Mr. Speaker, with your leave I should like to inform this House that a statement on the discussions held in New York between South Africa’s Minister of Foreign Affairs and the Foreign Ministers of the USA, Britain, France, West Germany and Canada will be made to this House after the hon. the Minister has had an opportunity of reporting to the Cabinet. I believe that hon. members will realize that I must give timely warning that in view of the sensitivity of the problem I cannot now—i.e. before the return of the hon. the Minister— commit myself as to how penetrating the first announcement will be, nor as to whether it will be made before the interested parties in South West Africa themselves have been advised of and been consulted in connection therewith. A full statement will, however, be made to this House at the earliest possible opportunity.

Mr. Speaker, may I ask the hon. the Prime Minister whether he anticipates that there will be an opportunity of debating the report which will be given, in the same way in which there was an opportunity of debating the report which the hon. the Prime Minister made on his return from Vienna last year?

Mr. Speaker, I have no objection to such a debate. It all depends, however, on the circumstances to which I have referred, and it is therefore a matter which the hon. Whips will have to decide in consultation with one another.

Mr. Speaker, I move—

Section 4(1) of the Exchequer and Audit Act, 1975 (Act No. 66 of 1975), provides that until such time as provision has been made in an Appropriation Act for the requirements of the State during a financial year, Parliament may, by a Part Appropriation Act, appropriate out of the State Revenue Fund a sum of money necessary to finance a part of such requirements.

As hon. members will know, the Appropriation Act for the 1978–’79 financial year will only be passed by Parliament at the end of the present session, while the financial year itself will commence on 1 April 1978. In the Part Appropriation Bill now before the House, authority to spend an amount of R2 900 million on the State Revenue Account is therefore sought to carry on with the services of the Government during the interim first four months of the financial year. In accordance with the provisions of section 4(2) of the Exchequer and Audit Act, 1975, the moneys sought to be appropriated by the Part Appropriation Bill may only be utilized for existing services, i.e. services in respect of which expenditure was authorized by the Appropriation Act for the 1977–’78 financial year or in respect of which some other authorization by Act of Parliament exists.

It will be noted that no provision has been made in the Bill for an advance on the South West Africa Account as was done in the past. By virtue of the constitutional developments in the Territory the Administrator-General will in future appropriate the revenues of the Territory to the various services, and the function of Parliament in this regard has therefore fallen away.

As in customary, I intend giving the House a review of our economic situation when I present my main budget. However, there are some aspects of the economy which should like to comment on at this stage. Officially published data on our economic performance are available up to the third quarter of last year, but last-quarter figures are unfortunately not yet complete, particularly in respect of the national accounts and the balance of payments. Nevertheless, I feel that a few observations from my side may perhaps be of interest to hon. members.

Starting with the current account of the balance of payments, it is true that there was a reduction in the surplus for the third quarter of last year compared with that of the second quarter. On a seasonally adjusted annual basis the reduction was from a total of R1 277 million to only R22 million in the third quarter. However, preliminary indications are that this was only a temporary decline and that, for the fourth quarter, we reached a much higher total which could result for the year as a whole in a surplus on current account of the order of R700 million to R800 million, a figure which I have already mentioned during my intervention in the censure debate.

In fact, if one analyses the details of merchandise imports during the third quarter, it soon becomes evident that extraordinary factors contributed to the increase in imports for that period. The most important of these were a concentration of mineral imports and the acquisition of container ships. These special factors had not been repeated during the fourth quarter, and this leads me to the conclusion that we can expect a very satisfactory 1977 current account surplus, particularly if one considers that we were saddled with a current account deficit in the first quarter of 1976 of as much as R2 529 million, adjusted to an annual basis, and that this was transformed during the second quarter of 1977 into a surplus of approximately R1 277 million, also calculated at an annual rate, a switch-around of nearly R4 000 million within a period of only five quarters. Our current account performance during the first quarter of this year should also, I think, be quite satisfactory.

I believe this is an achievement to be proud of and it proves once again that the South African economy and people are willing to make sacrifices in order to take the right medicine in the right doses at the right time. Our conservative fiscal and monetary policies over the past two years or more have borne fruit to the extent that we have been able to repay substantial sums of money borrowed abroad during recent years. In addition, we have been repaying substantial sums in the form of trade credits because of our lower import account. This has once again provided the proof that our foreign banking friends were looking for, inasmuch as it has again been shown conclusively that in times of adverse economic conditions South Africa, unlike many other countries, is willing and able to take corrective action quickly and effectively.

To my mind this particular determination on our part to take remedial action notwithstanding any negative domestic side-effects that might emerge, has increased our credit-worthiness abroad and gone a long way towards offsetting the effects of the unfortunate politically motivated attacks on South Africa.

Partly as a result of the substantial repayment of foreign indebtedness and partly because of a reduced inflow of long-term capital, the capital account as a whole reflects a net outflow for 1977. There is no doubt that an important factor in this situation has been the political uncertainties prevailing in Southern Africa, both real and supposed.

The South African economy remained sluggish during 1977. Though my expectation is that we will show for the year as a whole a positive rate of growth, this will probably not exceed 1% in real terms. I think one should be thankful for a positive figure considering the problems we had to contend with during the past year, and the fact that several of our trading partners abroad experienced, even until quite recently, negative growth rates to a greater or lesser extent.

Nevertheless, on a per capita basis this growth rate is not satisfactory and consequently it was decided towards the end of last year that although fiscal and monetary discipline must be maintained as the key to overall economic strategy, it was time to stimulate, on a selective basis, some of those sectors of the economy which had been most affected by the prevailing recessionary situation. In other words, what we have been engaged in is a shift of emphasis in our policy, from financial discipline as such to a moderate stimulation in order to give more emphasis to growth. As I say, this is on a moderate basis.

During the latter half of 1977 it became apparent that a further deflation of the economy might not only impair economic growth, but also further increase unemployment without either improving the overall balance of payments or reducing the rate of inflation to any significant extent. Certain moderate selective stimulation measures were accordingly announced in November last year.

The most important of these was the provision of an additional amount of R250 million to be spent on low-cost housing for Blacks, Coloureds and Asians during the ensuing 30 months. Of this amount R165 million will be provided by local banks as bridging finance and the balance will be available from public funds over the period. It was also decided that the periods allowed for hire-purchase repayments for passenger and for commercial vehicles would henceforth be extended from 30 to 36 months and from 24 to 30 months, respectively. Thirdly, the implementation of Phase V of the local content programme for the manufacture of motor vehicles was postponed for a year, to 1 January 1980. Finally, I also announced that export promotion would continue to form an important part of official economic strategy.

Subsequently a small increase in civil service salaries was authorized, as from 1 January 1978—the last rise had been in July 1976—and this step too should have a moderately stimulatory effect inasmuch as a further amount of nearly R250 million will be injected into the economy in the ensuing year.

The low rate of economic growth during 1977 was reflected in a continuing slack demand for labour. Unemployment was relatively high in South African terms, for Whites, Coloureds and Asians as well as for Blacks. On a seasonally adjusted basis, the number of Whites, Coloured and Asians registered as unemployed has risen from a little over 11 000 at December 1975 to 36 600 at December 1977. However, in proportion to the relevant economically active population the percentage at the end of December last was still only marginally above one per cent, which is well below the figure applying to most other countries in the same period.

In the case of Blacks we have, until very recently, had no dependable date on the increase in unemployment. Official estimates have, however, just come to hand and these estimates indicate that Black unemployment was of the order of 12,4% of the Black economically active population late in 1977.

It is interesting to note that the United States, a country with a moderate growth rate at present, is also saddled with a stubborn unemployment problem. The USA experienced a decline in the national unemployment rate from 7,8% in December 1976 to 6,4% in December 1977, but this represented, almost wholly, a drop in the White jobless rate from 7,1% to 5,6%. In contrast, the Black unemployment rate declined only marginally from 13,4% in December 1976 to 12,5% one year later. The percentage of those unemployed in American cities is substantially higher.

Another way of looking at the matter is to point out that 58,7% of the White population in the United States had jobs at the end of December 1977. I am referring here to the total population. This is the highest percentage ever for the White population, but the equivalent Black employment ratio, at 52,7%, is only marginally above the lowest level ever for Blacks.

As to inflation, on a December to December basis we are still saddled with a very sticky 11% average rate of inflation. However, looked at on a quarterly basis I think it is interesting that the increase between the first and second quarters of 1977 was 2,8%, between the second and third quarters 2,6%, and between the third and fourth quarters still lower, at 2,2%. This means that there seems to be a slowing down of the rate of increase calculated on a quarterly basis. Unfortunately the unavoidable increases in administered prices of the last month or two are likely to have an upward effect on the comparable percentage increase between the fourth quarter of 1977 and the first quarter of 1978.

What is encouraging, however, is the fact that the wholesale price index has been moderating substantially during the year 1977, from a January 1976 to January 1977 rate of 15% to a December to December rate of 9,9% at the end of last year. Put differently, on an annual, seasonally adjusted basis, wholesale price rises have moderated from a first quarter 1977 rate of 16% to only 7,1% for the last quarter of that year. I think we can expect that this reduction will eventually also be reflected in the consumer price index.

I have purposely not gone into too much detail in setting out my views of the current situation of the economy because most of the official statistics for the fourth quarter on the national accounts and the balance of payments are, as I have said, still outstanding. Iwill, of course, deal with those matters fairly comprehensively in my budget speech on 29 March.

There are, however, a few current matters with which I should like to deal specifically. The first relates to the recent appointment of Judge Mostert as a one-man commission, firstly to investigate malpractices relating to the avoidance and evasion of the Republic’s exchange control measures; secondly, to investigate measures to combat such malpractices and, thirdly, to report on any exchange control, taxation and other implications which may result from these investigations and to make recommendations accordingly. There is no doubt about the importance of this commission, particularly in view of the increasing degree to which our exchange reserves appear to be detrimentally affected by irregular exchange transactions. These transactions are costing the country substantial amounts in foreign exchange, and I am determined, as far as possible and as soon as possible, to rectify the position.

The second matter to which I wish to refer is a study on South Africa published by two American writers, James Morrell and David Gisselquist, working for the Centre for International Policy which is, I understand, a private Washington-based political research group. These two writers have alleged that South Africa has borrowed substantially from the International Monetary Fund over the past two years and commented that “as a grisly footnote to the IMF’s aid to South Africa, the April 1977 IMF study said that the increase in military spending in 1976–’77 came to $450 million—almost exactly the amount of IMF assistance”. The implied accusation here is, of course, that South Africa obtained IMF loans specifically for the financing of its increased military expenditure.

First of all I have to draw the attention of the House to the fact that the minutes of discussions at meetings of the executive board of the IMF on which, according to Press reports, the study was based, are completely confidential documents and not available to any outside institution or person. Hence the ability of every executive director to speak out purely on the economic justification of any application before the board, irrespective of the political attitudes of the country or countries which he may represent. The fact that such a confidential document is being used by an outside organization for its own purposes is disconcerting, to say the least. I am glad that the fund itself immediately reiterated to all concerned the confidentiality of its discussions and minutes.

As to the implied allegation itself, Mr. Speaker, to wit: that we almost exactly financed the increase in the Republic’s military spending in 1976–’77 by loans obtained from the IMF, I need hardly tell the House how ridiculous it is. The fact that the two amounts happen to be about the same is sheer coincidence and nothing else.

South Africa has been a founder member of the IMF since the mid-forties and throughout the years we have been one of its most consistent supporters. We have on occasion utilized the facilities of the fund but have been very strict in complying with any conditions that may have applied. On its side, the IMF—both its board members and its staff—have treated any application by South Africa for loan or other facilities with scrupulous fairness and objectivity, and politics have been rigorously excluded from their deliberations and decisions. We shall shortly be receiving a routine visit by a mission of the fund, and I am confident that their report on the Republic’s economic performance since their last visit will be characterized by the same objectivity, thoroughness and sound common sense as have been such important features of their previous reports.

Turning now to the question of gold, recent events have strengthened my belief that a continuing important monetary role for gold is assured for the foreseeable future. In this regard it is important to note that the essence of the “understanding” which was reached on gold by the Interim Committee of the IMF on 31 August 1975, and which I welcomed at the time as a step in the right direction, has been incorporated in the proposed new fund articles. These articles are expected to come into effect within the next three months.

This “understanding” on gold was basically a compromise. On the one hand it was agreed that gold would not be restored to its former role as the so-called “numeraire” or unit of account of the system and that there would be no increase to a higher fixed level in the official price of gold in terms of all currencies. Instead the fixed official gold price would be abolished. Provision was also made for the fund to sell one-sixth—about 25million ounces—of its gold “for the benefit of developing countries”, as they said, and to “reinstitute” one-sixth to members at the old official price.

On the other hand, the new understanding recognized that gold holdings formed an important part of official reserves and should be made usable again to finance balance of payments deficits. It was therefore agreed that monetary authorities could enter into gold transactions among themselves at market-related prices and, in addition, could buy gold in the private market and not just have the right to sell in that market as previously.

These various provisions relating to the official price of gold and the freedom of monetary authorities to engage in gold transactions will take full legal effect when the proposed new fund articles come into operation shortly.

This compromise implied the rejection of proposals which had been made to move towards the early demonetization of gold by maintaining the official gold price at the level of $42,22 per fine ounce and retaining the legal prohibition on gold transactions among monetary authorities at prices higher than the old official price, as well as on gold purchases by monetary authorities in the private market. This had naturally led to an immobilization of official gold reserves—gold had sunk to the bottom of the pile and was practically never used.

In retrospect it would appear that the initial bearish reaction of the gold market to the 1975 understanding on gold was due largely to an inadequate appreciation of the true meaning and significance of this so-called understanding. This is not surprising in view of the fact that the understanding was presented in some circles at the time as a step towards the final “phasing out” of gold from the world’s monetary system. That this interpretation was manifestly incorrect was apparent from any comparison between the new arrangements and the de facto situation which had prevailed during the preceding seven years, ever since the institution of the two-tier gold system in March 1968. Far from representing any phasing out of gold, the new understanding clearly had the effect of giving gold a more important and meaningful monetary role than it had had for some time. Moreover, when the new fund articles come into effect, the “official” price of gold will, in effect, be increased, not to a new fixed level, but to a fluctuating one, which today is about four times higher than the old official price of $42,22 per fine ounce. But it has taken some time for the market to appreciate the true significance of these developments.

Another reason for the initial bearish reaction of the market was, of course, the fear that the impending sales of 25 million fine ounces of gold by the fund on the private market would greatly reduce the price. However, it is now a matter of history that, after declining from the peak of $198 per fine ounce reached towards the end of 1974 to a lower turning point of about $102 in August 1976, the gold price resumed an upward tendency and has recently passed the $170 level. The fund’s gold auctions have become accepted as a normal part of market activity and the additional gold put on the market in this way has been well absorbed.

One reason for the rise in the price of gold since August 1976 has been the increase in the industrial demand for gold. But there has also been an increase in the investment demand for gold. In a world plagued by excessive exchange rate instability and inflation, people have once again turned to gold as a reliable and proven store of value.

When the new understanding on gold was finalized in January 1976, it was also agreed outside the articles of the fund that, for an initial two-year period, the total stock of gold in the hands of the fund, the monetary authorities and of the Group of Ten would not be increased. In this regard I was pleased to note the announcement by the Group of Ten in January of this year that these transitional gold arrangements, which were due to expire on 31 January 1978, would not be extended in view of the impending change of the fund’s articles. This means that when the new articles come into effect, monetary authorities will be legally free to buy and sell gold at market-related prices without any agreed limitation on the amount of official gold holdings. Gold clearly still has a vital part to play in the international monetary system.

While on the subject of gold, Mr. Speaker, I am pleasantly surprised with the success of our Kruger rand sales. Total 1977 sales abroad amounted to 3,2 million coins and South Africa earned no less than R436 million in foreign exchange. It is indeed satisfying to note that the demand has increased so substantially abroad that we have difficulty in fulfilling all orders. January of this year exports amounted to a record 661 000 coins, which, together with local sales, boosted the total to 669 030, the highest monthly total to date. In January Kruger rands absorbed more than one-third of our total gold production in that month.

As to the gold price itself, I am, as I have been all along, quietly optimistic. We must expect the price to fluctuate somewhat before moving on to higher levels. Let us, however, be prudent and not base our policies on too high a figure. We should ensure that if, due to market or other factors, there occurs some easing of the price, our economic, fiscal and balance of payments policies will be able to cope adequately with the position.

*I should now like to say a few words about certain misconceptions concerning our exchange policy. For a long time now the South African rand has been linked to the US dollar. What this means of course is that the S.A. Reserve Bank quotes fixed buying and selling rates for the US dollar, i.e. rates at which the bank and authorized exchange dealers are prepared to do business with the public. This does not of course mean that the rand must inevitably appreciate or depreciate in company with the dollar at all times. If necessary, and if it is in South Africa’s interest, the level on which the rand is linked to the dollar can always be changed. In other words, the rand can at any time be revalued or devalued in terms of the dollar by means of a specific decision by the South African authorities.

For a long time now it has been our policy to preserve stability with the dollar and only to change the linkage in a case of a fundamental change in our circumstances. The last occasion on which something of this nature occurred was in September 1975 when the rand was devalued by 17,9% in terms of the US dollar. At that juncture the new rate was determined as R1 equals $1,15 and that is still the prevailing rate.

As in the case of most other member countries of the IMF South Africa is provisionally still in the position where it has to link its monetary unit to something: Either to an important international monetary unit such as the US dollar or the pound sterling, or to a basket of monetary units which is determined according to the weights of some formula or other, or to the Special Drawing Rights of the IMF, which, in its turn, is linked to a basket of monetary units. The reason why such a link system is necessary, is the absence of an adequately developed foreign exchange market in South Africa where rates can be determined by supply and demand and in which the central bank need only intervene in order to ensure that changes take place in an orderly manner and that excessive or unjustified fluctuations are prevented.

It is virtually only the largest industrial countries that have really developed exchange markets. The monetary units of these countries are consequently the only ones which can really float in the sense that their rates are determined by the free market mechanism of normal supply and demand factors. Of course there are many forms of flotation. Flotation can be absolutely free, but it can also be artificially influenced. A monetary unit can also float independently or in a group, as in the so-called “snake” of Europe.

A country that does not have such a broad-based and active foreign exchange market is consequently obliged to accept some or other form of linkage. However, it has a whole series of options as to the type of linkage which can be decided on. In this way, for example, a country may decide to accept a fixed link for long periods to one monetary unit, or to adjust its linkage point as frequently and to such an extent that its policy virtually amounts to flotation. It can even deliberately imitate flotation by constantly changing the linkage point in such a way that it brings about changes or movements in the exchange rate which would probably have occurred if such a country had in fact had a developed exchange market.

The policy of linking the rand to the dollar has in recent months of course meant that the rand depreciated in terms of monetary units such as the German mark, the Japanese yen and the Swiss frank which floated upwards against the dollar, and that it appreciated in terms of those monetary units which floated downwards against the dollar. In this regard there are certain misconceptions which I consider necessary to eliminate.

The hon. member for Yeoville suggested during the censure debate that South Africa should free the rand from the dollar and link it to a basket of currencies. The argument seems to be that the rand will not then be dragged down with the declining dollar, or, on the other hand, if the dollar strengthens, it will not pull us upwards when our own circumstances may not justify it. This is of course a proposal which has frequently been made by others, and in 1974 and 1975 we did indeed link the rand to such a “basket” for a time. This is certainly a matter which the De Kock Commission, which was specifically requested to examine the exchange policy of the Republic as well, will investigate very thoroughly, and it will come to the Government with considered recommendations in this regard.

The first misconception I should like to eliminate is the assertion that the dollar has since September 1977 become the “sick” monetary unit of the world and that it has depreciated against almost all other monetary units. This is of course not correct. What actually happened was that the monetary units of a few large surplus countries in the world, particularly Germany, Japan and Switzerland, and more recently for special reasons the United Kingdom as well, floated upwards against almost every other monetary unit, including the US dollar. During the same period, however, there were various other monetary units which floated downwards, or which were indeed devalued in terms of the dollar. The result was that the trade weighted average effective depreciation of the dollar against all other monetary units was only approximately 5% as from September of last year. In a world of floating exchanges, this is not abnormally large.

A second misleading impression which exists is that the rand is being dragged down by the dollar and that it has undergone an exceptionally marked depreciation in recent months. This is clearly not the case either. Of course many very strong monetary units such as the German mark, the Japanese yen and the Swiss frank, floated upward against the dollar—and therefore, too, against the rand—by large percentages. For example, since the end of September 1977 the rand has depreciated against the German mark by 10%, against the Swiss frank by 16,3%, against the Japanese yen by 9,7% and against the British pound by 10,7%. By definition, however, the rand has not depreciated in terms of the US dollar, which represents a weight of approximately 28% in South Africa’s current payments. Moreover, the rand has appreciated in terms of certain other currencies.

The trade weighted average effective depreciation of the rand since September 1977 was in fact only approximately 4,4%. On an average against all other monetary units, the rand is today on approximately the same level as it was on immediately after the September 1975 devaluation. In a world characterized by major unfavourable balances of payment and floating rates, it is only natural to expect that a monetary unit such as the rand will show divergent tendencies against various monetary units. There is nothing we can do about this, even if we wanted to, and it is certainly not an unnatural result of this that, regardless of our balance of payments and internal economic situation, it will always be in our interest to link the rand to the strongest monetary unit in the world at any given stage.

We cannot strengthen the rand by simply linking it to the strongest monetary unit of the day. The ideal effective average depreciation or appreciation of the rand over any given period would depend on our own balance of payments and internal economic circumstances. At times an appreciation of the rand would be in our interests, but at other times it might be in our interests to allow the rand to depreciate. It is certainly not possible to express any a priori opinion about it always being in our best interests to allow the rand to follow some course or other.

Another misleading impression is being created by the statement which is being made that, because the rand has depreciated with the dollar against certain other monetary units, South Africa derived no real benefit from the upward movement in the dollar price of gold in recent months. Fortunately this view is not correct. South African gold is sold for US dollars. Since the rand is linked to the dollar, an increase in the dollar price inevitably results in an increase in the rand price of gold. Since gold mining costs have not increased to the same extent, the mines consequently benefited from the increased gold price and it is hoped that this might subsequently in turn give rise to a higher tax income for the Exchequer. What I find disappointing, however, is the gradual decline in our physical gold production.

The rand value of imports from countries whose monetary units have become stronger, has also increased of course, but in terms of the whole rationale of the flexible exchange rate régime the volume of imports from these countries ought to decrease in time as importers change over from more expensive to less expensive sources of supply, whether these are local or foreign. It is true that future repayments of existing foreign loans concluded in those monetary units will become considerably more expensive and could entail losses for South African borrowers, but that in itself cannot make it essential or even desirable that the rand should at all times move with the strongest monetary units. In this connection it is also wrong to argue that it is meritorious for the rand to keep on appreciating under all circumstances with the strongest monetary units because, as it is claimed, “capital flows to those countries with the strongest monetary units”. The fact of the matter is of course that capital does not flow to countries whose monetary units are over-valued. On the contrary. Such countries frequently experience short-term outflows in the form of unfavourable leads and lags in the balance of payments in anticipation of a devaluation or downward flotation.

Therefore I see no reason to revalue or to devalue the rand in terms of the dollar now. For the present both our policy of linking the rand to the dollar as well as the level at which it is linked will remain unchanged. This does not of course mean that we are entirely satisfied with all aspects of our exchange practices and policy. On the contrary. The fundamental changes which have occurred in the international monetary system in recent years has made it clearly necessary for us to reconsider this matter very carefully with a view to effecting improvements where necessary. This is of course one of the principal reasons why I recently appointed the Commission of Inquiry into the Monetary System and Monetary Policy in South Africa. One of the main terms of reference of this commission is to investigate South Africa’s exchange policy and practices and to make specific recommendations in this regard.

I requested this commission to give top priority to this part of their work. The commission is hard at work, and requested financial institutions and other interested parties weeks ago to submit their standpoints in respect of the various subjects that have to be investigated. I look forward with interest to the results.

Then, Mr. Speaker, there is one other matter I want to put before this House. It was with great disappointment and concern that I read in a Sunday newspaper a few weeks ago, under banner headlines, of a “shock tax” which is suddenly going to be forced upon the public. With this was meant the terminal point sales tax which I envisaged a year ago in my budget speech. The insinuation was that an onerous, comprehensive tax would now, suddenly and unexpectedly, be forced on South Africa.

The underlying tone of the report was also one of exaggeration and sensation. So, for example, the Bible had to be dragged in as one of the items which would be taxed and reference was made to the “jongste geldskok”; “Die nuwe belasting gaan die bestaande reg na speletjies laat lyk,” and so on. And this at a time when many decisions still have to be taken by the authorities.

What newspaper was that?

The hon. member will get an opportunity to speak. I wonder if he can just exercise a little restraint.

We just want to know which newspaper.

Order! The hon. member has now made enough interjections.

If the reporter had only taken the trouble to have consulted me or the Secretary for Inland Revenue beforehand, he could have done his readers a service by publishing a factual report informing them of the envisaged tax, a report which could have been of considerable benefit to them, because this is a complicated tax. Admittedly the planning has not yet been finalized and the Government still has to take decisions of policy on certain matters. The envisaged tax is, or ought to come as, no “shock” whatsoever, since, as I have already said, I announced it in my 1977 budget speech, almost a year ago, and then said, inter alia—

On that occasion I said far more.

Since the end of the previous session the Secretary for Internal Revenue and his planning committee for this tax has held long talks with organized commerce, industry, agriculture, mining and the fishing industry as well as with the various population groups. Since the private sector will have to collect the tax and the system has to be developed in such a way that it produces the best results with the least disruption, the new tax procedures have been planned in close co-operation with that sector. The only aspect which has never been discussed is the rate at which the tax will be levied, since that is solely a budgeting matter. Therefore there has been no secrecy whatsoever about the tax or its scope as far as the private sector is concerned, and the Secretary and I have on various occasions discussed it or mentioned it in public. I do not want to elaborate any further on this matter at this juncture since I intend giving notice shortly of a Bill to authorize the registration of undertakings for the purposes of the envisaged sales tax and since a draft Bill on the tax as such will also be published soon for general information and criticism, after which legislation on the matter will be submitted to this House.

There will thus be adequate opportunity for discussion of this subject. I have broached the matter here because I am perturbed at the possibility, after the sound co-operation between the private sector and my department in establishing what is as far as possible, a model sales tax for South Africa, that such sensational reporting could cause uncertainty and resentment among the public before the particulars are known. Nothing constructive has been accomplished and the tremendous task resting on the shoulders of the tax-collectors has most certainly not been facilitated in this way.

In conclusion I should like to refer to the talks which my colleagues and I held for three days last week with a ministerial delegation from Israel. The Israeli Minister of Finance, Mr. Simcha Ehrlich, is the first serving Minister of a Israeli Cabinet to pay an official visit to South Africa.

During the visit by the hon. the Prime Minister to Israel, in April 1976, it was mutually decided between the Prime Ministers to establish a joint ministerial council which would meet from time to time to discuss matters of common interest. The visit of Mr. Ehrlich has given effect to this.

I am pleased to be able to report that our discussions were exceptionally cordial and fruitful. Matters to which attention was given included investment capital, trade, fishing rights, co-operation in the spheres of agriculture, medicine and related scientific spheres, the improvement of air communication services, as well as assistance with the establishment and expansion of Israel’s industrial infrastructure and certain undertakings. At the same time I also signed an important agreement with Israel for the avoidance of double taxation.

We are not living in easy times, but I have every confidence that, since our policy has preserved and maintained the inherent soundness of the South African economy, we shall together eliminate the problems— the obstacles in the road ahead—to the benefit of all races in Southern Africa.

Mr. Speaker, in terms of Standing Orders 48 and 156 I shall in a moment move the adjournment of this debate. At the outset I just want to state that I have been authoritatively informed that the hon. the Minister of Finance and the hon. Leader of the House in fact intend to proceed immediately with this particular debate. With your leave, Mr. Speaker, I would like to give two or three reasons why I believe that the House should consider the adjournment of this debate.

Order! The hon. member must first move his motion before speaking to it.

Mr. Speaker, then I move—

We have listened with great interest for something like 45 minutes to the hon. the Minister of Finance. The first point I want to make is that he has done at least three things. Firstly, he has given us a great number of facts and figures which were totally unavailable to the House until this afternoon. I think he would be the first to concede that. There are obvious reasons for this. However, there is a great mass of material which has become available to us only now. The second thing he has done, is to give a general survey of the economy of South Africa over the past few months, particularly the second and third quarters of last year. It is an interesting survey. There will obviously be people who will agree with it. Others will not.

Thirdly, what the hon. the Minister has done, is to deal in detail with some—and I counted almost 20—particular economic and fiscal matters in the course of his Second Reading speech. He dealt with at least 20, and every single one of these is in a sense—however technical—controversial, if not tendentious. He dealt with gold, inflation, unemployment and with the current account. All these are extremely important matters, from the point of view of the economy of this country. The point is that if we are to proceed with this debate now, members on both sides of the House are in fact going to have to commit themselves off the cuff to particular stances on monetary, fiscal and economic matters.

It has been done for 50 years.

I do not believe that this is fair. But, Mr. Speaker, what is much more important is that I do not think it reflects well on this House. I do not think that it is right, for the best performance of hon. members in this House, that they should be expected to be plunged immediately into a debate of this importance. It is made much more important by virtue of the fact that this is not just a humdrum and ordinary year in the economic history of this country. It is not just a straight up and down year. It is a very important, if not crucial year. I think the hon. the Minister has conceded that. There are special measures which he has in fact introduced, special measures he mentioned which he is not going to introduce, and certain other measures which he intends introducing. I therefore make this point in the context of a particularly important fiscal year.

I want to say, in the second place, that I have not caught the governing side by surprise. In fact, I protested last week. I made my position quite clear. I said that when it came to the fiscal and monetary aspects of this Second Reading debate, it was not right that we should be expected to be plunged into the debate right away.

We want Harry.

Thirdly, despite the interjections which have come from the other side, it is quite clear that an established practice has grown up over the past few years with regard to the Part Appropriation Bill. This has certainly been the position over the last five or six years, which is as far back as my researches went. On every single occasion there was a speech by the hon. the Minister of Finance and then a reply lasting some five or 10 minutes by the chief speaker on the Opposition side. Sometimes it was a struggling speech and sometimes not. After that speech the Opposition spokesman formally moved the adjournment of this debate. That was then agreed to. The House is not under some avalanche of business at the moment. There is no particular urgency. We have lots of time. In fact, we are now beginning to sit on Monday evenings, as from today, and on Wednesday evenings, as from next week. In addition, certain matters, which I cannot deal with now, are under consideration, matters which may well assist in the running of this House later in the session. In other words, there has been a fair amount of planning with regard to the legislative programme before this House. Having regard to all these factors, the hon. the Minister, and certainly the hon. the Leader of the House, should consider this plea from me that in the interests of the House and of the country, we should have time to consider the very weighty matters that have fallen from the hon. the Minister’s lips.

Mr. Speaker, as is customary in connection with the business of the House, as it is determined by the Leader of the House, I informed the Opposition early in last week that we would immediately proceed with the discussion of the Part Appropriation Bill. Before the House met today the hon. Chief Whip of the Opposition told me that he was going to protest against this. It is so that he is a new Chief Whip on that side, and I have to tell him that the business of this House can run smoothly only if we approach each other timeously on these matters and air our problems. In the first place it is the duty of the Leader of the House to see to it that the business of the House runs smoothly. He is not here at the moment, and is represented by the hon. the Minister of Labour. Now, however, is not the time for the hon. Chief Whip to air his objections. I want to point out that this debate will last for a period of 12 hours. Moreover, not only one speaker from the Opposite side is going to participate in the debate. There will be virtually three full days for hon. members opposite to process the details which the hon. the Minister has just given them and to debate them. Before this hon. Minister became Minister of Finance, it was not customary for the Minister of Finance to furnish any information whatsoever as an introduction to this debate. After he had become Minister, however, he started making certain information available to the Opposition so that a debate could be conducted. Instead of the Opposition appreciating that, they are now objecting to the fact that they receive the information here. The hon. the Minister spoke for 45 minutes today, while he spoke for only 10 minutes on previous occasions. He was polite enough to give them these details now, something which, under other Ministers, was not the custom in the past.

We need time to process these details.

Now they are objecting. [Interjections.] I do not think the Opposition should complain about their incompetence to act. [Interjections.] They should not run away from their responsibility. If the hon. member for Yeoville is not capable of standing up here and now and making a contribution after he has received this information, he ought not to be their chief spokesman. If the former hon. member for Constantia were here, he would have risen immediately and started the debate. [Interjections.] It is clear to me that the Opposition cannot accept the responsibilities of an Opposition. They should not, however, upset the business of the Whips and of this House by asking now, at this late stage, for time to go and do their homework. They ought to have done it before.

Mr. Speaker, I just want to put the record straight. I think this House should know that when we were first given the information that we were to proceed immediately with this debate, we made our objections then. As the hon. Chief Whip’s colleague will tell him, we made our objections both in a written note and in a conversation. At the time we were informed, after a short while, that the hon. the Leader of the House had considered the matter but was insisting that we proceed as we are about to do now. So it is not something new.

I want to add that if my memory serves me right my colleague, the hon. member for Mooi River, also protested at that time on behalf of his party. This is consequently nothing new. It is no great shock. The one point we want to emphasize, however, is that we have the fullest confidence that the hon. member for Yeoville can and will make an outstanding speech in this debate.

There is no problem there at all. What we are concerned with, however, are the traditions and customs of this House. For the past five years there has been an adjournment to afford one time to give careful consideration to the matters in hand.

[Inaudible.]

Now suddenly that hon. Chief Whip wants to tell us that Parliament has been wrong for the past five years. We dispute that and I therefore support the motion.

Your speech writers have let you down.

Question put,

Upon which the House divided:

Ayes—29: Aronson, T.; Bartlett, G. S.; Basson, J. D. du P.; De Beer, Z. J.; De Jong, G.; De Villiers, I. F. A.; Eglin, C. W.; Lorimer, R. J.; Malcomess, D. J. N.; Marais, J. F.; Miller, R. B.; Myburgh, P. A.; Oldfield, G. N.; Page, B. W. B.; Pyper, P. A.; Raw, W. V.; Rossouw, D. H.; Schwarz, H. H.; Slabbert, F. van Z.; Sutton, W. M.; Suzman, H.; Swart, R. A. F.; Van der Merwe, S. S.; Van Rensburg, H. E. J.; Widman, A. B.; Wiley, J. W. E.; Wood, N. B.

Tellers: B. R. Bamford and A. L. Boraine.

Noes—111: Badenhorst, P. J.; Ballot, G. C.; Bodenstein, P.; Botha, C. J. van R.; Botha, J. C. G.; Botha, P. W.; Botha, S. P.; Clase, P. J.; Coetsee, H. J.; Coetzer, H. S.; Cronje, P.; Cruywagen, W. A.; Cuyler, W. J.; De Beer, S. J.; De Jager, A. M. van A.; Delport, W. H.; De Villiers, D. J.; De Villiers, J. D.; Du Plessis, B. J.; Du Plessis; G. C.; Du Plessis, P. T. C.; Durr, K. D.; Durrant, R. B.; Du Toit, J. P.; Grobler, J. P.; Hartzenberg, F.; Hayward, S. A. S.; Hefer, W. J.; Herman, F.; Heunis, J. C.; Heyns, J. H.; Horn, J. W. L.; Janson, J.; Janson, T. N. H.; Jordaan, J. H.; Koornhof, P. G. J.; Kotzé, G. J.; Kotzé, S. F.; Kotzé, W. D.; Krijnauw, P. H. J.; Kruger, J. T.; Langley, T,; Le Grange, L.; Le Roux, F. J. (Hercules); Le Roux, Z. P.; Ligthelm, C. J.; Ligthelm, N. W.; Louw, E.; Malan, J. J.; Malan, W. C. (Randburg); Marais, J. S.; Marais, P. S.; Morrison, G. de V.; Mulder, C. P.; Muller, S. L.; Myburgh, G. B.; Nel, D. J. L.; Niemann, J. J.; Nortje, J. H.; Olckers, R. de V.; Potgieter, S. P.; Pretorius, N. J.; Raubenheimer, A. J.; Rencken, C. R. E.; Rossouw, W. J. C.; Schlebusch, A. L.; Schoeman, H.; Schoeman, J. C. B.; Schutte, D. P. A.; Scott, D. B.; Simkin, C. H. W.; Snyman, W. J.; Steyn, D. W.; Steyn, S. J. M.; Swanepoel, K. D.; Swiegers, J. G.; Tempel, H. J.; Terblanche, G. P. D.; Theunissen, L. M.; Ungerer, J. H. B.; Uys, C.; Van den Berg, J. C.; Van der Merwe, C. V.; Van der Merwe, H. D. K.; Van der Merwe, J. H.; Van der Merwe, S. W.; Van der Spby, S. J. H.; Van der Walt, A. T.; Van der Walt, H. J. D.; Van der Watt, L.; Van der Westhuyzen, J. J. N.; Van Heerden, R. F.; Van Rensburg, H. M. J. (Mosselbaai); Van Rensburg, H. M. J. (Rosettenville); Van Vuuren, J. J. M. J.; Van Vuuren, P. Z. J.; Van Wyk, A. C.; Van Zyl, J. J. B.; Venter, A. A.; Viljoen, P. J. van B.; Vorster, B. J.; Vosloo, W. L.; Wentzel, J. J. G.; Wessels, L.; Worrall, D. J.

Tellers: J. H. Hoon, J. P. A. Reyneke, N. F. Treurnicht, A. van Breda, W. L. van der Merwe and V. A. Volker.

Question negatived.

Mr. Speaker, the hon. the Minister of Finance delivered a speech lasting some three quarters of an hour in the form of a buck-shot of a variety of selected issues and statistics, but what is significant about everything that he said, is what he did not say. I would have imagined that a Minister, rising to speak on this very day, would have concerned himself with some of the immediate problems that face the country. He might have concerned himself with the fact—if he is aware of it and I assume he is—that there is a real threat to South Africa of economic sanctions hanging over our heads. He might have taken the opportunity to talk about that subject, to reassure the people of South Africa in regard to that matter and to take us into his confidence in regard to the plans that are being made if that unfortunate eventuality should ever come about. He might have told us how he proposes to deal with the ever-increasing unemployment in South Africa. He might have told us about the unfortunate situation that has arisen in regard to the bonus bonds which are so near to the hearts of many of us in the House. He might have told us about some of the plans he has for South Africa. We challenged him to do so already during the censure debate, but he has been remarkably silent. He has told us what his objectives are. He has spoken about wanting a strong rand; about wanting growth; about wanting to increase the living standards. These are objectives he states, but plans he does not appear to have. A certain American politician told the following apocryphal story about President Carter: President Carter was in the company of his finance man, Blumenthal. He looked at the prices on the New York Stock Exchange—as you know, the New York Stock Exchange has gone down because of their problems—and he said: “You know, if only I was not the President, I would buy these shares.” In reply Mr. Blumenthal said: “So would I.” That story applies to the hon. the Minister too. If only he was not the Minister, perhaps we in South Africa might hear some plans or some proposals instead of being told about newspapers that carry sensational reports. He was not prepared to mention the name of the newspaper even after I had asked him three times across the floor of the House.

Do you not know? Are you so ignorant?

I do not know. I am so ignorant. The hon. the Minister quotes from so many newspapers on so many occasions and—this is the point of the adjournment—he refuses to give one a chance of checking up. One has to rely on what he says he read in a newspaper report weeks ago, and he still refuses to mention the name of the newspaper concerned. Why does the hon. the Minister not mention the name of the newspaper? What is so terrible about mentioning the name of a newspaper? That is the way in which this matter has been approached and the way in which the hon. the Minister has dealt with it.

The hon. the Minister has tried to take advantage of this situation, because there is a tradition in the House that one gets an opportunity of checking on his statistics. He told us about linking the rand to the dollar. The hon. the Minister went to great lengths to say why the rand cannot be linked to a basket of currencies. He said that we trade with a lot of people, he gave figures as to how the currencies have appreciated, and in the end he said that the rand had not depreciated against all the currencies. What the hon. the Minister does not tell us, however, when we talk about the appreciation of the German mark, is what the percentage of our trade with Germany is. My statistics—I have only been able to look them up while we have been sitting here—indicate that almost 20% of our total imports come from Germany, and that our exports to Germany are in excess of 10%. Is it not then material? The hon. the Minister referred to the Japanese yen and as we all know the yen has appreciated tremendously against the rand. Again the hon. the Minister does not tell us that, in fact, our trade with Japan is of such a nature that—according to the statistics I have here—10% of our imports come from Japan and more than 10% of our exports go there. Therefore, when we talk about linking the rand to a basket of trading partners, I am referring to the people that we trade with. It is no use if the hon. the Minister takes some obscure currency in a country which we have virtually no trade with and says that the rand, in fact, has not depreciated against that currency. Let us talk about the currency …

I gave you the figures. —

Is the most substantial portion of our trade not with Britain and has sterling not in fact appreciated because of our link with the dollar? Is that not the case with the French frank; the German mark; the Japanese yen? So we can list them. That the hon. the Minister does not tell us because he does not want to take us into his confidence in this regard. The truth is that a currency needs to be linked on a basis which has a relationship with the people with whom one trades. That is a fact and every economist in the country, with the exception of the hon. the Minister of Finance, will agree with that.

You are talking nonsense.

You are proving it.

I have consulted with six leading economists …

Yes. Six leading economists all sitting on the NP benches. The hon. the Minister should ask his own banker, whom he introduced in the House, after he has made his maiden speech on the Immorality Act, about this matter and see what he says.

I will ask him.

The truth is that the strength of our currency must be taken into account in the light of the trade that we conduct. When one links it with the dollar, the truth is that the imports which we have had with the countries where the currencies have appreciated, have introduced more inflation into South Africa. That is a fact and again is something which the six economists will tell the hon. the Minister when he consults them.

Let me continue. The hon. the Minister has spoken about a variety of selected subjects. We are very pleased, make no mistake … If I may suggest, the hon. the Minister of Agriculture should stand in front of the hon. the Minister permanently. It may help.

He is not listening!

The hon. the Minister is not listening. Apparently he is not interested. What are the real problems facing South Africa? I want to suggest— and I would ask the hon. the Minister to respond to this in his reply to this Second Reading debate—that the issue that on this very day concerns more South Africans than any other issue in relation to finance and economics is the danger of sanctions against South Africa. That is the issue which affects us and the hon. the Minister had not one single word to say about it. The truth is that this Part Appropriation debate takes place in the shadow of the possibility of sanctions against South Africa. From an economic point of view this Part Appropriation debate is probably more serious than any Part Appropriation debate since 1940 and 1941 as far as South Africa is concerned. However, the hon. the Minister had not one single, solitary word to say about this matter in these circumstances.

Let us look at the situation concerning South West Africa. I respect what the hon. the Prime Minister said in regard to South West Africa, but I certainly do not intend to say anything which can embarrass anyone in this situation. Many of us heard and saw last night what the hon. the Minister of Foreign Affairs had to say on the matter. One particular appeal that I want to make today from these benches is that whatever they do, the Government must not stop talking because while there is an opportunity of talking, while there is debate and discussion, the possibility of finding a solution exists. We believe the Government should continue to talk. There should be no question of breaking off negotiations. This appeal to continue talking and to negotiate is a very sincere one coming from these benches today. I want to say here and now that it is unfortunate that the negotiations which took place in New York, and the negotiations which have taken place before and will hopefully still take place, should be under the shadow of sanctions hanging over South Africa. I think the question can be asked in all fairness whether the shadow of any threats hangs over any other party to these negotiations. In other words, if the threat of sanctions is being held over South Africa, what, for example, is being held over Swapo? I ask this because the way I read it there are no threats at all being made against Swapo.

If we have threats hanging over us, I believe it is not unfair to ask whether there is anything hanging over any other parties to the negotiations. While I have appealed to the Government to continue talking, I think one must also appeal to the Western powers in this case. I believe the Western powers have a responsibility. I believe they must continue to try and find a way, not only a way with honour, but also a way in terms of which the true expression of the will of the people of South West Africa can be ascertained. I think, with respect, that the West also owes us something. If we look at the history of Southern Africa, at the history of colonialism and at other matters such as trade and associations in war, it seems to me that the West owes us something as well. I believe that when the South African Government is sometimes called a White anachronism, we have to ask ourselves who has actually created the situation on the African continent which has resulted in an anachronism coming into being. We obviously do not approve of Government policies on these broad issues, but we do approve of the concept that Whites in Southern Africa are not obliged to commit suicide in order to satisfy anybody’s whim in this world. I think that should be clear. I think it should be brought home very forcibly to those who actually believe in peaceful change—we in these benches believe in change, but we also believe in peaceful change—that sanctions will make the task of seeking political change even more difficult, will encourage those who seek violence and confrontation, will create hardships, particularly for those people whom they are supposed to help, will harden the attitude of many Whites, and lastly, and perhaps worst of all, will set the stage for a long, weary and unfortunately, a bloody struggle which will not only harm Black and White South Africans alike, but will in fact harm the cause of the West.

I now want to discuss the economic impact of sanctions on South Africa. South Africa is an open economy. More than 50% of the gross national product of South Africa is connected with imports and exports. South Africa needs vital imports in order to keep her economy going. She needs foreign capital in order to enable her to grow at an adequate rate. If economic sanctions are imposed, the effect on South Africa in the long term can be very serious. I am not thereby saying that we cannot survive. I think South Africa can survive even if sanctions are imposed, but at what price? We can survive with dramatically reduced living standards without the means for economic growth to uplift the underprivileged in South Africa. That is in fact the crucial factor in the whole situation. In order to ensure peaceful change in South Africa we have to have economic growth. I have said before that if one has a cake of a certain size and somebody wants a bigger share of it, one either has to have a bigger cake or somebody has to give up a part of his. If this economy cannot grow, we cannot satisfy aspirations and we are headed for conflict in South Africa. I believe that many of those who advocate sanctions against South Africa and who say that they do so because they want to use peaceful means to help bring about change, in fact want the very contrary and want to impose sanctions because that is the beginning of conflict in Southern Africa. I think this must be made very clear. Those who advocate sanctions must not pretend that they do so because they actually want peaceful change. I believe economic sanctions are a precursor to violence in Southern Africa.

Let me give an example which can demonstrate what can happen if there are full economic sanctions against South Africa. This is illustrated by what the hon. the Minister has done in regard to the question of the current account of the balance of payments. I give the hon. the Minister credit when he achieves something of substance, and the turn-around in the current account of the balance of payments has been remarkable. All those who have been concerned with it should be congratulated.

I think that is fair and I think it is correct. But at what cost to South Africa in other respects has this been achieved? The hon. the Minister knows that if one does this sort of thing and one applies that kind of tough medicine, one does kill the degree of growth which is possible, that in the circumstances one does create unemployment, and that to some extent there is a self-imposed recession. That is where we see what can happen to South Africa if economic sanctions are imposed against South Africa.

The other point which I think we have to remember, and it is a very important point, I believe, is that once economic sanctions are imposed against South Africa over the issue of South West Africa, I do not believe that they will ever be lifted. There will then be another reason why, once the South West African problem is solved, the sanctions should remain. Once sanctions are imposed a most difficult stage will be entered, a longterm stage where South Africa will have to adjust its living standards and its approach completely.

Then one can also ask what sanctions are likely to be imposed against South Africa if that unfortunate situation comes. I cherish the hope and the belief that the West does not want to impose sanctions against South Africa. I believe that they certainly do not want to impose complete economic sanctions against South Africa for a whole variety of reasons, reasons on which I do not want to enlarge at the moment because of time. However, I believe that there is a real possibility of selective sanctions, particularly in regard to investments in South Africa and particularly in regard to loan finance becoming available to South Africa, being imposed.

The second possibility which, of course, we cannot ignore, is that there may thereafter be another set of selective sanctions which relate particularly to oil. What do we as South Africans do in order to face these threats? We already have high inflation in South Africa, we already have low growth in South Africa and we have unemployment at levels which we cannot afford. There is little doubt that any form of sanctions, even if it be at the moment only in respect of investments in South Africa, will only make the situation worse. We therefore believe that countermeasures have to be taken in order to deal with this situation at the earliest opportunity. In the first place the Government must do all it can to avoid that situation of sanction arising and, secondly, they will have to deal with the kind of economy which is likely to come about. I believe that one cannot fight the possibility of sanctions against South Africa on a political level by piece-meal action or, for example, by managing to escape sanctions on the South West African issue. I believe that the Government of South Africa should have a long-term understanding with the West, in terms of which the West understands the road to political change that there will be in South Africa. In terms of this long-term understanding with the West it must be agreed that there will not be sanctions against South Africa, but that the West will exercise a veto, provided, of course, that we keep to our terms of that long-term understanding. I believe that to deal with it on an ad hoc basis is not a solution, but that we need a long-term understanding with the West.

The second point which has often been made in this House is that the unity of the people of South Africa has to be achieved. Last night I watched the hon. the Minister of Foreign Affairs on SATV and I heard him answer in reply to a question that South Africa has an army which is a multiracial army—I am paraphrasing what he said—in which Blacks, Coloureds and Indians also fight for South Africa. I think many other hon. members will have also heard the same, although I may not be quoting the hon. the Minister exactly. How does one reconcile that and how does one justify the situation when one has to contrast that with what the hon. the Minister of Bantu Administration and Development said in this House only a few days ago, namely that as far as the Blacks in South Africa are concerned, as soon as the Government’s policy is fully implemented they will all be foreigners? How does one reconcile the situation of unifying people in South Africa to give them a State and a country to defend when they are told at the same time that they are going to be foreigners in the land of their birth? How can one expect that to take place?

What about Nato?

What about Nato? Nato happens to be separate armies combined together. What kind of nonsense are you talking about defending South Africa? I want the people of South Africa to be unified. The people of South Africa cannot be unified to defend it if the Government says to them that under their policies they will cease to be South Africans. This is a disaster which, with great respect, prevents a solution to the problem unless the situation is remedied. This is the disaster into which the Government is heading South Africa because it is unrealistic in relation to this matter. One cannot unify the people unless one gives them a State to defend, unless one allows them to have pride in the country which they are to defend. That is what is required in the present circumstances. I believe the hon. the Minister of Foreign Affairs can say what he likes in that regard overseas, but he is in fact being sabotaged by that policy of the NP which is being announced in this House. I think the sooner that stops the better it will be. [Interjections.]

One thing I want to make clear is that the Government and the people of South Africa will have to understand that on these issues electoral majorities are utterly irrelevant. It is utterly irrelevant how many seats one has in Parliament. The truth is that South Africa is in a vicious circle where economic stumbling can lead to political fall, where in a siege economy living standards will drop, unemployment will rise, inflation will be rife and all of these will lead to more internal disorder. Hon. members do not have to believe me. They can ask Mr. Ian Smith. Mr. Smith came back to Parliament with a bigger electoral majority than the NP has now, a much bigger electoral majority. However, what is he doing? He is negotiating a deal on which he asked his electorate to reject the opposition parties. Let me tell hon. members, Mr. Speaker, that electoral victories are utterly irrelevant in regard to this matter because the truth is that even somebody like the hon. the Minister of Police, who is sitting there, will in the end—if he is still in power—be negotiating a policy which may be far to the left of anything I believe in. That is the tragedy of South Africa. The Government gets the vote but does not see what is in fact taking place.

Let me turn to what I think is required in order to deal with this situation. The one thing I had hoped the hon. the Minister would do today, would be to do something to restore internal confidence in South Africa, to bring about greater investment in South Africa, to encourage people to start something new, to utilize more of their productive capacity and to encourage the creation of new jobs. What is in fact taking place, is that we are in a situation in which we have an ever-increasing work force. We have very substantial unemployment and there is no plan to deal with it. Now we find ourselves in a position in which our growth may well be stunted by outside efforts, but the hon. the Minister sits here on this momentous 13th without saying a word about it. Instead he takes a selection of matters and shoots them at us, almost as though he was trying to scatter them across the House with a shot-gun. [Interjections.]

However, let us deal with specific things. We believe that the hon. the Minister should now set about giving encouragement to South Africans to invest their money in concerns which produce—in factories and industry. We do not need more investment in property. We do not need more investment in financial institutions. We need it in industry in order to create jobs. That is what we need, and we need incentives to achieve it. It is done in other parts of the world. The hon. the Minister should know that in other parts of the world where situations of unemployment exist people are subsidized to employ, incentives are given people to employ. It is done either by way of cash or by way of tax incentives. That is what is required in South Africa. We need incentives for people to employ more workers.

By subsidies?

I said there were different examples in the world. I believe in tax concessions. I believe that one should give a tax concession—in the same way as one gives an investment allowance on machinery—aimed at the employment of new labour over and above existing numbers of workers at a fixed date.

I have just written down that you said “subsidies”.

If the hon. the Minister had listened properly, he would have heard me saying that in other parts of the world they give subsidies. Of course they do! In the depressed areas of Great Britain subsidies are granted. I am giving an example to indicate that incentives are given to employ more workers where it is necessary in other parts of the world, but I am on record as having said in this House, before today, that I believe in tax incentives so that more people can be employed. I hope the hon. the Minister now understands this.

Secondly, I do not believe that in the coming budget we should stimulate the economy by having more stimulation in the Government sector. What we need is more stimulation of private enterprise, and this should take place in the right sectors. The hon. the Minister referred to what he announced in November, but the hon. the Minister knows as well as I do that that has not had the right impact on the South African economy. He knows that it has had an inadequate impact on the South African economy and that more selective stimulation is needed.

The third thing the hon. the Minister knows—and he knows it because he has just been speaking to the Minister of Finance of Israel—is that in the future economy of this country inflation is going to become a tremendous problem. What is therefore needed in South Africa, and what is needed now, is to encourage savings by the creation of inflation-proof investments.

Which industries must I further stimulate?

I shall tell the hon. the Minister what industries he should further stimulate. I believe that he should further stimulate any industry relating to the production of new raw materials for export. There must be management of those raw materials so they can be exported in a more developed state. I can give further examples of the exporting of articles, and the hon. the Minister knows that South Africa’s exporters do not regard the present situation as offering sufficient incentives or as sufficiently motivating them. The hon. the Minister knows that because I know of the representations made to him.

They are very costly already.

Yes, it may be very costly, but it is also very costly to defend South Africa, yet we are prepared to spend that money. Perhaps this is as important as the money we are spending on defence because the hon. the Minister and I both know that one can only defend South Africa if South Africa is economically strong. If we are not economically strong we cannot defend South Africa militarily, and if we are not in a position to defend South Africa militarily, the responsibility lies on the hon. the Minister’s shoulders because we have to be economically strong.

There are a number of other aspects one could deal with. Let me begin by dealing with the announcement the hon. the Minister made about the retail turnover tax. I want to allege that there are very many ordinary businessmen in South Africa who do not know when this tax is going to be introduced. I, for example, do not know either. There are people who say it is 1 July. Some say they have been told 15 July and there are others who say it is 1 August. Business needs time to implement these measures, and I therefore ask for an announcement detailing this scheme— though not specifically the rate—at the earliest opportunity.

Let me now talk about bonus bonds for just a moment. The bonus bond scheme is not attracting all the money that it should, and the reason for this is the marketing of this scheme. It is not being marketed correctly. One cannot imagine the harm that was done to that scheme as a result of the Port Alfred episode. When something was sold to someone, surely the people selling it should have known what they were doing. How can one subsequently announce to the public that the winner cannot collect his prize? Then, instead of having another draw, so that everyone can participate again, there is merely a bland announcement that the winner of the second prize is now the winner of the first prize. This is all calculated to do harm to a scheme which is essential if South Africa is to raise money. I do not believe we can have that kind of handling of a scheme. It should be handled properly according to principles of good public relations and proper market mechanisms.

I now just want to touch briefly on exchange control.

Could you be a bit more specific about that? A lot of time is spent on the marketing of this scheme.

Unfortunately every time that money is spent, it is not always spent in the correct fashion, because one slip-up in the marketing of this scheme neutralizes the money spent on trying to sell the scheme. This is the tragedy of it. Let me give an example. Bonus bonds should not merely be sold through post offices. They should be sold on a much broader basis. [Time expired.]

Mr. Speaker, because we are dealing with the Second Reading of the Part Appropriation Bill today, it is a special occasion indeed. I want to deal, firstly, with the motion of the hon. the Chief Whip of the official Opposition. The idea as regards a part appropriation is most definitely not to discuss the total economic position of the country. The Part Appropriation Bill is introduced as a measure for enabling the Minister of Finance to do certain things pending the approval of the Appropriation Bill. It has become customary in the past for the Minister of Finance to give a review of the anticipated economic conditions in the country when introducing the Part Appropriation Bill. In preparation of this day on which I have to make a maiden speech in a certain sense, I checked on the attacks launched by previous hon. members on the opposite side during discussions of the part appropriation. It really amazed me that the hon. the Chief Whip of the official Opposition thought it necessary today to move that the debate be adjourned until a later stage. To motivate his motion he said that the speech of the hon. the Minister of Finance was so involved that they needed time to be able to deal with it. The hon. the Chief Whip also fell back on a discussion of the traditions in this regard, etc. There is nothing in the hon. the Minister’s speech …

You are right. There is nothing in it.

… which renders it impossible in any way for the hon. member for Yeoville to reply to it. I, too, did not know what the hon. member for Yeoville would have to say, but in spite of that the hon. the Chief Whip on this side did not move that the debate be adjourned so that we could first study what the hon. member for Yeoville had had to say.

Mr. Speaker, on a point of order: Is an hon. member permitted to discuss a motion which has already been disposed of?

The hon. member for Schweizer-Reneke is not criticizing a decision of the House. He has referred to the discussion which took place in the House. I think he has been in order so far.

Mr. Speaker, it is clear to me now that I must address myself to the hon. the Chief Whip of the Official Opposition once again. I cannot believe that a responsible member of this House, a person who is the Chief Whip of the Official Opposition, can make two such mistakes on one day. [Interjections.]

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

I do not have enough time at my disposal to answer questions.

Why has the practice been changed over the past four years?

I do not want to answer as far as the merits of the change over the past four years are concerned; the hon. the Chief Whip can do so.

You cannot answer.

Let us consider the actions of the hon. member for Yeoville this afternoon. I must say this for the hon. member—and I am serious in saying this—that there are many things on which I agree with him. When he talks about the possibility of economic sanctions being applied against South Africa, I agree with him that no one in their right mind could express himself as being in favour of such economic sanctions. I agree with the hon. member that South Africa is vulnerable to selective sanctions. I also believe with him that since the institution of sanctions is being linked in recent times to the outcome of the discussions on South West Africa—the hon. member referred to this on the basis of last night’s television broadcast—it is not in the interests of South Africa for us to discuss the advantages and disadvantages of economic sanctions now. It could create the impression that we were telling foreign countries that if this or that economic sanction were to be applied against South Africa, this or that might happen in South Africa. I am not saying that it is not necessary to conduct a public debate on the matter; I am simply saying that I do not think it is a good thing to discuss it at this stage.

For the rest of the views of the hon. member for Yeoville were reasonable and balanced. I cannot differ with him on many of the things he said. There are some technical things which the hon. member raised and with which this side of the House will still deal.

Do you need to adjourn the debate for that?

No, we do not need to adjourn for that. But surely the hon. member will realize that it is not possible for one speaker to reply to all the questions which he asked.

You need only say, “Touché!”

No, Mr. Speaker, I am not prepared to ask for an adjournment in order to reply to those things. If the hon. member wishes, the hon. the Chief Whip of his party may rise in a moment and give me the opportunity to continue by allowing me a next turn to speak. Then I shall be able to reply to all the questions put by the hon. member.

We must draw attention to the fact that once again, as in the censure debate, the hon. member reverted to financial and economic affairs at the end of his speech. In saying this I do not mean that what he said earlier on in his speech, was not important. However, we may deduce from that that the hon. member does not have many problems with what the hon. the Minister said to this House this afternoon. In fact, I think that we in this House and in South Africa should express our thanks towards the Government and the Minister today for the financial and economic policy the Government has been following over the past number of years. If one looks at the improvement which has taken place in the current account of the balance of payments, one finds that it is a dramatic improvement indeed. If one looks at reports on the current accounts of other countries in the world, one sees that South Africa is one of the few countries that has been able to achieve this. It is a remarkable achievement and it is the consequence of an economic and financial policy which indicates a conservative approach to the whole situation. I shall return to this later on in my speech.

In the times in which we are living in particular, I think it is necessary for South Africa to have a strong economic foundation. There is probably general agreement that South Africa needs a strong foundation in view of the problems which it has in spheres other than the economic sphere in particular. In order to determine whether South Africa really has a strong economic foundation, it is also necessary to take a look at the history of economic activities in South Africa.

It is often incorrectly alleged that something or other is wrong in South Africa’s financial or economic structure, because those who criticize do not have the necessary background to be able to judge the economic and financial structure in South Africa properly.

Even today economists throughout the world recognize the idea of models in the so-called New World, viz. that social community structures and economic structures develop according to models. When I speak of the New World, I am speaking of the period when settlement took place in South Africa and in other parts of the world. Economists still use the idea of three models today. In the first place there was the settlement of people coming from one part of the world—let us be practical: They came chiefly from Europe to the so-called New World which was empty, i.e. to areas where there was a small native population that was completely taken over by those who came to the New World. The second model is the colonial exploitation model which we in South Africa, and which Africa, in particular, know well, and which sprung chiefly from the European desire for expansion. This simply means that a small number of people—fewer in number than those living in the country to which they went—arrived in a country with the necessary knowledge, etc., initiated certain activities in that country on a temporary basis, simply to disappear again at a later stage.

The third model is the complete interaction model. This means that the arrivals in the new country were either taken up into the population of that country, or that the population of that country was taken up in their ranks. This may not seem important to us in South Africa, but I think we should take cognizance of it. In actual fact South Africa has nothing to do with any of these models. However, South Africa does have characteristics of the first two models. This actually brings us to a dualism in our economic set-up and our economic concepts. It is a dualism which we can explain as follows: On the one hand we have the developed economy or the economically active people who subscribe to the profit motive, and, on the other hand, that section of the population chiefly adapted to a subsistence economy. We can go into the matter further and there are many other terms which we can use in this regard. We have the “haves” and the “have-nots” and we also have the “cans” and the “cannots”. This is the built-in dualism in South Africa’s economy, and he who cannot see this dualism, cannot understand or judge South Africa’s economy.

I should like to refer to certain comparisons which are always drawn. It is very easy to stand up in this House and compare South Africa to some country or other. The very contention I want to make, however, is that a comparison like this is not practical because of this dualism which exists in South Africa’s economy. This precludes one from comparing South Africa to a model. A comparison like this is simply not possible, and I want to refer to a few examples in order to indicate why it is not possible. South Africa is an important member of the International Monetary Fund in which it has a major interest. That fund also makes use of certain elements in the economy of a country in order to draw comparisons. For instance, for administrative purposes, the IMF places South Africa on the same level as Australia and New Zealand. On the other hand, a discussion is contained in the IMF’s annual report for 1976 on the revival in world trade as well as on certain trade patterns. For the purposes of that discussion, however, South Africa is categorized as a non-oil-producing and a non-industrialized country. The IMF goes further and for analytical purposes includes South Africa with other countries known as the “more developed, primary product-producing countries”. A classification like this may sound very complicated to us, but the fact of the matter is that South Africa does not really fit into any of the groups in which it has been placed. There are merely elements in the economies of those countries which correspond to elements in the economy of South Africa. Therefore, South Africa does not fit completely into those classifications. The second category to which I referred was the non-oil-producing, non-industrialized countries. South Africa does not fit into that category because we did in fact share in the prosperity brought about by the revival of world trade. However, at the same time South Africa experienced certain growth problems as well as having problems with its balance of payments.

There are also certain elements which are comparable in the third category, but South Africa hardly fits into that category because, we are one of the countries that produce gold. Because of the position of gold South Africa could not fit into that model.

The question which arises now is this: What does all this have to do with the price of eggs? The point is that when we in South Africa judge our financial and economic policy, we shall have to take cognizance of the fact that it cannot be judged according to models. South Africa must judge its economy according to certain factors which are peculiar to South Africa and based on the dualism in our economy and compare them to those of other countries. We cannot get away from this basic fact. I could go on to mention other similar examples which can have an influence in this regard, for example, how South Africa is affected by the General Agreement on Tariffs and Trade, etc. However, I do not want to go into this any further at this stage.

I want to take a closer look at certain bottlenecks in our economy against this background. The hon. member for Yeoville referred to the unemployment situation, but I want to leave it at that for the moment. In particular I want to go into what, as far as I am concerned, is a very important situation concerning the gap between our import and export figures. Any country would probably want to be considered primarily as an export country. During the past few years South Africa has made good progress in promoting its export trade. I think the specific projects announced by the Government made a large contribution in this regard. It remains important for us to ask ourselves: Could South Africa not perhaps import less? South Africa has been following an import replacement policy for a long time. If I remember correctly, the beginning of this policy in South Africa was roundabout 1926 and it continued as a stimulus to the economy up to the ’sixties. What is important is that the import replacement policy which was followed during the period I mentioned, also made an important contribution towards providing employment in South Africa. It was chiefly the manufacturing industry and other industries that gained by it. From the earliest times a pattern has developed in South Africa, one according to which we imported chiefly two types of goods, viz. consumer goods and capital-intensive goods. It was built into the import replacement policy that we replaced mainly consumer goods. It is alleged today—and this may probably be alleged rightly—that we have reached the zenith and that we cannot take the policy of import replacement any further. I believe that there is in fact a ceiling, but that we have not yet reached that ceiling and that it will be worth our while to examine the ceiling. It is necessary for us to take into consideration the circumstances of South Africa, within the framework of the so-called GATT agreement.

South Africa is primarily an exporting country as far as certain raw materials are concerned and we export mainly unprocessed materials. When we refer to the export side of the matter and take into consideration the fact that we have virtually reached the optimum as far as import replacement is concerned, a second component still remains, viz. the capital goods which are imported. South Africa, and Africa, too, does not have the market for any significant stimulation of industrial development on that level. I know the hon. the Minister has just told the hon. member for Yeoville so, but I want to repeat that it is an expensive project to effect export stimuli. I nevertheless believe that we should stimulate the export of basic materials in a processed form to a greater extent for the sake of our balance of payments and also because this may assist us to combat unemployment. In this sphere we could concentrate on the establishment of industries and factories which basically are not capital intensive but labour intensive. In this way we would help to solve our current unemployment problem.

I want to point out to hon. members that South Africa has been faced with the problem of unemployment on several occasions. Various steps have been taken in the past to combat unemployment. I have referred to the policy of import replacement which the Government followed for some time, but which has apparently reached its optimal point now. We must not underestimate the influence which this policy has had on unemployment. If one thinks of the period from 1926 and of the position of even the Whites of South Africa at the beginning of the ’thirties, one cannot underestimate that influence. By the end of the ’fifties it was clear that further stimulus had to be given in order to combat unemployment. The Government then decided that certain stimulants should be applied. Investigations were made and the Government put into operation the border industrial areas plan and the growth point development plan. This resulted in the establishment of the Department of Planning and everything connected therewith. Later on the Physical Planning and Utilization of Resources Act was put into operation. Whether or not we agreed with the idea politically, the fact remains that a decentralizing policy of industrial and other activities is a sensible idea. One can argue as to whether this policy is successful or not, but if a projection is made back to the present situation of unemployment, one finds that according to the report of the Commission for Industrial Settlement, an additional 100 000 employment opportunities were created from the beginning of the ’sixties to the end of 1969. I repeat: Whether we agree with it politically or not, the fact is that this policy succeeded in bringing work to the worker. It may be argued that this happened at a price. We could make calculations in this regard. People who are not favourably inclined towards this policy allege that of these 100 000 posts which were created and have in actual fact already been filled, only 23 000 were really posts which arose due to the withdrawal of labour from the White areas to that specific area. According to them the other posts occurred spontaneously. However, one must bear in mind that in order to set this process in motion, one had the situation that in the homelands, for instance, there were only three urban areas of any importance. In that same period, 74 new towns arose in the homeland areas. These towns accommodate approximately a million people. There is also a negative aspect to the matter. We had the situation that 61% of those people were found in only ten of the towns in the Bantu homelands. Although we succeeded in creating employment opportunities for the worker to a certain extent, resistance developed. This resistance developed amongst the industrialists and businessmen because the amount of non-White labour they could employ, was limited by the Physical Planning and Utilization of Resources Act. As a result a capital-intensive system arose in the expansion of trade and industry instead of a labour-intensive one, because these people did not want to decentralize their activities.

If we take the facts into consideration, we see that we find ourselves in the very serious situation that there are unemployed non-Whites in the White areas who have become unemployed in recent times. I think it would be as well if we were to reconsider all these factors. We are being faced with a new flood of unemployment once again and if we look at the successes which we have achieved in the past, we must ask ourselves whether it is not desirable to look at this whole formula for the purposes of establishing labour-intensive industries with a view to promoting our export trade, and see how we can stimulate this sector of our domestic economy in such a way as not to be inflationary, but nevertheless to help us to combat the unemployment problem.

Mr. Speaker, I should like to congratulate my good friend, the hon. member for Schweizer-Reneke, on his promotion in his party.

Is it promotion?

Yes, because he was the first speaker on that side of the House to participate in this financial debate. Apparently he longs for the times when this kind of debate was somewhat livelier. Today the debate is proceeding very calmly and soberly, and I do not believe the hon. member is very satisfied with that.

The hon. member spoke of a dualism in our economy and the fact that there were people in our Black population who were at various stages of development. I have to say very frankly that to me he seemed to confirm the argument I advanced last week, because development towards pluralism is taking place amongst the Blacks in the Black urban and rural areas. It seems to me the hon. member has merely taken this idea of dualism in the economy further. Therefore, we are able to agree with him on that matter. He also talked about the creation of employment by the Government. I hope to be able to discuss this further in the course of my speech.

†When the hon. the Minister introduced the debate, he made mention of the unfortunate political attacks which have been made on South Africa. I do not think that we can allow the hon. the Minister simply to get away with it as easily as that. We have had a little bit of a debate about that. The hon. member for Yeoville talked about sanctions being imposed as a result of what, for instance, happened in South West Africa. When one considers the actions of South Africa’s adversary in South West Africa—Swapo—one must ask what the Government has done that has so completely alienated every responsible Western nation to the point where they are prepared to institute sanctions against one of their own major trading partners, something which can only do themselves considerable harm. It is not only South Africa which is going to suffer in this process. The nations of Western Europe which are going to implement the sanctions are themselves going to suffer. What has happened? How has it come about that the UN, the Western nations and everybody else have adopted Swapo as being an adversary which is due and fit to be supported against a country like South Africa? If one wants the reason, it is the total failure of the Government either to put across what it is achieving in South Africa or to present in a positive fashion the things that are happening here. The censure debate which was held two weeks ago was one which dealt to a great extent with the failure of the Government to govern the country and to reflect outside what is really happening. I am totally opposed to what is happening under the present Government, but I am prepared to concede that there is a considerable measure of progress being made in this country. Whether it is because of the Government or in spite of the Government, I am not debating now, but progress is being made. Nevertheless, it is never getting out to people overseas that this in fact is happening. Because of cases such as the Steve Biko case and others, which put us in such an impossible light, we find ourselves in this situation, and the hon. the Minister cannot simply come here today and say that unfortunate political attacks are being made on South Africa. He and his Government have to bear a tremendous amount of responsibility for those attacks. There is a great deal of malice in those attacks from communist countries, but at the same time the hon. the Minister himself cannot simply shrug them off and say: “Oh well, that is nothing.”

The hon. the Minister has stated that he is going to stimulate the economy selectively; certain sectors are going to be stimulated. That is a far cry from the good old days when the NP were prepared to bend or break the economy in the interests of apartheid. Do you remember those days, Mr. Speaker? They were the big old days, the tough days of the NP. What has happened now is that financial reality in the person of that hon. Minister has come to light and put the thumbs at the neck of the policy of the NP. It has had to fall into line and obey the absolutely inexorable laws of economic reality. And that is what we are seeing here today. The hon. the Minister himself is sitting in a straitjacket. There is no way in which the hon. the Minister can act otherwise than the way in which he has been acting. He is being forced to do so.

He may wriggle.

He may wriggle every now and then, but at the same time he is in a straitjacket and he is not going to escape from it easily. He mentioned the registered unemployment among Blacks, currently running at 12%. He knows as well as I do, as does everybody who knows the Black people, including the hon. member for Schweizer-Reneke, that the degree of underemployment among the Black people is immensely greater than 12%. He knows as well as I do that among the Black people the family unit will carry people who are unemployed. Although there is a figure of 12% in respect of unemployment, we can be quite certain that there is an immensely larger number of people who are very much more seriously affected by unemployment than the figure of 12% might indicate. The hon. the Minister cannot get away from it by saying: “Well, in the USA there are a lot more people who are Black who are unemployed.” I am afraid that argument does not hold water. That really does not matter as far as we in our country are concerned.

The hon. the Minister mentioned administered prices. It is significant that straight away prices are starting to go up. We had a debate last Friday involving the hon. the Minister of Agriculture. The whole message of the private member’s motion to which that hon. Minister replied was that food prices are going to go up, and they are going to go up sharply. Every hon. member on that side of the House was in total agreement and we on this side of the House are not in a situation where we can argue. If the farming community is to be kept in business food prices will have to go up. Those prices are among the administered prices which the Government controls between various ministeries.

But you agree with that.

I do. I say that if the farming community are going to stay on the land the price of food will have to go up. However, I said to the hon. the Minister—and he did not reply to me when he replied to the debate—that he will have to accept the consequences, which will be demands from sector after sector of our economy in order to keep in line with the demands that the food price is going to make on the cost of living as it increases.

I agree with you.

The hon. the Minister agrees with me in such a low tone that one hardly gets the impression that it is so.

You stole my time on Friday, otherwise I would have replied.

I was here and I listened very carefully to the hon. the Minister. The hon. the Minister said that he was going to deal with the hon. member for Mooi River just then, but then he said that he would leave those “boys” at that.

†The point that I want to make is that the hon. the Minister—and he knows it— sits in a straitjacket today. Economically he sits in a straitjacket. The measure of initiative that he can take is very limited indeed. Without an infusion of foreign capital which is going to allow him to shake loose the bonds in which he sits now, he is not going to be able to take any kind of really constructive steps which will enable us to get out of the present problems in which we find ourselves. However, I want to address myself to the hon. the Minister about capital formation. One of the greatest problems we have in this country today is the fact—and the hon. the Minister mentioned that himself—that people are not investing money, that there is a doubt and an uncertainty in the economy, that people are very reluctant to invest money, particularly in industrial enterprises. The hon. member for Yeoville too, dealt at length with that particular point. However, one of our greatest problems is—and that is why we are so dependent on overseas capital— that the hon. the Minister and the Government now, with the high level of taxation under which we suffer in South Africa, are making capital formation in the hands of the private investor almost impossible. It is coming to the point …

Socialism!

Socialism. Quite rightly so. We are very rapidly reaching the same situation which Great Britain has reached. [Interjections.] The hon. the Minister may well laugh. He should look at the economy of Great Britain, one of the greatest economies the world has ever known. It is an economy which is today completely—I think of the word they use in America—hog-tied, absolutely tied up. Fact is that there are so many demands on the private taxpayer by the State that there is nothing left over for the one thing that can change the entire economic picture in any country. That is the private individual who invests his money, who works for himself and who seeks a profit. This is the one thing which the hon. the Minister, in his taxation policies, is rendering almost impossible. A person should be able to work, to have a goal, to establish himself. In the old days this sort of person used to go out to create empires. Of course, I am not pleading here now that we should have robber barons like J. Gould and others in the USA. What we need, however, is the sort of person who will go out to create financial empires, something this country needs to get it going. One of the problems is that the part played by the Government in the industry and in the economy is getting bigger and bigger. I believe that is one point of which we need to take very serious cognizance. I hope that on another occasion we will have a chance to debate that very seriously indeed.

Will you tell us how we must finance those big companies?

Mr. Speaker, I will do that on another occasion. [Interjections.] We must take notice of the question … [Interjections.] Another occasion will be coming up soon … [Interjections.] I shall answer that question on another occasion. [Interjections.] The point I wish to make to the hon. the Minister …

The Government should reduce the moneys paid to the Department of Information. [Interjections.]

Mr. Speaker, the point I want to make … [Interjections.] I want to draw the attention of the hon. the Minister to what I regard as the most important thing that has to happen in South Africa today. That is the involvement of the Black community in the private enterprise system. Let us face one thing. If we are going to survive as a private enterprise country and if the free market system is going to persist in South Africa, the one thing we ought to do is to involve the Black community in it to such an extent that they will see their own future, their own success, their own hope and everything they can wish for for the future bound up with that economy and with the rewards they will draw from it. I would like to ask the hon. the Minister what he has done and how he sees the involvement of the Black community in the private enterprise system. Basically the whole policy of the NP is to say to the Black community: “Go your own way,” to shut them out of the economy.

Hon. members will remember that Blaar Coetzee used to say in this House that the year 1978 would be the golden year, the year when all the Black people in the urban areas would tiptoe away quietly into their homelands. [Interjections.]

You got stuck there and never noticed what happened afterwards.

Mr. Speaker, the hon. member for Schweizer-Reneke knows perfectly well what has happened. He knows that Blaar Coetzee, as with everything he spoke about, have been proved to be totally wrong and totally false. [Interjections.] Ten years ago Blaar Coetzee said what was going to happen in 1978, this year. It is not happening at all this year. [Interjections.] The problem that we face is to involve the Black community in the free market system. Let me draw to the attention of the hon. the Minister that the idea of Black socialism is something which is endemic, something which is inherent in the Black tribal structure, in the Black social system in South Africa today. The hon. member for Schweizer-Reneke knows as well as I do, having served on a certain commission, about the talk of Black socialism that we had to listen to and about the papers and documents which came out during the course of that particular investigation. He knows about the organizations which were in favour of a radical redistribution of wealth and power.

It was quoted just the other day about Inkatha which is—make no mistake about it—a growing political force in South Africa. Inkatha is out and out a socialist organization because they do not see a decent share for the Black man in the present economic set-up in South Africa—the present free-market system.

I think that personal private property is the absolute basis of all capital formation. It is the basis of one’s involvement in the private enterprise system. This is merely another argument for the fact that we on this side of the House have suggested that a place like Soweto as well as other areas ought to be declared urban Bantu territorial authorities. This will make it possible for the people who are living there and who are involved in our economy—they actually turn the wheels day by day—to own the ground and to create capital there. They will be able to sell their property there, thus enabling them to become involved to that extent in the private sector of the economy which I say is the key to the future of all people in South Africa. I want to draw it to the attention of the hon. the Minister. He has put a bit in the mouth of apartheid with the financial disciplines which he has imposed upon the Government. Necessities imposed them upon him. I am not saying he is a great guy, but he has imposed upon the Government financial disciplines which have put a bit in the mouth of apartheid and the way in which it was developing. I want to draw attention to the fact that he will have to find a way. We, in fact, can make a suggestion because we see a plural reality here in South Africa. In terms of our policy we see an area such as Soweto as being a different group of Black people more involved in the private enterprise community than any of the other Black people can be. We should be grateful if the hon. the Minister would see his way clear to enforce this upon the Government. To give some point to what I have been saying, I intend moving an amendment, the words of which come from the aims and principles of this party. I think hon. members will understand what a wise and well thought out body of words those are. I therefore move as an amendment—

Having moved the amendment, I wish to point out to the hon. the Minister that there has been appointed a Royal Commission of Inquiry in Great Britain which is seeking a different basis of tax for the individual. I know the hon. the Minister must know about it; he probably knows a lot more about it than I do. He must, because if he does not, he is not worth his job and he should resign. What we seek now urgently is a means whereby capital can be built up in private hands and where the incentive which makes a man go out and work for his business 24 hours a day, will not be taxed punitively as it happens in South Africa today. As I understand it, such proposals are only in rough terms, but I hope that when we discuss the budget later on, we shall have a lot more detail about them. The new basis is that a man should be taxed on the level at which he lives, on the money which he expends. If he wants to own three Mercedes cars and a Jaguar, he should be taxed at that level whereas I, who am driving around in a much smaller car than that, must be taxed at a different level. I think the hon. the Minister should realize that 5% of the population, the entrepreneurs, are being squeezed into the situation where they are not rendering all that they could to the economy of South Africa. They find it much easier to work as consultants. As consultants they work only for two or three days per week and they do not make the effort which we desperately need in this country to enable us to pull ourselves out of the problem in which we are at this very moment.

May I just, in passing, mention something which concerns me and which I hope we shall have another chance of discussing on another occasion. I am referring to the involvement of the State which I have discussed on many occasions with the hon. the Minister of Economic Affairs, my point being that State investment should be spun off into the private sector. I think we have reached that stage in our economy when it could be done. Whether it is the right moment to do so now or not, I do not pretend to know.

Another problem I think we have is the fact that our country’s economy is dominated by the State on the one hand and a very large corporation on the other. I wonder sometimes whether we should not have a very close inquiry into what is going on in the political and economic relationship between the Government on the one side and Anglo-American Corporation on the other. I think that what we need is …

Another Minister!

… the development of private enterprise. The concentration of managerial talent and capital in that corporation is, to my mind, something that may well be an inhibiting factor on the sort of development we are going to have to have in this country if we are going to involve more and more small individuals. I remember how Mr. Blaar Coetzee, on one occasion, tried to go to war with the supermarkets on behalf of the small grocers and traders. We all know what happened to him. He did not win that one very easily at all.

My problem is that I do not believe the Government sees the Black people as part of the free enterprise system. I do not think the Government recognizes them as an integral part of the economy of this country of ours. I think there is a great need for them to rethink that attitude, and I hope this hon. Minister will be instrumental in doing so.

Mr. Speaker, usually there are three major debates in this House to be considered. One is the no-confidence debate, and I think that this is the debate which, more than any other, lends itself to affording the Official Opposition a chance to expound its political policy as against that of the Government. The second debate is about the part appropriation. Here the Opposition has the opportunity to look at the previous year’s budget and to see to what extent it has been a success and whether the Government has perhaps been wide of the mark. It also creates an opportunity for them to expound their own financial policy as against that of the Government. On this occasion they can also, where necessary, make certain suggestions about the budget to come. The third debate, then, is the budget which will take place later. In that debate the Official Opposition has the opportunity to berate each hon. Minister about his Vote. Matters of general importance may also be raised. 105 hours are allocated for the committee stage of that debate and in that time they can attack this Minister and the Government.

Thus far we have had two debates, and what has happened? In the first debate, the censure debate, the Opposition had to state its official policy. However, when the hon. the Prime Minister asked the hon. Leader of the Opposition across the floor of the House what his policy was, the hon. the Leader of the Opposition was silent as the grave. He had no reply. That is the position in regard to the political policy of the Official Opposition. This afternoon the hon. the Minister of Finance introduced the part appropriation. The Government’s main purpose in introducing the part appropriation is to make a sum of money available to cover the few months ahead until the budget is introduced and dealt with. Sir, what did we find here? Right at the outset the hon. Chief Whip of the Official Opposition rose …I am pleased he is still present. I see that the hon. member for Yeoville is absent; I should like him to come to the House. The hon. Chief Whip proposed that this matter be postponed. He argued that the Minister had released certain facts in the House of which they had previously been unaware. He must tell us which facts were not common knowledge in this budget. If he looks at the annual report of the Reserve Bank or at any magazines or newspapers he will see that there was nothing in the hon. the Minister’s speech which was not general knowledge or could not have been unearthed.

Why do you bother to speak then?

The hon. member asks why we speak, but it is only they who are afraid. The fact of the matter is that the Official Opposition was not ready for action as far as this debate was concerned. The people who draft their speeches for them were not finished yet. The hon. Chief Whip referred to technical points and then he mentioned inflation, gold and unemployment. Surely all this is general knowledge. We discuss it all day. All the newspapers are full of it. These, then, are the technical matters which the hon. Chief Whip was unable to discuss.

However, the hon. member for Yeoville probably had quite a major speech about sanctions worked out. He also wanted to know what the name of a certain newspaper was. I am tempted to bet that if the Minister had wanted to announced a sales tax here and had said that this tax would continue, the hon. member for Yeoville would have taken the newspaper concerned from his file and said: “Look here: The newspaper predicted a shock tax long ago.”

Give us the name of the newspaper, man.

He knows which newspaper it is. I myself wanted to refer to the newspaper this afternoon, but now I shall not do so.

Show us.

The hon. member for Yeoville had a great deal to say about sanctions this afternoon. He said that the Minister had made no reference to them whatsoever. What are the hon. member’s motives in saying that? He wants to tell the world that South Africa fears sanctions. Where is the terrible danger of sanctions? We have been hearing threats in this regard for years. Far worse threats have been directed at us than the so-called sanctions to which the hon. member referred. Must the Government of South Africa be frightened to death just because a few countries threaten to impose sanctions? Later in my speech I shall show that the Carter administration or a group of agitators do not have the sole say. I shall show, giving chapter and verse, how the businessmen of the USA—the source of the loudest threats—want to trade with South Africa and in fact do so.

The hon. member for Yeoville also said: “Our balance of payments is sound, but at what price?” In this regard he referred to large-scale unemployment. Would the hon. member prefer the balance of payments to get out of hand? What would that have cost us? If we had had a negative balance of trade, the danger of sanctions from overseas would have been tremendous. However, the world knows that the South African Government stands firm. Our imports have dropped and our exports have shown a tremendous increase. As far as that is concerned, South Africa is in a strong position.

The hon. member added that raw materials should be exported. Surely, Sir, there is such a thing as supply and demand. One cannot simply export. To whom and where does he want to export them? America, Germany, France, England and other countries are also experiencing a substantial degree of recession. Those countries are not going to buy more raw materials than they require. One cannot export to them on an unlimited scale. They too are committed to purchasing only as much raw material as their economies permit. I think that in this regard South Africa is faring very well.

I am sorry that the hon. member for Yeoville is not yet present. There is one matter I want to bring to the attention of the House, namely the insinuation he made here when he said that the majority of the election results were irrelevant. What is he insinuating thereby? Does he want to destroy democracy in this way? Does he want the world to think that the Government’s majority does not count or matter? He must shed some light on this statement in a subsequent debate for our benefit.

As far as the speech by the hon. member for Mooi River is concerned, I want to give that hon. member good advice and urge him rather to devote himself to other spheres than set himself up as a great economist. However, I understand that party’s problem. They do not have many members and that is why that hon. member had to enter the debate. When the hon. member said that he was going to discuss capital formation I pricked up my ears because I thought that he was going to suggest a solution to South Africa’s problems. What solution, however, does he propose? He proposes that the Blacks in Soweto be allowed to purchase their land. By so doing he wants to form capital for everyone in South Africa who needs money.

In his amendment the hon. member asks that the economy should not be handicapped by State interference. That hon. member must tell us in what respect this handicaps the economy. The whole argument of the hon. member for Yeoville concerned stimulation of the economy. He asked that we should stimulate the economy. However, the question arises: If we stimulate the economy, where are we to draw our funds? I challenge that hon. member to show me one body, sector or sphere in which so-called interference by the State has handicapped the economy and caused a scarcity of jobs. The hon. member’s whole argument contradicts the standpoint of the official Opposition that the State should stimulate the economy.

The hon. member referred to the issue of growth, and I want to point out to him that the hon. the Minister has already spelled out very clearly—he also did so during last year’s budget—that he has two major aims. His first aim is to keep the balance of payments in check and the other is to limit the rate of inflation. Both of these aims have been achieved in full and South Africa owes the hon. the Minister a major debt of thanks in this regard. As the hon. member indicated, there has been a tremendous upswing in the balance of payments, with the result that today we have a favourable balance and instead a debit balance. As far as the rate of inflation is concerned, we are probably all aware of the price increases which have taken place. Although we are also aware of other price increases, the rate of inflation has been forced downwards by the fiscal and monetary policy of the Government and in consequence it has not skyrocketed.

As far as the growth rate is concerned, the hon. the Minister reacted as far back as November last year, and did in fact spell out his policy in this regard again today. I want to put special emphasis on the issue of export promotion. We cannot stress the vital need for export promotion strongly enough. We must never allow too many goods to be imported, while too little is exported. That is why we must furnish aid in promoting exports in the spheres of trade, industry and construction.

Let us see how many of the sectors of the South African economy would have been badly off if the Government had not assisted in those spheres by way of stimulation. Firstly we can look at the motor industry because it is said that that industry is having a hard time of it. The Government has assisted where possible and has done its duty. However, because our economy is based on the capitalist system, it is specifically the task, function and responsibility of the private sector—and is undoubtedly also the wish of that sector—to see to it that the economy reflects a sufficiently high growth rate. The heading in this newspaper reads: “South African cars break through—exports aims at 100 million.” Without much interference …

Was it an Opposition newspaper?

The report appeared in the Sakerapport of 5 February. It is clearly stated in this report that in the case of the motor industry, the private sector has now climbed in and are going to manufacture and export. The whole article is devoted to this. The hon. member could have read it, although it seems to me that they do not read Afrikaans newspapers …

Nonsense.

… They do not know what is written in these newspapers, nor do they know where it comes from. This is particularly the case with the official Opposition. The State has assisted in this regard and I want to ask the hon. member for Mooi River whether he regards this as interference. The report reads—

The hon. member must tell me whether he regards the Government’s purchase of so many motor vehicles as State interference, or is it not perhaps the case that the State is stimulating the industry?

We can also look at other sectors such as the construction industry. Of all the industries, the construction and related industries have probably had the hardest time of it recently. Should I show the House what the figures reveal? I do not wish to weary hon. members by referring to too many numbers and figures but since the official Opposition failed to study the data, I am nevertheless going to mention them here. The official Opposition is unaware of what appears in the newspaper every day and that is why they have to ask for postponement of the debate in the House. Because they do not read the journals such as the short-term economic indicators, the Gazette and the journal issued by the Reserve Bank, we have to furnish them with the data across the floor of the House.

The true figure with regard to approved building plans in October 1975 was R102 million. The figure for the same month in 1976 was R89 million. In 1977 the figure was R84 million. Although the figure did drop, a drastic collapse did not take place. What did give rise to concern, however, was the declining trend with regard to dwelling units. The true figure for October 1975 for the construction of dwelling units of which the building plans had been approved was R58 million; in 1976 it was R44 million and in 1977, R30 million. When the Government saw this it acted immediately, and on 10 November the recommendations appeared in the Gazette. Now, my question to the Official Opposition and to anyone in the world is: Show me a Government and a Minister of Finance who could act with as much rapidity and accuracy. When he saw that the industry was declining, he made the large sum of R250 million available for the stimulation of the building industry in November.

To go into this further, I should like to refer to the number of completed buildings. In October 1975, buildings worth R74 million were completed; in October 1976, the figure was R81 million and in October 1977 it was R95 million. The value of buildings completed therefore increased from R74 million to R95 million. The question now arises: Has the building industry really had such a hard time of it? With regard to the construction of dwelling units, the figure remained fairly constant, but when a declining trend with regard to the approved building plans was detected, the Government acted at once.

If we look at the total sum of R371 million spent on the building industry in the 10 months from January to October 1975, we find that a mere R28 million less was spent in the subsequent year, viz. R366 million. That is not a very large sum. As regards the construction industry, too, the Government gave timeous warning and acted. From 1975 to 1977 there was a small decline of R6 million in the industry. That is really a very small decline.

If there is in fact large scale unemployment in South Africa, why has the Official Opposition not quoted a single official figure thus far?

Because the figures are so out of touch with reality.

However, the Official Opposition does not make use of short-term economic indicators and the statistics and tables available. As far as mining is concerned, we shall note that in August 1975, 637 000 people were active in this industry; in 1976 the figure was 681 000 and in 1977, 770 000. The number is still rising. What is the situation with regard to the manufacturing industry? In July 1975, 1 254 million people were working in factories and in July 1976 the figure was 1 373 million. In July 1977 the figure dropped to 1 236 million. In the one year there was a drop of 37 000. Apart from the fact that the number of people diminished, we also had to take cognizance of the salaries and wages paid, because the amount paid out in salaries and wages was not much less. In July 1975, R252 million was paid to the manufacturing industry; in July 1976 the figure was R291 million and in July 1977 it was R310 million. This indicates that in spite of the fact that there were fewer people employed, more was paid out in wages and salaries. In spite of the fact that there were 37 000 fewer workers, R19,7 million more was paid out in wages and salaries. Why is this so? It is due to a number of factors. One of these factors is the narrowing of the wage gap. It is well known that when the elimination of the wage gap began, employers paid off some of their workers so that they could pay the others more. This is all that happened. Because the employers were obliged to pay certain workers more, they made do with fewer workers. For example, in the building industry, too, there was a trend to build smaller and less luxurious houses. Although the value of the house plans approved was not as great, that is not to say that the number of dwelling houses built was correspondingly less.

Let us take a look at what the Government and the hon. the Minister have done over the past year. Let us test the Government and the hon. the Minister by the yardstick of their actions. The hon. the Minister did not do it all single-handed. He has a team of advisers in the Reserve Bank, his department and so on. Furthermore he made use of intelligent people in South Africa over the past year. If the Official Opposition were not included among these, they should not be angry, because there is another reason for that.

Let us take a look at South Africa’s system of taxation. South Africa has a fairly stiff system of taxation, but it is one of the finest systems in the world. In many other countries—which I could mention if necessary—the inhabitants pay far, far more tax than we in South Africa do. What has the hon. the Minister done in regard to the system of taxation? There is a Standing Commission on Taxation Policy and in the hon. the Minister’s budget speech on 30 March 1977—I have it before me and could quote from it—the hon. the Minister mentioned, inter alia, various recommendations made by that Standing Commission, and furthermore he acted on them. These recommendations concerned the taxability of the income of married women, widows, widowers and divorced persons, inflation bookkeeping, taxation of marketable securities, company annual duty and sales tax. The hon. member for Yeoville kicked up a tremendous fuss about the latter item this afternoon. The Standing Commission also looked at every individual item in our system of taxation. Eminent and distinguished personages serve on this commission. What hon. member of the Official Opposition has ever submitted a single recommendation of any nature to the commission? They will not do so; they do not know enough to make any impression on those intelligent and skilled men who serve on that commission.

The hon. the Minister went much further. We in South Africa lack sufficient capital to finance everything. The hon. member for Mooi River made such a fine gesture in suggesting that if all the Black people of Soweto could purchase their land, we should have sufficient capital. The hon. the Minister has appointed a departmental committee under the chairmanship of the Secretary of Finance to go into this matter of the capital priorities of the public sector. I shall be obliged if the hon. the Minister could furnish more information in this regard in his reply.

Another major factor in South Africa which affects all of us—it affects the Opposition as much as it affects us—is the labour legislation. Last year the hon. the Minister of Labour appointed a commission under the chairmanship of Prof. Wiehahn to investigate all the labour legislation. At a later stage a further one-man commission chaired by, Dr. Piet Riekert, was appointed to go into all these matters and a large variety of other legislation as well.

The hon. the Minister appointed one of the most able commissions, under the chairmanship of Mr. Justice Mostert, to investigate currency and exchange control. I want to make an appeal to the hon. the Minister to act as soon as the commission’s report is available by introducing legislation in this connection. The measures must be drastic, because people who smuggle South Africa’s currency out of the country are terrorists and saboteurs. They must be mercilessly dealt with in all respects.

The hon. the Minister has also appointed a Commission on Monetary Policy under the chairmanship of Dr. G. H. de Kock. Thus one can mention the steps taken by the hon. the Minister one after the other. The hon. member for Yeoville kicked up a fuss this afternoon about currency. Does he not intend to submit a motivated memorandum to this commission? He must be prepared to motivate his arguments better. He must not simply put a few insignificant questions in the House in an attempt to create the impression that he knows everything.

Another matter I should like to raise concerns the impression that is always being created that South Africa does little for the non-Whites, for the Black man as such. Even the motion introduced this afternoon by the NRP hinted at that. What has taken place in South Africa? As far as the Bantu are concerned, I want to quote from the H. F. Verwoerd memorial lecture delivered on 8 September at the University of Port Elizabeth by the hon. Mr. M. C. Botha. I quote—

This gives an indication of what the Government of South Africa is doing for the non-Whites. In many respects the Whites in South Africa have done their bit.

I also want to refer to the issue of the national debt. A great deal is said about this. In recent times hon. members have elaborated at length on the national debt which is supposed to have increased so drastically. I want to point out very briefly that in 1974, our national debt amounted to R7 986 million and towards the end of September 1977 it amounted to R13 484 million. In 1974 the national debt comprised 35% of our gross domestic product; in 1976 the figure was 41,5% and 30 September 1977, 39,7%. Our debt, which had at first risen, has dropped. On what was the money spent when the national debt rose? It was used to develop South Africa’s infrastructure. With that money, rolling stock was purchased for the Railways, the harbours were all enlarged, the Saldanha Bay project and the harbour at Richards Bay were established, the S.A. Airways was expanded, some of Escom’s power stations were financed, Iscor was further developed and the Railways’ container system was brought into being. By means of this money a great deal was done for South Africa and a useful, sound and favourable basis for growth was created. These expansions enabled the Government to furnish employment to the people in South Africa, White and non-White. I wonder what our situation would have been today if the Government had not been so far-sighted at that time.

I should like to point out to the Opposition a few matters they are always losing sight of. What were the aims of last year’s budget? Many insinuations and predictions are made by those hon. members. In spite of the fact that if Defence is excluded, the budget was only bigger by 5,1%, there was an increase in regard to the National Housing Fund of R43 million, of 39%. That is what was done for the poor man and for the non-Whites. The increase in the appropriation for the Department of Indian Affairs was 17%; for the Department of National Education it was 15%; for the Department of Coloured Relations, 15% and for the Department of Bantu Education, 50%. However, nothing is said about this.

I had intended referring to the speech by the hon. member for Parktown, but I shall have to do so in the next debate because my time is now very limited.

In conclusion I want to point out that in this financial year we must maintain a high growth rate. We must attempt to do so. At all costs our imports must be kept to a minimum. On the other hand our exports must increase so that our balance of payments can reflect a major surplus. Then there can be a drop in unemployment and everyone will be able to live a secure and healthy life in this country. But that can only happen if there is more confidence in South Africa’s future. Hon. members must not, as they did here today, shake confidence in the future of South Africa, nor should they lack confidence in themselves. We must go forward with the stringent financial discipline under this hon. Minister as it has been up to now. Every person must do his or her bit every day.

There must be greater efficiency and more work for less money and not just more money for less work—the slogan for many people in South Africa nowadays.

To conclude, I want to say the Official Opposition—in fact, the whole Opposition— should be more loyal to South Africa and should not try to act as a mouthpiece for South Africa’s activists. If that were to happen, we should do very well.

Mr. Speaker, the hon. member for Sunnyside will forgive me if I do not react to his arguments, because I have a problem with time.

†Normally the first Opposition speaker indicates whether the Opposition opposes the measure and whether it intends moving an amendment, more especially to a Bill which appropriates R2 900 million. I am already the sixth speaker in this debate and we still do not know what the stand of the Official Opposition is. I hope they will, before the end of the debate, let us have a sight of their amendment so that the amendment can be debated. The effective Opposition, as they call themselves, have been caught with their pants down. I want to make certain that I am not caught with my pants down and would therefore like to move the following further amendment—

Mr. Speaker, at this stage I would also like to wish the hon. member for Schweizer-Reneke well in his new position. I see he has broad shoulders. He will need them and he is going to do well in the scrum.

Confidence breeds more confidence and the Government must by its actions instil confidence and ensure political stability as far as it is within its power to do so. Economic stability is dependent on political stability. Simultaneously, the public and the private sectors must do everything in their power to advance the economy. The attitude of the USA is an important factor with regard to foreign investment. The change to the Carter Administration has been to the distinct disadvantage of South Africa so far. The arms boycotts and the possibility of economic restrictions and the American commitment to “one man, one vote”—the last commitment being spelt out by Vice-President Mondale in Vienna on 20 May 1977—are the type of threats the Carter Administration holds out for the South African economy. Why then should any South African welcome the Carter Administration as a powerful ally to pressurize the South African Government? The hon. member for Yeoville will never make a plea like that. I know him too well for that. However, there are hon. members who make that sort of plea. According to The Argus of 15 July 1977, the hon. member for Houghton welcomes the intervention of the Carter Administration in South Africa to pressurize the Government. Has the hon. member for Houghton lost confidence in her fellow South Africans in that she welcomes outside interference? Does this welcoming of pressure from the part of the Carter Administration mean that the PFP no longer believes in the ballot box as an instrument to bring about change in South Africa? The hon. member for Houghton said at the same meeting, according to the report, that she opposed …

Why do you not cross the floor?

The hon. member will get his opportunity to speak. In fact, he will get more than a number of opportunities. I know this hurts, but he is going to have to listen to it. The hon. member for Houghton opposed certain defence expenditure at the same meeting, according to the same report of 15 July 1977. I think I should quote what the hon. member for Houghton said. She said—

Why does the hon. member for Houghton play off defence expenditure against the urban Black requirements? Both these requirements are urgent and both of them have a place in our economy, but why play off the one against the other? The hon. member for Yeoville would never do something like that. Of that I am utterly convinced. The hon. member for Yeoville is in the House now. Perhaps he can tell me whether he supports the hon. member for Houghton when she makes statements like this.

Do you still beat your wife? [Interjections.]

Mr. Speaker, I am convinced that the hon. member for Yeoville would never make a statement like that.

Answer my question!

Mr. Speaker, the hon. member for Houghton is in fact saying to the urban Blacks …

Do stop dropping your aitches. [Interjections.]

The hon. member for Houghton …

[Inaudible.]

Mr. Speaker, I am not one of the Houghton clique. [Interjections.] The hon. member for Houghton is in fact saying to the urban Blacks that the purchase of one submarine is denying them the electrification of Soweto. [Interjections.]

Order!

That sort of statement is not in the interests of good relations in South Africa.

Nor is your speech!

[Inaudible.]

What does the hon. member for Houghton know about the defence requirements of the Navy? She does not consider the purchase of a submarine to be a necessity. This reflects her attitude towards defence expenditure and towards equipping South Africa against a hostile world. The hon. member for Houghton is an establishment Prog. In view of her seniority she is in fact the boss of that party. [Interjections.] The hon. member fully reflects the attitude of her party when she makes statements like that.

Please speak in Afrikaans now!

Mr. Speaker, I know that the hon. member for Yeoville does not subscribe to the statements that are always made by the hon. member for Houghton.

Why do you not leave me out of this?

You are a very important link in this. The presence of the hon. member for Yeoville lends a cloak of political respectability to the PFP throughout the country.

You are the first ever to call me respectable.

His view can never prevail because he was never, and he can never be, an establishment Prog. I mean this to be a compliment to the hon. member for Yeoville.

He takes it as such and he simply loves it!

The money must be found for the electrification of Soweto. I believe that it is urgent and that it is important. In fact, it warrants that the hon. the Minister of Finance should tell us when and where he intends finding the money to have it done and when we can expect the electrification of Soweto.

The matter of the dollar-rand link is of vital importance. The hon. the Minister intimated that the De Kock Commission would probably look into the situation and would probably bring out a report on the situation. The De Kock Commission has very wide terms of reference, and, in my view, may be occupied for many, many months. As the dollar-rand link is so important it should be investigated without any further delay and the hon. the Minister should consider asking the commission to approach this matter separately from all other matters and to issue an urgent report in regard to this matter.

*Mr. Speaker, it is no longer the time for the Government and the Official Opposition to comer one another in connection with certain matters. I do not suggest that these matters are not important. There are however certain matters which are more important than others. In view of the background of the immense problems of South Africa, there is no greater responsibility on all South Africans within and outside this House than to place our fatherland first. I believe there is a time in the existence of every country when the bells begin to toll and the call of one’s fatherland is more important than the personal or political views of anybody. It is my humble opinion that the year 1978 and the years immediately after may determine the future of all in this country.

†Every South African has a responsibility in the fight for survival, but then all must have a stake. The size of the stake must depend on the person’s ability, but every South African must be on the risk and must stand to lose something. A South African who stands to lose nothing is the one who concerns me the most, because his interest in the welfare of his country could have limitations.

The SAP is optimistic about the future of South Africa and in the short time at my disposal I shall express a few thoughts. The hon. the Minister of Finance announced last year that the Government was spending R250 million on additional housing. This is very commendable and we welcome this expenditure. Especially now with unemployment, the Government and the private sector must do everything possible to eliminate the housing backlog. The Government must give the private sector tax and other incentives to help in this massive task.

I should like to ask the hon. the Minister of Finance whether I would be correct if I were to assume that the R250 million plus all the other money which is being allocated by the Government this year for housing would provide homes to people who would lease those homes. I have no doubt that I am correct. The bulk of South Africans are lessees. This is merely a fact of life in South Africa. I am not looking to blame anyone; all I am pleading for is that we should be prevented from remaining a nation of lessees. The lessees have no stake. Home-owners will stand together in difficult times and shoulder to shoulder in time of need, should it ever arise. Those who are lessees by choice, I am sure, we can count on as well.

We should forget about leasehold rights. We should sell the person right and title to the land and the house on it. Such a person should, if necessary, be able to get even a 100% bond. We should allow him to repay the bond over a long enough period so that the difference between the rental and the repayment is negligible. Home-owners will make improvements and they will make contributions in the form of rates and taxes throughout every city and town in South Africa. Pride of home-ownership will extend the incentives for people to work harder and to produce more. Home-ownership can be achieved overnight by selling immediately on easy terms every house and every flat owned by the Government in every city and town in South Africa. Let all the people in South Africa have title deeds. That is all we ask of the Government.

Economically and educationally every South African must be entitled to advance to the best of his or her ability. The improved quality of life of all the have-nots in South Africa will enhance the quality of South Africa to withstand the onslaughts from within and without. This fact and the other one which I shall mention presently affect overseas investment.

The Press has a very vital role to play in the “Sell South Africa” campaign. I can sling mud to the Press today and I have every reason to do so, but if my appeal has to meet with any response, then there is a reciprocal duty on us to put our shoulder to the same wheel and share equally. Many of us have found overseas that Press reports emanating from South Africa have made a profound impression to the detriment of South Africa and obviously affect investment decisions in relation to South Africa. There is no doubt that Press reports can be vital in improving the racial situation inside South Africa. The Government and the Press have to declare a truce and be partners in this campaign.

Partnership involves good faith and in times of difficulty and storms the one partner may have to provide a shelter or an umbrella for the other partner. If the Government and the Press should fail to find each other in a final accommodation, the consequences for South Africa will be disastrous. In an article in To the Point on 27 January 1978 it is reported that on 4 December 1977, the UN voted by 140 to 0 to launch anti-South Africa propaganda campaigns with an annual budget of $270 000. It is said that the campaign has a whole battery of radio stations in various countries at its disposal. The writer of the article is Dr. Jan du Plessis, and I should like to quote the following from his article—

This factor and all the other factors operating against us are more than sufficient reason for the Press and the Government to arrive at some final accommodation. To the Press and to the Official Opposition I say, in all humility, that I am surely entitled to assume that their love for their country is greater than their hatred for the NP. If I am wrong in this basic assumption, they will sow the seeds of their own destruction. Loyalty to one’s country does not mean that one has to become a member of a particular party. There are difficult times ahead and the Government, the Opposition, the Press and all South Africans have a special role to play, and if anyone fails to play his role, it is not the NP that will be damaged. It will be South Africa that is damaged.

The hon. member for Parktown explained to the House why he made a statement to the effect that if he were a foreign investor, he would refrain from investment in this country. Mr. Stephen Mulholland, in the Sunday Times of 15 January, 1978, quotes Mr. Aubrey Dickman, who is an economic consultant to Anglo American, as being in favour of foreign investment. Mr. Mulholland then goes on to say, and I quote—

In other words, the Sunday Times and its readers in their thousands, or after the weekend in their hundreds of thousands, understood the statement of the hon. member for Parktown to mean that foreign investors should refrain from investing. I am surprised that the hon. member did not record his regret for his obvious mistake—and I accept the fact that it was an obvious mistake—instead of justifying himself in having said what he did. I say this because no explanation can ever justify those ill-chosen words in that ill-chosen statement of his. An admission of regret was appropriate, and let me say that it is still appropriate.

We sell gold bars, which are the life-blood of our economy, for a mere pittance. We are thereby cheapening one of our most valuable assets. The hon. member for Simonstown has made a plea for a gold-processing industry. According to the financial reports, at $150 an ounce we receive R2 812 million per annum for our output, and at $180 an ounce we receive R3 600 million per annum for our output. There are many advantages in processing our own gold. Firstly, there could probably be an additional income of R3 000 million per year, or even more at a guesstimate. Secondly, the people marketing our gold could assist in investigating the feasibility of the scheme and could participate in the arrangement. Thirdly it would have a tremendous effect on the price of gold. Imagine the effect of a financial report stating that South Africa intends selling the bulk of its gold industrially. Fourthly, the gold industrial process will assist in employing thousands of unemployed South Africans and will do us an enormous amount of good in that particular field as well. The higher price of gold would assist marginal mines in continuing their mining operations profitably. The additional income could help us strengthen the economy immeasurably. It could assist us in improving the quality of life of all South Africans.

In the amendment we have introduced, we have asked the hon. the Minister to investigate this matter as one of urgency. We feel that the Government would here be failing South Africa if it did not do an in-depth investigation into the feasibility of such a project. The revaluation of our gold resources is important. I think it would be appropriate if the hon. the Minister could indicate when this revaluation may be expected. The hon. the Minister has refused the request by the Chamber of Mines for this profit or a portion of it, according to a debate we had in the House on 7 February 1977. I want to tell the hon. the Minister that we agree with him. We support his refusals for the reasons set out on that occasion. We believe that the revaluation profits should be used to strengthen the economy and improve the quality of life for all South Africans.

The South African Party does not have to go into detail on our approval of defence expenditure. Our attitude towards that is well known. However, for the record I should like to mention that no matter how strong the country is militarily, it could always be stronger. This requires a vast defence budget and the most modern and sophisticated weapons. To maintain and increase this expenditure we have to strengthen our economy immeasurably. To be fully equipped and prepared is absolutely vital, and we have to be fully equipped, more especially in the uncertain times and uncertain world all countries live in today.

Mr. Speaker, this country and its recently independent homeland countries are a haven for foreign investors wishing to expand. They could enjoy a very favourable and profitable situation here, one which very few countries in the world can match. Sir, this recession could be turned into the golden years of the South African economy which could close the gap between the haves and the have-nots in South Africa. The worst offenders who are preventing full scale foreign investment in South Africa are often South Africans themselves or are South African inspired. Sir, I believe that any South African who, in the present circumstances, attempts in any way whatever to discourage foreign investment now or in the future, is committing economic sabotage of the worst kind. Foreign investment could assist to the greatest extent in improving the quality of life for all South Africans. It could be a major factor in closing the gap between the haves and the have-nots in South Africa. The West must decide whether they want to help promote peace or strife in Southern Africa. Peace can be promoted by foreign investment: poverty and strife by disinvestment. The West has a role to play and has a responsibility, but unfortunately some of the leaders of the West have either lost their ability or their will to lead their people.

Mr. Speaker, some South Africans are leaving the country, and we are sorry to see them go; others should have left a long time ago. To some of those who are going, I want to say: “Some of you are doing irreparable harm to those who are staying by consistently and persistently being prophets of doom and gloom.” Some of the leavers and some of the stayers must snap out of their pessimistic attitude. South Africa is a young country with an enormous potential and vast untapped resources which hold out permanent and lasting benefits for all South Africans. The Government’s role in developing this potential is an absolutely crucial and vital one. Confidence in all sectors is required.

Inflation has produced a cost-of-living increase that has made life a burden for the have-nots, many in the twilight of their lives. Something urgent must be done about our pensioners, many of whom cannot keep body and soul together in present-day conditions. For the unemployed who do not draw financial benefits life is at the moment an absolute nightmare. In times like these there is increase in crime, which is something that, obviously, nobody condones. In fact, we deprecate an increase in crime. We have to husband all our resources to combat unemployment and the Government has to encourage and give incentives to commerce and industry to expand. The Government itself must act on low-cost projects like the backlog in housing. I believe the Government should throw hundreds of millions of rand if not thousands of millions of rand into low-cost housing as that will provide work opportunities and will also give the Government the golden opportunity of eliminating the enormous backlog in housing in South Africa.

Mr. Speaker, the men on our borders and elsewhere and the police protecting our lives and endangering their own deserve our greatest loyalty. Money can never recompense them for their duty to South Africa. However, on their pay their families are in grave difficulty. I would urge the hon. the Minister to remove defence and police personnel from the limitations imposed by the Public Service Commission to enable them to earn better pay. Secondly, I would urge him to start paying danger pay to all those who are entitled to and who deserve danger pay.

Irrespective of colour.

The hon. member for Simonstown said “Irrespective of colour”. He anticipated me. I was going to say that. A duty rests on the leader of every community to encourage his people to work harder to produce more and to encourage foreign investments in order to build a bigger and better South Africa for all of us. Some people go through life never hearing the call of their country. South Africa is now making a call on all its people who are prepared to listen.On the response of the people will depend their future and the future of those who are dependent on them. It is in this spirit that I have moved my amendment.

Mr. Speaker, I shall not react in detail to the speech of the hon. member for Walmer. He had quite a few positive things to say with which, for the most part, I agree. In the course of my speech I shall refer to a few matters which he touched on and on which I should like to voice an opinion.

Mr. Speaker, first allow me to congratulate the hon. member for Schweizer-Reneke on his speech today in his new capacity as chairman of the finance group of the Government. I think he did it very well. One would indeed say that he was an economist.

It has become tradition during the part appropriation debate to make a projection of the economic prospects in South Africa, and also to review the economic activities of the past year. Before we consider the economic prospects, however, it is necessary that we should consider the present position realistically. It is probably unnecessary to state that we are still in a very uncomfortable economic situation and that this is mainly as a result of certain inhibiting factors. The problem is actually that we have control over very few of these inhibiting factors. The most important of these factors is the continuing recession abroad and the position in which our main trading partners find themselves in spite of a short-lived improvement. There is still a measure of uncertainty about the monetary role of gold and the dollar as a world monetary unit is very unstable, in spite of certain supportive measures implemented by the American Government. Furthermore, there is uncertainty about the amount of gold which America possesses to back the dollar. It is a very topical question in the world economy today. With regard to our other important trading partners, we find that England and France are under continuous socialist pressure, pressure which is so intense that their economies cannot recover fully. They have constantly to implement measures as a result of political considerations—hon. members should take note of the fact that they are political considerations—to support their own monetary units. Free enterprise, which can ensure the greatest measure of efficiency, therefore labours under great uncertainty. Reference was made to this aspect in one of the speeches this afternoon. I believe it was the hon. member for Yeoville and the hon. member for Mooi River. They wanted to suggest that the South African economy also labours under the socialist yoke. This is certainly not so.

Free enterprise is in the first place the stated policy of the Government. Certain aspects of the “ugly face of capitalism” do not occur in South Africa, because the Government takes steps to control them. Basically we have a free enterprise system, however, and nobody can deny it. South Africa has a very open economy which is very sensitive to the instability in the economies of our trading partners. We have another very serious problem to deal with as well—the hon. member for Walmer also referred to it and proved it by quoting from certain newspapers—and that is the unsavoury publicity which we get in this world of double standards. This is especially the case with regard to certain political events in South Africa, events which are taken completely out of context and exaggerated, not only by people abroad, but also by people here in South Africa. The role which certain hon. members of the Official Opposition played in this regard, is unforgivable, because it did South Africa immeasurable harm. Unpatriotic statements aimed at harming the Government, do immense harm abroad, especially in undermining trading and investment confidence.

Whom are you talking about?

I refer to hon. members on that side of the House. In connection with the view of the hon. member for Yeoville with regard to sanctions, one can ask him whether he cleared the matter with his leader.

He agrees.

Have the hon. member and his leader reached a compromise about his pleas for certain measures to exert economic pressure which the hon. leader made in the Business Week, a publication which is circulated world-wide? We are still waiting for a reply from that side of the House. The hon. the Minister of Finance raised the matter last year; I raised it during the Third Reading of the Appropriation Bill and the hon. the Prime Minister raised it during the censure debate this year. However, we are still waiting for an answer with regard to the serious accusation against the Leader of the Official Opposition. The half-hearted standpoint which the hon. Leader of the Opposition stated in the Sunday Times before the election with regard to the implementing of military sanctions against South Africa, does not set the matter right, because it was nothing more than an election trick. The collaboration with militant Black leaders who also welcome sanctions and have made statements about it, does not improve the image of the PFP at all. We can no longer tolerate the situation, and if the Government has to act against people who sabotage the economy of South Africa, hon. members should not complain about that.

There are also certain other basic realities which the Opposition has to face. Economic pressures and sanctions against us will only make us more determined to solve our economic problems internally. They will not persuade us to abandon our policy, because our right to exist in this country depends on our policy. Any movement in the direction of the policy of the Opposition will harm business confidence in South Africa, because the businessman knows what the implications will be if the policy of the PFP is implemented. The implementation of their policy can only lead—nobody has any doubt about that any more—to a Black majority Government. Any economist knows what the implications of that will be. If the policy and the hope of the Opposition are based on revolution, I can say to them that it cannot succeed in South Africa. The power and the skill of South Africa will see to it and the development of the policy of the NP makes it impossible in any case. The hon. members on that side of the House should stop talking about economic pressure for the sake of political change. You should stop talking about “the redistribution of wealth”. You should stop creating false expectations amongst the non-White peoples of South Africa, because in the process you are cutting your own throats.

The last basic reality which you have to face, is the irreversibility of the systematic coming to independence of the homelands and the new constitutional deal for the Coloureds and Indians.

The latter development ushers in a new phase of stability, in the economic field as well, and confidence with regard to our internal race relations issue. Nothing which you do slyly, as in the case of the independence of Transkei and Bophuthatswana, will change that. The indications are that these peoples are starting to accept this deal with great enthusiasm and with new interest. The NP is opening new horizons to these peoples. They are negotiating with them and you must keep your noses out of it.

Order! The hon. member must address the Chair. He may not address the Opposition directly as “you”.

Mr. Speaker, I beg your pardon. At times I get quite serious about the matter.

A realistic view of our present economic condition is, however, also necessary if one wants to be objective. We are indeed still struggling with an inflation rate of approximately 11% and a low growth rate of approximately 1%. Our foreign reserves are still too low, mainly as a result of the repayment of short-term foreign loans. Furthermore, the net foreign capital flow is still negative and that can also create problems for us. The prospects with regard to the improvement of exports are not very rosy as a result of recessionary conditions and the protective measures of the USA and the European Common Market. Therefore, exports will probably not rise as sharply as during the past year.

The internal economic activities also warrants a measure of concern. Retail sales are still sluggish, while manufacturing production is levelling off. The immigration balance is negative or static. Furthermore, a moderate rise in consumer prices can still be observed, although I think that it is a good sign that the index of wholesale prices is improving. This tendency has to filter through to the consumer sector. The residential building sector is still deteriorating, but a moderate revival can be expected as a result of the selective stimulation which the hon. Minister of Finance instituted recently.

It is therefore clear that, apart from political factors, business confidence has also been seriously harmed by the effect of the lasting recession. It has become essential that investment confidence in South Africa should recover in the near future.

Let us rather consider a few positive aspects of our economy during the past year. I think we are on the eve of an economic revival. I do not believe the Western powers will be quick to take the risk, despite their threats, of launching full-scale economic boycott against South Africa. They are aware of our inherent strength to survive it, and that such a boycott will harm them as well. There are a number of economic indicators which point to the fact that we can achieve an economic revival relatively soon with a little effort. In the first place, there is considerable slackening in the short-term interest rates, while the long-term interest rates are still dropping. The unemployment rate has dropped as a result, inter alia, of the greater employment in the mining industry. Industrial shares are stabilizing on the Stock Exchange. In the past year we have furnished proof of our ability to create our own capital. Despite what was said about our potential for creation of capital, I believe that it is much higher than what was required of us during the past year. We would be surprised to know what the inherent capacity for capital creation in South Africa would be if it should come to the point where we are put under pressure.

There is greater liquidity of capital and furthermore there is an indication, on the basis of certain surveys carried out, that the mood of entrepreneurs is improving. This fact is in contrast to the pessimism which that side of the House displayed this afternoon.

If we take the fine improvement in the gold price and the greater international confidence in gold into account, it becomes clear to us that the picture is not so gloomy. The determined attitude of certain companies, to which the hon. member for Sunnyside also referred, especially in the motor car industry, to stay here and to announce even greater projects for expansion, is very encouraging. We are very grateful for the announcements made on a much wider level in this regard. We believe in the ability and the skill of the South African people to prove themselves in the near future, in spite of the present economic situation and any economic sanctions which may be implemented against us.

The hon. member for Schweizer-Reneke and other hon. members also referred to one of the most remarkable achievements in our economy in the past year, i.e. the improvement in the balance of trade. I do not think that we should just coolly ignore this great event. Seeing that we obtained loans from the IMF, our economy is subject to inspection by that fund. The officials who were in South Africa for the previous inspection, indicated that this was one of the most remarkable things which has happened in the world economy in this century. It is not something which we can just ignore coolly. The hon. the Minister of Finance instituted certain measures in this regard last year, and other measures which go back as far as 1975 with the devaluation of the rand, and we in South Africa should pay sincere tribute to the hon. the Minister for the brave steps which he took, because this great achievement would otherwise not have been possible.

I believe that the inherent self-discipline which the South African nation exercised with regard to the economy, also made a great contribution in this respect. We should, however, take note of the fact that more than 70% of the improvement in our export trade was due to the export of iron ore and coal—in other words our primary sector did well. This, too, the Government made possible by the timeous development of Saldanha Bay and Richards Bay. That is a further step towards the achievement of our long-term goal, namely to replace gold in the long term.

The necessity of continuing with an action programme for import replacement, which was also referred to this afternoon, cannot be over-emphasized. It was really gratifying to learn that the private sector has carried out a co-ordinated investigation into these various possibilities. According to this investigation, which was based on 1975 prices, imports to the value of R870 million can be replaced by employing idle local capacity and imports to the value of a further R750 million per annum can be replaced by creating new production capacities within the framework of our present economy and know-how. However, within the cadre of this new economic potential we shall have to launch a new aggressive “Buy South African” campaign if we want to achieve our goal. We cannot sit back in this regard. It is not, however, the task of one man. It cannot be done by the hon. the Minister of Finance alone. It is a task which will have to be tackled by every sector in South Africa and inspired by every sector, including the consumer public, if we want to succeed. I quote—

The increase in the buying power of the Black people in South Africa is not a minor factor either. In this process it will be employed to its maximum.

In conclusion there are a few warnings which I should like to sound. We should not allow ourselves to be caught up in the hysterical materialism which characterized the boom periods of the past. We shall have to save with determination, because if we do not create our own capital we cannot win. The Opposition will have to take a look at themselves and they will have to think very seriously about the systematic undermining of confidence by means of declarations they make. We cannot afford that either. Emphasis should be placed on labour-intensive industries in the border areas and also in the homelands. Emphasis should be placed on productivity and no longer on ultimate over-employment. This is expensive labour. Salary increases should be accompanied by higher productivity; that is the only criterion. South Africa is asking you now, more than ever before, to be true patriots, in the economic field as well.

Mr. Speaker, shortly after we had arrived in Cape Town as newcomers, we were told, and rightly too, that we should not pose as saviours of the people. I honestly want to say that having sat in this House for two weeks, having listened to the outstanding debates and having been involved in everything in Cape Town, I cannot help feeling that I am quite incapable of making any contribution whatsoever. It is in this spirit that I want to mention a few matters to this House, matters which are of great interest to me.

†Mr. Speaker, our country is facing an international economic onslaught as never before in our history. The greatest Western power is indeed actively discouraging investments in South Africa. This can lead to grave consequences to our country; because, being a young and developing country, we are to a great extent dependent on external monetary resources for our capital requirements. But we are also to a great extent dependent on economic activity because of our peculiar social structure. A great percentage of our labour force are unskilled workers belonging to another race. They will be the first to be affected by an economic slump, and this may result in racial tension.

But Mr. Speaker, the main reason why the strength of our economy is of paramount importance to us all is because it is indeed the lifeline of our very survival. The ability to defend our borders is totally dependent on the strength of our economy, because our economy will have to sustain the military action in every respect. The arms embargo against South Africa underlines the fact that for arms we are also dependent on our own resources. Therefore, because our ability to withstand military aggression ultimately rests on our economic potential, the state of our economy should be the concern of every patriotic South African. It should not only be the responsibility of those in Government; it is also the responsibility of each and every one of us. It should be the concern not only of the highest official, but also of the lowliest worker. However, the question now presents itself: What can the man in the street do to strengthen our economic potential? I wish to suggest two actions he can take. The one concerns his consumption pattern and his attitude towards consumption patterns. The second concerns his productivity and his attitude towards productivity.

*From the nature of the case, Mr. Speaker, we only have control over our internal savings for the purposes of capital formation. In order to increase these savings, other expenditure will have to be reduced. The only expenditure which can be reduced is expenditure on luxury articles, expenditure which will have to be canalized into savings in order to compensate for the loss of foreign loans. To achieve this, we will each have to ask ourselves whether we are not living beyond our means, whether we are not living too comfortably, whether we are really contributing our share to the creation of capital goods which are so important to our economy.

It is tragic that when someone tries to evade military service, it is immediately identified as a form of national sabotage, which is in fact correct. However, when someone is guilty of extravagance, when he indulges in excessive luxuries, thereby withholding money from investment in our economy, such economic sabotage is not recognized for what it is. What is it but this? In South Africa there is no more room for extravagance and excess.

The same applies to our productivity. Has it not become customary to ask what more one can get, without asking what more one can do, and especially what one can do better? Everyone ought to ask himself whether he is worth his wages. For the sake of our country and its survival, everyone will have to ask what more he can do and how he can do it better. Then the reward will not be lacking.

Neglect of duty and shirking will have to be stigmatized. In fact, I am advocating a social sanction insisting on productivity and a sober attitude to life which should be just as strong as the sanction existing with regard to military preparedness. Economic preparedness is just as important, if not more important, as military preparedness.

In saying these things I am well aware of the fact that the man in the street is living through difficult times. However, it is in times such as these that we can show our mettle. It is in times such as these that we must show our mettle. Adjustments in times of prosperity require no sacrifices, and our country demands sacrifices and discipline of us. There is a saying that the grass will never grow over the road which leads to the house of the outstanding artisan, even if he lives in the most remote forest. In the same way I believe that South Africa’s economy has nothing to fear if it can produce quality. For that we depend on the contribution and the sacrifice of the man in the street.

Mr. Speaker, please allow me to conclude on a personal note. In the spirit of what I have said, I want to pray that as long as I may be privileged to serve in this House—and I believe it to be a tremendous privilege—I shall not only be conscious of the privilege of being here, but also of the great responsibilities which this entails. It is my wish that I may constantly strive to be of greater service to my people and to the people of this country, and not to derive personal benefit from my position.

Mr. Speaker, it is my pleasant task to address a few words of congratulation to the hon. member for Pietermaritzburg North on his maiden speech. Coming from another newcomer, he will probably not take much notice of what I say, but I can assure him that I was struck by two features of his speech. The one was that he was very brief and concise and the other was that he held the attention of a large number of the hon. members—I was watching them— while he was speaking. May I express the wish that this will always be the case with the hon. member for Pietermaritzburg North and that he will be able to make a significant contribution to the deliberations of this House.

The subject on which I want to express a few thoughts to this select audience concerns the state of the fine arts in South Africa at the moment. It is a pity that the hon. the Minister of National Education cannot be here this evening, for I should very much have liked him to give attention to the thoughts I want to put to this House. However, it is a good thing that the hon. the Minister of Finance is here, for like most pleas, mine, too, will include an appeal to the hon. the Minister of Finance—a reasonable one, I hope.

I may be asked why it is important for an abstract matter such as the state of the fine arts to be discussed in the course of a serious debate on the financial conditions in South Africa, including international political affairs. In this connection I should like to quote a well-known remark made by an English philosopher. It has often been quoted by the hon. the Minister of National Education. As a matter of fact, it is really a kind of slogan of his. I am referring to the words of Ruskin. Speaking of standards of civilization, he said that the great societies of the world wrote their autobiography, the story of their activities, in three parts: One in words, one in deeds and the third in their art. None of the three can be understood without taking the other two into consideration. Ruskin goes on to say that of the three, the story told by their art is the most reliable. Kenneth Clark, who quotes this remark in his book Civilization, adds that he believes it to be true, for, he says—I am glad the hon. the Minister of Community Development is here—if he had to decide who was speaking the truth, the Minister of Housing or the houses built during his time, he would undoubtedly believe the houses and not the Minister.

I do not intend to discuss all the arts in South Africa tonight. In any case, this would take up far too much time. The performing arts are at the moment subject—in part, in any event—to an investigation by a very competent commission of inquiry. The purpose of the investigation is to determine what the financial relations between the authorities and the various regional boards ought to be. Therefore this is a contentious matter which I do not want to discuss on this occasion. I hope we may be able to debate this subject on a later occasion. Nor would I like to discuss the state of literature, Afrikaans as well as English-language literature, in South Africa, for there we are concerned with a delicate question, that of censorship or control of publication.

I hope that it will be possible to conduct an open debate on this subject as well at a later stage.

I want to confine myself to the plastic arts and the critical state in which they find themselves. When I speak of the critical state in which the plastic arts find themselves today and have found themselves for the past two years, I say this advisedly. The plastic arts include sculpture, painting and the graphic arts. Hon. members have probably noticed from newspaper reports that we have come to a stage where the work of even the older painters, sculptors and graphic artists, which consistently commanded very high prices two or three years ago, are practically being given away for nothing at public auctions today. This is a shocking state of affairs for the collectors who paid prices for those works that were ten or twelve times higher than the ones they now fetch at public auctions.

However, this is not the main cause of my anxiety about the state of the arts in South Africa. There are a large number of artists still living—senior artists whom one could describe as professional artists—who hardly get an adequate income from their artistic achievements today. The market for contemporary art has virtually collapsed. We cannot expect people to stay active and to achieve things in the field of art while it is clear that they will have almost no market. Some hon. members may say that the urge to create and to achieve will always be there in a good artist, whether or not he is paid for it. However, it is not as simple as that. After all, every one must have enough to live on, and if an artist is reduced to the point where he can no longer count on a proper return for his labour, because the market has collapsed, we cannot blame him for saying: So far and no further. We now have the dangerous situation that we may come to the point where a good artist, who is able to give us work of truly lasting value, is no longer able to work in that field. It is impossible today to say how many good works of art have remained and still remain unborn, as it were, under our South African dispensation.

However, even this is not the most important aspect. The most important, in my humble opinion, is the fact that the young artists, the people who are now on the threshold of their career and have to choose whether they want to become bank clerks or artists, may decide—in violation of their talents and of the gift bestowed upon them by the Creator—to find work of a non-creative nature. We are going to lose them. Fortunately we shall never know what we have lost with them. My plea is briefly the following: We have to devise something which will enable the young artists to go on working. What form should it take? Personally I am completely opposed—I think experience has shown that it is not to be recommended—to the payment of personal subsidies to artists. This is a method which is to some extent followed in the Netherlands, where direct and indirect financial assistance is given to artists who are struggling and who are gifted and talented. In England there is the British Art Council which works in the same direction. However, they do not give direct allowances, subsidies or assistance to artists. They prefer to do it by means of purchases or, in the case of the performing arts, by making performances possible. In my opinion, neither of these methods offers the final solution. I believe the solution to lie in the method followed in America, and in this connection I should like to have the attention of the hon. the Minister of Finance.

In America, considerable tax concessions are made to donors of contributions to art institutions. Unfortunately I am unable, in the time available to me, to go into detail about the way this operates, but the end result of this system is that donors such as private persons and bodies who donate money to art institutions such as art galleries, art associations, etc., are to a large extent granted tax concessions such as those applicable in the case of donations to university institutions, for example. In this way it ought to be possible to ensure that there will always be a reasonable climate of financial well-being in artistic circles. I should like us to create something of this nature in South Africa as well. Of course, the Minister of Finance will first have to determine whether this is at all practicable, what the financial implications are, etc.

However, I have another reason for urging this. I am not only doing it to help our artists within this country, but also in order to create an agreement or bond, in the way I have suggested, with artists outside the Republic of South Africa. This point has been strongly highlighted by the impending independence of South West Africa. The South African Association of Arts, of which I have the honour of having been president for some time, has an affiliated branch in South West Africa. When the possibility arose that that territory would get its independence, we were faced with the problem of what the relationship would be between the association in the RSA and the one in South West or Namibia. In my opinion, there is only one solution, i.e. that the fund which I should like to be established with the aid of tax concessions should be a fund or foundation to which South West Africa would also be able to contribute. Contributions could be made by individuals as well as by the State itself. Once we have created that pattern or possibility, we could go further and extend this fund or foundation to look after the interests of artists in neighbouring countries and in any place, country or region in Southern Africa. If there are countries further to the north in Africa who would like to join, they would of course be welcome to do so. In brief, what I should like to see is a foundation to which States, private parties and artists would contribute and which would look after the interests of artists over a large part of Southern Africa. It should be free of all political implications and quite independent of the Governments involved, so that there can be no friction or possibility of conflicting interests. So I want to see a foundation which would create opportunities—especially with regard to exhibitions—for young artists, senior artists and others all over the subcontinent. We would probably have to launch such a project in South Africa, but for goodness sake, let us not create the impression that we want to dominate anyone or that we want dictate to anyone what he should do. Let us try to make it a spontaneous movement, with indirect assistance from the State, private donors and art lovers. In this way we can create a network all over the southern subcontinent, not only for the benefit of all the inhabitants and artists of the country, but also for the benefit of posterity, for in this way we shall be able, because of the assistance we shall be rendering, to give visible form to the artistic talents of our artists.

Mr. Speaker, I should like to congratulate the hon. member for Johannesburg North on his maiden speech. He is a person who has distinguished himself in many walks of life over a very long period. Today, too, he demonstrated that he was an authority on the subject on which he concentrated in his maiden speech. I want to wish him everything of the best, in his new position.

†Mr. Speaker, in one respect I am more fortunate than the hon. member for Johannesburg North. I gathered that he would have liked more people to have been in this Chamber when he spoke whereas I now want to address myself only to one person who, fortunately, was here when he spoke. I refer to the hon. member for Yeoville. That hon. member today accused the hon. the Minister of Finance of delivering a buck-shot speech. I would like to tell him outright that I have never seen more buck-shot in my life than in his own speech today. One moment he was dealing with financial matters and the very next moment as in the censure motion debate, he was breathing down the neck of his leader by trying to make a statesmanlike speech. There was no line in his speech and we on this side of the House would really have appreciated a little more information on their views of our financial problems. However, again he let the opportunity slip through his fingers.

He said something about change and the need for economic growth to effect change. I would like to tell him that the NP, the Government, we on this side of the House, are the most important agents of change in South Africa. I concede that we do need economic growth to achieve just that. Indeed, we need vast economic growth and resources to change South Africa from the mess that we inherited from the colonial powers into something that is viable and which takes account of the realities of the situation in South Africa such as, for instance, the fact of the existence of our various population groups. I would like to tell that hon. member that he again paid lip-service to economic growth today. Who in this country is more responsible for the fact that a normal and very sound principle of economics, namely decentralization, acquired through the years a political connotation which it has not been able to shake off up to now? They have to assume responsibility for the fact that many of our homelands could have achieved a far greater degree of development had it not been for a policy of short-term political point-scoring by that side of the House. I would also like to remind him that he talked of a unified South Africa based on their policies, of course, and that the hon. member for Orange Grove said: “Jy praat snert!” when the hon. member for Newcastle referred to PFP policy as being one of Black majority rule. That is the sort of unified South Africa they want. A Black majority rule situation is inevitable in terms of their policy. That kind of South Africa offers as little attraction to a foreign investor as any other policy in any other part of Africa. [Interjections.] It is for them to realize that fact and it is not use their denying it again and thereby perpetuating their election gimmicks in the sense that they denied that their policy was leading to Black majority rule.

Where are you leading us to?

I would like to ask those hon. members to evaluate also in terms of foreign investment lost to this country the effect of their political image to the outside world as the alternative Government which they hold themselves out to be.

A very important point was made by the hon. the Minister of Finance by way of an interjection. He requested the hon. member for Yeoville to say what he meant when he talked about selective stimulation. That hon. member immediately mentioned raw materials. I want to tell him, however, that he is completely out of touch with the state of the world economy. There is not a single financial journal, nor a single noteworthy economist, who does not sound the warning that according to the level of international economic development in all the industrialized countries of the world, the demand for primary products, also from South Africa, is declining. This tendency is also reflected in commodity prices which are now falling. For him to say that we should selectively stimulate the production of raw materials is absolutely absurd.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Speaker, when business was suspended earlier this evening, I was discussing a few matters raised by the hon. member for Yeoville in his speech. I now want to discuss two further matters which tie in with this. The hon. member for Yeoville said this of the hon. the Minister: “He has no plan to deal with unemployment”. Unemployment is not a matter which can be solved just like that. It is very simplistic to think that a perfectly ordinary stimulation of the economy will necessarily eliminate unemployment. I want to quote what an authoritative bank journal in the USA had to say about unemployment in America—

The paragraph then concludes—

We look forward to hearing an appeal to the private sector, on the part of the hon. the Opposition as well, to make their contribution as well in this regard. Even a newspaper like the Sunday Times published in its last edition a very significant report on the contribution of the manufacturing sector to the solution of the unemployment problem.

The hon. member for Yeoville also said something about selective stimulation. This is a term which is being used right and left today and is one the consequences of which are properly understood by very few people. I examined the input-output table, the most recent of which appeared in 1971. However, the data has not changed much, since it is a structural matter. The hon. the Minister of Finance, when he decided on a selective stimulatory measure, rightly chose an ostensibly innocent sector such as the building industry to stimulate moderately. We know him to be a cautious person, and it is owing to his caution and to his conservative approach with regard to the structural recovery in the economy that we have been able to achieve the relatively sound position in both the balance of payments and the inflation rate. The hon. the Minister chose the building industry because the building industry would not directly exercise a major influence on imports. In the second place the building industry is pre-eminently that sector of the economy which is labour intensive and which can manifest a short-term upswing in employment. If ones studies the input-output table, however, one finds that the three biggest suppliers of intermediary products to the building industry jointly supplied intermediary products to the value of more than R433 million to the building industry in 1971. In their turn, however, they jointly imported goods to the value of no less than R156 million, of which of course not everything was supplied to the building industry. Nevertheless a portion thereof was. This indicates that although the building industry at that stage had a direct import expenditure of only R800 000, a far larger amount could have been added to the import figures, after taking into consideration the coefficient. The Official Opposition, and specifically the hon. member for Yeoville, must first do their homework in regard to these matters when they participate in the main budget debate and explain specifically to us what they mean by selective stimulation. They must then account for their proposals here so that there can be an obligation on their part as well in regard to the choice of possible stimulatable sectors and so that they are not able, after a while, to allege again that only the hon. the Minister might have made a mistake in his choice of the next possible sector to stimulate. It is time we had from them a quantified and a properly motivated explanation of what precisely they mean when they speak of the stimulation of the economy.

If one refers to the potential growth in our economy, one must be very certain what one is talking about, and one must do so against the background of many specific factors. The first factor is our still vulnerable balance of payments, and the second is our inflation rate. Both these factors cause the hon. the Minister to be very careful in his approach when formulating certain policy measures in regard to the stimulation of the economy. I do not want to spend any time discussing our balance of payments. Enough has already been said about it.

I do want to exchange a few ideas on inflation. The average inflation rate of the OECD countries fell from 13,5% in 1974 to 8,5% in 1977. In other words, South Africa, with its inflation rate of 11%, still finds itself in a relatively problematical situation. However, I think that we can be grateful that, seen as a whole, it is clear that the inflationary pressure is far less today than it was a year or two ago. In the first place there is no longer an excessive demand and, secondly, our liquidity has been kept in check. It is no longer the old classic story of “too many dollars chasing too few goods”. In the third place there are no excessive wage demands. In this respect we are very indebted to the workers who have kept their demands so well under control.

As regards our inflation rate measured against the consumer price index, there are a few very important component shifts which deserve the attention of this House. Firstly, it is a fact that when we eliminate foodstuffs as a component contributing to the rising inflation, the inflation rate shows a strong downward tendency. Food prices have gone up again from just over 9% to close to 11%; and are therefore running into double figures again. What is more, the end of these increases is not in sight. Service tariffs soared in the second half of last year. Those who contribute to this would do well to take note that they are contributing disproportionately to the other sectors to the price increases. Power and fuel also continue to be a tremendously large contributory factor to the inflation rate. There were marginal changes only, which did not signify much. What is interesting is that housing and rentals dropped from an already low level to an even lower figure. It appears all too likely that people are beginning to live off their capital.

A third factor against which we should examine growth potential is the inherent uncertainties during recessionary conditions. In other words, it is no longer a question here of a change in attitude, although there are certain practical implications as well. Let us examine the position of the consumer. The consumer has become very alarmed, his salary has remained almost static and prices have risen. Unemployment influences his spending; it makes him more careful. It also influences his confidence in the future and makes him want to remain as liquid as possible. This phenomenon is to a certain extent reflected in our savings figures. Because the consumer is hesitant to spend, it affects the overall demand. This is clearly reflected in the average unutilized capacity in the industrial sector of approximately 17%.

The investor, too, cannot be blamed for also feeling an inherent uncertainty. Who would want to invest money if one sees that owing to diminishing turnovers marginal costs are very high and that lower profits are reflected in companies’ balance sheets? These factors would cause the investor to incur risks with his capital if he was simply to invest. That is why investors are being cautious, and we cannot blame them for doing so.

Therefore, to sum up as far as this background is concerned, we must take cognizance of the fact that an expansion in the monetary conditions is limited in its scope. However careful the hon. the Minister may be, he will to a lesser or greater extent place the balance of payments and the inflation rate in jeopardy with any further measures which he may adopt. The stimulation of the building industry by the hon. the Minister was wisely done because it will be applied over a period and one will still be able to call a halt to it if it should appear that the balance of payments is being detrimentally affected. Another impression is that even if we experience a good upswing in the industrial sector, there will still continue to be many specific problems. One of these problems is that even a low growth rate of 3% to 4% will immediately be held in check by a lack of skilled labour, which may be directly attributed to the fact that owing to the lack of local demand, the immigration figure has dropped from an average of 29 000 during the past few years to a loss of 1 000 during the first ten months of last year. Unfortunately I do not have the latest figure. An upswing in the industrial sector also brings with it an import sensitivity which makes it risky and which constitutes an inherent problem in respect of growth.

We can examine a number of quarters in which an upswing in the South African economy may be expected. I first want to discuss a few aspects concerning the internal situation. A considerable increase in consumer spending can bring about an upswing, for if the consumers begin to spend, the demand will increase. If the demand increases, dealers will begin to build up supplies which will mean that manufacturers have to make their contribution towards supplementing those supplies. In this way a ripple effect can be achieved. The fact of the matter is, however, that the real income of our people has been under strong pressure for several years now as a result of the minor or virtually non-existent salary increases which people in certain sectors have received in recent years. Inflation has seriously erroded and undercut our standards of living, with the result that people are very wary about incurring further obligations.

The question of unemployment has a considerable effect on the total spending ability of our consumers. In addition, as I have already said, there is the tendency to want to remain liquid. Consequently it was not strange to find that in 1977, for the first time since the Second World War, there was a decrease of as much as 2% in real consumer spending in South Africa.

The demand as such is also a function of the cash which the consumer has at his disposal. Where does this cash come from? In the first place there is his salary. In the latest edition of Volkshandel there is an excellent exposition of salary increases. It is very interesting to note that the average salary of Whites increased by 80,8% during the period 1970 to 1976, while the consumer price index over the same period rose by 74,2%. In other words, there was a real wage increase of only 3,8% over that period. As against this—and this is an extremely important aspect—the average salary of employees of the Central Government rose by only 57%, that of employees of provincial administrations by 69,6%, that of employees of the Department of Railways and Harbours by 82,5%—they at least have passed the inflation rate—and those of employees of the Post Office by 75,8%—thus only just passing the increase in the consumer price index. This means that a vast number of our officials have up to now been willing to accept that there has indeed been a decline in their standard of living. That is the sacrifice they have made in our economic struggle and they deserve the appreciation of this House for doing so. It means however that they cannot begin spending on a large scale now. If we consider these figures, we see that the expendable income of the population of South Africa has followed this course: An increase of 19,2% in 1975, over that of 1974 and a predicted increase of only 13% in 1978 over that of 1977. In other words, this is only a very small increase in real terms if we take the inflation rate into account. The recent salary increases granted by the Government will, as a whole, make only a small contribution to the availability of cash in the hands of the consumer in order to stimulate internal demand and to set the ripple effect in motion. This means that the living standards of wage and salary earners will in fact remain static.

I want to refer next to the question of consumer credit. I want to agree with the hon. member for Newcastle that there has been a moderate upswing since September 1977. Hire purchase credit has risen relatively sharply since September. In the case of lend-lease there has continued to be a constant increase. Since that date there has also been a large increase in bank loans. It means that the private sector is making greater use of credit facilities which are placed at their disposal, because for a long time the credit ceilings did not really have any effect because loan levels were so low. In this connection it is interesting to note that the hon. the Minister, with his monetary instruments, succeeded to an eminent degree last year in complying with the IMF requirements in regard to the restriction of credit in South Africa by allowing a growth in bank credit of only 6,3% during the first six months, in comparison with 13,8% during the same period in the preceding year.

I feel, therefore, that we should be very careful with the stimulation of consumer spending, particularly by means of an expansion in the availability of money, taking into consideration both the matters which I have mentioned, viz. the balance of payment and the inflation rate. We could perhaps have a moderate expansion, be it in whatever way the hon. the Minister considers best. But we shall have to see what happens in the budget. I have not perused it and therefore I am at liberty to mention what I have read about this matter in publications. If he does so by means of deficit financing as the publications have been speculating, or by whatever means he chooses, we are at risk in two ways as far as our balance of payments is concerned, and we have to take very thorough cognizance of this. Self-evident is the possibility of increased imports, but there is another very important problem and here I wish to differ with my hon. colleague from Newcastle. If we allow a rapid increase in the supply of money in the country, it will happen, as he said, that the interests rates will drop.

Although interest rates the world over are very low in comparison with the record levels of 1973–’74, the American interest rates are rising and the Euro-dollar market, with which we also do business, reflects this. And if the interest rate margins between our short-term interest rate and the American interest rate, for example, or in turn the Euro-dollar market become too small, we could have a reversal of short-term financing which we, as some people think, can place at risk up to R2 000 million in regard to the financing of foreign transactions. We cannot afford to allow a rapid drop in the interest rate in South Africa.

In addition, as far as consumer spending is concerned, there has at least, as my hon. friend from Newcastle said, been something of an upswing in the demand for durable and semi-durable goods. It is interesting that the consumer is incurring that expenditure primarily to replace the durable and semi-durable commodities in his home. Unfortunately this increase in demand is too modest to justify a reasonable buildup of supplies in the commercial sector at this stage. The Bureau for Economic Research of Stellenbosch predicts only a 3% real growth at constant prices in regard to consumer spending for 1978.

Another possible source is private investment, but here one finds a surplus everywhere: A surplus capacity in manufacturing; in some sectors less than in others, but a surplus. There is already a surplus of office and shop buildings. In White housing there is, in some areas, a vast surplus. And the typical tendency is for there to be an over-utilization of these existing facilities first before substantial further investment takes place. In other words, an economic upswing cannot originate in this quarter either now.

Nor can it originate from Government spending, for Government spending is under pressure from two quarters. In the first place there is the cry that the State should curb its expenditure. Last year we had no alternative but to increase expenditure on a few vital items. Secondly, the State’s sources of revenue are also under pressure owing to diminishing company profits, etc.

From what source can growth then come? From exports? We cannot try, out of step, to launch an export initiative if the growth rate of our principle trading partners is going to decline this year in comparison to what it was last year. We can hardly count upon expecting a dramatic upswing in that way. Our export structure is very vulnerable owing to the high proportion of primary products. The demand for primary commodities is declining, and so are the prices of such commodities. There are technological problems as well. One cannot simply gain access to a market, because one’s specific primary product is perhaps not suitable for the blast furnaces, or whatever, of the country to which one wishes to export. It sometimes has to be of a certain quality and a breakthrough here is a long term matter. In the short term we cannot, in other words, expect anything dramatic from exports.

If we were able to expect an upswing in the industrial sector, what would become of the higher yields which would be produced? Would we then be able to have the co-operation of the industrialists in pegging inflation because of lower marginal costs or will these merely be reflected in the increased profits. We cannot take it entirely amiss of them either, because many of them will in fact be recovering their profits after these had been under pressure for so long.

Therefore we should not necessarily draw the conclusion that not one of the factors which I have mentioned is strong enough and has impetus enough to lead to a recovery in our economy. Perhaps a combination of factors could occur, but we should not expect too much, because we might get hurt in the process. But one thing is certain, namely that whatever the hon. the Minister is going to do in the Budget, he will depend greatly on the co-operation of the consumer, the worker and the industrialist to play their part in helping South Africa to surmount its present economic problems.

In relation to comparable countries, our savings pattern is poor. We shall definitely have to give more attention to the generation of more internal capital. Our personal savings pattern will therefore have to improve. Therefore, I am making—by way of a concluding remark—a justifiable appeal from this House to the Official Opposition to discharge their duty as well in their communication with the private sector in order to encourage people to display the maximum economic patriotism during the time which lies ahead and not to try to make a farce of any stimulatory measure which might emanate from this House. We are making an appeal to the Official Opposition to co-operate and to help in the process to get South Africa out of its difficulties—as the hon. the Minister of Labour also correctly remarked. I am not pessimistic about matters, but I do not want to create great expectations among our people, particularly not among the Blacks, and also not among those who are at present unemployed.

I just want to point out that our civil servants, perhaps for the first time now, understand what it means to have job security. Perhaps that is why they are willing to make sacrifices. We trust that this frame of mind will also filter through to the other workers, and that it will also reach the business man who will also have to make his contribution in future.

Mr. Speaker, it is indeed an honour for me to rise in this hon. House tonight. I hope hon. members will forgive me if I do not follow the main trend of the debate thus far. Because of the circumstances in which I stand here that can be understood.

Because Maitland is a seaboard constituency lying on the Atlantic coast, and because it has important estuaries and important wetlands I wish to speak a little bit about marine conservation with particular reference to the marine reserves which are about to be proclaimed. Hon. members will know that the seas, including our own seas, are under enormous assault. If we look at what modern oceanographers and marine explorers have to say we note that some 30% of marine life has disappeared during the last 20 years. This is a world wide phenomenon. In the Mediterranean the position is acute. I heard on the news over the weekend that countries bordering on the Mediterranean have in fact just signed a treaty in terms of which they will co-operate to stop the dumping of pollutants, noxious effluents, etc., into the Mediterranean. In certain areas, along the French coast for example, it has reached a point where the council employees have to vacuum-clean the beaches in the morning and spray scent to make things more acceptable for visitors. Vast parts of the Mediterranean are dead.

In our own country we have a similar situation, although far less advanced. However, with incidents like the recent collision along our coast of the Venpet and the Venoil we saw that the threat of a major disaster in terms of pollution of our coasts became very real. But for the courage of people guarding our coastlines, their quick action and bravery a great disaster was averted, though we heard Dr. Shannon say that the mousse which sank to the bottom in certain areas, especially around Victoria Bay and the mouth of the Great Brak River, have damaged marine life to such an extent that it would take between three and five years to recover.

I would like to draw the attention of hon. members to the fact that the oceans comprise some 75% of the surface of the globe. Yet, in terms of volume, by comparison with the earth, the volume of water is very small indeed. This volume of water, however, of course has the function of being the primary pump of the world, producing as it does some 70% of our oxygen supplies. The oxygen supply again is dependent upon the healthy bloom of plankton, which regenerates the oxygen. The plankton in turn requires unpolluted sea-water. The world health authorities tell us that recent studies show that the chemical balance of the seas is such that this may well alter in 20 years. This could have dramatic consequences.

I know that many of these things sound alarming, but it has been found that marine predictions have usually been conservative rather than alarmist. That I mention just in passing. It is nevertheless certainly true that there is a scramble for the sea. Marine life is under assault. Off our own coasts we see marine exploration taking place for oil. We also mine diamonds from the sea. The North Sea probably looks like Texas looked at the turn of the century. Then there was the cold war between Iceland and Great Britain. So, Sir, we see that there is conflict on the sea because of the dwindling resources of mankind, the increasing cost of those resources, such as oil, and the rapid advancement of marine technology.

The other very significant thing is that we have extended our sphere of influence as regards the sea to the 200 mile limit. That event, which took place quite recently, was an extremely important and significant one. In fact, we have increased the size of South Africa by some 50%. I wonder whether we ever pause to think of it in that way. The foreign fishing fleets are basically out of our waters now, but for a few of them that are here with permission, and the resources, which were severely damaged through overfishing and over-exploitation, are recovering. I am sure that as the habitat recovers, we shall see a healthy marine and fishing industry. I think it was with this in mind that the hon. the Minister of Economic Affairs set up a committee under the chairmanship of the Director of Sea Fisheries to investigate the proclamation of marine reserves. That committee has proclaimed, or is about to proclaim, four such reserves. The first is the Langebaan lagoon, including the associated islands, but excluding the adjoining or abutting land. The second is a 3 km marine reserve on the west coast of False Bay. The exact boundaries are still to be defined by negotiation. Then there are two on the Natal coast. The one is 3 km long, from the southern boundary of Trafalgar Beach to the Impanyati River and stretching 500 metres into the surf, and the other stretches south of the St. Lucia estuary and Mabibi. Both of these last two areas will fall under the Natal Parks Board. I want to congratulate the hon. the Minister on this step. All people who understand conservation—and I am sure that all of us in this House fall into that category—will be extremely grateful to him for these steps that have been taken. We recognize that the steps he has taken are significant, correct, enlightened and bold.

There is, however, one point I should like to make in connection with the west coast system. This is one of the three major systems, the other two being the south coast from Agulhas to Port Elizabeth, and the stretch of coast from Port Elizabeth to Zululand. The south coast area is covered by the Tzitzikamma National Park, and the Natal coast is fairly well protected in terms of existing legislation and the recent proclamations. The west coast, however, remains completely unprotected, even with the new proclamations. I would therefore appeal to the hon. the Minister of Economic Affairs to have another look at this question. I believe it is important that we do something in this regard now. I believe it is important that we do something before the marine rush, if I may call it that, gains momentum, as it will over the next few decades.

One reserve which of course does lie on the west coast and which I have not included in my definition of the west coast, is the Langebaan lagoon, which has been proclaimed. That is, of course, very important because, as hon. members will know, it is where the juveniles or young fish and larvae congregate, and these congregations of fish, spawn, etc., are what the west coast fishing industry rests upon. This nursery is therefore very important. Perhaps an equally important role which this lagoon has, however, is in the question of the protection of coastal waders (which are coastal birds). The Langebaan lagoon, comprising over 5 000 ha, has some 1 750 ha of sand flats and some 600 ha of salt marshes, and these support over 37 000 coastal waders. The figures I am quoting have been provided by the Percy Fitzpatrick Ornithological Institute Investigations. The figures indicate that this is a wetland of international significance. I should therefore like to make a further appeal in that regard and say that South Africa was a signatory to the “Ramsar Convention on wetlands of International Importance”, we were one of the original signatories of the document drawn up in 1975 at Heiligenhaven in Germany, and I believe that it is important that we now list and register, by proclamation, the Langebaan lagoon as part of the Ramsar Convention.

I say this not only because it is our ecological duty to do so, but also because I believe that the international ecological lobby is an important one in most of the sophisticated and developed countries. In undeveloped countries the ecological function is usually in the hands of developed or civilized people. I therefore think it fitting that we in South Africa, who stand in defence of civilization and civilized standards, should at this time in our history list and register such a wetland. I believe that the favourable consequences to us, e.g., foreign publicity, etc., would prove well worth it.

I would, however, like to sound a warning about Langebaan, and that is that I do not think that the committee on marine reserves is aware of the fact that the intertidal zone that I mentioned, i.e. the salt marshes, the sand flats, etc., is not, in fact, covered by the proclamation, although I know that it is the intention of the proclamation. My research has shown me that by historical accident, unlike the rest of the Cape where the Sea Fisheries control automatically goes to the high-water mark; in respect of the Langebaan lagoon area, however, the ownership of the two major farms extends to the low-water mark. I do not, however, believe that the intertidal zone is of any agricultural significance, and I would regard it as an absolute priority for the hon. the Minister to have a look at this with a view to the proclamation of this intertidal zone, without which what we are trying to achieve there, would not be possible.

I should, however, also like to congratulate the hon. the Minister on another very enlightened move he made during the recess, since this House last met. I am referring to the handing over, to the provincial nature conservation authorities, of the intertidal zone and all those areas where provincial reserves are already present on the coast. I am thinking of examples like Goukamma, De Hoop and De Panne. These reserves have had problems in the past in the sense that beach buggies, scramblers, etc., have entered the nature reserve areas. The dune grasses are fragile and there are grysbokkies and other beautiful animals in these very sensitive dune areas which have been degraded by beach buggies, scramblers and people who do not really understand what conservation is all about. The fact that the hon. the Minister has now handed over control to the nature conservation people in the Cape Province, which means that bollards will be put up and these areas protected, is to my mind significant, not because organisms are necessarily threatened with extinction in these areas, but because it will allow climax colonies to develop in these areas. I am referring to climax colonies of birds and other forms of intertidal life. I think that that is devoutly to be wished.

Sir, I should like to make one further appeal, and that is in respect of sandy beaches. I notice that in terms of the intended proclamation no sandy beaches are to be proclaimed. I know one can argue that there are perhaps hundreds of kilometres of sandy beaches along our coast that do not require protection. However, I believe now is the time for us to proclaim these areas. They are not at a point of conflict, they are not expensive to acquire as in fact, most of them are State-owned in the first place—in the case of the Cape Province, control extends to the high-water mark. However, just as a man like Paul Kruger had the foresight to proclaim huge tracts of lands in his day, a century ago when people must have thought he was silly, I think we should have that sort of foresight now and proclaim areas that are not threatened so that they may become inalienable for future generations. I say this in respect of sandy beaches for a good reason. I saw some figures published in 1974–’75 by the British Tourist Authority which show that some 70% of British holidaymakers go to the sea for recreation and that there is now no less than 9 cm of beach left for each British holidaymaker. When you consider our exponential growth rate and the fact that the population is doubling every 25 years it is clear that we are only a generation or two away from that situation ourselves. I use that to motivate the point that we should act in advance of what is to come.

Finally, I want to refer to the fact that there is also talk of the proclamation of a coral reef reserve on the Zululand coast. That is very important.

You know, Sir, in Tahiti people with crowbars are destroying coral reefs at the rate of about 10 km per week. It is very important that we protect the coral reefs on our coast. The Department of Sea Fisheries is in touch with the Department of Bantu Administration and Development which in turn is negotiating with the kwaZulu Government. It is heartening to me to learn that the kwaZulu Government is looking at this matter sympathetically. I say it is heartening because I am quite certain that, unless we can also interest the other population groups in South Africa in conservation, unless we can motivate them in this regard and we should try, all our conservation efforts will perhaps be of no avail.

*Mr. Speaker, I wish to thank you for the opportunity you granted me to address the House and to say something in appreciation of the marine reserves, the biological life in the sea and the intertidal reserves which are to be proclaimed in order to protect our fine marine heritage.

Mr. Speaker, it is a very welcome privilege to me to be honoured to congratulate specifically the hon. member for the Maitland constituency on his maiden speech. A very long time ago I also had the privilege to represent that constituency in this House.

Maitland has now come to its senses!

I sincerely congratulate the hon. member. I should just like to warn him that the last member of the National Party who won that seat, lost it again at the next election. I hope that the hon. member will go from strength to strength in this House and that he will always display the personal charm which he showed here tonight.

Mr. Speaker, we saw the hon. Minister here this afternoon in the guise of the secret oracle. Here and there he did lift the veil and gave us quite a lot of information, but at other points and with regard to other matters he preferred to draw the veil again, for example when he refused to identify a newspaper from which he quoted, when he failed to tell us who his high-ranking economic advisers were and, of course, with regard to the present state of our reserves which I will deal with by and by. We do not want to be equally secretive however, but we should like to lift the veil so that the House can learn what the amendment is that we wish to move. It reads—

I should like to comment briefly on the other two amendments which were introduced. We have no objection whatsoever to the amendment moved by the hon. member for Mooi River. As a matter of fact we fully agree with what he said. However we wanted to raise certain other matters; hence our amendment. With regard to the amendment by the hon. member for Walmer, I believe that I should assure him in his absence that the fact that we do not like his amendment, has nothing to do with the question as to whether the Prog establishment likes him personally, something which was worrying him so much this afternoon. We have certain doubts regarding his amendment, however, and cannot therefore support it.

Mr. Speaker, if one wants to discuss the present state of our national economy, one should actually start with the bottlenecks which are probably giving the hon. the Minister and his officials a headache. The hon. member for Mooi River referred to the straightjacket in which the hon. the Minister found himself. I believe that that straitjacket consists mainly of the alarming level of our reserves. The hon. the Minister did not see fit to furnish us with the latest information in this regard, but he did point out the excellent performance—and it is an excellent performance—which we notice with regard to the current account of the past year. According to all information which has become available to us from official publications, it seems as if the state of affairs regarding the capital account, is more or less of such a nature that all the advantage gained in the current account, was lost in the capital account. If I am wrong, the hon. the Minister will probably let us know about it in his reply, but that seems to be the situation more or less.

The second bottleneck is of course the continuing high inflation rate which has already been referred to. The third is the increasing unemployment and the substantial drop in the general standard of living as a result of a real growth rate which is much lower than the population growth with which we have to contend today. I should like to come back to the reserves, however. Their sustained low level is presumably the reason why the hon. the Minister and his officials dare not really stimulate the economy because that could entail an inflow of imported goods which could result in the reserves dropping to an intolerably low level. By saying this I do not in any way want to create the impression that I do not appreciate what the hon. the Minister is trying to do by way of stimulation. I should like to say in particular that I am not ungrateful for what has been done for the building industry, however, I do not think that there is anybody here who will say that enough has been done to halt the decline in the real standard of living of our people as a whole. The question arises, then, whether we can go on like this. If we can, for how long and under what circumstances? The hon. member for Yeoville this afternoon pointed out certain dangers that may be in store for us, the danger of sanctions in particular. Even if sanctions are not applied against us, and even if we are lucky enough to escape them, then one must still ask oneself whether we, with our increasing unemployment, with delining standards of living and without capital inflow, can go on as we are at the moment. I do not believe that it is impossible in all circumstances to survive in this scenario, but we shall only manage that by moving solidly into the so-called siege economy which is being mentioned lately. [Interjections.] Does the hon. the Minister want to ask a question?

Why “without capital”?

Is it not customary for an hon. member to rise when asking a question? [Interjections.] If we are forced—I cannot see us doing it on any other basis—to move into the siege economy, it will probably mean that there will have to be measures to control almost everything. This will quite possibly give rise to the necessity for a massive devaluation, and one wonders whether the free enterprise system itself—I assume that to be one of the few aspects in which everybody in this House believes—will be able to survive such measures. It is in my opinion improbable that the free enterprise system will survive under such circumstances, therefore it is a most uninviting prospect. Therefore it is in our interests and it must be in our interests to cause investment capital to flow into the country again if we are to achieve any measure of success in this regard. It is true that a too great a dependence on capital inflow involves certain dangers. In this regard I should like to refer to a recent article which appeared in the Studies in Ekonomie en Ekonometrie of the Buro vir Ekonomiese Ondersoek of the University of Stellenbosch by the well-known economist, Prof. Terreblanche. He mentions the fact—as we all know—that our total imports during the past 15 years has been consistently greater than our total exports, except for a short period at the end of 1967. In other words, the usual pattern of our economy is that there is sufficient capital inflow to fill the gap between what is paid for imports and what is received for exports. I quote—

The professor’s criticism is severe and I do not know whether I agree with everything he says, but what is important here, is that our way of life has to a large extent been built around the relation between our imports and our exports. The professor goes on—

This is a neat description of the situation in which we find ourselves today. He goes on—

The professor’s warning is not unfounded and very timely. What he is saying is that we should try to get away from too great a dependence on foreign capital. Nevertheless I believe that it should be a very important priority, at least in the short and medium term, to restore the capital inflow. Therefore one should ask oneself what the determining factors are.

I think it is necessary to distinguish between two groups of people abroad. Very often we fail to do this clearly enough. On the one hand there are the politically orientated groups, the anti-apartheid league and others. It has always been my impression, from a businessman’s point of view, that these groups do not achieve much. They have been kicking up a fuss for years, and during all that time the capital flow to South Africa continued unabated. On the other hand, there is the second group which, in my opinion, are of real importance, namely the professional investment managers. They are people who look after the risks and returns of their investments. As I know them, these people have no political prejudice one way or another. They have no feelings for or against South Africa. They only look at their investments and weigh up the risks against the returns. The returns in South Africa are very attractive today, and have been so for some time. If, for example, one looks at the average return on industrial shares in South Africa, the United Kingdom and the USA, one finds that on the basis of earnings, the most recent figure for South Africa is 25%, for the United Kingdom 17% and for the USA 11% If one looks at the dividend yield, it appears that in South Africa, the figure is 9,8%, in the United Kingdom 5,7% and in the USA 5,2%. South Africa’s position is not at all unattractive and in my opinion it is those returns which give us reason to hope that the capital inflow will be resumed in the future.

As I have said, these people do not formulate any demands in political terms. But they do look for stability and security for their investments. They do want to be sure that where obvious historical pressures exist within a particular society, those pressures will be accommodated in a reasonable manner. As an example of a remark which could have an adverse effect, I would like to quote something which the hon. Minister of Bantu Administration and Development said quite innocently in the House last week. He made it quite clear—we who know politics, know that that is the case—that it is the policy of the NP that eventually no Black man will have South African citizenship. [Interjections.] It was stated quite innocently, it is the policy of that party and we all know it. However, that remark was disseminated throughout the world in banner headlines and had an immediate effect on the stock exchanges.

Things like that affect the stock exchanges, not because they are untrue or because people are politically prejudiced, but because they make them anxious about the safety of their investments. Throughout the Western world, and it is after all in the Western World where we must look for investment capital, there is the feeling that stability in any country depends on the existence or otherwise of a government by consent, as it is called. These people are shocked by the idea that Black people, who constitute the indispensable labour force of South Africa, will forever be without franchise in the country in which they work and live.

It is not true!

For that reason the innocent remark by the hon. Minister had an adverse effect on the confidence of investors.

What you are saying now, is not innocent.

What are we to do? We can do anything which will show that there is at least some measure of concurrence between those who are governed and those who govern. The ideal would be a few dark faces in those benches. [Interjections.] That would look like a government by consent.

How many?

Since that seems to be impossible, the Government should do everything in its power to show that it is engaged in friendly talks with the truly representative leaders of the Black people in South Africa. Above all, the Government should try to prove that it is bringing about negotiation in South Africa instead of confrontation. So much for the balance of payments, the reasons for the low level of reserves, the hon. Minister’s straitjacket and the effect thereof on the prospects for a return to prosperity.

With regard to inflation and productivity, I agree for the most part with what the hon. member for Florida said. To combat inflation is no easy task.

†I think our understanding of the factors causing inflation is still imperfect but, certainly, one factor relating to inflation is productivity. Without real wage increases, if we could raise productivity we would be well on the way to fighting inflation. However, there has in fact been a drop in productivity. According to the same article by Prof. Terblanche from which I have quoted, productivity has fallen by 7% in 1975 and 1976. As my friend the hon. member for Yeoville, has said we must encourage our exports and the best way to do this—and here again I agree with the hon. member for Florida that it is not easy—is to lower our unit costs because it is mostly by reducing unit costs that one can do business in this world. It is important to replace imports, as the hon. member for Schweizer-Reneke has said, but again only at a reasonable cost. The danger in import replacement is naturally always that one may send the internal cost structure spiralling. We need efficiency and productivity and we are not getting it in a sufficient degree. What is this due to? Again, it is not easy to give a complete picture, certainly not in a few minutes; However, I believe there is too much protectionism in our economy. There is not enough competition or freedom. The hon. member for Mooi River said that there is too much governing and I think he is right. I certainly think that the last of the economic colour bar should go very soon and very quickly. I think we should be looking very hard at the apprenticeship and closed-shop regulations. The Government should look again at the whole apparatus of licensing and control to see whether it can release the free market forces of competition in order to procure greater efficiency in the economy. It would of course be immoderate and impractical to do away with everything overnight, but we must have as much private enterprise as possible and we must be conscious, as the hon. member for Mooi River has said, of the overwhelmingly important need in South Africa for our Black people to be led towards faith in the free enterprise system. This, under the present circumstances, looks to be a very difficult task indeed.

The hon. member for Yeoville spoke about the need to encourage industry. The watchword is confidence, not only externally—we have said a great deal about the external investor in this debate and at other times—but on the part of the internal investor as well. If one looks at the conditions inside South Africa, one finds that there is not a very great shortage of money at the moment. The banks are operating well within the restrictions laid upon them. There is a reluctance on the part of the internal investor as well as on the part of the external investor. This is again the confidence factor I was talking about.

Very briefly I want to draw attention to a very important feature of our economy, a feature which is not very prominent at the moment but which is potentially tremendously important, and that is the shortage of skilled labour. It is ironic that in the midst of the considerable unemployment, to which the hon. the Minister referred, we actually have important categories of skills in industry where there is a definite shortage of trained people. For the moment this may be masked by the general recessionary conditions in which we find ourselves, but when there is again an upturn, it is going to be this bottleneck more than anything else that is likely to strangle our economy and to send inflation spiralling. Many projections are made and each one shows that we need tens of thousands more skilled people year by year from now on into the future. There is no chance that these can be found in the ranks of the White population. On the negative side there is the colour bar which has to be got rid of and on the positive side we have to improve and expand enormously the training facilities available for Brown and Black people to become artisans, supervisors and foremen on the other levels of skills which we need in our economy.

*Mr. Speaker, now something about the growth rate. It is obviously important to any country to maintain an adequate economic growth rate. Its people have expectations and these must be satisfied in some way. I say this is important to any country, but it is of particular importance to a country such as ours in which, on the one hand, the population increase is rapid, and on the other hand one has a growth rate of 1% as we evidently have at the moment. This is hopelessly inadequate in view of the fact that we have a population increase of between 2,7% and 2,8%. In addition it is particularly important in a multi-racial country in which there are real differences in the standard of living and in which such differences mainly coincide with the racial divisions. As long as the standard of living of our poor people is improving, discrimination is still tolerable to a large extent, but when there is discrimination and the real standard of living is falling as well, then discrimination can become intolerable with consequences that none of us would like to face. Then stability is endangered.

As an example of what is meant by discrimination, the other day we had in this House a discussion of the situation of the White foreigner in South Africa with a residential permit, and the rights that his child obtains, and that was compared to the rights of a Black child whose parents were South African citizens, but who no longer are. There is an even more simple example, and I should like to use this example here this evening.

†Let us talk about South African citizenship. If we are serious in our wish to move away from discrimination and if we wish to create the impression that this is a stable society adjusting itself, as it needs to do, towards the pressures to which it is subject, then this sort of thing is very important. A Briton, a Frenchman, a Greek can come to this country and he can live here for five years and, provided he has behaved himself and has some knowledge of one of our official languages, he can become a citizen, he can vote, he can come here and become a member of Parliament. But a fluently bilingual person in English and Afrikaans, with a professional skill, for example a doctor, who is born here, who has lived here for 40 years, cannot apply for citizenship, for the vote or for membership of this Parliament. And the reason is the colour of his skin. It is not that he was born far away because the man who is born far away can acquire citizenship. The reason is simply the colour of his skin. That is if he is Black. If he is Coloured, he can get citizenship. That is a considerable consolation prize, but he still cannot get the other things. He cannot get those political rights.

There is no way that we can pretend or that we can persuade anybody that that is not racism or that that is not discrimination.

You are being childish.

These are the things which arouse the anxiety among people to whom we are looking for investments. The South African economy is fundamentally strong. We have ample resources, we have people who have proved their capability of producing at a satisfactorily high level, but we fail always to make the best use of our people and therefore we fail to develop our resources in the most productive way. While these matters are, as I have said repeatedly, complex and we cannot give all the answers, there is no doubt that the inefficiencies in our economy are to a considerable extent the result of the colour bar which persists, both inside the economy and in society generally, and in the second place, the result of inadequate education and training of most of our people.

The more we bungle our politics the more we endanger our stability and the more we interfere with our ability to obtain the capital we need. The solution to our economic problems lies mainly in the political field.

That is an outworn platitude.

When I say that I am not saying that I believe that our economic management, either in the public or in the private sector, is really very bad. On the contrary, I think the authorities have done pretty much what they had to do in the circumstances in which they found themselves, because fundamentally the economic problems stem from the political field. The price of apartheid is rising and it will soon become more than we can pay.

Mr. Speaker, the hon. member for Parktown spoke about citizenship of Black people. It seems it will be essential for me to return to that presently. There was such a peaceful atmosphere here in the House today with all the maiden speeches which were made that I thought I would make a peaceful speech too. However, the hon. member for Parktown made it easy for me to talk politics a little. [Interjections.] The hon. member referred to the hon. member for Yeoville several times. It seems to me as if the PFP is treating that hon. friend of theirs very harshly. Not only does he have a very lowly seat here in the House, but as chief speaker on finance he is not even being entrusted with moving an amendment any more. [Interjections.]

In actual fact, only three spokesmen of the Official Opposition have spoken so far today. Apart from the very good speech by the hon. member for Johannesburg North, the hon. member for Yeoville and the hon. member for Parktown both sounded a very sombre note here. A spirit of utter defeatism was evident from their speeches. The hon. member for Yeoville sees the sword of sanctions poised above our heads, and it looks too terrible for words. [Interjections.] The hon. member for Parktown talks about unemployment which is on the increase, of inflation which has got out of hand, of investors who have lost confidence. This is definitely a subject on which the hon. member could have been much more eloquent. He could have mentioned which factors really affect the confidence of investors. The hon. member spoke about dropping standards of living. Finally, he saw how our security in this country is being threatened.

All I can tell the hon. member is that there are many things about the NP which he will not understand. However, he must understand one thing, and that is that we are people whose roots lie very deep in this soil, that we are inspired by an invincible desire to survive. There will be problems in the future, but problems are there to be overcome, and we believe that if the will is there, if the dedication is there, and above all if belief is there, we will overcome these problems. It is essential that I ask the Official Opposition certain questions. I am not doing this in order to talk politics, but because I myself am unsure about some of the policies of the Official Opposition, because the voters are confused and, last but not least, because there is confusion in their own ranks and because they are blowing hot and cold on many vital matters.

I had actually wanted to talk about Bantu affairs tonight, but so far in this debate nothing has been said about Bantu affairs. In actual fact, only the hon. member for Mooi River referred to the subject in passing. The hon. member said that as long as 10 years ago, the late Mr. Blaar Coetzee said that in this magical year, 1978 … [Interjections.] … the flow of Bantu from the White areas to the homelands would be reversed. According to the hon. member this did not happen. [Interjections.] But good gracious, is the hon. member for Mooi River a stranger in Jerusalem? Has he not seen what has been happening around him over the past few years? [Interjections.]

Have you changed citizenship?

Mr. Speaker, I shall return to the question of citizenship presently. In 1960, the census figures indicated that 63% of the Bantu lived in the White areas, and 36% in the homelands. According to the 1970 census figures, 53% of them were in the homelands as against 47% who were in the White areas. According to the latest figures, approximately 50% of the Bantu are already in the homelands. Sir, there is a population growth in the homelands which cannot simply be ascribed to a natural growth. There is a shifting of Bantu from White areas to the homelands, and this is due to the infrastructure which we have created … [Interjections.]

Order! Hon. members cannot all talk at once.

That shift took place as a result of the infrastructure which has been created in the homelands, the tremendous industrial development which was initiated by the Industrial Development Corporation and the other efforts of the Government in that regard.

Sir, this is an historic session. For the first time in 30 years we have a new Opposition, and I think the question which has arisen in the minds of the voters at large, is: “How is this Official Opposition going to perform?” We in this country have an unrivalled political stability. Since 1910 we have had only two changes of Government as a result of an election. The Opposition has not always been so stable. This is already the fourth opposition which we have as a result of an election. In 1920 the NP took over from the Unionist Party. After that the United Party was in Opposition, and now the PFP have taken over from the United Party. Sir, all opposition parties in the past strove to become the Government. So far only an NP Opposition has ever managed to do so. For the first time in history we have an Opposition here which has set its sights no higher than becoming the Official Opposition. The furthest horizon and prospect of the PFP is merely to become the Official Opposition, but they simply are not an alternative Government. They are being realistic in that, at least. They are a party without viability because this nation is not in a mood to commit suicide. Apart from the hon. member for Musgrave, all seventeen representatives of that party come from a small spot in Cape Town and another in Johannesburg. Sir, the hon. member for Parys is sitting here next to me. All those 17 seats of the PFP could fit into an average rural constituency like Parys, and then the hon. member for Parys would still have enough land left over for a huge maize harvest. The PFP receives its support chiefly from a few rich man’s areas here in Cape Town and in Johannesburg.

Anglo American!

Yes, an hon. member says “Anglo American”. The “establishment” which brought that party into being, is a powerful economic oligarchy and these are the people who ask for a broad political democracy, a democracy in which the majority of those people are people with little private property. The day we have an economic oligarch as against a broad political democracy in this country, we are going to have the greatest head-on collision in the history of this country. It will be a collision in the social, economic and political spheres. Therefore, it is a puzzle to me why that party with its policy does in fact come from that “establishment”. I think the reason for this point of view must be sought not in political factors, but rather in a psychological explanation.

†The PFP is already displaying those qualities which led to the downfall of the old UP. One day, when the history of the UP is written and the reasons for its demise are tabulated, I believe that high on the list will be the fact that the party had lost its credibility and died because it tried to be all things to all men. In the process there was that continual double-talk. I believe that has already become the PFP’s problem too, and I shall come back to this question.

Not tonight!

Another problem of the UP was that they harboured people of divergent political views. This is precisely the problem also facing the PFP. I believe they have not been selective enough in their membership. They are a motley group indeed. In their midst they have a wide variety of political persuasions including erstwhile Liberal Party members, ex-members of the University Christian Movement—yes, that hon. member looking at me now! I could add the Christian Institute to the list as well. Their membership extends right across the political spectrum to ex-members of the Ossewa-brandwag and the NP [Interjections.] We have today, in the ranks of the Official Opposition, a collection of politically unstable beings.

Tell us about the economy!

There is not a single person sitting on that side, with the exception of the new members whose political history I do not know, who has not already belonged to three or four political parties. Small wonder that those hon. members cannot speak with one voice and have all this double-talk in their ranks on vital matters such as “one man, one vote”, a vital issue on which they are continually contradicting one another.

On the one hand we have the hon. member for Houghton and the hon. member for Groote Schuur openly admitting that ultimately “one man, one vote” could be the policy of the PFP. In the recent election campaign we had the following gem of wisdom from the candidate for Umhlanga, Mr. Johan Buys, who said that he believed that with the policy of the PFP there would ultimately be majority rule, but that it would not be Black majority rule. [Interjections.] However much we disagree with the hon. member for Houghton and the hon. member for Groote Schuur, we can at least admire their boldness and their frankness. On the other hand we have those hon. members who vehemently deny that their policy is one of “one man, one vote”. Those gentlemen were particularly vociferous in their denial prior to the election. It was not only the small-fry who were denying that that was the policy of the PFP. Some of the leading lights such as the hon. member for Sea Point—yes, he is here, hiding behind the hon. member for Musgrave—and the leader of the PFP in Natal, Mr. Harry Pitman, said very distinctly that “one man, one vote” was not the policy of the PFP. The electorate has the same difficulty with the PFP that it had with the UP. The electorate is already beginning to find it rather difficult to fathom what the policy of the PFP is. I want to say that if the PFP wants to achieve any credibility it must end this double-talk and equivocation and state clearly and unambiguously what its policy is on these vital issues, even if this were to mean repudiating some of its members and redrafting the principles of the party.

Who is right?

Not you!

Those who say that their policy can lead to “one man, one vote” or those who deny it?

Japie says both!

That is precisely the attitude that those hon. members have been displaying up to now. Both of them are confirmed in that belief. I shall, however, address myself to those who deny that that is the policy.

I want to ask the hon. members of the PFP whether I am correct in saying that the PFP states that it stands—and I quote from memory from the programme of principles of the PFP—for full citizenship for all South Africans irrespective of race or colour.

That is correct.

The hon. member for Pinelands says I am quite correct. I thank him for that. Sir, let us analyse this statement. What does the PFP understand by “all South Africans”? I found a reply in a statement by the hon. member for Sea Point in a speech he made on 21 June last year. That hon. member is usually very vague, but this time he was very concise and very clear. He gave us a definition of South African citizenship. I quote him (Hansard, 21 June 1977; col. 11025)—

Hear, hear!

The hon. members endorse that statement.

What is the point?

No, it is not off the point … [Interjections.]

Order!

The hon. member for Sea Point goes ahead and states the following—

Hear, hear!

That seems to find approval with the hon. members as well. Then the hon. member goes on to say—

Hear, hear!

Will they say “hear, hear” to what follows? He continued—

Hear, hear!

—

Here the hon. member uses the Mondale formula, “full participation”.—

What does the hon. member understand by “full participation”? When Vice-President Mondale was asked what “full participation” meant as opposed to “one man, one vote”, he replied: “No, no: It is the same thing”. Is it the same thing for the hon. member for Sea Point?

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

Mr. Speaker, the hon. member speaks here about political discrimination. Am I interpreting him correctly when I say that, if one wants to avoid political discrimination, one must have a common roll for people of all races …

You must not ask us questions if you are not prepared to answer questions yourself.

… voting for or against the same candidates on the same day at the same polling station?

Zip!

Mr. Speaker, the programme of principles of the PFP speaks of full citizenship for all South Africans. The operative words here are “full citizenship” and “all South Africans”. What does “full citizenship” mean?

Last week the hon. members opposite fought tenaciously and the hon. member for Houghton, who has just made her appearance, led this fight, saying that place of birth should determine citizenship. She wanted all Transkeians and Malawians born in South Africa to become South African citizens and eventually to obtain full citizenship in accordance with the policies of the PFP.

I did not say that.

Mr. Speaker, what does full citizenship mean? My citizenship entails that I receive the right to vote at the age of 18 years and that I retain that right as long as I live. Only under very exceptional circumstances is it ever taken away from me. I want to ask the PFP: Does this, according to the PFP, apply to every adult born in South Africa?

We will not answer your question until you have answered ours.

There is a deafening silence over there, Mr. Speaker. Does that apply to every South African?

Mr. Speaker, may I ask the hon. member whether under the constitution envisaged by the NP, there will be full citizenship for Coloured and Indian members of the South African community?

The answer is that there will be limited citizenship for the Coloured as far as representation in this House is concerned and there will be limited citizenship for the Whites as far as representation in the Coloured Parliament is concerned. As far as the Bantu is concerned, they will have limited citizenship in this country, but full citizenship in their own homelands. That is our policy. I want to ask the members of the Opposition whether there is full citizenship for the Black man in this country. [Interjections.]

Order!

Their programme of principles mentions full citizenship. Is that citizenship limited in any way? Is it for all South Africans as is clearly stated, or will there be exceptions in respect of certain people who will be excluded from that citizenship and who will not have the vote? If that is so they are misleading the people because the Black people take this statement at face value and they are creating expectations that cannot be met.

When I registered as a voter all that was asked of me was my name and address, the date and place of my birth and my occupation. I was not asked what my income was. I was also not asked what assets I had.

Did they ask you what your colour was?

I was not asked what my educational qualifications were.

Only your colour was asked.

I want to ask the hon. member for Pinelands: Does this also apply to the people of Soweto, Langa and Qwaqwa? Will they be able to register in the same way that he and I could register on the common roll? [Interjections.] If this is the position— and they tacitly seem to agree that this is the case—then I ask the members of the PFP Where then do I err when I say that the only logical conclusion of this statement is a policy of “one man, one vote”? [Interjections.]

Mr. Speaker, I fear the consequences of this policy. I fear being swamped by the ruthlessness of numbers and therefore I—and the electorate—reject the suicidal PFP policy.

Mr. Speaker, I must confess that I, too, took a sudden decision this evening to make my maiden speech because things are now getting so interesting in the House that I felt that I had to take part. In the first place I want to congratulate the hon. member for Port Natal on his speech. I must admit that he put his case very well. He said everything, but he said it just a little better than I should have been able to.

I understand that it is the custom when one rises, even to make a maiden speech, to mention the member on the other side who spoke before you. Unfortunately I cannot talk politics during my maiden speech and I may not reply to or criticize the speech of the hon. member for Parktown. I shall no doubt be permitted to sympathize with the hon. member for not knowing his newspapers either. At the same time I shall probably be permitted to praise him by telling him that although he does not know his newspapers, the newspapers and the voters know him and are fully aware of who he is and what he said.

Mr. Speaker, you will probably also permit me to thank you personally for the 13 years or longer during which we co-operated so cordially in the Queenstown constituency; you as the MP and I as the MPC. I want to express the hope that that co-operation will continue here in the House. [Interjections.] Sir, you know me well enough to be aware that I had no ulterior motives in saying that. You will understand, too, that whereas you and I have now got the Queenstown constituency almost perfect, I now have to start right from scratch with the constituency of King William’s Town.

This evening, in my first speech in the House, I want to discuss right and justice, “justice for all”. I want to refer in particular to the loss of property which has taken place in my constituency. The land of some of my voters has been lost and in the course of time has become the property of the State.

Frankfort, as the name indicates, is the region where the German settlers established themselves. The inhabitants of Frankfort are people who, right from the start, have not had an easy time. They are people who have worked with their hands from sunrise to sundown every day. They are people who have been bending over in their vegetable lands and their gardens all day and every day. They are people who sit round the kitchen table as a family every evening, dog tired, to pray and to eat. By eight o’clock everyone is in bed and the candles and lamps extinguished. They are people that have not had time to read newspapers, let alone the Daily Dispatch or the Gazette. [Interjections.] They are people who, each on his own little piece of land, have tried to eke out a livelihood from the soil. Each of these people had a joint right to have their cattle graze on the commonage. This right of theirs was an inalienable one. In 1965—I think it was in December—the Department of Agricultural Credit and Land Tunure made known in the Gazette—and perhaps in the Daily Dispatch, too, for all I know—that the commonage would be divided among the various people who had grazing rights on it; that each would have his own piece of land. This subdivision was subsequently carried out and each one fenced in his own piece of land which he had obtained as part of the commonage, grazed his cattle on it and occupied it as his own property. He received this in exchange for his former grazing rights on the commonage. Notice was also given in the Gazette that every owner would have to have his piece of land registered in his own name within five years, otherwise he would forfeit his right to ownership. Some of the people never acquired title deeds to their section of the commonage, due to ignorance of the proclamation. Others failed to do so due to their exaggerated faith that an attorney would keep all their affairs in order, and others, again, failed due to circumstances beyond their control. In certain cases the documents were missing after application had already been made, in some cases at the department itself, while in other cases they were destroyed when the attorneys’ offices burnt down. Some people, therefore, were blissfully unaware of the fact that the registration of the land in their name had never taken place. They only found out when the Department of Bantu Administration let it be known, after the land has been valued for the purchase thereof, that they could not pay the full amount for which the land had been valued because the piece of commonage which belonged to them was not registered in their names. This was the moment of truth for these poor people. Many of them realized for the first time that there was something wrong as regards the registration of the property. Pleading, cajoling and letter-writing were useless. The Department of Bantu Administration is very law-abiding. It cannot purchase what a man does not possess, what is not registered in a man’s name. The Department of Agricultural Credit is equally law-abiding. In terms of the law, that land now belongs to it. If the law states that it must take the land, then it takes it—just like that, free of charge. The department annexes all these unregistered pieces of commonage from the people free of charge in the name of the Republic of South Africa, as the law provides. I want to say that in this case my Government has made the wrong mistake. [Interjections.] The Government has made a mistake in the sense that although the Government neither was nor is responsible for this injustice, it should have been more accommodating by having afforded these people another opportunity to retain what had been theirs for generations.

They believed, perhaps in ignorance, or perhaps because they did not have time to read newspapers, that this land was their inalienable property, something which they had toiled for for generations. Any person or body which takes or acquires property for free should surely know that somewhere along the way, someone must have suffered injustice.

I want to plead that we should accommodate these people, that we should give all the bona fide cases another opportunity, and that the department should pay out these people for what has always belonged to them. For the State, the R100 000 or R150 000 this would involve a drop in the ocean, but to these people it will mean a fortune to receive R10 (XX), R15 000 or R20 000. I am not blaming any Minister or department. The State simply applies the law, but we who want to govern justly from this House and who pray every day in the House that we may be able to do so, ought certainly to be able to rectify a blatant case of injustice such as this by changing the Act in such a way that these people can receive what is due to them. After all, Parliament is sovereign; we are always saying so. If that is so, there is nothing to stop us from using this sovereign Parliament to rectify this injustice. I address this plea on behalf of my people to the Minister concerned and his department.

Mr. Speaker, it is both my pleasure and my privilege to congratulate the hon. member for King William’s Town on his maiden speech. I want to tell him that we also do not want these poor farmers in the Frankfort area, with whom I have the utmost sympathy, to be told—what perhaps other Cape farmers have been told— that they must remember “die wet van Transvaal”.

I can make interjections now; so just leave them to me.

The hon. member for King William’s Town and I have crossed swords in another place. I notice that he is already interjecting, as it is now his right to do. I look forward to crossing swords with him again in the future. I do not, however, want to react to the speech of the hon. member for Port Natal. I found that it basically did not have much to do with economic circumstances in any shape or form.

Firstly, I should like to recap on the financial situation up to 1976. At this stage we had a rising gold price which had included a certain amount of euphoria in the minds of members of the Government. They had discovered the Midas touch and the goose that lays the golden eggs, and they had broken those eggs and spent them just as fast as they had been able to. They had spent money as if a tap had been turned on and would never be turned off. Concurrently they had been busy with three enormous development schemes in South Africa. I am referring to the Orange River Development Scheme, Richards Bay and Saldanha Bay. Undoubtedly two of these schemes are first-class schemes, but they should have been started earlier and perhaps have been completed later rather than attempting to pay for them all at more or less the same time. This ate up foreign reserves to a very great extent. I must admit that I still, to this day, query the wisdom of the Saldanha Bay project. Recently I have heard some rumours, and I should like an answer from the hon. the Minister as to the truth of these rumours. Perhaps he would be prepared to furnish an answer. I understand that at Saldanha Bay there are virtually mountains of iron ore which have been mined and which South Africa is not able to dispose of. What is the position?

I want to ask a second question. I also understand that in the northern Cape the iron ore mines are not working a full week. I want to ask the hon. the Minister of Finance whether this is true. I have just heard the rumours. He is obviously not prepared to answer here and now. Perhaps he will react to my questions later on. The Saldanha Bay project was a very expensive scheme. It cost South Africa a great deal of money. I submit that every bit as good a result could have been achieved, in terms of earnings from foreign exchange, by carrying out the proposed scheme for building an off-shore iron ore loading berth in Algoa Bay. This, I believe, could have been done far less expensively than Saldanha Bay and almost the same results achieved in terms of iron-ore exports.

The salad days were over at the end of 1975 and the world economy went into recession, and South Africa’s economy went with it. There was a slow-down of the economy, with the inevitable results. These inevitable results were tragic for many South Africans. They were tragic in terms of the numbers of insolvencies that we still see in our courts every day and tragic in terms of rising unemployment.

The growth rate declined drastically and we heard, at the beginning of this debate, that last year it did not even reach 1%. Policies were introduced which, of course, the hon. the Minister of Finance had no option but to introduce. We were in a poor situation and the word economy was dragging South Africa down with it. Steps were consequently taken to put this right because the hon. the Minister had no option but to drastically slow down the economy. This had certain good results. Imports dropped, exports rose and the balance of payments improved considerably on the current account. The inflation rate, however, remained in excess of 11% and it would appear, from previous debates we have heard, that with the round of price increases lately, and the round of price increases likely to come from the agricultural sector, this inflation rate is certainly not going to decrease. However, there is a more serious problem.

This is where I wish to leave the realms of finance and place the blame where I believe it belongs. The blame for the situation in which South Africa finds itself today must be ascribed, purely and simply, to politics. I say this because South Africa has lost its credibility in the international world. Over a number of years statements have been made which have not been acted on. The hon. the Prime Minister said, several years back, that the world must just give South Africa six months and it would be amazed at where it would stand. There has been no drastic change in the dismantling of discrimination, and this is what the world is constantly worried about. The hon. the Minister of Foreign Affairs said virtually the same thing in the United Nations, viz. that discrimination would be dismantled. But it has not been dismantled, and it was quite apparent from the debate last Friday afternoon on the Mixed Marriages Act and the Immorality Act that that side of the House, despite more verligte opinions that might have been voiced from its own members, is not prepared to move.

This situation has resulted in the gross gold and foreign exchange reserves dropping by R100 million in the first 11 months of 1977. We have already said that we had fixed the balance of payments on the current account, and a great job was done in this regard. This should have resulted in South Africa’s foreign exchange increasing. The situation should have been rectified and we should now be able to reinflate the economy. We should now be able to create job opportunities and we should now be able to see that all our people have a square meal and a fair job. But this has not happened, and it has not happened because the overseas investors have lost, to a large degree, their confidence in the investment scene in South Africa, and this has resulted in the drying up of foreign currencies coming into South Africa. Foreign currency coming into S.A. could have had a twofold effect. From an investment point of view it would have improved our foreign reserves. Secondly, it would have created job opportunities in terms of industrial development. West Germany is probably the world’s strongest economy today, something like 34 billion dollars strong. West Germany used to invest heavily in South Africa. In 1975 DM 119 million were invested in South Africa. In 1974 it was DM 110 million. Today it battles to reach DM 50 million. The point is …

What figure is that?

I am talking about the investments by German investors in South Africa. I am talking about West Germany.

[Inaudible.]

I will just check on my source. I will quote the exact figures. I was quoting from memory.

That is one mistake you must not make!

If the hon. the Minister will bear with me for a second I will quote the figures. Here I have it. In 1974 it was DM 110 million. In 1975 it was DM 119 million. That is the flow of investment capital to South Africa from West Germany. More serious is that the Government has found it increasingly difficult to raise the necessary foreign capital to help the South African economy grow to the 6% that we need in order to keep our people employed. This is what we do need. We need a minimum of 6% to keep our people employed. We are finding that, in order to borrow this money— when we can borrow it—we have to pay an exorbitant rate of interest, a rate of interest which is not paid by countries which we would consider to be less stable and less safe than South Africa.

I do not want to mention their names, because if I do, I would probably be accused by hon. members opposite of upsetting some country or another. However, the fact remains that South Africa has to pay a very high rate of interest if it wishes to borrow money on overseas markets. So, we have reached this stage. Basically it is not the fault of the hon. Minister of Finance that we have reached this situation. It is the fault of the whole political situation that has developed in South Africa over a number of years, and it is political reasons that have dried up the source of foreign funds flowing into South Africa.

We on this side of the House have proposed an amendment which I heartily endorse. Basically this involves the elimination of all forms of unnecessary Government interference which impede economic development and restrict the principles of a free enterprise economy. Now, let us take some examples of what the Government is doing right now which is contributing towards creating a situation in South Africa which makes it more difficult for people to obtain employment. Let us look at the Physical Planning Act. Can one really say that this encourages free enterprise in a free economy where industrialists are unable to expand production by the use of Black labour in certain areas? They are only entitled, in those areas, to employ as many Blacks as they employed at a certain date, and if they wish to expand and to employ more Blacks, they have to move into specific areas which might well mean a tremendous lot more of an investment for them. It might well mean that they are a long way from their markets. Were they, for instance, to come down to the part of the world where I live, they would find that to rail a container of their locally manufactured goods from East London to the Rand complex—to Johannesburg—would cost them in excess of R1 300 per container. The same container, railed from Durban to the same point on the Reef, would only cost them R400. This seems to me an extraordinary difference, R400 from Durban to Johannesburg as against R1 300 from East London to Johannesburg. How then can we expect industrialists to move their plant to the East London and border areas when it is going to cost them, as I have said, three times as much to rail their goods to East London as it would to rail them from Durban? I do not believe this is fair. I believe it is restricting the principles of a free enterprise economy.

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

Mr. Speaker, I am afraid my time is limited, I still have some points to make and I wish to continue making them. The next item I wish to discuss is job reservation, this horrible spectre that looms over South Africans, particularly Black South Africans or South Africans of any colour. Job reservation prevents us from developing our vast unskilled labour resources to the ultimate point where we can turn them into skilled labour units. We are stopped, in the motor industry operating in White areas, for example, from having Black apprentices. We are stopped, in all sorts of ways, from training our Black labour to do semi-skilled and ultimately skilled jobs, and this restricts the free economy.

Finally, I want to refer to a point which has been mentioned before in this debate, i.e. the right of all South Africans—and I do not speak of South Africans in the sense referred to by hon. members on the other side because I mean all South Africans, White and Black, including those Blacks who will probably remain South Africans, no matter what hon. members on the other side might say—to have freehold property in South Africa, their right to own a piece of ground and their right to build on and develop that piece of ground. This right is being denied them. So I say again that when considering this Part Appropriation Bill we must look at it not merely in terms of a financial situation, but also in terms of a political situation. We must take many steps to ensure the rights of all people to equal participation in the national economy. They do not have this at the moment, but they must get it. They must have equal pay for equal work and equal responsibility. I am not suggesting more pay for less work. I am simply suggesting equal pay for equal work.

There is a final thing I think we have to do. We on this side of the House have tried very hard, in the past, to get the Government to make certain moves which they have refused to make. I have already mentioned, during this session, that the Government should create open residential areas, but now I want to get onto commercial and industrial areas. I believe that there can be no excuse for not allowing all population groups to operate freely in commercial and industrial areas. Here I am not speaking about residential areas. I realize that the whole residential concept is a very emotive concept in the South African society today, but I cannot believe that if we were to open all our commercial and industrial areas to ownership and operation by all—and I repeat all—South Africa’s race groups, we would in fact, create a far, far better society in South Africa than we currently have. This would cut both ways. It would mean that Black and Coloured entrepreneurs would be entitled to open factories in White areas, but it would also mean that White entrepreneurs would have the right to open businesses in what are currently Black areas, and I believe that this would help the economy enormously because the White entrepreneurs would then be reaching, to a far greater degree, that tremendous and powerful Black market. We have heard an hon. member referring to increases in the salaries of the different racial groups. There can be no doubt about it that the Black people are earning more money which in turn is creating a bigger and bigger market. Yet White entrepreneurs and businessmen are being prevented from utilizing that possibility to its fullest extent. I see that the hon. the Minister of Agriculture is not in the House at the moment, but I think that from the farmer’s point of view it would also be most advantageous if they could utilize that possibility. Take milk alone. In Rhodesia the authorities have allowed milk to be sold freely in all the Black areas by the White companies. Were this to happen here, I am sure we would find that there would be a tremendous increase in the sale of milk in South Africa.

That is not a new idea.

I realize that it is not a new idea, but it is an idea that still has not been carried out by the Government. Therefore I appeal, finally, to the Government please to let us open all commercial and industrial areas to all race groups and thus encompass a better South Africa for all its people.

Mr. Speaker, my predecessor in the constituency of South Coast was Mr. Van Coller, a kind and good Christian. As far as I know he had not a single enemy. I, too, shall try not to make enemies. I understand there are people who are sorry that he is no longer here, particularly from the point of view of bowls.

Mr. Speaker, in my maiden speech I should like to speak about the fourth Commandment, but you should not take fright and think that I am going to preach, because that I shall not do. As you know, the fourth Commandment is an important one because it is a commandment with a promise. It concerns our elderly people. It concerns the senior citizens of the country. It concerns our fathers and mothers. Now it is true that this is one of the major industries in the constituency which I represent. There are only three industries there, viz. tourism, the retirement industry and the agricultural industry. Because I live in that constituency, I am attuned to the needs of the elderly. Their needs are not solely of a physical nature. They are not confined solely to food, clothes and a roof over their heads. They also have needs at the psychological level, needs that have to do with love and recognition and a need to belong to something or someone. This evening I should like to propose a new philosophy or approach in regard to the senior citizens of the country. To be specific, I believe that certain parts of the country should be earmarked for retirement purposes, just as certain parts are set aside for border industries. The planning and provision of services can then take place accordingly.

I just want to illustrate my approach briefly by pointing out how various Government departments can adapt their planning and provision of services accordingly in these areas. I shall be brief. In the first place there is the issue of sport and recreation. Mr. Speaker, I like to play golf and some of my best golfing friends have been old people in their eighties. Age is not always a pleasant thing, but there are people of 83 who played golf with me and who are today perhaps no longer able to play golf as they would have liked because they are unable to afford it. This, therefore, is one sphere in regard to which the Department of Sport and Recreation could loosen its purse-strings in these parts of the country. It is also true that after their retirement, people establish themselves in that area because the climate attracts them there. Holidaymakers are attracted there for the same reason. Consequently, with a view to the promotion of tourism, there will also be a more sympathetic approach in regard to these areas. I mentioned the South Coast as an example, but I think that there may be other such areas as well, for example Knysna, Plettenberg Bay or the Strand. Many hon. members own property in the South Coast area and I believe that they will enjoy their stay there. We should very much like to have them there. Those who have been there once and have contracted South Coast fever always come again. I think they realize that the beaches in the lower south coast region, seen as a whole, are among the finest beaches in the world.

However it is true that the interests of tourism clash with those of retired people. I feel that such a clash is unnecessary. The principle that the tourist industry should be subsidized, by the provinces in particular, has already been accepted. For example, I have in mind the development at Golden Gate in the Free State, at the Blyde River and other areas in the Transvaal, and at the Midmar Dam in Natal. Since these areas have already been developed for the tourist industry and since the needs of pensioners and those of the tourist industry clash, as it were, I feel that facilities for tourists should be provided on a different basis. The poor pensioner is heavily taxed to establish facilities for the holidaymaker. They have to contribute in part towards the cost of the provision of shark nets and this also applies to tidal pools and ablution facilities. An Olympic standard swimming pool has been built in Margate, but I feel that those who go there on holiday do not wish to prey on the elderly.

I could suggest other Government departments as examples. These are departments that could furnish aid in the areas set aside to provide for the needs of retired persons, aid which might also involve their approach to the issue of planning and provision of services. I have in mind in particular the field of health, because these old people have special needs in this connection. Furthermore there is also the issue of police protection for the security of these people. The Department of Justice can also be involved in this regard. In Margate alone there are approximately 4 000 voters but no magistrate’s office, while in smaller centres like Harding and Ixopo such facilities do exist.

The idea is of course that if these areas are set aside for the purpose envisaged, people whose health permits it may be kept out of old-age homes. According to available data, 8% of the White population of South Africa is accommodated in old-age homes. In the United Kingdom this figure is 6% and the average figure in the world is 2%. Such facilities cost the State a great deal of money.

In one old-age home in my constituency there are more than 600 elderly people. They call it the “Village of Happiness”. It may be a “Village of Happiness” for those who are not in good health, but for the healthy it is a “Village of Sadness”. Such people feel that they no longer belong to the community. Indeed, they have been pushed aside to die. It is estimated that approximately 70% of the people in my constituency are concerned with the needs and so on of retired people. There are other areas too, which, due to the suitable climate, may be utilized to meet the needs of these people. Planning for these areas, too—as in the case of border industries—can be carried out as part of the overall planning by the Government departments concerned and also by the provincial administrations to provide for the needs of retired persons so that still more people may be attracted there. In this way these people will be able to participate actively in the activities of society. For example, their needs can be satisfied by participating in sport and by making use of the facilities established for tourists.

Mr. Speaker, even the Department of Agricultural Technical Services can adapt its planning so as to contribute towards satisfying the needs of our senior citizens in these parts.

†One of the best pieces of legislation ever passed by the Department of Agriculture was Act No. 70 of 1970. This Act stopped the fragmentation of our agricultural land into units that are economically non-viable. Like most things in life one should not, however, be dogmatic, and one finds that there is normally an exception to prove the rule. This exception will be applicable to these areas and I feel that if the Act could make provision for the actual cutting up of farms into smallholdings, also on a controlled basis, to allow for older people to retire, it would be a perfect Act because it would make provision for the exception to the rule. The Farmer’s Weekly states that the majority of its readers are urban people. So many people do live in the concrete jungle, and throughout their lives they look forward to the time when they can retire on a small farm. They look forward to this, because if they own the little farm, for the first time ever they can keep a cow, and when their children and grandchildren come to visit them, they can see where milk actually comes from. They can also, for the first time ever, go into their gardens to pick a whole paw-paw; they need not go to the Portuguese shop on the comer to buy half a paw-paw. One finds that in these areas it is amazing how well these people farm, irrespective of the fact that they farm on small farms which are supposed to be economically non-viable. They can also then fulfil some of their needs to belong to a certain community because as farmers they would belong to the farming community, could serve on the executive of the farming community and could go to the Christmas parties of the farming community. I can assure the House that these people are doing valuable work, perhaps not always so much in the economical field, but a sociological need is certainly fulfilled in this way. The previous representatives from Natal who served on the Banana Control Board were people who fell into this category. One was an ex-judge and the other was a lawyer, and the Banana Control Board certainly needed the services of the lawyer. I could also quote other instances who could plan their services in accordance with the needs of our older people or senior citizens in the areas earmarked for retirement. A fortnight ago a symposium was held at the University of Cape Town and the point was raised that because so many people are jobless in France today, workers retire at a younger age. I feel it is an absolute crime to put these people into institutions when they are still physically fit. I am sure that the Government will be able to save money by creating an area where these people can retire, because every person sitting in an old-age home is costing the taxpayer and the Government a lot of money. Some of these people, who are physically disabled, cost the Government up to R8 a day; others cost less.

The psychological needs are the more important needs of the people. The physical needs are not all-important. I am sure that if we earmark these areas for retirement—I know this is in line with the policy of the Government—we shall find that more and more people will retire in these areas and can be accommodated in the community as a whole.

What I tried to do was to give an example of how planning and the rendering of services could be done by Sport and Recreation, as well as Tourism. I also mentioned Health, Police, Justice and the Department of Agriculture. I can go on in this way. My plea is that we must look at these people from this point of view and if we can earmark areas where the climate attracts them, and plan as indicated, it would serve to fulfil all the needs of our older people and be in line with the fourth commandment which I referred to in the beginning of my speech.

Mr. Speaker, I regard it as a privilege to congratulate the hon. member for South Coast on his maiden speech. Over the years we came to know the two predecessors of the hon. member and we used to expect an interest in the South Coast area of Natal from them. We knew the two predecessors of the hon. member as friendly and good-natured people, who were pleasant and who gained the confidence of this House over the years. I am sure that the hon. member will do the same. We were particularly interested in the reference the hon. member made to the aged in his neighbourhood, the homes for the aged and the smallholdings, and what can be done for the aged to make their last days easier, but in such a way that they can continue to contribute to the community. We thank the hon. member for his speech and look forward to his future contributions.

†Mr. Speaker, when one approaches a part appropriation debate one tends to look in the hon. the Minister’s speech, which serves as an introduction to the debate, not only at what he actually says, but also at what he does not say. When we protested this afternoon against the compulsion to continue with the debate immediately after the hon. the Minister had sat down, we were thinking, not, as some of the hon. members may have imagined, about the difficulties of replying to the points the hon. the Minister raised, but of the need to investigate those points which he had left out of his short speech introducing the Bill. One of the things I like to look at, for example, on a budget occasion is the Economic Development Programme. The economic Development Programme has served over the years as an outline, a plan, an indication of the way the Government proposes to move financially and economically in order to achieve certain fundamental objectives.

In recent years the Economic Development Programme which, as I say, tends to forecast the future and plays the role of a crystal ball for the South African economy, has proved very embarrassing for the Government, because for some years now the Government has failed by a long way to meet the kind of essential, minimum objectives laid down in the Economic Development Programme by the economic advisers to the Prime Minister. Looking at the programme for 1976 to 1981, which I believe appeared last year, I notice in the preface that there is some attempt by the hon. the Minister of Economic Affairs to disengage from the commitments of the Economic Development Programme. It is said, for example, that this plan should no longer be regarded as a forecast, but that it is merely an indication of the type of bottleneck the economy might run into. Recently there has existed some doubt as to whether it is in all respects the most suitable for our circumstances and a need has been felt for other forms of economic planning. However, the Economic Development Plan continues to indicate the parameters, to lay down the minima and to show quite clearly what achievements are necessary in the economy if this country is to continue to progress and to make provision for its growing population with its growing expectations.

We are a long way off the mark. In this plan, which covers the period in which we are now, it is indicated quite clearly that a growth rate of 5½% or, at a pinch, a minimum of 5%, will just about squeeze us through. It is quite clear that in the first years for which this plan makes provision, namely 1976 and 1977, we were a long way away from achieving anything like an average growth rate of 5½% over six years.

As a result of our failure to achieve this growth rate in 1976 and 1977, we shall have to maintain a growth rate of 6,2% over the remaining four years under review to fulfil the requirements of this plan.

This means a new economic miracle of the order achieved by the Germans and once, for a brief period, by South Africa. This is now required as a consistent performance over the next four years. When we take into account that, as the hon. the Minister said this afternoon, the growth rate for 1977 was in fact probably 1%, we find that our average performance over the remaining few years of this phase will have to be of the order of 7%, which is clearly an impossibility. If this slow growth rate were in fact accompanied by a reduction in inflation, we might regard this as a compensation. However, the fact is that the inflation rate—and we must congratulate the hon. the Minister on at least achieving some of his objectives, like reducing the creation of money—still is 11% despite every effort which has been made to control it. An inflation rate of 11% simply means that we are going to go nowhere and that there will be no growth, because it is almost impossible to grow at an adequate rate against such an inflation rate. We shall not produce the per capita growth which is needed by this country, because with a growth rate of 1%, which is the net growth, compared with a population growth of about 3%, we are in fact not moving forward at all in human terms, but are steadily moving backwards. This is the grim picture. I believe therefore that when one looks at all the fine words and the achievements such as they are it is also always necessary to look to the survival of this country as a civilized country. We must look to the survival of our people as part of the modern world, people with real expectations of participating in the benefits of the modern economy of the 20th century. When one looks at it in these terms, it becomes clear that we are really facing a very grim future. Unless we can reverse this economic trend, all of us will become steadily poorer and more depressed. Our economy will grow weaker. All the fine things we say, all the great dreams we dream about the future and all our fine defiance of the world outside will be meaningless unless we get the muscle back into our economy.

I believe the time has come—as is indicated in this report—to take a fresh look at the whole basis of our economy. The hon. member for East London North is entirely right when he says that it is no good just trying to remedy these weaknesses by looking at the economic and financial factors. One cannot remedy these matters merely by controlling the money supply. One cannot remedy them merely by fiscal measures. One cannot remedy them merely by economic planning. One has to go down to the roots of our society and at the roots of our society lies the low productivity of our people. This arises from the low rate of participation of our people in the economy both in quantity and in quality. One has to go down to the human factor which underlies our whole performance, and this means politics in bold terms. One has to get down to the politics of the situation in order to remedy the weaknesses in the economy.

We have enormous resources of minerals in South Africa. We are perhaps the most richly endowed country in the world in respect of minerals. We are a very richly endowed country, in potential at least, in respect of our human resources. We are also a very richly endowed country in terms of our energy resources. We have coal and uranium, we have unexplored and unexploited hydroelectric resources to the north of us—again depending on political settlements. We have all these things which if put together will put us in the first league of developing nations, the first league of industrial nations in the world, but we are hampered, we are held back, not because of a malignant fate, but because of our own inhibitions, our own inability to overcome certain restraints in our own political and human society. Until we learn to overcome these things South Africa will not achieve its full greatness. Hon. members on that side of the House who are sure of their policies, who are so sure that they have found the only solution, must learn to think in economic terms, must learn to ask themselves whether survival in the sense of a political survival, in terms of a race survival,survival of a particular colour or creed, is of any use at all when one has destroyed oneself economically and is unable to produce the kind of defences for that kind of survival. I believe we need to take a fresh look at these things. In the small amount of time which is available to me, I do not want to attempt to take a fresh look at these things now, but perhaps there will be other opportunities.

In respect of exchange rates there is a commission sitting on the matter now. I believe the matter is being investigated and I believe, as the hon. the Minister indicated this morning, that we may get away from our present attachment to the dollar which, while it clearly has merit, can also get us into serious trouble. We have also discussed the possibility of a basket of currencies. I want to put to the hon. the Minister, not as a firm suggestion, as it needs a great deal more exploration, but as a tentative idea, that we might consider trying to establish a base relating to the Kruger rand which is now being marketed on a world-wide scale. I think the hon. the Minister indicated this morning that one third of our total gold exports was in the form of Kruger rands. Therefore there is a small international market in Kurger rands with a recognized price. I want to make it clear at once that I am not suggesting a return to the gold standard. I am not suggesting a return to par between the rand and the gold rand.

I was rather hoping you were!

I wish I could. I am suggesting that if an international value can be established in a South African coin—it had an acknowledged international value, even though it fluctuated the way other currencies fluctuate—and if, for example, the ordinary rand were then to be valued as a percentage of this coin, and remained flexible, and were open to devaluation or revaluation, as other currencies are, at least we would have a link with a visible international value which would be very largely under our control. This is unlike the present situation where we are linked to the dollar which is by no means under our control and which subsists in an economy which has really nothing to do with the South African situation, but which we yet have to follow blindly. The same applies to the basket of currencies. The basket of currencies reflects a state of affairs, a state of values, a state of trade, a state of economy in a number of other countries, a set of circumstances which are not related to South Africa or our local conditions. I believe that whatever criticisms may be raised against the idea of having our own value to which we may attach our own currency, the weaknesses in that proposition can be shown to be weaknesses which already exist in our relationship with the dollar or the basket of currencies.