely different type. I want to suggest to him what he could do. He could vote R100 million for the Betterment Fund and then simply not buy any items, thus creating an artificial saving. Instead he could buy those items by financing them from capital or other sources, or not buy them at all. He could create for himself an artificial saving by postponing purchase or by simply not purchasing items. This would result in an artificial saving in capital which he could then use to finance a shortfall in order, for instance, to increase salaries or wages. I accept that there must be more flexibility, but I cannot accept that we, as Parliament, should now authorize the complete negation of the very principle which was debated and indicated to be the Policy during the appropriation debate itself. The hon. member for Constantia will move an amendment to which he will speak and we will deal with this further in the Committee Stage.

There is only one other general point to which I want to refer and that is to welcome the hon. the Minister’s reference to the Select Committee. It is traditional that the Select Committee is never referred to in legislation of this nature, whereas in point of fact it is in practice the body which has an influence on many of these aspects, the limits on amounts to be expended under different headings, new works and minor works, etc. I had made a note to raise this in the Committee Stage and therefore I welcome the hon. the Minister’s assurance that the Select Committee will still perform the function it does and that it will still be consulted before any major or fundamental changes are made in the system of financing. We shall therefore support the Second Reading of the Bill and deal with the other matters in the Committee Stage.

Mr. Speaker, the hon. the Minister initially explained that this is, to a certain extent, consolidating legislation because certain aspects and certain Acts affecting the Railways Administration and the Railway Fund as such are being brought together in the new legislation based on the principle of the Exchequer and Audit Act passed by Parliament last year or the year before. We all welcome the Bill because, in my view, it eliminates red tape to a large extent. No one wants a slackening in good legislation or sound control of the management of the S.A. Railways because this is a very large organization we are dealing with. One must bear in mind that the running expenses of the Railways amount to R2 800 million and the capital programme to R800 million. The appropriation of R3 600 million is probably one of the biggest in the country. It therefore goes without saying that sound control over the organization must be exercised and that a sound accounting system must be used. We welcome the changes that are being introduced and there are, in my view, specifically three clauses that introduce sound improvements.

The hon. member for Durban Point referred to one of the improvements and said that with clause 6 in its present form the hon. the Minister could accumulate certain moneys. Firstly I am of the opinion that when money is voted in a budget, that money is voted for utilization under a specific head. Let us look at the items under column 2 of schedule 1 of the Appropriation Bill. For those items the amount voted is a mere R141 million out of a total amount of R2 814 million which constitutes the total appropriation. It is therefore a minimal amount.

This includes the funds, however.

Yes, but in principle the R141 million must be spent under the specific heads for which it was voted. In that connection provision is only made for the savings on the Revenue Account. The hon. member must surely be able to distinguish in the sense that the measure is not applicable to the column 2 items in the capital programme. I therefore do not think that the dangers, which the hon. member sees in the relevant principle, do exist. I think the hon. member exaggerated a little. If an amount is voted for the normal running expenses I cannot, in all humility and in the light of the smooth functioning, management and running of the Railways, see why savings, such as those which will now be statutorily possible under column 1, cannot be used under the other heads. The savings under column 2 of the Revenue Account can only be used when the amounts voted under column 1 are exceeded. This cannot simply happen because an ex press provision has been introduced to the effect that this can only be done with the approval of the hon. the Minister. It can therefore not be done freely, and I honestly think that the hon. member has slightly exaggerated the danger involved. When one manages such an organization it is a good thing that it should be subject to strict rules, but on the other hand I do not think one should have oneself restricted in respect of administration that runs smoothly or in respect of sound business principles.

There is, however, another clause to which I briefly want to refer, a clause which, in my view, embodies certain provisions that we really welcome. In his introductory speech the hon. the Minister referred to the fact that the Railways wants to get rid of outmoded methods and wants to streamline the Administration. In the past the State President had to authorize the appropriation of money for expenditure for which money had not been voted in the budget. This usually involves items that suddenly crop up and for which provision has not been made in the budget, the result being that additional funds must be obtained. In that connection I specifically have in mind the state of affairs we encountered during the previous financial year as a result of the floods in Natal. An amount of R545 000 is now being voted to divert the river. In the past, in such cases, one has always encountered red tape that has led to very roundabout procedures. One has always first had to go to the State President to obtain his approval, and every two months a statement of expenditure has had to be submitted to the Auditor-General who, in turn, has had to submit this to Parliament. Since Parliament has only one session per year, documents drawn up in the recess have had to be kept for submission at the beginning of the next session. All the red tape is now being eliminated. In the future, however, the information will still appear in the budget and will still have to be approved.

The third provision, which in my view really introduces an important and sound improvement is contained in clause 19. This involves the recovery of losses as provided in the Exchequer and Audit Act. If an official of the Administration has been negligent in the collection of funds, has not taken the necessary steps and has allowed consequent losses to be incurred, in terms of the old Exchequer and Audit Act the Auditor-General has had to determine the losses suffered. He could then determine whether the losses were to be recovered in toto or in lesser part. This provision entailed a tremendous burden for the Auditor-General and his staff. To determine the losses in future, and to analyse the merits of the case, it is now laid down that this will have to be done by the head of the relevant department of the Railways Administration or by the accounting official, as laid down in the present Exchequer and Audit Act. The said persons are in a much better position to form a judgment because they have a better background for determining where losses were suffered or where irrecoverable losses have been incurred, thus being able to judge to what extent funds must be recovered and what action must be taken. I think this is a great improvement and I therefore welcome this Bill. I think the hon. member for Durban Point must really reconsider the matters he objects to in clause 6 because this measure will greatly facilitate the procedure.

Mr. Speaker, after the Exchequer and Audit Act of 1975, it was quite obvious that this piece of legislation would have to come before this House in one form or another. One therefore logically anticipated it last year, but there were of course very good reasons why it could not be proceeded with then. Our approach on these benches to this piece of legislation is to look at it from the point of view of whether it encourages and assists in regard to modern budgeting, whether it assists in regard to the accountancy practices that we believe should be followed and whether it establishes and maintains the financial control that we believe should be exercised in respect of the finances of the Railways. If we look at it in this particular light we have to express some degree of disappointment with the speech of the hon. the Minister because, firstly, I think that an improvement is possible in regard to the presentation of the budget. We believe, in other words, that if we were to adopt the concept of budgeting by objectives in so far as the Railways is concerned and applied modern budgeting management concepts in regard to the presentation of the budget, the House would be better informed. The hon. the Minister now has the power to present the budget in a different form. I believe that attention should be given to this. I do not believe that the hon. the Minister should be the final arbiter in this and he has said that he will consult the Select Committee. That is what he has indicated, but I regard the Select Committee as being the instrument of Parliament for this purpose and I would have preferred the legislation to provide that Parliament should be the final arbiter in regard to this matter. The hon. the Minister may recollect that that was also the attitude that we on these benches and the official Opposition adopted in 1975 in regard to the presentation of the budget and the control that should be exercised. I express this degree of disappointment because I hope, not being entirely familiar with what goes on in the Select Committee, that something will be said in regard to what we can expect in the future.

The second matter I want to deal with is whether this affects Parliament’s right in respect of the budget as such and in respect of the accounts and finances of the Railways. Parliament’s right, as I see it, is, that we have the right to be informed, the right to debate and the right, based on the information which we have available to us and which should be made fully available to us, to either vote or withhold supplies in respect of the Railways.

Here I come to the question of information and to what the budget should convey to us together with the other documentation. I am satisfied that this piece of legislation is adequate machinery to ensure that Parliament is kept fully informed. Of course the difficulty is that the Minister has a high degree of discretion. Were he to exercise that degree of discretion in such a way that we are not kept fully informed, our attitude might change in the future. This deals with the issue of debate and the question of the right to withhold or to grant supplies.

The matter that does arise and which is very important, is the issues which are set out in clauses 6 and 7 of this piece of legislation. The hon. member for Durban Point has already dealt with clause 6 to a considerable extent, and I share the views he expressed. May I just point to the history of budgeting over the years under the parliamentary system. In the first place one voted purely for a specific matter. The money so voted had to be spent on that specific matter. No savings from a sub-vote could be used to finance a matter under another head. One specifically voted what was in fact to be spent. Because that created problems, there gradually was an erosion of this principle. If one looks at the history of the development of the control of Parliament over finance, one finds that the Minister got more and more power to decide where he should spend the money, irrespective of what Parliament has voted it for. One finds less parliamentary control. If this continues we are going to find ourselves in a situation where all Parliament will do is to vote a lump sum of money with the Minister having complete discretion as to where and how he spends it. One can look at the history of parliamentary government in Britain, and one will notice an identical situation to the one in South Africa if one looks at the history of parliamentary government here. That is why I and my colleagues in these benches take the view which accords with the view of the official Opposition, and that is that we believe that this is an unwarranted intrusion into the powers of Parliament. That is why we shall support the amendment to be moved by the hon. member for Constantia.

I now come to clause 7, with which the hon. member for Vanderbijlpark dealt in his speech, no doubt in anticipation of criticism. Where Parliament votes money for a particular purpose and it is part of the budget, I can understand that the Minister has a discretion. But where the expenditure is of an unforeseen nature, an excess on a vote not contemplated by Parliament when it voted the budget, then it is our belief that that responsibility should not be the responsibility of the Minister, but of the Cabinet. Cabinet responsibility relates to excess Votes, unforeseen matters and matters which Parliament has never agreed to spend money on. If that is left to the discretion of the Minister, Parliament is again substantially abdicating a power. Where it is vested in the State President, through the issue of the State President’s warrants, it is a safeguard that that decision will be one of the Cabinet and will be made by the Head of State on the recommendation of the executive. But here one puts oneself entirely in the hands of the Minister. I must say that I mourn the passing of the special warrants and of the State President’s power. It constitutes an inroad into the protection Parliament is entitled to in respect of the spending of money that has not been voted by Parliament.

But it comes to Parliament.

It does not come to Parliament in its present form, because at present the procedure is that special warrants have to be tabled without delay, whereas under this new procedure it only comes to Parliament very much later. If in fact money has been spent which Parliament feels should not have been spent, Parliament should be informed of such expenditure at the earliest opportunity so that it can take the necessary action. That right is being done away with, and I regret the passing of this special warrant and the fact that the power to issue special warrants in these circumstances is being taken away from the State President.

There are a few other matters to which I should like to draw attention. Firstly, I wish to refer to the provision contained in clause 11(2) of the Bill, which reads as follows—

In other words, accounting is to be done on an accrual basis and not on a cash basis. This is interesting in so far as Government finance works on a cash basis and not an accrual basis. I think the hon. the Minister should tell us why he prefers this method to the method adopted in State finance. In point of fact I agree with him because one of the difficulties which this circumvents is that, even if a tremendous amount of expenditure has been incurred before a budget is introduced, payment can be deferred till after 1 April as a result of which there will be a tremendous amount of expenditure immediately after 1 April. Anybody who looks at the returns of the Exchequer receipts and payments will see how one is able to juggle with the budget. I am very pleased that the hon. the Minister has tied himself here to not being able to do this sort of juggling.

However, I wonder whether he will tell us why he has chosen this path and not the loose-living ways of his colleagues. I wonder whether he will tell us why he is being so precise and accurate—I welcome it—and why he has not chosen the loose-living ways of his colleague, the Minister of Finance, who has far greater authority in this regard. Sir, I must add that I use the term “loose-living” purely in a financial-accounting sense, as you may well imagine.

I next come to the question of the Railways as a separate borrowing entity. I should like to ask the hon. the Minister whether he sees much point in the Railways being a separate borrowing entity, particularly in the international market, when on my information—I hope he will correct me if I am wrong— virtually every loan the Railways has been able to obtain overseas has had to be guaranteed by the Government in any case. Are there real advantages to there being another borrower on the market instead of the number of borrowers being limited? One can for instance take the example of the provincial administrations. They are not direct borrowers, either in the local market or in the overseas market. I should like to know from the hon. the Minister how he sees this situation, bearing in mind that, as I understand it, he cannot really borrow money overseas unless he gets a State guarantee in that regard.

The last issue I should like to touch on is the question of surcharges contained in clause 19. There is something I am concerned about here and I should like to put it to the hon. the Minister. I have no objection to the head or subhead of the department having the power to surcharge in the normal circumstances. However, does the hon. the Minister not believe that that power should be subject to the supervision and the review of the Auditor-General? The head and subhead of the department may be too involved in the situation. It may well be that the Auditor-General would surcharge whereas the head or subhead would not surcharge in the particular circumstances. I wonder whether we do not need the safeguard that, whatever power of surcharge is exercised by the head or subhead of the department, it should be exercised under the supervision and control of the Auditor-General. There could well be abuses—I am not saying that there are abuses—and our job is to ensure that one legislates to prevent abuses from taking place.

Sir, as I have pointed out, there are a number of matters in this piece of legislation that we do not agree with. I have also suggested certain improvements. Nevertheless, having looked at the Bill as a whole, we regard this as obviously necessary and an improvement on the existing situation and therefore we shall support the Second Reading.

Mr. Speaker, it was interesting to listen to the hon. member for Yeoville on the one hand giving credit for the merits of the modern form of auditing and financial administration, including the various restrictions imposed on warrants, restrictions on both the Minister and other bodies to make use of certain excesses while having to report in full to this House at some or other stage. Likewise the recognition granted to a Select Committee in respect of changes in the form of the returns submitted to this House. Notwithstanding all this he nevertheless hints, here and there, at objections to certain clauses, or the legislation in general, but in the final analysis he nevertheless indicates his support. I find it strange that we must take up the House’s time for such double talk. I am quite satisfied that in the age we live in it is essential that we must redefine the value of time, streamlining and the elimination of unnecessary administrative obstacles. He said he preferred the State President to give his approval to warrants or that the matter should be held over to the next session of Parliament to obtain approval for excessive expenditure. This is in complete contradiction to the modern concept of administration and control. Let me mention just one practical example. If my farm manager knows that I need a good saddle-horse and he finds one for sale at a very reasonable price, must he wait a month for my return to get my approval and allow a good bargain to be lost? In the long run such a standpoint could entail unnecessary additional capital and interest costs, not only as far as the Railways Administration is concerned, but also eventually as far as the State is concerned. All that is envisaged with this amendment is to make the situation a more practical one and to ensure that the whole system, particularly the proposed better control and administration, will be employed to the benefit of the Railways. In my opinion that is what this is all about, and instead of following his example and making a long speech, I just want to add that we agree with the Bill. That is all I want to say. In the Committee Stage we shall perhaps have a little more to say about the various clauses.

Mr. Speaker, this Bill is a fairly comprehensive measure, covering as it does the financial administration of the Railways from a number of angles. In the main, we on this side of the House find this a good measure. As far as the accounting procedures that are laid down are concerned, they largely embody the re-enactment of existing measures and existing procedures, and we have no fault to find with them. The same applies to the financial control measures embodied in the Bill, which follow very closely on the provisions of the Exchequer and Audit Act. As far as the rules and the basis which are laid down in this measure under which the Auditor-General is to carry out his audit are concerned, I think these provisions represent a very great improvement on the existing provisions in that they widen the scope of the audit and the powers of the Auditor-General. In this measure the Auditor-General becomes more of an ombudsman than he has been in the past. He will have the power now to investigate things which he was not required to investigate in the past. He can investigate whether moneys are spent advantageously and efficiently, he can investigate the efficiency of internal control measures relating to revenue and expenditure; when reporting to Parliament he can report on any case where money in his opinion was wastefully or inefficiently spent; he can report on any instance where stores or equipment have been used or kept in a manner detrimental to the Administration, and he can report any other matter which in his opinion should be brought to the attention of Parliament in the public interest. I believe that that is a very great improvement on the situation that prevailed in the past. I say so without casting any aspersions at all on the Administration of the Railways. I believe that in a huge organization such as the Administration is, it is only to its benefit to have an independent party, such as the Auditor-General, with powers to thoroughly investigate any aspect of the operation of the Administration.

It is, as the hon. member for Durban Point indicated, when we come to the budgetary procedures and the rules within which the Administration must work as far as the budgetary procedures are concerned, that we have some difficulty with this Bill. This Bill, as the hon. member for Durban Point has indicated, contains an important change in principle which affects the efficacy of the control which Parliament exercises over the finances of the Administration. I refer again to clause 6 and the fact that for the first time the Minister will be allowed to use savings under column 2 items to finance excess expenditure on any other item in column 1. I am aware that there is a similar provision in the Exchequer and Audit Act of 1975. However, we opposed that provision very strongly when it was introduced, and for the same reasons as we advanced then, we are opposed to the introduction of the same principle in this Bill.

The main items, as far as the Railways are concerned, which come under column 2 in schedule 1, are the Administration’s contributions to its own reserve funds which are intended to provide for improvements, for capital expenditure and for capital redemption. In this year’s Appropriation Bill these contributions to the funds for these purposes account for some R141 million out of the total of R143 million of column 2 items in schedule 1. It is true that to some extent the use to which these contributions to funds may be put, is circumscribed. The Republic of South Africa Constitution Act, for instance, requires that a statutory amount of R5 million be paid each year to a Sinking Fund. In the Appropriation Bill which we dealt with last week an amount of R47,5 million out of the amount appropriated of R80 million to the Betterment Fund was specifically earmarked by clause 2 of that Bill for spending on capital and betterment works and for no other purpose. However, the position now is that if the balance, or any part of the balance, of funds appropriated in column 2 for use on capital works in terms of schedule 3 is not used for capital works, they could become available as savings to finance excess expenditure under any heading under column 1 in schedule 1. In other words, savings on capital expenditure can become available for increasing the running expenses of the Administration. In total these savings could be very substantial indeed. I would like to draw the attention of the House to the fact that during the current financial year there has been a saving of R25 million in the Betterment Fund which, in terms of the measure that we are now discussing, would be available to finance excess expenditure on any item in column 1. I find the explanatory memorandum which deals with this particular clause rather misleading in that it gives the impression that the importance of column 2 items lies, first of all, in contributions to public bodies, secondly, in grants-in-aid to local authorities, thirdly, in ex gratia payments and, fourthly, in contributions to reduce deficiencies in pension funds. From the figures which are contained in the Appropriation Bill of this year this is not so. Those are not the important column 2 items. If those had been the items we were talking about, where savings could be used for column 1 expenditure, then we would have had far less objection to this in principle than we have, because such large funds are involved. If only those small funds, which are subject to variation outside the control of the Administration, were the only ones involved, I think a case could be made for any saving due to variation in those items being used on column 1 items. However, this is not the case. These items are relatively insignificant compared with the amounts that could be saved under the other column 2 headings. To allow savings under those headings, namely the contributions to the Administration’s own funds, to be used to finance running expenses, is an altogether different matter. These are large amounts which are specifically appropriated by Parliament for specific use on specific projects. I think it would make a mockery of parliamentary control to allow this money to be diverted to completely different uses at the whim of the Minister without any reference back to Parliament. Taken to its absurd limits, in terms of this year’s Appropriation Bill, it would mean that the Minister could increase column 1 votes by some R90 million without reference to Parliament.

I have indicated that I think that this change in clause 6 is undesirable, but I also think that it is unnecessary, because in my view clause 7 provides whatever financial flexibility is desirable. I am in full agreement that a reasonable degree of financial flexibility is desirable for the Administration, but the flexibility provided by clause 7 is in my view sufficient.

Clause 7 allows the hon. the Minister to exceed any vote if it is in the public interest to do so and to exceed column 2 votes provided the total excess of expenditure does not exceed 1% of the total budget and provided Parliamentary approval is sought at the first opportunity. In terms of this year’s Appropriation Bill that would have given the hon. the Minister flexibility to the tune of R36 million, which I consider—without the power the Bill contains to use any savings on column 2—is quite sufficient flexibility for any unforeseen circumstances which—and I am the first to admit it—do arise from time to time.

In the Committee Stage I shall move an amendment to take care of what I said in regard to clause 6 at Second Reading. There are other minor amendments—which the hon. the Minister has already dealt with—which I wish to move, but the amendment to clause 6 is in our view the gravamen of the problem we have with this Bill.

Mr. Speaker, questions have been asked about what I want to describe as the Railways’ own Exchequer and Audit Act, something which is extremely necessary and which we shall support in principle at the Second Reading. Like other hon. members who have spoken before me, I too, however, have a few problems. There are snags, which were very clearly pointed out by the hon. members for Durban Point, Yeoville and Constantia. The objections appear for the most part to be directed at clause 6. As it reads at present, one sees in it a desire on the part of the Administration to effect a greater degree of flexibility as regards the financing of the expenditure in column 1. Perhaps one should really guard against another problem too. It is true that one has to allow a degree of flexibility, but it is also true that one cannot create a situation in which the careful attention that must be given to budgeting will be reduced. It is not unthinkable—I do not want to say this with specific reference to the present Administration—that a situation could develop in which, if it knew that large amounts were available to make up deficits on revenue on specific items, the Administration would not budget with the same degree of care. I think it would be a pity if that were to happen. On the other hand, as I say, one wants to have the flexibility as well. I therefore wonder whether one could not solve the matter by allowing the Minister to apply savings under column 2 towards column 1, with his approval, and when he has done this, to report those savings and applications at the next Parliamentary session. The hon. the Minister would then be in a position to state his case here and Parliament, too, would be in a position to debate the matter.

Why then does he not act in terms of clause 7?

Clause 7 provides for the provision of funds for totally unforeseen circumstances, circumstances which arise due to events for which no one had made provision. I should like to see the same degree of control by Parliament for clause 6 as we already have for clause 7. If I can word it, I shall try to move something of the kind at the Committee Stage. However, I have one problem. We find the situation that the hon. the Minister, for argument’s sake, has permitted R20 million under column 2 to be applied to finance items in column 1. The matter then comes to this House where it is discussed in great detail and the conclusion is reached that the hon. the Minister was wrong and should not have spent the money. What does one do now? After all, the hon. the Minister cannot pay for it himself. It seems to me that in this case the horse will have bolted and the stable door will have been closed too late. I should like parliamentary control to be exercised in this connection. If we were to do this, the situation could easily arise in which the hon. the Minister would have to pay in a few million rands and I do not know whether the hon. the Minister is in a position to do so. I think the hon. the Minister would have to apply to the hon. member for Yeoville for assistance.

We support the Second Reading of the Bill and we shall discuss it further in the Committee Stage.

Mr. Speaker, it seems to me that the main argument concerns clause 6, and hon. members are proposing that a section at the end of the clause be deleted. With regard to the clause I want to mention that in its report on the 1975-’76 accounts, the Select Committee did away with column 3. They included the column 3 items under column 1. There are also certain items under column 2 which were transferred to column 1 at the time. All we seek to do by means of this process is to perpetuate the flexibility of the measure—as the hon. member for Maitland called it. It goes without saying that if the amounts requiring additional appropriation are substantial, then in any event they will be included in the additional appropriation. In those circumstances it will in any event have to be done with the Minister’s approval. The hon. member for Maitland proposed that the data be submitted to Parliament as soon as possible. I can solve the hon. member’s problem in this connection by telling him that excesses or savings are in any event published by the Auditor-General.

That is a year late.

That may be so, but it is there nevertheless and by rights the Auditor-General is the figure who has to serve as the watchdog in regard to these matters. In other words, the hon. member will in any event have to obtain the details with regard to excesses and savings through the Auditor-General. The column 2 items—as we have heard this afternoon—comprise for the most part ex gratia payments and grants to municipalities.

No, those are only R2 million.

However, I am not finished yet. There are also the applications, which involve fairly substantial sums. In this regard I have in mind for example the Betterment Fund for which an amount of R80 million was voted this year. This was the case last year too. The Betterment Fund is not utilized solely for capital projects. Now, just what is wrong with that? The hon. member for Constantia indicated a moment ago that this was exactly what we envisaged doing this year. If we do not use all the funds in the Betterment Fund this year, then we must use them for deficits which occur under other items in column 1. Is that really so terribly wrong? All we are really doing is expanding on what the Select Committee of 1965-’66 suggested. This will give rise to more flexibility and there will be no need to fear that parliamentary control will be forfeited as a result.

The hon. member for Yeoville raised a few other aspects. The hon. member expressed the fear that—as he put it—Parliament would eventually merely vote a lump sum to the Minister and that he would then be able to spend it as he liked. I think the hon. member exaggerated a little, but it is unnecessary to elaborate on this further. The hon. member referred to clause 11(2) and said that in fact he was very satisfied with the clause. He wanted me to explain why we were satisfied with that clause with which he, too, was satisfied.

Why do you not tell that to your colleague?

We have always done so. The Auditor-General agrees with this and the Select Committee does too. For example, where purchases of rolling stock are made, the debits are brought to account at once, even though the payment is made at a later stage. The hon. member asked whether the fact that the Railways, too, now acts as a borrower on the loan market was of real benefit. The hon. member will agree with me—and I think it is correct to say so—that if there are two or three borrowers or bodies which attempt to seek loans, then in the nature of the matter more loans will be obtained than when there is only one. Furthermore, if everything were to be handled by the Treasury, the physical management thereof would be on a scale which would cause it to be unwieldy and probably unmanageable.

The hon. member went on to refer to clause 19. I am told that the Auditor-General feels that it is not his function to act in these cases and that in fact it is the function of the head of the department. I want to say in all honestly that I do not think that fault can be found with that.

We should do better to discuss the details of the measure further during the Committee Stage.

Mr. Speaker, has the hon. the Minister given attention to the point I raised, to change the form of the budget to a system of budgeting by objectives or a management budget?

That can be looked at. I do not want to give a definite answer at this point. However, what I did say—I said it in my introductory speech—is that as far as the submission of the budget is concerned, it will always be done in consultation with and in collaboration with the Select Committee. The Select Committee will not be ignored and the Minister will not simply decide on his own how the budget is to be submitted to Parliament.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 2:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

The amendment is merely textual. It is interesting to see this new form of wording. I have never seen this form in legislation before, where legislation is worded as a statement of fact. I have always known it as either compulsive, prohibitory or deeming. The hon. the Minister has indicated that he will accept this amendment, which I move simply to bring the legislation into line with standard practice.

Mr. Chairman, as I have already indicated, I have no objection to the amendment.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 4:

Mr. Chairman, the hon. member for Yeoville has indicated, during the debate on the Second Reading, the possibility that there may be advantages in changing to a different type of budget. I believe that there are several types of budgeting systems that might at some future stage be considered by the Railways. It is not only the system of budgeting by objectives that might be considered parallel with the Treasury, but also the system of budgeting on a basis where direct expenditure is separated from overhead or fixed expenditure. If there is to be a change in the budgeting system I do believe that it is absolutely essential that that change be agreed to by the Auditor-General before it is introduced. The auditing is closely connected and affected by the budget system. The Auditor-General has to report on the performance of the Administration in relation to the budget passed by Parliament. In order that he can do his work properly he must be satisfied that the form of the budget system will allow him to do his work satisfactorily. I believe that this is important and this is the reason for the amendment which I now move as follows—

Mr. Chairman, I should like to support the hon. member for Constantia in regard to the amendment he moved and at the same time draw the Minister’s attention to the fact that the proposed amendment reads “after consultation” with the Auditor-General and not “in consultation” with him. I cannot imagine there not in fact being consultation when the whole basis of the budget was being changed. I think this is obvious. I am therefore unable to understand the hon. the Minister’s objection to the amendment. It would take place in any event and it is neat legislation to state in the legislation what does happen and will happen. The hon. the Minister himself says that he will not effect amendments to the form of the budget without discussing them in advance with Audit. I therefore hope that he will reconsider the matter and accept the amendment in order to state here what the position already is.

I go on to move the amendment printed in my name on the Order Paper, as follows—

The Green Book is a vital part of the budget and for that reason I am pleased that the hon. the Minister has intimated that he will accept the amendment.

Mr. Chairman, we support the amendment moved by the hon. member for Constantia, but in doing so I want to indicate that in our view the amendment does in fact not go far enough. We would have preferred it to have been permissible, but I am afraid it cannot, because the principle has been accepted in the Second Reading to have Parliament decide the form of the budget. The reason for that is that Parliament, in order to have the information, should have the final word as to what should be placed before it. I believe there is a safeguard, and the hon. the Minister has given an undertaking that he will consult the Select Committee. That safeguard therefore exists, but fundamentally it is the right of Parliament to decide what information should be placed before it by the Minister.

That is what I said.

At least this is a safeguard, Sir, but unfortunately I will not be allowed to move an amendment to the effect that Parliament should decide, because the principle has already been accepted at the Second Reading.

Mr. Chairman, I fear that I cannot agree with the two previous speakers as far as clause 4 is concerned. Apart from the fact that adequate provision is made in clause 9 for the Minister to perform certain functions after consultation with the Auditor-General, this form of presentation already exists in practice. In fact, we again found this year that after the Select Committee had been consulted in advance, certain decisions were taken which were accepted and which affect these forms of presentation. As far as practice is concerned, I therefore feel that what the hon. gentlemen have come up with in connection with this clause is entirely unrealistic. I am quite satisfied that there is a double assurance that in practice, the so-called requirements to which they have referred are already being complied with.

Why then is it not being stated?

Mr. Chairman, the accounting structure of the Railways is determined by the hon. the Minister in consultation with the Auditor-General. We are dealing here solely with the form of the budget as it appears before the House and that form is determined by the hon. the Minister.

That is correct.

What this really means is that we in this House have every right to make suggestions to the hon. the Minister, oppose his view, etc. In fact, therefore, the form of the budget is controlled here. It therefore seems to me that there is no point of difference whatsoever between the hon. the Minister on the one hand and the hon. member for Yeoville on the other. Therefore, in my humble opinion, this amendment is unnecessary.

Mr. Chairman, I am pleased that the hon. member for Maitland supports me in this matter. I really think that this is going a little too far. One has to take the popular interpretation of the clause into account. Subsection (3) provides that—

Reference has already been made to clause 9 and that clause provides for the account books and accounts on which a decision is taken after consultation with the Auditor-General. The Auditor-General has therefore already been consulted. After all, it goes without saying that the budget submitted has to bear relation to the account books agreed on under clause 9. That pattern has to be followed.

Another aspect of the matter is that if the amendment moved by the hon. member for Constantia were to be taken literally, it would mean that I would have to call in the Auditor-General in person and speak to him. I should have to call in not the office of the Auditor-General, but the Auditor-General himself to discuss the budget. I think that this is quite inappropriate. The Minister must decide on the form of the budget in consultation with the Select Committee. This is a parliamentary matter. The Minister must decide on this in consultation with the Select Committee—I have promised this. If, then, the House is still dissatisfied with it, it can express its opinion here on the form of the budget presented. I am sorry, but I am therefore unable to accept the amendment, as I have indicated here. However, I am prepared to accept the amendment of the hon. member for Durban Point for the reasons I have already indicated.

Amendment moved by Mr. D. D. Baxter negatived (Official Opposition dissenting).

Amendment moved by Mr. W. V. Raw agreed to.

Clause, as amended, agreed to.

Clause 6:

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

The arguments in this regard were fully stated in the Second Reading debate. I therefore do not think it is necessary to repeat what we have said in that debate with regard to our reasons for this amendment. However, I should like to say that in his reply to the Second Reading debate, the hon. the Minister has reinforced our ideas on this amendment. The basic reasoning behind this amendment is that the authority given to the Minister to use savings under column 2 items to finance excess expenditure in column 1 items in schedule 1, will diminish the financial control of Parliament over the finances of the Railways when this measure is passed. When we discussed clause 4 a moment ago the hon. the Minister was very conscious of the need of Parliament to have a say over the finances of the Administration. In terms of clause 6 he is now coming with the opposite thought, viz. to reduce the powers of Parliament to control the finances of the Railways. In fact the following is very nearly what would happen with relation to Schedule 1 of the Appropriation Bill of this year. What we would very nearly be empowering the Minister to do, would be to present us with a globular figure of R2 814 million. We would then virtually be saying to him that that money may be spent as he likes as long as he does not exceed the amounts under any of the items in column 2. That is virtually the power we would be giving the Minister in terms of clause 6. I feel that that is a material diminution of the powers of Parliament to control the finances of the Administration.

Mr. Chairman, during the Second Reading debate the hon. member referred to column 2 items and what they involved and how the Minister could effect savings on them so as to balance his operating account. He also referred, inter alia, to the capital account. With due deference, I do not think this is so easy for the Minister to do. In the first place, the budget is submitted to Parliament, requesting approval to incur certain expenditure.

If this House feels—and there is sufficient proof—that the Minister is providing either for a ridiculous amount for the Betterment Fund, or for another item of expenditure that is far too high, or if it feels that he simply wants to have an amount placed on the budget, this House may reject it. But why should the Minister do this now? If the Minister were to do this and we found ourselves in a position such as the one we do, in fact, find ourselves in this year, the Minister would have to turn to the public and obtain the money from them by way of rates increases in order to balance his budget. I think it would be ludicrous for the Minister to do such a thing.

Now what, in fact, are the column 2 items in schedule 1 of the Revenue Account? The hon. member has rightly said that they constitute miscellaneous expenditure. They fall under the heads of transport, harbours, pipelines and airways and constitute smaller amounts for which provision is made. Amounts are appropriated which, to a large extent, are intended, inter alia, as a grant-in-aid to local authorities, a subsidy to the provinces for the building of roads and matters of a like nature. It is the smaller amounts that are included in the column 2 items. Moreover, a large amount of R80 million is being provided for the Betterment Fund this year. Therefore, when one is dealing with one’s capital appropriation, which one has before one and which in this case amounts to R807 million, and one appropriates R47 million from the levy of R80 million, what I want to know is just where is the opportunity to play around with that money. The other point is that after all, the money paid into the Sinking Fund cannot be used for anything other than the Reserve Account because the constitution stipulates what is to be done with those funds. In that flexibility to which reference was made, another large amount is being made available in this budget. I am referring to an amount of R52 million out of R132 million. I am now referring specifically to the revenue services because only the column 2 items in the Revenue Account are at issue, and not column 2 items in the estimates of expenditure on capital works. That amount, namely column 2 items in schedule 2, is minimal because it concerns the elimination of level crossings. A column 2 amount may not be used for any purpose other than that for which it was appropriated. Consequently, I really cannot agree with the hon. members that the Minister is now being given wide and unlimited powers. What the legislation is in fact doing, is establishing a little more flexibility, and to a certain extent, this eliminates administrative control. However, the appropriation is first submitted to Parliament, which scrutinizes every item of expenditure under every head. We devote eight hours to this in the Second Reading, eight hours in the Committee Stage and approximately another 1½ hours in the Third Reading. Surely every hon. member had full opportunity during that discussion to criticize the appropriation submitted to us? That expenditure must be covered by the Revenue Account In the times we are living in, there ought to be no objection on the part of the Opposition to the acceptance of this motion, as contained in the Bill.

Mr. Chairman, surely, the object of a budget is to present to people to whom it is presented as accurate a forecast as one can possibly give under the various headings under which one presents one’s budget. I maintain that this provision of being allowed to use column 2 savings in the manner in which it is envisaged they would be used, is allowing the Minister to get away from the concept of budgeting as accurately as possible. I illustrate the fact that the main column 2 items that appear on the Appropriation Account are the contributions to the Betterment Fund which this year amounts to R80 million, and the contribution to the Sinking Fund, the Reserve Fund, which is a free fund, and is R52 million. The purpose of those funds is to finance capital and betterment works. However, there are other sources of funds from which money can come to finance improvements on capital works. It may well happen that they are financed from other sources, such as Loan Funds, and that a big saving is then shown on the Betterment Fund. This Fund is then not drawn on and a saving can be effected in it. This happened this very year when there was a saving of R25 million on the Betterment Fund. We are not talking about small amounts that become available for use under column 1 items. I maintain and adhere to my view that Parliament requires accurate budgeting; as accurate as is possible. If there are going to be major diversions from the budget—and major diversions may occur if column 2 items are going to be used on column 1 expenditures—they should be subject to parliamentary control. That is the gravamen of my argument.

Mr. Chairman, as the hon. member for Constantia said right at the beginning, there is not much more to be said on the subject. We have already dwelt on the various items in column 2 of schedule 1. Most of the amounts are fixed amounts and there will be no savings on them. But here and there it is in fact possible for a saving to be effected on various items. If we look at the other items the hon. member mentioned, the Betterment and Sinking Funds, the hon. member will agree that the Sinking Fund is there specifically for the purposes of capital expenditure. The source of our funds that are spent for capital purposes are taken into account and are in fact stated. The result is that the only thing under the head that can be manipulated a little—if we want to put it like that—over and above the miscellaneous items, is the Betterment Fund. I really cannot see so much harm in that. After all, one budgets as correctly as possible. The hon. member’s only objection is that if the Railways now acquires this right, it could perhaps remove its motivation to budget as correctly as possible. This is a theoretical argument, however, and must be weighed against the greater flexibility, which also entails substantial benefits, in the budget. Since the savings and overspending are still reported by the Auditor-General and the hon. members take cognizance of them and receive all the information in that regard in any event, I feel that the Committee may as well grant me that concession.

Mr. Chairman, I do not intend to carry the argument further other than to say that the Select Committee has been very generous in its relaxation of limits to give the Administration flexibility in respect of all sorts of things. We have increased limits from R20 000 to R50 000, from R1 000 to R5 000, etc. I do not know of any occasion where the Select Committee did not agree or co-operate where flexibility was necessary. However, there is a difference between flexibility and no financial control … [Interjections.] … then a weakening of financial control by Parliament…

That sounds better.

Right. I accept that there is still financial control, but it will weaken financial control, and we stand by our amendment.

Mr. Chairman, I have set out the reasons why we support the amendment of the hon. member for Constantia in the Second Reading. I would like to draw your attention to the fact that an identical debate took place on 5 June 1975 on the identical point. If hon. members care to look at the Hansard columns, they will find it ranged over a wide period, finally ending with the Minister’s reply in column 7601. There appears to be a difference between the Opposition and the Government on this issue. The Opposition regards themselves as being the guardians of financial control and attach importance to the fact that one discharges one’s responsibility as member of Parliament by having the greatest control over expenditure, whereas the Government’s attitude is that it must have the greatest ability to spend once the budget has been passed. In passing the hon. the Minister referred to what I had said, that eventually you would still have a globular sum. Sir, if you look at what has happened in Parliaments in respect of this matter, you will notice that we are not far away from a globular sum. In fact, this is what we are doing now, namely allowing the Administration to do what they like in respect of items in column 1 and virtually allowing them to do almost what they want in respect of items in column 2. As the hon. the Minister correctly pointed out, column 3 was abolished some years ago. Eventually there will be one column and the Minister will have the power to spend the money any way he likes. That is the forecast which I make, and this moving away from control is something that we cannot support.

Mr. Speaker, I have indicated that I am very sympathetic towards the hon. the Minister’s request for greater flexibility. I am prepared to allow it to be granted him, but I set just one condition, and that is that such utilization of savings in column 2 be reported to the House of Assembly annually. The hon. the Minister answered me by saying that it is reported to the Attorney-General in June in any case. My problem, however, is that this is done a year too late. By that stage, the matter has lost its impetus. If Parliament is really to execute its function, it ought to control this matter on an annual basis. Consequently, I feel that unless the hon. the Minister can help me, I am regretfully unable to support him.

Mr. Chairman, I move the amendment standing in my name on the Order Paper, as follows—

The State President’s warrant was indicated by a special asterisk as an identification in the estimates. The Minister will now have the right to replace the State President’s warrant and I believe that it should be equally so identified in the actual estimates. I do not agree with the hon. member for Yeoville that this is a major change because, knowing the hon. the Minister’s colleagues in the Cabinet, I do not think they really study every application for a President’s warrant. If they did, I do not think they would be able to follow it and therefore it does not make much difference whether the hon. the Minister authorizes it or whether the hon. the Minister and his colleagues authorize it. We do not object to the change, but we do want it identified.

Mr. Chairman, I should like to express our opposition to the clause. With great respect to the hon. member for Durban Point, I do not think he can assume that the other members of the Cabinet do not do their job.

I am sure—I do.

The hon. member is assuming it, whereas I choose to believe that when the executive meet, they actually do their job. I should imagine that if the public believed that when the executive met, they did not apply their minds to what was before them, they would show grave concern in respect of the affairs of State. In my view, the first change, in terms of which the power to issue warrants is abolished, means that the hon. the Minister is being given a blank cheque, not merely for R1 million, as it was before, but for 1% of the budget, which is a very substantial sum of money. There is a very substantial difference between the issue of a warrant where the Cabinet as a whole took the full responsibility for expenditure which was never debated in this House, which then got the approval of the State President, and the Minister himself making the decision. In those circumstances we regard this as a fundamental departure and, therefore, as far as we are concerned, we cannot support this clause.

Mr. Chairman, as I have already indicated, I shall accept the amendment of the hon. member for Durban Point. As regards the remarks the hon. member for Yeoville made, there could, theoretically, be some merit in what he said. In practice, however, I do not believe there is any difference whatsoever between them. Moreover, the principle has already been accepted in the Exchequer and Audit Act and this will simplify the whole procedure. I therefore want to insist that we continue with the clause.

Amendment agreed to.

Clause, as amended, put and the Committee divided:

As fewer than 15 members (viz. Messrs. D. J. Dalling, R. M. de Villiers, R. J. Lorimer, S. A. Pitman, H. H. Schwarz, Mrs. H. Suzman and Messrs. H. E. J. van Rensburg and G. H. Waddell) appeared on one side,

Clause, as amended, declared agreed to.

Clause 18:

Mr. Chairman, I move the amendment as printed in my name on the Order Paper, as follows—

1. (a) in the case of paragraph (a), (b) or (c) of that subsection, for sanction; or
2. (b) in the case of paragraph (d) of that subsection, for validation.

Mr. Chairman, I move the amendment printed in my name on the Order Paper, as follows—

This is the clause that deals with unauthorized expenditure by the Administration. The clause makes provision that in the event of there being unauthorized expenditure, that unauthorized expenditure must be submitted to Parliament for sanction by law or, if the expenditure has been inconsistent with the provision of any law, for validation by law. This clause makes no provision whatsoever for the eventuality of Parliament not sanctioning or not validating that unauthorized expenditure. The Exchequer and Audit Act does make such a provision, in that the official who was responsible for the unauthorized expenditure can be charged under certain circumstances with that unauthorized expenditure. I believe that the clause in this Bill, as it at present stands, leaves the whole situation in the air as to what would happen if Parliament were not to sanction or validate unauthorized expenditure. I believe that the law is incomplete without some provision as to what should take place in that eventuality. The subsection that we have drafted in our amendment is rather less harsh than the clause contained in the Exchequer and Audit Act. It was deliberately drafted to be less harsh, but we do believe it is necessary to have some provision of this nature.

Mr. Chairman, I know that there is a similar provision in the other Act, but I share the Minister’s misgivings about this amendment. I indicated that there might be another way around this, and I would like the Minister to consider the possibility of the whole question of the surcharge being dealt with in consultation with the Auditor-General. What I should therefore like to move instead is: in clause 19 on page 18, in line 14, after the word “shall” to insert “in consultation with the Auditor-General”. In other words, the Auditor-General will then be aware that this matter is pending and if necessary the appropriate steps can then be taken by him. My difficulty with the hon. member’s amendment is that it actually imposes an obligation upon a departmental head which is, for example, not imposed on the Minister. If the Minister does not do certain things to recover money, nobody can tell him that he has to pay it in himself. What, for example, will be the situation if we say that he has taken steps to recover it, but if somebody then decides—I do not know who is going to decide this— that these steps were not reasonable? What are reasonable steps to recover the amount concerned from the beneficiary or from the person concerned? He may, for example, come to the conclusion that the man is insolvent and that it is therefore not worthwhile taking steps. Somebody may then afterwards say that he should have gone ahead with the matter. I cannot believe that the staff will welcome this kind of provision which imposes such a responsibility upon a man. Normally, if a man does not do his job, there are standing rules which can be enforced. Furthermore, disciplinary steps can be taken against him. I have very serious doubts whether it is desirable to put this kind of provision in an Act. Whereas I believe that officials must do their job and that if they do not do their job, they must in certain circumstances be penalized, I believe that we cannot support this amendment. Even if the hon. the Minister accepts it, we will vote against it. I will move instead the amendment which I have read to the Committee.

You are dealing with the wrong clause now.

No, I am not; it is clause 19.

We are on clause 18 now.

Well, then I shall move it when we come to clause 19. However, I still oppose this amendment.

Mr. Chairman, 1 only want to emphasize one aspect. The hon. member for Yeoville asks, “Who will decide what is reasonable?” It is the Administration, and that is a defined entity. I cannot believe that the Administration is going to be unreasonable towards the heads of its own departments. However, if this is not provided for, this legislation will contain an incomplete provision. The Act determines what shall be done to rectify unauthorized expenditure, but will not provide for what happens if that is not authorized. Therefore this has the effect that, although unauthorized expenditure will be reported to Parliament, Parliament cannot vote against it because that would create a vacuum. Unless provision is made for an alternative to validation, Parliament’s right to decide and Parliament’s option in this regard is removed. If Parliament does not validate it, what happens? There will simply be a vacuum. So in effect Parliament is being bound.

Parliament must be given some other choice of action. The other action would be to say that here was a case where action should have been taken and that we trusted the Administration to determine whether it was reasonable action or not. There have been cases—only last year there was one—as to whether an account which had legally become prescribed should in fact have been repudiated on the grounds of prescription when in fact it was a morally payable account. In that case the head of the department took the decision and the Select Committee condoned it and Parliament approved it. If that had not happened, if there had been a dispute over it, what would then have happened? I think that a clause of this nature which calls for reasonable steps and which leaves the decision in the hands of the Administration is not imposing an unfair burden. I think it is a much fairer burden than if the Auditor-General should be involved because the Auditor-General is a person whose duty it is to protect the finances. He would take a purely financial, legalistic view according with the rules and regulations. The Administration, in terms of this amendment, will look at it from a reasonable point of view and therefore I believe that the head of the department is the man to take the decision, as is provided for in the next clause, and that the onus should not be on the Auditor-General but on the Administration which will be reasonable towards its own subordinates.

Mr. Chairman, I should be much obliged if hon. members would scrutinize this clause. We must decide for ourselves whether it is right and fair for the clause, as moved by the hon. member for Constantia, to be included. As I have said before, my problem is that a similar provision already appears in the Exchequer and Audit Act, 1975. I agree with the hon. member for Constantia that the section appearing in the Act is much more strict than this clause. Section 33(4) of the Exchequer and Audit Act provides—

In other words, it is not the case that he has been negligent. If he is unwilling to recover the amount concerned, it must be recovered from him; but what is more, if he is unable to recover it, he still has to pay. In this case, the accounting officer is the head of the department. I think this provision in the Exchequer and Audit Act, 1975, goes extremely far. Consequently, I appreciate the fact that the hon. member’s amendment states it far more leniently, as follows—

In other words, the hon. member’s amendment provides that the money will be recovered from the official only in the event of his not having taken reasonable steps to recover the money. My problem is that in the case of the Railways, as opposed to Government departments, very large amounts could be involved, too much by far for that official to pay. Now the Administration is faced with a fait accompli to recover from him an amount he cannot pay.

The hon. member for Durban Point suggests that it should be within the discretion of the Administration to decide whether or not he did in fact take reasonable steps. The hon. member must also accept, however, that the discretion of the Administration is not just to be exercised willy-nilly. It is indeed the Administration that has to decide whether the necessary steps were in fact taken or not. If the Administration comes to the conclusion that the necessary steps were not taken, then it has no other choice but to recover the money from the head of department. It is for that reason that I have doubts about this. I have already said that a similar section already appears in the Exchequer Act of 1975 and that it is stated in much stronger terms than the one the hon. member for Constantia has suggested. Of course it is true that two wrongs do not make a right, but bearing that in mind it is difficult for me to accept this provision. We have excluded it from the legislation deliberately for the considerations I submitted to the Committee.

Mr. Chairman, there is one point the hon. the Minister has not replied to. Let us take it that the amendment the hon. member for Constantia moved, is not before the Committee. As the clause then reads, and the specific expenditure referred to is not sanctioned or made law by parliament, what is the position then? All that is happening now, is that a vacuum exists in the present clause. Either Parliament is faced with a fait accompli or there is a possibility that a vacuum does in fact exist. Now I ask the question: If Parliament says “no” and therefore does not want to approve it, what will happen then? This is the point hon. members must reply to.

Mr. Chairman, I am not sure now whether the hon. the Minister is going to accept the amendment or not. I feel he does not really want to, but that he is nevertheless going to.

That is more or less the position.

I would like to appeal to the hon. the Minister not to accept this amendment, but to give further consideration to this matter before the Bill goes to the Other Place and, after consultation with the appropriate people in the Administration, perhaps have another approach to it. I should like to put certain considerations to him. In the present instance it is not only the head of the department who is aware that there was unauthorized expenditure, the provision lays down that these facts must be reported to the Auditor-General. Therefore, if action has to be taken, it is not only the head of the department who can take the action; it is the Administration that can take the action for recovering, because if legal proceedings have to be taken, it is not the head of a department who takes such legal proceedings. He merely initiates the steps to see that legal proceedings are indeed taken. So other people could take these steps as well. It is not merely the head of a department who can do so.

Another matter which was referred to is unauthorized expenditure. It is not unauthorized expenditure which the head of the department himself incurred; it is merely that, if it is unauthorized expenditure, the head of that department is responsible. That is quite a different situation. Therefore a responsibility is being placed on the head of a department to take what are regarded to be reasonable steps, which is a subjective test. Admittedly, the Administration can apply that subjective test, but eventually somebody will have to decide whether these steps were reasonable or not. I think that in the present circumstances there are other remedies available. I, therefore, want to appeal to the hon. the Minister not to accept this amendment at this stage. We will certainly continue to oppose it.

Mr. Chairman, now I am really in hot water. [Interjections.] I feel inclined to agree with the hon. member for Yeoville because I, too, have very grave doubts about this. As regards the amendment the hon. member moved, I should like to request that we … Incidentally, it has come to my attention that the Auditor-General is also of the opinion that this is simply a theoretical provision. Under those circumstances, we feel that we should rather not include it. However, I should like to inform the hon. member for Constantia that I undertake to give thought to this matter. I shall look at it in depth and decide whether or not it is desirable for us to do this. If we then feel it is necessary in the light of all the circumstances, I should prefer to move it in the Other Place. In this way, it could in fact be included, if necessary.

Mr. Chairman, in the light of the assurance which the hon. the Minister has just given me, I will withdraw my amendment.

Amendment moved by Mr. D. D. Baxter, with leave, withdrawn.

Amendment moved by the Minister of Transport agreed to.

Clause, as amended, agreed to.

Clause 19:

Mr. Chairman, I now move the amendment which I somewhat too precipitously wanted to move earlier—

Mr. Chairman, I have already motivated this amendment and I believe that it is necessary that the head of the department should consult and relieve himself of the sole responsibility.

Mr. Chairman, in the nature of the matter, I had no knowledge of this amendment. At the moment, however, I feel that this is an administrative matter, a matter that belongs in the department concerned in the Administration. I feel that it should be dealt with there, without the interference of the Auditor-General. In the light of the limited time I have had at my disposal, I am unfortunately not prepared to accept the amendment.

Mr. Chairman, I am afraid we of the official Opposition cannot support this amendment, although not for the reasons given by the hon. the Minister. If this amendment were accepted, one would get a subhead of a department consulting directly with the Auditor-General. It would be illogical that a subhead, a comparatively junior official in the Administration, should have to go directly, and over the head of the Financial Manager, to the Auditor-General. Consequently, we cannot support this amendment.

Amendment negatived (Progressive Reform Party dissenting).

Clause agreed to.

Clause 24:

Mr. Chairman, I note that the White Paper in regard to clause 24 refers to 5%, while the clause itself provides for 10% variation. As I understand it, the figure in the Bill is correct. However, in the fourth line of the second paragraph on page 9 of the English and Afrikaans versions of the White Paper it refers to a maximum of 5%. I wonder if the hon. the Minister can just clarify the difference and confirm that he accepts what is stated in the Bill.

Mr. Chairman, we must accept the figure in the Bill. It is apparently a mistake that crept in on the White Paper.

An effective Opposition!

Clause agreed to.

House Resumed:

Bill reported with amendments.

Third Reading

Mr. Speaker, I move, subject to Standing Order No. 56—

Allow me, Mr. Speaker, to express my appreciation to hon. members for the support I have been given in view of the fact that the legislation must be promulgated before the end of the month.

Mr. Speaker, in view of the hon. the Minister’s kind words, I shall not hold up the proceedings by making any speech at all.

Question agreed to.

Bill read a Third Time.

Mr. Speaker, we come now to the Third Reading of this Bill, a Bill to amend the Inquests Act of 1959. An inquest, as I am sure the House realizes, is a judicial inquiry into the death of a person where it cannot be said that death was a result of natural causes or, more often, where there is suspicion that there was foul play of some kind associated with the death. Consequently we are dealing with matters of importance to the well-being of any community. The amendment embodied in clause 1 of the Bill—it is, in effect, a one-clause Bill—is to limit the scope of those cases of inquests which are to be subject to review by the Attorney-General. As the law stands at the present time, all cases of inquest are subject to the review of the Attorney-General. As I have indicated, a death is the subject of an inquest only where there is a question-mark over the death of the person concerned. At the present time, where an inquest has been held—and I say again it is in the nature of things held only because there was a query about the death—and the ultimate result of the judicial inquiry is a finding that death is due to natural causes or that it was, for example, an accident, the case goes up for review to the Attorney-General concerned. We on this side of the House take the view that that is a desirable state of affairs because it follows the long-standing practice of our judicial procedure where decisions in serious cases held in inferior courts, the courts of the magistrates, are subject to automatic review by a superior body. That has been found to be necessary partly because judicial officers are human and human beings are fallible and can make mistakes, and partly because in the nature of things the procedure in an inferior court is not as deliberate as in a superior court. Of course, the same factors are present in judicial inquiries associated with the death of a person in inferior courts. One must accordingly seriously consider any curtailment of judicial surveillance of the findings in inquest proceedings as a result of a death.

At an earlier stage I have already indicated, by reference to the replies to questions put to the hon. the Minister in respect of a particular category of inquests, namely those which have been held as a result of the death of persons whilst in custody, that in the ordinary case of inquests there is included a particular category of cases, namely those I have just referred to, which are of particular concern to the public. I say that simply because when a person is in custody, he then is, in the nature of things, normally in a safer situation than, for example, a person who is liable to be knocked down by a car in the street. Consequently, if a death occurs in those circumstances where, firstly, the person is in the safekeeping of the authorities and, secondly, where medical attention is readily available in a prison hospital or from the district surgeon when the person is ill, a death in those circumstances is subject to particular scrutiny. In all the cases of which I am aware when such a death has occurred, very properly an inquest has been held. Although the results of those inquests are in many instances not yet available to us—and I am not permitted to press that point to any great extent; it will have to be done on another occasion, unless the hon. the Minister choses to reply to it now—it at least shows that the authorities regard them as special cases because an inquest is, as far as I know, held in every case.

I believe I have said enough to indicate that an inquest is a matter of special inquiry and concern. Consequently, I think it is wrong that there should be a curtailment, such as is contained in clause 1 of this Bill, of the surveillance of the Attorney-General. As I and others have said on an earlier occasion, it is not possible, for procedural reasons, to bring in a suitable amendment to this clause. Accordingly we find it necessary to oppose this measure at Third Reading. As I have said, it is largely a one-clause Bill. The entire gravamen of the matter is contained in clause 1 and for the reasons I have given, we shall oppose it at Third Reading.

Mr. Speaker, after the fairly long debate which we have had, ranging through all three stages of this Bill—a long debate which has encompassed a very short Bill—I think it is a matter of regret that the hon. the Minister has not seen fit—despite the very well-reasoned arguments put by the Opposition on this side of the House—to withdraw the Bill, particularly at this time. We in these benches have stated quite clearly that we see no dark motives in the Bill itself, but that we do think that the timing of the Bill, as also the very concept of the Bill, is unwise, particularly at this time when South Africa’s internal situation, the question of detainees, the question of the conditions of internment and the very legal system of South Africa is very often the subject of hostile world scrutiny. We believe that the Bill can only do damage to foreign confidence in the South African judicial procedure. We also believe that its provisions could well weaken confidence in our law, even within the country. Finally, following on the twice-spoken arguments of the hon. member for Umhlatuzana, we believe that the tried and tested procedures involving checks and balances which would eliminate and which have in the past eliminated errors of judicial decision, errors of law and of judgment, innocently made, should not be done away with to save typing man hours. That was the main argument advanced in support of the Bill. Accordingly, we shall once again vote against the Third Reading of the Bill.

Mr. Speaker, we in these benches oppose the Third Reading of the Bill for the reasons that we advanced during the Second Reading and during the Committee Stage. I do not think it is fair on the House that I should rehash the arguments advanced during the Second Reading or the Committee Stage. The hon. the Minister is well aware of the viewpoint that we expressed, and we ask the hon. the Minister to reflect seriously on the viewpoint that we in these benches express. The hon. the Minister could, if he is so inclined and if he reflects on our viewpoint, introduce amending legislation during this very session. For the reasons we have set out earlier during the debate, we oppose the Third Reading of the Bill.

Mr. Speaker, I just want to thank all the hon. members who have participated in the debate. They have submitted some interesting standpoints for my consideration. I think I have tried to reply to all the hon. members’ arguments to the best of my ability and for that reason, I do not want to say much now. I do not think that the cases of people dying whilst in the custody of the police should receive special treatment. If a person has not died as a result of some unnatural cause, a death certificate is provided by a medical practitioner. I do not think there is anyone in the House who would doubt or question the ability of our medical people to determine whether someone has died as a result of unnatural or natural causes. The present legislation provides that if anyone dies from an unnatural cause, one of two things automatically follows. This could be either a charge by the Attorney-General or an inquest. We have debated the matter of the inquest and have indicated that there is normally a very thorough investigation. I cannot understand the analogy drawn by the hon. member for Umhlatuzana in respect of the automatic review. According to the present provision, a magistrate may sentence someone to imprisonment of three months or a fine of R100 and that sentence is automatically reviewed by the Supreme Court. I cannot see the analogy in this regard at all. The hon. member has not convinced me that it is an analogous case. In the first place, the automatic review process is a review of the magistrate’s ruling by the Supreme Court. It is really an automatic appeal and entails checking the magistrate’s reasoning. The reason for this is that people are in prison. I cannot see how this could be analogous to the death of a person where either a death certificate is issued or the matter is referred to an inquest. Consequently, I do not think there is any substance to the analogy the hon. member tried to draw. I want to assure hon. members once again that the Attorneys-General will give instructions to prosecutors carrying out inquests that if anything comes to light in the inquest that leads him to believe that the Attorney-General ought to give it attention, he is to request the record of the inquest at once. Under this Bill, this is quite possible.

I want to give the assurance that we will have every case of unnatural death investigated very thoroughly and I do not think hon. members need have any fear whatsoever that justice will not be done. As far as the hon. member for Sandton’s reference to the outside world is concerned, I, like all hon. members, am very sensitive to foreign opinion. I want to state very clearly in the House, however, that I cannot withhold legislation simply because foreign countries might have the wrong idea about what is going on in South Africa. We do our best to inform them adequately but it is our duty to proceed with legislation as we see fit as well as to proceed with such amendments of law as we deem necessary to govern our country. I want to express the hope that the hon. member for Sandton will contribute towards putting the country’s image in the right perspective abroad. This is all we ask. We are not trying to shield ourselves; all we ask is that foreign countries should at least have the correct facts.

More than that I cannot say in regard to the Bill, except that I am pleased that it has been passed because it is going to save my department a tremendous amount of labour, and the country as a whole, a tremendous amount of money.

Question agreed to (Official Opposition, Progressive Reform Party and Independent United Party dissenting).

Bill read a Third Time.

Mr. Chairman, this clause provides in essence that written statements by any person other than the accused shall be evidence to the same extent as oral evidence is. I am going to deal with certain apparent safeguards, but let me say right away that this clause is clearly and unambiguously in conflict with the findings of the Botha Commission. I do not want to read the findings of the Botha Commission at length. The findings I refer to are contained in paragraph 10.13 and 10.14 of the report. This clause is a radical departure from the traditional form of criminal trial requiring witnesses to testify and to be subjected to cross-examination. At worst, it enables the State to serve upon the accused the police docket containing the statement to obviate the necessity of the trial. In terms of this clause, only the accused will be obliged to give evidence. The door is therefore opened to trial by docket. Quite apart from the departure from the principle, the clause in addition prescribes the value that must be attached to that evidence. It prescribes peremptorily the value to be attached to that evidence in that it provides that it must be given the same effect as oral evidence. What is the need …

Order! Before the hon. member proceeds, I just want to say that I regard this clause as containing one of the principles of the Bill. Therefore I shall allow one member of each Opposition party to reiterate his party’s opposition to the clause, in accordance with the practice of the House. The hon. member may proceed.

What is the need for this clause if it is intended to deal with expert testimony? There is already a clause which deals with that, namely clause 212. If it is intended to deal with documentary evidence, there are two clauses, namely clauses 221 and 222, which deal with that aspect. The objections to this clause are, first of all, the provision that written statements shall carry the same weight as oral evidence. The objection is that he cannot be cross-examined and that one cannot assess the demeanour of a statement as one can assess the demeanour of a witness who is cross-examined. Secondly, there is the difficulty that one would have to reject contradictory oral evidence, unless it was corroborated, because deficiencies in the written evidence could not be shown. Thirdly, where the written statement is in conflict with the accused’s evidence, the rules which presently apply to single witness evidence, could not be applied. Up to now the situation has always been that all witnesses, including the accused, have been treated on an equal footing. If that principle is to be retained, the accused should also be allowed to put in a written statement. The fifth objection is that the State, and also the defence, knowing that any witness would likely break down under cross-examination, could avoid cross-examination by this means. The sixth objection is that the language of affidavits which would be put into courts, is always the language of the drafter of the affidavit and not of the deponent himself. If one then looks at the written statement the trial is based on the wording of the drafter. This is one of the points that the Botha Commission makes.

It is true that the clause provides that the accused may object in advance up to two days before the trial when the written statement is served on him. But that is not a proper protection, as there is no provision that the accused should be told that he is entitled to object. In practice what will happen is that an unrepresented or unlettered accused will simply be given a statement and be told that that is the statement that will be used at the trial. He will probably not know that he is entitled to object to that. The ordinary accused will simply accept that document and prepare his defence accordingly, but he will not know that he can object to it, as there is nothing in the clause that says that. There is no requirement in the clause that stipulates that he should be told that he can object.

An important point that I wish to make is that this clause is not “proof of statements by consent” as the rubric has it. If it were in fact admission of “written statements by consent”, we would support the clause. It would be a good thing to have, as happens in practice all the time, the possibility to say to the State that they should put it in by consent. That would be entirely acceptable. The trouble is that although the rubric says “by consent” it is in fact proof by default. As the hon. the Minister will know, there is a very great difference between a judgment by default and a judgment by consent. There is indeed a very great difference. In a case of proof by default, one has to prove a proper service in civil matters, whereby the matter is explained to the person on whom it is served. Here it will be admitted by default, without the person who is defaulting necessarily knowing that he has the right to object. There is another apparent safeguard that I must deal with, and that is in subsection (4)(b), where it says that notwithstanding the aforegoing “the court may, of its own motion, and shall, upon the application of any party to the proceedings in question, cause such person to be subpoenaed …” The trouble with that is that again the accused does not know, if he is unrepresented during a trial—and in most of our trials the accused are unrepresented—when the statement is put in, and bearing in mind that it was served on him some time before, that he is entitled to say that he wants oral evidence and wishes to cross-examine the witness. If at that stage he does ask for the witness to be called, to cross-examine him, the matter will almost certainly have to be postponed, which will be prejudicial to the accused in any event. In most cases in magistrates’ courts, the matters can otherwise be dealt with right away; so it will be a waste of time for the court. There is the third difficulty that, what may well happen and will often happen in magistrates’ courts is that the court may have to invoke this provision at a very late stage of the trial. The accused may come up with evidence on his own behalf and the court may then find that that evidence is in conflict with the written statement, so that the witness must then be called. The court may then decide to call the witness, but the position will be that the case for the defence has already started. The witness will then be called, but the problem is that the State must have the right of rebuttal of that evidence.

I just want to say that I very sincerely believe that this clause will create a terrible mess in our criminal procedure. It will not save time, but will create a mess which will lead to more time being wasted. For those reasons we are opposed to this clause. We do not think it will in fact save time at all.

I must confess that I am also puzzled by this clause. The hon. member who has just spoken has, correctly, indicated that so far as expert witnesses and documentary evidence are concerned, it is dealt with in the two previous clauses of which we have already approved.

This, Sir, appears to relate to the general evidence being given at a trial. It is correct that where an accused person is not represented, there could be grave prejudice to him where, for example, he is detained in a gaol prior to his trial and proofs of statements are served on him with a formal notice that this will be received in evidence and be taken as acceptable evidence. Presumably there will be a notice to the effect that this will be done unless he objects to their production at least two days before the proceedings start. He probably does not know when he is to appear in court in any event. He may well be illiterate and it may be a very perfunctory sort of explanation that is given to him by those who serve the notice on him. Then, when it comes to the trial, it will be too late in terms of paragraph (c) for him to object to the evidence being received, so that that will stand. I believe that the other criticisms of the hon. member for Durban North are also valid.

Were this procedure to be used in a case between lawyers, that is today in negotiations between the prosecutor and a lawyer acting for the accused, it could well be acceptable. As I say, were this procedure to be applicable only to those cases where the accused is legally represented and it is a question of a discussion between lawyers, one might well find that the lawyer representing the accused would accept a lot of the statements that were handed to him but would not accept others. If it is limited to the case where the accused is legally represented, I can see some merit in the proposal. Accordingly, I move as an amendment—

where the accused is legally represented The provision will then read—

If that amendment is acceptable to the hon. the Minister, I believe that a lot of the danger involved will be taken out and that a lot of the criticism which we have against the clause as it stands would be vitiated. It would also enable some commendable shortcuts, as provided for in the clause, to be used in the appropriate cases. However, if my amendment is not accepted by the hon. the Minister, I am afraid we cannot support the clause as it stands, because, for the reasons given by the hon. member for Durban North—I do not wish to repeat them—there could be substantial prejudice to the average run of illiterate or unsophisticated accused persons who do not know legal proceedings, who would not know the import of this clause and who would certainly not appreciate the effect the reception of statements of this kind as evidence would have on the running of their cases. Therefore I hope the hon. the Minister will find it possible to accept my amendment.

Mr. Chairman, in the first place I want to tell the hon. member for Umhlatuzana that I unfortunately cannot accept his amendment. I think his amendment has merit in this sense that, since there is legal representation in these cases, it is always easier to present this kind of document. When people are not represented you can imagine for yourself, Sir, that it may happen that the witness is ill for a few months. In the meantime the accused then has to sit in prison and wait while the court case keeps on being postponed, while we are now providing that the evidence may be used by way of a document in the trial with the consent of the person concerned. I am in fact prepared to consider the possibility of effecting an amendment in the Other Place aimed at making certain that the person does in fact realize that he may object. At present it is provided that when the document is served on him, he may object, but it does not seem unfair to me to provide that on the day when it is served on a person, he shall be informed that the document will only be used if he has no objection to it. In that case it will, in other words, virtually take place by agreement. Then he can study the document properly and decide for himself whether he is prepared to recognize that evidence. This will serve to make court cases much shorter, which will be to the benefit of the accused.

I want to draw the attention of hon. members to the fact that this clause appeared in the Bill which was submitted to Appeal Judge Botha, and that he agreed to it. It is also based on English law of evidence, and specifically on section 9 of the Criminal Justice Act, 1967. I have been informed that that provision works quite well in England.

Is it not by consent?

I think that it is precisely the same as the provision which we have before us at the moment. As I said however, I am not disinclined to order that a person shall be informed that this will take place by way of agreement between the State and the accused. While the trial is in progress it must of course be by agreement. If a person wishes to use a document while the trial is in progress, consent has to be obtained in this regard. Consequently I do not think that it is unfair that the necessary consent should also be obtained in respect of the first document, before it is admitted. I think that this will serve to make trials shorter. As far as I know, it makes the trials in England shorter, and it works very well there. I think it ought to work quite well in South Africa too. Apart from the amendment which, as I have indicated, I shall consider moving in the Other Place, I am under the circumstances not inclined to accept the amendment of the hon. member for Umhlatuzana.

Mr. Chairman, I am sorry the hon. the Minister is adopting such an inflexible attitude on a matter which is now being introduced into our law for the first time. It is not as if this is a re-enactment of a provision which we have had in the past; this is something which is totally new. The real gravamen of our objection lies in paragraph (e) of subsection (2), which provides that if a party does not object under paragraph (c), the statement shall be admissible. We have further objections to subsection (4), with which I shall deal in a moment. However, coming back to paragraph (e), if the hon. the Minister were to remove the words “if a party does not object under paragraph (c) or’ ’ and substitute that it would be admissible as evidence “if the parties agree before or during the proceedings”, it would go a long way toward meeting our objections. Our objection here—and that is the reason for the amendment moved by the hon. member for Umhlatuzana—is that there will be accused who will not be aware of their rights. It is inexcusable for any attorney or advocate to be unaware of the right of the accused, but it is not always every accused who is aware of his rights. Similarly, when we come to subsection (4), we see that it provides that if at any time during the trial the accused finds that there is documentary evidence which is being used against him, he may then demand that his opponent be brought before the court in order that he may cross-examine him. But how many accused are aware of these conditions? If the hon. the Minister is not prepared to accept the amendment moved by the hon. member for Umhlatuzana, will he consider such an amendment or two amendments?: Firstly, to remove the words in paragraph (e), in line 15, “if a party does not object under paragraph (c) or” and, secondly, an amendment in subsection (4) which will provide that the accused will be told by the presiding officer that he has the right at any time to demand that the deponent in this case shall be produced before the court in order that he may cross-examine him.

Mr. Chairman, I was very pleased to see the hon. the Minister’s very reasonable approach and his assurances with regard to what he will do before taking this legislation to the Other Place. May I suggest to him that the amendment moved by the hon. member for Pietermaritzburg South is a good one. Not only is it a good one in practice, but it will, then also mean that the clause will accord with the marginal note. As the wording stands at present the marginal note does not accord with the wording of the clause. If the hon. the Minister were to accept such an amendment the wording would accord. In addition, it would in fact created a legislative situation which we do adopt in practice. Where cases are defended by lawyers or by somebody responsible that is what they do. It is good practice.

Amendment negatived (Official Opposition and Progressive Reform Party dissenting).

Clause agreed to (Official Opposition and Progressive Reform Party dissenting).

Clause 217:

Mr. Chairman, there are four amendments standing in my name on the Order Paper, which I now move—

1. (1) On page 152, in line 28, to omit “or justice”;
2. (2) on page 152, in line 34, to omit “or justice”;
3. (3) on page 152, in lines 35 to 52, to omit proviso (b);
4. (4) on page 152, in lines 53 to 55, to omit subsection (2).

These are really only two amendments. The first two amendments are in effect one and the same amendment. The third amendment is the second amendment and the fourth amendment is consequential on the third. Therefore, the first and the second are the first amendment and the third and fourth the second amendment. The reason for my wishing to omit the words “or justice”—the first amendment—arises out of the well-known case of Mofokeng, where in 1968 Mr. Justice Colman was dealing with the Brixton Murder and Robbery Squad. He dealt at length in his judgment with the practise of the Brixton Murder and Robbery Squad of obtaining confessions, which were confirmed by senior members of that same squad. They, of course, are justices in terms of legislation. The judge made the point there that this led to greater delays in trials as the accused in these circumstances, because they had not gone before a magistrate, simply made their confession before a senior police officer of the same squad that was conducting the prosecution and they were wont to challenge these confessions. This procedure caused a delay in the trial. So, with respect, I suggest that those words should be omitted.

My second amendment deals with a proposed change in our law. The change proposed in this clause is that the onus of proof of the free and voluntariness of a confession is now shifted onto the accused. I appreciate that the situation as it is at present could do with a change, and the change that it could do with is that the accused should perhaps be obliged to give notice to the prosecution of the witnesses he wants called if he is going to challenge a confession.

Business interrupted in accordance with Standing Order No. 22.

House Resumed:

Progress reported and leave granted to sit again.