Mr. Speaker, I move—

To draw up a budget which fits the particular, and sometimes diverse, tendencies in the economy, is never an easy task. In today’s circumstances, in which South Africa is being buffeted by political as well as economic gales, the task is not only particularly difficult but also of great significance to the future of our country. A weak budget can jeopardize our political as well as our economic future; a strong budget, on the other hand, can demonstrate to the world our determination to surmount our present problems and to lay a firm foundation for the future. It is in the full realization of this responsibility that I present this budget to the House.

That South Africa still has to contend with serious economic problems, is certain. As I shall indicate later, however, we have already made good progress in solving our problems. The purpose of this budget is to continue and extend the policy measures which have made these favourable tendencies possible.

General Economic Conditions

The main economic aims of my budget last year were to improve the balance of payments and to reduce the rate of inflation. These objectives were essential in the interests of long-term economic growth. The budget was therefore conservative in the sense that it was designed not to stimulate spending unduly.

Today I am pleased to be able to say that from the middle of 1976 considerable progress has been made in attaining these objectives. It is true that during the past twelve months South Africa’s economic difficulties have been exacerbated by certain unforeseen developments, to which I shall presently refer. But the facts show that, despite these new adverse factors, the co-ordinated application of fiscal and monetary policies did succeed in restraining the expansion of bank credit and the growth of the money supply, and thereby made a key contribution to a significant decline in the current deficit on the balance of payments and in the rate of inflation.

Of course, in the prevailing circumstances these achievements were accompanied by a continued slowing down of the economy. To some extent the present slackness in South Africa is a normal cyclical phenomenon; our business cycle normally lags behind that of Europe and the United States by several months. For various economic and noneconomic reasons the time-lag on this occasion has been considerably longer than usual, and it would appear that the South African economy is still in the final stages of a downswing, i.e. in the phase just prior to the beginning of a new upswing.

Until about the middle of 1976 the recessionary tendency in South Africa was much less pronounced than in most other countries. The reasons for this were mainly the sharp increase in the price of gold in 1974, the devaluation of 1975 and the stimulatory effect of the public sector’s financial operations during 1975 and the first half of 1976. From the middle of 1976, however, the recession in South Africa became more noticeable, particularly in certain sectors of our economy.

Taking into account the depth of the world depression, the decline in the gold price during 1975 and the first three quarters of 1976, and the unfavourable political developments in Southern Africa, we can be satisfied that the real gross domestic product increased by about 1,5% during 1976, following a rise of 2% during 1975.

Of the major components of gross domestic expenditure, only consumption expenditure by general government showed a real increase throughout the year, and even in this case there was a marked decline in the rate of increase during the second half of 1976. Real private consumption expenditure showed a small increase over the year as a whole, but declined during the second half, while real investment declined throughout the year, largely owing to a decline in inventories and in private fixed investment.

The contributions of the various economic sectors to the gross domestic product showed diverse tendencies.

The contribution of agriculture declined slightly in 1976 by comparison with 1975. During the first half of 1976 the net income of farmers was lower than in the previous year, but in the second half it exceeded the corresponding figure for 1975 by 12%. The good rainfall experienced this year in the summer rainfall area holds out the promise of good harvests, but in the winter rainfall area the fruit harvest has suffered considerable damage. In general, however, the current agricultural season can be considered as relatively favourable.

Mining’s contribution to the gross domestic product increased in 1976 by 2,5%, but that of manufacturing declined slightly. Furthermore, the physical volume of manufacturing production has shown a declining tendency since the second quarter of 1976, and in this sector there is at present a considerable degree of unused capacity. In the building and construction sectors the level of activity declined further in 1976.

The volume of retail sales was higher in 1976 as a whole than in 1975, but in respect of the second half of the year the level was virtually the same in both years. The volume of wholesale sales declined in 1976, as well as the number of new motor vehicles sold.

In these circumstances, it is understandable that unemployment increased in 1976. The seasonally adjusted number of registered unemployed Whites, Coloureds and Asians increased from 10 568 in February 1976 to 22 207 in February 1977. The latter figure represents about 1% of the comparable labour force. As hon. members are aware, there are still no reliable statistics in respect of unemployment among Blacks, but although it will entail difficult statistical problems, the Government is giving attention to the procurement of such data. There can be little doubt, however, that unemployment among Black workers increased during recent months. Despite these unfavourable tendencies, total employment still continued to increase during 1976.

The consumer price index shows that we have made progress in the fight against inflation. The index increased by 10,8% between December 1975 and December 1976, compared with 11,7% from December 1974 to December 1975. Moreover, by the fourth quarter of 1976 the annual rate of increase in the seasonally adjusted consumer price index had declined to about 9%, by comparison with the peak of 17,5% reached in the third quarter of 1974. In the first two months of 1977 the consumer price index increased more rapidly again, so that the increase between February 1976 and February 1977 came to 11,9%. This acceleration, which is largely attributable to an increase in transport and housing costs, is hopefully merely an indication of a temporary interruption of the downward trend.

Salaries and wages did not in all cases keep pace with price increases during 1976. During the first three quarters of the year average real salaries and wages per employee in the non-agricultural sectors of the economy declined by 3,2% in the case of Whites, by comparison with the corresponding period of 1975; for non-Whites, however, there was an increase of 1,7% in real terms.

Balance of Payments

As already indicated, the balance of payments has improved in certain important respects during the past nine months. The slowing down in the South African economy, the moderate economic upswing in some of the major industrial countries, and the conservative fiscal and monetary policies of the authorities, combined to bring about a substantial decline in the deficit on the current account of the balance of payments. At R1 515 million for the full year 1976 the deficit does not show such a marked improvement over the figure of R1 832 million for 1975, but the quarterly figures indicate a striking change during the course of the year. Thus the current deficit declined from a seasonally adjusted annual rate of R2 405 million or 8,9% of gross domestic product in the first quarter, to only R693 million or 2,3% of gross domestic product in the fourth quarter. The latter figure can be compared with an average of more than 3% during the post-war period as a whole.

The improvement during the course of 1976 occurred despite the disappointing course of the gold price, which declined substantially until the third quarter. Since then it has, of course, improved noticeably. Other exports, however, increased from a seasonally adjusted annual figure of R4 222 million in the first quarter to R5 277 million in the fourth quarter of 1976, while the value of imports declined from a seasonally adjusted annual figure of R7 711 million in the first to R7 132 million in the fourth quarter. Since import prices increased throughout 1976, this means that the volume of imports, which had already decreased by 6% between 1974 and 1975, declined substantially further in 1976. For the full year the volume of imports was about 11% lower than in 1975 and 16% lower than in 1974.

During the course of 1976 there was also a substantial improvement in the “basic” balance of payments, namely the current account plus long-term capital movements. In 1976 there was still a relatively large net inflow of long-term capital, namely R1 113 million, compared with the exceptionally high figure of R1 746 million in 1975. Of the former figure, R138 million flowed to the central government and banking sector, R721 million to public corporations and local authorities, and R254 million to the private sector. The net result of this decline in the inflow of long-term capital and the improvement in the current account was that the basic balance of payments showed a deficit of R402 million for the year 1976, compared with a deficit of R86 million in 1975. As in the case of the current account, however, the basic balance improved appreciably during the second half of 1976.

Unfortunately, however, there was a large net outflow of so-called “short-term capital not related to reserves”, which in 1976 amounted to R654 million, including errors and unrecorded transactions. To the extent that this outflow reflected the decline in our imports and the consequent net repayment of trade credits, it was a natural and welcome development. It was, however, also caused in part by the political problems of Southern Africa and particularly by the biased and exaggerated reports of these difficulties in overseas news media.

To assist in financing the resultant balance of payments deficit, the government and banking sector in 1976 obtained short-term loans amounting to R536 million from foreign banks and official institutions. This includes an amount of R316 million drawn from the International Monetary Fund. Together with the gold swop transaction entered into in February 1976, this had the effect that the gross gold and other foreign reserves declined over the year by only R219 million.

It is important for the formulation of policy that we should view our present balance of payments position in proper perspective. Together with virtually all other non-oilproducing countries, South Africa was seriously affected by the depression in Europe and America. In this respect our balance of payments problem was therefore initially largely a cyclical phenomenon. As the world depression, partly owing to the disruption caused by the increased oil price, was much deeper and of longer duration than any other recession since the Second World War, South Africa’s balance of payments deficit on this occasion also lasted longer than usual. The fact that our real economic growth rate in 1974 and 1975 was much higher than that of most other countries, naturally also contributed to our balance of payments deficit.

Gradually, however, non-cyclical factors increased in importance and created a much more serious balance of payments situation. One of these causes was the political uncertainty which was brought about by developments in Southern Africa since the last quarter of 1975 and which led to both an increase in defence spending and a reduction in the inflow of foreign capital. Another important non-cyclical factor was the further decline in the gold price during 1975 and 1976, largely as a result of the gold auctions of the International Monetary Fund. Other non-cyclical factors were the further increase in oil prices and the introduction of television. The addition of these non-cyclical developments to the existing cyclical factors made it necessary in 1976-’77 to adopt the conservative fiscal and monetary policies to which I have already referred.

The figures show that these policies, together with the moderate economic upswing in some of the main industrial countries, brought about a marked improvement in the current account of the balance of payments. Indeed, had it not been for the large outflow of short-term capital during 1976, the net official gold and other foreign reserves would by now in all probability have increased strongly and the financial environment would have been more conducive to a new upswing in the South African economy.

Nevertheless, the outflow of short-term capital did occur and is indeed a new adverse factor which further retards the anticipated recovery in the net reserves.

Monetary Conditions

Since the middle of 1976 the monetary situation has undergone a radical change. During the first half of the year the supply of money and near-money still increased at the relatively high seasonally adjusted annual rate of 16%, compared with 17% during 1975 as a whole. But as the conservative monetary and fiscal policies began to exert their full influence, the rate of increase declined to only slightly more than 2% during the second half of 1976.

This welcome decline was mainly the result of the transformation in the government sector’s financial operations after the middle of the year. The seasonally adjusted figure for net bank credit to the government sector increased by R857 million during the first half of 1976, but in the third quarter rose by only R264 million, and in the fourth quarter there was actually a decline of R417 million. This dramatic change was the direct result of last year’s Budget.

Bank credit to the private sector increased by less than 7% during 1976, as compared with 20% during 1975. This reflected the Reserve Bank’s continued restrictive credit policy, as well as the normal decrease in the demand for bank credit in a period of recession.

The seasonally adjusted annual rate of increase of total domestic credit expansion, i.e. to both the government and the private sector, accordingly declined from 19% in the first half to about 5% in the second half of 1976.

Interest rates generally remained high and the rate on long-term government stock increased over the year from 10% to 11%. Share prices were relatively low and the flow of medium and long-term funds to deposit-receiving and related institutions increased substantially during the second half.

In recent months the financial markets have shown the typical symptoms of a downward cyclical phase. These include the difficulties experienced by certain property development companies, such as Glen Anil, and by two relatively small banks, Rondalia Bank and Rand Bank. The two banks were placed under curatorship, and the danger that their problems could spread to other banks was effectively averted by the action of the authorities and the large banks.

Economic Prospects

In drawing up any budget it is obviously necessary to look ahead. No matter how unpredictable the future is, certain assumptions about economic prospects have to be made in formulating fiscal and monetary policy. And in an important trading country like South Africa, this implies amongst other things that a view be taken on future developments in the world economy.

I cannot say that I feel completely confident about the immediate prospects for the world economy. It is true that the United States and certain other major industrial countries have now been in a new cyclical upswing for more than a year, and that their negative real growth rates of 1974 and 1975 have been transformed into positive growth rates in 1976. Important countries such as the United States and West Germany have also achieved considerable success in reducing their rates of inflation. As against this, however, the upswing has thus far not been particularly vigorous and during the second half of 1976 even lost momentum. There has not yet been any real upturn in fixed investment and unemployment rates remain high. On top of this, certain large industrial countries, such as Britain and Italy, have also had to contend with serious balance of payments disequilibrium. Even worse is the economic situation of many developing countries, which are suffering from unfavourable terms of trade and carrying a heavy debt burden.

Nevertheless, the world economy is at present undoubtedly in the process of recovery and most international economic institutions and experts are forecasting a continued economic upswing in the major industrial countries during 1977. In addition, the GATT is predicting that the volume of world trade, which already increased by 11% in 1976, will show a further, although smaller, increase in 1977. The general expectation is also that prices of primary commodities will rise further in 1977.

From the data I have presented, it is evident that South Africa’s exports have already derived considerable benefit from the current world economic recovery. If the world upswing continues throughout 1977, there is every reason to believe that our exports will still rise considerably further.

In the meantime the gold price has gradually recovered again from its low point of $103,05 per fine ounce in August 1976; during the past two weeks it has exceeded the $150 mark. The confidence which I have consistently expressed in the longer term future of gold, even when the gold price declined considerably last year, has therefore clearly not been misplaced. The market is showing definite signs of strength and a further increase is possible, but it would be unwise to rely upon it. The value of our gold output will nevertheless probably be appreciably higher in 1977 than in 1976.

After a certain point this increase in export incomes and in the value of our gold output should, in turn, have the effect of stimulating domestic consumption and investment, and thereby initiating the next upswing in the South African business cycle. It is difficult to predict precisely when this will occur. It depends amongst other things also on noneconomic developments and on the behaviour of the capital account of the balance of payments. But there is no doubt that the foundation is now already being laid for a new export-led upswing in South Africa.

When the new upswing commences, however, it will naturally take a few months to gain momentum. Real private consumption expenditure will probably show little, if any, increase in 1977 over 1976. Real fixed investment is expected to continue its downward tendency of the past year, mainly owing to a further decline in private fixed investment.

Inventory investment should once again be negative. Only real consumption expenditure of the government sector will probably show an increase in 1977, and I expect that this increase will be considerably lower than the 7% of 1976. Real gross domestic expenditure as a whole will therefore probably show a moderate further decline in 1977 over 1976.

These expectations with regard to expenditure tendencies during 1977 are, in turn, partially based upon the prospect that total domestic credit expansion and the quantity of money and near-money will continue to rise at relatively low rates. As I have already indicated, we have succeeded very well since the middle of 1976 in gaining control over these significant monetary aggregates, and we are determined to maintain this strict control. After this Budget no one should have any doubt about this.

Against this background it is logical to expect the volume of our total imports to decline further. Despite constantly rising import prices, the value of our imports should not rise unduly in 1977 and might even decline still further. Since the value of our merchandise exports and net gold output is rising, the deficit on the current account of the balance of payments should therefore decline even further. As a percentage of gross domestic product it will probably be abnormally low in 1977 as a whole.

In normal circumstances we could therefore have expected a reasonably large surplus on the balance of payments and increasing net gold and other foreign reserves in 1977. In the present abnormal circumstances, however, reliance cannot be placed on a normal inflow of either short or long-term capital. Furthermore, there are certain foreign loans to the official and banking sector and to public corporations which will have to be repaid during the course of the year. It would therefore be prudent to expect only a modest net inflow of foreign capital in 1977.

Nevertheless, the balance of payments in 1977 as a whole should be in reasonable equilibrium and an increase in the net foreign reserves may possibly be expected later in the year, particularly if the gold price should continue to firm.

As far as the inflation prospects are concerned, it must be accepted that the encouraging downward tendency of the past year in the consumer price index could be interrupted temporarily by the recent increases in administered prices, such as transport and electricity tariffs, as well as by the increased indirect taxes which I recently announced. Obviously all these adjustments must exert an upward influence on the consumer price index. However, in view of the current tendencies in the economy and the existing conservative fiscal and monetary policies, the rate of inflation should decline again later.

Conclusions for Financial Policy

To the Government, the implications for financial policy of all these domestic and foreign economic developments and tendencies are clear. For the time being, our policy package must consist mainly of fundamental restrictive fiscal and monetary measures, and we should avoid popular nostrums. A policy of “spending for prosperity” is out of the question.

The Government continues to attach the highest importance to the long-term growth of the economy and wishes to attain a position as soon as possible in which it can once again deliberately encourage total economic activity, and particularly fixed private investment, by means of monetary and fiscal policies. But we have not yet reached that point. If we were to stimulate the economy prematurely, we would risk sacrificing the substantial gains we have already made in solving our economic problems.

I indicated earlier what good results our policy has already yielded in respect of the current account of the balance of payments and inflation. In the ordinary course of events we would therefore by now probably have been in a position to adopt a more expansionary stance in our budgetary policy. But because the great improvement in our current account has thus far been neutralized by the decline in the net inflow of foreign capital, such a shift in emphasis would not be in the national interest at this stage. The lower capital inflow does not mean that we need less financial discipline—on the contrary, it makes the need for financial discipline all the greater.

Because of South Africa’s great underlying growth potential I remain optimistic about the prospect for capital inflows in the medium and long-term. For the reasons I have mentioned, however, it would be prudent for us to accept that, for the time being, the net capital inflow will be lower than the post-war average of 3% of our gross domestic product.

This implies that for the time being we cannot afford, for the sake of more rapid growth, to maintain an average deficit on the current account equivalent to 3% of gross domestic product. The average current deficit will therefore have to be reduced. It follows further that, in a cyclical recessionary situation like the present, the current deficit should be even lower than the new average. Although it will require certain economic adjustments, it is certainly not beyond our capability to achieve such a lower current deficit.

A further consideration in determining current financial policy is the desirability of the central government and banking sector repaying some of its short-term foreign loans and of building up our gold and other foreign reserves to a more satisfactory level. To build up reserves is, of course, never a costless process, and as an aim of policy it must always be weighed against other important objectives, such as curbing inflation and encouraging economic growth. But a higher level of reserves is considered to be important by the Government precisely because it will afford us more scope in future downward cyclical movements to introduce anti-cyclical policy measures.

In the short-term, therefore, the main objectives of the Government’s financial policy are still to strengthen the balance of payments further and to counteract inflation. In the past our reputation for financial discipline and sound money has greatly assisted us in obtaining foreign capital for the rapid development of our rich natural resources, as well as bridging finance in times of temporary balance of payments deficits, and this capital has helped considerably to ensure greater employment opportunities and a higher standard of living for all sections of our population. We are determined that this favourable reputation will not be tarnished. This Budget will accordingly serve to demonstrate our willingness and ability to do whatever is required to maintain sound financial conditions in South Africa and to ensure that the economy adjusts to changing circumstances.

Acceptance of this broad conservative approach naturally does not rule out the possibility of selective stimulation of certain sectors of our economy which are at present experiencing serious problems. It also does not close the door to measures to reduce unemployment, for example in Black townships. Thus provision is made in this Budget for substantial expenditures on housing in Black and Brown residential areas, and the Government has in principle agreed to a scheme for the electrification of Soweto with temporary financing from the banks. But any selective measures of stimulation will, for the time being, have to be applied within the framework of the present conservative monetary and fiscal policy.

I realize, of course, that we are not dealing at present with the normal case of overspending or demand inflation in a boom period, i.e. with a situation in which the total demand for domestic as well as imported goods and services is simply excessive and therefore has to be curbed. On the contrary, we are confronted by a conflict situation in which the domestic economy is in a recessionary phase and requires stimulation, whereas the balance of payments situation for the time being still calls for a conservative policy.

In such an abnormal situation the question always arises whether a conservative fiscal and monetary policy is, in fact, desirable and whether the dilemma could not rather be resolved by shifting a portion of the demand for imported goods and services to domestically produced goods and services, for example by means of import quotas, import deposits, import tariffs or even devaluation.

The matter is, of course, not as simple as that. Nevertheless, in the present circumstances such a train of thought is not entirely illogical. Provided such a shift of demand is restricted to South African goods and services which are comparable in respect of quality and price with imports, it need not in the present situation have the unfavourable consequences which could normally be expected. Thus, for example, in the present recessionary situation it should not immediately promote inflation by reducing the supply of goods and the degree of competition while increasing demand. In the short term it need also not harm economic growth through the protection of inefficient industries and the resultant misallocation of resources. Moreover, to the extent that it results in the utilization of surplus capacity, it can stimulate domestic economic activity and expenditure without significantly raising imports.

Provided it proves possible in practice to shift import demand to the right domestic goods and industries, such a diversion of demand should therefore be able to contribute to the solution of our present economic problems. I have accordingly taken this consideration into account in the taxation proposals which I shall put forward. In addition, I would again appeal to all South Africans to give preference to South African goods and services in all cases where the quality and price of such goods and services are comparable to those of imports.

Nevertheless, the contribution of such a diversion of demand will in the nature of the case be limited, and will also entail costs and sacrifices. Moreover, it can be of a short-term nature only, because once the expected new upswing is in progress, a continued policy of diverting demand will suffer from the serious disadvantages that it could aggravate inflation, undermine real growth and produce new pressure on the balance of payments. Even in the present abnormal circumstances, therefore, measures to divert import demand to the domestic economy cannot serve as a substitute for conservative fiscal and monetary policies.

Before proceeding to the discussion of the Government accounts, I wish to mention certain monetary and exchange control measures which are being imposed in order to strengthen the balance of payments and to intensify the fight against inflation.

When the ceiling on bank credit was imposed in February last year, the banks were allowed to increase their maximum credit to the private sector by ½% per month from April 1976. With a view particularly to the seasonal return flow of funds from the Government to the private sector during the first quarter of the financial year, it is advisable at this stage to gain firm control over the expansion of bank credit. The Governor of the Reserve Bank has accordingly announced today that the increase of 14% per month has been suspended and that the maximum level of bank credit to the private sector as at 31 March 1977 will remain unchanged until further notice.

As a more direct measure to protect the balance of payments and to correct certain deficiencies in our control, I have decided to amend the exchange control directives as follows:

1. (1) Foreign controlled South African enterprises are at present allowed to declare dividends and transfer profits to foreign countries provided this is done out of income earned after 1 January 1960. This can cost the country much foreign exchange at an inopportune time, and I believe it is reasonable that the date in question be moved forward to 1 January 1975. Furthermore, it will in future be shifted forward annually, so that transfers can only be made out of profits earned during the preceding two years.
2. (2) The facilities available to emigrants for the transfer of capital and income are reasonably liberal and in this regard a number of malpractices have recently arisen. To counter these malpractices, the facilities will be made subject to certain limits and conditions.
3. (3) Legacies may at present be freely transferred abroad up to a maximum amount of R20 000 per beneficiary. This concession is sometimes abused and legacies will in future be subject to the securities rand procedure.
   These measures come into effect immediately. There is also one further measure which will be put into operation later.
4. (4) It appears that exchange control over payments for imports is sometimes deficient and that it leaves loopholes for capital transfers. Administrative measures to make the control more effective will shortly be imposed.

The amendments are largely of a technical nature and full details are provided in a statement which is being released today. I can assure the House that the measures are essential in the light of experience in order to make our exchange control more effective and to strengthen our balance of payments.

I wish to refer here to recent Press reports about large-scale currency smuggling in South Africa, and to give the House the assurance that the Police, the Reserve Bank and the Department of Customs and Excise have been investigating the matter for some time and are taking the necessary steps in this field to counter this evil. Their effective action merits the appreciation of us all. The measures which I have just mentioned, together with certain other measures I have in mind, should contribute greatly to the checking of these malpractices.

I come now to the Government accounts and I start with the financial year 1976-’77.

The Financial Year 1976-’77

In the financial year which ends tomorrow, 31 March 1977, expenditure from State Revenue Account is estimated at R8 294 million, which is R317 million or 4% higher than the amount provided for in the main Appropriation Act.

The increase of R317 million comprises R260 million provided for in the Additional Estimates plus additional statutory payments in respect of the Public Debt amounting to R87 million, less anticipated savings of R30 million.

Hon. members will recall that of the R260 million provided for in the Additional Estimates, an amount of R34 million, namely R20 million for the purchase of land for the Bantu homelands and R14 million for the State’s increased contribution to pension funds, will again return to the Exchequer. Other important additional amounts are:

These and the other amounts included in the Additional Estimates, were all required urgently for essential services which could not be postponed.

The receipts from customs, excise and sales duties are estimated at R1 392 million, which is slightly lower than the original estimate. Despite lower receipts from gold mines—mainly as a result of larger deductions in respect of capital expenditure—the total receipts of Inland Revenue will be slightly higher than the original estimate, namely R5 358 million. The increase is mainly due to increased receipts of income tax on individuals. Total State revenue is therefore estimated at R6 750 million, which is only R6 million less than the original figure.

With the financing of the resultant deficit of R1 544 million we achieved a good measure of success. Foreign loans yielded altogether R576 million, including drawings of R331 million from the International Monetary Fund; from this gross amount R205 million must, however, be deducted in respect of repayments. After provision for redemption, net domestic stock issues—excluding the Public Debt Commissioners—and miscellaneous loans amounted to R393 million. Sales of Defence Bonds will be very near the estimate of R120 million, namely R112 million, while the Public Debt Commissioners will contribute R330 million. Import deposits yielded a net R234 million, namely, a gross amount of R347 million less repayments of R113 million in this financial year. After reducing the surplus of R151 million for 1975-’76 by R5 million on account of the contribution to the Loan Fund for the Promotion of Economic Co-operation, we consequently drew only R30 million from the Stabilization Account—instead of the R240 million originally budgeted for—and nevertheless I expect that we will end the financial year with a surplus of R72 million on the State Revenue Account.

Expenditure on the South West Africa Account is expected to be slightly higher than the original estimate but revenue will be considerably higher with the result that the deficit is now estimated to amount to only R37 million instead of the R56 million originally anticipated. I propose that this deficit be met from the surplus on the State Revenue Account.

I propose further that, as was the case last year, an amount of R5 million be transferred to the Loan Fund for the Promotion of Economic Co-operation. This will leave an anticipated surplus of R30 million in the State Revenue Account.

The Financial Year 1977-’78

Expenditure on State Revenue Account

Hon. members will note that in the Estimates of Expenditure I shall table this afternoon, a further ten votes have been converted to the integrated budgeting system. Details are furnished in the accompanying memorandum. I trust that the House will find the new system useful and informative. It is expected that the conversion will be completed with the introduction of the 1979-’80 estimates.

The printed estimates make provision for total expenditure of R8 960 million in 1977-’78. As I shall indicate later the final figure is considerably lower, namely R8 785 million. To enable a comparison to be made between the figure in the printed estimates, namely R8 960 million, and the expenditure of 1976-’77, certain adjustments have to be made to the latter as a result of procedural changes. An amount of R43 million must be deducted in respect of payments to Botswana, Lesotho and Swaziland in terms of the Customs Union Agreement which have thus far been included in the Vote of the Department of Customs and Excise, but which in terms of the recent amendment to the Customs and Excise Act, will in future be paid directly to the countries concerned. A further amount of R104 million must be deducted in respect of the interest and redemption component of provincial subsidies. Because this component, which covers interest and redemption on loans made by the State to the Provincial Administrations, is simply repaid to the State, it will in future be deleted. Legislation to convert the existing loans into capital grants will in due course be submitted to the House.

After these adjustments have been made, the estimated expenditure for 1977-’78 is just under 10% above the revised estimate for the current financial year, but once again I wish to point out that this is not the final percentage increase. Mr. Speaker, one often hears light talk about the need to prune Government spending. I sometimes wonder whether these critics appreciate the scope and difficulty of this task. In considering the expenditure for 1977-’78, with the valued co-operation of my colleagues, I pruned an amount of no less than R1 300 million, and I think I can safely say that this whole amount was earmarked for useful and desirable purposes.

Furthermore, in considering the estimates I had to take certain priorities into account. The first is naturally defence. The provision for defence in the printed estimates amounts to R1 654 million, 21,3% above the revised figure for 1976-’77. This large amount, which is partly due to the sharp escalation of prices abroad, makes high demands on the Treasury, the taxpayer and the country as a whole. I am nevertheless convinced that adequate provision for defence will, in today’s particular circumstances, receive the support of the whole House.

If the provision for defence is excluded, the increase in expenditure is only 7,7% above that of 1976-’77. Here, too, I had to apply priorities and especially bear in mind the Government’s undertaking in terms of the Collective Campaign against Inflation, namely, “to expand the infrastructure adequately so as to avoid cost-raising bottlenecks; and, in this manner, to provide adequately for future economic growth and the promotion of education and training of manpower”. Furthermore, I could not disregard the current problems of the building and construction industry in respect of its level of activity and provision of employment. This links up with the provision of housing which enjoys a very high social priority with the Government, as is proved by the increase of R43 million or 39% in the contribution to the National Housing Fund under the Vote Community Development. The total provision for this purpose is R153 million, compared with R57,8 million only three years ago.

Because of accounting adjustments the provision for 1977-’78 is not always strictly comparable with that of the previous financial year, but it is still significant that the Vote of the Department of Indian Affairs is increased by 17% above the revised estimate—excluding salary increases—for 1976-’77, that of National Education and of Coloured Relations by 15% each, of Community Development by 19% and of Public Works by 23%. Bantu Education is increased by 50%, but because of the transfer of provisions between Votes this year’s appropriation is not comparable with that of 1976-’77.

The provision for the Railways Administration is increased by 27%, but this includes an amount of R104 million in respect of the take-over of the Sishen-Saldanha railway line. In fact, the Railways have, in the light of the current fiscal position, applied economy measures and the amount of R530 million provided for their general capital expansion is the end-result of a serious effort to prune capital expenditure.

The above-mentioned increases imply that I had to deal very strictly with the budgets of other Government Departments, and I wish to convey to my colleagues, as well as the Administrators, my sincere appreciation for their co-operation in this difficult task. As I shall indicate later, I am still not satisfied with our performance in this regard and I have therefore again appealed to my colleagues to make still greater sacrifices. Later in this speech I shall furnish further details in this regard.

First, however, I wish to submit to the House certain proposals regarding social pensions.

Social Pensions

This Government has never failed to improve the living conditions of the aged and the handicapped and it has virtually become the practice to increase social pensions every year. In fact, social pensions have since 1970 been increased by more than 100% with a corresponding increase in the amount of the expenditure involved.

The House will appreciate that it is not possible in the present financial situation to grant such an increase as we would all wish to see. Nevertheless, it is my privilege to announce the following increased benefits for social pensioners of all population groups.

I propose, namely, that social pensions, including parents’ allowances and settlers’ allowances, payable to Whites, be increased by R7 per month and that social pensions and parents’ allowances payable to Coloureds, Indians and Chinese be increased by R4 per month and by R2 per month in the case of Bantu.

It is further proposed that the allowances payable in respect of children’s homes and foster children be increased by R5 per month per child in the case of Whites and R3 per month per child in the case of Coloureds, Indians and Chinese. In the case of Bantu it is proposed that the allowances payable in respect of children’s homes be increased by R1,50 per month per child and that allowances payable in respect of foster children be increased by R1,50 per month per child in cases where the ordinary scale is applicable and by 50 cents per month per child where the special scale is applicable.

I also propose the following further increases in the case of Whites:

1. (a) Maintenance grants, family allowances and allowances payable in respect of the children of settlers: R2,00 per month per child.
2. (b) Place of safety allowances: R0,20 per day per child.
3. (c) Subsidies payable to homes for the aged in respect of:
   1. (i) Group I residents: R0,50 per month per resident.
   2. (ii) Group II residents: R3,50 per month per resident.
   3. (iii) Group III residents: R6,00 per month per resident.
   4. (iv) Group IV residents: R8,50 per month per resident.
4. (d) Subsidies payable to homes for the handicapped in respect of:
   1. (i) Homes not having suitably trained staff: R3,50 per month per resident.
   2. (ii) Homes having suitably trained staff: R5,50 per month per resident.

In the case of the other population groups the following further increases are proposed:

1. (c) Subsidies payable to homes for the aged in respect of:
   1. (i) Normal aged: R0,50 per month per resident.
   2. (ii) Infirm aged: R2,50 per month per resident.
   3. (iii) Extremely infirm: R4,00 per month per resident.

It is also proposed that the subsidy payable to institutions for handicapped Coloured people be increased by 10%.

Finally I propose that military pensions consolidated in terms of section 8 of the Military Pensions Act, 1976, be increased by 10%.

The concessions in question will, where appropriate, also apply in South West Africa and will in accordance with the general practice become effective from 1 October 1977.

The concessions proposed are estimated to cost the Exchequer approximately R51 million per year or R25,5 million for the 1977-’78 financial year.

Public Corporations

At this point I must mention a special problem confronting the Treasury, namely, the financing of the State corporations and especially Iscor and Escom.

The highly capital intensive expansion projects of these corporations, the major escalation of construction costs and the present problems in obtaining foreign loans, created serious financial problems for them.

Foreign capital has played an important, but not dominant, role in South Africa’s total economic development in the past few years. The net inflow of foreign capital has usually amounted to between 10% and 15% of our gross fixed capital investment. For the public corporations, however, foreign capital has fulfilled a more important role.

For a variety of reasons, but especially because of the political developments in Southern Africa, we must expect that foreign capital, especially long term loan capital, will in the immediate future only be available on a modest scale. I also consider it advisable that, given the vagaries of the foreign capital market, the corporations and South Africa in general should be less dependent on foreign capital. By scaling down and phasing their capital programmes over a longer period, the corporations, like the Railways, have managed to prune to a certain extent their immediate capital requirements, and I appreciate what they have accomplished in this regard. But further reductions appear to be essential. It is obviously also imperative that continued attention be paid to their price and tariff policies.

I also wish to mention that the Government recently appointed an interdepartmental committee, with the Secretary for Finance as chairman, to investigate the capital priorities of the public sector, of which the public corporations of course form an important part.

Despite all these measures the corporations still have a considerable and immediate financial problem. I do not consider it advisable for them to seek loan capital from all manner of dubious sources abroad; this could only adversely affect South Africa’s status and creditworthiness in foreign capital markets. To my mind it is also desirable that the corporations should, as far as possible, not look to the State for financial assistance, except for the normal share capital required by Iscor for which a provision of R100 million has already been made in the Estimates. I shall later return to methods of solving this problem.

After providing for the increased social pensions which I proposed, State expenditure totals R8 985 million for the 1977-’78 financial year.

State Revenue 1977-’78

In the prevailing slackness of the South African economy it is to be expected that State revenue will grow relatively slowly.

The revenue from customs, excise and sales duty is reduced by the change of procedure to which I have already referred, namely that the money payable to the other members of the Customs Union in terms of the Customs Union Agreement, is to be paid directly to them and thus deducted from the total receipts of customs, excise and sales duty. Even allowing for this change, but disregarding the tax increases I announced on 7 March, the estimated yield from this source is 7,2% lower than in the current financial year, mainly as a result of the anticipated influence of the measures to save petrol.

The rise in the gold price should increase the income from gold mining taxation, and a substantial increase is also expected in the yield of income tax on individuals. Because of the current recessionary conditions, however, I expect that the tax on companies and certain other taxes will show only a relatively small increase, with the result that the estimated receipts of Inland Revenue will be 12,3% above the figure for the current financial year.

Total revenue on the existing tax basis, but without taking into account the recent increases in customs, excise and sales duty, then amounts to R7 150 million, leaving a deficit, excluding loans, of R1 835 million.

Over and above this amount, R811 million and R180 million, respectively, are required for the redemption of domestic and foreign loans. Financing therefore has to be found for a total amount of R2 826 million.

Financing Available

As far as foreign loans are concerned I have already mentioned that it will be prudent to accept that such loans will in the immediate future only be obtained on a modest scale. The prices of our stocks have already improved abroad, and I expect further improvements, but for the following financial year I accept, for the purposes of this Budget, that only existing loans, to an amount of R149 million, will be renewed.

In respect of domestic loans I expect that the following amounts will be available:

If the opening balance of R30 million is taken into account, an amount of R1 555 million remains to be found from new domestic loans or other domestic sources.

South West Africa Account

The estimated expenditure on South West Africa Account for the 1977-’78 financial year totals R207 million or 8% more than the revised figure for 1976-’77. As against this, the estimated revenue of the Account is R169 million or 10% higher than in the current financial year. As is customary, provision will be made in the 1978-’79 financial year for the resultant anticipated deficit of R38 million.

†The Financial Requirement for 1977-’78

I have already stated that we still need to find, from new internal borrowing or from other sources, an amount of R1 555 million during the financial year 1977-’78.

This very large financial requirement is the result of a number of factors, in particular the continued steep increase in defence expenditure, the present difficulty in obtaining foreign loans, and the comparatively slow growth of State revenue.

I also have to bear in mind the capital requirements of the public corporations, to which I have already referred.

It is clear that we are faced with a fiscal problem of a magnitude which cannot be solved by the normal marginal adjustment of tax rates. The rates of income tax on companies and individuals were in any event substantially increased last year and are now at a level where a further appreciable increase could be counter-productive.

The Stabilization Account stands at R792 million and most of this sum is invested with the National Supplies Procurement Fund. Excessive use of the funds in this Account for financing the Exchequer would, however, increase the money supply with dangerous implications for inflation and the balance of payments.

I have therefore had to look for some less orthodox sources to help bridge the gap. Before considering these sources, however, I should like to deal with some changes in the normal revenue sources.

Customs, Excise and Sales Duties

On 7 March I announced the following increases in customs and excise duties:

I also announced that sales duty would be increased by about 25%. For example, a duty of 6,5% would be raised to 8%, 10% to 12,5%, 13% to 16%, 16,5% to 20,5%, 20% to 25% and 26,5% to 33%.

At the same time the former ad valorem excise duty on pipe tobacco was changed to a specific duty.

The reason for these increases will be obvious from what I have already said. The pressing need for additional revenue makes it inevitable that the consumer of the relative dutiable articles must bear a share of the additional burden. The additional revenue from these sources in 1977-’78 is estimated at R137 million.

Recommendations of the Standing Commission on Taxation Policy

The Standing Commission on Taxation Policy submitted a number of important recommendations to me during the year, and I should like now to deal with some of them briefly.

Taxation of the Income of Married Women

Hon. members will recall that in my Budget Speech last year I informed the House that both the Commission and the Department of Inland Revenue, after careful consideration of the matter, had come to the conclusion that the present basis of taxation of the income of married women should be retained, and I tabled the Commission’s report and the Department’s memorandum on the subject.

The present system of aggregating the incomes of spouses for tax purposes is not, as is sometimes implied, based on old-fashioned ideas of an inferior status for women. It is based simply on the practice common to the majority of South African families where the wife receives an income, namely, that the income of the wife augments that of the husband to form the combined income of the household.

The separation of incomes of husband and wife for tax purposes not only gives rise to anomalies and administrative difficulties, but must inevitably entail an increase in tax rates so as to maintain the State’s revenue. Furthermore, the Commission was not convinced, on the available evidence, that the present system significantly deters married women from taking up paid employment, as has been alleged.

As both the Commission and the Department of Inland Revenue point out, the root of the trouble is the high marginal rate of income tax on individuals. I entirely agree that it would be desirable to lower this marginal rate as soon as the fiscal situation permits, but unfortunately this cannot be done at present.

After careful consideration I find myself in agreement with the views of the Commission and the Department. With the greatest respect, therefore, for the eloquent and charming critics of the present system of aggregation of incomes of spouses, I have decided that it is in the best interest of the taxpaying public as a whole that the status quo be maintained.

Widows, Widowers and Divorced Persons

The Standing Commission submitted recommendations to me on the vexed question of the tax treatment of widows and widowers on the one hand, and of divorced persons on the other.

Widows and widowers are taxed as married persons, whereas divorcees are taxed as unmarried persons. This often gives rise to complaints from the latter category that they suffer unfair discrimination.

There are other aspects of the matter which also require careful consideration. I have not yet arrived at firm conclusions and will give further attention to the problem.

Inflation Accounting

The Standing Commission has also completed its investigation into the difficult question of inflation accounting which I referred to it for consideration. After careful study the Commission arrived at the following conclusions:

1. (1) inflation accounting, as a basis for determining taxable income, cannot be supported at this stage as no uniform accounting standards, accepted by the accountancy profession, have as yet been laid down;
2. (2) inflation as a factor in determining taxable income cannot, having regard to the purpose for which tax is imposed, be taken into consideration without a serious loss of revenue or increased tax rates resulting;
3. (3) no other country has, so far as the Commission is aware, introduced inflation accounting with respect to fixed production assets as a basis of taxation;
4. (4) provision is already made in the Income Tax Act for the problem areas, namely fixed assets and inventories; and
5. (5) when standards for inflation accounting have been determined and accepted, the matter can be examined again, but the effects of inflation on the entire taxpaying community, and not only on certain sectors, must be considered.

I accept these conclusions, and again wish to point out, as I did last year, that our existing system of wear and tear, initial and investment allowances already compensates to a considerable extent for the effect of inflation on the value of productive assets.

Marketable Securities Tax

The Johannesburg Stock Exchange has frequently complained that the marketable securities tax and the stamp duty on the registration of marketable securities in effect discriminate in favour of transactions entered into outside the Exchange. The Standing Commission has studied the matter and has recommended that—

1. (1) the rate of stamp duty on the registration of shares purchased outside the Exchange be increased from 1% to 1,5%;
2. (2) marketable securities tax on the selling leg of Exchange transactions be abolished; and
3. (3) marketable securities tax on the buying leg of Exchange transactions be increased from 1% to 1,5%.

These recommendations should remove the grounds of complaint, and I accept them.

While Stock Exchange activity remains at its present level, no material change in revenue should result.

Company Annual Duty

This duty is payable by all companies at the rate of R2,50 for each R10 000 or part thereof of the issued share capital of the company plus its share premium account, with a minimum of R50. The Standing Commission has observed that many large companies have openly but quite legitimately been avoiding the duty by transferring huge sums from their share premium accounts to reserve accounts. In order to protect the discus the Commission has recommended that the Companies Act be amended to take into account, for purposes of calculating the annual duty, the amount of any undistributable reserve created out of share premium account.

I accept this recommendation, and I consider furthermore that an increase in the duty is justified. I propose, therefore, that with effect from 1 April 1977 the rate of duty be increased from R2,50 to R4 for each R10 000 or part thereof, with a minimum of R80.

These changes should result in additional revenue to an amount of R9 million in 1977-’78.

Sales Tax

At the request of my predecessor, the Commission made an intensive and extensive study of the possibility and advisability of levying a universal sales tax or “turnover tax” at the point of sale to the final consumer, instead of a selective tax at the point of manufacture or importation as is the case with the present sales duty. After receiving evidence from organized commerce and industry and after making an on-the-spot investigation of the administration of similar taxes in the United States, Britain and Rhodesia, the Commission concluded that a universal sales tax at the point of sale to the final consumer or user would have important advantages: it would provide a broader base for indirect taxation with built-in growth as consumption expenditure increases; it could be used as an economic regulator; it would have little or no escalation effect, and its burden would be spread more evenly.

The Commission accordingly recommended that, provided the necessary staff could be obtained, a universal sales tax should be introduced. It recommended that a simple and practical tax should be imposed, at a low uniform rate and without exceptions, on the broadest possible basis. The tax should be administered by the Department of Inland Revenue.

The Government accepts in principle the proposal for a universal sales tax. Even a relatively simple tax, however, will require a great deal of preparation. A system of licensing must be introduced for persons who make final sales in order to enable them to purchase goods free of tax for subsequent resale. Field inspection and an efficient information service will be essential. All this will require the assembling and training of a large number of officials. Consideration will have to be given to such questions as the continuation of the existing sales duty on certain articles.

The Department of Inland Revenue, where necessary in co-operation with other departments, will proceed with all possible speed with preparations for the introduction of the tax. At a later stage the Department will publish detailed proposals which all interested parties will have an opportunity to study and comment upon.

It is clear that it will be many months before the tax can be put into effect. I do not think that I can rely upon obtaining any revenue from this source during the 1977-’78 financial year.

Apart from the various recommendations submitted by the Standing Commission, there are a few other tax matters with which I should like to deal briefly.

Taxation of Agricultural Co-operative Societies

In August last year I announced that, after long and thorough consideration of the Report of the Steenkamp Commission as well as of subsequent representations by organized agriculture, commerce and industry, the Government had decided that agricultural cooperatives would be liable for tax in respect of tax years beginning on or after 1 April 1977.

The normal rules for the determination of the taxable income of ordinary companies will be applicable to agricultural cooperatives, but having regard to the particular operational circumstances of these cooperatives the following adjustments will be made—

1. (1) Surpluses of an agricultural cooperative which are declared, in whatever form except dividends, to members within six months of the close of the financial year, will be allowed as a deduction for tax purposes. As at present, the distributions will, on allocation, be taxable in the hands of the recipients.
2. (2) As in the case of industrial undertakings in prescribed circumstances, cooperatives will be granted a building investment allowance and an annual allowance in respect of factory buildings, and buildings used for the storage of the agricultural products of producers.
3. (3) As a bridging measure, agricultural co-operatives, in determining their taxable income, will be permitted, for the first ten tax years, to deduct repayments of loans which the Secretary for Inland Revenue is satisfied were raised to provide facilities for the storage or primary processing of the products of their members.

The necessary legislation will be introduced during the present session of Parliament. No additional revenue is expected from this source during the 1977-’78 financial year.

Other important matters in the context of the operations of the agricultural co-operative societies, such as financing and licensing, have been the subject of close study and discussion with the various interests involved, and good progress continues to be made in resolving what is in fact a wide-ranging and complicated issue.

Mining for Natural Oil

It will be observed from the tax proposals which I will table, that it is proposed to increase the maximum rate of the normal tax which will eventually be payable by oil mining companies.

The reason for the increase is to bring our rates into line with those of other countries who also increased their rates as a result of the energy crisis. The new rates have been discussed with the exploration companies concerned and are not unacceptable.

Exporters’ Allowances

In present circumstances it is of the utmost importance to encourage exports so as to strengthen our balance of payments. In this respect the income tax export allowances play an important part, as also do the export incentives under the control of my colleague the Minister of Economic Affairs. I believe, however, that a greater measure of coordination and rationalization is desirable to ensure that the maximum effect is obtained within the limits of our resources, and I am pleased to say that my colleague has agreed that the departments concerned make a study of this matter. This study is already under way.

Insurance Premiums and Medical Expenses

Primarily in order to encourage saving and the making of adequate provision for old age, and also in recognition of the rising cost of medical services, I propose that for tax purposes the maximum combined abatement for insurance premiums and medical expenses subject to the conditions applying to all abatements be increased from R700 to R1 000 for a married person and from R600 to R750 for an unmarried person. The loss of revenue is estimated at R9 million for a full year, but there will be no loss in 1977-’78.

Pension and Retirement Annuity Funds: Contributions and Benefits

I propose further that the maximum deduction in respect of current contributions to a pension fund be increased from R1 508 to R1 750 per annum, and to a retirement annuity fund from R3 000 to R3 500. Arrear pension contributions are not at present deductible, and I think it is fair that in this respect a maximum deduction of R1 000 per annum should be allowed. The maximum exemption in respect of lump sum payments from pension, provident and retirement annuity funds will be increased from R40 000 to R45 000.

The cost of these concessions is estimated at R3 million for the next financial year and at R6 million in a full year.

Housing Allowance for Employers

Employers—other than farmers and mining companies, where other provisions apply— are allowed to deduct 25% of expenditure on housing for their employees up to a maximum of R2 500 per dwelling. In order to encourage employers to provide such housing, I propose that the maximum be increased to R3 000. The loss of revenue in a full year is estimated at R1,2 million, but in 1977-’78 it will be negligible.

Stamp Duties

After these concessions I think some tax increases are justified.

Stamp duties were last reviewed in 1968, and I propose moderate increases in certain fixed duties. Full particulars of the items affected are contained in the tax proposals which I shall table. The increases will come into operation on 1 April 1977, but in the case of the increased stamp duty on cheques, i.e. from 2 cents to 3 cents per cheque, the additional duty will come into effect on 1 July 1977.

Apart from the increases to existing items, it is also proposed that stamp duty shall henceforth also be payable on lease agreements relating to movables at the rate applicable to lease agreements of immovable property.

The additional revenue in 1977-’78 is estimated at R4 million.

The net result of these changes will be a revenue gain of R10 million in 1977-’78, as follows:

After deducting from the financial requirement at this stage of R1 555 million, the amount of R137 million expected to be raised from the increased indirect taxes announced on 7 March, and the R10 million derived from the minor tax changes which I have just outlined, I still have to find an amount of R1 408 million.

Further Reduction in Expenditure

I do not think it desirable or practicable to raise this extremely large sum either in taxes or loans, and I have therefore considered it imperative to effect a further reduction in State expenditure. Not all items of expenditure can be reduced—obvious examples are pensions and interest on the public debt. But with the co-operation of my colleagues, I have no option but to effect a reduction of R200 million, bringing total expenditure down to R8 785 million. Furthermore, augmentation of this amount in the additional estimates will be considered only in the most exceptional circumstances.

The reduced aggregate expenditure figure is only 7,8% above the revised figure for 1976-’77. If the provision for defence which I regard as absolutely essential, is excluded, the increase is only 5,1%. Thus even with the record defence spending included, the rate of increase in Government expenditure is well below the rate of inflation.

Even after this further very substantial reduction in expenditure I am still left with a gap of R1 208 million, and the question is—how is it to be financed?

Prescribed Investments by Financial Institutions

The pressing financial needs of the Treasury arise basically from the urgent requirements of defence and from the need to build up our economic and social infrastructure in the broadest sense of the term. There are also the financial requirements of the public corporations to which I have already referred. On the other hand we are faced with a relatively slow growth of State revenue and with a likely reduction in the availability of foreign capital.

In these circumstances it seems to me to be essential to mobilize the nation’s capital resources to assist in meeting these requirements. The financial institutions, as the repository of the nation’s savings, can make a major contribution in this respect, and I have no hesitation in calling upon them to make this contribution.

I envisage that the statutory percentages of prescribed assets to be held by insurers and pension funds be increased so as to yield a contribution from these two sources in 1977-’78 of approximately R520 million. The major part of this increase will have to be devoted to investment in Government stock, but, in order to meet the needs of the public corporations, a portion will have to be made available for investment in these corporations.

Since 1971 building societies have been granted exemption from the statutory provision for prescribed investments in the Building Societies Act. Because of the important service they render in connection with housing, I would normally have been reluctant to call upon them for a contribution. Conditions are, however, not normal. Moreover, the societies are at present enjoying a reasonably good inflow of funds while on the other hand there is a decline in the demand for housing loans. The exemption will therefore be withdrawn and the Act will be amended to require building societies to make certain investments in Government stock with a currency of more than three years. I envisage a contribution of R120 million from building societies in the fiscal year 1977-’78.

Some contribution from the banks in respect of their long-term liabilities is also justified. I propose that the percentage prescribed investments required to be held against such liabilities be increased so as to ensure from them a contribution of R120 million in 1977-’78.

It will be desirable to discuss this matter in detail with representatives of the financial institutions concerned. This could not be done before the Budget, but I intend to do so in the near future. I want to give the assurance now, however, that the rate of interest on Government stock will be a fair one.

I am sure that the institutions will realize that, in the national interest and indeed in their own interest too, it is necessary to call upon them to make a larger contribution to the financing of the public sector. It is my intention, as State revenue becomes more buoyant and as foreign loans become more readily available, to reduce the percentages wherever practicable.

The total amount which should become available to the public sector from these sources should be of the order of R760 million, of which I envisage an amount of R500 million being invested in Government stock.

National Defence Savings Bonds

I believe it is also desirable to provide an attractive investment for the private investor to encourage him to make a greater contribution to the financing of our sustained defence effort. We already have the Defence Bonds, and they will be continued, but I think some additional attraction is necessary.

I have therefore decided to issue special National Defence Savings Bonds, which, in the same way as the present Defence Bonds, will have a currency of five years and carry a nominal interest rate of 916%, plus a premium of 3% at maturity.

The distinguishing feature of these bonds, however, is that of the 916% interest, 7% will be paid to the bondholder and the remaining 216% will be paid into a fund which will be used to purchase further bonds. These latter bonds will be distributed to those bondholders whose bond numbers are drawn by lot from time to time.

It is intended that new bonds will be issued in smaller denominations than the present Defence Bonds, and I hope and expect that they will prove attractive to a large number of investors.

I want to emphasize that every investor will be sure of recovering his original investment plus 7% interest plus a 3% premium if the bond is held to maturity. He foregoes 216% interest in order to have a chance of obtaining, through the periodical drawings, a substantial additional investment in the bonds. As with the existing bonds, the new bonds will be redeemable after one year, at the discretion of the bondholder. As a further attraction, the 3% premium payable on maturity on the new bonds will be tax-free.

It is obvious that the administration of this scheme will require extensive preparation. The Treasury is engaged on this task and the scheme will be introduced as soon as possible.

It is difficult to estimate the receipts from this source but I put the figure at R160 million.

Revenue Duty on Imports

A substantial amount still remains to be found. I have already mentioned that I do not consider it advisable, after the appreciable increase last year, to propose a further increase in income tax or loan levy. I have therefore decided that the only practical way to raise the additional funds required is to impose a special revenue duty or surcharge on all imported goods—including importations of goods qualifying for industrial or other rebates and for drawbacks of duty.

In view, however, of the Republic’s commitments under the General Agreement on Tariffs and Trade (GATT) the surcharge cannot be imposed on imported goods subject to a GATT binding and such goods are therefore excluded from payment of the surcharge. In terms of certain other agreements and customs conventions which the Republic has joined certain other importations also have to be excluded. As it is an accepted practice that importations by Central Government departments, Provincial Administrations, etc., are not dutiable the surcharge will consequently not apply in respect of goods imported for use by these bodies. Certain petroleum products—for example crude oil, petrol, diesel oil, etc.—are also specifically excluded as the surcharge would have resulted in a further increase in the retail prices of these products.

Detailed information regarding the headings and subheadings of the Customs Tariff to which the surcharge will apply, as well as the exemptions from payment thereof, are reflected in the taxation proposals which I shall lay upon the Table. Copies of these proposals are available at all the offices of Controllers of Customs and Excise for immediate use by importers, clearing agents and other interested bodies.

The surcharge will not be included in the determination of the value of imported goods for sales duty purposes and the sales duty is therefore in no way affected by the surcharge. In order to obtain the maximum amount of revenue by means of the surcharge it is essential that the tax base should be as wide as possible. The exclusions reflected in the taxation proposals account for a significant percentage of the Republic’s imports and in order not to erode the base of the surcharge any further, no other exemptions of any nature will be considered.

The surcharge will be levied on the value for customs duty purposes and will be effective immediately on the imported goods concerned which have not yet been cleared for home consumption.

The initial rate of the surcharge will be 15% ad valorem. However, I regard this duty as a temporary measure, and it is my intention to reduce or remove it as soon as I can, more particularly when our revenue sources can be augmented by the revised and broader sales tax to which I referred earlier.

It is always difficult to estimate the yield of a new tax but it is estimated that the additional revenue which will be collected by means of the surcharge will amount to R400 million in 1977-’78.

Mr. Speaker, in terms of section 58(1) of the Customs and Excise Act, 1964, I now lay upon the Table, for consideration by the House, the formal taxation proposals in respect of the new surcharge on imported goods.

Stabilization Account

After taking account of all the additional sources of funds to which I have referred, I am left with a shortfall of R148 million. I propose to cover this out of the Stabilization Account, which, after the transfer in respect of the financial year 1976-’77, will still stand at the impressive figure of R792 million.

Summary

As is customary, a summary of the State’s accounts is subjoined in the printed version of the Budget Speech.

Mr. Speaker, I thought I would preface my summary of the main features of the Budget by quoting some characteristic comments which Winston Churchill made about Ministers of Finance arising from his own experience as Chancellor of the Exchequer in the 1920s. They seem to have some force still. Of himself he has recorded:

He also said—

He said further—

He continued—

Finally he said—

It seemed to me, Mr. Speaker, that these quotations were particularly apt in the context of the present Budget.

The preparation of this Budget presented me with a twofold problem.

Firstly, from the economic standpoint, it is desirable that the Budget should be strong and conservative in order to safeguard our balance of payments and curb inflation, but not so restrictive as to leave no room for a resumption of rapid economic growth when conditions permit.

Secondly, from the fiscal standpoint, the Budget has to meet a situation where a substantial increase in expenditure on defence and on essential infra-structure services is required, but where, because of the recessionary tendency in the economy, State revenue is growing comparatively slowly and where foreign loans are likely to be less readily available.

The gap which remains between expenditure on the one hand, and revenue and the other available financing on the other hand, is too great to be covered by normal marginal tax adjustments. In any event, it has been laid down that there should be no increase this year in income tax or loan levy on individuals or on companies—in fact, I have made certain concessions designed to encourage saving and the provision of housing for employees. To bridge the gap by an excessive use of bank credit is, moreover, economically unacceptable.

What measures, then, remain open to me?

Clearly, bold, strong measures are imperative.

My first step was to secure a further reduction in State expenditure. This has required considerable sacrifices from my colleagues and will also not be painless for the private sector.

Secondly, it was necessary, in the special circumstances, to divert a greater part of the country’s capital resources to the public sector. As a temporary measure, therefore, financial institutions will be asked to invest a higher proportion of their assets in the public sector and particularly in Government stock.

Thirdly, it was desirable to make it more attractive for the public to invest savings directly with the State, more especially to help finance our defence effort. I trust that the new National Defence Savings Bonds, with the attraction of substantial bonuses, will receive wide support.

Fourthly, in order to cover most of the remaining shortfall, it has been decided to institute the temporary revenue duty of 15% on imports.

By means of these measures I have succeeded in reducing the rate of increase in total State expenditure—even including defence expenditure—well below the rate of inflation, and I shall draw upon the Stabilization Account to a considerably lesser extent than I planned to do during the financial year which is now ending.

The House will observe that, by these devices, I have deliberately set out to finance this Budget, as I did the previous one, in as non-inflationary a manner as I could.

Barring unforeseen events, I believe that this Budget will continue the good work of last year’s Budget and will contribute to a further strengthening of our balance of payments and, eventually, to a further reduction in the rate of inflation. By strengthening our economy, we strengthen our country. By this means we not only safeguard ourselves against political and economic pressures from without, but also place our economy in a strong position to take advantage of the more favourable world economic climate which surely lies ahead. I affirm once again my own and, indeed, the Government’s profound confidence in the underlying strength, versatility and resilience of the South African economy.

In conclusion, I wish to refer to an event which, when it occurs, will herald the end almost of an era in our public financial affairs. Mr. Gerald Browne, who has held the high office of Secretary for Finance for a record 17 consecutive years, has informed me that, after much thought, he feels the time has come for him to make way for a younger man and that he wishes to retire at the end of October of this year.

It is very difficult to pay adequate tribute to Mr. Browne for his long and distinguished tenure of office. In point of integrity, of devotion to duty, of ability and of sheer sustained hard work he has set a standard in keeping with the finest traditions of our Civil Service.

It is not only at home that his name has become a household word. I have seen at first hand the esteem in which he is held by leading bankers and financiers in the world’s capital markets. I extend to him the thanks of a grateful Government and I am sure that every member of the House will wish to be associated with these sentiments. May he and his charming lady wife be spared to enjoy good health, great happiness and prosperity in the years ahead.

As his successor the Government has decided to appoint Dr. J. H. de Loor, Director of Finance in my department and currently South Africa’s Principal Resident Representative at the International Monetary Fund and the World Bank in Washington. Dr. De Loor has had many years’ experience in the Treasury and has served his country with distinction both here and overseas.

Mr. Speaker,

I now lay upon the Table—

1. (1) Estimates of Expenditure to be defrayed from—
   1. (a) the State Revenue Account [R.P. 2—’77]; and
   2. (b) the South West Africa Account [R.P. 3—’77], during the year ending 31 March 1978.
2. (2) Estimate of Revenue for the financial year ending 31 March 1978 [R.P. 4—’77].
3. (3) Statistical Survey [W.P. B.—’77],
4. (4) Comparative figures of Revenue for 1976-’77 and 1977-’78.
5. (5) Taxation proposals [A. 1—’77].

Mr. Speaker, first of all, I should like to associate this side of the House with the tribute the hon. the Minister paid to Mr. Gerald Browne. To our knowledge and experience Mr. Gerald Browne has been a civil servant in the best and truest traditions of the Service. He has been courteous and helpful at all times and in our dealings with him we have found him impeccably impartial. He has had a distinguished career not only in the Civil Service, but also prior to joining it. He was a Rhodes Scholar of SACS and had a distinguished career at Oxford. He has helped a number of Ministers of Finance to guide the finances of our country, and he has done that with great ability and, over the long period in which he held this position, he has obviously gained great and unique experience not only in national finance, but also in international finance. We on this side of the House wish Mr. Gerald Browne everything of the best in his retirement. We hope it will be a long, a happy and a healthy one.

Now we come to our first thoughts on the budget. If there are two things the budget has brought home to the public of South Africa, the first is the imminence of the physical dangers besetting our country, the threats to our borders, and the fact that we are having to meet and counter these threats alone. Hence the huge amount that has had to be set aside in this budget for defence. Let me say that we on this side of the House support the purpose of this expenditure designed to secure the safety of the State, expensive as it is and despite the extent to which expenditure of such a large amount on economically unproductive purposes aggravates South Africa’s economic problems.

Where we differ from the Government, and differ fundamentally, is in respect of the steps taken to satisfy the rightful aspirations of more than half of the non-White population of our country, namely our urban Africans, Coloureds and Asiatics, because those steps are totally inadequate: we are not winning friends amongst them; we are not winning support amongst them; we are not winning friends in the Western world who might help relieve the pressure on our borders and on our Defence Account. The Foreign Minister-designate, Mr. Pik Botha, spelled out on television on Sunday evening what must be done. What must be done is that fundamental steps must be taken to make fundamental changes. It is too late for cosmetic or for peripheral changes. Until those steps are taken, we shall have to provide substantially and increasingly for defence.

The second thing that this budget spells out, despite the optimistic note the hon. the Minister sounded from time to time in his address, is the failure of the Government to relieve any of our fundamental economic problems. Last year in his budget speech the hon. the Minister identified three main problem areas as being our balance of payments problem, inflation at an unacceptably high rate and lack of growth in the economy. In the year that has passed since that budget, our balance of payments, as measured by the Reserve Bank’s foreign exchange and gold holdings, has worsened. These reserves have fallen from more than R1 200 million to less than R700 million. Our inflation rate has climbed from what it was at the time of last year’s budget, that is 10,9% to 11,9%. Our growth rate has slowed down from a miserable 2,1% in 1975 to a more miserable 1,4% in 1976. Unemployment, which was not identified as a problem by the hon. the Minister last year, has climbed 2½ times—that is the only measurable unemployment which is among Whites, Coloureds and Asiatics— from 10 500 to something like 25 000. In nobody’s language can what I have said be described as a happy picture of success. As in any endeavour, whether in business or in government, it is results which count. Therefore the Government must stand to be judged by these results about which I have just spoken. Whether the Government’s financial management, within the framework of the budget which has just been presented, will be more successful this year will be the subject of our discussion in the Second Reading debate.

I would now like to come to a few first impressions on the details in the budget. First of all I would like to say to the hon. the Minister that I believe that at long last he may have taken a real step towards a solution of our economic problems by limiting the total expenditure to 7,8% above that of last year’s. I say “may” because I cannot forget the experience of last year, when in his budget the hon. the Minister estimated an increase of expenditure of 10,5% while we have ended the year with an increase of something like 16,5%, which is a very different picture from what was estimated.

It is not as much as that.

If the hon. the Minister is able to keep his expenditure down to 7,8% over that of last year, then he will really have started taking the steps that are needed to deal with our economic situation.

I am also pleased that the hon. the Minister has recognized that direct taxation of individuals and companies has reached a ceiling and that an increase would be counterproductive. I welcome the decision to levy sales tax at the point of sale rather than at source. That is a real anti-inflationary measure in that it avoids intermediate charges being added to the tax between source and point of sale. I welcome in particular the increases he announced in social and military pensions. These are people who really need the help they are being given. The last bouquet I am going to give the hon. the Minister this afternoon is in respect of his introduction of the national defence bonds which contains an element of chance. I very well remember a private member’s motion—I think it would have been about 1973—when the hon. the Minister of Community Development, who was then a front-bencher on this side of the House, put forward a proposal very, very similar to the one that has been put forward by the hon. the Minister of Finance this afternoon. [Interjections.] Mr. Speaker, the hon. member for Durban Point has just reminded me that he seconded that proposal. [Interjections.]

All the measures which I have just mentioned follow very closely on UP policy, on what we have been recommending and pressing for over the years … [Interjections.] The hon. the Minister is to be congratulated on learning the lesson that we have been teaching him. [Interjections.] Unfortunately I cannot say the same in respect of other features of the budget. In particular I cannot say the same of the decision by the hon. the Minister to plunder the assets of the financial institutions: the building societies and the banks. [Interjections.] As far as the financial institutions and banks are concerned, by doing so he is going to tie the hands of these institutions, particularly as to how they invest their funds. He is going to inhibit investment in the private sector, investment which will get the private sector moving, something which is so necessary under present conditions. By plundering the assets of the building societies he is, in a sense to a large extent, negating the good work that he has done by encouraging the building of houses in the townships.

Nor can I commend the hon. the Minister for the general surcharge on imports which he has announced. This is going to lead to a sharp increase in prices of imported goods, and as we are a country which depends extensively on trade, it is going to have an appreciable effect on the cost of living.

Mr. Speaker, in order that we may have an opportunity of studying what has been a long and in many ways a complicated budget, I now move—

Agreed to.

Mr. Speaker, when this amendment Bill has been agreed to, it will result in more labour-intensive industries gravitating towards the border industry areas. Bearing in mind what was said by the hon. member for Benoni and the hon. member for Johannesburg North, namely that it is risky for industrialists and that there is a possibility that they will go bankrupt, I think that in all fairness towards the industrialist in South Africa, we must state the factual situation as to what will happen to them when the Bill is implemented. Businesses in decentralized areas will still be economically viable and allegations to the contrary being made by the official Opposition are unfounded. If we take a look at the statistics, we shall find that expansion in decentralized White areas which requires financial aid, is subjected to a thorough investigation in advance in order to determine its economic viability. The industries are investigated first. The corporations also keep a continuous check on those decentralized business undertakings that have received assistance. In other words, it is not simply a question of an industry being forced to move to the wide open spaces. There is no such thing. The Decentralization Board looks after these people. It is interesting to note that according to statistics of the Decentralization Board, there are few decentralized business undertakings which are not successful. Therefore I do not know where the Opposition got hold of the story that border industries are not successful. On the contrary, judging from requests for expansion approved by the Decentralization Board, most business undertakings are maintaining a satisfactory growth rate. Many of the business undertakings are continually expanding. I am mentioning these facts because this Amendment Bill is going to force many more industries to move to industrial areas. That is why industrialists must have peace of mind and not listen to the irresponsible statements which the official Opposition makes. I cannot understand the official Opposition. They make accusations before they have investigated a matter. This is alarming. Industrial development is in the interests of South Africa. During 1976, 386 applications were approved by the Decentralization Board: 164 in the homelands and 222 in other areas. 175 of these applications were for new business undertakings, 121 for expansions and 90 for moving from metropolitan areas to decentralized areas. The Decentralization Board also declares that—

Therefore there is no such thing as industrialists going bankrupt if this Bill is implemented. By the end of 1976, R254,7 million had been loaned to industrialists by the IDC. Bad debts amounted to only R3 million, that is a mere 1,2%. This is very good by any business norm. It is important that economic progress of industries in South Africa is now being linked with industrial peace and stability. Should we dissociate these two concepts, we would find that we would not have the industrial growth which we ought to have. Now, what will happen when industrialists switch to the border industrial areas in terms of the Amendment Bill? The Black factory workers will be a happier community than they were. I come from an area which has been declared a border industry area and I have found that this is the case. Literally hundreds of Bantu travel to the homelands by bus and other means of transport every weekend. Over the weekends there are literally thousands of Bantu who have to come from the metropolitan areas to the homelands. We must not forget that these people are attached to their tribal and cultural heritage. They find these things in the homelands and not in the metropolitan areas. This cannot be found in Soweto. When I worked in Soweto as a student, the Black people told me that they longed for their homes. I heard this in Pilansberg where Chief Tedimane Pilane of Bophuthatswana put it very clearly to Minister M. C. Botha that the industries must be established so that the Black people could return to their own area. The tragedy of the whole matter is that some people are opposing this Bill for the sake of temporary material gain. We must not only look at the individual industrialist who will be affected by this. I concede that the industrialist will need capital funds to transfer his factory from the metropolitan area to the decentralized area. However, do they also think of the social evils, including slum conditions and the transport problems which are developing? There is no doubt that this over-population and over-centralization is causing tremendous social evils. All this is to the detriment of the worker. It is interesting to note that during the riots, no riots took place in those towns which border on the homelands. Peace reigned there. But these things happen in the over-populated areas, the breeding ground for inciters. There can be no doubt about this.

In my opinion this Bill is in the interests of labour peace in South Africa. Consequently it must be applied and the labour-intensive industrialist must be encouraged by being informed that a fine future lies ahead of him in the decentralized area, in the interests of the Black worker, the industrialist and South Africa.

Mr. Speaker, the hon. member for Rustenburg commenced the speech he has just completed shortly before the House adjourned last night. In his usual arrogant way he started by attacking us on this side of the House and by accusing us of disloyalty.

Order! I feel it is advisable not to use the word “arrogant”. The hon. member must withdraw it.

Mr. Speaker, I withdraw it and say, not in an arrogant way, but in a supercilious way, if you will accept that. I want to say to the hon. member that it is time he learnt the lesson—which it appears the hon. the Minister of Finance has learnt this afternoon—that it is no good accusing the Opposition of disloyalty on every occasion that they oppose any legislation. The loyalty of every member of this side of the House has been tried, tested and proved. I cannot say that of every member on that side of the House. [Interjections.] The comment that was made while he was making his speech last night, was very apt, namely that all that he was talking was a lot of Magaliesberg “twak”.

The hon. member then proceeded to talk about the speed of industrial development. He said that it had to be increased in the interests of South Africa. Of course, we agree with him on that. The hon. the Minister of Finance has told us this afternoon that unless the speed of industrial development is increased and unless we have a higher growth rate in this country, a growth which is going to result in greater growth of the State’s income, we are going to face even more troubles.

What is this Bill doing? This Bill is going to make it even more difficult for an industrialist to expand and increase his turnover and his trade.

Where do you read that in the Bill?

The hon. the Deputy Minister asks me where I read it in this Bill. If he will read clause 2 of the Bill, he will find …

I have done so.

I hope the hon. the Deputy Minister has done so. What does clause 2 stipulate? It says that every person who wishes to employ one more Black person, must first get the Minister’s approval.

It says so in the present Act.

No. With respect, I want to say that if he has a look at this Bill, he will find that that section is being repealed and re-enacted.

It does not stand there.

Of course it stands in the Bill. If he looks at line 13, page 2, of the Bill, he will find that it is intended to delete from the Act—

But of course.

Of course, but then he must not say that it has nothing to do with the Bill if he removes it from the Act. Later on, on page 4 in line 6, it is re-enacted …

Order! It is simply a rearrangement of the section and not a repeal.

With respect, Sir, it is a repeal of the subsection and a reenactment of it in a different guise.

No, I investigated this very thoroughly before the debate began. It is not open to discussion.

I shall then leave that line of debate, but I shall tackle the matter from a different point of view. The hon. member for Rustenburg went further and said that industrial expansion was tied to labour peace and contentment. He then went further to say that with the unrest which we had during the second half of last year, which is greatly deplored by this side of the House, very little of it, if any, took place in the border areas. The hon. member proceeded to draw the completely wrong conclusions. Why was there no unrest in the border areas? It is because the Act does not apply in those areas. The Act has been applied by the Government particularly in those areas where there was unrest. The application of this Act has been mainly in the Witwatersrand triangle complex and in the Western Cape …

And in Port Elizabeth.

… and in Port Elizabeth. Where were the hearts of the unrest? The hearts of the unrest were precisely in those three regions. That is where most of the unrest occurred. I believe it is precisely as a result of the application of this Act. I believe it was one of the contributory causes. The hon. member for Bellville had the temerity to make the statement that the Act is intended to assist in the decentralization of industry and the hon. member for Rustenburg went further and said that we must not look only at the individual industrialists who will be affected, but that we should look to the growth of the whole country. What are the facts since the Act was introduced?

Since the Act was introduced, 2 002 applications for extensions of factories have been refused, involving a total of 101 557 additional jobs for Black people. That is how the hon. member for Bellville and the hon. member for Rustenburg see the Act being applied to increase the industrial output of South Africa. Again I want to put it to the hon. the Deputy Minister that to try and tie a factory to the labour force that it had in 1968, is absolutely unreasonable. Does the hon. the Deputy Minister expect no growth at all? Have we had no growth since 1968? We have the situation that every single factory that wishes to expand in any way and that wishes to employ one more Black person, first has to run to the hon. the Deputy Minister to ask for his approval.

Order! I am sorry, but the hon. member is not discussing a clause of the Bill.

Mr. Speaker, may I draw your attention to the amendment which was moved by the hon. member for King William’s Town? The amendment has been accepted as competent in the debate and it reads—

I am now speaking to the amendment moved by the hon. member for King William’s Town in which he claims that it is essential that there should be extension and advancement of the industrial development in South Africa for the well-being of the country.

Yes, I accepted that amendment after due consideration. The Bill boils down to the fact that the main Act must be enforced in law. In any case, I accepted the amendment and the hon. member will be allowed some lattitude, but I shall stop him whenever I think that he is going too far.

I appreciate that, Sir, and I shall abide by your ruling. Dealing with the particular question of the growth, I believe the Bill goes a great deal further than simply—I am referring to what the hon. the Deputy Minister said when he introduced the Bill—to assist him in the administration of the intention of the Act. The intention of the Act is quite clear, i.e. that no person shall employ an additional Black person in those areas where the Act applies, without first having obtained the approval of the hon. the Deputy Minister. Where the Act does not apply, he has no jurisdiction. I believe that the matter goes a lot further than that and I should like to draw your attention to the new paragraph (a) of section 3(5), which is inserted by clause 2(b) of the Bill.

In terms of that provision we are for the first time being given a definition of “Bantu employee”. I believe that it is essential that the hon. the Minister has such a definition if he wishes to apply this measure. As he told us, and as we all know, there have been cases where the judicial officer has decided that because there was no definition of “Bantu employee” he was unable to sustain the charge and to convict the person concerned. Now the hon. the Deputy Minister seeks to introduce a definition of “Bantu employee”, which reads as follows—

So far, so good; I do not think anybody can argue with that definition. The definition then continues—

If we were asked to accept only that much, we would be prepared to say: “Well, we suppose it is reasonable. We disagree with the principle of the Act and we disagree entirely with what the hon. the Deputy Minister is trying to achieve with this Act, but it is an Act and to get it to work you need a definition of ‘Bantu employee’.” We would, in other words, be prepared to go along with that definition up to that point. But then the hon. the Deputy Minister goes further in the definition and says—

In saying that, I believe he is going beyond the scope of the Act. He is now introducing a completely new principle, something which is beyond the scope of what the Act provides for today.

Never!

“Never!”, says my hon. friend on the other side, who is supposed to be a learned gentleman! Has he not read the Bill? He must read it for himself and try to understand what is written there. I want to put it to the House that there is a hidden reason behind this Bill which the hon. the Deputy Minister did not disclose when he introduced the Bill. That hidden reason is the fact that many factories today are employing contractors to undertake certain services within those factories. The hon. the Deputy Minister does not like that, because in that way they are circumventing the provisions of section 3 of the Act, in his view. Because he has to be Lord Pooh-Bah of all industrial development in this country and because he must control any extension or any new development in the industrial field, he is now taking this power. The effect of this amendment is that if a factory owner employs a contractor to carry out some function in that factory, be it the cleaning, be it the maintenance, be it the gardening, be it the painting of the factory or anything else, and that contractor brings in Black workers as part of his team to carry out that contract, they will be counted as part of the work force of that factory owner. That constitutes an increase in the number of Black employees of the factory, and that then renders file owner of the factory liable to prosecution unless he first obtained a permit from the hon. the Minister to employ an outside contractor to carry out certain functions in the factory. The hon. the Deputy Minister is very quiet. He is looking very sheepish at the moment. I hear a few half-hearted “Nee, maars” over there in the comer, but I believe that this is true, because that is what is written here. If it is the intention of the hon. the Deputy Minister, then I believe he has sneaked something into this Bill which he tried to hide.

What have I done?

The hon. the Deputy Minister asks what he had done. What have I been trying to explain to the hon. the Deputy Minister? I have been trying to explain that he has sneaked something in here which was hidden. It is not simply an administrative measure, Sir. It is not simply being done with a view to the administration of the Act, to enable him to get a conviction in terms of section 3 of the Act. He has now extended the scope of section 3 to cover the Black employees of contractors who will go into the factory to undertake certain services under contract. If we go to page 4 and look at the proposed paragraph (b) of section 3(5) we find that even the employer of the Black workers who will go there under contract will find himself in trouble as well because he is assisting the owner of the factory. I do not believe that it is right that this power should be given to the hon. the Minister. I believe this argument widens the whole scope of the debate on the Bill to include the application of section 3 of the Act because section 3 of the Act is now being applied to another group of people. Those are the contractors who today are providing services to factories throughout the country. This is not a ruse which has been introduced simply to circumvent the provisions of section 3 of the Act. This has been a case of economic necessity. More and more in the world of economics today, both in commerce and in industry, people are using contractors to do certain services for them instead of employing their own people to do this work. Now we find caught up in the web of this legislation those innocent persons who have set up contracting services. They will now be caught up in this web because they happen to employ Black people who will temporarily be employed on the premises of an industrialist. The fact of their temporary employment on the premises of an industrialist amounts technically to an increase in the number of Black employees of that factory, which amounts technically to an extension of the factory in terms of section 3 of the Act, and that amounts to an offence which is being committed and which is punishable. Is it reasonable for the hon. the Deputy Minister to come here and ask us to accept a thing like that? I do not believe it is. For no other reason—let us forget all the other provisions of this Bill, let us forget that we are totally opposed to the application of the Act—I must support the hon. member for Hillbrow when he moves the most stringent opposition that we can to a Bill, namely that this Bill be read this day six months. What are the facts of life today?

The facts of life are that every business exists on expansion. No business can continue to exist if it does not expand. No business can stagnate. It cannot stand still, or it will go backwards. To expect these industrialists to remain at the employment figures of 1968 is ridiculous. The hon. the Deputy Minister’s department has tried to take action against these people. I find in reply to a question that during the first quarter of 1976 they tried to prosecute on 11 occasions and obtained one conviction. That is why we are today looking at this Bill, so that he can get more convictions, so that he can get 11 out of 11 convictions and not one out of 11 convictions. I am told that hundreds of other summonses were issued but that they were never brought to court because the hon. the Deputy Minister realized that he could not obtain convictions. Now he comes with this Bill to enable him to obtain those convictions. Why does he want the convictions? Why does he want to curtail the industrial development of South Africa? It is all very well those hon. members talking glibly about the provision of services, the provision of housing and the provision of transport facilities. I do not believe that those are matters of concern today because most of that infrastructure already exists. He has to look at the change in the pattern of labour too. In 1968 there were 26 500 Coloured workers in the clothing industry. Today there are only 21 000. Those 5 500 who have gone out of the clothing industry have to be replaced by somebody. The only people who can replace them are Black workers. That is why we are so opposed to this extension of the power to limit the number of Black workers that an industrialist may employ. They have to be replaced. Those Coloured people have gone up the scale of employment and are looking for better remunerated jobs. At the same time there is this massive Black unemployment. There is a mass of Black people looking for work and here we are asked to pass a Bill today which will limit the employment opportunities for Black people. The conservative estimate of the Bureau of Research at Pretoria University under Prof. Van der Merwe comes to a figure of 630 000 Black unemployed people. And here we are being asked to limit the number of job opportunities. I do not believe it is fair of the hon. the Deputy Minister to come with such an amendment.

There is the position of the clothing industry which I have mentioned and which has to be taken into consideration. It is significant that the inspectors of this hon. Deputy Minister’s department have started in the clothing industry, and that all the prosecutions that have taken place are taking place in the clothing industry. I believe that from here he will move on to other industries. The next one will be the leather workers and thereafter the furniture workers. These are industries where the Coloured workers have moved out to go into more lucrative employment, employment under better circumstances, under better conditions. These are positions of employment which the Black people need and which they seek and which they want. This hon. the Deputy Minister is today taking the power to even further curtail their employment in those regions.

Sir, I believe that I need not go much further. The Minister of Foreign Affairs designate has recognized, as he did last Sunday night in an interview over one of the media, that we need development, expansion and employment. We must have full employment. The hon. the Prime Minister says his greatest headache is the threat of unemployment in South Africa. The hon. the Minister of Finance says he needs greater growth in South Africa so that he can get more income to enable him to run our country as he should and so that we will have money for defence. Yet this hon. Deputy Minister, in introducing this Bill, attempts to limit further the work opportunities of the Black people. For this, if for no other reason—I shall not deal with the other clauses; there is no need to deal with them, because they have been adequately dealt with by others—I support the amendment of the hon. member for Hillbrow.

Mr. Speaker, I am pleased to have an opportunity to reply to the debate which has been conducted on the provisions of this Bill. Sir, I do not want to make your task a more difficult one and therefore, if you tell me that I am going beyond the framework of the provisions of the Bill, I shall obey you immediately. However, since several hon. members have nevertheless availed themselves of the opportunity, despite your friendly request, to touch upon certain matters, you will also allow me to say certain things here. In the first place I want to say something so that everyone may know about it, including the non-official Opposition, i.e. the new UP group, which unfortunately was not involved in it, and the PRP. I have always respected the official Opposition as an Opposition which I have to take into account. I also consulted the other Opposition groups in this regard as far as was possible. For the information of this House I want to say that, when these amendments were drawn up and after problems had arisen, as was pointed out quite correctly—and I myself never made any secret of it—in court, I did what I try to do in 90% of the cases when I deal with legislation, viz. to consult the main speakers of the Opposition parties in regard to this legislation and in certain instances even go so far as to ask my senior officials to attend the caucus meetings of the official Opposition and explain legislation there so that questions may be asked about it, and also to ascertain what misgivings there are on their part and then to consider the matter in a calm, sober atmosphere, in which we can sit down around a table to discuss matters like adults in an attempt to reach an agreement when there are points of difference. The hon. member who has just resumed his seat accused me of “trying to sneak something into the Bill”. Those were his words. But did he not have an opportunity to listen to my officials?

Yes.

He admits that he did. He was therefore present at a caucus meeting at which I afforded him the opportunity of questioning my senior officials at length in regard to this matter. However, he did not avail himself of the opportunity. To judge from the evidence of my officials, this was not said there, although my officials replied to the questions which were put to them. The hon. member comes to this House and accuses me as a Deputy-Minister of the Government, of trying to “sneak” something into the Bill.

Sir, I don’t mind a fight. I enjoy differing with people in all sincerity and fighting hard over an issue. Let me say that I did not afford the PRP or the IUP the same opportunity, for the simple reason that there was not enough time to do so. But I did consult the Official Opposition in this regard. Not a single member of the Official Opposition had the time—I do not want to say anything about the decency or consideration—to telephone me to say that they had misgivings in this regard. However, they have every right to do so. I do not in the least begrudge the hon. member for Hillbrow the right to move as drastic an amendment as the one he moved. When it comes to the merits of the matter, I am prepared to discuss them. I want to begin with the hon. member who accused me of trying to “sneak” something into the Bill. I want to tell him, he who is a legal expert and who was a member of the judiciary while I am no lawyer, that in the 1967 Act there is a section, section 1(4). Hon. members must remember that this is a law of Parliament, which I respect. I was not Deputy Minister at the time, but I accept full responsibility for the implementation of the Act. In section 1(4) the following is stated—

It is possible that we may differ in this regard. It is not only possible, I know for a fact that we differ. There are objections to this legislation, and I can understand the viewpoint of the people who have objections, particularly the industrialists. I understand the problems of people in particular industries, and I try as much as possible, by means of personal interviews, to persuade them to come and discuss the matter with my officials. This is legislation which I have to implement. When it came to the application of the legislation, it was discovered that “Bantu employee” ought to be defined in this legislation. It was then so defined. I explained to the official Opposition what the purpose of doing so was. None of them accused me of dishonesty or said that they thought I was trying to pull a fast one on them. The insinuation has been made in this debate that a Deputy Minister dealing with legislation in this House is trying to sneak something into the Bill in a dishonest way, while making pious speeches about it. I just want to tell the hon. member that this definition, as he as a lawyer will probably know, is not my definition. It has been drawn by the law advisers and I went through the legislation and all its implications properly with the law advisers and my officials.

Order! I should just like to clarify something. I have no problem at all with what the hon. the Deputy Minister said. The hon. the Deputy Minister, as I interpret it, did not accuse anyone of dishonesty, but I just want to make certain that it was completely outside the context of his words.

I want to say again: I am not accusing nor do I suspect, anyone of dishonesty. I am simply objecting to it having been said by implication here that I was dishonest in the introduction of this Bill.

The hon. the Deputy Minister may proceed.

Mr. Speaker, on a point of order: Is the hon. the Deputy Minister permitted to accuse me of having dragged in this point in a dishonest manner? [Interjections.]

Order!

Mr. Speaker, I would like to repeat what I understood the hon. member to have said in your absence. He said that I as Deputy Minister was sneaking into this Bill something which I did not tell them I was going to put into it. He implied that it was done dishonestly. There is no other way in which I can interpret it. If you rule it out of order, Sir, I shall immediately apologize.

I am not asking the hon. the Deputy Minister to withdraw or to apologize. I am simply asking him to accept the assurance of the hon. member for Pietermaritzburg South that that was not the way he meant it.

I gladly accept his explanation that he did not accuse me of dishonesty.

Let us now consider the merits of this matter. The hon. member said that this Bill contained a wider definition of the concept of “Bantu employee”. I do not want to quarrel with him on that score. If that is in fact the case, it is my honest attitude that, if the hon. member should move a relevant amendment, I am prepared to consider it. That is what we have a Committee Stage for. If something has been incorporated in this Bill which was not intended in the original legislation, it is a matter for consideration. It is only fair that such a matter be considered. However, it was never stated to me in this way, nor is that how I interpret the Bill. In any case I tried to assemble all the necessary information in regard to this entire matter. I am now going to deal with the other matters which the hon. member raised point by point.

†Mr. Speaker, I will try as best I can to steer clear of personal remarks. Nevertheless, I feel I have to reply to the personal remarks that have been levelled at me. The hon. member for Bryanston deemed it fit to pass certain personal remarks against me, remarks which I want to quote. That is why I asked the hon. member to be present to listen to my reply to this debate. Unfortunately I have only the translated version of his speech from which to quote. The hon. member said (Hansard, 1977, col. 3931)—

*The hon. member was referring to the welfare of the citizens of the country. He went on to say—

Mr. Speaker, I see the hon. member for Orange Grove is nodding his head. Apparently he is thus indicating his agreement. I repeat that I can endure anything from an honest and sincere fighter. What is being said and meant here, what is being said here to the unfortunate citizens of South Africa, is that there is a Deputy Minister here, a person who represents the Government, a person who presents himself in pious garb, but who is in reality committing murder of the innocents. And the innocents in this case are the Black people of South Africa. From this entire speech made by the hon. member for Bryanston it appears that I was allegedly introducing a measure here with the object of deceiving the Black people. He made allegations of dirty play, and called me a wolf in sheep’s clothing.

During all the years I have been in this House, and even in the years before that, certain allegations were sometimes levelled at me by people on my own side of the House on my views on the Black people of South Africa. However, I make no secret of the fact that I have the greatest respect for by far the majority of our Black people in South Africa. As far as I personally am concerned, I have endeavoured, and shall keep on doing so in future—regardless of what anyone says—to improve the conditions in which the Black citizens of South Africa find themselves. If an hon. member who has just been elected to this House levels an accusation at me and uses the words he used, he is not only doing his party an injustice—although I do not know what injustice can in fact be done to the policy of such a party—but he is also doing himself an injustice.

†I want to tell the hon. member that one can become at times vitriolic in one’s way of expression. I do not blame the hon. member for that. But when he becomes vituperative and vindictive, as the hon. member did, when discussing the merits of a Bill and casts suspicion on my integrity towards the Black people of this country, then I take the most serious exception to it. The hon. member can ask the Black men and women of South Africa to judge me on past deeds, and not necessarily only on the words which I say to the wide world.

Unfortunately they judge you on your words and not your deeds. [Interjections.]

I want to promise that I shall at all times try to show respect for the opinions of all members in this House, no matter how sharply we differ, by replying to them as fully as possible. But that young friend—the hon. member who bears an Afrikaans surname—has made himself a stranger to his own people and has sought friends elsewhere. That is correct. I try to befriend my English neighbours as I do all the citizens of South Africa. But the hon. member has also estranged members of the UP with his acrimoniousness towards them. He has made enemies, and is making strangers of the Black South Africans. The hon. member is making a stranger of himself in South Africa by the kind of hatred and suspicion which he is disseminating against me and against people like me.

†I want to reply to those arguments of the hon. members which had merit and were relevant to the Bill. He said that the Bill could perhaps cause unemployment. I want to agree with him, as I do with others, like the hon. members for Johannesburg North and Port Elizabeth Central and others who mentioned it. I think it should be repeated that one of the greatest dangers which this country might have to face up to could be the danger of unemployment.

*Unemployment will create a danger for all South Africans, Black and White.

†However, I am not saying this in reply to the debate.

*In all humility I want to draw the attention of the hon. members to the fact that an hon. member on the opposite side of this House said a few months ago, with reference to a newspaper report that—

†It was said by the hon. member for Pinelands. He nods his head in agreement. I accept responsibility for what I said weeks and weeks ago. We cannot afford to allow unemployment.

Questions were asked about the effect of the Bill, amongst others by the hon. member for Maitland. In question 243 the hon. member asked (Hansard, 3 February, col. 122)—

1. (a) How many prosecutions have been instituted in the last 12 months for contravention of section 3 of the Environment Planning Act;
2. (b) How many Bantu persons were prosecuted, and
3. (c) what types of industry were involved?

I shall read out the replies to those questions I think the correctness of those replies was not doubted by the hon. member. I quote—

1. (1) 13 prosecutions.

Then the question: How many Bantu were prosecuted? The reply was—

1. (2) Nil. Undertakings are prosecuted and not their Bantu employees.

Does the hon. member accept that as the truth? Question (3) was what type of industry was involved, to which the reply was—

The details of those were given. I want to read one detail. This was stated in a reply to question 298, which was put by the hon. member for Walmer. He asked: “How many persons have been prosecuted under the Environment Planning Act; what was the nature of the prosecution, and whether any other prosecution are pending?” The reply was that 13 undertakings were prosecuted. I quote the reply—

The hon. member for Walmer also asked whether there were any further prosecutions. The reply was “no”. There was also the question of how many Bantu were involved in these prosecutions. The answer was that 694 were involved. Only 694 Bantu out of the total working population on the Witwatersrand and elsewhere were involved. I shall give one example. They talk about factories. Out of this number of 694—the names were asked, so I can give them—a farming concern illegally employed 292 Bantu. So there are about 400 left. Over those all this fuss in the discussion of this Bill.

Before people talk about the unemployment that is going to be caused by the application of this Bill, I think they must first of all get their facts right.

*I want to go further than that. Previously I gave an undertaking. If it is said that it was merely an undertaking, which was just so many words, that was being given by a wolf in sheep’s clothing, I say that we held talks with leaders of the Garment Workers’ Union to find out what their problems were. I cannot disclose the nature of all those talks. The Cabinet Committee dealt with the matter. The question of Coloureds leaving the industry was thoroughly investigated. If hon. members want evidence on the outcome of those talks, I invite them to ask the leaders of the Garment Workers’ Union what the attitude of the department in regard to the problems was. When those problems were being discussed with us, after the prosecutions had been instituted, we immediately said that prosecutions would not be instituted merely for the sake of prosecuting people. That was never the intention. A circular was then sent out.

†I want to quote part of this letter seeing that it has already been circulated to all employers. I quote—

This letter went out to try to assist these people. What more can we do to assist.

*I should like to conclude by referring to one last absurdity which came from that side of the House. It has been asked why I am excluding local authorities from the provisions pertaining to quarries. Yesterday the hon. member for Bryanston presented a long argument in regard to the health legislation. He wanted to know why more powers were not being given to the local authorities.

†When we exclude local authorities and the provincial authorities from the provisions of an Act as far as quarries are concerned, the hon. member complains that we are legalizing illegal actions by Government departments. One day he wants this and the next day he wants something else.

*I am completely certain that I am incorporating into this legislation only that which I mentioned in my Second Reading speech.

Mr. Speaker, I move—

The few clauses of the Bill to amend the National Institute for Metallurgy Act, 1965, stem from the recommendations made by the control board of the institute. The envisaged amendments are not of a far-reaching nature and pertain to two aspects. Firstly they pertain to a person assisting the institute with a research project who is not an official or employee of the institute or has received a bursary or a grant-in-aid from the institute, and the awarding of a bonus or other financial benefit to such a person in the case of a discovery, invention or improvement made by him and, secondly, to a minor extension of the owners of the institute in regard to the assignment of the rights to a discovery, invention or improvement which are vested in the institute.

With reference to the first amendment, as indicated in clause 1 of the Bill, I must point out to hon. members that section 10(2) of the Act provides that the institute may award a bonus to any discoverer or inventor referred to in section 10(1), or that the institute may make provision for financial participation by him in the profits derived from such discovery, invention or improvement made by such a discoverer or inventor, to such extent as the Minister of Mines, in consultation with the Minister of Finance may determine.

Section 10(1) of the Act refers only to discoveries, inventions or improvements made by officials or employees of the institute or by persons to whom bursaries have been granted or to whom grants-in-aid have been made by the institute. Therefore the provisions of section 10(2) of the Act, read in conjunction with section 10(1), do not make provision for the award of a bonus to or for financial participation by persons making a discovery, invention or improvement while assisting the institute with a research project who are not officials or employees of the institute or who are in receipt of bursaries of grants-in-aid from the institute.

The institute sometimes works in close collaboration with other bodies on a particular research project and it may happen that a valuable discovery, invention or improvement which belongs to the institute may result from this research. This may happen particularly in the case of research projects jointly undertaken with the Atomic Energy Board. As I have already said, the Act makes no provision for a bonus or other financial benefit to be paid to “outsiders” in the research team, who have possibly made a valuable contribution.

It is consequently being proposed that section 10(1) of the Act be amended so that the right to a discovery, invention or improvement made by a person assisting the institute with any investigation or research and who is not an official or employee of the institute or is in receipt of a bursary or grant-in-aid from the institute, is also vested in the institute, and so that such a person may also qualify for a bonus or other financial benefit in terms of section 10(2) of the Act if he has made a valuable discovery, invention or improvement.

The amendment of section 10(4) stems from the amendment of section 10(1) and is necessary so that the provisions of section 10 may not be applicable in respect of a discovery, invention or improvement made by such an outsider other than in the course of research or investigation with which he was assisting the institute, and which has no connection with such research or investigation.

The second amendment, as set out in clause 2 of the Bill, seeks to bring about a minor extension of the powers of the institute in respect of the cession of the rights to a discovery, invention or improvement which are vested in the institute. In terms of section 11A of the Act the institute may cede such rights to the S.A. Inventions Development Corporation or to another body established by or in terms of a law which is competent to develop or utilize the discovery, invention or improvement. Section 11A therefore does not make provision for the cession of such rights to any other natural or juridical person. Provision for the transfer of the rights to other natural or juridical persons will constitute an important and essential change because it will make the involvement of a far wider field, namely the private sector, possible here.

Hon. members will note that another small amendment to section 11A is being proposed, viz. the insertion of the word “terms” preceding the word “conditions”. The position is that the institute may upon written agreement cede the rights to discoveries, inventions or improvements which are vested in it, on the conditions set out in the agreement. In such an agreement the institute also wishes to stipulate for financial benefits for itself as well, and it is therefore being proposed that the word “terms” be inserted to make provision for this as well. I think that this is reasonably clear.

Mr. Speaker, today the House is dealing with the National Institute for Metallurgy Amendment Bill. When the original legislation appeared before the House, it was strongly supported by this side of the House because we are very much aware of the need for a national institute of this kind as well as of the valuable work that it can do in connection with developing South Africa’s mineral resources.

Over the years, the Institute for Metallurgy has also shown very clearly that it is well able to make the very contribution which was expected of it. I had personal experience of the institute when I was attached to the atomic energy industry. I am also very well aware of the exceptional work which can be done, the technique which can be contributed and the assistance which can be given by a technical institute like this in the further development and exploitation of the mineral resources of South Africa. There is still a great deal of work ahead and although the institute has already made a very great contribution, there is still a very wide field to be covered, especially in regard to the further exploitation of South Africa’s resources before the broader mining industry as a whole can make its full contribution to the developing economy of South Africa.

An institute for metallurgy which is a Government body, is also limited in regard to the remuneration which it can give people who make major contributions to the development of its work and technique. Consequently we give our full support to the proposals included in the Bill which provide for certain remuneration for co-workers or contributors towards the work of the institute. Then, when important discoveries, inventions or improvements are made, in co-operation with the institute, by co-workers or even by persons employed by the institute, certain benefits should be available to them and there should be a sound system of rules to act on when remuneration for special contributions to the development of the institute and the development of the mineral resources of South Africa are at issue.

I doubt whether it is really possible to discuss the details of this legislation because the hon. the Minister has already explained it very thoroughly and clearly. Therefore I shall content myself by saying that we on this side of the House support the Bill and have no objection to the Second Reading.

Mr. Speaker, I merely want to inform the hon. the Minister that we will support this Bill.

Mr. Speaker, on behalf of my party I, too, support the Bill. It is simply aimed at facilitating the activities of the institute, and we welcome it.

Mr. Speaker, I thank hon. members for their support. I think that the legislation is quite clear. All we are aiming at with this Bill, is to ensure that those people who assist in developing the affairs of the institute, are remunerated. I had expected hon. members to support the Bill, and I thank them for doing so.

Question agreed to.

Bill read a Second Time.

Committee Stage taken without debate.

Bill read a Third Time.

Mr. Speaker, I move—

The Bill to amend the Atomic Energy Act, 1967, pertains primarily to the facilitation of certain functions of the Atomic Energy Board in regard to which an increasing need for more efficient implementation has developed. Hon. members will note that some of the amendments have financial implications. I shall deal with the amendments in sequence, and shall explain the nature of and the need for each amendment. Amendments with financial implications have already been approved by the Treasury.

†Clause 1:

Certain new provisions regarding the cession of the rights in any discovery, invention or improvement vesting in the Atomic Energy Board, to the South African Inventions Development Corporation, will be explained to hon. members when I deal with clause 7. A definition for the word “corporation” referred to in these new provisions, is necessary in order to indicate that it means the South African Inventions Development Corporation established by section 2 of the Inventions Development Act, 1962.

*The amendment of the definition of “special nuclear material” arises from a need to eliminate duplication of authorities through the application of sections 7(1)(e) and 8(1) of the Act. Section 7(1)(e) of the Act provides that no person may obtain, import, export, or be in possession of or dispose of any special nuclear material without the written authority of the Minister of Mines, while section 8(1) provides that no person may, except under written authority of the Atomic Energy Board, produce, otherwise acquire, dispose of, import into or export from the Republic of South West Africa, or be in possession of, or use, or convey or cause to be conveyed, any radio-active nuclide.

Authorities under section 8(1) are granted by an authorized officer on behalf of the Atomic Energy Board and authorities in terms of section 7(1)(e) are issued by the president of the board in terms of the power delegated to him by the Minister of Mines. Because certain radio-active nuclides, for example any isotope of neptunium, plutonium, americium and others are also special nuclear material, separate authorities have to be issued in terms of the said sections, viz. firstly an authority under section 8(1) and subsequently an authority under section 7(1)(e). The president of the board has to sign personal authorities under section 7(1)(e) in respect of special nuclear material the concentration limits of which are not really intended to fall under section 7 of the Act for security reasons. For this reason the amendment is being proposed so that dual authorities will be required only in respect of radio-active nuclides containing special nuclear material above the concentration limits determined by the State President.

In this way duplication of work in this respect is to a large extent being eliminated.

†Clause 2:

Section 10 of the Act makes it compulsory for persons who acquire certain information concerning source material in the course of prospecting, mining, research and other activities, to submit particulars about the occurrence and locality of this material to the Secretary for Mines. It is considered essential that such information be also supplied directly to the Atomic Energy Board, and the suggested amendment will expedite the board’s evaluation of this information.

Clause 3:

Section 12(5) of the Act makes provision for the appointment of, inter alia, alternates to those members of the board representing persons engaged in commerce and industry. As these alternates seldom attend board meetings, and are, owing to the nature of the board’s activities, not fully conversant therewith and consequently unable to render substantial contributions thereto on the rare occasions upon which they do attend board meetings, it is deemed advisable to abolish these alternates. This measure will also reduce the distribution of secret documents. I should like to add that this clause has been fully discussed with all the concerned parties.

*Clause 4:

The amendment to section 18 of the Act stems from the amendment of the sections pertaining to patents and special investigations which I shall deal with later. Section 18 is exclusive and authorizes only certain sources of revenue for the board. When the board concludes agreements in regard to the rights to discoveries or patents, it must also be able to stipulate for moneys or royalties and pay such proceeds into its research fund.

The amendment of section 18 seeks to enable moneys which are paid to the board in terms of section 27(1), 28 and 28A to be paid into the research fund of the board and also to exclude moneys obtained by virtue of an agreement in terms of which the rights to a discovery, invention or improvement in terms of section 28 or 28A are made available for use in the public interest from the moneys paid out annually by the board to the contributors or former contributors to the research fund of the board. It is already the position that the moneys obtained from the licensing or sale of patents of the board acquired in terms of section 28(3) of the Act are not utilized for payment to the contributors or former contributors to the research fund of the board. In this respect, therefore, there is no new principle at stake.

†Clause 5:

The amendment of section 27(1) is proposed in order to enable the board to involve persons, other than officers of the board, in projects initiated or financed by the board. The board is approached to an increasing extent by parties interested in joint projects from which inventions may come to light. Joint projects with personnel of the National Institute for Metallurgy are also undertaken. The right to any discovery, invention or improvement made by such other person or “outsider” while assisting the board in any investigation or research, will also vest in the board. The amendment to section 27(1) of the Act will have the effect that such other person or “outsider” will, in respect of any discovery, invention or improvement made by him while assisting the board in any investigation or research, also be considered for a bonus or other financial benefit in terms of section 27(2) of the Act. The deletion of the words “on behalf of the State” is really necessary because the retention of the words would in the first instance render the cession of patents for exploitation purposes difficult. By the deletion of these words no actual monetary loss is caused to the State as the patenting of inventions of a scientific nature is usually a protective measure, such patents being seldom commercially exploitable on a profitable basis. This suggested amendment also brings section 27(1) in line with the corresponding provisions of the NIM and CSIR statutes. Any income derived from such inventions will be paid into the Atomic Energy Research Account from which the board’s research and development programme is financed. From this programme inventions and patents may arise. The words “terms and” are added to make provision for terms such as financial arrangements which are not really conditions in a strictly juridical sense.

These amendments have been approved by Treasury.

Clause 6:

A new section 28 is proposed which will widen the scope of the present section 28 in the following respects:

1. (a) Subsection (1) is to be divided into two paragraphs. In paragraph (a) the words “terms and” are added for the same purpose as indicated above and paragraph (b) is inserted to cover matters falling outside the scope of the Act. This is advantageous to the board for its expertise can be applied in the national interest to investigations which cover wider areas than purely nuclear matters. Ministerial approval is required for such investigations on the basis of agreements, to ensure that the privilege is not abused. This measure has retrospective effect to cover existing agreements.
2. (b) The scope of subsection (2) is widened to make provision for joint ownership by the board and another party. This measure is equitable and practical to ensure that the interests of the parties to the agreement are protected as well as to eliminate the possibility of disputes.
3. (c) The proposed amendments to subsections (3) and (4) are consequential to the express provision for financial arrangements.
4. (d) Subsection (5) is inserted to cover the financial arrangements where joint ownership is agreed upon and also to provide for the possibility that the application for a patent in the name of both parties or only in the name of the board can be made for practical reasons.

Clause 7:

The proposed new section 28A is introduced in order to make provision for cession of the board’s rights to inventions, discoveries and patents for the purposes of exploitation to the South African Inventions Development Corporation defined in clause 1, and also to any other natural or juridical person. The board is approached to an increasing extent by the private sector in regard to special investigations. Therefore provision for cession and assignment of rights on a wider basis is essential.

Mr. Speaker, in dealing with the previous Bill, on the National Institute for Metallurgy, it gave us pleasure to be able to support the Bill without demur. Although the Atomic Energy Amendment Bill deals with some matters similar to those that are included in the National Institute for Metallurgy Amendment Bill, I am sorry to say that we cannot give the hon. the Minister the same support.

The Atomic Energy Board is responsible for the development of nuclear energy in South Africa. Its functions are largely those of research, promotion and development. Although it has been in existence for some 20 years more or less, its functions—through no fault of its own—remain limited to the fundamental functions of research and development. The fact is that we do not yet have any nuclear power-station in South Africa, we do not yet have a commercial enrichment plant in South Africa and we do not yet have a fuel fabrication plant in South Africa. In other words, the commercialization and exploitation of nuclear energy in South Africa has not yet really begun. Nevertheless, the Atomic Energy Board has thought it right repeatedly to introduce legislation into Parliament in order that various terms of reference, regulations, modes of procedure and prospects, whatever they might be, should be set right from time to time and year by year. We feel that there is a degree of complication and elaboration which runs ahead of the actual needs which may arise, in the legislation which is brought to the House. Nuclear energy and the circumstances which apply to nuclear energy are in a process of constant change. This is entirely true, but because of this fact I believe that the time for renewed legislation and the time for amending legislation will come when these needs arise. If one anticipates from year to year what kind of changes are necessary in atomic energy legislation, one will never stop legislating and the Atomic Energy Board, which does not realize the nature of these changes and the imposition it places on a Parliament, will, in fact, become a legislative nuisance. I do not wish to put my criticism as high as that in respect of the Atomic Energy Board, but I wish to warn of a degree of impatience at the repetitive amending legislation that is put before the House year after year. I believe it is unnecessary and extravagant The Atomic Energy Board would be well advised to look to the simplification of its legislation rather than to the complication and the multiplication of it.

As regards clause 1 of the Bill, we can quite see the need for the amendments which have been brought. We do not believe that they are of an urgent nature, but they seem to be justified as they stand. In regard to clause 2 we have the situation, in terms of the original Act of 1967, whereby any person wishing to prospect, mine or otherwise look for nuclear sources and who discovers such sources, is obliged to report his findings to the Minister of Mines. The hon. the Minister of Mines is the Minister who has been appointed by the Government as being responsible for the work and the activities of the Atomic Energy Board. We now have the inclusion of an amendment requiring that prospector, the investigator, the finder of uranium resources, to report his findings not only to the hon. the Minister of Mines and his department, but also to report the same details to the board which is subordinate to the hon. the Minister and his department. Why this duplication should be necessary, I simply do not know, nor has the hon. the Minister made any attempt to explain to us why the obligation resting on a person who is, after all, rendering a public and economic service to the country, should be multiplied and complicated when it is, in fact, the simplest thing in the world for such a person to do his duty by reporting to the Ministry of Mines which will have no difficulty in informing the authoritative board under its control of the findings and asking that board to investigate the matter. It seems to us one of these unnecessary complications and unnecessary duplications that are introduced when one goes for legislation on such a large scale as unfortunately appears to be the case with the Atomic Energy Board.

Clause 3 conceals more than it reveals, but the hon. the Minister has been quite frank. It is the intention to exclude representatives of commerce and representatives of industry form membership of the Atomic Energy Board. I believe that this may well be justified. I do not know whether, at the present stage of the development of atomic energy in this country, it is in fact necessary for representatives of commerce or of industry—and I use these terms in the broad sense—to be members of the Atomic Energy Board. I believe that that time will come, and that atomic energy in this country will in fact develop to the level where it will be in the direct interest of commerce and of industry to be represented in the development of atomic energy in this country.

They are represented now, as you know. This concerns the alternates.

Yes, but the hon. the Minister made it clear when he introduced this amendment that commerce and industry had agreed that it was not so important that they should be present. I believe that this is a temporary attitude of mind and that atomic energy will yet play so important a part in the affairs of this country that they will in fact clamour to be represented. They will make entirely sure that when affairs of atomic energy are discussed, they will indeed be present at such discussions. I think it is also true to say that they have made quite a considerable contribution in the past. There are those who have represented them who have made their contributions. They have also made financial contributions towards the research programmes. I believe too that although this amendment is perhaps necessary, the omission of alternates from commerce and industry may well be something that will have to be looked at again at a later date. This, however, supports my original argument that in a developing science and a developing technology like atomic energy, it is not necessary, in anticipation of ultimate development, to come to this House every year in order to make those minor adjustments and improvements to the legislation which are not really of an urgent nature at the present time.

As regards clause 4, we have no particular objections.

In clause 5, we have a provision which is very similar to one which we have just agreed to in the case of the National Institute for Metallurgy. This clause relates to the rights of people who make inventions, discoveries or improvements in conjunction with the board. But now we find introduced into the new subsection (1) of section 27 of the principal Act an additional provision which differs from that in the National Institute for Metallurgy Amendment Bill. This clause, with which I shall deal more fully in the Committee Stage, if necessary, contains an additional provision in that the rights in discoveries, inventions and improvements “in relation to any matter within the purview of the board in terms of this Act, and in any discovery, invention or improvement of whatever nature, whether within the purview of the board or not, made by such officer or such a person in the course of any investigation or research initiated or financed by the board, shall vest in the board.” All of this is an addition and it is a qualification which makes an important distinction as between this Bill and the one we have just passed. We are curious to know why this should be necessary. I hope that when the hon. the Minister replies he will indicate why a provision which was entirely acceptable in the case of the National Institute of Metallurgy Act should in fact require this further elaboration in the case of the Atomic Energy Board.

We then come to clause 6, where we have a very real difficulty. I have in fact given notice on the Order Paper of my intention to ask for the deletion of the proposed section 28(1)(b). The new section 28(1)(a) provides that—

This makes fairly good sense. The board may by arrangement with any person and on such conditions as may be agreed carry out or cause to be carried out special investigations with a view to making improvements, inventions, etc. We have no objection to that, and we support it.

Now, however, comes this curious addition in the form of paragraph (b), which reads as follows—

I do not know whether there is any precedent in the legislative history of South Africa where a Bill is brought in which it is said that arrangements may be made with the approval of the Minister for a board to enter into an agreement with any person in relation to any matter falling outside the purview of the Act. This gives absolute carte blanche, it is a blank cheque. It means in effect that the board, subject only to the Minister’s approval, may speak to anybody it likes, in any place it likes about anything it likes in order to enter into an agreement about anything which falls outside the Act and outside anything contemplated in the Act. If for example the board should get it into its head to take part in space research programme or to investigate the improvement or the invention of a new type of ice cream factory in Korea, it is not excluded, but is entirely permissible. It is the most extraordinary provision that I have seen in my brief experience in Parliament. I believe that it goes so wide and lends itself to such abuse that it is unthinkable that Parliament should agree to pass such a provision.

I do not know whether the hon. the Minister was aware, when he undertook to introduce this Bill to Parliament, what the exact implications were, because it goes so wide as to stagger the imagination. I believe that it is totally unsuitable as a measure to be introduced into this House. I believe that if we wish to seek powers and if we wish to authorize the board to do certain things, we must say specifically what that board may do. If we wish to widen the powers, then surely we cannot go wider than to say “and to do all things contemplated within this Act”. That is a fairly wide authority. In that case Parliament at least knows what kind of authority it is giving to the board. It then knows that, whatever the board may do, it must do so within the purview of what is contemplated in the Act. How can one say to the board: “You may do anything you like outside the purview of the Act, outside anything Parliament has contemplated”? The hon. the Minister mentioned that the board is obliged to consult him before it does this so that he may keep them on the rails. Sir, we demand the same of an hon. Minister. When a Minister comes to this House and asks for delegated authority to deal with legislation by regulation or at his discretion, we at least give the Minister that permission within the ambit of the legislation we are contemplating. We give him those extra powers, those discretionary powers, within the limitations of the legislation which we contemplate when we give him those powers, because then Parliament knows what he is doing. It will then know what the limitations are within which the Minister will be acting. But Parliament never gives, even to a Minister, the right to use his discretion about any matter falling outside the legislation under discussion because this gives him absolutely unfettered jurisdiction to do whatever he may like anywhere he likes and with anybody he likes. Unless the hon. the Minister can give us a far better explanation and far stronger assurances than we ourselves can find anywhere in this Bill, we shall have no option but to oppose the Second Reading. There is much in the Bill to which we do not object. On balance we have few quarrels with this Bill. However, if the hon. the Minister feels it is essential to include a clause of this nature, he leaves us absolutely no option but to oppose this Bill at Second Reading.

There are some other matters to which I could refer as regards the remainder of clause 6, but I think this will keep for the Committee Stage. This applies also to clause 7, which, broadly speaking, is entirely acceptable to us on this side of the House. They are no cause for anxiety and we can deal with them briefly in the Committee Stage. However, I wish to make it quite clear that in the absence, firstly, of the withdrawal of the particular provisions in clause 6(1) which amends section 28 of the Act and, alternatively, in the absence of an extremely good explanation by the hon. the Minister which will satisfy us entirely in respect of the objections I have raised, I am afraid we have no option but to oppose the Second Reading of the Bill.

Mr. Speaker, I do not want to go over the same ground which the hon. member for Von Brandis has already covered in great detail. However, I do want to tell the hon. the Minister that we agree with the reservations which have been expressed by that hon. member, particularly in regard to clause 2 of the Bill and, of course, in regard to the proposed section 28(1)(b) as set out in clause 6.

I hope the hon. the Minister will in his reply give us an explanation. He says that information is not readily transferable from the Secretary for Mines to the Atomic Energy Board in regard to written reports submitted by those prospecting for uranium and other nuclear material. To be quite honest, Sir, we find that difficult to comprehend. I would have thought an internal administrative arrangement could have been set up between the Secretary for Mines and the Atomic Energy Board and that therefore the necessity for prospectors to produce reports to the board would then fall away. Let us assume someone finds a source of uranium in, the course of normal prospecting activities. Within 30 days he has to submit a report to the Secretary for Mines—nobody objects to that. It is obvious that if, at that point of time, one is going to insist that a similar report be given to the board, it is of cardinal importance that—and I am not suggesting that any risk is involved—the matter be treated with the greatest confidentiality, because as I understand it there are three representatives of the mining industry on that board and, naturally, if a report is submitted prima facie, presumably the location would have to be given of where the source has been detected. That would then be available to the members of the board. I am not in any way suggesting that the members of the board are not going to treat the matter as being confidential. All I am saying is that by peripherating the necessity to impart knowledge at a very early stage, the risk to the prospector will be increased to some extent. Clearly, if one comes across uranium 12 feet or deeper underground, one will need more than 30 days to evaluate whether one has a viable ore body, and clearly this is a point where the proliferation of information from the prospector will be something with which they are concerned.

I should now like to deal with clause 3, which deals with section 12 of the principal Act. I take the point that the hon. the Minister has said that the representatives of commerce and industry, or at least their alternates, are required to attend meetings so rarely that they are really not au fait with the workings of the board and that, therefore, their contributions must of necessity be somewhat limited. He also made the point about security and the confidential nature of the matters discussed. I hope the hon. the Minister will give us two assurances: Firstly, that this is not a matter which will necessarily be put out of mind in the sense that it is an indefinite prohibition, but will always be subject to review; and secondly: Could the hon. the Minister tell us whether the two representatives who are there at the moment attend the meetings in a very regular way? To be honest, I do not know how often the Atomic Energy Board meets during the course of a normal year. If it is 10 times, or whatever the figure may be, could the hon. the Minister tell us whether the present representatives of commerce and industry have been attending the meetings regularly?

The basic objection put forward by the hon. member for Von Brandis lies in clause 6, which deals with section 28(1) of the principal Act and which comes with this new addition to those powers. In his introductory speech the hon. the Minister said that where these matters fell outside the purview of the present Act, in the sense of giving powers to the board, and subject to his agreement, it would relate to matters which arose from the experience and skills developed by the board so that they could be used in a different sphere when that was in the national interest. That sounds perfectly reasonable, but unfortunately the point is that simply no restriction or restraint is put on this. It is obvious, as the hon. member for Von Brandis has said, that, technically speaking, this could be used for any purpose and in any part of the world. I doubt very much that that is the hon. the Minister’s intention, and I therefore hope that he will indicate either that he is prepared to delete the clause—which I would think is unlikely—or that he would be prepared to consider an amendment which restricts the ambit of this particular power which is being given, because, after all, once this power is given it has a natural tendency to surface elsewhere. There could then be a whole series of boards who could literally do anything outside its traditional role, subject only to the agreement of the Minister.

We therefore support the hon. member for Von Brandis, and in the absence of either the deletion of the clause or the placing of restraints on the power which is being sought here, we shall not be able to support the Second Reading of the Bill.

Mr. Speaker, the hon. member for Von Brandis and the hon. member for Johannesburg North raised certain objections to this Bill being passed. I do not think that most of the aspects to which the hon. member for Von Brandis objected actually amount to very much. What his first objection amounts to is that it is annoying that the Government makes amendments to this legislation from time to time and that this is being done in a way which is actually irritating. The hon. member for Von Brandis should really bear in mind that we are dealing here with a matter which is especially important and especially valuable. Therefore, where the board has seen fit to make amendments in the interests of this matter, the hon. member must also bear in mind that, wherever possible, Parliament will be accommodating in regard to accepting these recommendations.

Furthermore the hon. member alleges that he cannot understand why anyone who has made a certain discovery should send the particulars in connection with such a discovery or invention or whatever to both the Minister and the board. According to the hon. member this is supposedly an immense duplication. But it is such a simple matter to draw up those particulars in duplicate and send a copy of them to the board. Consequently I cannot understand the hon. member’s problem in this connection.

The problem of the hon. member for Johannesburg North in regard to this clause also boils down to the fact that it will be very difficult to present the particulars in connection with the basis of his opinion to the Secretary of Mines and the board within 30 days. However, it is quite clear that the person who has developed the process concerned or who has carried out the research concerned, is only obliged to provide the above-mentioned particulars once he has reached his conclusions.

Moreover the hon. member for Von Brandis made certain concessions to the hon. the Minister and said that there were certain aspects of this legislation which, in his opinion, may possibly be essential. He says that he has no particular objection to these. For instance, he refers to the fact that the secundi of certain representatives of trade and industry are no longer allowed to attend meetings of this board. I think that the hon. the Minister motivated this matter completely. I believe it is in the interests of the confidential nature of the activities of the board, and that it is also in the interests of the organizations that approved of this. As regards the questions which the hon. member for Johannesburg North put to the hon. the Minister in this connection, I take it that the hon. the Minister will reply to them in greater detail.

I now come to the most important objection which the hon. member for Von Brandis raised, in which he was supported by the hon. member for Johannesburg North. That objection concerns clause 6(1)(b)—

Hon. members must bear in mind that we are here dealing with legislation which, essentially, is aimed at matters which are very much in the interests of South Africa and that it is important for the Atomic Energy Board to have as many powers as possible. Moreover there are certain limitations. Firstly, there is the limitation in clause 6(1) which provides that—

The agreement is being entered into for this purpose. In other words, the first limitation is that the board can enter into an agreement with any person or body with the object of making discoveries, inventions or improvements. The provision concerns this aspect and not an ice cream factory in Korea. I think such an idea is ridiculous.

A second very important limitation is that it is subject to the approval of the Minister. It can therefore be discussed by the House and is, consequently, subject to further consideration and review by this House.

Thirdly, as regards the objection advanced by the hon. member for Von Brandis, he must look at section 28(2) of the Atomic Energy Act, Act 90 of 1967—

I want to suggest that the words “whether within the purview of the board or not actually presuppose that certain agreements could have been made which would have fallen beyond the purview of the board and therefore beyond the purview of the Act as well. Therefore I think it is quite fair for the board to be able to use the important knowledge and information at its disposal in order to further matters which may be very much in the interest of South Africa. The arguments of the hon. the Minister are well-founded and I support the Bill unhesitatingly.

Hon. members objected to national interest being such a decisive factor in legislation of this nature. I want to agree entirely with the hon. member for Johannesburg North in this connection. It is essential for information of this nature to be considered confidential and for the activities of the board to be in the national interest in all respects.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Speaker, I listened with interest to the contribution to the debate made by the hon. member for Brakpan. The hon. member is trying to argue that the objection of the hon. member for Von Brandis to the many amendments to this Act, is not really applicable. However, the Act has already been amended five times since it was submitted to the House for the first time. I think the argument the hon. member for Von Brandis advanced, was justified. If only we had given a little more thought to the Act before it was submitted, we could have had fewer amendments. Moreover, many of the amendments are not really of an urgent nature, although the hon. member does not feel strongly on that aspect.

The second argument the hon. member for Brakpan advanced was that he could not understand why one cannot simply make a duplicate of the report mentioned in clause 2, which has to be given to the Secretary of Mines. I want to tell the hon. member that this is not a traffic ticket that can simply be written out. In many cases, the information in a report like this makes for a very intricate technical document with charts and all sorts of details. One cannot just go ahead and make a duplicate of such a report.

Mr. Speaker, may I ask the hon. member a question?

No. The question the hon. member for Von Brandis put, was why it was now necessary for a duplicate report to be handed over to a board under the control of the Secretary of Mines, on which the latter also serves. There is therefore more than enough liaison, and it is probably not difficult to furnish the board with this information if the secretary of the department is already serving on that board. We should like to have a little more background to this clause.

I now want to refer to clause 3. As regards the question of replacement—which the hon. member for Brakpan, probably as a consequence of his Potchefstroom background, referred to as secundi—we shall have to realize that commerce is going to become increasingly important. If we look at the periodical Kernaktief, we see, for example, that the Atomic Energy Board is conducting research into the use of radio-active rays to keep fruit fresh in a better condition, and into preventing the problem of bacterial contamination in the process. This sort of development is going to bring commerce into alignment with the Atomic Energy Board to an increasing extent. All we ask is that consideration be given to approving replacements, if there are in fact any. Perhaps they could be approved in advance and not every time someone is nominated. It is not important, but I point it out because the hon. member for Brakpan is apparently a little upset about it.

I want to come back to clause 6. Mr. Speaker, I think you will realize that to a degree, this clause is a very interesting one because it raises certain new aspects. I am not a real attorney—just an amateur attorney— but I want to tell the hon. member for Brakpan that there is a very great difference between the meaning of the words “within the purview of the board or not” that appear in section 28(2), and the provisions of section 28(1)(b). The latter provision is expressed very widely. I think it would be wise of the hon. the Minister to be a little accommodating in regard to this clause.

Yes, he knows everything! [Interjections.]

We welcome many aspects of the legislation because we know that what our Atomic Energy Board does, is of the utmost importance for South Africa. We also believe, however, that the right of the House of Assembly to deal with legislation is of still greater importance than the work done by the Atomic Energy Board. I want to assure the hon. the Minister, however, that we are aware of the problems he has to contend with and that we realize that this is a very sensitive area, particularly in the light of the present situation in South Africa. I want to assure the hon. the Minister that we will afford him all the co-operation possible in this regard, but we believe in the sovereignity of the House of Assembly and hope the hon. the Minister will do something about clause 6.

Mr. Speaker, we on this side of the House by no means share the misgivings of the hon. member for Von Brandis in relation to the Bill. The hon. member’s argument was that too many amendments appeared in the Bill and that it was too early to effect the amendments. We consider the Atomic Energy Board to be a very worthwhile body that does very good work. We also accept that it took its problems to the hon. the Minister and that it requested him to submit an amendment Bill to eliminate its problems.

Now you are talking like a good Nat!

I shall act responsibly whenever it is in the interests of South Africa … [Interjections.] … and I shall not use this House to score petty political debating points off anyone. [Interjections.] Nor do I want to waste the House’s time if I do not have good arguments. [Interjections.] We consider the Atomic Energy Board to be a very worthwhile body and we accept that the amendment was moved at the request of the board. We believe that the hon. the Minister is making an effort, by way of the legislation, to facilitate the activities of the board and we are not going to stand in his way. However, we too have our misgivings about clause 6(1)(b), which, in my opinion, is badly worded. I do not doubt for one moment, however, that if we were to take our problems to the hon. the Minister …

The hon. the Minister is going to withdraw it!

… the hon. the Minister would request his legal draftsmen to word the section better so as not to cover such a wide field and we would therefore not experience any more problems in that regard. We shall support the Second Reading of the Bill and if the hon. the Minister does not request his legal draftsmen to word the section better, we shall debate the clause in the Committee Stage as well as during the Third Reading, as responsible people do. We are not going to delay the Second Reading of the Bill or in any way stand in the way of the Atomic Energy Board to prevent it from doing its work efficiently in this country.

Mr. Speaker, I am sure that the hon. the Minister must be somewhat comforted by the knowledge that having friends like the hon. member who has just sat down, he does not need to fear any enemies at all.

The hon. member for Brakpan has endeavoured to deal with clause 6 and I should like to come back to what he has said about it in order to try to convince the hon. the Minister why this side of the House is not prepared to accept the provisions contained in clause 6 which seeks to insert section 28(1)(b). I listened with a great deal of interest to what the hon. the Minister had to say in this regard. I must say that he gave us a very interesting explanation of the purpose of his amendments. He particularly drew reference to the many functions of the board and the important part it has to play in the life of the country. None of these views we disagree with. It was very interesting to know that the hon. the Minister was prepared to substantiate every amendment in the Bill by referring to the importance of the Act and the value of the Act and by telling us why he felt that an amendment should be introduced. I listened to the hon. member for Von Brandis, who has a great deal of knowledge of this subject. He certainly knows a little more than I do of the specific technical matters involved in this particular Bill and the subject of uranium, more particularly of U-233, on which the hon. member once gave a very interesting exposition to the House. I must accept that he was well motivated in his views when he criticized what he felt was perhaps over-legislation. Nevertheless, that is a matter which I must leave to the hon. the Minister to deal with because he obviously feels that it is necessary although I must say that I do accept what my hon. colleague has said and I would be prepared to abide by his views on this particular matter.

One of the important aspects of this question of what the hon. member for Von Brandis calls the proliferation of legislation, is the constant introduction of amendments to try always to be just one step ahead. Although this is not a blameworthy purpose, one’s attention is particularly directed to clause 6. The thing that strikes one immediately in this endeavour to ensure that the Act works as perfectly as possible, is that the clause, which talks about the board being able to proceed with similar agreements with regard to inventions, discoveries, investigations and so forth, does not only deal with matters which fall within the purview of the Act itself, but can with the approval of the hon. the Minister even deal with matters falling outside the purview of the Act.

I would like to draw the attention of the hon. the Minister to clause 5 of the Bill, which similarly mentions agreements of this nature. It mentions for instance grants-in-aid to people and states that where discoveries and inventions are made by members of the board or persons other than officers of the board, these people must make such discoveries available to the board. It deals with matters, whether within the purview of the board or not. That one can well understand in a Bill of this nature where the board has certain functions to perform related specifically to the nuclear field. The board may find itself possibly dealing with matters falling outside the nuclear field, as the hon. the Minister stated in his motivation for the specific amendment I am dealing with. As I have said, clause 5 makes provision for matters falling outside the purview of the board and the functions of the board. However, when we deal with a clause which gives the board a right, albeit with the approval of the hon. the Minister, which is perhaps the cardinal factor in the whole amendment, to deal with matters falling outside the purview of the Act, then I feel that it is contrary to the very spirit of the Constitution of the Republic. After all, the Constitution of the Republic makes provision for the executive. It makes provision for Parliament to function with an executive and other subsidiary authoritative bodies such as provincial and local authorities. Therefore the executive is an instrument of a statute. The executive should be subject to Parliament and the laws of the country. Because of the tremendous expansion in the activities of the executive it has become common practice for powers to be delegated. But as the hon. member for Von Brandis has said, in his short experience and in my longer experience and I am sure in the experience of members who have had a longer experience than we have had, we have not seen a Bill in which a Minister is being authorized to take certain actions and do certain things outside the purview of an Act which has entrusted him with these powers. To me this is an extraordinary situation. We know that according to accepted democratic practice on which our Constitution is based the affairs of the citizens should be regulated within the framework of the laws which Parliament has adopted. Legislation is the only machinery for the delegation of the powers of the executive and this should only be within the limits which should not exceed the supreme authority of the legislature. The hon. the Minister, therefore, although carrying out powers, should nevertheless carry out those powers in terms of a statute which the legislature has brought into being. Perhaps I may draw the hon. the Minister’s attention to what was said by a person who gave evidence in 1949 before a Select Committee which considered the question of the delegation of powers. He described the delegation of powers as follows—

This has been the cardinal principle of any parliamentary approach to the delegation of powers, i.e., that one has to view it cautiously and carefully, whilst accepting that delegation of power is in fact necessary. If the executive were to be given power to administer every law within or without the purview of the law, i.e., if the executive were empowered to take such action outside the ambit of a law which Parliament has adopted, we would be reaching the stage of a bureaucratic dictatorship. That would be silly, and the hon. the Minister would be the last person in this world to accept a view of that nature. I think that the Bill could easily be amended. All that it has to provide is the following—

That is all that is supposed to be. I think the hon. member for Von Brandis made it clear that as far as he was concerned, the board carried out the wishes of the statute under the surveillance of the Minister in charge. He made it clear that the board was the instrument of the Minister in carrying out these powers. Therefore, if the board has to carry out any action under the aegis of the Minister himself, it should be within the purview of the Act itself. These are the matters that we feel strongly about and the grounds on which we believe that we cannot accept the Second Reading of the Bill.

Mr. Speaker, the hon. members conducted the debate on four points and I should like to reply to all four of these matters. In the first place the hon. member for Von Brandis said that he was surprised that we were coming to Parliament so frequently with legislation in regard to the Atomic Energy Board. I want to concede that the hon. member is correct on that score. One does not like coming to Parliament repeatedly with legislation because it may appear as though we cannot finalize the matter, or do not know what course we want to adopt, or do not know what the scope and effect of the legislation will be. But I want to point out that one will not come to Parliament with legislation from time to time unless it is, necessary.

I also want to tell the hon. member that he and I have to accept responsibility for the legislation which is now before this House. You will recall, Sir, that in the past it was necessary on more than one occasion to return to Parliament with amendments to the Atomic Energy Act. The reason for that is that the field of nuclear science is a new one for South Africa. With the best will in the world no department, when it draws up a law, can foresee where it will eventually end. Let me give examples. I do not think that, when the Atomic Energy Board was established, it was foreseen that we would reach the stage at which we would have our own nuclear installation and that the inspection of such an installation would be an important factor. One could not, at that stage already, say how an inspection would be carried out. The world itself was unable to give advice on that matter at the time. Science and technology have developed so rapidly that, on the basis of the knowledge we have acquired and of our own needs which emerged, we had to come to this House with amending legislation. We could not have foreseen that we would make discoveries ourselves, and that very interesting facts and discoveries would emerge from research which still had to be done, facts and discoveries which South Africa would be able to utilize. In other words, when one enters a new field, such as this, one must from time to time make provision for developments which take place.

The hon. member asked whether we could not now reach the stage where we could get done with amendments. He was therefore asking whether we could not foresee what would happen in future, and prepare ourselves for it now. The promise was made that we would return to this House, and what we have returned with is the Bill at present before the House. In other words, the Bill before the House is a reaction to representations on the one hand and the willing consent of the Minister on the other. That is in fact what has happened. In other words, he and I are jointly responsible for our having this Bill before us this evening. I think the hon. member ought to understand that. Let me tell the hon. member at once what I told the Atomic Energy Board last year: “Representations were addressed in Parliament. Let us now see what we still want to do by way of legislation, so that we can introduce it and try to have done with it.” The Board reacted to that statement, and we have the result in front of us. But that does not mean to say that other circumstances cannot arise, circumstances which we cannot foresee tonight, which will necessitate our having to introduce further amendments here within the foreseeable future. If it is necessary to do, we shall do so in the national interest. However, one would avoid this if one could.

The other point which the hon. member for Von Brandis as well as other hon. members made hinged on the fact that when discoveries are made a report has to be submitted in this regard to the hon. the Minister and to the board. Until now the position has been that if a mining company made a discovery it was required by law to submit a relevant report to the Minister of Mines. The Minister of Mines then had to scrutinize it, and of course forward it to the Atomic Energy Board, because they are involved. In cases where the Minister needed advice, he turned to the Atomic Energy Board. The fact of the matter is that we are running a risk. Hon. members will know that all documentation on this matter is highly confidential. There is none of this documentation which is not marked Top Secret and put under lock and key. The position is that when a report is submitted by the Minister he has to forward it to his department. Then it has to be duplicated and it passes through four or five pairs of hands before he gets it back. This is simply the way things happen administratively. In the interest of the secrecy aspect, we think that if a company can make a copy of its report and send it directly to the Atomic Energy Board and the original to the Minister, no further handling of it will be required because the Minister, and if he wishes, the secretary who has his confidence, scrutinizes the documents which are then locked up in a safe. No-one else will see them in this case. I want to give the assurance that documents of this nature go directly from my office to the safe and no-one else handles them. If we do not do it this way, they would normally pass through a number of hands. What we are trying to do therefore is to safeguard the documents in a very simple way by sending a copy of the report directly to the president of the Atomic Energy Board and a copy to the Minister so that they both receive them simultaneously. That is why we are doing this. I think it is an improvement and I think the security in this case is better assured, the administration is better and the Atomic Energy Board prefers it this way— and so do I—for I do not want to create the opportunity, in the process of forwarding the document from my office to the president of the Atomic Energy Board, for highly confidential material to go astray. That is the reason.

The third point I want to make concerns the question of alternate directives. Now I want to tell hon. members what happens when documents are handled and also at board meetings. A member of the Atomic Energy Board receives a document, usually a very thick document. It is delivered by hand and when it is received it has to be signed for by that person. He is under oath and has to ensure that only he will see that document, for it is highly confidential. When he travels by air, he must keep it with him; he may not allow it to leave his hands, and he knows that if there is a leak, he is liable to a heavy fine. Once he has attended the board meeting and the meeting is over he and other members have to return their documents. Their documents are numbered and these are checked to see whether all the documents have been returned. He is not even allowed to take it home—so strictly confidential are these matters kept.

From time to time members of the board have discussed this whole matter. With the consent of those members of the board who represent the private sector, it was felt that the number of persons concerned should be as small as possible. Therefore we are now proposing that alternate directors be abolished, because an alternate director cannot be of any use if he does not attend the meetings from time to time. Nor can he examine that document because it has been returned to the Atomic Energy Board. It is the unanimous request of the board itself, and a request therefore from the members of the private sector represented on the board, that they do not want alternate directors. In other words, what we have before us is a request from the people who are actually involved in the matter themselves. The alternate directors cannot be given duplicates, nor old documents to bring them up to date, and only three meetings are held a year, and at all those meetings in the past there has always been a full attendance. Therefore it is a general request that the matter be dealt with in this way.

The debate also dealt with clause 6, or rather the use of technology and knowledge, as described here very aptly. I just want to quote it again. Clause 6(1)(b) reads as follows—

By way of background I want to tell hon. members that the Atomic Energy Board has learnt from experience that there is a great deal of expertise emerging, that discoveries are being made which may benefit the private sector, that technologies and instrumentation are being developed which may be utilized not only by the Atomic Energy Board but may be utilized to very good effect outside. Let me mention an example in this regard to the hon. member. The board developed a process for the reclamation and processing of certain nuclear material and it is clear that this technological knowledge holds promising potential for application to other non-nuclear material and non-nuclear products. Perfection of the application of these discoveries may, it is hoped, lead to the establishment of new enterprises and technologies in South Africa.

As another example I can point out that the board has developed a few instruments and analytical techniques to meet its own needs. Once again the possibility arises that the expert knowledge acquired in this way may potentially be utilized in the public interest in a non-nuclear sphere. The position is that the Atomic Energy Board, in its activities, is constantly in the position of having information at its disposal which may be utilized to very good effect in another field. The Atomic Energy Board, however, may do nothing that the Act does not allow. That is why this hon. House has been asked for consent to do these simple things, and to prove that the techniques and the knowledge acquired in this way may also be applied outside the board, that these things, in other words, may flow from the board to the private sector because they may result in very great benefits. I can give the hon. member the assurance that I know how the misunderstanding arose. However, I do not believe that any of the hon. members who have spoken would differ with what I have said up to this stage. I am also certain that hon. members will concede that I am correct when I say that it would be very foolish to spend so many millions of rands on the acquisition of new knowledge and on the development of new techniques and then hide that knowledge and techniques under a bushel, while only the Atomic Energy Board may make use of it, and no one else. The intention is to make it available now. As it is defined at present in the Bill—and this I can understand very well—it seems as though the door has been thrown wide open. Of course I did not draft the Bill myself. As far as the drafting of the Bill is concerned, I was not the expert. My department did its best, and regard was had to this aspect. With the saving that we may arrive at another formulation in this House, other than the one appearing in the Bill at present, I should like to suggest that we accept it as it is in the meantime. I declare myself prepared to consider the formulation and to rectify it in the Other Place, although with the retention of the motive behind it.

Why cannot it be done in the Committee Stage?

We could do it there. However, the Committee Stage has been set down for tomorrow, and I am not certain whether we will be able to rewrite it within such a short space of time.

It is not such a difficult thing to change.

Hon. members must realize that the definition will probably be longer and more complex now. I might have it ready in the Committee Stage—that is, tomorrow. If not, I undertake to rectify it in the Other Place. Of course I do not want us to wage a dispute in this debate on matters affecting the Atomic Energy Board. What my suggestion amounts to therefore is that I shall reconsider the definition and decide whether it should be amended. After that I shall rectify it either in the Committee Stage or—if it is not ready in time—in the Other Place.

Question agreed to.

Bill read a Second Time.

Mr. Speaker, I move—

Clause 1 of the Bill before the House contains an amendment of section 9(1)(k)ter and clause 2 contains an amendment of section 15 of the South African Tourist Corporation Act, 1947 (Act No. 54 of 1947). Clause 3 contains the short title and stipulates when this legislation shall come into operation.

I shall first deal with clause 1. The existing section 9(1)(k)ter provided that the Board of Control of the South African Tourist Corporation may, subject to the approval of the Minister, pay a portion not exceeding one half of any contributions due by employees of the corporation under any group medical aid scheme approved by the board.

Rates increases which have been introduced by the Statutory Organizations Medical Scheme—which has been approved by the House—with effect from 1 January 1975, have resulted in employees of the corporation having to make more than double the maximum contribution presently applicable to Government officials, to their approved medical aid scheme.

The limitation of 50% on the contribution the board may make to such premiums, makes it impossible for the board to help carry a larger portion of the burden which has been placed on employees of the corporation in this way.

Since the State at present contributes 60% of the premiums to the Public Service Medical Aid Association, and the officials 40%, it is proposed that the limitation presently imposed on employees of the corporation by section 9(1)(k)ter, be removed.

This would enable the Minister of Tourism, at the recommendation of the board and in consultation with the Minister of Finance, to approve periodically any necessary adjustment in the ratio between the contributions by the board and by employees of the corporation to the medical aid fund in question.

The financial implications of the proposed amendment will depend on the percentage contribution made by the corporation, and decisions may be made on this from time to time. I can give hon. members the assurance, however, that it will be a very small amount. The Treasury is at present instituting an investigation into the possibility of increasing the employers’ contribution to the Statutory Organizations Medical Scheme and the amending provision will not be put into operation until the investigation has been completed and a final decision made in that regard.

I now turn to clause 2. The existing section 15 provides that employees of the corporation shall be subject to such conditions of service as the Minister may, on the recommendation of the board, and after consultation with the Minister of Finance, prescribe by regulation. In other words, it only makes mention of service conditions and does not provide for service benefits, which differ from and supplement the service conditions and which, analogous to the Public Service regulations, do not belong with those regulations and ought not to be incorporated in them. By service benefits is meant those concessions or benefits which may fall to the lot of staff of the corporation from time to time but which do not regulate or control their service contract with the corporation, and which therefore do not constitute service conditions in the strict sense of the word. Examples of these are allowances which are paid on a temporary basis and which can be altered or terminated without this affecting the basic service contract, as well as bonuses which can be lump sums; for particularly meritorious work, for example.

Moreover, under section 15, the Minister of Tourism is only qualified to specify the conditions of service of staff of the corporation in cases where the board recommends this.

From time to time, however, it happens that recommendations and authorizations are received from the Treasury and the Public Service Commission, relating to the application of specific uniform conditions of service and service benefits to the staff of statutory bodies, including the S.A. Tourist Corporation.

Consequently, the restrictive provisions of the existing section 15 create problems in the implementation of these conditions of service and service benefits, and clause 2 envisages authorizing the Minister of Tourism, in consultation with the Minister of Finance and the board, to determine the conditions of service and service benefits applicable to the employees of the corporation, without the board having to make a recommendation in that regard beforehand. The proposed amendment will not remove or influence the board’s authority to make recommendations.

Mr. Speaker, I must thank the hon. the Minister for the fair way in which he explained the Bill and let me hasten to add that we will not be opposing the Second Reading of the Bill. I am sure that the hon. the Minister will be glad to hear that.

However, I believe it is important that I should say why we will not be opposing what are in effect rather drastic measures which the hon. the Minister is asking for. The hon. the Minister frowns, but let me put it to him this way. If the Minister of the Interior were to come to this House and ask for these powers to apply them generally to the Civil Service, I do not believe that any of the Opposition parties would support him. In fact, I will go so far as to say that I do not believe his own party would support the Minister of the Interior if he wished to apply these measures to the Civil Service within the Republic of South Africa. Let us have a look at what exactly the hon. the Minister is asking for. There is no argument about clause 1. The question of whatever amount we, in consultation with the hon. the Minister of Finance, shall decide shall be the contribution the corporation will pay regarding the contributions to a medical aid scheme, is not in question at all.

In clause 2 the hon. the Minister is asking for a complete departure from the normal basis of arriving at the remuneration which an employee of the State or a statutory body shall receive. The hon. the Minister is now asking for the first time that he may determine the conditions of service of an individual employee, not of a class of employee.

Not conditions of service.

The wording of section 15(1) is “the conditions of service of any person”. This implies the conditions of service of any one person. Earlier on I said to the hon. the Minister that I did not want to fight with him this evening. We are in agreement with him. I want to point out why we would not accept this had it pertained to the Public Service. The Public Service would never accept such a condition. But the hon. the Minister is now asking to be allowed to determine the conditions of service of any individual employee of the S.A. Tourist Corporation. We are prepared to give it to him because of the peculiar circumstances which pertain, inter alia, because the S.A. Tourist Corporation does not only employ people here in South Africa, but in various centres throughout the world, where different circumstances prevail and where the standard and cost of living is nothing like we have in South Africa. If this corporation is to carry out the functions for which it is designed, it is imperative that it should be able to attract the top quality staff it needs, people of the highest qualifications and ability. To attract those people, the corporation has to compete in a very competitive labour market. For that reason we are prepared to allow this particular provision with regard to this particular corporation to go through. We find that previously, on the recommendation of the board of the corporation and after consultation with the hon. the Minister of Finance, the hon. the Minister was able to determine those conditions of employment. I talk about conditions of employment and of service because those are the terms the hon. the Minister uses in the Bill. Now there is to be a change. Now the corporation, with the approval of the hon. the Minister, in consultation with the hon. the Minister of Finance, may determine these particular conditions of service. The change is that whereas in the past the hon. the Minister, simply on a recommendation from the board and after consultation with the hon. the Minister of Finance himself determined these conditions, we find that in the future it is going to be the corporation with the prior approval of both the hon. the Minister and the hon. the Minister of Finance. Where in the past the hon. the Minister of Finance did not agree, the hon. the Minister of Tourism could go ahead on his own. As the Bill is amended today, he will not be able to do so, but must get the approval of the hon. the Minister of Finance. We believe that it is a sufficient check on the activities of the hon. the Minister of Tourism and on the activities of the corporation, and consequently we support this particular provision, especially in the light of the peculiar circumstances which are outlined in the Bill and which pertain to the particular corporation.

Mr. Speaker, I am sure you will allow me two minutes to digress a moment from the provisions of the Bill. The corporation is important to the Republic of South Africa, because it is one of the bodies which is being used to sell South Africa. In my experience as a traveller and meetings with different people, I have found that very few people who have visited South Africa are opposed to South Africa. The people outside who are against South Africa are those who are fed by all sorts of information by the news media. They have never been here to look for themselves. I believe it is the function of this corporation to bring those people to South Africa to see for themselves what is going on in the Republic of South Africa in order for them to realize that it is not such a damned bad place after all. But there is a noticeable fall-off in the number of tourists who have been to the Republic of South Africa. In 1975 a record figure of 730 000 tourists visited the country who paid an estimated R270 million, which helped our balance of payment situation. During last year there has been a fall-off of 10%, although we do not have the exact figures yet. This means a drop of 70 000 people who should have visited the Republic, but did not come. It also means a loss of approximately R30 million in foreign exchange. Therefore I believe that the function of this corporation has to be seen in the proper light.

Particularly in the overseas countries where local people are very often employed by the corporation, it is imperative that the hon. the Minister should be put in a position where he can attract people of the highest calibre so that they can perform their functions towards the Republic of South Africa to enable us to sell our country and to tell the people outside that South Africa is not such a damned bad place after all.

With these few words we shall support the Second Reading of the Bill. There is, however, a minor amendment to clause 2, about which I have advised the hon. the Minister and which we shall move in the Committee Stage.

Mr. Speaker, we in these benches have no particular problem with the Bill at all. Together with the hon. the Minister we understand the peculiar situation of the South African Tourist Corporation with regard to their officers overseas. We know that the hon. the Minister has been trying to get the Bill on the Order Paper and to get it through for some time, from last year at least. We realize that the hon. the Minister has other and more serious problems on his plate at the moment and therefore we shall vote for the Second Reading of the Bill.

Mr. Speaker, the hon. member for Pietermaritzburg South and we on these benches do not have the same definition of the expression “few words”. Our “few words” are merely that we support the Bill.

Mr. Speaker, I would extend my sincere gratitude to the three parties on that side of the House for the friendly manner in which they have received the Bill. I wish we could more often display the wisdom of Parliament in an endeavour to do good to the people who do good to South Africa.

The hon. member for Pietermaritzburg South has raised certain points and I would extend to him the courtesy of a full reply. The hon. member complained about the amendments to section 15, in clause 2 of the Bill. If the hon. member takes a good look at it, I think he will find that it means nothing more than what I said in introducing the Second Reading. In the first place there is a textual change. The word “every” is supplanted by the word “any”. The law advisers felt that if the Bill provides that I can do things for “every” member of the staff, it means every one to the exclusion of nobody whereas it was intended that I could do it for any particular member and not necessarily for all. That is the point. I think we all agree about that. Another aspect is that instead of waiting upon recommendations from the board, the initiative to benefit the staff can now come from the Minister acting on the advice of the Treasury and of the Public Service Commission. The purpose is merely to streamline the implementation of measures to the advantage of the staff without waiting on a recommendation from the board. The new section 15(2) is intended to make it possible for us to recognize particular and very special service by staff members of the Tourist Corporation. At the moment we have no such power. I cannot give a bonus and I cannot award any special recognition for outstanding services beyond the normal call of duty to any member of the board; that will now be possible under this legislation.

The hon. member for Pietermaritzburg South also referred to the wonderful work the corporation and its staff are doing to encourage tourism to South Africa. He spoke with a measure of distress about the fact that we experienced a fall-off in the number of tourists coming to South Africa last year after the problems we had in our country. It is true that there was a marked decline in the number of tourists and there were even cancellations of organized tour parties because of the unrest. I am very pleased to say that we did not sit quietly when this happened. Even while the unrest was still in progress the various offices of the South African Tourist Corporation in the United States and the various countries of Europe and in Australia conducted a very special campaign in a large number of newspapers to restore confidence in South Africa as a tourist destination and there was a high frequency in the appearance of the advertisements. We had discussions and seminars with the tourist industry in these various countries and the results have been quite remarkably encouraging, so much so that I have here a telex which I received only yesterday morning to tell me that although figures fell in the second half of last year, they have been rising quite spectacularly in the first two months of this year. There has been a remarkable recovery in the attraction of South Africa for tourists from overseas.

Compared with what other two months?

January and February

Of last year or the year before?

After the riots there was a decline in the number of tourists coming to South Africa and there were even cancellations. In January and February, however, the first two months of 1977 …

Compared with the first two months of …?

No, no. Compared with the decline after the riots.

[Inaudible.]

Let me try to put it so simply that even the hon. member for Sea Point can understand it. There was a decline in the number of tourists coming to South Africa and there were even cancellations during and after the riots we had last year. In the first two months of this year that decline was arrested. There was a tremendous improvement and no more cancellations were experienced.

Mr. Speaker, may I ask the hon. the Minister whether the figures for this year in January and February were higher or lower than the figures for January and February last year?

They compare favourably. I do not have the exact figures but I can get them for the hon. member. I will give the hon. member figures in a minute if he wants them. The significant thing is, however, that the decline that was experienced after the riots, has been arrested and has been reversed. There are no more cancellations and bookings are heavy. That is the point and that is the tendency that I am emphasizing. [Interjections.] I want to add …

Order!

… that the travel industry in other countries as well as tour operators and hotels in South Africa are all reporting a noticeable increase in tourist activity towards South Africa. I will give hon. members an example to give them an idea of what is happening. During the whole of last year we had 1 553 tourists from the Argentine. In the first two months of this year we had more tourists from the Argentine than during the whole of 1976. That is an example of what is happening. I am not here to discuss my Vote at the moment, but I am responding to the concern of the hon. member for Pietermaritzburg South by reassuring the House—which I am sure the hon. member for Sea Point will greet with as much gratification as I do—that the decline has been arrested and that the position is improving spectacularly. [Interjections.] Perhaps I am expecting too much from the hon. member for Sea Point that he should rejoice in any good news for South Africa, but I will continue to hope that one day his fundamental South African origin and background will assert itself and that he will also rejoice with me when good things happen to South Africa.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 2:

Mr. Chairman … [Interjections.] Mr. Chairman, you know, hon. members on the other side just have a habit of moaning every time I get up. I really do not know why. [Interjections.] Wait a minute; they must listen to what the hon. the Minister listens to. He knows that there is sense coming even if they do not.

As the hon. the Minister so rightly said, with this clause we are changing the whole format of the determination of the conditions of service of employees of the S.A. Tourist Corporation. Subsection (2) of the proposed section 15 reads as follows—

I do not think we need go any further than that. If we analyse this particular sentence it says the corporation may with the approval of that hon. Minister, which shall only be given in consultation with the Minister of Finance and the board, grant certain privileges. Therefore, it would appear that there are four persons involved, namely the corporation, the Minister of Tourism, the Minister of Finance and the board. However, when we look at the S.A. Tourist Corporation Act, No. 54 of 1947, we find that section 3(1) reads as follows—

I submit that the corporation, the first body of the four who will take the decision, and the board, the fourth body, is the same body.

Yes.

The hon. the Minister nods his head and says “yes”. It is for that reason that I now want to move—

I move this because I believe that the corporation, which is personified in the board, can only take a decision if the board acquiesces. I do not believe it is necessary to have both the corporation and the board mentioned here. If the hon. the Minister will say that he believes that what should rather be taken out of the subsection is the reference to the corporation, and that we should rather say that the board may, with the approval of the Minister of Tourism, given in consultation with the Minister of Finance, take a decision, then I am prepared to accept that as well. I believe it is a little bit ambiguous to have a situation where four bodies have to agree where there are in fact only three bodies involved.

Mr. Chairman, I realize that the hon. member who moved the amendment, did so because he would like to make the construction of the clause as elegant as possible. I do think, however, that he will agree with me that it is not really relevant. What I want to achieve here, is the following. Up to now the Minister could act to the benefit of specific staff members of the corporation only after a recommendation had been received from the board. Now I should like to take the initiative myself and have powers which I did not have before. As I have said, I consult with the Minister of Finance whenever I can, and then I am able to take such a decision in conjunction with the board of the corporation, whereupon the decision will be implemented by the corporation. That is what this means. It does not mean that I have to consult with the corporation and the board. I consult with the Minister of Finance and I consult with the board and if we reach agreement the corporation must grant those privileges to the people concerned. I think that that is correct, both grammatically and logically, and therefore I hope the hon. member will not insist on his amendment.

Mr. Chairman, I follow the argument of the hon. the Minister. What he is trying to say is that the corporation, as the body concerned, as the legal persona, is the body which is going to grant these privileges to the staff and that that legal persona, the corporation, may only do so with the approval of the hon. the Minister, given after consultation with the Minister of Finance and the board.

And the board of the corporation.

Yes, and the board of the corporation. In other words, he believes it is essential that he should retain these three bodies in this particular clause.

Yes.

Sir, I think I must accept the explanation given by the hon. the Minister. [Interjections.] With the approval of the Committee I shall withdraw my amendment.

Amendment, with leave, withdrawn.

House Resumed:

Bill reported without amendment.

Bill read a Third Time.

Mr. Speaker, I move—

The high failure rate among undergraduate students at universities and especially among first-year students is a matter which has been causing concern for some time. It is not only a waste of money with regard to the State subsidies to universities and financial sacrifices which have to be made by the parents of many students, but it is also a waste of mental and intellectual potential. Mr. Speaker, much has been said and written about this matter and although there are no instant solutions to this problem, various measures can be taken, and are already being implemented, in an effort to limit the failure rate among first-year students at our universities as far as possible.

It is important to me, however, not only that consideration be given to methods of counteracting the high failure rate, but that those students who have little chance of success at university, judging by their progress, should be enabled in good time to switch to a course of study at a college for advanced technical education or to another institution in the field of tertiary education, where they may have a far better opportunity of making progress.

In this way we can avoid the unnecessary wastage of the mental and intellectual potential of our country’s people. It is usually possible for a university to determine after the first six months of an academic year which students have progressed so unfavourably in the academic sphere that they can be considered potential failures. According to existing legislation, however, the registration of a student may not be terminated at any time other than the end of an academic year. For this reason the Commission of Enquiry into Universities recommended in its report that the Universities Act, 1955, be amended to give a university the right to terminate the registration as such of a student at the end of the first half year on the grounds of unsatisfactory academic progress. The amendment to section 10(2) and (3) of the principal Act by clause 2 of the Bill will enable a university council to require the renewal by a student of his registration after less than one year and to subject such renewal to prescribed minimum requirements of study.

†Mr. Speaker, it has become apparent that the existing provisions of the Act are insufficient to prevent persons or institutions, not being universities, offering courses purporting to be degree courses or awarding degrees of bachelor, master or doctor. On several occasions in the past, reports and advertisements have appeared in the Press and in promotional literature where claims have been made by certain institutions that they can award degrees and offer degree courses. Such claims are not only misleading as far as the general public is concerned, but they also tend to bring into disrepute the good reputation and recognition of the educational value of university training and degrees awarded by universities. It is therefore regarded as essential that the statutory provisions should be sufficiently clear to prevent persons or institutions committing acts of this nature. Clause 3 of the Bill amends section 28bis of the principal Act by extending the provisions regarding offences to make it illegal for an institution other than a university to offer degree courses or to award degrees.

Mr. Speaker, the Bill under discussion deals with important aspects relating to universities, as the hon. the Minister has said. We in these benches have always held the point of view that the autonomy of the universities should be respected and that the universities should be allowed to exercise their authority in their own field as far as possible.

In effect the amending Bill contains only two principles, the first of which is contained in clauses 1 and 3 and the second in clause 2. As I shall deal with the second principle first, in other words that contained in clause 2, I want to tell the hon. the Minister at once that we welcome the additional power being granted to the universities to act with regard to the registration of students. I think we all realize—and the hon. the Minister said this as well—that the State and the parents spend vast amounts of money annually because of the privilege which students have to attend universities. I hold the point of view that it really is a privilege. I believe that in South Africa in particular, where we have so very many problems and where such a vast gap exists between the educational level of the Whites and of the non-Whites, the State cannot afford to waste money on Whites who are not prepared in any way to make use of the privilege which they are being afforded.

†Therefore, Mr. Speaker, the introduction of clause 2 of the Bill, whereby section 10 of the principal Act is amended, will, as far as we are concerned, give the university authorities a wider scope within which to act, not only in general, but also, as is stipulated in the clause—and that is very important— “in particular cases”. This is something which the Committee of University Principals have been pleading for, something they have been discussing for some time. Of course, as the hon. the Minister has mentioned, it is also one of the recommendations of the Van Wyk de Vries Commission. We only hope that the hon. the Minister will hasten to implement more of the wonderful ideas expressed by the Committee of University Principals. The position is here that the regulations will still be determined by the council—and this is very important—after consultation with the senate. That particular principle has been retained exactly as we found it in the original Act. The only difference is that it will no longer be issued in terms of section 17 of the Act. However, I believe that, under the circumstances, this is not so important.

As far as clause 1 and clause 3 amend the principal Act, it is clear that the idea is to protect universities against bogus institutions and to ensure that the role of the university is not usurped by inferior institutions.

If one reads clause 3, one notices immediately that the powers provided there are drafted very widely. It is my contention that we must realize that, should we want to catch the imposter, we should cast our net as wide as possible.

Especially in Natal.

Yes, especially in Natal, as the hon. member says, because there we have had the experience of an hon. gentleman claiming to be a doctor with I do not know how many doctor’s degrees. He became the principal of a school. In the end, however, it turned out that nobody was even aware of him and that even the universities at which he claimed to have studied, did not exist. But in Natal we catch people out very quickly. [Interjections.]

The reason why it is so important, is because a country cannot afford to have suspicion cast on its educational system, especially its tertiary educational system. One only has to find one institution that is suspect and all other institutions are being viewed in a similar light. We know, of course, what the situation is in some countries, particularly in America where, as we hear from time to time—I do not know how true it is—people can obtain degrees merely through attendance, and also, sometimes, by only paying a sum of money.

Correspondence!

Yes, that is of course another thing. We also have to look into correspondence courses which are being offered, correspondence courses, the standards of which are claimed to be equivalent to those of universities. I believe it is a sad thing, but it is part and parcel of our civilization that the more sophisticated we become, the more sophisticated our imposters’ techniques become. For that reason it is important that we should have very wide ranging legislation.

With regard to clause 3, there is one important point that I want to raise. The reason why I mention this, is because this point of view has been put to me. Of course, that is not to say that I entirely agree with it. However, there are people, particularly from the colleges for advanced education, who claim that they too offer courses of which, according to their claims, the standards are equivalent to those of courses offered by universities. Courses particularly referred to in this regard, are diploma courses for pharmacists, of which, as we know, the standard is equivalent to that of a university course. They also make the same claims with regard to some of the engineering courses that they offer. My interpretation—if the hon. the Minister does not want to reply to it in the Second Reading, he can reply in the Committee Stage—is that clause 3 of the Bill which substitutes section 28bis(b) of the Act, in fact, shows that if there is a definite link between the colleges for advanced technical education and the universities those will be no problem. The proposed provision reads—

I am convinced that this provision can in no way be interpreted as being aimed against the colleges for advanced technical education and that it will counteract their claim that the courses that they offer are of a standard equivalent to that of the universities. Apart from that particular point, we on this side of the House support the legislation enthusiastically.

Mr. Speaker, it is really a pleasure for me to be speaking this evening immediately after the hon. member for Durban Central has spoken because he, as an authority on education, has based his support of the Bill on sound reasons. In the course of my speech I shall link up with certain ideas he expressed. The hon. member for Rissik will deal with clause 3 in greater detail, and for the moment I therefore leave it at that.

South Africa has need of the maximum of its spiritual and intellectual potential. This can only be had if all the capabilities of every person, whether spiritual, physical or intellectual, are fully developed and he is placed in the labour market in a position where he can make optimum use of his talents and capabilities. To achieve that ideal the necessary provision is already being made in education by virtue of the fact that the necessary vocational guidance is being offered to pupils. Differentiated education has been introduced with outstanding results. At present there are various types of schools— academic, technical, agricultural, domestic science, etc. In my view someone who has the ability to become a scientist must not, under any circumstances, be used as a plumber. On the other hand, a person who has manual and technical ability will most certainly not give of his best or be made optimum use of for our country if, for the sake of argument, he is an insurance representative. I can briefly sum up by saying that every person must be trained for the life’s work he is best equipped to do. Only when that happens can he make his optimum contribution to the community.

It is equally true that neither the individual, the State nor the community can afford the luxury of a university student who is not intellectually equipped for such study or does not have the necessary motivation. I immediately concede that the present methodology in our schools sometimes misleads both the pupil and the parents about the pupil’s intellectual capabilities, when seen in the light of whether he has sufficient ability to attend a university or not.

I do not want to put the schools in the wrong, but it is possibly as a result of the present system. I should like to refer to a few examples. In the first place the promotion system in schools is such that a teacher is also judged by the successes of his pupils. This encourages the adoption of certain methods and practices in the schools which could possibly, in the final analysis, lead to the pupil achieving results which do not bear any direct relationship to his actual intellectual ability. Here I am referring, in particular, to the parrot work and the continual repetition, with the teacher himself doing more of the work and then just giving it to the pupils to digest. Frequently, too, the prestige of the school is at stake and is gauged by the number of pupils who pass. That perhaps also encourages unsound educational practices. I think it is unfortunately also true that there is quite frequently a lack of personal initiative and comprehension teaching in many schools and that the child eventually finds himself at university without having been properly equipped for the task he has to carry out there and the courses he must take.

Much worse—and this is where the greatest wastage takes place—is that one finds students at university who do have the intellectual ability to take a university course but who are attending that university for the wrong reasons. They are not there to really equip themselves intellectually after they have left school; they are chiefly there to take part in the jollifications and frequently for the glorification of sport. It is regrettable that it frequently does happen that a student attends university for several years not so much for the academic side of university life, but rather to make an outstanding contribution to the university, year after year, on the sportsfield. I do not think that we in South Africa can afford that luxury any longer. Students also frequently attend university purely for the snob value involved. I regret having to say this in so many words, but I am convinced that there are people today who have the financial means to send their children to university, whether the children have the intellectual ability to attend or not, purely so that they can say that they have also been to university. I do not want to claim, however, that there are not many other useful experiences, apart from academic experience, for one at university. However, one goes to university primarily to qualify oneself academically so that one can subsequently take one’s rightful place in the community. I am afraid that there are too often students at university who occupy themselves with subversive activities, some of which even possibly aimed at undermining the State and exercising a detrimental influence on the preservation of our national identity. For that reason I welcome this Bill.

Why is there such a high failure rate at the universities? I immediately concede that there are a variety of reasons that we cannot gather together into neat compartments. Without going into detail I just want to point to a few. Firstly it may be that in his first year at university a student is inadequately prepared for his university studies because of having received inadequate tuition at school in study methods—particularly in respect of selfstudy. I want to refer back to what I have already said about the practices we encounter in some schools. In the first place I think it is the school’s duty to inform its matriculants, who want to qualify themselves at university, of what they can really expect at university so that adjustment problems at university can more easily be overcome. I know that all universities take the necessary steps when first-year students apply. Firstly the students must go through an orientation period. However, I do think that the teachers at school could already have taken the necessary steps to make it easier for the child to adapt to the university. I think there is also a second reason. I am not all that sure that students are not over-burdened with courses at university. If it is true, with respect to our schools, that we overload the syllabus too much and set too high a standard, it can also be true, particularly in the case of certain courses at our universities, that it is made virtually impossible for a student to complete his studies successfully within the prescribed period. I know that in practice there are students who succeed in doing so. I think that that matter can profitably be scrutinized.

I should like to mention a third reason why, in my view, students find it difficult to pass during their first year at university. I am afraid that certain lecturers at our universities do not have the necessary training in methodology. Some of the lecturers at our universities are excellent academics. Many of them, however, have never taught at schools and therefore have never learnt the necessary methodology to convey to the student. I want to assure the House that in this connection it is not merely a question of a lecturer having the knowledge to simply convey to the student. There is a particular methodology involved. When there is something wrong with the methodology of a particular lecturer, it is no wonder that some students are unsuccessful in specific courses in specific years. Lastly, in my view, there are many students who find themselves at university without the necessary motivation. In that connection I now also want to address myself to the parents. When parents send a child to university, I think it is the responsibility and duty of the parents specifically to inform that child of the reason why he is attending university. If it is put very clearly to the student that it is his own interests, and in the interests of our country, for him to attend university, and if it is explained to him what the priorities at university are, the student can attend university with a greater sense of motivation and the failure rate will probably be reduced.

I refer briefly to a report of the Joint Matriculation Board, as reported in the report of the Van Wyk De Vries Commission. The report indicates that at the end of 1975 there was a failure rate of 30,8% of all first-year students who had registered for the examination. Further in the same report it is indicated that there was a failure rate of 36,4% of all the first-year students who had registered at the university at the beginning of the year. This does not include the failure rate for individual subjects. The same report states that only 55% of the first-year students obtained degrees within the minimum period, plus two years, allowed for a degree. That is a tremendous waste of time, work capacity and money. According to evidence given by the universities before the Van Wyk De Vries Commission, approximately 35% of the students obtained their degress within the minimum period. In other words, 65% do not succeed in doing so.

Are you referring to B.A. degrees?

This relates to various courses. In my view it is therefore worth having the matter investigated, and I therefore welcome the legislation. For that reason the Van Wyk De Vries Commission recommended that procedures be developed for the elimination of those students at an early stage. We find that recommendation on page 235 of the report. The commission also suggested that an end be put to the registration of students at the end of June. This legislation therefore empowers a university to refuse a student, who does not make the desired progress, further access to the university after a certain portion of the year, as laid down by the council, has elapsed. In terms of the provisions of clause 2, of course, this also applies to students in their second, third or subsequent years of study.

I am not impervious to the fact that some students could experience problems towards the middle of the year and as a result not make the desired progress. However, I do not believe that any university, which is now to receive these powers, will not have the necessary understanding and judgment when it comes to their implementation. If the student’s poor achievement is the result of acceptable circumstances, I am convinced that no university would refuse him further access. I am aware of the fact that students can choose the wrong subjects, or even the wrong courses, and then realize this towards the middle of the year. I am also aware, however, that universities give the necessary guidance, and in such cases I still think it is in the interests of the student, the country, the parents and the university if the student leaves and for six months is of service in some or other temporary work, returning again the next year to take up other courses. I therefore do not think that we should be concerned about possible discrimination against a student who was unsuccessful in any particular year because of specific circumstances.

If a student does not have the ability it is, in any event, also in his own interests, and in the interests of the country, for him immediately to carry out productive work at another level. Students who have taken the wrong courses must then take other courses, perhaps at a college for advanced technical education or whatever the case may be.

Clause 2 also gives the university the right, if the student does not comply with the minimum requirements of study as provided by the council, to refuse such student permission to renew his registration in future, i.e., at the beginning of the next year. This might sound drastic, but it is in the country’s intersts that a student does not waste his time, nor the time of the lecturer and other students. This is no new concept. In any event, it is a concept we find in precisely the same form in the old Act. I find this important because this legislation does not provide that a student who, for the above-mentioned reasons, has been refused access to a university, shall also be refused access to any other university. Because the legislation does not provide for that, this evening I want to make a very serious appeal to universities to ensure the utmost co-ordination amongst themselves with a view to utilizing the powers granted to them by the Act. I am aware of the fact that the principals of universities take action in the closest cooperation with one another. I am afraid, however, that it does possibly happen that various students, perhaps of different races, study at a university and are completely unsuccessful because they do not meet the minimum requirements. However, they gain access to another university for a particular course. I do not think that ought to be allowed, and for that reason I am making this appeal to the principals of universities to ensure the necessary co-operation and create the necessary machinery, in this respect too, so that such a state of affairs becomes impossible in practice. It is a great pleasure for me to support the Second Reading.

Mr. Speaker, I cannot agree with the hon. member for Virginia when he says that he blames the universities for a lack of method. I think he should rather blame the schools for not training the child properly so as to enable him to follow a university career. That has nothing to do with a university. When a student reaches university, he should be in a position where he knows how to learn and how to absorb knowledge. I notice that the hon. member for Virginia does not agree with me. It seems to me that the hon. the Minister does not agree with me either. It makes no difference to me however, because schools follow the example of the private I think that it will be much better if our schools in providing an extra year of study after matric. The pupils who have followed this post-matric course of one year do much better at university than those who have not done so.

I can see that you did not do such a year.

The hon. member also spoke of university students who undermine the State. I do not want to go into that any further. I prefer to speak of young people who would have been students were it not for the fact that they are national servicemen. It seems to me this Bill does make provision for national servicemen, because from clause 2 it appears that section 10 is being amended so as to make provision for a person who is a national serviceman, that is, a person who is registered for less than a full academic year. I say this because I am concerned about those national servicemen who find that they have such a measure of free time available that they would like to study. I know of such cases.

†Mr. Speaker, I am aware of the fact that there are quite a number of national servicemen who after they have done their basic training, find that they have time on their hands. Basic training only takes about three months. They have time on their hands and, consequently, want to improve their position. I believe that the Defence Force encourages them to do extra studies while they are still doing their service. Where are they going to get any assistance in this when they are in the Defence Force? The only assistance they can get is from the University of South Africa. But the University of South Africa says that they are not prepared to assist these national servicemen unless they are registered as students during the month of March.

Have you read the Bill?

The hon. member for Rissik and the hon. member for Worcester have probably read the Bill, but apparently do not see what is actually in it. The hon. Minister shakes his head. Therefore I presume he had not read the Bill either. I referred earlier to students arriving at a university and being incapable of absorbing instruction. These are the people who have been spoon-fed. Well, I do not want to allege that the hon. the Minister himself has been spoon-fed.

I have been bottle-fed.

Despite being bottle-fed, I suggest that he reads the Bill again, because he will then see that it says very definitely that—

That is what it is all about. I suggest to the hon. the Minister that he now gets down to the Bill and reads clause 1. If he does that he will know what I am debating. I also suggest that to the hon. member for Worcester and to the hon. member for Rissik, because then they may be able to take part in this debate and may be able to debate this very point that I am now putting. I am interested in people that take an intelligent interest in a debate. I am not interested in those who come here spoon-fed by officials and only have one idea, namely the idea of whoever drafted the Bill. I say that if the Bill makes provision for the registration of a student for a period of less than one year of study, it means that you can register for a period of less than one year. Most universities start on or about the 1 March. I want to tell the hon. the Minister, if he does not know yet what I am trying to get across, what in fact happens to national servicemen. National servicemen go in for their training at the beginning of the year, usually about 3 or 4 January. By the time they have done their basic training, three months have elapsed, which brings them to the end of March—just about this time of the year. They say that they now find, after the intensive basic training that they have had for three months, that they do not train so hard anymore and, consequently, have a little time on their hands and would therefore like to register as students at the University of South Africa. When they try to get the lectures from the University of South Africa, the university writes back to them and says: “We are very sorry but you should have registered by 1 March or, at the latest, by 5 March; because you did not register by 5 March 1977, we are very sorry indeed but we cannot provide you with those lectures.” I think that that is a disgrace! If the hon. the Minister says he does not think it is a disgrace, I believe he should have another look at what happens to national servicemen. I may say that the Army encourages servicemen to study. I believe the hon. the Minister should have a look at the opportunities of servicemen for study and, if he does not know anything about it, he might have a chat with the hon. the Minister of Defence tomorrow morning—I see he is not here tonight. Let him in that case postpone his reply to the Second Reading debate. Then, after he has had a chat to the hon. the Minister of Defence, he can come along and tell me whether I am not correct. That is the position.

That is simply nonsense!

It is not nonsense at all. That is in fact what happens.

I believe we should go a lot further. I believe the hon. the Minister, should find out what the University of South Africa is prepared to offer national servicemen. If he is not satisfied with what the university is prepared to offer them, he should go and talk to the university authorities. I suggest that he should have a very serious talk with them. What do they say to the poor chap who wants to enter into university life after completing his Army training and who in the meantime wants to equip himself to be able to deal with his university training after his national service in a far better manner than would otherwise be the case? All he will be asking for, is to receive lectures from the University of South Africa. He will be quite prepared to pay for those lectures and, as hon. members know, those lectures cost a lot of money. To a national serviceman they mean a great deal because some of those courses of lectures cost between R75 and R100 per year. The national serviceman is quite prepared to pay for that, but the University of South Africa says: “I am very sorry but, since you did not register as a student by 1 March, you cannot get the lectures even though you are prepared to pay for them.” [Interjections.] Sir, the hon. member wants to know about my dates.

Jack, now you should give your brain a chance.

Sir, I did say a little earlier that it was 1 March in most cases, but that in some cases it had been extended to 5 March. As far as the University of South Africa is concerned, it was extended to 5 March this year. What happens is that, although the national serviceman says he is quite prepared to pay for the lectures, the university says: “Because you did not register in time, you cannot have the lectures.” What I want the Minister to do is to go to the University of South Africa and to say to them: “You know that I, as Minister of Education, subsidize you to a very large extent every year, and I think the very least you can do is to subsidize national servicemen. ’ ’ I want the hon. the Minister to get up and do that. I want him to fly to Pretoria tomorrow to go and see the university authorities and to tell them to do that. [Interjections.] I think it is disgraceful that hon. members laugh at a very important matter such as this. Where a national serviceman wants to improve his position while he is serving South Africa, the hon. the Minister and his colleagues on that side of the House are prepared to laugh. The attitude which they display is absolutely disgraceful. It is quite obvious to me that they do not realize the seriousness of the situation.

Do you know what is in the Bill?

Of course. I have the Bill here in my hands. Not only do I have the Bill in my hands I have also read it. I would like to suggest that those hon. members too read the Bill. The Bill provides for a student to be registered for a shorter period than one year and because this is so, I say the hon. the Minister should go to Pretoria and tell the University of South Africa that they may now register a student who is a national serviceman for a period shorter than one year. I suggest that he does that immediately.

Mr. Speaker, the hon. member for Wynberg touched on a point that I am not going to take any further although it could be considered from point of view of the logic of the Bill, but with my limited experience of university life, I see this as disregard for the administrative problems which it raises.

It is in the interests of our soldiers.

I shall come to that point. In 95% of the cases it is a fact that all students register for a period shorter than one year. I do not think there is any university which registers students for the whole period from 1 January to 31 December or for the full year of study. Let us suppose, however, that a student registers in June for a specific course or degree. This means that the particular faculty or department sits with either half-year courses or year-courses, and the University of South Africa, in particular, works on a system of correspondence with students. This might therefore mean that a whole new system must be worked out. I do not want to say that it is not worth investigating the matter; it is a possibility, but in terms of the existing structure, it seems as if it would raise administrative problems.

I find myself in the extraordinary position of being able to say, without qualification, that an hon. member on that side of the House made an intelligent and substantial speech. I am referring to the hon. member for Virginia. He touched upon the point that frequently at school the results a child achieves are not proportionate to his abilities. Like other hon. members in the House with limited experience of university lecturing, I can assure you, Mr. Speaker, that as far as that is concerned I have frequently come across students who just scraped through matric and yet eventually made excellent university students. In fact, there are cases of what we used to call “oupa-matriek” in Stellenbosch, when referring to a student who had not passed matric at all. However, that person is frequently the most motivated of students and does much better than those who have gained five or six distinctions in matric.

There is another instance I could mention. For a few years I was housemaster of a university hostel and there, in one particular year, the qualification for students to gain admission to a university hostel was a pass-mark of 61%. In spite of that there was a failure rate in that particular hostel of between 35% and 40%.

A poor housemaster!

I must say that after I took charge there, things did improve. The point I want to emphasize, however, is that there is no opposition to this legislation from these benches, and that we support it. In fact, according to my information the Committee of University Principals has been able to study this legislation fully. A little bird told me that they actually wanted far more comprehensive legislation, but they are satisfied with this legislation as it stands at present.

Personally I am very satisfied with clause 2 of this Bill, for the simple reason that as far as I know this is the first time a distinction has been made between the requirements for admission to a university and restrictions on continuing one’s studies at a university. One has frequently come across a situation— because of educational methodology, as it has been referred to, or parrot work—where students who have obtained six or seven distinctions in matric are complete failures at university. Because they are clever enough, however, they can change their course combinations in such a way that they can remain at university for an unlimited time and eventually obtain a degree which, in any case, does not enable them to make any productive contribution in the community. However, they can remain at university because there is no way in which they can be brought to book.

They are, in any case, people who neglect their studies.

Here, however, for the first time we have a restriction imposed on the continual presence at a university of people who are not prepared to work. I personally welcome this. I also welcome it for the same reason as the one referred to by the hon. member for Virginia. I am referring to a phenomenon so frequently encountered, i.e. a hankering in society for status. This results in the attitude that people simply have to go to university, and I therefore find it gratifying that the hon. the Minister emphasized the importance of technical education.

It is specially important in the light of the fact that there is such a status symbol attached to university training that people simply feel they have to go to university, even if they do not have the vaguest idea of what they want to do there. Their only idea is to simply “take a degree”. In this way—if one may describe it in these terms—an unemployable, overtrained élite is created in society, people who are, in any case, totally unproductive and who can make no possible contribution. They can tell you everything about subjects ranging from Ricardo to Keynes but they cannot even do simple arithmetic when it comes to managing their own affairs. In this respect I believe that this legislation can be regarded as a very productive measure.

I also agree with the envisaged measure in this legislation preventing certain educational institutions taking it upon themselves to grant degrees, because that function actually belongs to universities. Unfortunately I cannot completely agree with the objections raised by some people—objections to which the hon. member for Durban Central referred— the implication being that this would possibly detract from the status of colleges for technical education. As far as I am concerned there is a world of difference between a university degree and the necessarily comparable standard of tuition at colleges of that nature. As far as their standards are concerned, technical universities do not have to stand back at all for the tuition offered at any university. The tuition at those two institutions are of a totally different kind.

For chemists the same applies.

Yes, precisely. The standard and quality of tuition is indeed the same, but this cannot be compared with a degree obtained at a university.

In conclusion I agree with most of the facets referred to by the hon. the Minister in his Second Reading speech. We agree with that and support this Bill.

Mr. Speaker, I see that the hon. member for Newton Park is ready to stand up. I shall give him a chance to speak, however, as soon as I have finished.

I believe that the hon. member for Durban Central would be spending his time very well if, in the evenings just after 7 o’clock or so, he squeezed in a few minutes to give the hon. member for Wynberg a few lessons. The hon. member for Wynberg apparently no longer has any idea about what university life is all about or what the circumstances there are. The hon. member for Mossel Bay made a very interesting remark when he said the hon. member for Wynberg knew nothing of the law and even less about education. I think we had better leave him at that.

I do not think the hon. member for Durban Central did his homework all that well either. The argument he advanced was in connection with someone he had spoken to. However, the hon. member ought to know that colleges for advanced technical education are also under this hon. Minister’s department and that the kind of problem his informant mentioned would never, by the very nature of things, crop up in practice. There are, in fact, constant discussions between university principals and the people from the technical colleges.

Is that what Jaap Marais tells you?

I do not know. I did not ask him. It has been a long time since I saw him.

What does Koos Yster say?

Yes, what does Koos Yster say? [Interjections.] I do not only think that the Bill we are discussing is important, I also think it is very essential.

As far as clause 3 is concerned, I want to make the observation that the universities in South Africa are known for the very high standards they maintain, and throughout the years the lawmakers have revealed their exceptional pride and protected the importance and standards of the universities. I think the particular clause aims at protecting the standards of our universities. The measure has also been introduced to protect prospective students. There are frequently people who would very much like to have training but who, for some or other reason, cannot study at a university. Such a person may spot an advertisement and easily be misled by people who offer cheap degrees. In the modern world we live in there are some people who want to make money out of anything. It is therefore very important, for the protection of the standards of our universities and the protection of prospective students, that that clause be inserted.

I also want to make a few remarks about clause 2 which provides that universities will have the right to terminate a student’s course before the student completes the year of study for which he is registered. In the past few years the NP has, with care and dedication, given attention to the universities in South Africa. Anyone who visits universities today and takes note of the additional facilities such as hostels, will find proof of the importance the Government attaches to the universities. The universities, like many other institutions in modern society, also have defects and problems.

One of those problems is the tremendously high failure rate, particularly amongst first-year students. The high failure rate amongst first-year students is not restricted to South Africa, since for the past few decades a country like America and countries in Europe have been struggling with the problem. Data from behind the iron curtain indicate that even the Russians have problems with the high failure rate at the universities. However, when it comes to our universities and university principals, I must say in their favour that over the years these things have not simply been ignored and, as far as I know, at all the universities committees and commissions have been appointed to investigate the problem. In spite of that, we have not yet obtained the results we should like to have from our first-year students.

To a parent or a student clause 2 could perhaps seem very harsh, superficial and inaccessible. It could seem as if the lawmaker and the university principals have no sympathy or understanding for students who, for some or other reason, experience problems in the initial periods of their academic career. However, this evening I want to state very clearly that the measure is not aimed at punishing or chasing away students, nor is it aimed at making university training difficult for a good student. The purpose of the clause, however, is to contribute instrumentally to the handling of the problem. This evening I want to make my small contribution by linking up with what the hon. member for Virginia said, i.e. that the problem of a high first-year failure rate could be alleviated if the lecturing staff also really made a contribution. They must not take up the old attitude that a professor or a lecturer walks into a university, gives his lecture and then walks out again and that the student only sees him again when the student’s examination papers or tests are marked. I think it is important for lecturers, apart from their other duties, also to be teachers and educationists.

I am aware of the fact that a large percentage of our lecturing staff, in spite of the academic milieu in which they function, in a certain sense do have that orientation. Therefore I think that it is important, in the appointment of lecturing staff, not only to look at the applicant’s academic record but also at his ability to work with young people. Other important people who could be of assistance to first-year students and contribute to their development, are the senior students. In recent years we have taken strong action against initiation at our universities. I think, however, that in prohibiting initiation there is perhaps one thing we have sometimes neglected to do, and that is to acknowledge that senior students also can and must maintain discipline. I think that senior students, organized as they are within their hostel, house committee and house contexts, can play a very important role as guardians and seniors to first-year students. I think that older students, particularly those who hold positions of leadership, ought not to ignore this task. Another very important factor I want to point out relates to the parents themselves. For many parents it is difficult because they themselves have perhaps not had an academic training. Frequently they are also very busy. I think, however, that the parents’ interest in the university, and in what goes on on the university campus, is very important. Therefore parents should not think that their personal responsibility ends the day their children have written the matriculation examination and registered at the university. On the contrary, this entails further responsibilities for the parents.

In conclusion I just want to emphasize again that the blessings of work lie in the fact that those who work and have bad luck will find everyone sympathetic and, in the long run, will still achieve their goals. Those who do not work, however, carry all the blame for their failures and search in vain for interesting excuses for their failures. That also remains a fact of decisive significance. The apostle said: “If any would not work, neither should he eat.” To put it another way, we can say: “If any would not work, neither should he make deserving progress. ’ ’ I want to conclude with the well-known Roman motto ora et labora.

Mr. Speaker, it was a pleasure to listen to the hon. member for Rissik, a man whose constituency includes a large portion of the University of Pretoria. He has always shown an exceptional interest in the welfare of students and was himself, at one stage, a lecturer at that university.

This Bill is going to empower the Government to terminate a student’s year of study at a specific stage, as it may think fit. The council may think it advisable for several reasons. The reasons can involve the student’s background, the fact that the parents perhaps did not do their duty, that the student is wasting his time or that he chose the wrong course of subjects. I do not think it is actually a matter for investigation by this House at this stage. However, I do think that the hon. the Minister has made out a good case in support of why the councils of the relevant universities should have this power. There is, after all, no doubt that at our universities today there are numerous students who are, to a large extent, not only wasting their parents’ and their own time and money, but also that of the State. I think that in that connection we do have a responsibility to grant those powers to university councils, powers such that after they have seen that a student would be unable to properly complete his course or shows little interest in such a course, they can cut short his studies after a certain period. That is really the only matter before the House, plus, of course, the matter of the institutions which grant so-called degrees but ought never to be entitled to grant degrees or diplomas. It is actually only those two aspects which are before the House at present.

We on this side of the House therefore have no objection to this legislation because we feel it is in the interests of the student, of the educational institution involved, of the parents and of the State that those powers should, in fact, be granted. In that connection we shall therefore have no objections.

To conclude on a lighter note, particularly with regard to clause 3, I want to refer to an election that took place years ago in South West Africa. There were a great many candidates in the election and each was exceptionally proud of his academic qualifications. One chap went from platform to platform announcing that he had an M.A. degree. During the election, however, the people found out that there were others who must have studied with him at the university. When he was eventually asked when it was that he had studied at the University of Stellenbosch and he mentioned the relevant year, the gentleman who was putting the questions to him said: “But, my friend, in that year there were only a few students. In that year I also took the course you say you took. How did you get your degree?” His reply was: “I got my degree ipso facto.” It is the granting of such ipso facto degrees that have to be stopped. Provision is made for that in clause 3.

Mr. Speaker, I should like to express my sincere thanks to all hon. members in the House who took part in the debate. I also want to thank them for the generally high level of debate. I think it redounds to the credit of everyone of us that we have been able to reach complete unanimity about the legislation. In my opinion it is without doubt a good piece of legislation. Hence the unanimity this evening. There are actually only a few aspects I still have to discuss. It is not necessary for me to emphasize certain statements made here, statements which will appear in Hansard and will also be made public by the newspapers. I merely want to react to a few of the questions put to me.

In the first place I want to assure the hon. member for Durban Central that there is not the slightest doubt that clause 3 will not apply to the colleges for advanced technical education. In fact, we are doing everything in our power—the Department of National Education, and I myself am personally taking the lead—to try to bring about a situation in the Republic of South Africa in which the over-emphasis on the status of the universities will be decreased and that of the colleges for advanced technical education will be increased. I express my thanks and appreciation to our universities which are brilliantly performing a very difficult task in South Africa. It is however true, as stated in the House this evening, that there is a tendency to overemphasize the status of universities in the Republic of South Africa. It is therefore necessary to do everything possible to try to increase the status of the colleges for advanced technical education and to very carefully delimit the field of operations and tasks of each, those of the university as an academic and research institution and those of the colleges for advanced technical education as the more practically orientated institutions, however with equal status. It is my ambition to obtain proper liaison, co-ordination and co-operation between these two institutions by carefully delimiting their spheres of operation and granting them equal status. It is therefore essential that there should be no provision in this Bill which would adversely affect the colleges for advanced technical education. I can assure the hon. member that that is the case. While the hon. member was making that point, I received a note from the Secretary for National Education to the effect that this is in no way aimed against the colleges for advanced technical education.

This is, therefore, a point that has already been settled with the legal advisers and I do not want any misunderstandings whatsoever about this. We must increase the status of the colleges for advanced technical education and there is nothing in this Bill which, even to the slightest degree, aims at what the hon. member for Durban Central touched upon.

I should very much like to emphasize what the hon. member for Virginia said and associate myself with his appeal to the universities to grant the necessary co-operation and to ensure that when a university withdraws a student’s registration as a result of unsatisfactory academic achievements, another university will not allow that student to register there. We know that there is good co-operation between the universities in this respect and that there is mutual agreement that this should not be done. I nevertheless want to endorse the plea that universities co-operate in this connection to ensure that the Act is properly implemented.

It is a pleasure for me to inform hon. members that this Bill was circulated amongst all the universities. After the Van Wyk/De Vries Commission recommended the Bill, it was studied further by the Universities’ Advisory Council, and it is only after that council came to us with recommendations that the Bill, which is before the House this evening, was formulated.

I was very surprised at the standpoint adopted by the hon. member for Wynberg. I was surprised because I can honestly say that the point he raised in no way entered the minds of the law-makers. I can therefore rightfully say that the relevant clause does not have any bearing whatsoever on national servicemen. Legally speaking the point raised by the hon. member for Wynberg is invalid. To underline the intention of the law-makers, the hon. member must have a look at the existing section 10. Subsection (2) provides—

To put that right, because the Universities’ Advisory Council recommended it, we are now endeavouring to give the universities the right, not to do what the hon. member suggested, but to terminate the registration of a student as such at the end of the first half-year on the grounds of unsatisfactory academic achievements.

That can be interpreted in two ways.

Yes, but the point I want to make is that there must be no doubt about the intention of the legislation. There can be no doubt about that. What I am now saying will also appear in Hansard, in any event. The intention is to correct the existing Act because the existing Act states that as long as any student remains a student of a university, he must renew his registration annually. Consequently a university did not have the right to terminate a student’s registration at the end of the first half-year if he made poor academic progress.

The wording is different, however.

No, that is also what the wording states. Because that is the intention of the legislation—and I think the wording is very clear in the light of the existing Act, the wording of which I quoted to the hon. member—I undertake to ask the department to make doubly sure that the hon. member’s interpretation is incorrect because I do not think it is the law-maker’s intention to interfere in the question of military service. If my interpretation is correct, we leave the matter there. If not, I give hon. members here in the House the undertaking that I shall put the matter right in the Other Place.

That is not what I wanted …

Apart from the legal aspect, however, I must tell the hon. member that there is a good arrangement between the Department of Defence and the universities in connection with this matter. However, I shall again bring the matter to the attention of the Minister of Defence because this does not rest with the Minister of National Education. I want to make it very clear that I do not think we can write into this legislation what the hon. member envisages.

I now think I have answered all the questions put to me and I again just want to express my great appreciation for the unanimity in connection with this Bill. Our country cannot afford to lose people. I therefore want to express the hope that the impact of this legislation, with which it is our intention to help the universities carry out their academic work with better results, will not be such that students, whose studies are terminated at the end of the first half-year, will be lost to the country. On this occasion my appeal is that this Bill should assist those students to best realize their talents in other institutions. I hope that universities and other bodies will, along these lines, grant the necessary assistance to help these students to be really successful in society, instead of continuing to fail and becoming failures in society. As I see it, this is the aim and intention of this Bill.

Mr. Speaker, may I put a question to the hon. the Minister? I should like to know whether he is prepared to ensure that national servicemen can get lectures from the University of South Africa, even if they have not registered by 5 March 1977?

It is not possible for me to give any such undertaking. The hon. member is quite well aware of that. However, I am prepared to have a look at the matter and I also undertake to investigate it. That I can do in my capacity as Minister of National Education, but I can give no other undertaking whatsoever in this connection.

Question agreed to.

Bill read a Second Time.

Committee Stage

Clause 2:

Mr. Chairman, I am just standing up to explain briefly a point which the hon. member for Wynberg made because I do not think the hon. the Minister interpreted that point quite correctly. Basically there is a problem involving national servicemen who are only able to study after the first three months of the year. The hon. the Minister states that his interpretation of this clause is actually much narrower than that of the hon. member for Wynberg. The hon. the Minister says that the clause merely means that someone can be registered from a certain date and that the period can be made to be less than a year.

The student registers annually.

The clause provides that every person can be registered “for one year of study”. Well, a year of study means from the day of registration to the end of the year when the student has written the examination. But the student can also be registered for a “shorter period”. The hon. member for Newton Park also gives it a narrower interpretation. His interpretation is also that the shorter period is also recognized as being only from the official day of registration. However, the clause also provides that regulations can be laid down in general or in particular terms. The actual words are “in a particular case”. This could mean that regulations can be laid down for an individual case. All that the hon. member for Wynberg specifically wants to bring to the attention of the House and the universities is simply that here we are dealing with a new provision, the old provision being that a person must register annually and that this is subject to regulations made in terms of section 17. Section 17 provides that regulations must first be published in the Government Gazette and also tabled. In other words, it is a very much more cumbersome method. In reality the University of South Africa is now being given more flexibility. All that the hon. member actually asked was that universities should be prepared to allow the student’s attendance at the university to be shortened by chopping a little off at the end, but that he should be allowed later registration and that, in such cases, the lectures should still be made available.

But why can they not register earlier?

In spite of the attitude of the hon. members of the other parties in the House, and perhaps also in spite of the interpretation the hon. the Minister has given to this, I should nevertheless like to ask the university authorities, amongst others the University of South Africa, to take what we advocate into consideration and, in point of fact, to accommodate such persons in terms of this clause. Even if other hon. members do not think it necessary for the people to be accommodated, and even if they think that a narrower interpretation should be given to this clause, even if we on this side are the only ones who do so, we should like to tell the university authorities: “Forget about what other hon. members have said; this clause is possibly so wide that you could, in point of fact, accommodate those young people.” I repeat that we do not want to compel them to do this or that.

Mr. Chairman, I want to state very clearly that in my opinion we are arguing quite unnecessarily because this Bill has nothing to do with the date of registration of a student. This is solely a question of a certain period. What the hon. member for Durban Central and the hon. member for Wynberg spoke about remains the prerogative of the university councils. They may continue to determine their conditions for registration.

For late registration?

The council of a university determines its own conditions for registration, as the circumstances demand. The important point is that the hon. member surely cannot argue that we must prescribe, in this Bill, when students can register. We cannot provide for them simply to register left, right and centre—that is what the hon. member is, by implication, asking for. After all, there must be some order at a university. A university cannot simply take students indiscriminately; it must properly regulate its affairs and therefore cannot admit students without restriction. Therefore I am not prepared to extend the legislation further than clause 2 provides at present, i.e., that students normally register for a year and, in terms of this legislation, if a student does not make satisfactory academic progress, his registration can be terminated after six months.

Mr. Chairman, this clause deals with registration. What we are now asking is that consideration be given to universities allowing students to register later. That is all that is involved. I cannot understand why the hon. the Minister cannot meet us halfway. I am sure that the hon. member for Krugersdorp has many people in his constituency who are in that position. Now hon. members on that side of the House allege that it cannot be allowed. All we are saying is that we are not going to compel the university to do so, but we will urge them to allow persons to register at a later date, particularly in the specific category of national servicemen. Circumstances are such that they simply do not have any time during the first three months, but they do have some time in the last half of the year. All we are now telling a university is that it should not tell those people that they are two days too late to register, as does happen with students. They must meet those students halfway because they fall into a specific category, and in the Bill mention is made of “in general” and “in a particular case”, and if reference is made to “in a particular case”, surely that encompasses a particular group. I therefore cannot understand such an attitude on the other side of the House. It is not true to allege that we want to compel the universities.

Mr. Chairman, may I ask the hon. member if he means that in terms of clause 2 we should grant the concession to the University of South Africa?

Of course! I want that concession …

Then why are you complaining?

At the present moment we have quite a bit of evidence to indicate that the university is unwilling to grant that concession. One does not have to go far to find people who are affected by this legislation, people who have already fallen victim to it. All we want to do, on this occasion, is to tell the university that it must forget about what was said by the IUP, the Nationalists, etc., and make use of this concession by giving that particular category of people the necessary opportunity. The hon. the Minister must say whether he supports that concession. At the moment he says that it cannot be done. What about the few persons who are going to be involved? Surely it is not going to turn the administration topsy-turvy to such an extent. In reality they have a right to late registration, but we say it must be applicable to this particular group.

Clause agreed to.

Clause 3:

Mr. Chairman, as the hon. member for Rondebosch indicated, we are in favour of these four clauses, but let me confine myself to clause 3. I have a problem with the wording of this clause. I should like to draw the Minister’s attention to the fact that the wording of this clause is too narrow. As we see it, there are two types of protection contained in the clause. The one involves the status of the university in that other institutions may not profess to be able to do the work of a university or profess to have the status of a university.