Mr. Speaker, I move without notice—

Agreed to.

Mr. Speaker, when the debate on this Bill was adjourned last Wednesday I had expressed the opinion that this was an inflationary budget which would inevitably result in serious consequences and seriously hamper any prospect of an economic recovery. Since that time, and after a further examination of the budget presented by the hon. the Minister, I find that I have no reason at all to change my mind. It is an inflationary budget and will inevitably be followed by a chain reaction of price increases which will adversely affect the cost of living. There will be a further drop in living standards for all of us. The hon. the Minister said in his Second Reading speech that the Railways too were the victim of inflation. That is quite right, in that the Administration is having to pay more for commodities which are a basic part of running costs, commodities such as electricity, coal, steel, etc. However, here we have a standard example of the inflationary spiral at work.

Transport costs go up and so the chain reaction starts because to meet the increased transport costs, the prices of coal, steel and electricity have to be increased and because these commodities are costing more, the Railways have to increase their tariffs further. And so we are off again on the monstrous merry-go-round of inflation.

We all know that inflation is a world-wide problem, but we are singularly blessed in this country because we have the raw material resources which should enable us to make a better job of fighting the inflationary spiral than most other countries in the world are able to do today. This is why I believe the hon. the Minister has done us a great disservice by raising tariffs for the fourth time in two years. As I pointed out last Wednesday, tariffs have increased by over 50% in two years. In an interjection the hon. the Minister claimed that I was actually talking about a three-year period and that this budget was for the year that lies ahead, until the end of March 1979. I hope that I can take it as a definite assurance from the hon. the Minister that under no circumstances will he even consider an interim increase like the additional increase he was subjected to in September 1976.

A 50% increase in tariffs not only surpasses the national inflation rate for the last two-year period, but is even well in excess of the rate over a three-year period. I think we must all accept that transport costs are basic to every part of our economy. Everything we use or buy has as a part of its cost structure a percentage representing transport. I believe it will not be unfair for us to ask ourselves the question: Where does the inflationary spiral start? I believe we can come up with the answer and that is that it starts with transport. I admit that it is a sort of chicken-and-egg situation which faces us. Which does come first? However, there is no doubt at all in my mind that transport costs are so basic that this is one area where inflation begins, where the spiral starts. If we are ever to get on the road to real economic recovery we have to dig in our heels and say: “No, we are not going to raise tariffs. Whatever the difficulties, the inflationary merry-go-round must stop.”

A 50% increase over two years has damaged our economy on several fronts. Firstly, our exporters are obviously going to be severely prejudiced in their attempts to compete on the highly competitive world market. Manufacturers have to face a decreasing demand for their products as rising prices are affecting both the local and the overseas markets. People just do not have the money to buy any more.

I see from Press reports that, as a result of this tariff increase—I hope it is merely speculation—we are likely to be paying more for petrol. I consider this to be disgraceful when one looks at the enormous profits made by the Administration on the pipelines. An estimated R108 million profit on pipelines poured in during the last year to enable the hon. the Minister to balance his books. However, was he content with that 470% profit? Not at all! The motorist is expected further to subsidize losses incurred in other operations. I think that this is an absolutely scandalous situation. Why must pipeline tariffs be pushed up when they are already operating with a huge profit margin? Is this fair? I believe that the hon. the Minister is punishing the motorist unjustly, and in doing so he is running the risk of killing the goose that lays the golden egg.

Another section of the community due for a tremendous punishment in this budget is, of course, the farmers, and I would like to hear the latest comments from the hon. the Minister of Agriculture. [Interjections.] Livestock transport costs jump by another 10%. Fertilizer will cost more to get to the farmers. [Interjections.] In fact, virtually everything the farmer needs is going to cost him more, and it is also going to cost him more to market his products, to get his products to the market. That is why I think I will do well by quoting the S.A. Agricultural Union’s economist, Mr. J. F. Coetzee, who has estimated that the farmers’ production costs will go up about R40 million. I think we have reached the stage where the hon. the Minister could well be turning into a “Boere-hater”. [Interjections.]

Which Minister? Me or the Minister of Transport?

In answer to the hon. the Minister of Agriculture, I would start with the Minister of Transport and only put the Minister of Agriculture second. Undoubtedly farm produce costs will filter through and the consumer will be paying more for foodstuffs. This has serious implications, particularly with regard to the staple foods. The hon. the Minister of Agriculture told an audience in Potchefstroom last week that we could shortly expect an increase in the price of mealies. Higher railway tariffs obviously contribute to the necessity for this increase. At a time of growing unemployment, when more and more people are living below the breadline, there are serious social implications when food prices go up. The head of the Bureau for Economic Research at Stellenbosch was quoted in the Press as having said the following vis-à-vis the budget—

He went on to say that the higher rates would increase pressure from trade unions for higher earnings. Of course this pressure will increase. Mr. Ronnie Webb, President of the Trades Union Council of South Africa, has said that the ripple effect of tariff increases would contribute to the erosion of living standards. He is quite correct. Throughout the South African economy there will be greater justification for wages to be upped—another turn in the dangerous spiral of inflation.

Higher commuter fares too increase the burden on the working man, particularly in so far as the poorer sections of the community are concerned. Higher commuter fares could well be the straw that breaks the camel’s back. I believe that this Minister must approach his colleague, the Minister of Finance, with a view to subsidies on Black commuter fares on a greater scale so that the present level can be maintained. Most South Africans are finding that travelling anywhere has become so prohibitively expensive that they just have to stay at home. Petrol increases cut out a lot of travelling by car, and now rail increases are putting it beyond the pocket of most people. I should like to say to the hon. the Minister at this stage, however, that we feel there is one type of traveller who deserves special consideration, and that is the serviceman. I want to ask him whether he would be prepared to consider special concessions for servicemen on South African airways. When our young men in the forces are given a few days’ leave, there is very little they can do because travelling to see their families is too much for their pockets. I would like to see the hon. the Minister make some effort to make it a little easier for servicemen to travel. Concessions on air fares would certainly make occasional visits home a possibility for some.

While I am on the subject of fares, I would like to know whether the hon. the Minister is in a position to tell me what the cost to the Administration is of free or concession travel by Railway and other Government employees. This seems to be a great bone of contention with many members of the public. I am continually being sent letters from people who seem to resent these concessions. I think it would be in the public interest if we knew how much these actually cost. There may well be a case for getting rid of these concessions and compensating Railway employees in some other way. I do not know whether the figures are readily to hand, but I think the hon. the Minister would do himself a favour if he could let us know just how much this is costing the Railways annually. A woman wrote to me the other day, to say that she had travelled in a compartment with five other people and that she was the only one of the six people in that compartment who had actually paid for her ticket. She was very cross about it.

I should like to pass on to other areas where increases have come forward. Why the hon. the Minister has seen fit to put up harbour charges when he is already making considerable profits from most of our harbours, I just do not know. Again I should like to express the opinion that harbours should fall under a different department from the Railways. This is an old argument between the hon. the Minister and myself. I believe they should be separated. There are in fact four departments lumped together, if one considers Airways and Pipelines as well. I think the whole organization has become too unwieldy. I feel that the best interests of all four departments would be better served if they were separated. If the hon. the Minister did not have Pipelines and Harbours to balance his budget, he would not find it quite so easy. Railways would then be seen in isolation and harbour users would not be in the position where they have to subsidize other less profitable—or perhaps I should say unprofitable—areas of Railway operations.

Mr. Speaker, I am distressed at the fact that the users of containers are to be severely penalized. Before I deal with this aspect of the budget, however, I think a word of congratulation should be directed to the General Manager and his staff. We have seen containerization get off the ground on schedule, with a minimum of teething troubles, and I think praise is due for the efficiency with which the commissioning of both the harbour and inland terminals was carried out. A top-class job was done by the Administration, but I regret to say that the hon. the Minister has spoilt what was otherwise a very praiseworthy achievement. Why did he find it necessary to push up container tariffs to such a degree? I am particularly distressed at the punishment meted out to the users and owners of containers that do not belong to the Railways. Active encouragement was given to individuals in private enterprise to invest in their own containers. During the early years of containerization they were actively encouraged to invest in their own containers. I also think I am right in saying that an undertaking was given by the General Manager at a meeting between representatives of commerce, industry, agriculture and the Railway management, a meeting which was held in November 1975. The undertaking was that the principle of a rebate on railage for the use of private containers would be maintained. The rebate has, however, now been withdrawn, but to maintain the principle of the rebate, the hon. the Minister told us, in his introductory speech, that a levy was to be imposed on the use of containers owned by the Railways. I do not know how much the levy will be, so it becomes a little difficult to comment, but unless this levy is fairly substantial, in line with the 5% to 10% rebate that has now been dropped, the withdrawal of the rebate by the hon. the Minister, I would say, would clearly constitute a breach of faith. People who were encouraged to invest in containers could well be penalized.

Even if the levy does, however, maintain the level of differentiation between the two types of containers, the privately owned containers and the railway-owned containers, one must realize that the withdrawal of the rebate, plus the increased tariff for containers, means that in some instances the rate for the usage of containers is to go up as much as 23%. How can the hon. the Minister justify an increase of 23%? South Africa was persuaded that containerization would be a great benefit to us all because of its being that much more efficient. Millions of rand were pumped into a scheme for providing a container service and then, before the new service has found its feet, it is saddled with this huge tariff jump. This I do regard as a breach of faith, and I should consequently like the hon. the Minister to tell us how he can be so cynical as to wait until people have committed themselves to the use of containers before immediately slapping on enormous additional charges.

There is another aspect which needs attention. The increased costs of transporting cement, steel and other building commodities will be very bad blows indeed to the building industry. As the hon. the Minister knows, this industry is already in a very serious predicament, and these increases will inhibit any chances of improvement. It is almost like hitting a man when he is down. The industry is not really surviving at the moment, and then it is subjected to all this.

If one looks at the total effect of this budget, it can only be said to be disastrous. The poor of South Africa are going to have to bear an increased burden which they can ill afford. An 8,6% increase, seen in isolation, would not be all that serious, but the hon. the Minister’s track record has been so bad that 8,6% in these circumstances is just about the last straw. There has been an increase of 50% in two years! This hon. Minister’s predecessor did far better because during the few years prior to that we did not see anything like the percentage increases we have seen recently.

I have looked at a few of the worst aspects of what can only be called a thoroughly bad budget, but I think one should also try to probe the reasons which have brought it about. Why has it been necessary for us to raise tariffs by 50% in two years? Firstly I should like to take a look at the situation of the growing burden of debt carried by the Railways and the huge amount of interest on borrowings which has to be paid out. We have seen this interest level climb in a most spectacular manner in recent years. In the 1973-’74 financial year approximately R180 million in interest on capital was paid out. This climbed to over R202 million in 1974-’75 and then to over R254 million in 1975-’76. Then in 1976-’77 this again jumped enormously by over R70 million to just over R325 million. In the last financial year there was again a spectacular jump to just over R444 million. We are budgeting for a massive R508 million to be paid out in interest charges alone. Before any working expenditure is taken into consideration the Railways have to pay out R508 million in interest on capital and on funds. This is a tremendous burden for any organization to carry.

I think the hon. the Minister must answer some questions for us in this regard. How much money does the Railways Administration in fact owe? If one takes an average interest rate of 7%, as I did, one could infer that the total amount owing is well over R7 billion. The hon. the Minister will be able to tell me whether I am very far out, but in anyone’s language this is a tremendous amount of money.

One can find it in the annual report.

When one considers this, one wonders whether there is ever going to be any prospect of paying this off. In answer to that hon. member, let me say that the figure for the coming year is not in the Annual Report. What I think we need to know from the hon. the Minister is some details of policy with regard to Railway borrowings of this magnitude. How is he going to cope with it? How fast does he hope to pay these debts off?

I should like to know from the hon. the Minister whether the situation is not getting a little out of hand. I know we have just been through a period of tremendous capital expenditure. Richards Bay, Saldanha and containerization have all been very costly. How long is it going to be before it will be possible to regard these projects as being profitable? Let us just have a look at Richards Bay for example. In a statement of estimated revenue and expenditure for the year ended 31 March 1979, i.e. in the Green Book, one sees that the estimated revenue for transportation services at Richards Bay is R3,618 million. Working expenditure is estimated at R4,092 million, which means there will be a working loss of approximately R474 000, or just under half a million rand.

However, on top of this, we have to add a figure of R28 685 million, which results in a loss of over R29 million in one year on Richards Bay harbour. We all know that this new harbour will be a tremendous benefit to South Africa—I agree with that. We know we are already earning a tremendous amount in foreign exchange because of coal exports through Richards Bay. We know, too, that the harbour is not yet finished and that its profitability will only become evident when it is in a position to handle more cargo, including general cargo. However, when does the hon. the Minister anticipate that the Railways—it is the Railway budget we are discussing today—will start benefiting by way of profit from this harbour? When does he hope it will show a profit? How much longer are we going to continue to finance tremendous losses? I understand that the guaranteed line to the harbour is still losing money. When is it anticipated that this will become profitable? I have no doubt in my own mind that Richards Bay can only be of tremendous benefit to South Africa as a whole, but it is benefits to the Railways Administration we are talking about today. Should the Administration be made to carry the whole load? We should like to hear from the hon. the Minister just how he sees the next few years. The same thing applies to Saldanha. The Green Book shows no interest on capital in respect of this harbour and therefore it is impossible to estimate its profitability. Perhaps the hon. the Minister can give us some idea of how well we are doing both on the Sishen-Saldanha line and on the harbour itself.

Another aspect of our borrowing that could be very disquieting has to do with the total value of foreign loans at the present time and the countries from which these loans originate. The fact that the rand is tied to a steadily depreciating dollar has obvious implications for loans from countries such as Germany, Switzerland, Britain, etc.—I do not know where the Railways loans have come from. As we all know, the dollar has reached its lowest level ever. I know the hon. the Minister cannot be held responsible for the fact that the rand is devaluing because the dollar is devaluing, but this has obvious implications for the Railways Administration. Can he give us some idea of how much this is going to cost, both in terms of increased interest and on loan repayments? I think we in these benches would feel very much happier if the hon. the Minister could enlighten us on what is going to happen as far as the Railways loans are concerned. What prospects are there of repayment? Are the Railways always going to be saddled with this load of debt? If there are prospects of repayment, when will such repayment take place?

All in all, this is a very disappointing budget. We had hoped that the increase of 14,6% last year plus the increases in 1976 of 11,2% and 9,4% respectively would have tided us over for at least another year. I have been very interested in some of the Press comment, especially by those newspapers which normally do not support members in these benches. For instance, one could look at what the Citizen has to say—

They end up by saying—

Die Transvaler said the following—

The following report appeared in Oggend-blad—

Hoofstad said the following—

We in these benches can only agree with these sentiments. We believe that the hon. the Minister has abandoned any serious attempt to fight inflation. He has meekly accepted that inflation is inevitable. He has fanned further inflation, thus expressing a vote of no confidence in the recovery power of our economy while present world attitudes towards South Africa as an area of investment prevail. We cannot agree with the tariff increases and I accordingly move the following amendment—

1. (1) insufficient attention is given to the necessity to halt the inflationary spiral;
2. (2) tariff increases constitute a major setback to hopes of economic recovery; and
3. (3) it will result in increases in the cost of living and a lowering of living standards”.

Mr. Speaker, a good many years ago, when you and I were still very much younger, we had our own TV. Those were the days when one still found it difficult to save up nine pence for the matinée at the silent movies. Our TV consisted of gathering together where the one and two-shaft school carts stood near the paddock. Our altercation consisted of the challenger having to give a “kesh” to the one who accepted his challenge. A “kesh” had to be given forcefully, because one had to stagger back a step or two so that one could work up enough heat for a proper reaction. Mr. Speaker, the “kesh” which we have received from the hon. member for Orange Grove sounded more like a serenade to me. He tried today to rectify the introduction and conclusion of the short speech he made last week, but without success. This serenade went as follows—

I find this serenade strange. The hon. member concluded his speech by saying—

Read the rest.

Yes. I will read the rest. He also said—

*I am going to reply to this. He went on to say—

With all respect, I did not actually know whether the hon. member intended to cross swords with the hon. the Minister and whether he wanted to kiss him! I do not want to say too much, but I nevertheless want to warn the hon. the Minister that there is such a thing as the kiss of death. The two lines on the carpet in the House leading to the Chair represent a tradition which is older than our Parliament; we inherited it. These two lines are a sword’s length apart, one for the challenger and the other for the one who accepts the challenge. However, it seems to me—and I want to complain of this to you, Sir—that from the day when the PFP entered that door as the Official Opposition Party, the interest and the cut and thrust of politics left through the door behind your Chair. This must necessarily lead to frustration. In all seriousness, one wants to bewail these things as one colleague to another.

The standpoint of the hon. member for Orange Grove is quite illogical, for instance in asking how it is possible for us to introduce tariff increases at this time, while our own fatherland has tremendous mineral riches at its disposal and also has the advantages of exporting through harbours like Richards Bay and Saldanha Bay. He described the tariff increase as irresponsible and rash. However, the hon. member neglected to mention the fact that steel had reached its lowest price in years on the international market during the past few years. How should we now use our minerals to compensate for a deficit in the revenue and expenditure account while this is the position? There is no logic in an allegation and a standpoint like this.

As far as containerization is concerned, why did the hon. the Minister not adopt an accommodating attitude by cancelling the surcharge which he had allowed for private owners? As a result of the inactivity in the industrial and commercial sphere—in the economy in general—the projection was 40% lower than expected. Should the hon. the Minister and his management still have played Father Christmas under the circumstances?

The hon. member advanced another argument which I cannot understand or appreciate. He spoke about profits of up to 470% on the petrol pipe-line. However, this is such a hackneyed subject that one is sick and tired of the mere mention of it. Surely the hon. member is aware of the fact that the Railways follows a policy of cross-subsidizing: high rated goods must compensate for a lack of income due to the transport of low-rated goods. The hon. member is also aware of the fact that 42% of the volume of goods transported by the Railways represents low-rated goods which, in most cases, shows a loss. How is this to be compensated for? From the Treasury or from a subsidy? The hon. member must tell the taxpayer whether one must recover this by means of a tariff increase or by means of higher income tax. One must pay for it. It is a deficit which must be made good; this is as plain as a pikestaff.

The hon. member made certain admissions in his speech. He concedes that world circumstances are rather against us and that capital is scarce. The best of all is the climax of his argument, which is that the hon. the Minister, with his tariff increases, is responsible for the inflation spiral. As far as I know, the hon. the Minister increased the tariffs after the price of coal and electricity had been increased for the umpteenth time in January this year. Since the railway tariffs were increased by 8,6% on an average, compared with the prices of steel and coal which were increased by 12% and 13% respectively, I should like to know how the hon. member reconciles these two points and concludes that the Railways is primarily responsible for the inflation spiral and the increase in the cost of living.

The hon. member also argued and reasoned as if the South African Railways operated entirely in isolation, separated from the rest of the world. The hon. member argued that since this was the case, the Railways should do better than other bodies. Let us take a look at the picture as a whole. To present a fact in a biased manner may have a negative result. This is what the hon. member tried to do the whole afternoon. One must see facts in perspective against their background and then interpret them. Only then do those facts become part of one’s knowledge. One must interpret the facts correctly. However, those hon. members are afraid to do so.

What is the position of the railways of other countries under these circumstances? In Great Britain, there were tariff increases of 50% recently for passengers alone, there was a tariff increase of 12,5% in January 1977 and an increase of 14,5% in January 1978. The cumulative effect is therefore an increase of 28,8% within the space of 13 months, just for passengers. This is what happened in a country which those hon. members held up to us as a model for railway management, a country we must emulate by establishing a directorate to manage our Railways, i.e. a body consisting of businessmen from outside the Railways. But this is the position with the railways of Great Britain, and then I am not even referring to the subsidies of hundreds of millions per year which are paid to their railways or to the fact that they had to retrench 7 000 officials and to abolish jobs. The S.A. Railways has not yet abolished a single job or retrenched a single official.

We must at least maintain a reasonable balance in our approach, and in maintaining a balance, we must convey the message that a premium of 8,6% in the form of increased railway tariffs is small when one sees it against the possibility of an increase of 86%, or one’s general assets and possessions. Throughout the world, just like here, there is a struggle going on. We are not going to accept this condition with resignation. We are going to fight for a time of transition, evolution and development. We heard a passing reproach about the Sishen-Saldanha project and Richards Bay. What is the position there? With the necessary apology to the hon. the Minister of Finance I want to remind the hon. member for Orange Grove that within the space of 12 months, a negative foreign balance of payment of R1 700 million was converted into a positive balance of payment of R800 million. Without Richards Bay, the Sishen-Saldanha project and agriculture it would not have been possible. Behold the function, position and power of our own national transport organization! I want to remind hon. members that this is only the beginning. Once again with the necessary apology to the hon. the Minister of Finance, I want to say that with its projects like the Sishen-Saldanha project, the S.A. Railways will make gold look small in the next decade or two. We are dealing with long and shortterm planning here. The Japanese Railways, with a volume of transport which is incomparably larger, relatively speaking, because of greater imports and exports, increased its tariffs by 45,4% from 1975 to 1976.

What about Honolulu?

That hon. member’s remark is just as fatuous as his face is. Our problem in this country began just as it did in many other countries of the world. The inflation spiral which the hon. member for Orange Grove referred to began with the increase in petrol prices. The increase in petrol prices had an effect on the balance of payments, which in turn had an effect on the availability of capital for investment. A lack of available capital for investment had an effect on the growth rate of the economy of countries. The growth rate had an effect on the standard of living, which in turn had an effect on the unemployment situation. That is where the problem began and not with the hon. the Minister and his officials or the Government’s policy. It approached us like a monster. We are in its shadow today, but are we going to take it lying down? No, we shall never accept it.

We have a team of men in control of our national transport organization who have approached every facet of the Railways in this budget in a scientific way and tackled their problem with characteristic business expertise. They have their problems. The below-cost percentage of the volume which they must transport, a lack of loan capital and an increased demand for transport have been handled by them in a masterly way to the satisfaction of all.

Except the farmers.

I am coming to that. They did this with a surplus capacity of 15% in the case of rail transport and an occupation rate of 62% to 65% in the case of air transport. They are right to combat the situation. They have planned over a long term and they now have some latitude. What do they work on every day? In brief, their greatest problem is to create and generate capital. I wish that the whole business world and the economic sector of South Africa would take a leaf out of the Railways’ book. How did they do it?—By planning, by saving and by increased production. After all, we have learned a lesson from history since the last war: One can generate capital—one does not have to borrow it—by working harder, by planning better and by aiming at a specific goal. The Railways Administration has done this. I want to mention a few practical examples of this instead of talking in the abstract as my friend the hon. member for Orange Grove did.

I should like to begin with a simple item in the Railways, viz. a concrete sleeper. Traditionally, sleepers were manufactured from wood and iron, but as hard wood became scarcer and iron became more expensive, they fell back on concrete. We also did this according to the old European model. In the sixties and seventies we used the double block system with the steel pincer connection. This did not work in practice due to our difficult soil surface.

Furthermore, the continuous, welded tracks were not so effective either and the Railways had to look for another method and another model. A system was eventually found. During 1975-’76, South Africa was the largest purchaser of concrete sleepers in the Western World. It may now be asked: What does this story mean? I spoke about saving, about forward planning and about the generation of capital. The cost of a concrete sleeper amounts to approximately R11, as against R20 for iron or steel and R22 for wood, a saving of over 100%—and the hon. member for Orange Grove would do well to listen—on a single item.

I want to mention another example. In the old days when the friction material for brake blocks consisted of cast-iron, the account for these cast-iron brake blocks amounted to R16 million annually. Over six million brake blocks were ordered annually by the Railways. In the late thirties, they started an investigation into this problem and tests were first carried out with synthetic material, the same substance which the brake-shoes of motor-cars are manufactured from. It was not a great success. Then, there was a breakthrough in 1968. Since 1975, all suburban electric trains have been equipped with composition brake blocks. The figures show a phenomenal saving on suburban trains. In 1970, 1,1 million brake blocks were purchased at a cost of R3 million and in 1976, only 53 000 were purchased at a cost of R½ million—a saving of over 80% on one single item. These are people who work with vision, people who are interested in their responsibility. These are people who try to serve their times and history by means of their planning. I will not allow ignorant, uninterested people to disparage them unnecessarily with their jeremiads.

A further saving was brought about by these brake blocks due to the reduced wear and tear on wheels which resulted. The hon. member for Orange Grove may listen again and then tell me whether this is just a trifling matter. The use of a composition brake block doubles the normal life of a single train wheel. Those who have tried to count the legs of a centipede would do well to count the wheels of 150 000 railway trucks which turn in South Africa every day, and then double the number. In this way one can try to imagine the influence of this single item on the economy of the Railways and the economy of the country.

Here we have an example of people who know and who say that they can succeed if they want to. They have proved it too. It is not a theory. It has been proved.

Apart from brake blocks and wheels and concrete sleepers, the Railways has also paid attention to introducing longer trains. In 1960, the heaviest train in South Africa which was equipped with a vacuum brake system was one weighing 1 800 tons. Since then, the vacuum brake system has been improved considerably and loads of up to almost 4 000 tons are transported. In 1970 the air brake system was installed in unit trains. It brought about a phenomenal change in bulk traffic. Today, goods trains transport up to 7 300 tons; trains of more than one kilometre in length. In 1975, a train of this kind made a test run between Kimberley and Port Elizabeth, an experiment which was very successful. This formed part of an enterprise in which an investigation was made and research was conducted with a view to increasing the carrying capacity of the railway line to Richards Bay—a line for the transportation of coal. What was the result of this? It was ascertained that trains with a tonnage of 11 800 could run regularly. If anyone is so foolish as to ask me what is saved by this, I can only say that we must take into consideration the saving with regard to time, man-power, turn-round time and run-through trucks. This is a simple calculation which hon. members can make for themselves. If anyone really expects me to do it for him, my answer is that I will not even try because I will never be able to bring this home to such a person. Such a question would be quite nonsensical.

A train with a tonnage of 23 000 has already undertaken a successful journey on the railway line between Sishen and Sal-danha. If the load of that specific train had had to be transported by seven-ton trucks, for example, it would have required 2 671 trucks. If these trucks were parked in a single line, they would extend over a distance of 19 km. We have had this measure of development in this sphere since 1960. It has been achieved by the industrious, dedicated service of the officials.

As far as the high-stability bogey is concerned, hon. members on the other side and I had the privilege of putting this discovery to the test between Pretoria and De Wild. In this sphere we have made a world break-through, so much so that we are ahead of the rest of the world. Countries like the USA, Australia, Germany, Jordan and South Korea are extremely interested in the bogey and are already engaged in preparatory work with a view to conducting practical tests. The effect which this bogey has on wear and tear on both the wheel and the railway track is very great indeed. To this must be added the advantages of the bogey when it comes to speed and the way it facilitates the transportation of goods. Wear and tear is cut by more than half in the case of goods as well as passenger trains.

The latest development has been in the electro-technical sphere and this has enabled Escom to provide the Railways with alternating current power as it does in the case of industries. The peak period can now be determined and the power can be provided when and where it is required. This leads to a saving, not only of energy, but also of manpower. This method of power utilization is already being used on the Richards Bay coal line and on the Brits-Ellisras section.

Furthermore, there has also been development in the sphere of signalling and telecommunications. One of the most sophisticated traffic control systems in the world has resulted from this development. Traffic routes extending over a total distance of 3 547 km have been equipped with centralized traffic control systems. This promotes an increased line capacity and reduces travelling time, while the high built-in safety factor is proof of the efficiency of that traffic control system. All this is in glaring contrast to the old, conventional ways of traffic control.

In the mechanical sphere there is the development of a South African manganese monoblock crossing. Although the manganese crossing is more expensive than the normal crossing, its life is at least six times longer. It also requires much less maintenance work and this alone is extremely important when it comes to saving.

The block load system has been introduced with a view to the better utilization of manpower. By making use of this, a train moves between two points without calling at other places. The turn-round time and the time which is usually taken up by arranging the flow of trucks is considerably reduced as a result. Handling is reduced, damage to rolling stock is avoided and because the goods themselves suffer less damage, there is a drop in the number of claims which are received. In addition, there is a better utilization of traction.

Order! I am sorry, but the hon. member’s time has expired.

Mr. Speaker, I am concluding.

Order! No, the hon. member does not have any time left for concluding.

Mr. Speaker, I listened with great interest to what the hon. member, who has just sat down, has had to say. Being an engineer, I was naturally interested in all the technical advances the Railways have achieved in recent years. I do not think anyone can deny that the technical and engineering achievements of the Railways Administration, over the past few years, have certainly been considerable. Indeed, I believe that this reflects the fact that the General Manager of the Railways is a mechanical engineer. It is therefore to be expected.

Just do not think they are going to make you the next manager.

This debate, however, is about the budget of the Railways and about whether the budget is going to improve the economic position of South Africa, and not about whether it is going to glorify engineers. The end result in business is whether one has more money in one’s pocket or not, and whether the nation can afford to expand its standard of living and the general security of the country. The main topic of this debate is therefore whether or not this budget is going to have an inflationary effect on the economy of South Africa. That is the issue. I challenge any speaker on that side to get up and debate the subject! Let us not worry about irrelevant subjects such as whether the brake blocks of a railway car are better than they used to be. Let us talk pure economics!

I should now like to quote from an editorial of the Citizen to which my hon. friend in the benches to my right referred earlier on. I quote—

And what are the staff associations going to say about this budget? I quote further—

This is the issue we must debate at this particular juncture.

What are you quoting from?

I am quoting from an editorial in the Citizen. It is to be expected that people should react to the Railway budget as they have done. After all, the Railways employs 260 000 people. Its working and maintenance budget is nearly R3 000 million, which is 9% of the GDP of South Africa. Its capital budget, at R1,3 billion, is estimated to amount to some 12% of the coming year’s gross domestic fixed investment.

I want to ask the hon. the Minister of Finance and the hon. the Minister of Economic Affairs, whom I see are not here, whether they agreed to this budget. I want to know whether the hon. the Minister of Finance is happy about this budget. Did the hon. the Minister of Transport get the approval of the hon. the Minister of Finance before he imposed these tariff increases on South Africa? At the present time inflation is South Africa’s enemy No. 1. Inflation is making South Africa poorer. We only have to ask the citizens of South Africa. We cannot afford the standard of living we used to enjoy. The poor are getting poorer. This is a fact. The reason for this, of course, is inflation, and whether the hon. member who has just sat down agrees or not, this budget is going to increase the inflation rate in South Africa. It is on those terms that we must judge it. I therefore move as a further amendment—

1. (1) it will be a root cause of spiralling inflation during the coming year;
2. (2) projected capital expenditure places too great a burden on the Revenue Account;
3. (3) it will have a negative effect on the industrial development of South Africa; and
4. (4) it provides inadequate relief for Railway pensioners labouring under the burden of inflation”.

What is inflation? I think that at times we should get back to some basic definitions. The Oxford Dictionary states that inflation is due to—

Put another way, it means that South Africa is spending money it has not earned. Therefore, the purchasing power of the rand is decreasing and we are getting poorer. I think we must accept that in the overall economic scheme of things every product and every service, including the Railways’ service, has its own real or true value relative to all other services and products, and indeed, relative to the true or real wealth of the nation. Regrettably, all too often during the spending sprees of boom times, sprees which usually and inevitably result from a liberal government fiscal and monetary policy, the individual or the company, or the S.A. Railways for that matter, and indeed the nation, as the Western nations are finding today, may place different values on their products or their services, thereby distorting the real or true value of those products or services. In so doing—and the Railways are doing it now—more payment is demanded for the product or service than is its real value relative to the economy as a whole and relative to the real wealth of the nation. It is this sort of thing which results in the value of things being inflated, which then leads to the spiral of inflation we have seen in this country in recent years.

Such a situation cannot continue indefinitely. The basic laws of economics eventually bring to all the moment of truth, as South Africa is now finding.

What is your solution?

The hon. member asks me to give my solution, but the solution is in the budget if he is prepared to study it. Unfortunately, as a result of the type of attitude I have sketched, many people get hurt, as we are now seeing in South Africa. How many bankruptcies have inflation and recession caused in South Africa at the present time? How many people are suffering today as a result? However, Government services, Government corporations and institutions like the Railways are protected against financial collapse. They are protected either by the taxpayer who is asked to fork out money to finance this excessive expenditure, or by the consumer who is asked to pay higher tariffs as is happening in this budget. As a result of this we all get poorer.

The responsibility for this lies not with the staff of the Railways; it lies with Parliament. Indeed, it is the duty of Parliament to give a lead and to ensure that all Government departments put their houses in order. After all, economic circumstances are forcing the private sector to do that and, if Parliament does not force the Government to do the same, we shall continue on the way we are going right now.

Give us one constructive suggestion.

I will. I accept that there have been some signs that things are improving, especially from the side of the Minister of Finance. I regret to say that this budget is going to sabotage some of the advances the hon. the Minister of Finance has brought about in recent times. I believe that what is being done, must be put more positively. I believe the hon. the Minister must say to the General Manager and his subordinates who, let us admit, are now becoming more goal-orientated in their approach to their work, as the hon. the Minister also pointed out in his speech: “Your goal is to defeat inflation.” That is what the goal of the Railways should be. It should not be to create a massive technological empire in South Africa; that is not going to solve the economic problems of South Africa.

The hon. member for Witwatersberg said just now that the attitude of the Railways is: “If we want to, we can.” I challenge the Railways: If they want to beat inflation, let us see them do it.

They will accept that challenge.

I believe that all people involved in transport—let me say that I am only involved in transport as a simple farmer—must appreciate that transportation is not a creator of wealth in the true sense. Transportation is a necessary evil. In the economy as a whole, it is not a true profit centre, but rather a cost centre and, as such, it is an economic parasite on the wealth-earning sectors of the economy. Therefore, I believe transportation must be effected at the lowest possible cost. I believe it is the duty of the hon. the Minister and the General Manager of the Railways to re-examine their priorities. I believe they must get into the right perspective the role of the Railways in the overall economy of South Africa. They must do so in the best economic interests of South Africa.

I do not intend to discuss how this should be done, but I have a colleague who … [Interjections.] Mr. Speaker, if I may finish, I was going to say that I am not prepared at this stage to go into the effects of incorrect planning on the part of the Railways in recent years because an hon. colleague of mine will do this in a subsequent speech. I shall look at the details of the actual budget. The tariff increases due to an expected shortfall in revenue amount to some R242 million. The question is whether the Railways could have prevented this shortfall. We believe that if they had listened to the advice that came from these benches three years ago, they could have, and I am going to explain why. If we examine the operating costs we find that—excluding depreciation costs and the Net Revenue Account—the total increase last year was estimated to be R330 million. The actual expenditure is going to amount to R225 million or 68% of the original estimate, thus effecting a saving of R105 million. I think it is good that this saving has been effected and, incidentally, it is in line with what the hon. the Minister of Economic Affairs insists upon, for instance in the case of the sugar industry, namely that they can only recover in their revenue 70% of the increase in costs.

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

Mr. Speaker, I do not have much time and I am accordingly not prepared to answer any questions at this stage. The balance of 30% of the increase in costs has to be carried by the industry itself. This year the budget shows that the operating costs were estimated to increase by R239 million. This appears to be an improvement because it is less than last year’s estimate. I will explain why I say “appears” later. Should the hon. the Minister set a goal-orientated approach to the budget this year, to limit the increase in costs to 70%, as he was able to do last year, he will save R72 million. However, this still leaves a shortfall of R169 million in the overall shortfall of revenue which he mentioned in his budget speech. The main problem we encounter when we examine the total increase, is the increase in capital costs of running the Railways. However, before I discuss capital, I want to explain why I say that there “appears” to be an improvement in the operating costs. Each year Parliament is presented with a budget which mainly reflects financial figures. A few broad estimates which are given by the Minister and appear in the budget, reflect productivity changes. However, nowhere in the details that we get in this House, are detailed revenue and expenditure estimates related to detailed productivity or production estimates.

During the debate on the Additional Appropriation Bill earlier this session, the hon. the Minister stated that he had economized. I referred to the amount in question, which was R105 million, but where and how did the hon. the Minister economize? No details were given. According to the report costs were down, but so was production and so was throughput, so where did these savings really come from? I would like to submit the thought that the reason for the saving was that the original estimate was a result of over-budgeting. This could be a reason and unless we get other figures to disprove this, this is what we must assume in this case.

Today budgets in big businesses are usually preceded in the report by production estimates on which the financial estimates are based. This should not be difficult for the hon. the Minister to do. I would like to ask him to talk it over with his administration to see whether it can be done, even for his own interest and definitely for the interest of this, the board of directors of the South African Railways. If he is unable to do this, it means that a lot of his estimates are sucked out of somebody’s thumb. Some years ago we used to get a lot of labour statistics. When we started to talk about these labour matters, what happened? We were denied these figures. I want to ask a question: If we are denied these figures, does it mean the Railway machine is trying to protect itself?

I want to get back to the total operating costs. If the hon. the Minister limits his administration costs to 70% of the estimated increase in his operating costs, he will save R72 million. However, he will still have to find an additional R169 million to avoid putting up the tariffs this year. When one examines the cost of capital—and the hon. member for Orange Grove mentioned this earlier—one gets a shock. I want to quote some figures in regard to this budget. Depreciation is costing the Railways R313 million. Interest amounts to R508 million. Contributions to the Reserve Account of the Sinking Fund to buy capital goods amounts to R103 million, which gives a total of R940 million. This is a shock, because when one examines the total budget of R3 120 million, the total cost of financing capital expenditure of the Railways amounts to 30,2% of this year’s operating budget. This is a considerable amount of money. It is interesting to note that in 1977-’78 we accepted the principle that a special reserve account in the Sinking Fund should be established. In this budget an amount of R103 million is allocated under revenue. This represents 3,3% of the total budget and is the equivalent to a profit of 3,3% by the Railways. This amount is to be used to finance capital expenditure.

What is wrong with that?

There is nothing wrong with it if the nation can pay for it, but the fact that the cost of living is going up, proves that we cannot pay for it. That is the issue of this budget debate. We agree that capital debts should be repaid, but if this approach is continued along with increasing the rates of depreciation—recently the Select Committee agreed to a further increase of 20%—and using the money to finance more grandiose capital development schemes, we are simply not going to beat inflation. The total increase in respect of all these items is R177 million in the current budget. If the hon. the Minister had listened to our warnings of three years ago, when I was constantly talking about capital, had taken a more prudent approach to capital expenditure and had been able to avoid this increase of R177 million, and had brought about savings on the operating account, as every other industry in South Africa has been forced to do, he would have been able to save the amount of money which he is now asking for with this 8,6% increase in tariffs.

Finally, I would like to quote part of the speech of the hon. the Minister. He said—

This means that the private sector has been starved of essential investment capital, which is what is required to get the economy in South Africa back on the move. Because the private sector has been starved, we have had recession, unemployment and rising living costs. Yet the S.A. Railways can write into its budget costs, through the Sinking Fund and through increased depreciation rates, the necessary capital to finance these capital expenditure programmes. Who has to pay? The consumer has to pay, and that is why I say that we are getting poorer and poorer. This capital budget gives no indication of corrective action and I regret to say that the capital to be spent this year is R1 140 million. It is R291 million more than that of last year. After having repaid foreign loans of R352 million, that amount to be spent on project is still R788 million, which is R134 million more than last year. Where is the money being spent? That is what I would like to know from the hon. the Minister. In his own report he says there is a surplus of capacity in the transportation system of the Railways. Where is the money being spent? R41 million of it can be found in the assisted housing scheme. R41 million of the R240 million which the hon. the Minister is asking for, is going to assist Railwaymen with their housing.

Last year only R9 million was spent on this programme. One would have thought that if one wanted to stimulate the building industry in South Africa, one would not have done it in the Railway budget; it could be done in other areas, for instance, through the building societies or other financial institutions.

In conclusion I want to appeal to the hon. the Minister to re-examine the budget in the light of the relative value of the Railways to that of the economy of South Africa as a whole and to wealth of South Africa. If Government departments continue to spend money as they are doing, beyond their real value, it means that the value of the rest of us depreciates.

Mr. Speaker, I do not think the hon. member for Amanzimtoti did justice to himself today. The few facts he mentioned in his speech were buried beneath a political tirade utterly inappropriate in a debate such as this. [Interjections.]

If you really think that, your understanding is nil.

That hon. member must just keep quiet for one moment.

Order!

I know it is not easy for the hon. member to do so, but he should at least try. For the hon. member for Amanzimtoti to say that this was the time for the Railways to see its place in the country’s development in perspective and then to make the blatant allegation that up to now the Railways had made no contribution towards the development of South Africa, in fact, that the Railways had been playing a parasitic role all along … [Interjections.] … is the most arrant nonsense I have ever heard in this House. [Interjections.]

He did not say that.

The hon. member went on to speak of major developments and of works which were being undertaken so as to build an empire for the Railways. In the course of my speech I shall deal with every single argument advanced by the hon. member.

I want to ask those hon. members on the opposite side who quoted so freely from the newspapers this afternoon, why they altogether avoided quoting the Sunday Times as well. Surely the Sunday Times is the promoter of the Opposition … [Interjections.] Why did the hon. members quote all the negative things that had been said about the budget, but failed to quote what had been said by the Sunday Times? Why do they leave it to me—one who dislikes doing so—to quote from the Sunday Times? [Interjections.] What is written in yesterday’s Sunday Times? It is written—

What that is, I do not know—

Yes, that is correct, of course.

Wait a moment, I have not finished yet. The report continues—

What do the hon. members say about this? [Interjections.]

It is a fact that for a number of years South Africa has been going through a period of experiencing a declining economic growth rate. The Railways, as the largest single enterprise in South Africa, has been feeling the full impact of that and has had to adapt itself to this pattern.

Owing to the economic recession, the Railways has landed in the difficult situation of finding, on the one hand that it has not been possible to utilize all of its capacity and facilities to the full, whilst finding on the other hand a constant increase in the volume of tonnage to be transported. At a time when capital for development projects was not readily obtainable, the Railways was obliged to expand the capacity of certain branches of its service continually. That is what the hon. member for Amanzimtoti complained about today. In this period of a low economic growth rate, the Railways is obliged to extend certain branches of its service so as to cope with the traffic offered. In replying to the question by the hon. member for Amanzimtoti, I want to say that it is for this reason that one finds that the Administration has had to delve deeply into the Railways’ coffers to find the money to stimulate these developments and to create extra capacity for the conveyance of freight. What is more, this freight is usually mass freight, which is not exactly transported economically.

At the beginning of the financial year, the hon. the Minister and his Administration, with all the information at their disposal, decided to increase the tariffs to a level at which they thought sufficient revenue would be yielded to balance the books of the Railways. When the increases were announced last year, the Opposition, as the hon. member for Amanzimtoti again did today, advanced the same arguments and said we were overtaxing the users of the Railways, and that the same amount of money could be obtained by means of a more moderate tariff increase. Now, at the end of the financial year, there is a deficit of approximately R55 million on the estimated revenue. This proves that the hon. the Minister had been too optimistic at the time and that people who argued as the hon. member for Amanzimtoti did, were totally wrong.

What strikes me most in this regard, however, is that it was possible, because of the efficient management of the Railways, to avoid the situation of this budget being totally different as it could have been but for the effective financial grip of the Railways Administration on the service as a result of which it was ascertained early on in the financial year that revenue would not be maintained at the anticipated level and that timeous cuts and economies would have to be effected in every possible way. This enabled the Railways to present this budget, one which would have been totally different had it not been, as I have already said, for the efficient financial control of the management.

I shall try to indicate that this was accomplished by concentrating throughout on increasing productivity by means of more efficient working methods, the rationalization of services, longer trains, restrictions on Sunday services and overtime, and other matters to which the hon. member for Witwatersberg referred. I shall also try to indicate that the Railways accepted the challenge with which it was faced in the economic climate in which it was operating, and that the results for the year’s operations, i.e. a profit of R34 million, is the highlight of a success story which speaks volumes for the outstanding financial control over and the efficient management of the services by the Railways Administration.

First of all I should like to refer to the influence of high-rated traffic on the revenue of the joint services. This is one of the most important reasons for the revenue not being as anticipated, for the inability to maintain the level of revenue. There was a dramatic decline of 9,8% in high-rated traffic during the past year. This change in the traffic composition represents a potential R72 million in terms of Railway revenue. During the past 20 years in which I have been taking an interest in Railway budgets, it has always been so that the Railways has been able to derive more than 50% of its revenue from approximately 20% of its traffic, from its high-rated traffic. But now the situation has arisen that ratio having changed drastically over the past three years. That percentage has declined from 20% to a low of 13,4% during the past year. I think this is the lowest point, seen in the overall traffic set-up, to which high-rated traffic has ever declined, and I hope it will be the lowest point to which it will ever decline.

I should also like to emphasize another aspect in this regard and that is that the Railways experienced not only a drastic decline in high-rated traffic because of the progressive flow of this type of traffic to private road users, but also the loss of a major share of the total transport market. In fact, its share in the total transport market is becoming progressively smaller. Twenty years ago it was calculated that the Railways’ share in the total transport market was 62%. By 1971-’72 it had declined to 56%. It is anticipated to decline to 44% of the total transport market in the next ten years. This is a trend which is not peculiar to South Africa. It is a world-wide trend. One finds the situation everywhere of more and more transport being diverted to the private carrier as a result of the relaxed control measures insisted on throughout the world, including South Africa. It is only logical that the private sector will skim off the cream and will take away more and more of this lucrative transport from the Railways. Because of these trends and circumstances, one finds that the most affluent industrial economic country in Europe, viz. West Germany, had a deficit of R4,4 milliard last year which had to be made good by the State. I have been informed that 50 000 trucks stand idle in West Germany every day. In Belgium the situation is such that the local railways system can cover only one-third of its expenditure from revenue and that it is dependent on low-grade transport emanating from the steel industry for 70% of that revenue.

The hon. member for Orange Grove once again asked for the separation of the various services. That would have disastrous consequences. He said the budget was a disaster, but I should like to see the disaster the day the services had been separated in South Africa. It would have fatal consequences for the transport services in South Africa. The sole reason for the South African transport service still being able today to operate successfully to the extent it does and to show the results it does show, is that there is a totally integrated transport system in South Africa. The losses suffered in one sector, can be made good by profits made in another sector. It is possible to separate the services; it is possible to do what the hon. member for Orange Grove requests, but the end result would be that the S.A. Railways, which is just about the only railway system still able to make the grade under these circumstances will also become dependent on the State for a subsidy of millions and millions of rand each year. This is the state of affairs today where the services have been separated. That is the reason why the operations of other railway systems do not come anywhere near being so successful as those of the S.A. Railways. It is because there is no integrated, joint national transport system. I just want to show hon. members where this leads to. In addition to the subsidy which the German railway system receives, the figures with which I have been furnished with regard to the subsidies paid to the various European railway services during 1975, are as follows: A Government subsidy of R615 million was paid to the British railway service; the French service received a Government subsidy of R1 350 million; the Italian service …

Tell us about the South African Railways!

The hon. member for Umhlanga knows nothing about these things. [Interjections.] The Italian railways received a Government subsidy of R860 million, the Belgian railways received R480 million and the Dutch railways received R260 million. If we compare these subsidies which the other railway services receive with the subsidy of 26,3% which the S.A. Railways receives from the State for services rendered to the resettlement areas, then, in my opinion, the S.A. Railways can be proud of its achievements.

That is because the Railways have a monopolistic protection.

What do the farmers say about that?

He is still coming to that. Just give him a chance! [Interjections.]

Mr. Speaker, I can tell the hon. member for Pietermaritzburg South now that is the Railways had to transport the farmers’ products at an economic price, they would have to pay at least another 30% more than they are paying at the moment.

Make it 25%! [Interjections.]

For the Railways it is … [Interjections.]

Order!

For the Railways it is not an economic proposition to handle this type of transport. For that reason the hon. the Minister has already said that people who prefer to convey or have their livestock conveyed by road, are free to do so. Some farmers have been doing this for some time. They are coming back to the Railways one by one, however, because they have ascertained that railway transport is still the cheapest for their products and livestock. This is my answer to the ignorant hon. member for Pietermaritzburg South. [Interjections.].

Allow me to dwell for a few minutes on the increased tariffs. The influence of higher tariffs on every sector of the national economy is something which cannot be denied. We do not want to deny today that this budget is going to stimulate inflation to the extent I have already indicated—0,5% to 1%. But it is wrong to isolate this aspect and to emphasize this aspect alone and to use it against the Railways as a point of negative criticism. The fact is that the Railways with its separate services, just like South Africa and the whole world, is experiencing an economic climate today, the most important characteristic of which is that everyone is being forced into a fixed pattern of constantly rising prices. During the past number of years the best economic brains in the world have been unable to arrest this vicious circle, to break this spiral and to make any impression on this trend.

A gigantic enterprise like the S.A. Railways with all its different activities is all the more a prisoner of and prey to unbridled price increases. Just a few commodities, for example iron, steel, fuel, coal and electricity, cost the Railways R100 million more in the current financial year than during the previous financial year. The latest increase of 13% in the price of coal, 13,7% in the price of steel and 12,5% in the price of electricity, will again cost the Railways another R20 million extra in the coming financial year. My contention is that it is not fair to single out the Railways as the scapegoat when it comes to inflation and price increases. The Railways forms part of this whole pattern. We should rather realize and accept that a high rate of inflation of 10% or more has simply become a fashion and that we shall have to live with it If price and tariff increases can be justified under such circumstances, as I allege the Railways can justify its tariff increases, then I prefer such increases to occur more regularly and in smaller amounts at a time so that the country’s economy may be better able to absorb them, and I prefer this to the periodic introduction of high shock increases which cannot readily be absorbed by the national economy and which will also handicap our export efforts. I have quoted that the FCI has said that the increases are economically absorbable.

The most important point which still has to argued in this debate, is, in my opinion the question as to whether there is justification for the increase in the tariffs. In this regard I want to pose a counter-question: What more could the Railways have done than it did do to prevent an increase in tariffs? The fact that our national transport service was able to perform as well as it did in the present economic climate, is, in my opinion, attributable to three factors. In the first place there is the matter of economizing, an aspect with which the hon. member for Witwatersberg dealt. In the second place there is advance planning, another matter to which he gave attention. In the third place there is productivity.

I think the national transport service was very fortunate, but also very wise and farsighted when, during the good years which South Africa experienced, it developed and extended the railway service to such an extent that as far as all the branches are concerned, it can meet the highest demands which can be made on it. If that had not been done, where would we have been today? I am putting this question to the hon. member for Amanzimtoti.

If we did not have the capacity today to transport the freight offered, what would the position have been? What would our position have been if the Railways now had to spend vast amounts of capital to create the transport facilities which it had to have of necessity? Surely the Railways does not have the capital now for the creation of such facilities. What would have happened if the Railways had not prepared itself to cope with any economic upswing and to satisfy the demands which will be made on it? What would the Railways have done if that capacity had not already been created?

But the hon. member said there had been a “spending spree”. He charged the Railways with having embarked on vast and luxury programmes. I want to point out to him that today the Railways is reaping the fruits of its past investments. Moreover, the Railways is prepared, when there is an economic upswing, to meet all the demands which will be made on it.

This has cost millions and I readily concede that. I can only point out that during the financial year 1966-’67, approximately R210 million was spent from the Capital and Betterment Funds. For the current financial year, that amount was pushed up to R1 200 million. The outstanding achievement in the spending of the money was not so much the fact that vast amounts were invested in the Railways in good time in order to extend the system, but the outstanding performance is reflected in the judicious and expert manner in which the money was utilized.

The additional capacity which had to be created, was not created in the most expensive manner by simply embarking on high-cost schemes, by doubling railway lines, or by building new railway lines. A large percentage of these amounts was spent on relatively cheaper but highly effective improvements to the existing service. That was done by utilizing civil engineering to the maximum extent, by effecting improvements to the signal and communication systems, by mechanization, by automation and by the electrification of the service. The success achieved in this field, is illustrated by the fact that as far back as 1965-’66 the Railways transported 96 million tons at full capacity over a route network of 220 000 km, whereas last year, 141 million tons—i.e., 46,9% more freight—were transported over a network which had been enlarged by only 464 route kilometres and with a labour force which increased by less than 10,5% during the same period. That is conclusive proof of how the use of the most modern equipment and the application of the most modern techniques and procedures have increased the productivity of the service to an uncommon extent. This achievement is so much the greater if one has regard to the fact that as a result of the economic circumstances the Railways has been unable to exploit some of its major capital programmes to the full. Thanks to the effective utilization of its two major production factors, i.e. labour and capital, the Railways has been able to maintain a consistently high level of productivity during the recessionary periods which it has experienced during the past few years. Labour has been utilized effectively, mainly as a result of modern training facilities, by scientific selection and placement of staff, and by the introduction of incentive schemes.

I want to emphasize, however, that the increased productivity of the staff has been achieved to a large extent by the improved and sophisticated equipment which has been placed at the disposal of the staff to utilize their potential to the full. When it came to the utilization of capital for increased productivity, there were two possibilities open to the Railways. It could, as I have said, have undertaken this task by creating additional capacity by expensive methods, but owing to a lack of capital funds and the concomitant problems it would have been possible to undertake this on a limited scale only.

The Railways decided on the second alternative by taking a close and critical look at the utilization of the existing capacity. However, I do not have the time to go into all these aspects, but my colleagues on this side of the House will prove what phenomenal achievements there have been in this regard, as was mentioned by the hon. member for Witwatersberg.

In the first place, a close look was taken at the rapid turn about of our truck fleet and our traction. Improved operating efficiency was attained and freight offered could be transported by fewer trains. Attention was given to truck design and truck modification in order to meet modern needs more efficiently. The passenger services, which account for such a phenomenal loss, were continually evaluated and uneconomic services were eliminated. Millions of rands were saved in this way. This is an incontrovertible guarantee that the Railways has accepted the challenge and the demands made on it as a national transport service by the economic conditions of the country, and has done so with great realism and insight and that it has succeeded admirably in performing its task more efficiently and more cheaply. Consequently the question may rightly be posed: What more could have been done so as not to increase the tariffs?

Mr. Speaker, I am afraid the hon. member for Parow made very heavy weather of attempting to defend the Railway budget this year. It must have been a bitter pill for him to swallow when he had, in fact, to quote the Sunday Times as the only source of comfort in this defence. I only hope that next time we on this side quote from the Sunday Times, the hon. member will accept its authority.

The question of the finances of the Railways Administration has already been dealt with at some length; so I do not intend to go into that any further. I think, however, that the hon. member for Parow should not be allowed to get away with his proposition concerning the question of whether the Railway Administration should not have its authority subdivided among the various departments. He dealt with that issue very casually. I think he ought to know that there are many people in this country, including experts, who believe we have not heard the last of this particular matter. I would tend to agree with the hon. member for Orange Grove that, certainly, this could be looked at further.

There are two main issues I want to talk about this afternoon. The first is a domestic one and relates to Table Bay Harbour. I think the hon. the Minister should be informed, if he does not already know, that there is a great deal of dissatisfaction in regard to certain arrangements at the harbour. One would have thought that, when the control tower was erected a few years ago, we would have come to the end of certain administrative problems. However, from what I can gather, that particular structure has not been an unqualified success. I hesitate to call it the Taj Mahal, as it is known in some quarters, and I do not wish to refer to the restaurant which is at the disposal of the hon. the Minister—we had that question out some years back. There are, however, a couple of defects which have manifested themselves and which, I believe, indicate that there was not proper planning in regard to the new control tower. The first is that—Sir, can you imagine!—shipping agents and various other people concerned with ships’ movements have had to go from the new dock and the control tower area right round to the old Victoria Basin in order to lodge their documents. It is incredible that the shipping community has had to go to that extraordinary inconvenience—and this is a daily occurrence; it must happen many, many times each day. From a question I put to the hon. the Minister, it appears that other premises have been secured for the lodging of documents. Why on earth is there not space for this in the control tower? I cannot imagine why there was that defect in the planning.

I also put a question in regard to the manual logging of VHF messages. I asked whether the question of recording has been investigated. Why has there been this delay in this respect? I cannot imagine why a modern, sophisticated and simple method of logging such as that has not been instituted long since in Table Bay harbour.

I want to deal with another matter which is perhaps of a rather more national nature. If one were to ask a Capetonian what the most dramatic event of 1977 was, he would probably say it was the stranding of the two tankers at Oudekraal and Llandudno last year. I have in my possession a rather shocking document in that respect, namely the findings of the Court of Marine Inquiry into the stranding of those two giant tankers. It is perfectly clear from those findings that in fact the S.A. Railways Administration was substantially at fault in regard to those standings. I do not want to start a witch hunt—I do not think this is the proper place in which to do so and I think the hon. the Minister will probably have read the report and will have made inquiries—but I do think that this particular incident highlights a great defect in our system of protecting the coastline and saving life and property at sea.

The other spectacular event last year was the collision at sea between the Venpet and the Venoil, another two giant tankers. If it were not for luck …

That is also the fault of the Railways, I suppose?

… if it were not for the chance presence in the vicinity of a Court Line helicopter, that could have been the worst maritime disaster in the whole history of mankind in terms of actual loss. There can be no doubt about that. Mr. Speaker, you will want to know what I am getting at. I have raised the subject with the hon. the Minister before in the Other Place but I have never really had any satisfaction from him. I do not know whether he is unwilling to act or whether he is unable to act. I believe that these disasters last year have highlighted the fact that this country can no longer afford not to have a properly coordinated and sophisticated South African National Coastguard. If the hon. the Minister would be patient with me I could list the countries of the world which do, in fact, have a co-ordinated system. One does not have to be a television addict and one need not watch American television programmes to realize this. I am not getting at that kind of sensationalism, Mr. Speaker. However, Greece, Norway, Denmark and Britain are all countries with coastlines which do have a properly co-ordinated coastguard. I know that in some of those countries there is not such a body as a national Railways and Harbours Administration. On the other hand, in many of them there is. Despite that, they have seen fit to institute a proper coastguard system.

Mr. Speaker, you may wonder why I raise this question on this Bill. The point of the matter is that no such system is possible unless it is initiated, subsidized, and, in fact, run by the Administration. There is no other authority that I can think of capable of doing so. The dimensions of the problem are the following. I think hon. members would be interested to know the number of vessels that pass Cape Point. The figure is astounding—1 000 vessels per month. Many of these are tankers of the order of 250 000 tons. Accordingly there is a tremendous traffic, in terms of numbers, in terms of tonnage and in terms of size. Ships being what they are and human nature being what it is, these ships tend to cut comers. Therefore we in this country have a perpetual problem on our hands. Apart from these vessels there are also about 80 deep sea trawlers operating from our ports and a very large number of smaller inshore trawlers. Thirdly, there is a vast number of small craft which are used for gain or for pleasure. I am glad to say that there is a commission of inquiry at present investigating the whole question of small boats which are being used for pleasure off our coastline.

We must all know that the South African seaboard is notorious throughout the world. There are seamen whom I have spoken to who believe that it is more dangerous than Cape Horn because of our storms, our winds, our reefs and swells. They regard it as one of the most dangerous seaboards in the world.

Perhaps you would be interested, Mr. Speaker, in statistics regarding the number of accidents involving shipping around the South African coastline. In 1975-’76 there were 31 accidents and in 1976-’77 there were 37. By accidents I mean collisions or major disasters at sea off our coastline.

In terms of an Act which Parliament passed last year, South Africa’s territorial waters have been extended from 6 to 12 miles and the fishing zone has been extended to 200 miles. When one bears the latter figure in mind and looks at the coastline of the country, which is 1 344 nautical miles long, I wonder whether it is realized that that gives us an area which has to be policed of 270 000 square miles. Having set the background, I am afraid that if one looks at the facilities which are available to deal with all these manifold problems, one will find that although there are a great number of bodies and institutions, all of which are well-intentioned and some of which possess outstanding equipment, there is a gravely defective overlapping of powers and authority as well as a lack of a co-ordinating authority.

Let us firstly take the Administration itself. It has a Port Captain’s staff and it has tugs available for salvage operations. In passing I want to say that I find it extremely strange that the Administration solemnly requires a contract to be signed before one of its tugs can proceed to sea to save property; not to save lives, but to save property. Can hon. members imagine that one has to get hold of somebody in authority, whether it is the ship’s agent or somebody else, to actually sign a piece of paper before a tug can proceed to sea? I think that is a very bad system.

Secondly, Safmarine has the two most powerful tugs in the world in the S.A. John Ross and the S.A. Wolraad Woltemade. They have a propellor power of 14 300 kilowatts, which is absolutely incredible power. I shall deal with the issue of the Wolraad Woltemade and the two tankers that stranded at Oudekraal in a moment. It was a supreme irony that the world’s best salvage tug was available then, but was not used. These two vessels are on permanent charter to the Department of Transport, and one of them is normally stationed, as a matter of course, at some South African port.

In the third place, Court Line Helicopters provide an off-shore service to passing vessels and to prospecting oil rigs. I want to pay a compliment to Court Line Helicopters, because they have done a great deal of salvaging of life and property; in many cases without contemplating claims for salvage.

The next facility is the NSRI which is a voluntary association with 24 boats operating from 20 stations along the South African coastline. I happen to have been involved at the start of this association. I went to a dinner which was attended by the Acting State President, Mr. Tom Naude, when this institution was started and one never had any idea that from that start such an enormous organization could arise. They have saved 3 000 people since 1968, when they started, and annually they perform about 300 operations at sea. This organization gets a State subsidy of R50 000 and they have to find, as they will find this year, an extra R250 000 through their own efforts. I think this organization should have the public’s pride and confidence. Hon. members might be interested to know that the NSRI will feature in a documentary film on TV on Wednesday.

The Department of Sea Fisheries has a patrol vessel, the Custos, which attempts the hopeless task of policeing our fishing zone. The fishing industry itself owns and operates a fish-spotting aircraft which operates from D. F. Malan Airport. The Navy keeps track of ships’ movements from Silvermine, and also has naval vessels on exercises. Maritime Air Command maintains fairly intensive surveillance with Shackletons and Albatrosses and the S.A. Railways maintains lighthouses and radio beacons. Safmarine also has five antipollution vessels.

I mention all these, because although it is obvious that we have the facilities deployed, they are hopelessly unco-ordinated. I want to read the following from a section of the findings of the Court of Marine Inquiry into the stranding of the Antipolis and the Romelia. The magistrate, who was assisted by two nautical assessors, said—

This was the first of the two tankers to part her tow.

The biggest and most powerful salvage tug in the world was lying in Table Bay harbour waiting for work and for 34 minutes she lay idle. The learned magistrate said: “This lapse could have been vital.” In fact, it was vital.

It is unreal, but if someone requires sea-rescue operations off Cape Town, one has to ’phone one of two numbers, i.e. 43-0432 or 43-2160. These are the very busy telephone numbers of the Assistant Port Captain. You can try them now, Mr. Speaker, and you will find that they will be engaged. It is a hopeless situation. One cannot have a system operating like that. In fact, in the findings of the Court of Marine Inquiry it is stated that the senior officers in the Port Captain’s office went home after the report on the Antipolis and the Romelia came through to them. They went home because they work from eight to five or nine to five-thirty or whatever it is. I am not going to mention names because it would not be fair, but the two men who actually should have been in charge of a major salvage operation …

Is that the reason why the tariffs have been increased?

No, Mr. Speaker, I am dealing with a serious matter. I know that there is a permanent committee which deals in an advisory way with questions of salvage and the prevention of accidents, but I am not talking about a committee sitting somewhere in Pretoria I am talking about an authority that could have prevented the stranding of the Antipolis and the Romelia and, in fact, could have ensured that the Venoil and the Venpet disaster would have been at least followed up immediately by help.

I would suggest that the hon. the Minister should at least consider inquiring into the feasibility of a South African Coastguard. This Coastguard would have at least the following functions: Firstly, co-ordinating air and sea policeing of territorial waters and the Republic’s fishing zones in regard to, for example, trawling by foreigners, as well as health, immigration and customs matters; secondly, the prevention of accidents at sea; thirdly, salvage of life and property; fourthly, anti-pollution operations; and, fifthly, the protection of our undersea telecommunications cable. We have a cable from Melkbosstrand to Lisbon and it is interesting to note that this cable is regularly broken by foreign and presumably sometimes South African fishing trawlers. These trawlers put their nets down, and if they get snagged they may bring this underwater telecommunications cable to the surface—in which case they just cut the cable to free their nets. The cable was broken three times last year in this way. Can you, Mr. Speaker, imagine what happens to our communications system when this happens? I think this kind of work could well be researched, co-ordinated and undertaken by the kind of authority that I am thinking of. I have no qualms about supporting the proposition that such an authority should be given teeth. I do not believe that such an authority should merely be an advisory one; in fact, I think under the aegis of the S.A. Railways and Harbours Administration there should be a semi-independent authority which could conduct a certain amount of research, but basically would be on the spot for preventing these disasters. I think such an authority would have public support and I do not believe it would trespass on the domain of the private and public bodies and institutions. I am thinking of a body which can be called in an emergency and which will have the power to inspan all the expertise and the good intentions that we have amongst our seafaring, Naval and Air Force people.

Finally, I would like to say that such an authority would be able to prevent the undignified, dangerous and totally unnecessary scramble for salvage that took place at the time of the Venoil and Venpet disaster. The country was treated to a spectacle of helicopters, tugs and freighters all trying to get men on the bridge of a tanker adrift in order to establish a salvage claim. This is not only undignified, but positively dangerous and I think there should be an authority which will be able to say that everybody should lay off or that the helicopters or tugs should go in, whatever the case may be. In this way we would eliminate the circus of people all trying to establish bases for future salvage claims.

For these reasons I would ask the hon. the Minister, as in fact I have asked him by way of a question earlier this session, to which I got a very feeble reply indeed, to consider whether we should not follow the example of other countries and have a proper National Coastguard established in this country.

Mr. Speaker, for a number of years now I have had the opportunity to take part in a Railway Budget debate. Although this is a record budget if one takes into account the operating account of R3 121 million, the hon. the Minister made it easy for us by budgeting for that amount. I do not think it should be difficult for the hon. members for Orange Grove and Amanzimtoti to vote this amount. I cannot see how they can experience difficulties in this regard. Fourteen days ago, when the additional appropriation was introduced, those two hon. members would have applauded the hon. the Minister if the rules of the House and you, Mr. Speaker, would have allowed them to do so. They had praise for the hon. the Minister and said that it was the most wonderful additional appropriation because the hon. the Minister had saved more than 4% on operating expenses. However, the hon. member for Amanzimtoti now states that there were no savings, but instead a wastage. If there was high praise fourteen days ago for the savings which the Railways had effected in their budget, how can the hon. member now criticize this budget and say that savings have not been effected? When we are dealing with the budget and have to approve the amounts, surely we have to work from a starting-point, must we not? Let us work on the basis which hon. members were so happy about, namely the revised budget. They were very happy and satisfied about it. What is the hon. the Minister asking in addition? He is asking for an additional R395 million. In comparison with the previous budget he is asking for R306 million. The hon. the Minister referred to six cost items, inter alia, to salary increases, increases in electricity costs and increased depreciation. In the Select Committee those two hon. members agreed that we should increase the amount in respect of depreciation by 20%. Provision was also made for an additional R15 million for the Widows and Orphans Funds. These few items to which I have referred together amount to R293 million. In other words, the R102 million balance being requested for their operating account represents a mere 3,2% of the total budget. It is therefore very easy to understand that we cannot run the Railways without approving the amount of R3 121 million. My argument is that one must surely have that revenue in order to make ends meet and we know that we shall not obtain that revenue. What alternative is open to the hon. the Minister other than to increase his sources of income? There is no alternative if one is to balance one’s operating account.

The hon. member also referred to the capital account. He was very concerned about the capital account of R1 385 million. In this year’s revised budget the amount was R1 009 million. We are now asking for R376 million more. That difference includes R50 million voted for housing for Railway staff. When the housing motion was being discussed here on 3 March 1978, all the hon. members agreed that everyone in South Africa should own his property. However, when the Railways wants to put houses at the disposal of its officials, that is not good enough for them. An additional amount of R195 million is also being requested for working capital to redeem loans and supplier financing: a total, therefore, of R241 million.

As regards the item “working capital” to which the hon. member for Amanzimtoti referred, we are providing for a total of R351 million to redeem short term loans, foreign loans and supplier financing. This does not represent a read growth in capital assets. It is merely that one has to borrow money to redeem certain debts. This is not therefore an investment in assets. There are hon. members who say that the Administration has not planned at all. All these years they have been sitting here in this House and shouting: “Too little, too late!” They have complained that the Railways was unable to deliver the coal needed. Then they said that this was due to poor planning. Now they are advancing the same argument to prove the opposite point. Now that there is sufficient coal and all the other services may be rendered, they talk about “grandiose schemes” tackled by the Railways. That is a ridiculous allegation to make. Indeed, I am concerned about whether we have made sufficient provision in our capital account and whether in the future, if growth should again occur, we shall have the infrastructure to provide all the services. That is my greatest source of concern.

The hon. member for Amanzimtoti was fairly critical of the capital account. He said that it was too large. However, how much does it amount to?—R1 137 million. R73 million is financed out of the Betterment Fund. Due to the problems prevailing in the world, the Railways had to develop its own sources. We adopted that policy as far back as last year. Those hon. members agreed that we could borrow R88 million from self-generated funds this year in order to finance capital projects. We are also borrowing R100 million abroad this year for financing capital. What I find praiseworthy—and the hon. member is critical of it—is that for the first time in the history of the Railways we have progressed to such an extent that we have been able to deposit R100 million in the Reserve Account of the Sinking Fund for capital expenditure in order to keep our burden of interest, which the hon. member is so concerned about, at a low level. The Treasury loan is a mere R766 million.

Let us now look at the criticism which the hon. member levelled at the burden of interest. The amount is R508 million, viz. 36,5% of this year’s capital expenditure. According to him this is exceptionally high, but if one considers what the percentage has been over the years, for the years 1966 to 1977, one sees that the interest has varied from 27% to 37%. It now amounts to 36,5%. But all of a sudden this is abnormally high! In the years 1973-’74 the percentage of capital expenditure represented by the burden of interest rose as high as 39%. Surely it is ridiculous to argue along these lines. Of course the burden of interest will increase if the amount invested annually in capital expansion is taken into account. Of course that burden of interest has to increase. Due to the high interest rates and high interest on short-term loans, they must necessarily increase. The hon. member must not advance such ridiculous arguments. I ask that more be provided from revenue and that we adopt the Franzsen Commission’s formula, namely that we should provide between 30% and 40% from self-generated revenue. Then the Railways will not be in the dilemma of being forced into a straight jacket in which it has to accept short-term loans at interest rates which do not suit it. More provision will have to be made for that. It is obvious, of course, that the burden of interest on the Revenue Account would then drop.

Secondly, we know that there are people who say that since we are borrowing from the Treasury, we only pay interest and do not redeem capital burden and that we have to ask the State to write off those burdens at one time or another. I also felt that way, but I do not think that is the right way to go about it. Those loans negotiated with the Treasury are used to tackle projects. They are invested in capital assets and those assets are used to earn revenue for the Railways. Immediately depreciation is imposed on those assets. Now I ask, in all respect: After a certain period one has recovered the full replacement value of those capital assets. Is it fair, then, while the Railways has that money, to replace the asset and then go to the lender and say that the loan should be written off? I do not think that is fair. One can do that if one reduces the burden of interest in the interim, to the extent that the depreciation is imposed. What does that mean? By the end of that period it merely means that one has to go to someone else to negotiate a loan to replace that asset once again. That is all it amounts to. That is why I am not such an enthusiastic advocate of that principle. That is why I say that the only way in which to provide sufficient capital from revenue is to accept the recommendations of the Franzsen Commission so that at the same time the Railways can reduce its burden of interest.

Now I want to raise another matter and I have a bone to pick with the hon. member for Amanzimtoti.

Who is not present!

Yes, I regret that the hon. member for Amanzimtoti is not present at the moment. A while ago he had a great deal to say. I want us to take a look at the financial results of working as a whole. We must not look at the results for one year only. We must take them over a period in order to determine the true state of the Railways as a business enterprise. Then, too, we must determine what alternatives there are.

Is there any other way in which expenditure may be defrayed without increasing tariffs, or should we perhaps try to seek other ways and means? Now I have made certain summaries of the Railways’ various services for the years 1972 to 1979. From this it is clear that during the financial year 1972-’73, the Railways’ deficit amounted to R59 million. The proportional amount of the Appropriation Account has not been included in this amount. However, I think it should be taken into account in order to determine the precise net profit or net loss of the Railways operations. During the financial year 1973-’74 the total operating loss was R23 million, and during the financial year 1974-’75 it was R34 million. Now I should like hon. members to note that I use the financial year 1975-’76 to bear out certain comparisons in my later argument. During 1975-’76 the deficit on the Railways’ Operating Account was R123 million. During that financial year, R78 million was deposited in the Appropriation Account. If this is to be debited proportionally in regard to the operations for which it was in fact utilized—and this amounts to approximately 4% of the total expenditure—a further R60 million of that utilization must be added in order to determine the true losses. This brings the Railways total deficit for the financial year 1975-’76 up to R183 million.

Let us now take the financial year 1976-’77. This is the year in which we had two tariff increases. The Railways operating losses for the financial year in question were R79 million. The appropriation account, however, amounts to R65 million. This represents approximately 3% of the expenditure which must be taken into account in order to determine the operating losses. Therefore another R53 million must be added. In other words, the Railways’ operating losses for the book year 1976-’77 now amount to R132 million. However, let us now take a look at the financial year 1977-’78. That is the present financial year, the financial year which ends on 31 March this year. I am now basing my calculations on the revised appropriation. A surplus of R27 is expected on the results of working. Precisely because it is the accepted policy to utilize larger amounts from revenue to meet the Railways capital commitments, that appropriation account has increased to R148 million. This is the total amount in the appropriation account. As a result there will not be a surplus of R27 million but in fact a deficit of about R93 million after adjustment.

The hon. member for Parow referred to the financial year in which a certain percentage of high-rated traffic was budgeted for. However, there was a drop of 9,6%. This represents R72 million of the Railways revenue. Say for example the Railways had had a good year over the past year and had attracted the high-rated traffic planned and budgeted for. The Railways would nevertheless have still had a deficit of about R20 million. However, let us now consider the year that lies ahead. I am now referring to the Green Book if hon. members want to know where to find the figures. A surplus of R1,8 million on the results of working is being budgeted for. However, the appropriation account amounts to R172 million this year, precisely because provision is being made for an additional amount of R50 million. Therefore there is now R100 million in the Reserve Account of the Sinking Fund which can be utilized for capital expenditure. This therefore represents 6%which must be taken into account as expenditure. Of course, the operating profit will not amount to R2 million, but the true deficit at the end of the present financial year ought to be R138 million. It is therefore true that the Railways as a business enterprise has shown a deficit throughout, from 1972 to 1979.

Let us now look at the harbours. I do not want to go into them in detail. However it is clear that the profit on harbours over the past seven years has varied between approximately R30 million and R40 million. It can be a little more the one year and a little less the next. I am also taking into account the proportional portions of the Appropriation Account which arise out of this in order to arrive at a profit or a loss.

Looking at the Airways, we note that we had a deficit of R13 million in 1972. In 1976-’77 there was a deficit of R14 million. We have had a surplus now and again. What we are dealing with here, however, is operating profits or losses. If one takes into account a reasonable portion of the Appropriation Account with regard to the Airways, one finds that between 1972 and 1979 the Airways has not been a paying business either. However, the hon. member for Orange Grove comes along with a wonderful, a fine idea that we must give the soldiers airways concessions. Surely it is nothing but the creation of a socio-economic service which will make our losses on the Airways still heavier. Nevertheless that is the kind of thing they ask for. However, when we find that the accounts do not balance, they do not reply because they are not prepared to say that tariffs should be increased.

As far as the pipelines are concerned, this, as the hon. member said, is the goose that lays the golden egg. This is the service which really contributes towards balancing our operating account on all services.

We have already seen that the operating account of the Railways has shown a loss from 1972 to 1979. However, where is the quick of the ulcer? Let us look at the passenger services. I shall begin by taking the year 1975-’76 because that is the year in respect of which I have figures at my disposal. In that year the loss on our main lines was R82 million. The first class was 47% occupied, the second class, 46%; and the third class, 78%. In spite of the fairly high occupancy of third class, we suffered a loss even on that service. As far as the suburban service is concerned, the deficit was R90 million. If the State had not made a contribution of more than R26 million for resettlement services for the non-Whites, the deficit would have been not R90 million, but in fact R116 million. The total deficit on the conveyance of passengers on main lines and suburban lines amounts to R176 million.

If we had wanted to balance the passenger account in that year, if we had merely wanted it to come out “square”—if I may use that expression—we should have had to increase the passenger tariffs by 80%. If we had done that, the mere sight of a passenger train in the distance would have caused people to run so far that they would never be seen again. One would have created such tremendous resistance among the public that our trains would quite probably never have been able to run again.

I have said that the total deficit on the conveyance of passengers amounted to R176 million, but that R4 million thereof was in respect of other services which also fall under the passenger account. I now come back to the year 1975-’76, in which the total deficit on the Railways amounted to R183 million. Therefore, had it not been for the passenger services, the net deficit on Railways operations would have amounted to R7 million. Unfortunately I was unable to obtain details in respect of 1976-’77, but I am informed that it is estimated that the deficit on the conveyance of passengers for that year amounted to R215 million.

After we increased the tariffs, the operating losses of the Railways for that year amounted to R132 million. Here, then, we reached the break-even point, in the sense that the goods traffic is beginning to make good the losses on the conveyance of passengers. This is the true factual situation and this is what we must take into account. What alternative has this House of Assembly, under our present policy, other than to support the hon. the Minister and to say that if we want to render these services we shall have to increase our tariffs? We have no alternative unless we seek other measures or methods. I shall come back to that.

However, another question occurs to me, and it is a question which each of us, as members of the House of Assembly, must answer for ourselves. The question is whether it is fair and right that the Railways should render certain uneconomic and socioeconomic services and carry the losses on them. Is it fair and right, if it is in the interests of the economy of the country as a whole, that the Railways, which has to incur the expenditure, should have to carry the losses alone? Must the receiver of benefits not make an appropriate contribution in respect of the losses to the provider of this service? I do not think it is fair that the one who provides the service and has to incur the expenditure for that service should carry the losses alone. We have to know how far it is possible to go and to what extent the receiver of the services must contribute. That is the important question we must ask ourselves.

I doubt whether tariff increases are the solution to our problems. We admit that highrated traffic is a very important source of revenue. A small percentage increase in highrated traffic can cause our revenue to increase rapidly. However, I doubt whether this would furnish the solution. We must also be wary of ultimately, perhaps, pricing commodities right out of the market by way of tariff increases. We shall have to look at this.

Let us look at the passenger services. What do we expect from the Railways with regard to the suburban services on which there is a deficit of R90 million? For a period of two hours every morning, thousands of passengers have to be conveyed from their homes to their places of employment. The vehicles and traction power necessary to perform this service must therefore be there. This entails a vast amount of capital investment to cover a period of two hours because those people have to be conveyed rapidly to their destination. The same situation occurs in the afternoons. In a period of two hours one has to convey all those many thousands of people home again. However, it is not merely an issue of the capital investment in coaches and traction power.

Let us look at our urban areas. How do the lines run there? There are 12, 13 or 14 lines alongside each other! For goods traffic? No. Those lines built there are built exclusively for passenger traffic on which we suffer these tremendous losses. This entails vast capital investment. People are conveyed to the cities. They sell their labour to the industrialists, the traders, the mines or the State. They are productive. Their labour is sold, and this is in the interests of South Africa because our economy derives the benefit. If, therefore, our economy is to derive the benefit, a part of the losses carried by the national transport service must come back to it.

I believe that the Railways are there to render these services. My argument applies equally to the main lines. People must be brought in from the outlying areas. Their labour must be utilized in the industries in urban areas. They must also be taken back. We want the Black man to come here from the homelands to work and we want to take him back every day. If we want to do so at the present tariffs, do we realize what phenomenal losses this will entail for South Africa? Do we realize what this will mean to the Railways if it has to carry such losses? I do not want to say that I am opposed to this principle. On the contrary. I am in favour of it. Is it, then, fair that the S.A. Railways should have to subsidize these socioeconomic services alone?

We can go further. This does not only apply to passenger traffic. We can also look at goods traffic. I am not being critical. There is the goods infrastructure—all those wagons and all that tractive power! In the days when so many ships lay in the Table Bay Harbour and it looked like a little town out there with its lights shining, it was necessary to have the tractive power, and the trains had to be ready to convey the products to the interior. That was all high-rated traffic. Due to the levelling-out of the world economy the hon. the Minister of Finance had, however, to impose an import duty of a certain percentage on all imports. I am in agreement with that, but it hits the Railways hard. This ties the artery which provides the revenue of the Railways. This year the import deposits were abolished because there is now a 15% surtax on certain imports. Once again this does not free the arteries; once again it does not open the channels which ought to feed revenue. However, this falls outside the compass of the Railways.

They have nothing to say about this, but they have to be prepared to furnish the necessary services. I agree that this should be so, but in that case I want to make an earnest appeal—I know that the hon. the Minister is working on this—that this should again be investigated in depth. Let us hope that next year the State will be able to make its rightful contribution to these socio-economic services. Then the State will also have the right to say: “These socio-economic services cost me R1 000 million per annum, but they are only worth R200 million to the country.” In that case the State can decide to terminate such services because then they are not an asset to the country but represent a liability. On the other hand, the State may also decide that it wants to maintain the services, irrespective of the losses they entail. In such cases they have a joint say. However, it will demand from the Railways the provision of an effective and efficient service. That is how it must be done.

It may be argued that since the Railways receives appropriations from the State, there will not be effective management because the people concerned can relax. However, there are means to control this. For example, there is the annual report of the General Manager of the Railways. Similarly there is the annual report of the General Manager of the Railways. Similarly there are various documents, including the sources of revenue and expenditure which are made available. The expenditure is also subject to the approval of the Auditor General. There are, therefore, criteria which we can apply to determine whether the management is effective or not. However, in this regard there is also a duty to be discharged by every member of the House of Assembly. If we are not prepared to increase rates, it will be our duty, and we shall have to have the courage of our convictions, to tell the voters and the community when they exert pressure and ask hon. members to make a plea for certain services: “No, old chap, we cannot introduce that service because it is not an economic service. Who will bear the cost?” We shall have to take that duty upon ourselves. As soon as we receive a contribution from the Treasury with regard to these socio-economic services, we shall have turned the comer and then I believe it will not be necessary to have tariff increases every year or every second or third year.

Mr. Speaker, any right-minded person with a reasonable intelligence who makes a proper analysis of this budget, will find that it presents five salient features. The first is that the Railways under NP policy has gone from strength to strength. Every year the services have shown only an improvement; no deterioration has set in. Under NP policy there has been only growth, and no retrogression. In the third place, the Railways has complied with all that has been required of; in the fourth place, the Railways has kept pace with the development of the country; and in the fifth place, the planning of the Railways under NP regime has been clear and correct.

However, Mr. Speaker, I think it is time we made a summary in this House the members who are seated before you really are. The public at large gave its verdict on 30 November last year and, as we are dealing with Railway matters, I think it is time we made a brief analysis in this connection. Since we now have to discuss the Railway budget with all its consequences, I want to ask: Who, in this House, represent constituencies where the majority of voters are Railway people? Where are those hon. members seated? Mr. Speaker, I do not want to tire you by mentioning the names of all those hon. members. Many seats were uncontested and in others the candidates of certain parties forfeited their deposits. Uitenhage was such an uncontested seat. Was that not a great achievement? One of the largest Railway centres is situated in that constituency. Let us also consider other Railway centres which are situated in the constituencies which my hon. colleagues here represent. Where Opposition candidates in those constituencies did not forfeit their deposits, the NP candidate was returned unopposed. That is why we had such poor criticism on the part of the Official Opposition here this afternoon. This is the 13th Railway debate which I have the privilege of participating in this House, and in the course of this debate, I heard the poorest criticism that I have ever heard from the Official Opposition. So far only three hon. members on that side have participated in the debate. There sits the hon. member for Green Point. He looks a lot better now than he did in 1974 after I had finished with him in Uitenhage.

Mr. Speaker, the criticism was poor because the hon. members on that side do not have the support of the people. I want to prove it.

What do the farmers say?

Let me start with the hon. member for Amanzimtoti. I think he gave a better account of himself than the hon. member for Orange Grove. I have heard the hon. member for Orange Grove make far better speeches. The hon. member for Amanzimtoti said that all the achievements of the Railway staff to which the hon. member for Witwatersberg referred, and which I do not want to repeat, were nothing. He said that such achievements did not impress him and that we should rather conduct a debate on the other, more serious matters such as the rates increase—on which topic I shall reply to him directly. The achievements of the Railways staff have been ably referred to by the hon. member for Witwatersberg, and also by the hon. members for Parow and Vanderbijlpark. I have nothing to add to what they said, because they have already furnished all the particulars. In fact, Mr. Speaker, this debate has at this stage been worn so threadbare that there is nothing left to which a person can reply. Mr. Speaker, if these achievements, then, are nothing, I want to ask the hon. member for Amanzimtoti through you: Do the achievements of the Railways staff not bear testimony to sound management and proper planning? The hon. member will not answer me, because last year he said in this debate that poor planning and weak management had been manifested from the General Manager downwards. Those people who were so inefficient in the eyes of the hon. member last year, accomplished such wonderful achievements this year. How can one argue with such a man?

The hon. member for Groote Schuur is not here. Mr. Speaker, I shall tell you what that hon. member did. He studied the speeches which the hon. member for Simonstown had made over the past 10 years, but then put up an ever poorer performance. The hon. member for Simonstown is sitting here, and I call him as my witness.

I come now to the hon. member for Orange Grove. That hon. member has asked the hon. the Minister to furnish particulars of the amount which it costs the Railways every year to grant concessions to public servants. That, of course, includes Railway staff, because they also get free passes. I suppose it also includes members of Parliament. If that hon. member is so interested in the amount, why is he not frank with this House so that the people outside might know it? Does he want those concessions to be cancelled? Mr. Speaker, may I ask the hon. member through you what he wants to do with that information? That hon. member wants to know the amount from the hon. the Minister for one of two reasons: He does not want to use it here, but outside where he can have a meeting and campaign for these concessions to be done away with, or he wants to gossip-mongering with the amount as he is always doing. He wants the information for one of these two reasons. Admittedly the hon. member has not asked that these concessions should be done away with. I want to be quite fair. I can sense what he wants to do, because I sit near the hon. member. Anything can happen; for that reason my request to the hon. the Minister is that he should not even take the trouble to calculate the amount. I am not interested in that information, and in fact nobody in this House is interested in it. As far as I am concerned, the hon. the Minister can carry on and grant even more concessions to public servants and to the Railway staff, because they deserve them.

Do the farmers not deserve an increase?

I am not going to talk about the farmers, because there are only nine farmers in my constituency to be represented. [Interjections.] Perhaps there are a few more. The hon. member for Orange Grove has said: “Tariffs must not be increased. Let us now stop this ‘merry-go-round’ inflation”. I do not want to go into this in detail, because the hon. members who spoke before me have very ably dealt with the matter. If an increase in tariffs is conducive to inflation, then surely increases in tariffs in the past must also have been conducive to inflation. If these are “merry-go-rounds”, then we have had “merry-go-rounds” since 1910.

I do not want to go back to 1910, however, but I do want to tell the hon. member that between 1949—that was just after the NP had come into power—and the present day—if my figures are correct—tariffs were increased 14 times on different dates. During the period 1966 to 1971, there were no tariff increases. For the rest, there were regular increases. I do not want to deny it; nobody wants to deny it But if one listened to the speech which the hon. member for Orange Grove made this afternoon and if one then read the speech which he made last year, one would notice that he plays the role of a prophet of doom in everything he predicts. At one stage last year the hon. member said—I trust that I remember this correctly; I have the Hansard here too—that the NP Government, with the tariff increases, was creating a fertile breeding ground for communism, etc. But the hon. member did not say it this year! Does he still say it?

I did not put it like that last year.

I have never quoted anyone incorrectly in the House. The hon. member said the following on 14 March last year (Hansard No. 67, col. 3510)—

My argument is therefore: If we then had 14 “merry-go-rounds” between 1949 and the present day, then the public at large has said at every election that they have ridden on the “merry-go-rounds”, that it is over, and that they have come through it all to where they are today. [Interjections.] If railway tariffs should again be increased, next time, it will again be a “merry-go-round” and we will see that one through as well, because—and this is what is important to me: I am not a financial expert, but many of the hon. members who have spoken before me, are—not a single hon. member on that side of the House has ever offered a solution to the problem. We have been arguing here about tariffs since a quarter past two this afternoon, but not one hon. member on that side of the House has suggested a solution to the problem. I am sorry that the hon. member for Rustenburg is not in the House at the moment, for last year when the hon. member for Orange Grove referred to savings, cutbacks, etc. the hon. member for Rustenburg interrupted him and said he had to indicate what cutbacks should be made. Sir, we are still waiting for his reply. In his speech this afternoon the hon. member kicked up a terrible fuss about the increase in tariffs—they are welcome to do so—without offering one real solution. He did not make a single suggestion to the hon. the Minister about how the increases could be counteracted. I, who am a novice in the financial field, regard the tariff increases in this light: Let us assume for the sake of argument that the hon. the Minister and the management had been too stubborn and had decided not to raise the railway tariffs, “come hell or high water”. What would have happened then? The hon. member for Orange Grove has advocated that, and so has the hon. member for Amanzimtoti. The hon. member for Groote Schuur did not advocate anything. That I have already said. If no tariff increases had been introduced, one of two things would have happened. The people trained in economics must get up and say whether I am correct. In the first place, the operating expenses would have had to be drastically reduced to compensate for the R241 million which the hon. the Minister is seeking by way of tariff increases. Let us assume that the hon. the Minister does it right now. Surely it goes without saying that many services would have to be suspended. Staff would have to be reduced …

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

No, Mr. Speaker. I have no time for that and in any case I am not interested in the hon. member’s questions. In the third place there would have to be a decline in the Railways’ revenue, and in the fourth place, when all those things have been done, the hon. the Minister would still have to increase the tariffs to make his books balance. It is a circle; it is—as the hon. member for Orange Grove has said—a “merry-go-round”.

The merry-go-round is not so merry any more!

The “merry-go-round” will simply have to become merry again, old chap!

The second step which could, in my opinion, have been taken was to set aside fewer funds for depreciation. What would happen if the hon. the Minister were to do that? If he does that, he undermines the continued existence of the Railways and the Railways will collapse. There is no doubt whatsoever about that. Therefore I say that increasing the tariffs …

We shall simply have to keep on making increases!

The hon. member for Durban Central says we shall simply have to keep on making increases. But I have already said that if it is necessary and in the interests of the country, we shall keep on increasing the tariffs. The increase in tariffs is an unavoidable necessity which no one can argue away.

This afternoon the hon. member for Witwatersberg and other hon. members talked about the achievements of the Railway staff. I do not wish to discuss their achievements in detail, but I take off my hat to them, to every one of them, from the Minister and the General Manager down. It surprised me that they could achieve so much, because there are several factors which have to be borne in mind. The hon. members on the opposite side do not bear these things in mind. All they do is to suck poison from every situation with which they can bring the country into discredit.

This afternoon while I listened to the hon. members, especially to the insinuations by the hon. member for Orange Grove about the concessions, and to the tirade—as the hon. member for Parow described it—by the hon. member for Amanzimtoti, I almost felt inclined to ask them the same question which the hon. the Minister of Community Development asked them in the House a few days ago when his legislation was under discussion. He asked the Official Opposition: “What has South Africa done to you that you hate it so much?” I now want to ask: What have the hon. the Minister and the Railways Administration done to those hon. members that they hate them so much? I almost feel like asking them that question because there is so much venom inherent in their criticism.

You can do better than that!

I want to pay tribute to the Railway staff today, and I shall tell you why I am doing so. They have accomplished these achievements in spite of the fact that there is a great shortage of staff, especially of White staff, on the S.A. Railways. There was a staff shortage in key positions, in the most important positions, of those people who have to keep the Railways’ wheels turning. I want to quote a few figures. There is a shortage of 578 station foremen; 1 368 conductors; 72 shunters; 411 leading shunters; 1 244 checkers; and 1 437 staff members in the driving and cartage services. These are shortages which the Management had to contend with, but in spite of that they attained such achievements.

There is also another aspect on which I wish to pay tribute to the Railway staff. It concerns a matter which has often been debated in this House. The hon. member for Durban Point, who is not here this afternoon, was very fond of raising it. I want to pay tribute to Railway staff because, in spite of the fact that they had to keep the wheels turning, they cut down drastically on Sunday time and overtime. How often have we not heard in the House that Sunday time and overtime are the railwaymen’s greatest source of income? This we had to hear all the time. If that is so, then why did that Railway staff make greater sacrifices? During the 1976-’77 financial year there was a total decrease of R6,1 million in overtime and Sunday-time payments compared to the previous year. During the eight months from April until November 1977, the figures in respect of overtime and Sunday time payments showed a downward tendency. In that time, there was a saving of just over R2 million in respect of Sunday time payment and just over R7 million in respect of overtime payment. This saving is mainly attributable to the intensified control measures for the curtailing of overtime and Sunday time, the curtailment of capital works, the programmed repair work to heavy rolling stock in mechanical workshops, and the enhanced productivity on the part of the staff to cope with the economic situation.

The Official Opposition suggests that this is such a sombre budget and that things are going so badly with the S.A. Railways, but what is the actual position? I want to refer to what I meet with every day in my constituency, and every hon. member who represents railway voters, will confirm that this is the truth. In 1976 there were 15 618 resignations and in 1977, 13 080. That represents a decrease of 2 588. In 1976—and this is important—there were however 17 649 applications for re-employment and 20 494 in 1974. That is an increase of 2 845. During 1976, 4 214 people were re-employed, and 5 804 during 1977. That is an increase of 1 590. What does that prove?

We have a depression.

A depression? If this is what a depression looks like this, then I do not know what a real depression will look like. These figures prove that despite the fact that according to the Official Opposition these are such dark days for the Railways, more people are willing to re-enter the Railway service. I am speaking from experience. I deal with that every day. People who have twice or thrice been in the service of the Railways, come and plead with one to be given another chance. Why do they ask to be given another chance? The reason for that is that they want to enter the service of one of the best employers in the Republic of South Africa, that they are treated well and that the Government has always sacrificed everything it had for every worker in the service of the Railways. I can continue in this vein and prove that this side of the House has done everything in its power to look after the interests of Railway staff, who have also—despite everything which has been said, done their part and so placed the hon. the Minister in a position—in spite of the increase in tariffs—to present this budget, with which I do not find fault and with which, I am sure, the people of South Africa will not find fault either.

Mr. Speaker, I hope the two previous speakers will forgive me if I do not react to what they have said. Predominantly their speeches were purely a reaction to speeches on this side of the House. I also have a lot of things that I wish to say today and I have a limited amount of time.

The first point I want to stress is that the Railways and Harbours Administration has a great responsibility towards South Africa, a responsibility to see that the industrial development is supported by a good railway system, to see that areas get good support from the Railways to build up their infrastructure. I regret to say that the Railways are sadly lacking in performing this duty on behalf of all South Africans. They have given us an increase overall of 8,6% and the ripple effect of this increase is going to be felt throughout the economy for months to come, probably for the whole of 1978. It is going to add to our inflation rate which is today one of the worst in the Western world. We can no longer point to other countries, because our inflation rate is one of the worst.

The Railways can boost an industry or an area or they can kill it stone dead. With respect, I want to point to the fact that now that the NP has such a big majority in this House they appear to be deserting the farmers. They appear to be loading extra tariffs on the farmers, and I would dearly have loved to have heard what the hon. the Minister of Agriculture had to say in the caucus meeting when these increases were announced.

Why do you say that?

I would not blame him if he had in fact objected strongly to an extra 10% being placed upon the shoulders of the farmers. Another prime example of killing an area is the constituency or area from which I come, viz. East London. I want to point to this area as an example of how the Railways can build up or kill an area in terms of its industrial development.

Mr. Speaker, if you will forgive me, I want to start with a little bit of background. We are aware that the Government has a policy on Blacks. We are aware that Cape Town is one end of the squatter problem, but East London is the other end of that squatter problem. It is the side of the problem which is not written about in the newspapers, but the place that the Blacks are pushed to when their housing is pulled down around their heads in Cape Town. They are moved off; they get free Railway passes and they are moved to areas like East London. As a result, the East London area, in terms of its Black population, has increased enormously. [Interjections.] I hear the dulcet tones of the hon. member for King William’s Town fluting away in the background. It is nice to see that he is in the House, but I want to warn him that if he is not careful I shall have him for lunch tomorrow. I am talking about the kingklip. In East London there is Duncan Village. This is the age-old location which has been used by the Black people. We have now had Mdantsane built, and there are currently 17 500 houses with an estimated 180 000 people living there. There are to be an extra 2 500 houses, and in addition to that they are forming Potsdam area where there will be 30 000 houses for 300 000 additional people. This will give us a Black population of over half a million and these people need to work. They need to be able to earn their daily bread. So, Sir, East London established the Berlin industrial area with disastrous results to date, and why? I maintain because of the South African Railways and Harbours.

That will be the day!

Let us examine this, because I am going to develop this argument. The Pretoria-Witwatersrand-Vereeniging area provides 62% of the South African market. It takes East London industries 12 days to get their goods from East London to the PWV. Of these 12 days approximately two days are taken up in travelling and the balance is in delays, sometimes at the East London end, but predominantly at the Kaserne end. I would point to the fact that in the USA, with four distribution points only in that enormous land, one can deliver anywhere in the USA by rail within four and a half days. Compare this with 12 days. In Rhodesia one can deliver goods from Bulawayo to Salisbury overnight. That is a long distance. However, it takes 12 days from East London to the PWV area.

I realize that over-employment in the Railways was a legacy of depression, but the tariffs are loaded against secondary industry. We need tariffs that are more according to costs. And more than ever, we need a fair deal for East London. Let me go into this cost structure a little bit. If one transports a six-metre container, loaded with 18 tons of textiles, from East London to Johannesburg, which is a distance of 1 020 km, it will cost a manufacturer of textiles in East London R1 704. The same container moved from Durban to Johannesburg, over a distance of 717 km—only 300 km less—would cost R430. Now, as a manufacturer, Mr. Speaker, where would you set up your business? Would you set it up in East London where it is going to cost you R1 700, or in Durban where it is only going to cost you R430? If one wants to export goods from Johannesburg and one puts it in a six-metre container, to transport it from Johannesburg to Durban would cost one R200. The same container moved from Johannesburg to East London would cost again that same figure of R1 704. This is sheer discrimination against East London. [Interjections.] How can we in East London hope to attract industries to provide the necessary jobs for our 0,5 million Black people? How can we attract industries to supply South Africa? If those industries have to bring raw material into East London it would cost them double the railage. They have to pay railage twice. They have to import the raw materials via the Railways and then they have to deliver the finished goods via the Railways—in other words a double hit. Again, because of the delays—delays in that it takes 12 days for goods to be delivered by rail from East London to Johannesburg—East London manufacturers have to set up warehouses because they have to be able to supply their customers on a reasonable basis in that very important PWV area, which, as I said, represents 62% of the South African market. Therefore, I submit that the Railways Administration is discriminating unfairly against an area of our country which, I know, is sometimes referred to as “die onderwêreld”. When one sees the sort of discrimination against the people there, one can begin to understand why.

I am aware of the fact that the box rate in connection with containerization gives rise to problems. Cape Town likewise has problems in that they have to pay the ordinary transportation rates. They do not have a box rate. I am also aware of the fact that the hon. the Minister of Transport said in his Second Reading speech that he will apply the box rate to other centres. However, he qualified that by saying he would do it provided the other centres have the volume. Nevertheless, he has already done his best to see to it that that volume disappears, because everybody must move to Durban. [Interjections.] How is it possible for one to attract the volume to build up the container traffic through one’s port or from one’s industrial areas when another port or another industrial area already has the advantages? Obviously industries must flock to those particular areas.

Next I want to touch on the matter of the East London harbour. The East London harbour is basically the only natural asset that East London has, the only asset which can be expected to work for East London in order to provide employment. What is wrong with the East London harbour apart from the cost of railing goods? Here I must come back to the container situation again. Something of the order of R500 million was allocated or spent by the Railways Administration in terms of containerizing South Africa, on the sea ports, etc. Of this amount a mere pittance has been given to East London. One can spend R1 100 million on developing new harbours at Saldanha and Richard’s Bay, but East London has had virtually nothing. As a result of this East London has lost its historical traffic. 50% of the imported goods for the Free State used to come through East London and 10% of the imported goods for the Transvaal was also handled by East London. East London, however, has lost this traffic. As a result of less traffic through East London harbour there are less trains running. This again caused further delays. The whole thing is spiralling downwards. We have to do something about it. I want to point to one area only in the use of the East London harbour. I have a cutting here from the Daily Dispatch of 17 January 1978. I asked the hon. the Minister a question on the Order Paper in connection with facilities for the exporting of pineapples in East London. One got the impression, from the answer he gave, that the facilities existed and that there was no problem. Let me quote, however, what a prominent pineapple farmer in East London—probably the biggest individual pineapple farmer in the country—has to say about East London as a harbour for exporting pineapples. I quote—

He lives, I think, within ten to fifteen miles of East London, and this is where he produces his goods. His factory is right next to the East London airport, but he is sending his goods all the way to Port Elizabeth by road to export them. I quote further—

I am aware of the fact that we are getting roll-on/roll-off ships in East London, but this is but a drop in the bucket compared with the vast number of containers that come out in the big ships.

I see I am beginning to run short of time. I do, however, want to come to the question of East London as a wool exporting port. There has been no announcement from the hon. the Minister in this connection. We badly need to establish confidence in our area. It would take just that simple announcement to do so, and I hope he will make an official announcement, in his reply, to the effect that East London will remain as a wool exporting port, for this is most important to us, most important! East London harbour must be developed to its maximum potential and this, in my view, means that it must be extended outside of the Buffalo river. I would suggest that the cost of extending the harbour outside of the Buffalo river would probably be less than the cost of the Pretoria opera house. We must do something for the Cinderella of South African harbours, the most beautiful and the most neglected harbour we have.

I believe that the best thing we can do, to see that East London develops, is to have East London declared a free port. An export processing zone is only scratching at the surface …

[Inaudible.]

The hon. the Leader of the House must please listen to me. He might then perhaps learn something. East London could become the Hong Kong of South Africa because we are in the same situation as they were. We have few natural resources but we have lots of labour. At the moment there are in excess of 50 000 unemployed in East London, and we must have a free port because the main advantage is that it attracts industry. East London is ideally placed between the Ciskei and the Transkei. This would help South Africa’s exports, and it would also help imports in the sense that our labour would further process and then reexport. One would only need to rezone a portion of the eastern bank of the Buffalo river and the whole of the west bank, including the industrial area. Iscor already owns land in this area, so there would not be too much speculation in property. The Whitfield Commission said that we should have a railway line from the west bank to Mdantsane and to the north. This could take the processed goods from the free port through to the rest of South Africa. Areas could be set aside for tourists who could enjoy duty-free advantages. This would attract people. Everybody thinks it is a big excitement to be able to buy a carton of cigarettes at a somewhat cheaper price. This would be a haven for export-orientated firms if we could only have it, and what would it cost the Government? It would cost the Government very little indeed. The simple fact of declaring East London a duty-free port would create a whole new atmosphere and re-inspire confidence in the East London area, confidence which is vitally necessary. It is vitally necessary that the people of East London—Blacks, Whites, Coloureds and Indians—should have their confidence restored, and I submit that the hon. the Minister for Transport is, as one of the people most involved, a person who could do a lot to help. Let me urge him to do this before Chief Matanzima establishes Umngazana as a free port, which he is evidently going to do. It would be a tragedy for East London to have such a port established so close to us. This would mean that all the traffic from the Transkei that comes through us would disappear. I therefore urge the hon. the Minister and the Government to be bold. Let us think of this. Let us not just write off the idea of a free port as a lunatic idea. Let us think about it seriously. Let us perhaps have a commission of inquiry to investigate what exactly this would entail. I believe, as I have said before, that we have to re-establish confidence in an area which has declined and declined and declined in terms …

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

Mr. Speaker, I am not prepared to answer a question.

I say that in terms of the overall industry in South Africa, the East London area has become a smaller and smaller part. Against this we have a rising population of Black people. Imagine 50 000 new houses in East London in each of which approximately 10 people are living; that gives you more than 500 000 people. I therefore submit to the Government that it should be bold. The Government should investigate the situation in East London. Above all, the Government should restore confidence to the 500 000 people who do need work.

Mr. Speaker, if ever there was an unlucky day for East London in this House, it is today. I am terribly sorry for East London after the speech by the hon. member for East London North, because if this is the vein in which he is going to try and put East London’s case here in future, then disillusionment awaits not only him, but East London as well. I wanted to make a case for the Western Cape today, but if I were to have an ally like this in these matters, I really would not need an enemy, because in his entire argument about East London the hon. member completely ignored all the advantages which East London enjoys due to the harbour tariffs which apply to the East London harbour. That tariff means that goods which fall under tariff class I, can be transported 59,4% cheaper from East London to Johannesburg, than from Cape Town to Johannesburg. However, the hon. member prefers to ignore this type of fact. His hon. colleague talks about and blames the hon. the Minister for grandiose schemes, but at the same time the hon. member is dreaming about something which is from start to finish a grandiose scheme. I do not believe one should pay too much attention to the hon. member; I do not think he was serious.

The criticism we have had of the appropriation today, was really so threadbare that even at this stage it does not justify any further reply. This side of the House has already analysed the appropriation thoroughly and the arguments advanced by the Opposition side have already been run into the ground.

Therefore I want to take the liberty of taking a look at the Railways today. I want to do this with reference to four points. Firstly, I want to ask the question: What is the mandate of the Railways in terms of section 103 of the Constitution? Secondly, I want to know whether the Railways has carried out that mandate. Thirdly, I want to determine whether that mandate still holds good today. Fourthly, I want to take a look at the influence which the Railway tariff policy has had on industrial survival in the Western Cape within the framework of that mandate.

For the sake of background, let me quote what section 103(1) of the Constitution provides—

The S.A. Railways can never evade the mandate imposed upon it by the Constitution, even though prevailing circumstances are so entirely different to those originally foreseen in the Constitution. South Africa was primarily an agricultural country, there was no question of export, and therefore it was chiefly import-orientated. True to its mandate, the Railways played a very major role in the economic development of South Africa. It succeeded, because to a large extent it served the secondary objectives of the Act with its tariff policy. In this process South Africa became an industrial country, in contrast to the historical position. The secondary objective of helping to develop agriculture and industry by cheap transport and establishing the agricultural and industrial population in the interior, has been achieved today. The primary section of the mandate, however, was that the Railways should be administered on business principles.

Since the first part of the mandate, the part relating to development, has been substantially carried out, conflicting elements have arisen to carry out the other part effectively. The Vaal Triangle has been developed as an industrial area, primarily due to the mining industry which arose there and the consequent shifting of the population to that area. With the emphasis on inland industrial development and the Railways’ determination of tariffs to establish the original industries in those inland areas, that area has already developed today into a giant in Africa.

Not only is the greater part of the industrial development centred in the north, but as a result the biggest potential market also naturally arose in the north. If one looks at the differences in the structure of the economy of the Western Cape and of the country as a whole, one finds relative stagnation in the Cape. A lack of natural resources, especially in the mining sphere, is probably one of the greatest problems of the Western Cape area. However, what is much more important to us is the long distance to the largest potential market in South Africa and the relatively high costs of transport and power which are involved.

A new factor has entered into industrial development in South Africa today, viz. containerization. Distance, and the other factors which make containerization advantageous, serve at present as a further stimulant for the extensive establishment of industries in the north. In other words, containerization is now giving industries in the north a preponderance of advantage. It was probably not planned that way, but taking everything into consideration, it is just a natural consequence of all the favourable factors which one really cannot complain about.

Mr. Speaker, from what I have said bo far, you can deduce that there is concern about the deteriorating position of industry in the Western Cape and the influence of transport costs on that deteriorating position. The hon. the Minister would probably be justified in arguing that it is not the function of the Railways to deliver the Western Cape from this problem. However, the fact remains that this deteriorating position will also have a considerable influence on the Railways itself. Due to the relative shortage of natural resources, the Cape has to depend very much more on factories for its development, on retail and wholesale trade and on the other service sectors. The Cape is the third most important industrial region in the Republic. Today we still produce approximately 14% of the national production. The manufacture of food, clothing and textiles plays a very important role in the industrial sector and this comprises approximately a third of the total manufacturing production in the Western Cape. In other words, the emphasis falls here on consumer goods which fall into the category of high-rated traffic. Consequently the high cost of transport over long distances can play a tremendous role. In former years it did not have the same influence. When a considerable proportion of our raw materials still came via the harbour, the Cape was still strongly competitive, but today the relevant raw materials also came largely from the far distant interior. Previously it was customary to introduce a general increase of a certain percentage on all distances in an appropriation. Since the Cape is furthest from the market in the north, this increase probably hit the Western Cape hardest, financially speaking. Over the past few years—the past three years I think—in their calculation of costs the Railways has started to curtail the drop in profit of transport over very long distances. Therefore, when tariffs are increased, provision is made in the budget for larger increases over longer distances. On the basis of sound business principles, this step cannot be so easily condemned as a wrong one as the hon. member for East London is so quick to do here. Of course, the increased tariffs weakened the position of the Cape considerably in a market which has become extremely competitive. The degree to which the Western Cape has been prejudiced by this is apparent from the fact that in 1970, tariff classes 1 to 10 from Cape Town to Johannesburg were between 50% and 50,3% higher than the tariff between Durban and Johannesburg. With the additional loading over longer distances and in the absence of the advantages of a harbour tariff, for which the hon. member for East London North should be very grateful, the gap has widened to such an extent that in April 1977 the percentage was 70,4%. Port Elizabeth and East London are exempted from these steeper increases by a special harbour tariff which encourages the use of those harbours. Mr. Speaker, you can therefore understand that the Western Cape should be very grateful that the percentage of the tariff increase which the hon. the Minister announced in the latest appropriation, applies to all distances and that longer distances are not being singled out. The introduction of container traffic between Durban and Johannesburg, however, has a further influence on our position because it is resulting in the 70% difference in the Cape Town/Johannesburg and the Durban/Johannesburg tariffs being increased to as much as 200% in some cases.

When the transport of raw materials to the Western Cape and the export of finished products from this territory—these are chiefly high-rated goods—reaches the stage that it becomes necessary for our industrialists to consider establishing their industries on the Rand or even in Durban, then a few red warning lights start flushing. I do not want to give details today of cases in which these changes did in fact take place, but I just want to make a general statement.

A new development is that shipping companies are trying to obtain container freight in the Western Cape and then transport it by boat to Durban where it is discharged and then transported at the container rate by rail to Johannesburg. It has been discovered that some industrialists can deliver their products at a considerably lower price in Johannesburg than would have been the case if it had been transported to Johannesburg by rail. The Railways must not ignore this trend. In the interests of the Railways, as well as in the national interest, we simply cannot afford a further drop in high-rated traffic between Cape Town and Johannesburg. Although the Railways is very aware of this problem, there is not yet any indication that the Cape will soon be able to negotiate a container tariff on the same basis as that which Durban can negotiate for the transport of container traffic to Johannesburg. I nevertheless believe that it is probably the attitude of the Railways that there should be enough traffic to justify such a step. If what is happening now should happen to an even greater extent, i.e. the diversion of traffic by ship to Durban and from there to Johannesburg, we here in the Western Cape will never reach the situation of having sufficient demand here to justify a container tariff. Once again it is a question of what came first, the chicken or the egg. I feel that something dramatic will have to be done to keep the traffic on the Cape Town—Johannesburg railway line and to win it back. It is only the Railways itself that can do this. But then we once again have an element which conflicts with sound business principles; I concede this immediately. I shall return to this statement later on.

According to the mandate which our Constitution gives the Railways, the Railways must attempt to bring about a distribution of the industrial population in the inland areas. On the other hand, as a sound business principle, the Railways must also try to achieve a distribution of freight across its entire system. Import goods, which are for the most part being containerized now, are nowadays channelled through Durban harbour to a large extent. It is only logical that this should happen, because it is much more profitable to ship goods from Durban harbour, because the harbour traffic of Durban is really only being conveyed to the City Deep container terminal on the Rand. This is done at a special container tariff. I therefore accept that, as a sound business organization, the Railways Administration also takes the interests of the country into consideration as far as it is within its power to do so and also gives the necessary attention to the aspect of container facilities and container traffic, in other areas too. This is the only way in which the Railways can ensure the distribution of freight throughout the entire system. That is why I want to give my full support to the representations made by the trade and industry sectors in the Western Cape that a thorough investigation be made into the question of container tariffs. If the process cannot be halted now, development is eventually going to be entirely centred around the northern part of our vast country. Not only will this make life more expensive for us in the sparsely populated areas; it is also going to mean that the remaining industries in the south will be strangled in a non-competitive position.

As a result of everything I have presumed thus far, I shall of course appreciate it if the hon. the Minister is at this stage in a position to allay our concern here in the Western Cape in this regard at this stage. If investigations are still under way, I trust that those investigations will be expedited, especially because there is a real need for certainty in the planning of the trade and industry in this area.

However, there are also other factors which tend to create an imbalance in the activities of the Railways. The development of road transport is not an unimportant factor here. If one studies the appropriation and the other informative documents at our disposal, it becomes apparent that the Railways’ share in the transport of high-rated goods is decreasing year by year. Apparently, this year was no exception to the rule. Although the aggregate traffic increased by 12%, high-rated traffic dropped by 9%. Although certain economic factors probably contributed towards this, it is clear that further erosion took place in favour of road transport. The new legislation on road transport also makes it possible for more high-rated goods to be diverted to road transport. In 1957 Prof. Verburgh discovered that the ratio of the quantity of traffic conveyed by the Railways to the gross domestic product, was approximately 61%. In 1973 Prof. Smith of RAU discovered that this share had already dropped to 51%. In the meantime the private transporter has skimmed off a fair amount of the cream.

Another important factor is the rapid increase in the standard of living of both the Whites and non-Whites in South Africa. With among the highest per capita incomes in Africa and one of the highest per capita rates of private motor-car ownership in Africa, including the non-Whites, there is an increasing imbalance today between the capital assets for passenger transport and the supply of passengers. That is why the loss on passenger transport this year has already exceeded the profit on harbours and pipelines. The results of this imbalance are that the Railways is placed in a situation where it has to provide services on an uneconomic basis. The position in the country as a whole is therefore that the Railways is providing a socio-economic service. For the Railways, that must manage its affairs on business principles, according to the mandate given it by the Constitution, it is purely an uneconomical undertaking. The obligation of the Railways has come into conflict with business principles; that is why not all its services can be carried out economically. This is not only the case in South Africa. It is a recognized fact that there is a world tendency to subsidize rail traffic heavily. In this regard I have seen the figures for 1975 in which it is set out how the central Governments abroad subsidize their rail systems. From this, it becomes apparent that the British Government paid subsidies to the value of R615,2 million in 1975; the German Government, R3 001,1 million; the Dutch Government, R259,6 million; the French Government, R1 350,5 million, and the Italian Government, R862,8 million. I am not mentioning these figures to advocate the principle of Government subsidies for our Railways. What I am advocating, is that the Government should seriously begin to consider the terms of the Railways’ mandate. I am asking for this particularly in view of the economic implications for the country, the industrial distribution throughout the whole country and the concomitant population distribution in South Africa.

My plea for the Western Cape does in fact prove that there is a need for such consideration. It must be done so that it will not be necessary for us to single out the Western Cape, look at it in isolation and ask for special patronage. This region has a very important role to play in the national interest and in the interests of the overall picture we dare not allow it to be left behind. Let us help the Western Cape, both as far as the tariffs are concerned and as a whole.

To conclude, I want to say that the Railways have always, but particularly in the last few years, set such a standard with respect to their obligations concerning the creation of an infrastructure and as a national transporter, that it has been possible for South Africa to be sure of stability in its economy, and furthermore they have made South Africa a strong strategic bastion in the world. That is why, on the occasion of this budget, we wish the hon. the Minister and the Railway staff from the General Manager to the lowliest labourer, every success with their task in the future.

Mr. Speaker, the hon. member for Tygervallei began his speech by referring to the hon. member for East London North and saying that he had done the Eastern Cape a disservice. I want to begin my speech by saying that the hon. member for Tygervallei has rendered the Western Cape a service with his speech.

For every person, for every body and for every business enterprise there are a few basic lessons which have to be learnt, and if they are to be successful, those lessons must also be applied. One of the lessons I have learnt in my life—it is not a lesson which I was taught by a Railway budget or an official of the Railways Administration—I learnt from a very dignified agriculturist. This lesson is contained in a question which is put to anyone who is interested in agriculture, namely: “How well do you know your soil?” I want to ask the Opposition whether they know the S.A. Railways. However, I want to be fair to hon. members on the other side of the House and not embarrass them by expecting a reply from them. I am prepared to furnish that reply myself. Hon. members on that side of the House have shown in this debate up to now that they do not understand what this budget is all about.

When one looks at the success of a budget or at mistakes which can be made in any organization and which can have fatal consequences, especially in the case of business enterprises, there are a few facets one has to examine. Success cannot be achieved by means of indiscriminate purchases, uncontrolled expenditure, poor planning, poor services and poor management.

The hon. member for Amanzimtoti, who took part in this debate earlier on, made sarcastic remarks about the management structure of the S.A. Railways, remarks which I consider to be uncalled for in a debate of this nature. The hon. member for Witwatersberg referred in his speech, amongst other things, to the technical progress which had been made in this department. In reply to this the hon. member for Amanzimtoti alleged that this technical progress had been possible precisely because of the fact that a mechanical engineer was now the General Manager of the S.A. Railways, but he went on to allege that we were not concerned here with technical progress, but with the budget, which he believed to be a poor budget. The General Manager is core sponsible for this budget, so the hon. member is implying that the General Manager is a bad manager. I want to prove the contrary to him. Under the present General Manager there has been a change in management and, amongst other things, the management development scheme in the S.A. Railways has been initiated. He was paid one of the highest tributes in South Africa for his vision and management skills when he was nominated as one of the top businessmen by a Press group which is not well-disposed towards this side of the House. Apart from the fact that the University of Stellenbosch has awarded him an honorary doctorate in engineering—in legitimate recognition of what he has achieved in the technical field—he is to be awarded an honorary doctorate by the Rand Afrikaans University at the beginning of April, not in the field of engineering, but in the field of economics and the management sciences. For that reason I think that the remarks made by the hon. member for Amanzimtoti in this connection were not only inappropriate, but also uncalled for in a debate of this nature.

At the beginning of my speech I said that hon. members on that side of the House had shown us in this debate up to now that they did not understand what the Railway budget was concerned with and what the true nature of the S.A. Railways was. I learnt one of my lessons from the question: “How well do you know your soil?” I do not want to use this as a platform from which to criticize the increase in Railway tariffs, especially in regard to livestock and goods affecting the agricultural sector. I am unhappy and sorry about the fact that it has been necessary to announce these increased tariffs. However, I regard the S.A. Railways as a business enterprise which has to comply with the demands made on a business organization.

If those hon. members would look at the responsibilities which are being placed, not only on the top management of the S.A. Railways—the hon. the Minister with his structure of officials—but also on the worker in the S.A. Railways, they would see at once, without making any sums, that the largest employer in South Africa today is the S.A. Railways. The largest investment of capital in South Africa is to be found in the S.A. Railways. The largest buyer of consumer and capital goods in the country is the S.A. Railways. Next to Defence, this organization probably plays the greatest strategic role in time of war and in time of, shall I say, quasi-war. The organization therefore occupies a very important position in our national economy, but as a result of this, it is in its turn particularly sensitive to monetary and fiscal measures applied by the Government which naturally affect its responsibilities because of any inflationary pressure which may result from them.

Because of these wide-ranging functions of the S.A. Railways and its great responsibility, the S.A. Railways is also subject to many problems. These problems, which have been highlighted in the discussion of this budget—there is, for example, the problem in respect of operating estimates—are of a twofold nature, for on the one hand there is a strong increase in expenditure, together with a drop in the level of earnings on the other hand.

The S.A. Railways is expected to provide the necessary infrastructure for the transportation of the large volumes of export traffic which are particularly necessary at this stage for the improvement of the country’s balance of payments. In the absence of an increase in import traffic, the ratio between the high-rated and low-rated traffic keeps deteriorating, and this serves to lower the average level of earnings. In the case of commodities which are indispensable to the S.A. Railways, which the S.A. Railways simply must have in order to operate, such as steel, coal, electricity and petrol, the increases for the present financial year—I am not quite sure about the correct amount—will be round about R15 million. However, the problems are not limited to this field.

As regards the problems which the Railways is experiencing on account of inflation and devaluation, one can normally distinguish between a few types of inflation. There is demand inflation, cost-push inflation and the mark-up inflation. The economy of a country, and of our country as well in this case, is subject to a combination of these various types of inflation. One of the most important consequences of this is the drop in the purchasing power of our country’s currency. This is reflected by the gap between the real and the actual revenue. This problem is normally a complex one to which there is no simple solution. If there had been a simple solution, there would have been a railway network somewhere in the world which had mastered this problem.

Most problems experienced by the S.A. Railways, and the most important of them, are reflected in the conditions prevailing in the whole international transport network today. Losses on passenger services are an international phenomenon today. In the USA, the market share of mainline passenger services amounted to approximately 75% in 1930. Round about 1973, this had dropped to only 6%. This meant that the private railways in the USA could no longer withstand this financial pressure of passenger losses, and for this reason the State-controlled organization AMTRAC took over. Therefore I want to associate myself with what was said by the hon. member for Vanderbijlpark when he pointed out earlier in this debate that the time had come for South Africa to take a look at the socio-economic services which the S.A. Railways has to render today, not in the interests of the Railway budget, but in the interests of South Africa and of the public of South Africa.

I believe that with one exception—I am not sure whether this is Sweden or Switzerland—there is no railway system in the whole world today which does not show a loss. Because of these very problems, problems experienced by the S.A. Railways as well at this stage, the responsibility resting on the S.A. Railways is so much greater and so much more important. The basic objective for a railway network by means of which an infrastructure is to be formed, the basic objective for the establishment of any new complex with a view to the efficient management and handling of the activities of the Railways, is its functional efficiency. If I am not mistaken, the hon. member for Amanzimtoti also referred in his speech to the dramatic and great and expensive and luxurious projects undertaken by the S.A. Railways. We need only examine the details regarding any field in which there has been development over the past year and in which a new infrastructure has come into being, and we shall find that, bearing in mind the reasonable needs of the staff who are going to use the facilities, as well as the durability of the asset which has been created, the functional efficiency is in fact the objective which the S.A. Railways is pursuing today. Luxurious and unrealistically high standards are definitely not the aim of the S.A. Railways.

Furthermore, all capital improvement schemes are carefully analysed, using methods which include cost benefit studies. This is in fact one of the premises in establishing whether new schemes will be viable or not. I think one can quite honestly say that the planning of the S.A. Railways is of such a nature today that expansions are only embarked upon when departmental requirements really necessitate it, or when a body with a great deal of capital is prepared to guarantee the operating losses.

As far as the Railways is able to do so, care is taken that the cost structure in South Africa is not raised by the creation of assets which are not viable. This would only be a spur to inflation. The S.A. Railways is a victim of inflation, and for that reason the Railways Administration goes out of its way to avoid such inflationary tendencies. The S.A. Railways has contact with many sectors and also co-operates very closely with a variety of sectors. Basic sectors of the economy, such as mining, agriculture, commerce, industry, etc., all co-operate closely with the Railways Administration. The cooperation of these sectors, within the framework of our country’s economy, is of such a nature that the S.A. Railways always has first-hand knowledge, as far as this is possible of their requirements. In all fairness, however, one must also point out that unfortunately, the Railways Administration is not always kept adequately informed of the short and long-term planning of the private sector. I think that if commerce in South Africa wants to help the S.A. Railways, thereby serving South Africa, the time has come for the Railways to be very clearly, very closely and very regularly consulted, especially with a view to short and long-term planning in which Railway services will be used.

In spite of this, the Railways is steadily continuing to eliminate cost-increasing problem areas and to avoid potential problem areas. Many of the attempts and/or projects which have been embarked upon have been criticized, not only by people outside this House, but also by hon. members on that side. Such attempts include the Richards Bay scheme, the containerization of cargo to be handled by our harbours, the central marshalling-yard in the Rand area, the additional pipeline and so forth. These schemes have been launched with a view to the long term and I believe we can say that the Railways has proved that it is able to make the necessary adjustments under difficult circumstances.

It is true that adjustments have to be made to the tariffs. I do not want to become too technical, but let us look at a graph. The graph is drawn according to the tariff scale for a given distance, but there are intervals over this distance. The various points which are connected give shape to the graph and the graph allows one to see the tariff line. The tariff lines of the Railways do not correspond strictly with increase in distance. They show a relative decrease. Although the tariffs per ton increase with an increase in distance, the tariffs per ton kilometres decrease. This decreasing ton/kilometre principle, the so-called tariff abatement principle, is one of the services rendered to commerce in South Africa by the Railways.

At this stage—I cannot see how this can change in the future—the transportation service of the Railways remains the most suitable form of transport for medium and long-distance traffic. It may be somewhat less suitable for short-distance traffic, and this was the reason for the adjustment last year in the legislation on road transportation. However, we must remember—I do not like to use the word; in fact I am not going to use it at all—that the less pleasant work is so easily and so often left to the Railways. I think the time has come for the Railways to get its pound of flesh when it is flesh of a good quality. The Railways is expected—in fact, it is required by law—to balance its operating results. Profits and losses in one year must be off-set in the following year, so that a cost-based tariff system will have no influence on the total revenue in the long run.

This is the reason for the internal cross-subsidizing we have in South Africa. Some people may not like it, but at this stage one can argue as much as one likes; internal cross-subsidizing remains in the interests of South Africa as a whole. There may be certain sectors which feel that they are harder hit by this, but in the interests of South Africa as a whole this cross-subsidizing is of the greatest importance, especially in the present time.

One of the facets which are of decisive importance to the success of a business enterprise is the method of purchase. I think the Railways has shown us with its purchasing system, the tender system, that there are few other bodies in this field which are as alert and as vigilant as the Railways when purchases are made by means of the tender system. I do not want to dwell on the tender system at any length; my time is running out. Nevertheless, I want to say that the system is not only based on the ideal of buying materials as cheaply as possible, but is also intended to ensure that the articles that are purchased are articles of quality which are really necessary, in terms of the indications of standards. For this reason, the technical department of the Railways co-operates very closely with the Tender Board. When one looks at the whole tender pattern and at the stores department, which ascertains its needs and conveys them to the Tender Board, one finds that the Tender Board, whose members include a representative of the Department of Commerce, first gives further instructions to the stores department to fulfill its obligations with a view to the necessary documentation and the necessary requesting of guarantees, as well as the necessary certainty that the goods required will qualify when the tests are examined.

Another aspect for which the S.A. Railways deserves some credit is the way in which the local supplier enjoys the benefit of approximately 10% if the quality justifies it. If the goods concerned are not available in South Africa, the S.A. Railways asks that the purchases should at least be made by a South African representative of a foreign company, for the express purpose of supporting South African commerce in that respect as well.

I think we would be justified in saying that in these times, in which it was difficult to draw up a Railway budget which would be popular in South Africa, the hon. the Minister has succeeded, with his top management, in presenting the budget in such a way that it can be justified in any company. I think the right persons in the right places helped to lighten this burden for the S.A. Railways.

It is also true that the Railways finds itself in an unenviable position because of circumstances beyond its control, but in spite of this the S.A. Railways is not pessimistic. I think this budget has also shown us that the S.A. Railways is not pessimistic, but that it reflects on the course of events and takes note of tendencies and plans its operations in the light of these tendencies. I think that if there is one assurance which can be given to the House and to the public in this budget, it is that the House and the public must know that the aim of the S.A. Railways will always be to provide the best possible service at the lowest possible tariffs at all times and under all circumstances.

Mr. Speaker, the hon. the Minister referred in his budget speech to the so-called “unifying effect” the provision of transport had on States among themselves. It is gladdening to members on this side of the House to hear how aware the hon. the Minister and the Railways Administration are of this fact. It is also gladdening to learn what close ties South Africa still has with other States in Southern Africa at this stage. It is as gladdening to learn what economic interdependence still exists among States in Southern Africa, and especially to learn what a leading role South Africa, through the Railways, is still playing in this territory. What is even more gladdening, is that these relations are based on sound business principles. Although this situation therefore confirms that South Africa is indeed still occupying an indispensable economic position in Southern Africa, this indirect form of diplomacy does not cost South Africa a single cent. While political leaders in various States in Southern Africa are deriding one another and threatening one another with everything that is evil, the wheels are still rolling between these States and South Africa. One wonders whether there is not a lesson to be learnt from this by politicians. Is it not clear that if one bases one’s approach on sound, logical principles, one may expect a more logical reaction from one’s neighbouring States? I think this lesson ought to be learned not only by the political leaders elsewhere in Southern Africa but also by Government leaders in South Africa.

Mr. Speaker, the hon. the Minister referred to the Sishen/Saldanha railway line. The takeover of the line by the Railways after Iscor had been opposed to this for quite some time, was noted with satisfaction. It is gladdening to hear that now that line will be used not only for the transport of ore from Sishen, but also for the transport of another form of ore, for the transport of mining products from Namaqualand as well as for the transport of general traffic. We should like to learn from the hon. thee Minister to what extent this line is suitable for general traffic and about what will possibly be done to make it even more suitable. I am asking this question specifically because it was said at the time when that line was planned that it would be used exclusively for the transport of ore and that a minimum number of staff would be employed on the full length of the line. Obviously that was an ideal situation for a line intended primarily for the transport of ore. Conditions have changed considerably, however, as this line will now be used for general traffic as well. Additional sidings and stations will obviously have to be constructed to make this line more suitable for general traffic. With the planning of the line one gained the impression that the interests of the area through which the line was to run, were being ignored altogether and that the possibility of the line being opened to general traffic at some later stage, had not been taken into account at all. The impression was actually created that a straight line had been drawn on a map between Sishen and Saldanha and that the line had been constructed accordingly, that it was in no way integrated with the rest of the Railway infrastructure, and that it would be difficult to integrate it with that in future. For the purposes of general traffic such a line should surely pass near or through the country towns or urban areas concerned, as well as through production or sales areas, so as to render it viable.

Name those areas.

It would appear to me as though this line would still cost the Railways a lot of money before it would in fact be suitable for the type of general traffic and the volume of general traffic one would like to see there. I can just mention by way of example that there is another line between Cape Town and Bitter-fontein which runs virtually parallel to this line.

That is not so at all.

In my opinion more integral planning would have rendered the integration of those two lines possible. If the line had originally been planned for general traffic, then I believe it could have served a very useful purpose today.

Mention was also made of the locomotives presently being used by the Railways. In this regard I wish to refer to the question of the replacement of steam locomotives by diesel locomotives and electrically-powered loco motives. Electrically-powered locomotives do not concern me. It is also understandable that, as far as steam locomotives are concerned, one is faced with the problem of pollution and, in certain arrid regions of our country, with the problem of obtaining pure water which will not create maintenance problems. In spite of that I want to ask whether it is strategically wise at this stage, all things considered, to replace steam locomotives by diesel locomotives at such a rate.

What about the locomotives here in Cape Town?

In Cape Town they do not concern me. One can appreciate full well that it is unavoidable in Cape Town, but there are many country areas in which pollution has never been a problem and where it never will be a problem in future. I think it would be worthwhile to consider keeping some of the steam locomotives in service or, in any event, maintaining them in such a condition that they can be put into service again in the event of our being strategically threatened, for example if the oil flow to South Africa were to be drastically decreased or even stopped altogether.

As far as staff matters are concerned, there are a few points I want to raise. In the first place I want to associate myself with the hon. the Minister in his expression of appreciation to those members of staff who are performing such outstanding services abroad in spite of the threats against them. Here we obviously have a case where we can indeed express our appreciation. As far as housing is concerned, I want to touch on a matter which might be considered, and that is that where housing is provided to Railway officials in urban areas or townships, such housing be integrated with the rest of the housing in that area, whether it be in a town or a large city. I need not tell hon. members that unpleasant and unfounded stigmas have arisen on account of the fact that housing has been established around certain Railway centres. As far as housing for Black people is concerned, the hon. the Minister indicated that proposals in this regard had been submitted to the hon. the Minister of Plural Relations and Development so that Black workers in urban areas might acquire occupation rights. I should like to request the hon. the Minister to request the hon. the Minister of Plural Relations and Development to allow proper rights of ownership of land to these workers in the event of their living a stable life and being in the permanent employ of the Railways. In this way, the Railways can obtain proper rights of ownership for its Black staff. If the hon. the Minister complies with my request in this regard, he will not be the first Minister of Transport who will force a little bit of common sense into an otherwise political dream world. [Interjections.]

As far as pensions are concerned, I understand that the benefits announced for widows, are applicable to those who will become the widows of Railway officials in the future. It is, in other words, people whose husbands are still alive. These new benefits do not seem to be applicable to those who are already widows. Mr. Speaker, I should like to know whether I am wrong as far as this is concerned. If, however, I am correct, I want to ask the hon. the Minister to give consideration to the position of those people.

Increases in tariffs were announced and this probably was an unpleasant experience to everybody in this House, including members on that side of the House. Mention was made of the fact that these increases in fact represented a lower percentage than what the rate of inflation had been over the same period since the previous increase in tariffs. There can be no doubt, however, that these increased tariffs will further stimulate inflation. The Railways, as a State enterprise and especially as an enterprise which in many respects enjoys the benefit of a monopoly, has a solemn duty towards the public in general to arrange their affairs in such a way that tariffs will be kept within limits and that inflation may be curbed.

Mr. Speaker, you may ask me what my proposals are for pruning expenditure. Like the hon. member for Uitenhage, I, too, want to say that I am no financial expert. I do, however, have a strong suspicion that apartheid must cost the Railways, as virtually every other Government department which has to render services, a fair amount of money. In my view there can be very little doubt that the inevitable duplication of services which that entails, must cost the Railways a fair amount of money. Consequently I want to suggest that the hon. the Minister consider an investigation into the extent to which the separation of the races increase the running costs of the Railways. I want to hazard the opinion that if this had been done a few years ago, and if the correct steps had been taken in consequence thereof, we would in all probability not have been faced today with the tariff increases regarded as unavoidable by the hon. the Minister at this stage.

Business suspended at 18h30 and resumed at 20h00.

Evening Sitting

Mr. Speaker, in previous years the hon. member for Durban Point was usually the main speaker on the Opposition side in this debate. [Interjections.] I must honestly admit that from an Opposition point of view he made a much better speech than the present main speaker of the Official Opposition. I do think it is fitting to congratulate the hon. member for Durban Point on his election as leader of the NRP. [Interjections.] We are looking forward to a trial of strength with him in his new capacity.

We Natalians may not be able to play cricket, but we shall rectify the rest.

The speech of the previous speaker, the hon. member for Green Point, can probably be summed up—something which a new hon. member referred to in his maiden speech—as the shortest Van der Merwe joke in the House. It was very clear that he does not have the necessary experience to take part in such a debate as this and he made hackneyed pleas which have been debated in the House before and accepted. He referred for instance to the principle that Railway housing should not be concentrated in one area, but that it should be distributed amongst the various social communities. However, that has been the policy of the Railways with regard to housing for their workers for a long time. The hon. member also raised the party-political argument here that provision by the Railways of separate services for Whites and for non-Whites should be revised. I shall leave it at that, however.

The theme on which I should like to speak tonight is the important role of the Railways in the Southern African context. As the European Common Market developed, I foresee that the countries of Southern Africa, i.e. those countries south of the equator, will develop growing common economic interests. That will also lead to the need for closer political liaison in respect of common interests. We want to meet this challenge cheerfully and with full responsibility. The S.A. Railways has already played a key role with regard to the development of the value of the Southern African economy as a factor in world trade.

One aspect of world tension between Russia and the USA and their respective allies is that the spotlight is on Southern Africa. It is inevitable that both powers should want to involve the respective countries of Southern Africa in their international political confrontation struggle, for the sake of their own selfish interests. I believe that most newly-independent Black States of Southern Africa do not strive for closer contact with the Marxists out of conviction. Where liaison does take place it is only because they believe that their international status and their recognition as new countries will be enhanced and furthered by it. In the long term other factors will, however, be of greater importance and then the realities of economic co-existence, in cooperation with the many nations of Southern Africa will enjoy greater recognition. South Africa has a developed economy and industrial structure. South Africa has an extensive transport infrastructure which renders particularly reliable and efficient services. South Africa is part of the community of States of Southern Africa and their interests as well as our interests are the same.

You probably read the speech I made three years ago.

I do not know what the hon. member is talking about; I have not yet read that speech.

The prosperity of those countries is also our prosperity and mutual co-operation is therefore in the interests of all of us. The strength of the Opec countries lies in the close co-operation between the oil producing countries concerned. Just as oil is a strategic product, the States of Southern Africa, from Cape Town to Kinshasha and from the Namib to Ndola, also produce a variety of indispensable strategic minerals which are virtually just as important to the world economy as oil. Our international bargaining position is weakened and every State is individually disadvantaged to the extent to which the countries of Southern Africa are in confrontation with each other. I therefore believe that mutual co-operation will be the aim and object of each of these countries within the foreseeable future.

The S.A. Railways with all its services—the Railways itself, the Airways, especially air freight, and Harbours—will therefore play an increasingly important role in tightening the economic bond of unity between the States of Southern Africa. The transport infrastructure is surely one of the most important factors that make economic co-operation and interaction possible.

Let us consider the situation of the countries of Southern Africa and let us evaluate the role of the South African Government transport service in that situation. There are 18 countries, viz. Angola, Bophuthatswana, Botswana, Burundi, Kenya, Lesotho, Malawi, Mozambique, Rhodesia, Ruanda, the Republic of South Africa, South West Africa, Swaziland, Tanzania, Transkei, Uganda, Zaire and Zambia. These countries cover an area of approximately 10 million square kilometres. There is approximately 500 000 km of roads and 45 000 route kilometres of railway line. Twelve of the 18 countries do not have their own commercial access to the sea and in the whole subcontinent there are 15 harbours of any value. Of these harbours seven are within the boundaries of the Republic of South Africa, including Walvis Bay. Six countries—Botswana, Bophuthatswana, Burundi, Lesotho, Ruanda and Transkei—do not have their own railway systems, although the Rhodesian Railways serves Botswana and the S.A. Railways serves Transkei and Bophuthatswana. Apart from the 5 900 route kilometre of railway line of the Tanzam line, the remaining 39 000 kilometre of rail is of standard gauge, i.e. 1 065 mm and the same rolling stock can be used interchangeably.

†Even after the completion of the Tanzam railway the problem of an efficient export outlet for the minerals of Zambia and Zaïre through Dar es Salaam was not solved, because constantly efficient harbour handling expertise was not necessarily available, with the result that there is an enormous congestion in the harbour. Because of the closure of the Benguela railway line to the port of Lobito, due to civil unrest in Angola, over 70 000 tons of Zambian export traffic, mainly copper, and a large number of their wagons are still immobilized. When Zambia also refused to dispatch its traffic through the Rhodesian territory, it brought upon itself unnecessary economic hardship and considerable fluctuations in the volume of its foreign trade. South Africa has had to route its export to Zambia via Nacala or Dar es Salaam and hence to Zambia at a tariff nearly four times higher than would be the case if the traffic had gone through Rhodesia via the Victoria Falls bridge. Zambia also experiences a shortage of trucks and is hampered by an acute shortage of rolling stock. When the S.A. Railways was therefore approached by the Zambian Railways to assist them, the S.A. Railways could help them and did so for the benefit of Zambia and her people, and also neighbouring Zaire. The service is rendered on a basis of mutual economic benefit to both railway systems.

Since the completion of the Bot-Zam highway from Nata in Botswana to Gazankulu on the Zambian border, this route is also used by road hauliers after the goods have been railed from South Africa to Francistown.

Zaïre is landlocked. Its cheapest export route via the Benguela line through Lobito is closed. The other route through Zambia via the Tanzam line is also not without its problems. The third alternative route is through Zambia, Rhodesia and Botswana to the South African harbours. The first two routes are, even if they are in operation, slow, inefficient and expensive. It is also difficult to get Zaïre railway trucks onto the Tanzam line. The Rhodesian and S.A. Railways can handle Zaïre railway trucks without difficulty. Because of the efficient and speedy handling of this traffic on the latter route, importers and exporters in Zaïre prefer to use the South African harbours despite the higher costs due to the longer distance. On 14 December 1976, at Matchipanda the S.A. Railways after deliberation with the Governments and Railway Administrations of Mozambique and Rhodesia, retrieved, at the request of the Zaïre Railway Administration, 189 Zaïre railway trucks which were trapped in Mozambique as a result of the closure of Mozambique’s border with Rhodesia. These trucks were handed over to the Rhodesian Railways for despatch to Zaïre. This is another example of the value of interstate cooperation being more advantageous than confrontation.

South Africa has close connections with Malawi. The rail connection between South Africa and Malawi was also disrupted as a result of the closure of the Rhodesian Mozambique border on 3 March 1976. Despite this, co-operation between the Railways of Malawi and South Africa continue unabated. Although direct rail traffic between South Africa and Malawi has come to a standstill, air traffic, especially air freight traffic, between the two countries has increased considerably. In October 1976 500 tons of fertilizer was air freighted to Blantyre and at present some 70 tons air freight is carried to Malawi weekly.

Botswana is also landlocked. All its overseas exports, mainly meat, and its imports are handled by the S.A. Railways.

The Swaziland railway line is not connected to that of the S.A. Railways. The main traffic link is between the Ka Daka ore region and Maputo. Swaziland, however, has started to construct a direct rail link between Phuzumoya and Golela in Natal to obtain an alternative sea route through Richards Bay. The S.A. Railways renders direct assistance, including managerial aid. Previously Swaziland relied on assistance and skills from abroad, but has now turned to South Africa for this type of assistance, because South Africa, with similar and common interests, is better suited to render beneficial aid.

Recently Rhodesia completed its direct rail link to South Africa via Beit Bridge. This proved most beneficial to Rhodesia because its other two routes via Beira and Maputo were closed.

*With regard to Mozambique, there is an historical agreement of co-operation between Mozambique and South Africa which dates back to the times of Paul Kruger. The traffic handled via Mozambique forms a substantial part of the South African traffic, and although two-thirds of sea traffic, import and export, is handled by the Durban harbour, one-sixth—about 17%—of the import and export traffic of South Africa is handled via Maputo. And that in spite of the fact that, South Africa and Maputo have diametrically opposed policies. The hon. member for Green Point referred to this anomaly and said there is a lesson in it for various countries. Then he tried to make political capital out of it by saying that there is also a lesson in it for South Africa. However, what he does not seem to realize, because he is so politically narrow-minded, is the fact that South Africa has always pursued a policy of co-operation.

Quite recently the hon. the Minister of Agriculture intimated in this House that the Department of Agricultural Technical Services renders services to 47 African States. Other Government departments are equally prepared to have dealings with any country which is prepared to co-operate with South Africa for our respective common good.

It is quite clear that South Africa and the S.A. Railways, as the main organization which is able to render these services, set an example to many other countries in the world who are only too eager to get at us with boycotts and sanctions at the UN. In this respect South Africa has demonstrated that she is prepared to continue to trade and do business even with countries which develop in a different way politically, and not only with countries which are favourably disposed to South Africa—I refer to Rhodesia—but also with countries such as Mozambique. If the world were to take note of this and follow the example set by the S.A. Railways and by South Africa there will be far more development in the world and far less confrontation, because confrontation, at whatever level, always causes a lack of development. The Railways are, therefore, setting a very good example in Southern Africa. The Railways organization with all its services is building up a large measure of co-operation in Southern Africa which will serve as a great stimulus to developing a firm economic unity, a force in Southern Africa, a force in the world economy. One can only pay tribute to the S.A. Railways for the key role they are playing in this regard.

Mr. Speaker, in my opinion the hon. member for Klip River gave a very interesting résumé of the railway links between the various countries of Southern Africa. He also referred to our relations with the countries concerned. I found that very interesting. I think the hon. member was right in saying that their prosperity is also our prosperity. I think, too, he was right in saying that the services and the aid with which the South African Railways have up to now furnished those countries is of great value and should be further expanded in future. Especially in the light of recent events in Rhodesia, I believe that there will be a heavy rail traffic from Rhodesia to South Africa in the foreseeable future. I think we should start thinking about a better way of utilizing our coastal towns and our harbour facilities in the light of the heavier traffic which will be coming our way from Rhodesia as well as Zambia. I hope the hon. member’s optimism with regard to the future relations between South Africa and the countries of Southern Africa is not misplaced. I am not quite as convinced as he is. However, I hope that he is right and I am wrong.

†Mr. Speaker, I want to return to the Railway budget. I think it is common cause for all of us in this House that the Railways is a key organization in the transport industry, that it plays a vital role in our whole economic process, in the first place because it is probably the biggest employer of labour in the Republic, and in the second place, because of the vital role it plays in the whole production process. I maintain therefore that the Railways cannot operate in isolation. Whatever the hon. the Minister of Transport may do in his budget, whatever tariff increases he may announce, will naturally have an accumulative effect on the rest of the country, and more particularly on the productive sector.

The Railways is a Government instrument and it remains, in fact, the responsibility of the whole Cabinet, and not really the responsibility of the hon. the Minister of Transport alone. That is why the tariff increases which he seemed fit to announce are in fact not only his responsibility, but the responsibility of the Cabinet as a whole.

*Mr. Speaker, as far as the latest tariff increases of 8,6% are concerned, the hon. the Minister maintains that he knows what influence increased transport costs are going to have on the economy of the country, especially in the present inflationary circumstances. He claims that he has no choice other than to increase tariffs and fares with 8,6% in order to balance revenue and expenditure. In other words, according to the argument of the hon. the Minister, the Railways is in fact the victim of inflation. According to the arguments of other hon. Ministers and Government officials, however, the increased rail tariffs are the source of inflation in South Africa. In other words, there is a definite difference of opinion between the hon. the Minister of Transport and his colleagues in the Cabinet.

†However, Mr. Speaker, to me the real question is this. Is the Railways doing the job efficiently, and if so, at what price? Mr. Speaker, with your permission I would like to try to deal with the question of efficiency in the Railways as I understand it, having read carefully and trying to analyse the report that was recently laid before us.

A consideration of the 1977 S.A.R. annual report indicates, as I see it, that the S.A. Railways is operating at, what I would call, only 59% of reasonable efficiency. I shall try to prove my point. If this is so it is very serious, because railage charges form a very significant and integral part of the whole economy of the Republic and affect in fact every commodity. I refer to page 27 of the report which shows that the Railways and Harbours expenditure for 1977 totalled R1 857 million. 41% of this expenditure—and I say 41% because I maintain that the Railways are in fact operating at 41% below reasonable efficiency—is R760 million. That, of course, is a slide-rule calculation. If I could put it in another way, 41,5% of their revenue for 1977 amounted, as hon. members know, to R1 828 million. Therefore, had the S.A. Railways operated only reasonably efficiently, present goods rates could have dropped by 41,5%, with a magical improvement in the whole of the economy. Sir, I see the Minister is looking at me sceptically, so I shall have to try to prove my assertion.

You have not proved the 59%.

I am coming to it now. I shall explain how the figure of “59% of reasonable efficiency” is derived. On pages 16 and 17 of the report, under the heading “Improved Efficiency in Train Operations”, reference is made to several innovations and installations, including “computerized rolling stock control”, which should in effect have improved operating efficiency dramatically. Then, on page 59, mention is made of capital expenditure totalling R59 million on new and improved “signalling and interlocking”. May I explain that, Sir. The summarized total is in the report and is given as R25,8 million, but a simple addition of the itemized figures on that page gives one a total of R59 million, hence my reference to that figure. On page 14 reference is made to a capital sum of R370 million spent on the containerization project. Pages 17 and 18 refer to the introduction of “unit trains”, and on those pages we find the following—

Now we move on to page 37, where we find the following—

Reference is then made to the increase in the number of block loads. From all this capital expenditure, which is indeed heavy capital expenditure, and from the S.A. Railways’ own stated justification for the expenditure, one would have expected a very significant improvement in operating efficiency and savings in labour. In fact, the report shows just the contrary.

But you are just saying …

I take it that hon. member is going to speak after me. He must just bear with me and wait for me to complete my argument before he gets to his feet. I come now to the nub of my argument. Page 37 gives the truck turn-round time, that is to say the overall time for a round trip, as being 11.13 days. This key figure has remained stagnant at more or less 11 days for several years. For example, in 1975 it was 11,26 days and in 1976 it was 11,45 days. I use the term “key figure” because, as I see it, the moving of trucks is what the Railways is all about. The report does say that the latest figures for turn-round have been very accurately determined by new computerized methods, and therefore should not be compared with previous years, but surely the figures that were given to us in respect of the turn-round period in previous years must have at least been reasonably accurate. However, regardless of previous figures, the figure for 1977, i.e. 11,13 days, may be examined on its own. An estimate of “reasonable” turn-round time can be derived by taking into account the time needed for a return trip with loading and unloading at each end.

In addition, one must not forget that trucks very often travel laden in one direction only. Now let me come to my calculation. A return journey of 1 042 km, that is to say twice 521 km, at a slow speed overall, of say 35 km/h, would take 1,25 days. Shunting at each end would total two days. A load at each end would total two days. Off-loading at each end would total two days. Provision for contingencies could be calculated at 0,65 days. This gives one a total reasonable turn-round period, in accordance with my calculations, of 7,9 days. The actual figure of 11.13 days represents a 41% increase on this figure of 7,9 days. Now perhaps my hon. friend will understand how I came to this figure of 41%.

Inter alia, this indicates that 41% of the existing 182 000 goods trucks referred to on page 39 should be surplus. This involves no fewer than 74 600 trucks, with a net occupation of about 74 km of track. In the report no figure is given for the value of the existing rolling stock or track, but taken together these figures must be substantial. To reiterate, moving trucks is what the Railways is all about, so it is rational to consider that a 41% loss of reasonable efficiency in truck movement represents a 41% loss of reasonable efficiency overall.

Let us look for a moment at labour. Again bearing in mind the heavy expenditure on measures allegedly to improve operating efficiency, the staff figures, referred to on page 108 of the report, do not reflect creditably on the S.A. Railways. In 1977 there was actually an increase of 442 in White staff and an increase of 3 363 in non-White staff. A saving of 11 086 in the notoriously inefficient “casual” labour market was offset by an increase of 11 195 in what is referred to as “permanent” Bantu labour. So much for labour.

Let us now look for a moment at the picture in regard to harbours. In harbours, the R370 million investment in containerization should have effected significant labour economies, yet page 108 of the report shows only a saving of 53 out of 4 690 or a saving, in fact, of 1,13%. At 6,3% the annual interest alone on the R370 million investment in containerization is R23,5 million, probably more than three times the total wages of the total harbour annual labour force. Admittedly there was a slight increase of 2,39% in cargo handled, but that would only account for a small extra amount of labour effort. If the containerization scheme had been optimally planned it should, in my opinion, have effected a saving of at least 30% in harbour labour, but it does not seem to have done so. From reading the report, one can only conclude that very expensive facilities are, at present, being inefficiently operated.

I do, of course, make allowance for the fact that the project is still in its infancy, but certainly the figures referred to in the report do not present a very encouraging picture, either in regard to labour or in regard to economies resulting from the great capital expenditure we have undertaken in recent years.

*In my opinion the expected upswing in the economy will be delayed as a result of the increased tariffs. Experts in almost every newspaper in the country that commented on the budget, agree with me. Exports will definitely be prejudiced and new price increases will follow. I think our growth rate will not increase, because last year’s favourable exports will definitely be adversely affected this year. For this reason we in these benches shall support the amendment of the NRP, because in my opinion it contains fair criticism of the Railway budget and also refers to the plight of the Railway pensioners.

We may mention various other matters in the Committee Stage, but at this stage, i.e. in the Second Reading debate, it is in my opinion sufficient to object to the consequences of tariff increases, to warn the Government against that and to address an earnest appeal to the hon. the Minister to investigate the efficiency of the Railways, especially where, as indicated in the report, there seems to be unnecessary waste of time as far as truck transport is concerned.

Mr. Speaker, I cannot agree with that hon. member that the Railways is only 59% efficient. I appreciate that hon. member for always making a positive contribution in this House, but this time he juggled with figures to such an extent that I am afraid that he became a little entangled in his own figures. I am afraid that one would need a mathematician to decipher the speech he made here tonight. In my speech I shall come back to the important aspect of the efficiency of the Railways. We are grateful that things are not going as badly with the Railways as they are with the Official Opposition in this House. They suffered a serious derailment very early on in this session. It seems to me that they are still trying very hard indeed to get their train back on the rails again. As a matter of fact, it seems to us as though their train does not want to go; as if they are having a hard struggle to get up steam. We trust, in the interests of South Africa and of an effective Opposition, that they will soon succeed in getting their train back on the rails again so that we may have effective debates in the House.

I do not think the Railways deserves the criticism that came from the Opposition side in this debate. Much of this criticism was unreasonable and unjust. It was misplaced and without grounds, like the criticism of the hon. member for Amanzimtoti who told us about the wastage on the Railways. In fact, I want to show him tonight how little wastage there is on the Railways. I think we can take our hats off to the S.A. Railways. The Railways acted during the past year in the way a loyal citizen of the country would act under such circumstances. The Railways acted in the way which a good patriotic South African would act who knows that his country is engaged in a struggle for survival, and he therefore has to make sacrifices and steel his muscles. When the Railways saw that its revenue was beginning to fall off as a result of the economic recession—and it was not only experienced here, but throughout the world—when the management saw that the revenue of the Railways was diminishing, mainly, please note, as a result of outside factors, when they saw that the revenue was not what it ought to have been, they did not sit down in sackcloth and ashes but decided to take the bit between the teeth and to accept the challenge. In the midst of all the hard knocks of escalating costs, inflation, capital shortages and decreasing traffic, the Minister and the management of the Railways did not despair but decided to search their own hearts. The Railways decided to try and save itself under these circumstances, and what a wonderful rescue operation it was on the part of the Railways! The whip was cracked, at times severely, and it had the desired effect.

The very first thing they decided to do, was to spend less on the Capital Account because funds were not all that freely available. It was decided to follow a policy of self-financing. Furthermore it was decided that better use had to be made of available capital. In addition priorities, those things with the greatest value for the Railways under the circumstances, were carefully examined. It was decided that the Railways would have to operate within its means in future and cutbacks were effected everywhere. Less essential services were cancelled and overtime and Sunday time were drastically curtailed. As a result of this overtime was reduced by 16,8% in the first nine months of the financial year, while Sunday time was reduced by 12,2%.

The Railway staff deserve the thanks of us all for the wonderful co-operation they gave the management to make this effort successful. Although these people had to manage with less income and had to tighten their belts, they did not grumble or complain. The Railway staff made a very important contribution to this economizing effort. They displayed a great deal of patience as far as salary demands were concerned. They did not ask for too much when they needed money urgently. Neither did they insist on immediate salary increases. As long ago as 1955 ex-Minister Ben Schoeman said that he accepted the challenge of providing South Africa with an outstanding and efficient Railway system …

They are being treated ungratefully!

… and that every man and woman working on the Railways, should help him to do so. As far as the interjection of the hon. member for Durban Point is concerned, I want to assure him that the Railways has looked after its people very well. Since 1955 when Minister Schoeman made this request to the staff of the Railways, they have time and again, when the Railways was in the red, come forward to help get the wagon across the river. After that they had to do it time and again and now they have done so once again. The management of the Railways also contributed by improving the relations between the management and the staff and by making working conditions more favourable and pleasant for these people.

Throughout this giant organization the campaign to increase productivity and efficiency has been intensified. From top to bottom in the Railway service productivity was stepped up and efficiency improved. Every man and woman was expected to pull their weight and they did so cheerfully. The Railways is probably the only organization in this country that succeeded in simultaneously reducing staff and increasing production. One can only do that if one has a very loyal labour force. The Railways can be congratulated on the results they achieved in increasing productivity. For many years now the Railways has taken the lead in this regard and has set a commendable example to the country. Year after year the Railways has raised its level of productivity. During the past 15 years the Railways has increased its level of productivity by all of 30% and that is an almost unparalleled achievement. It was possible to do this because the Railways has utilized the two main production factors, i.e. labour and capital, efficiently. Without the exceptional resourcefulness and initiative of the men and women in the Railway service, none of these achievements would have been possible.

The Railways was the first to utilize new inventions of which other countries are also reaping the benefits now; it took the lead with technological developments and sophisticated equipment, some of which are unique in the world. Not very long ago we could not have dreamed of being able to convey such an enormous amount of freight with a single train as is now being done. We are at present using trains which are almost 2,5 km long. Such trains have up to 220 wagons and are pulled by six locomotives. It is a wonderful sight to see such a train. The hon. member for Witwatersberg told us more about this earlier on in the debate this afternoon. These things are to a great extent the result of the extraordinary ability of the Railways to keep on increasing its productivity. The result of this was that we were able to save more than R89 million during the past year. This was done in the midst of an appalling cost and inflation spiral.

The Railways succeed in doing the same amount of work with less staff. I want to quote only one example. Maintenance of the permanent way which was formerly given out on contract, is now being done by the existing staff themselves. Hon. members can therefore see that optimum use is being made of the staff of the Railways. Surely, then, results cannot be lacking. However, the Railways does far more than extricate itself from the difficult circumstances in which it finds itself.

Let us consider the capital position of the Railways. Because capital has become scarce and expensive, the Railways decided to be more self-sufficient in this regard as well by generating its own capital. It is a sound principle in the business world that the ratio of self-generated to outside capital should be a sound one. Businessmen believe that if one invests too much outside capital in one’s enterprise, such a business enterprise is no longer healthy. In the private sector it is believed that an enterprise should provide at least 50% of its own capital. The S.A. Railways realized that it would have to pay more attention to this sound business principle and that it would also have to adopt this course. The Railways is therefore, as far as this is concerned as well, on the right course to becoming self-sufficient with regard to the provision of capital.

The Railways has already been extremely successful in achieving this. Thus the Railways tried to save itself, when things became difficult, in a praiseworthy manner.

When we say that, we must not forget that it would not have been possible to do this if it had not been for the goodwill, loyalty and determination of the railway worker. What South Africa needs to get the wagon up the steep incline in these difficult times is the spirit of the railway worker. One sometimes wishes that the spirit of the railway worker can leaven the economy of the entire country.

The herculean effort on the part of the Railways resulted in a saving of almost R90 million. However, that is still not enough. The hon. the Minister has already indicated in his budget speech how much it takes to keep an efficient transport system going that can serve the country and form the nucleus of transportation in Southern Africa as well. The hon. member for Klip River has already referred to the important part the Railways has to play in this connection. If our Railways is to be ready for any eventuality we need more money. Where must this money be found? Surely it cannot be found by merely imposing higher rail tariffs. If not, we shall have to subsidize the Railways as other countries are doing. When one subsidizes the Railways, it amounts to the same thing: The money is still being taken out of the pocket of the taxpayer.

The Railways forms an important part of the infrastructure of our country and it plays a cardinal role in the economy of our country. The Railways has an important strategic part to play in the circumstances in which our country finds itself. It is inconceivable that we can allow the Railways, which has to play this important part, to find itself in a position where it can no longer operate efficiently because it does not have the money. It is also inconceivable that we shall have to continue with a transport organization which is being crippled simply because it does not have the money to stay in business and to do its work efficiently. Do hon. members of the Opposition—they are the people who criticize so easily—want to see the Railways become a crippled organization, our transport organization limp to a halt because we muzzle it by not voting the money necessary to enable it to do its job? Surely it is enough that we are saddled with a crippled Opposition in the country. Surely we cannot also be saddled with a crippled railway system.

It would be sabotage of our country if we were to handicap the Railways with a shortage of funds so that it could not continue with its work. Because the Railways has such a cardinal and vital part to play to assist South Africa in the present circumstances—one can almost say, in its hour of need—we should in fact make it financially possible for the Railways to plan ahead and initiate the necessary projects to meet the future needs of our country. There is, for example, the important extensions at Richards Bay and Saldanha Bay for which money is now being appropriated. For those extensions we need the vast amount of almost R160 million. It may happen overnight that much greater demands are made of a harbour such as Richards Bay. Does the hon. the Opposition now want us to refuse to vote that money for that extension at Richards Bay so that it can be ready for action when our country needs the facilities? Does the Opposition want us to be caught napping like the foolish virgins without oil for their lamps? Do they not realize that these harbours handle minerals and products which are important earnings of foreign exchange for South Africa in these times?

Transport is of vital importance in any national economy because the efficient development of the natural resources of a country, and consequently its survival, is to a great extent dependent on its transport system. It is expected that the Railways will have to double its carrying capacity during the next 20 years to satisfy the requirements of this rapidly growing country of ours. If that is the case, surely it would be foolish to clip the Railways’ wings now by not giving it enough revenue to prepare itself for this major development. If we obstruct the Railways, we are obstructing South Africa’s development and I shall go as far as to say that we shall then, in a certain sense, also be obstructing the development in Southern Africa.

It is no mean achievement that the Railways could save R89,3 million on its expected expenditure during the past year. The achievement is even greater if one takes into account that the economic recession led to fewer goods, especially high-rated goods, being available for transport. That had a drastic influence on Railway revenue.

The great savings campaign of the Railways, however, did not end with this great saving of almost R90 million. It is very clear that the Railways intends to carry on with this. We can see that in the fact that the average increase in tariffs is 8,6%, a percentage which is considerably lower than the present inflation rate of nearly 11%. In this connection I should like to quote one little paragraph from the Sunday Times of yesterday. The Sunday Times, a newspaper which is definitely not well disposed towards the Government, writes—

We therefore receive support for this argument from this quarter as well.

The important message of the budget is that the Railways succeeded in keeping a tight rein on costs and in increasing productivity. One wishes that one could say this of the economy as a whole. Today it is the dream of every country that is struggling with inflation to curb rising costs. The Railways did this. The other message that emanates from this budget, is that the Railways intends to maintain this achievement of theirs. I wish the hon. the Minister and his Management every success with that, because if they cannot maintain it, the present tariff increases will be completely inadequate.

Have you thanked the hon. the Minister yet?

The critics on the Opposition side cannot point out even one example of mismanagement or bad management in the Railways. The hon. member for Durban Point is welcome to rise and try to give us one example of that. I want to tell the hon. member for Simonstown that he cannot show us any examples of inefficiency either.

Our Railways organization is being managed and operated so well that it is one of the last in the world that is still able to show a profit. We were told here that subsidies from the State to other railway organizations in the world run into astronomical figures. Even the railways of a model country like Switzerland are now showing a loss. That proves one thing, and that is that our Railways organization is in very good hands and that it is being operated very efficiently and in a basically sound manner.

Mr. Speaker, the hon. member who has just sat down—I believe he is the senior information officer of the NP—gave us a demonstration of the two-monkey approach as opposed to the three-monkey approach. The three monkeys cannot hear, cannot see and do not talk. He has spoken a great deal but it is quite clear that he does not want to hear or see. He has in fact told us in so many words that an increase in rates must be seen as an act of patriotism. He said that one would sabotage the economy if one did not raise the tariffs.

I want to ask the hon. the Minister to give us his views and to tell us whether he agrees with the hon. member that one should use 50% of the Revenue Account for capital development and whether that is the target we should be working towards. The estimate of expenditure on capital and betterment works is R1 137 500 000. Is that the target we should move towards? If that is so, we shall have tariff increases in this country which will sabotage the economy and which will qualify as being unpatriotic.

The hon. member spoke a great deal about productivity, and during the course of my speech I shall come back to that particular aspect.

During this debate we have heard a great deal, and during the last couple of days a great deal has been written, about the tariff increases. We heard it again from the hon. member for Bloemfontein North when he had to take the sad step of quoting from the Sunday Times. The sad part of it is that we have to find consolation in the fact that the average increases are below the current rate of inflation. I want to point out that that runs into double figures, and therefore I maintain that it is not a big achievement to keep those increases below the current rate of inflation. The fact remains, and this is what we have to accept as the reality, that we have had an 8,6% general increase. As a result of this the consumer price index will rise during the ensuing year. Whether it is going to be 0,5% or whether it is going to be 1%, the indication is quite clear, and this is what the hon. the Minister should be concerned about, and this is what the Administration should be worried about, that the Railways and the country have not yet reached the stage where they can say that they are catching up with inflation. As a result of the introduction of this budget we shall keep on losing the battle against inflation. When one speaks of an average increase, one must realize that there is a maximum and a minimum. One must realize, too, that certain people or groups of people and certain sectors of the economy will be hit harder than others. In this particular regard we have the situation in which the agricultural sector finds itself. Mention has already been made of the effect of the tariff increases on the GDP, which will in fact be of the order of 2%, which is much higher than the average of 0,5% to 1% which has been mentioned. Whilst one has sympathy for the farmer, one realizes that in the end certain sections of the public will suffer more than others.

You are making a very good speech.

In the final analysis it is the consumer who will be hit the hardest. Whilst talking about this average, I want to point out that an average means nothing if one does not bear in mind some of the maximum figures. For example, one finds that the increase in the tariff for the transportation of milk or cream in cans of less than 5 litres content, over a distance of 63 km, is from 9 cents to 15 cents, which represents an increase of 66⅔. After rationalization—and hon. members know that under the word “rationalization” one can sometimes get away with murder—one will find that this is what in fact is happening.

May I ask the hon. member a question?

You may put the question tomorrow. [Interjections.]

Mr. Speaker, the hon. member is making a fine speech, but I should like to ask whether he realizes that less than 10% of the milk and cream are transported by rail. The rest is transported by road. [Interjections.]

Not only milk and cream are involved here. Other things are also involved.

†Most of the 116 000 White employees of the Railways and most of the 151 000 non-White employees of the Railways fall into the category of an average wage earner, and it is the average wage earner who spends a far greater percentage of his income on foodstuffs. Nobody can deny the fact that these tariff increases will result in a further rise in the cost of living. If one brings the increases into line with the incomes of those people it will represent a far greater increase in their cost of living than the theoretical 0,2% or 0,3%. For the majority of the employees of the hon. the Minister’s department and for the members of the public there is no consolation whatsoever in this theoretical argument nor from the quote from the Sunday Times saying that we should be so proud of ourselves because we have just managed to keep the figure below double figures.

I now want to refer in particular to one section of the population. We say in the fourth leg of our amendment, and I want to read it again, that we are not prepared to pass the Second Reading of the Railways Appropriation Bill, because—

This must be regarded as one of the shocks of this budget. In spite of the fact that mention was made of the increase in the pensions of widows, the forgotten group remains the pre-1973 pensioners. They are the ones who carry the heavy burden today as a result of inflation. They are the people who did not receive the big gratuities which were paid out to other pensioners. Regardless of the fact that they receive unrealistically low pensions, they are expected to be satisfied with an annual increase of only 2% which is the automatic yearly adjustment to their pensions. An increase of 2% used to make sense in years when the inflation rate was still lower than that. However, in the day and age in which we live now this is totally unrealistic. The people I have referred to, are people who will definitely be in need of urgent relief. However, this budget is going to add to their misery, because they are people who—like all other pensioners living on a fixed income—will be adversely affected by this budget. One can say that this budget is penalizing people who have worked and who have built the Railways to where it stands today.

I accept the fact that the Railways have problems, great problems. Other hon. members have also mentioned this fact. We accept that the Railways have problems regarding its socio-economic services, services for which it should receive compensation from the Railway revenue account. I was very pleased indeed to hear the hon. member for Vanderbijlpark mention so eloquently this very point, stressing the fact that it was not fair that the Railways should be performing all socio-economic services.

The leader of the NRP, the hon. member for Durban Point, when he was still chief spokesman on Railway matters for the UP, only two years ago, in 1976, moved an amendment in the Second Reading debate on the Railways Appropriation Bill in which he condemned the budget, saying it reflected the Government’s failure to transfer the financial burden of uneconomic socio-economic services from the Railways Administration to the Consolidated Revenue Fund. All I can say is that hon. members opposite are very much Johnny-come-Latelies in this respect. [Interjections.] What they should do, and what we should do in South Africa, is something really constructive, and I hope that something really constructive will be done in this respect.

I now want to refer to another aspect. I have already conceded that the Railways have difficulties with which they have to cope. The hon. member for Uitenhage said the Railways were constantly improving services. In fact one finds that in this respect it has been cutting down on services. In the case of passenger services a number of trains have been cancelled and in the case of high-rated traffic there has been a continual fall in volume. The Railways should by now have reached the stage where they can anticipate that type of thing.

Sir, let us look at the question of productivity. The hon. member for Bloemfontein North said that the productivity was so high. If we look at the annual report, we find that 39% of the money spent by the Railways is in fact spent on labour. This is the most important item of expenditure. In this connection I refer to the item “How rand was spent” on page 4, where 39 out of 100 cents is shown to have been spent on labour. Just to put the matter into perspective, I should like to mention that the second largest item of expenditure is in respect of materials. This accounts for 18% of the expenditure. Quite clearly, therefore, every effort must be made to ensure that the highest return in respect of productivity is earned on that 39% of expenditure. Through the years the whole problem of productivity and the actual level of productivity achieved has been worrying me, not only as far as the Railways are concerned, but in fact as far as all the economically active people in the country are concerned. This is worrying especially when one bears in mind that the Railways are by far the largest employer of labour in South Africa. When one deals with such a large labour force, one cannot afford a lack of motivation amongst workers; neither can one afford wastage in terms of a low level of productivity.

On account of the large number of people involved, if one finds even just a small degree of lack of motivation, resulting in a low level of productivity, one finds that there is a tremendous compounding effect. That compounding effect can in fact be crippling. I was therefore pleased to hear the hon. the Minister mention that the aim was to maintain a high level of efficiency, and that training was being done. He also made mention of management development courses and courses for senior administrative officers. What we need, however, is in my opinion a far greater effort in this respect. Motivation and productivity, with a consequent saving in operating expenses, are all different facets of the same coin. In many instances one finds a person working as hard as he possibly can, but that does not necessarily mean that his productivity is as high as it should be. These are factors which we should bear in mind. All this means only one thing, and that is that there is a dire need for the Railways to expand its psychological services. Psychometric testing must be employed to ensure that this large staff, which is to be increased once again by more than 5 000, will in fact be as productive as it should be.

Mr. Speaker, the hon. member who has just resumed his seat amazed us, as he usually does. He let fly with a spate of words and although he mentioned several points of criticism, he did not offer a single solution. The only solution which he did in fact offer, was that the pensioners should receive higher pensions. The Railway pensioners are people who know who has sympathy with them. The Railway pensioners have always enjoyed the best treatment from this side of the House, as far as the financial position allowed. As I said, Sir, the hon. member did not contribute anything. I say the productivity is very high. The hon. member mentioned a “lack of motivation”. If one takes a look at the Railway service, one finds one outstanding characteristic, and this is in fact the motivation and the resulting high productivity which one finds there. Surely hon. members of the Opposition know that the Railways will also be influenced—and is in fact influenced—by the detrimental price increases which occur. This has been spelled out here repeatedly today. I did not even intend to mention it again, but I am forced to do so. The increase in electricity rates and the increase in the prices of fuel, aircraft, steel, coal, aircraft parts and rolling stock, places a heavy burden on our Railways in the form of imported inflation. After all, our economy does not stand alone. Our economy is an integral part of the world economy and we are closely bound up with our trading partners. Factors over which we have no control, influence not only our income, but our expenditure too.

We have listened to criticism the whole afternoon and evening, but there has been absolutely no positive, constructive criticism. There was only a spate of words. Some hon. members serve on the Select Committee, and one would have thought that they would be better informed. However, they use arguments which simply flabbergast one. Does the Opposition still not realize that our Railways is one of the few railways in the world which still shows a profit? This is a very important fact. Whereas the railways of the rest of the world are going through serious crises, ours is still doing very well.

When I listened to the budget speech of the hon. the Minister last week, I repeatedly received an impression of the importance, the size and extent of the S.A. Railways. I also received an impression of the astronomical amounts and figures which they work with. It is absolutely flabbergasting! We are dealing here with a giant organization which has a ripple effect reaching out to the remotest comers of our country.

The importance of the Railways, with all its branches, the Airways, the Harbours and Pipelines, means that this organization is not only large and important, but that it is also the largest employer, an employer which provides work for approximately 260 000 persons. In addition the Railways is the largest investor of capital in our country. It is the largest purchaser of consumer goods as well as being the largest transport organization. It plays a very important economic role in South Africa. As was indicated earlier this evening, it also fulfils a very important diplomatic role, especially in regard to our neighbouring States like Swaziland, Mozambique, Rhodesia, etc. Here we really have proof of what can be done. When the history of this organization is written one day, it will make special mention of this exceptional attempt on the part of the Railways and its General Manager and staff who bring about those relations for us.

The Railways also has a very important strategic role to play in the times in which we are living, and in the very difficult international circumstances. Therefore, the affairs of the Railways must be sound. It needs funds for this. In order to do what is necessary, it needs the money and it is the task of this Parliament to provide those funds. To be honest, we on this side of the House are very sorry that we are forced to announce tariff increases this year. After all, tariff increases are not popular. We would rather have lowered tariffs if that were possible. We realize only too well the effect that increased transport costs have on the economy of our country, in the present economic climate in particular. But the Railways is merely another victim of the inflation monster. If there were another way out and if the hon. Opposition could indicate another way out, the hon. the Minister would definitely have taken that way out.

I should like to dwell on another aspect of the Railways’ activities tonight, viz. the S.A. Airways. In his budget speech the hon. the Minister painted a wonderful picture of the success which the S.A. Airways achieved in its sustained attempts to improve its finances. In fact, it made a financial recovery far more quickly than was expected. The operating results for the period April to December consequently indicated a surplus of R8,6 million as against an expected shortfall of R15,7 million. I want hon. members of the Opposition to take special note of this because it reflects the efficiency of the S.A. Airways and the quality of its service in these times of cost escalation. This recovery is even more remarkable if it is seen against the general economic and political background of the present time. The question arises as to what these improved operating results may be attributed to.

They must in fact be attributed to those things which we are being accused of here; they must in fact be attributed to the farsightedness, the planning and efficiency which the S.A. Airways displayed in building up our fleet of aircraft. With the aid of the long-distance flying ability of the Boeing 747 wide-bodied jumbo jet, the S.A. Airways succeeded in introducing more direct services to Europe and in this way decreasing the disadvantage of flying around the bulge of Africa. If I remember correctly, this meant an additional fuel account of R20 million for our Airways. This was accompanied by intensive sales and economy campaigns which resulted in a saving of R9,7 million in expenditure while the income was almost R14,7 million higher than was estimated. This therefore means that there was a total improvement of R24 million for the first nine months of the present financial year. This is phenomenal.

I can therefore say that things are going well for the S.A. Airways. On the most important trade routes of the S.A. Airways, i.e. those to Europe and England, the passenger traffic increased by 10,9% and the air freight traffic by 28,4%. This also holds good for our services to North America and Argentinia. The traffic on the service to Hongkong has more than doubled since it was introduced on 1 July last year. The aggregate profit of all international services, excluding the regional services, amounted to approximately R3,5 million for the period from April to December. It is disappointing, however, that the passenger traffic on our domestic routes dropped slightly by 1,3% over the same period.

This brings me to another aspect which I should like to bring to the attention of the hon. the Minister. I am now referring to the important role which the Airbus plays in our present set-up. Sir, you will remember that when the Airways was discussed in this debate last year and the year before that, the main theme was the delays in the Airways. The introduction of the Airbus on the domestic Johannesburg-Cape Town-Johannesburg and Johannesburg-Durban-Johannesburg routes, has reduced the delays of last year considerably. I am going to quote a few figures in this regard.

On the Cape Town/Johannesburg route, there were 69 delays in December 1976. In December 1977 the delays on this route were reduced by 46,4% to 37. From January to December 1976, there were 636 delays. In the same period in 1977, the delays were reduced to 411, a decrease of 35,4%. On the Durban-Johannesburg route, there were 67 delays in December 1976. In December 1977, however, there were only 19 delays on this route. This is an improvement of 71,6%. This is an improvement of 71,6%. In the period January to December 1976 there were 548 delays on this route, and from January to December 1977 only 226, an improvement of 58,8%. This bears out the statement I want to make, viz. that the introduction of the Airbus aircraft has solved this problem to a very large extent. We discovered that the Airbus is extremely well-suited to the service for which it is being used. It is the first wide-bodied aircraft which is specially designed to make flights of up to 2 000 miles. The direct operating costs of the aircraft are at least 15% lower than those of the best of its competitors over similar routes. The best wide-bodied medium-distance aircraft which are in service at the moment, use up to 40% more fuel per passenger than the Airbus. The latest available figures which have been made available by the SAA, show that the total operating costs per seat/kilometre for the Airbus are 10% lower than those of the Boeing 727 for a flight between Johannesburg and Cape Town. This is a remarkable achievement. The operating costs of the Airbus are not only considerably more favourable than its comparable competitors, the unit costs are also lower than the narrow-bodied medium-distance aircraft. Therefore, there is a considerable saving as far as expenditure is concerned. In addition, the attractiveness of the Airbus, which has established a new standard of comfort and space on the domestic service, contributed largely towards stimulating traffic. The contribution of the Airbus to the profitability of the domestic service, can therefore be established beyond all doubt. Therefore, the Airbus has solved the problems which were experienced in the mid-’seventies, when additional capacity was required, i.e. when it was decided to use wide-bodied aircraft on the domestic flights. Today, after the Airbus has been in service for more than a year, it can definitely be said that this aircraft came up to expectations in all respects and there can be no doubt about the wisdom of the decision which was taken.

However, there is one other aspect to which I want to draw attention, and this is the utilization of seats during the slack periods. According to information which I received, the utilization of seats during the peak periods is sometimes as high as 95%, but then it drops to below 50% during slack times. I know that a great deal of thought is being given to this problem, and I want to ask the hon. the Minister and the Management to think of ways of making better use of these unutilized seats during slack periods. Perhaps consideration could be given to special concessions for passengers during those times. I am under the impression—I am not saying that this is the case—that the present excursion rate does not fully serve its purpose. Perhaps the period of validity of 21 days for such a concession should perhaps be extended and the return flight could perhaps be shortened to seven days instead of ten. In addition it is difficult to book a month before the time. If a seat is available, it must be possible to utilize it, even if the period is less than a month. I do not know whether special concessions are available to touring groups, holiday-makers, sports teams, etc., but I believe that, with the necessary publicity—I want to emphasize this—the unutilized seats can be filled to the great financial benefit of the SAA.

There is also another aspect which I should like to raise briefly. In the light of increasing tariffs, the hon. members will perhaps be interested to know that the new cost of a flight from Johannesburg to Cape Town, a distance of 1 271 km, is approximately R75 as against the old cost of R71. In Brazil, the air fare for a similar flight, from Brazil to the Iguassu Falls, a distance of 1 279 km, is R83,40. From Cape Town to Durban, a distance of 1 246 km, the fare is R75. In Italy the fare from Milan to Catania, a distance of 1 030 km, is R98,50. The fare from Johannesburg to Port Elizabeth, a distance of 909 km, is R63. From Milan to Palermo, a distance of 887 km, the fare is R98,50. Let us take a look at the USA. From Cape Town to Port Elizabeth, a distance of 645 km, the fare is R49 while from Denver to Jackson, a distance of 646 km, the fare is R52,10. Admittedly there is not really a big difference.

There is no difference.

Of course there is a difference, i.e. R49 as against R52,10. From Johannesburg to Kimberley, a distance of 452 km, the fare is R40. In the UK the distance from London to Newcastle is 425 km and the fare is R48,60. Another good example is that the fare from East London to Port Elizabeth, a distance of 230 km amounts to R25, while the fare from Glasgow to Barra, a distance of 234 km, is R39,70. I am mentioning this because we can deduce from this that these increases, although we are sorry that they have to be introduced, do not yet mean that we are paying excessive rates for air transport.

Another bottleneck which I should like to take a brief look at, is the question of baggage. One of the bottlenecks at airports is to process the baggage of the 270 passengers which is discharged by the wide-bodied aircraft, on time, easily and quickly. A considerable improvement can be noticed as the staff become more proficient in the process and the waiting period is not nearly as long as it sometimes seems to be. Waiting for one minute at an airport sometimes feels like 10 minutes, but if one really keeps track of the time, the baggage is usually available within seven to eight minutes. More conveyor belts are being envisaged for some airports and as a result the situation will in due course be further improved. We in South Africa are perhaps inclined to complain too quickly if we have to wait a while before we receive our baggage. Abroad, one has to walk for about a quarter to a half a mile to reach the point where one can receive one’s baggage, and even when one arrives there, one still has to wait. But then it feels as if it arrives there fairly soon. In the meantime one does not take into account how far one has walked and how long it has taken to reach the terminus. We are inclined to bring the aircraft close to the airport so that the passengers can walk directly into the airport building. This results in passengers reaching the baggage terminus more rapidly and therefore it sometimes feels as if one has to wait longer than one does abroad.

The last aspect which I should like to raise, concerns our airfreight capacity. This is a very important aspect. In our domestic and external flights we have considerable air freight capacity in our wide-bodied aircraft. In certain sectors, these aircraft can convey as much as 20 tons of freight and more. This is done in co-operation with other airlines and here we have an important opportunity to get our products to overseas markets quickly and easily.

It is also much cheaper than by train!

Yes, it is too! Finally, I just want to mention that I recently had the privilege, together with other hon. members, of paying a visit to certain installations and working areas of the Railways, including the Jan Smuts Airport. There will not be time for me to go into this fully, but I just want to say that the visit which we paid to the Jan Smuts Airport, mainly to see what is being done in the technical division, as well as our visit to Koedoespoort where we took a look at the activities there, made me realize what a thorough organization the Railways is. It made me realize what type of person works in the Railways today and it made me realize that we have the best at our disposal today. I believe that when I say this, I am expressing the feelings of all who were there, including those of hon. members of the Opposition. The greatest experience for me was definitely the opportunity which we had to enter a flight simulator. I shall never forget that experience. To see how our people have succeeded by means of technology in simulating a situation which exactly resembles the actual position, was unforgettable. Unfortunately my time has expired and I cannot elaborate any further on this.

Mr. Speaker, the hon. members on the other side of the House, especially, have been impressing upon us all day how good the Railway budget is, how perfectly the Railways run, how quickly deliveries are made, etc. What mainly concerns me is how well the S.A. Railways and Harbours are serving the South African community, but especially how well this organization is serving that part of the community which needs assistance in difficult times. I half feared that the hon. the Minister of Agriculture would leave early, and I was very pleased to see him return. Up to now during the session, two motions have been tabled about agriculture. Although there was no direct reference in these two motions to transport costs, there was nevertheless a reference to the necessity of keeping production costs as low as possible. Part of one’s production cost is surely the transport costs of one’s product. When the hon. the Minister of Agriculture said earlier tonight by way of interjection that only a small percentage of fresh milk was being conveyed by rail, I became slightly nervous lest the hon. the Minister of Transport should insist that a larger percentage of milk be transported by rail. In that case, matters would be even worse than they are now.

The contribution of the agricultural sector is a very important one. It has been calculated that agriculture’s contribution to foreign exchange earned is approximately 30%. My objection is not specifically directed at the railway tariff on agricultural products which are intended for the export market, but rather at the increase in tariffs on livestock intended for the domestic market, as well as at the increase in tariffs for the transport of mealies in particular, which are used in poultry farming, dairy farming and pig farming.

Why are you against that?

I shall tell you why. I want to support the argument advanced by the hon. member for Tygervallei. He made out a strong case for preventing the Western Cape from being bled while as a result of the manner in which S.A.R. & H. matters are handled and as a result of its great distance from the mineral resources and the great consumer markets, and that the increased tariffs should not be allowed to harm the economy of this part of the country. That is more or less the gist of what he said, and I agree with that.

I want to say something about the effect which the proposed tariff increases will have on agriculture. Before I do so, I briefly want to touch on a little matter which the hon. the Minister must please attend to. In Cape Town—and I assume that it is also the case in other cities—we experience the problem that road truck and container truck drivers are prohibited, in terms of regulations which I have not yet seen for myself, from reversing the vehicles—it sounds funny, but this is the way it has been explained to me—with the result that it takes pleading and cajoling to persuade those drivers to use the reverse gear for easy loading and off-loading. I should imagine that there are hundreds, if not thousands, of premises where the space is simply too limited for some of these trucks to enter, turn and drive out. I think this matter should definitely receive attention.

There is another matter which the hon. the Minister ought to attend and that is that if the driver gets permission to use his reverse gear, documents must be signed to indemnify the S.A. Railways against any damage which may be caused as a result of the fact that he drives his truck in reverse gear. In my view it is unreasonable to expect of the owner or tenant of the premises to sign such an undertaking, because one does not know how experienced the driver is with that vehicle.

What has that to do with Railways?

It has to do with the Railways, because it is Railway vehicles which are used to load and offload goods.

To come back to the effect of the increased tariffs: Here in the Western Cape, until two or three years ago, there were a number of cattle fodder banks. The object of these was for cattle transported from South West Africa or from up-country to be left here near the abattoirs for a period, a few weeks, so that the contusions could heal and the cattle could be fed to the desired grade and then sent to the abattoirs at a suitable time, preferably when the prices would also be good. During the past 18 months it has happened, on account of the fact that the rail tariffs have unavoidably pushed up the price of fodder, and owing to the fact that the increase in rail tariffs has made it possible for the farmers to make use of their own transport, that the farmers have no longer made use of the fodder banks, but have marketed livestock directly, i.e., direct from the farm to the market, especially to the Cape market to which I referred, or they have sold their livestock to a speculator on the farm. In that way the farmer has unavoidably had to give away a part of his profit to a third person. That is one of the results of the tariff increases. The position is now that quite a number of these fodder banks are standing unused in the Western Cape and that that investment is simply no longer worth anything as far as revenue is concerned.

The real point I wish to make in connection with the Western Cape, is that something which damages the Western Cape even more than the question in connection with the transport of livestock is the problem with the production of broilers, and the position of the pig farmer. I do not think that I am going too far when I say that quite a number of broiler and pork producers are today experiencing immense financial problems as a result of the rise in fodder prices, which are mainly caused by the rise in rail tariffs. One almost gets the impression that the farmer in the Western Cape is being forced by the rail tariffs and the consequent rising in fodder prices to assume that he cannot practise that type of business in this part of the country and that the broiler and pig farming industry may eventually be forced to move to the maize-producing areas. I do not believe that the hon. the Minister of Agriculture has that in mind, but the increase in tariffs will result in just that. That will unavoidably do the Western Cape great damage and cause problems. For that reason I support the amendment which has been moved by this side of the House.

Mr. Speaker, the hon. member for Wynberg pecked here and there; hit on something here and there, but missed quite a lot of things. The last aspect which the hon. member referred to, that in connection with increased tariffs with regard to agricultural products, is a valid one indeed. I must concede that the hon. member is right. This is only one of the factors however. It is only one factor which contributed to the price increases. The hon. member will probably do well, especially if one bears in mind his opening remarks, if he remembers that in evaluating this or any other budget—but particularly this Railway budget and the operating results of the Railways—there is one cardinal factor which one dare not overlook. It is the general economic growth rate of the country. We cannot get past that. One must at all times take the expected growth rate for the coming year into account, as well as the economic trends and graphs prevailing at a given moment. The growth rate is also affected by the services rendered by the Railways, for if the Railways cannot render the services, the growth rate of the country is impeded. The hon. member will also willingly concede that the production sectors are dependent on the Railways for their supply of raw materials and production means and that the distribution sectors as well are almost 100% dependent upon the Railways. The Railways must take all these factors into account. That is why the things the hon. member mentioned—although valid—are only a drop in the bucket. They are not the full story.

They are not decisive.

The hon. member next to me here is remarking quite rightly that they can never be decisive. Let me leave the hon. member for Wynberg for the moment.

If it is borne in mind that the Railways, in terms of the Constitution of the Republic, is managed on a business basis—or should so be managed—one would be inclined to maintain that transport in South Africa has only an economic function to fulfil. It remains an irrefutable fact however that precisely because of the nature and type of service that it has to render, as well as its role in the infrastructure of our country, transport also has three additional—I should almost say inevitable—functions. Apart from its economic function, transport also has a social, a political and a strategic function.

If one considers the results of the S.A. Railways Administration in all its different facets and if one compares the transport situation of our country with that of other countries in Southern Africa—the hon. member for Klip River also referred to this a little earlier on—one realizes that the top management of the S.A. Railways Administration has a very great responsibility to ensure that all these functions of a modern transport economy are carried out in this country. This responsibility must of course at all times be fulfilled in accordance with the statutorily prescribed mandate given by the Constitution as I quoted it, viz. that the Railways should be managed according to business principles. If the Railways has a role to play—inter alia, too, others in the political field—the discharge of its functions should be consistent with general business principles. The test is a very simple one. One should just like to know whether or not a business concern would have applied such principles in similar situations or not; or whether it is the strategic military role of the Railways or its political role which has to be evaluated in a given situation. The test will remain the same in each case. Every factor here will have to be evaluated according to its shortterm and/or long-term benefits to the economic position of the Railways in particular, and to South Africa in general. The activities of the Railways, whether these involve the rail network, the harbours, the airways, the pipelines or road transport service, all play an enormous role in our general economy, because each of these sections of the organization, must be run, as I have said, on business lines, subject to one qualification only, that this is done to render a service and in the interests of the country, as opposed to the profit motive and limited interests one would expect from a private concern.

In a very important and extremely interesting lecture which the General Manager, Dr. Loubser, gave on 25 May of last year in his capacity as honorary professor at the Rand Afrikaans University, he said, inter alia—

Not only do I want to endorse this statement of the General Manager, but I also think he and the Railways organization deserve the gratitude of this hon. House and of the country in general for this standpoint view, and especially for the results which have already been achieved in this regard. I therefore found it interesting that the hon. the Minister referred to this aspect in this budget speech. The hon. the Minister said, inter alia, the following in his budget speech—

The role which the Railways plays in the political sphere, more specifically in the subcontinent of Africa, affords a very interesting field of study. I do not want to repeat all the facts and statistics which were furnished earlier by the hon. member for Klip River, but I should like to add that, apart from economic interdependence, all the countries to the north of us could to a greater or lesser extent divert a certain amount of traffic to the Republic. He also pointed out that the common gauges in most of the countries to the north of us has the inherent advantage that rolling stock need not necessarily be used on a particular railway system only. If the Republic of South Africa, together with South West Africa, is compared to the rest of the subcontinent, very important and most illuminating conclusions can be drawn about transport economics. That illustrates the special position which our country occupies in the field of transport economics as against the rest of this subcontinent. According to the statistical data of 1974 the standard of living of the Republic of South Africa based on income per capita, is almost seven times higher than that of the rest of the subcontinent south of the equator. The ratio of the gross domestic product per capita is approximately 6:1 in favour of the Republic.

These two figures alone reflect the relatively greater economic strength of the Republic compared to that of the remainder of the subcontinent. The transport infrastructure of our country is approximately eight times bigger than that of the rest of the subcontinent. An interesting comparison in this regard is this: Although the Republic has seven commercial harbours compared to the eight on the rest of the subcontinent, the following are the ratios regarding the adequacy of these harbours: The ratio of the harbour capacity per capita between the Republic and other countries is 17 to 1; and the harbour capacity per square km is as much as 16 to 1.

Again, as far as air transport is concerned, a very interesting comparison can be drawn. The domestic and local services of the S.A. Airways and the pool services together give the following very interesting statistics: The seat capacity per week in the Republic is 74 450 against a total of 31 200 in the rest of the subcontinent; seat capacity per 10 000 inhabitants per week is 29 in the Republic against only three in the rest of the subcontinent. A comparison based on the size of African airline fleets reveals that that of the South African Airways is more or less eight times that of the rest of the subcontinent. Broadly speaking, the transport-economic strength of the Republic is seven times that of the rest of the subcontinent. These comparisons are based on quantitative physical sizes. If the standards, in other words the quality of the transport infrastructure, plus the intensity of utilization could be added to that, the difference would probably be much greater, maybe even twice as much in some cases.

A very good example in this regard is the Tanzam railway line to Dar es Salaam which handles nearly 5 200 net tons per day, compared with the Natal main line through the Durban harbour which carries 34 000 net tons per day. There is absolutely no doubt about it that the extremely favourable transport-economic position of the Republic vis-á-vis its neighbours shows that the Republic in respect of all transport media is best suited to take the leading role in the development of transport and in the economy of Southern Africa. Add to that the high measure of technical know-how, research and general level of development of the Republic, the leading role which we will have to play in this regard becomes even more obvious.

As a result of wars and political factors which hamper transport systems on the subcontinent and have put economies under pressure, South Africa’s infrastructure achieved a very strong competitive position in countries like Zaire, Malawi, Zambia, Rhodesia and Mozambique. The hon. member for Klip River also referred to that. Let me state that a fair amount of goods destined for Zambia for example is sent by train from South African harbours or from South Africa itself to Francistown and from there by road to Zambia.

Our Railways Administration has also given valuable assistance to the Zambian Railways which enabled them to keep functioning more effectively, to the benefit of that country and its people as well as to its neighbouring state, Zaire. The Railways is being fully compensated for this aid. Zaire—just to mention an example—presently exports round about 470 000 tons of copper and 200 000 tons of copper concentrate annually. It is interesting that much of Zaïre’s import and export commodities are now being conveyed through South Africa by our Railways and handled by South African Harbours. The account of the South African Railways is credited with that profitable traffic. The hon. member for Klip River referred to the 189 trucks which the Railways seized for Zaïre in Mozambique. This operation was not only paid for, but it also made a great impression on the countries of Southern Africa.

The hon. member to whom I refer has already discussed Botswana and I do not want to elaborate on that. There is probably no need to say anything about road traffic, rail traffic and air traffic between South Africa and Rhodesia. The role which the Republic has played in this regard, especially over the last 12 years, is only too well known. The role which the Railways has played in this regard, is also no mean role.

Over a period of many years we have maintained very sound relations with the Railways of Mozambique. After the territory had become independent this sound relationship continued to the benefit of both countries. Maputo remains the nearest port to the biggest industrial complex in the Republic, i.e. the Witwatersrand and the Vaal Triangle. Consequently the railway lines to that harbour have been strengthened and electrified at a cost of approximately R70 million so that they could carry a higher capacity. The Natal main line to Durban, which is at the moment the nearest South African commercial port, but one, to the Witwatersrand, is at times occupied to full capacity. Therefore it is economically imperative that the line to Mozambique and to the harbour of Maputo remains available to South Africa. It is in the interests of South Africa that technical and administrative assistance be given them in order to achieve this aim effectively. Mozambique is to a large extent dependent upon the Republic for its food supply. By keeping open the railway link to Mozambique, the Railways are promoting sound neighbourly relations which can only have a good effect on the people of Mozambique.

Mr. Speaker, these are only a few examples of the involvement of the Railways in other African countries. At the same time it illustrates that the Railways primarily acts as a transport organization which meets the demands for transport. In the process the Railways not only makes money, but sound relations and ties of friendship are established at the same time. The question now arises: What are the advantages of this to South Africa and to the Railways? The normalization of trade relations with Mozambique, as well as with other African states emphasizes our economic interdependence which is to the benefit of the Republic as well as to that particular country. Technical, managerial and financial acumen and financial know-how is conveyed through the expertise of the Railways and its officials to the mutual benefit of all involved. Food is also transported to such countries and that still remains their primary need.

Hungry people could easily become the victims of foreign ideological views. Channels of communication are in this way kept open and this lays the foundation for a better understanding between the parties concerned. Most important of all is the fact that the good intentions of the White man towards the Black man of Africa is conveyed in that manner. Particularly in the case of Mozambique, South Africa must be careful not to give the Black man the impression that now that the Portuguese have left, the White man of South Africa has forsaken the Black man of Mozambique. In the lecture given by Dr. Loubser, which I have already referred to, he said the following—

I should like to say this to the hon. Minister, the General Manager, his staff and the whole organization: Keep up the good work!

Mr. Speaker, a great deal has been said here today about the way overtime has been restricted on the S.A. Railways. I think it is time now that we apply this restriction to ourselves. I therefore move—

Agreed to.

Mr. Speaker, I move—

Agreed to.