Mr. Speaker, I move—

I suppose there has seldom been a peace-time year in our history when it has been more difficult to formulate a sound and meaningful Budget.

For quite some time now we have been buffeted internationally by gale-force winds, on the one hand by our political foes, on the other by the faltering economic health of our trading partners; nearer home we are doing all we can to encourage those directly concerned to find lasting peaceful solutions in Rhodesia and South West Africa; and at home we are in the midst of a process of comprehensive socio-political adjustment which to a greater or lesser extent affects the day-to-day lives of all South Africans.

Fortunately we have succeeded during the past two years or so in building a firm economic base and sustained progress has been made in overcoming many of our manifold problems. It will be my aim in this Budget to construct a stronger economic force in our subcontinent, a viable power which will be able to withstand the onslaughts from wherever they may come. It is only if we remain economically strong and financially sound that we will be able to resist and surmount those forces seemingly bent on our destruction. In this way all the peoples of South Africa will be able to live and prosper in this land of sunshine and infinite promise. But, as Halifax expressed it, “the people will ever suspect the remedies for the diseases of the State where they are wholly excluded from seeing how they are prepared”. Therefore I propose to reveal the nature of my remedies as I proceed with the formulation of the Budget this afternoon.

Balance of Payments

In setting out the short-term objectives of official financial policy in last year’s Budget Speech, I placed the main emphasis on the need to strengthen the balance of payments. It therefore affords me particular satisfaction on this occasion to be able to report to the House that the outstanding economic development in South Africa during the past year has, in fact, been the remarkable improvement both in the current account and in the “basic balance” of the balance of payments, i.e. the current account plus long-term capital movements.

This favourable development was partly a reflection of the continued recessionary tendency in the domestic economy and the moderate economic upswing in the major industrial countries—the former contributing to a decline in our imports, and the latter to an increase in our exports. The devaluation of September 1975 also exerted a favourable effect in this regard. But to a major extent the improvement in the balance of payments was the direct result of the application of conservative fiscal and monetary policies. As I shall indicate presently, these policies fully attained their objectives of reducing the rate of increase of the supply of money and near-money, and of bringing about an actual decline in all the main components of real gross domestic expenditure.

According to the latest revised figures, the deficit on the current account of the balance of payments of R1 630 million in 1976 was transformed into a surplus of R751 million in 1977. This turnaround of nearly R2 400 million between the two years amounted to no less than 7½ of gross domestic product.

That a so-called “swing” of this magnitude represents a considerable achievement, has been widely acknowledged. This point was, in fact, given particular emphasis in an encouraging report on the South African economy formally presented to me earlier this month by a team of experts from the International Monetary Fund. The achievement becomes all the more remarkable if contrasted with the failure of most other comparable countries to reduce their current account deficits to any material extent during 1977.

Nor do the annual figures I have mentioned reveal the full extent of the balance of payments improvement. To gain the full insight one has to look at the quarterly statistics. Taken at a seasonally adjusted annual rate, the balance on current account changed from a deficit of R2 416 million in the first quarter of 1976 to a surplus of R2 192 million in the fourth quarter of 1977. This turnaround over a period of eight quarters has exceeded even the most optimistic expectations and has demonstrated once again the underlying strength and resilience of South Africa’s balance of payments.

A major reason for the improvement in the current account was an increase in merchandise exports from R4 889 million in 1976 to R6 332 million in 1977, an increase of almost 30%. By the fourth quarter of 1977 merchandise exports amounted to a seasonally adjusted annual rate of R7 034 million, which was a new record level and 65% higher than that of the fourth quarter of 1975. What made the exceptional increase in our exports during 1977 all the more convincing, was the fact that it was largely the result of an increase in volume. Although export prices also increased further during 1977, their rate of increase slowed down in the course of the year, as the weakness of the economic upswing in the major industrial countries resulted in a decline in the prices of many internationally traded commodities.

The increase in merchandise exports was reinforced by an increase in the value of the net output of gold, from R2 346 million in 1976 to R2 795 million in 1977, an increase of over 19%. This increase was entirely due to a rise in the price of gold—the volume of gold production actually declined slightly between these two years.

The other main reason for the improvement in the current account was the decline in the value of imports from R7 443 million in 1976 to R6 893 million in 1977, a decrease of 7,4%. Following declines of 6% between 1974 and 1975, and 11% between 1975 and 1976, the volume of imports declined further by 17% between 1976 and 1977. As a percentage of real gross domestic product, the volume of imports represented scarcely 15% in 1977. This was the lowest ratio since 1962 and well below the average of 19% for the post-war period as a whole. The substantial decline in the volume of imports during the past three years may be attributed largely to the recessionary tendencies in the economy, the devaluation of September 1975 and the restrictive fiscal and monetary policies applied during this period.

It is significant that during 1977 there was also a substantial improvement in the “basic” balance of payments, namely the current account plus long-term capital movements. Compared with a deficit of R641 million during 1976, the basic balance showed a surplus of no less than R962 million during 1977. This turnaround was the net result of the improvement in the current account and a decline in the net inflow of long-term capital, from R989 million in 1976 to R211 million in 1977. The latter decline was mainly attributable to large net loan repayments by the government and banking sector and by a substantial decline in net foreign borrowing by public corporations and local authorities. The net long-term inflow to the private sector remained relatively stable and amounted to R223 million in 1977, by comparison with R235 million in 1976.

Despite the fundamental improvement in the underlying balance of payments position, both the gross and the net gold and other foreign reserves showed a decline during 1977 as a whole. This was because the surplus on the basic balance of the external accounts was more than offset by a net outflow of so-called “short-term capital not related to reserves” of R1 086 million during 1977, compared with a net outflow of R415 million during the preceding year. To a major extent this net outflow represented repayments of trade credits and other short-term loans abroad, a process naturally associated with the sharp decline in imports. In part, however, it was also related to political developments to which I shall refer again.

The net result of the surplus in the basic balance and the short-term capital outflow during 1977 was a decline of R124 million in the net gold and other foreign reserves. In addition, the Government, the Reserve Bank and other monetary banking institutions repaid short-term loans, and thereby reduced their so-called “liabilities related to reserves”, to the extent of R221 million. The final outcome was therefore a decline in the gross reserves of R345 million if valuation adjustments such as those arising from gold swop transactions are excluded, and of R99 million if these valuation adjustments are made.

In analysing these reserve movements it is significant to note two things: The first is that the decline of R124 million in the net reserves during 1977 was considerably smaller than that of R1 056 million during 1976. The second is that due to increasingly large repayments of official short-term debt, the declining tendency in the net reserves was arrested during the second and third quarters of 1977, and then transformed into an actual increase of R59 million during the fourth quarter of the year. Moreover, the latest indications are that this upward tendency has continued during the first quarter of 1978.

Before leaving the subject of the balance of payments I wish to return briefly to the capital account. As I have pointed out, there are important economic reasons for the net outflow of capital during the past year. Clearly, however, this outflow must in part also be attributed to the political uncertainties relative to Southern Africa—real and supposed—including the arms boycott and the threat of sanctions against South Africa, and particularly to the biased and exaggerated reports of these difficulties in overseas news media.

In these circumstances it would be prudent to accept that the net inflow of foreign capital into South Africa in the period more immediately ahead may fall short of the post-war average of about 3% of gross domestic product For the financing of our growth on a short-run view, therefore, we may have to rely relatively more on domestic saving and less on foreign capital. If we manage our affairs judiciously, not only will we be able to afford to do so, but we shall derive advantages of their own kind in the process. In the meantime, the surpluses on our current account and basic balance have enabled both the public and the private sectors to repay substantial amounts of foreign debt. This has not only strengthened our external economic position but has also demonstrated to friend and foe alike that, far from being “overborrowed”, the South African economy must be rated among the most credit-worthy in the world.

Monetary and Financial Conditions

One of the main reasons for the improvement in the underlying balance of payments situation has undoubtedly been the effectiveness of fiscal and monetary policies in reducing the rate of increase of the supply of money and near-money. The figures speak for themselves. After rising by 23% in 1973, 22% in 1974 and 17% in 1975, the supply of money and near-money increased by only 9% in 1976 and by only 7% in 1977. Since the latter figure was well below the rate of inflation, the money and near-money supply declined significantly in real terms during 1977. This tendency continued in January 1978.

This welcome decline was mainly the direct result of the government sector’s financial operations. Indeed, after rising by R438 million during the first half of 1977, the seasonally adjusted net claims of the banking sector on the government sector actually declined by R225 million during the second half. For the calendar year 1977 as a whole, these net claims increased by only R212 million, compared with R719 million in 1975 and R896 million in 1976.

The significance of these figures can hardly be over-emphasized. They illustrate in stark terms how a policy of old-fashioned financial discipline can serve to bring the quantity of money and near-money under control, not only directly but also indirectly through limiting the creation of liquid assets for banking institutions, on which their money-creating ability is largely based.

Bank credit to the private sector increased during 1977 by the moderate amount of R526 million, or 6%, compared with 7% during 1976 and an average annual increase of almost 21% during the period 1973 to 1975. Moreover, between July 1977 and the end of the year it showed virtually no further increase. This to a large extent reflected the relative weakness of the demand for bank credit in the prevailing conditions.

As a result of these developments the seasonally adjusted annual rate of increase in total domestic credit expansion, i.e. to both the government and the private sector, slowed down from 12% during the first half of 1977 to less than 1% during the second half. I shall return to the policy implications of this highly significant development later in my address.

Apart from the usual marked seasonal fluctuations, money-market conditions remained more or less unchanged during 1977, with some rates showing declining tendencies over the year as a whole. In the capital market, most sections showed the typical symptoms of a downward cyclical phase. The tight conditions which had prevailed in the fixed interest security markets during 1976 and the first two months of 1977 eased considerably during the rest of the year. The fact that this occurred notwithstanding a substantial increase in the public sector’s demand for domestic funds, was related partly to the decline in the demand for loanable funds required by the private sector, and partly to the increased statutory obligation of financial institutions to invest in gilt and semi-gilt-edged securities. Not surprisingly in these circumstances, there was a decline in fixed-interest security yields. The yield on new issues of long-term government stock, for example, was lowered from 11% to 10,75% in November 1977.

General Domestic Economic Conditions

I turn now to an analysis of the state of the domestic economy as a whole.

It goes without saying that, as a nation, we did not attain our financial and balance of payments goals during the past year without considerable sacrifice. I therefore wish to pay tribute to the South African public for the way in which they rose to the occasion and accepted the financial discipline imposed upon them. Apart from having to cope with ordinary cyclical and seasonal fluctuations, the economy has in recent years been buffeted by a long series of unexpected adverse developments, ranging from the severe world recession which began in 1973, through Angola and Soweto, to the recently imposed United Nations arms embargo. The South African public’s reaction to these challenges is worthy of the highest praise.

In the circumstances which prevailed in 1977 it is understandable that our financial and balance of payments achievements were accompanied by continued recessionary tendencies in the domestic economy. After declining to 2½ in 1975 and 1½ in 1976, the rate of increase of the real gross domestic product decreased further to about ½ in 1977. The real gross national product, which takes into account changes in the terms of trade, performed somewhat better and increased by about 1% during 1977.

In last year’s Budget Speech, I predicted that real gross domestic expenditure would show a decline in 1977 over 1976. In the event, this decline amounted to about 5%. Moreover, it is significant that all the main components of real domestic expenditure decreased during 1977. Even real private consumption expenditure, for the first time since the Second World War, showed an actual annual decline. In the circumstances this was to be welcomed. The same can be said of the decline of about 1% in real government consumption expenditure during 1977, which contrasted with increases of 15% in 1975 and 5½ in 1976. As expected, gross domestic fixed investment declined further, by about 10%, while real inventory investment was also negative.

As during the previous year, the contributions of the various economic sectors to the gross domestic product showed diverse tendencies during 1977. The real income generated by commerce and industry declined by about 5½. Fortunately, this decline was offset by a substantial increase in the real income generated by the primary and services sectors. The contribution of non-gold mining increased by no less than 15% and favourable weather conditions resulted in good summer crops and increases in citrus fruit and livestock production.

Unemployment increased further in 1977. The seasonally adjusted number of registered unemployed Whites, Coloureds and Asians rose continuously from 21 084 in December 1976 to 34 641 in December 1977, before declining to 30 207 in January 1978. The latter figure represents about 1½ of the corresponding labour force. In the absence of registered data for unemployment for Blacks, the Department of Statistics recently estimated that in October the number of unemployed Blacks amounted to 634 000, or 12,4% of the relative economically active population.

Despite the substantial decline in real domestic expenditure, the rate of inflation remained at an unacceptably high level throughout 1977, partly as a result of increases in administered prices. Compared with increases of 11,1% in 1976 and 13,5% in 1975, the average monthly consumer price index rose by 11,3% in 1977. The seasonally adjusted quarterly increase in the consumer price index, however, declined from an annual rate of 13,3% in the first quarter of 1977 to an annual rate of 9,1% in the fourth quarter. A similar pattern was exhibited by the seasonally adjusted quarterly wholesale price index, which rose at an annual rate of 16% in the first quarter of 1977, but declined to an annual rate of 7,1% in the fourth quarter.

During the first three quarters of 1977 average real salaries and wages per worker in the non-agricultural sectors of the economy declined by 3,4% in the case of Whites, by comparison with the corresponding period of 1976. In other words, salaries and wages for Whites did not keep pace with price increases during that period. For non-Whites, however, real wages showed a modest increase.

As far as cyclical developments are concerned, it would seem that real economic activity continued its cyclical decline during the first half of 1977, but then tended to level out during the second half of the year. The volume of manufacturing production, for example, remained more or less constant during the last three quarters of 1977. Similarly, the rate of decline of wholesale and retail sales, in real terms, became progressively smaller as the year advanced, while the number of new motor vehicle sales increased markedly towards the end of 1977 and again during January 1978. Only in the construction sector did real activity maintain its downward course. On the positive side, real economic activity in the primary sectors continued to increase during 1977.

Economic Prospects

In formulating budgetary policy it is, of course, imperative to take a view on the country’s economic prospects, and in the case of an important trading nation like South Africa, this implies among other things taking a view on future developments in the world economy.

All is not well in the world economy. After more than two years of so-called cyclical upswing in the main industrial countries, the world economic situation should by now have been much better than it is. The truth is that the upswing has been patchy and weak and there has not yet been any real upturn in fixed investment. Unemployment rates remain high in most countries, and while inflation rates have come down in some countries, they have started rising again in others. On top of this the world economy continues to suffer from serious balance of payments imbalances. While the OPEC countries and certain others like Germany and Japan are running substantial current account surpluses, many other countries, including the United States, are having to cope with serious and stubborn current account deficits. Not surprisingly in a world of floating exchange rates, this has produced a state of turmoil in the main foreign exchange markets of the world, and the German mark, the Swiss franc and the Japanese yen have appreciated considerably against the US dollar during the past six months. Since the dollar is still the main reserve currency of the world, this has cast doubt on the viability of the present international monetary system, and there have been speculative movements of funds out of dollars into stronger currencies, as well as into gold, diamonds, platinum and other commodities which are considered to serve as a good store of value. The situation is further complicated by the problems of excessive international indebtedness and rising protectionism.

In these circumstances it is difficult to be optimistic about the immediate prospects for the world economy. It seems unlikely that the current rather indifferent economic upswing in the major industrial countries will gain much new momentum during 1978, and at some stage, of course, a new cyclical decline in these economies must be expected. It is also doubtful whether the prices of primary commodities in general will rise further in 1978. On the other hand, according to most forecasts, the volume of world trade should show a further increase in 1978, although at a lower rate than in 1977.

Although some of these international developments could conceivably have favourable implications for the South African economy, for example through increases in the prices of gold, diamonds, platinum and other “store of value” commodities, it would be unwise to base our fiscal and monetary policies on any assumption that our economy will have the benefit of any marked expansionary influences from abroad in the current year.

On the other hand, there would appear to be no reason to expect any decline in exports from the present high level in the foreseeable future. Indeed, present estimates suggest that our exports will rise further in both value and volume terms in 1978, although at a somewhat reduced rate.

The recent increase in the price of gold on the private market to levels between $170 and $190 per fine ounce has, of course, also been of great benefit to South Africa. Moreover, although it would be prudent to allow for wide fluctuations in the gold price in the short term, it seems reasonable to expect that the value of South Africa’s net gold output will be higher in 1978 than in 1977.

Taking everything into consideration, it would seem fair to say that not only is the stage now set for a new upswing in the South African business cycle, but that important expansionary influences are already at work.

The first of these is the exceptional increase in the value of exports and gold output during the past year, to which I have just referred. This increase, which has already helped to arrest the downward cyclical movement in the domestic economy, has almost certainly not yet exerted its full expansionary effects on domestic consumption and investment. These secondary influences will therefore probably still contribute towards a new cyclical upswing in the South African economy in the course of 1978.

A second important expansionary influence is the continuing process of import replacement. This process has been encouraged by official policy measures such as the devaluation of September 1975 and the revenue duty on imports introduced in last year’s Budget, as well as by recent efforts of the private sector itself to “buy South African”, with special reference to capital goods and intermediate goods. Tariff protection also continues to be provided on the advice of the Board of Trade and Industries to deserving manufacturing enterprises.

A third expansionary factor is the increase in capital outlays on special projects such as Sasol II and the Koeberg nuclear power installation. In this regard I would also refer to the scheme for the expenditure of an additional R250 million on low-cost housing in non-White residential areas which I announced in November last year.

Given appropriate fiscal and monetary policies, I would therefore expect real private consumption to show a moderate increase in 1978 over 1977. At the same time the downward tendency in real fixed investment should be arrested and inventories should cease to fall in real terms. After declining by more than 5% in 1977, real gross domestic expenditure should therefore show a moderate but significant increase in 1978 over 1977.

If these expectations are fulfilled, there should be a meaningful acceleration of the rate of real economic growth in 1978. The precise extent of this acceleration will, of course, depend on many unpredictable factors, such as world economic developments, the movements in the price of gold and the value of our agricultural production.

As the upswing proceeds and gains momentum, the stage will eventually be reached during which the volume and value of imports, particularly of capital and intermediate goods, should rise once again—the correlation between a rising growth rate and rising imports in South Africa is well established. However, given the general slackness in the economy and the surplus capacity existing at present in our manufacturing industry, the increase in imports during 1978 should not be inordinate. Despite the higher rate of economic growth, the current account of the balance of payments should therefore continue to show a reasonable surplus during 1978.

The capital account of the balance of payments is more difficult to predict. In the present abnormal circumstances, reliance cannot be placed on a normal inflow of either short or long-term capital. Moreover, in view of the current account surplus, it might suit us for the time being to continue making net repayments of public sector foreign loans. Although the gross gold and other foreign reserves might therefore not show any substantial upward movement during 1978, the expected further reduction in the “foreign liabilities related to reserves” should result in a significant further increase in the net reserves, which is a sign of sound financing under the prevailing conditions.

As far as the inflation prospects are concerned, it must be accepted that the downward tendency observed during the course of 1977 in the consumer price index could once again be temporarily reversed in the first half of 1978 by the effects of the recent increases in administered prices, such as transport and electricity tariffs. However, once these upward influences on the consumer price index have been absorbed, there are good grounds for expecting the rate of inflation to resume a downward tendency.

Conclusions for Financial Policy

The implications for financial policy of all these domestic and foreign economic developments are clear. The situation calls for a further shift of emphasis in our short-term economic policy in the direction of encouraging sound economic growth. I first pointed to the need for such a shift of emphasis in August last year and certain steps were then taken in that direction, including a slight easing of the Reserve Bank’s credit policy. In November I took the matter a stage further and set out the details of certain other selective measures of stimulation, including the additional expenditure on housing to which I have already referred. In presenting this Budget today, I wish to impart further momentum to this shift in emphasis and to announce that in the Government’s broad economic strategy for the year ahead, priority will be accorded to the objective of increasing the rate of real economic growth.

This further shift in emphasis does not represent any drastic reversal of policy. It should rather be viewed as a movement from Phase I to Phase II in the same broad economic approach. During Phase I of this approach we sought to reduce the rate of increase of the money supply and of total spending, and thereby to improve the current account of the balance of payments. To this end we had to adopt various restrictive measures which entailed sacrifices on the part of the population and inevitably contributed to the reduction in the rate of economic growth in the short term. From the facts I have presented, it is evident that this part of our policy was successful. We have now moved into Phase II, during which our main policy objective will be the encouragement of sound economic growth. In this phase we aim to avoid any danger of “overkill” and to remove those restraints on economic expansion which no longer serve the purpose of either improving the overall balance of payments or reducing the rate of inflation.

Our policy remains one of financial discipline. Indeed, if a further cooling down of the economy would have improved the overall balance of payments or reduced the rate of inflation, I would have favoured continuing with a strongly restrictive monetary and fiscal policy, despite the adverse effect this would have had on the rate of economic growth. However, in present conditions a continued deflationary policy would in my judgment be counterproductive. It would in all probability undermine growth and increase unemployment without either improving the overall balance of payments or reducing the rate of inflation. Indeed, it might well weaken the balance of payments by encouraging the outflow of “recession liquidity” and reducing both the inward movement of new capital and the re-investment of profits by overseas companies operating in South Africa. There would obviously be more profitable investment opportunities for capital in South Africa in 1978 if we were to grow at an annual rate of, say, 3% than if we continued to expand at the 1977 rate of ½. For these reasons we are now adopting a more expansionary stance and a policy which can perhaps best be described as one of “growth with financial discipline”.

The emphasis we are now placing on growth is not based on any belief that our balance of payments and inflation problems have been completely and permanently solved—we labour under no such illusion. We are not moving from Phase I to Phase II of our policy because we are complacent about the balance of payments or the gold and other foreign reserves, but for the very reason that we believe that this shift in policy stance will assist in coping with the problems still confronting us.

To elaborate this point further, we are not adjusting our policy because of any belief that the present abnormally large current account surplus is here to stay. We expect this surplus to fluctuate from quarter to quarter and in due course to decline as domestic economic activity picks up. But if, as is anticipated, the higher growth rate and the consequent decline in the current surplus is accompanied by a decline in the net outflow of foreign capital and eventually by a positive net inflow, the overall balance of payments situation would not be less favourable than it would have been with a lower growth rate. In any event, the shift in policy emphasis is unlikely to produce an inordinately strong expansionary effect in the short term. This is because of the normal lags involved between decisions to expand and actual expenditures on plant, equipment, construction and so forth. For this reason, and also because of the existing surplus capacity in manufacturing industry, the upward movement in imports which must be expected to accompany any marked revival of domestic economic activity, should not be unduly sharp in the period immediately ahead.

Another important reason why it would be unwise to carry a policy of deflation to excess, is that it would further erode the taxable income of the economy. This could lead to a vicious circle, in the sense that lower tax revenue might lead either to cuts in government expenditures or further restrictions on bank credit to the private sector, which in turn might erode taxable income still further.

In moving to a policy of “growth with financial discipline” I am mindful of the need to keep the economy strong in order to cope with the economic and political problems which lie ahead. Until recently this meant curbing excessive money creation and overspending. Now, however, it also means increasing the rate of real economic growth. In order to obtain the domestic savings and tax revenues required in the period ahead, a rising real gross domestic product is essential.

It will be necessary to move in a coordinated manner on a broad front. As I have been at pains to emphasize, we shall have to act within certain economic constraints, which means there can be no question of adopting a general policy of “spending for prosperity”. But for the reasons I have mentioned, the time has now arrived for more general and less selective, although still moderate, stimulation of sound economic growth.

First and foremost this means applying appropriate broad fiscal and monetary policies with a view to achieving the required level of aggregate demand and adequate rates of increase in bank credit and in the total supply of money and near-money. I shall put forward my proposals with regard to fiscal policy presently.

As far as credit policy is concerned, no further relaxations will be made at this stage, but the Reserve Bank is keeping the monetary and banking situation under close surveillance and stands ready at short notice to make any adjustments to its policy which might become necessary as the year progresses. There is a clear realization of the danger of excessive increases in bank credit and the quantity of money; there is an equally clear realization that if the economy is to grow, undue monetary contraction must be avoided.

Another aspect of policy which must be given further impetus is export promotion. I shall return to this subject later on.

Together with export promotion, import replacement will continue to play a prominent role in our policy. Obviously this method of stimulation has its limitations and, if carried beyond a certain point, can be inflationary and harmful to both economic growth and the balance of payments. In the present recessionary conditions, however, a valid case can be made for a short-term policy of shifting demand from imported to domestically produced goods and services. The recently imposed arms embargo and the threat of further action against South Africa naturally add weight to this argument.

All these aspects of policy, of course, also have a bearing on the important question of the exchange rate of the currency. It is necessary that the rand should be strong and soundly valued. There can be no doubt that the weighted average effective depreciation of the rand of 5,3% since September 1977, following its appreciation over the preceding two years, has on balance fitted well into our official economic policy. On the negative side, this depreciation has tended to slow down the decline in the rate of inflation. On the positive side, however, it has helped to counter the recessionary tendency in the economy and to pave the way for a recovery by increasing export incomes and encouraging import substitution. At the same time it has contributed to the improvement in the balance of payments position and outlook. This conclusion was also reached independently by the experts from the International Monetary Fund who recently visited South Africa and who expressed the view that the rand is at present neither over-valued nor under-valued.

I therefore wish to reaffirm that I see no reason either to revalue or devalue the rand in terms of the US dollar at this stage. Nor do I see any advantage at present in changing the practice of pegging the rand to the US dollar. Looking further ahead, it might well be to South Africa’s advantage to develop an organized foreign exchange market in which the rand can find its own value, with an appropriate degree of Reserve Bank intervention where deemed necessary. For that reason I have asked the Commission of Inquiry into the Monetary System and Monetary Policy in South Africa to make a thorough study of the feasibility and desirability of developing such a market in South Africa. I have also requested the Commission to investigate all other policy options open to us in regard to exchange rates and, in view of the relative urgency of the matter, to produce an interim report on exchange rates as soon as practicable in the course of this year. After that report has come to hand, we shall carefully consider the Commission’s recommendations and proceed to make such adaptations to our exchange rate policy as we deem desirable in the light of all the evidence before us.

To sum up, the conclusion I reach from the foregoing discussion is that it must now be our aim to ensure that the South African economy embarks upon the next cyclical upswing and that it makes good use of both the existing surplus capacity in industry and the enlarged infrastructure. In the medium and long term, excessive contraction will not avail to keep the balance of payments strong or to curb inflation. Our economy must grow. It must generate adequate employment opportunities, increased profits, increased real wages and salaries, increased government revenue and a growing supply of loanable funds on the capital market for both the private and the public sectors. In formulating policy we must view our economic future in these dynamic terms, always within the constraints imposed by realistic financial discipline.

Mr. Speaker, bearing this analysis of the economic framework and its implications for the formulation of budgetary policy in mind, I shall proceed to deal with the Government’s Accounts. I start with the financial year 1977-’78.

The Financial Year 1977-’78

In the main Estimates of Expenditure for the current financial year which ends on 31 March, the expenditure on the State Revenue Account was estimated at R8 985 million. Hon. members will recall that during my Budget Speech I announced that, as a special measure, departments would be requested to accept a further across-the-board reduction of R200 million on their printed votes.

Although the financial year has not yet ended, it is clear that the extremely strict financial discipline over state expenditures envisaged in my Budget Speech has been substantially accomplished. It is expected that aggregate expenditure will eventually approximate closely the original estimate of R8 985 million after the previously approved Additional Estimate of R89 million, the lowest in many a year, is taken into account and after further provision has been made for the servicing of the public debt. These unavoidable and unforeseen additional expenditures will largely be met from the savings of almost R200 million which departments have indeed, according to indications, been able to achieve.

In my 1977 Budget Speech I pointed out that the pruning of state expenditure was a comprehensive and difficult task and not one to be taken lightly. Today I can happily say that the task has been successfully carried out in the past year. For this I wish to thank my colleagues and their departments, the provincial administrators and their administrations and all bodies which are dependent on the Exchequer. It has been a signal achievement not only from a fiscal policy point of view, but also because it established an expenditure pattern and discipline without which the implementation of certain essential fiscal policy measures, to which I shall refer later, would not have been possible. A sound foundation has been laid and the restraint achieved has been invaluable.

On the revenue side, total estimated receipts from inland revenue, excluding loan levies, as well as from customs, excise and sales duties and the import surcharge, are now estimated at R7 049 million, compared with the original estimate of R7 216 million, that is a decrease of R167 million, or approximately 2,3%. The main reason for the decline is the somewhat disappointing yield from income tax on gold mines and gold-mining leases. Increased costs and production problems prevented gold mining profits from coming up to expectations, notwithstanding the higher gold price. As a result of the slackness in the economy and lower imports, collections in respect of income tax on individuals, of customs, excise and sales duties, as well as the import surcharge, also show decreases compared with the original estimates. On the other hand the tax yield from companies other than gold mining is higher than expected. As is customary, I shall table a return containing particulars of the revised estimates of revenue.

The response to Treasury loan issues was excellent, partly due to the higher prescribed assets requirements to which I have already referred, and partly as a result of discretionary investments which flowed to the Exchequer to a considerable extent in the absence of other more lucrative investment outlets in the present economic climate. Gross domestic loan receipts amounted to as much as R1 968 million, and the Public Debt Commissioners contributed a further R761 million. On the other hand, loan funds obtained from abroad fell short of the amount originally estimated—mainly because the Government did not particularly look for foreign capital during the past year—but the shortfall was more than compensated for by the increased proceeds from domestic loans.

Due to the success of the Treasury’s loan issues it will not be necessary to draw on the Stabilization Account as was originally envisaged. In fact, I expect that the financial year will close with a credit balance of R77 million after providing for the deficit of approximately R53 million on the South West Africa Account for the 1977-’78 financial year.

Apart from this adjustment, I propose that in order to finance an expected deficit on the South West Africa Account in the next financial year, an amount of R30 million be transferred at this stage from the surplus on the State Revenue Account to the South West Africa Account. It is likely that constitutional developments will lead to the closing of the latter Account in the ensuing year, but Parliament will, as in the past, undoubtedly be asked to make good the expected deficit. I think it is prudent to provide for that contingency now.

As in the past, I also propose that an amount of R5 million be transferred from the surplus on the State Revenue Account for the current financial year to the Economic Co-operation Promotion Loan Fund.

After accounting for these proposed transfers, the balance on the State Revenue Account as at 31 March 1978 is expected to amount to approximately R42 million, which amount will be carried forward to the new financial year.

This brings me to the 1978-’79 financial year.

*The Financial Year 1978-’79

Expenditure

From the Estimates of Expenditure which I shall table this afternoon, hon. members will note that a further ten Votes have been converted to the system of budgeting by objectives. The remaining departments will, hopefully, all convert to the new system with effect from the 1979-’80 financial year and all Votes will then be submitted in the new format.

In the printed Estimates of Expenditure provision is made for total expenditure of R9 621 million. To this amount my budget proposals in respect of additional expenditure amounting to R190 million, with which I will deal presently, should be added. In total, budgeted expenditure in the new financial year therefore amounts to R9 811 million, that is just more than R820 million, or approximately 9% higher than the estimated expenditure for the current financial year.

Against the background of rising prices and the latest salary improvements, this increase is relatively modest. In fact, to keep State spending within these bounds it was necessary, once again, to prune expenditures appreciably. I am thankful to be able to say that my colleagues and their departments, as well as the administrators and provincial administrations and other bodies receiving grants from the Exchequer, once more gave me their full co-operation.

One of the objectives of financial discipline is to create sufficient scope for shifting the emphasis of fiscal policy measures as circumstances change. The sacrifices asked for on the expenditure side during the past year, which, with the exception of certain selected programmes, are once again repeated in the new financial year, create precisely the required measure of budgetary flexibility and act as one of the keystones by which the success of my fiscal policy measures must be judged. It is therefore essential for departments and subsidized bodies not to relax their vigil and financial restraint, but to continue with the utmost circumspection to use the available funds effectively and economically. We cannot afford to fritter away the advantages derived from a deliberate policy of financial conservatism of the past two years and more.

Although the Estimates of Expenditure have been strictly curtailed, even in respect of programmes meriting a high priority, there are nevertheless a few heads of expenditure which may warrant special attention. I refer only to the following:

Export Promotion

In my Budget Speech last year I stressed the importance of promoting exports with a view to strengthening the country’s balance of payments and to promoting economic growth. During the past few years various incentives have been provided by the Government in order to stimulate the Republic’s export trade.

Export promotion remains an important part of official economic policy. The amount allocated for this purpose in 1978-’79 increases by 115% to R92,2 million compared with the 1977-’78 main estimate, or 40% compared with the revised estimate for 1977-’78. Only two years ago the original estimate for this service amounted to R33 million, or slightly more than one third of this amount.

The Study Group on Export Promotion Measures, which I also referred to last year, has in the meantime submitted its report with recommendations to the Government, and my colleague the Minister of Economic Affairs recently announced that the Department of Commerce, in consultation with the relevant interested parties, is currently considering the whole matter. I trust that we will eventually produce a sounder and more purposeful set of measures which will ensure that our export sector will successfully fulfil the important task entrusted to it.

Housing

The provision for housing, by means of the augmentation of the capital in the National Housing Fund, increases by nearly 16%, from R153 million this year to R177 million in 1978-’79. As recently as the 1975-’76 financial year this head of expenditure amounted to R66,5 million, and the increase of 166% over three years reflects the priority given to this service, despite the tight financial circumstances. Hon. members are also aware of the fact that, as part of the economic stimulation package which I announced in November last year, a substantial additional amount of R165 million, out of a total of R250 million, will be channelled to non-White housing through bank financing, R10 million of which has already been spent in the current financial year, R80 million will be spent in 1978-’79 and a further amount of R75 million thereafter.

The expenditure on housing not only fulfils essential social needs, but provides much-needed support to the building and construction industry; and it provides employment opportunities, without unduly influencing the balance of payments. Here I should like to add that a heavy responsibility rests on the private sector to increase its contribution towards solving the housing problem. The responsibility to provide housing is certainly not confined to Government, which is playing its part to the full.

Public Works

The provision for the building works programme of the Department of Public Works increases from R153,4 million this year to R175,9 million in 1978-’79, an increase of 23% on the revised estimate for 1977-’78. This expenditure will likewise contribute towards improving conditions in the building and construction industry, and promote employment.

Education

The National Education Vote shows an increase of R22,4 million, and substantially increased amounts have been included also in the provincial subsidies for educational services. Similar increases have also been allowed for the other population groups. For instance, an amount of R143,9 million has been included on the Education and Training Vote in respect of the Bantu compared with R117,4 million on the former Bantu Education Vote for the current financial year. This increase of R26,5 million, or more than 22%, is an example of the particular priority once again accorded to educational services.

Defence

Hon. members are probably wondering why I have not yet referred to Defence. As we all know, Defence deserves exceptional treatment in the dangerous world we are living in today. In fact, military preparedness remains our first priority. The budgets of the past few years clearly reflect this fact. The provision on the Defence Vote has risen from R493 million in 1973-’74 to R1 654 million this year, an increase of 235% over four years.

The basis of a strong defence force is, of course, a strong economy. Where the economy has been sluggish during the past few years, it is now necessary from a total strategic point of view to endeavour to shift the emphasis in the forthcoming financial year to a higher level of economic activity. Thereby our ability to be militarily prepared will undoubtedly also be strengthened. Against this background Defence’s estimated cash requirements for 1978-’79, and I emphasize the words “cash requirements”, show a decrease of nearly R100 million. This decrease, which should be seen in the light of the rapidly escalating amounts provided in the past few years, affords a timely opportunity to bolster certain sections of the economy, to the advantage of the country as a whole.

The inference should not be drawn from the decrease in the cash requirements of Defence that our defence effort is, or will be, scaled down. It will be noted from the printed Estimates that credits amounting to R128 million in favour of the Special Defence Account will be available. This amount should be added to that of the cash requirements. These credits are mainly attributable to the cancellation of certain contracts abroad. In addition, Defence’s commitment authority, that is, the total commitments which may be entered into in excess of the cash appropriation, also shows a small increase. The important programmes for landward defence, general training and logistic support still reflect meaningful cash increases. While over the past years we have increased substantially our ability to defend ourselves against aggression, and are continuing to do so, we must now also to an extent consolidate, in order to strengthen our other arm, the virility and productive capacity of the economy.

Budget Proposals: Additional Expenditures

I have mentioned that over and above the printed Estimates of Expenditure amounting to R9 621 million, I shall propose that a further amount of R190 million be provided by means of the Supplementary Estimates. My proposals in this regard are as follows:

Sasol II

When I announced during December 1974 in my then capacity as Minister of Economic Affairs, that the Government had decided to proceed with a second Sasol, I also mentioned that the project would be financed from three sources, the State Oil Fund, export credits and Parliamentary appropriations. The approved financing programme for the project provides for three consecutive Parliamentary appropriations of R100 million each, of which the first falls due in the next financial year. The cost of the project is still estimated at R2 458 million, excluding housing, working capital and interest during construction. I now wish to propose that provision be made in the Supplementary Estimates for an amount of R100 million for the Sasol II project. The Industrial Development Corporation will issue additional share capital to the State for this amount, and will at the same time increase its share-holding in Sasol correspondingly.

Pensions and other Social Benefits

My second proposal relates to pensions and other social benefits. Even in the most difficult of times no Government can close its eyes to the needs of the aged and the needy. Chamfort once remarked: “We need to be just before we are generous, as we need shirts before ruffles.”

It is accordingly once again my privilege to announce today a variety of concessions to various sections of our society. Details of the proposed concessions are set out more fully in the document of proposals for the improvement of social pensions and other social benefits, of military pensions and of civil pensions, which I shall lay upon the Table this afternoon.

In contrast to previous years when regular adjustments were made according to the Government’s capacity to pay, it has been decided this year to provide an additional non-recurrent amount of R10 million over and above an amount of R46 million which would normally have been sought to be made available on a basis of equity to pensioners and others who receive social benefits. The reason for the extraordinary additional appropriation of R10 million is the realization that the aged and the needy will also henceforth be liable for the payment of the new general sales tax, which I shall deal with at a later stage, and the Government feels that a special measure of assistance, as set out here, is called for. As Samuel Johnson puts it: “A decent provision for the poor is the true test of civilization.” All my proposed pension and related improvements therefore benefit from the special non-recurrent provision of R10 million.

The first proposal is that social pensions be increased, as from 1 October 1978, by R9,00 per month in the case of Whites, with corresponding increases in the cases of the other population groups and beneficiaries of other forms of social aid, such as parents’ allowances, settlers’ allowances, subsistence and family allowances. This means, for example, that a social pensioner who receives R79 per month at present, will have his pension increased to R88 per month, or by more than 11%. In the case of a pension of R39 per month at the present time, the amount will now also be increased by R9 per month, or by as much as 23%. For the other population groups the comparable percentage increases are even higher.

Secondly, I propose marked improvements in the subsidization of homes for the aged, homes for the handicapped and especially for children’s homes. Also, allowances for children in foster care or in places of safety as well as for general welfare services are increased. I believe that these improvements in benefits which will entail substantial additional expenditure, will bring much-needed relief to these institutions in their endless struggle to cope with rising costs. In the case of certain children’s homes, for example, my proposals could imply an increase of the subsidy to an amount equal to their unit costs.

A totally new approach in the subsidization of welfare organizations rendering welfare services is also proposed. Although the extent to which a particular organization will benefit under the new scheme will differ from case to case, the proposals could result in an improvement of as much as 40% in certain cases.

In the case of military pensions a positive effort is also being made to narrow the gap among ex-servicemen of the various population groups, and I propose that with effect already from 1 April 1978 all consolidated military pensions be increased by 12,5% in the case of Whites, 25% in the case of Coloureds and Indians, and 37,5% in the case of Blacks.

In the case of civil pensions I propose an increase of 5% in payments from the Exchequer, also with effect from 1 April 1978, with a minimum increase of R15 per month in the case of Whites and corresponding minima for the other population groups.

Furthermore, I am happy to be able to announce that it has been decided to grant further relief to certain civil pensioners by means of an additional increase of 10%. This will accrue to those who did not benefit fully from the improvements which were brought about in recent years in respect of benefits payable in terms of certain Government pension schemes. It is, however, not possible to defray the cost of the latter increases from public funds and the cost will accordingly have to be borne by the pension funds or schemes concerned. Further particulars of those who will be affected will be made available shortly. The combined effect of these two increases in civil pensions will mean, for example, that a person receiving R59 per month at present will henceforth receive R81,40 per month, or nearly 38% more.

Every endeavour will be made to arrange for the payment of the concessions which become effective on 1 April, to be made as early as May this year.

The total cost to the State of all the pension and other concessions will amount to no less than R88 million for a full year, the biggest annual aggregate to date. For 1978-’79 the total amounts to R56 million, including the additional special R10 million I have mentioned.

Agricultural Matters

My third proposal relates to agricultural matters.

Representations have recently been submitted to me, amongst others by the South African Agricultural Union, about problems at present being experienced in the agricultural sector. After careful consideration I have decided to make available at this late stage an additional amount of R10 million to grant relief to the most serious problem areas. The decision as to one half of this, namely R5 million in respect of loans to farmers by the Department of Agricultural Credit and Land Tenure for farming requisites, debt consolidation and housing for farm labourers could be taken just in time to include the amount in the printed Estimates.

Because of the stringent financial conditions prevailing, the amounts which could be set aside for the consolidation of the homelands inevitably had to be limited despite the high priority accorded to this programme. The provision appearing in the printed Estimates amounts to R30 million. One possible way of speeding up the land consolidation programme would be to issue further Government stock. This, however, has decided disadvantages and since the lack of funds for consolidation purposes creates serious problems for affected farmers, I wish to propose that the existing budgetary provision in this respect be increased by a further R5 million.

Animal Protection and Welfare

Fourthly, I wish to draw attention to a matter which in our everyday economic activities is so often pushed aside, the protection and welfare of animals.

The good work done by several voluntary organizations for the protection and welfare of animals is a matter which in my opinion warrants recognition and limited official financial assistance. As a result of representations which have been made over a long period, I intend trying to find ways and means in which appropriate assistance can be granted to the organizations involved. The nature of the assistance and the procedures to be followed are receiving attention. I propose that an amount of R100 000 be made available for this purpose through the Supplementary Estimates.

Other Expenditure Proposals

In total the proposals made thus far involve an amount of just more than R161 million. The remaining R29 million, out of the total of R190 million mentioned earlier on and which will be included in the Supplementary Estimates, will be accounted for a little later. Adding the amount of R190 million to the total in the printed Estimate gives aggregate expenditure of R9 811 million for the financial year 1978-’79.

I now wish to look at the revenue position in 1978-’79.

Revenue in 1978-’79

The printed Estimates of Revenue which I will lay upon the Table this afternoon, are based on current tax rates and do not take account of the changes in the tax structure which will result from the imposition of a general sales tax, the details of which I shall deal with presently. Total revenue (excluding loan levies) on this basis is estimated to amount in 1978-’79 to R7 470 million. This represents an increase of 6% on this year’s revised estimates of revenue of R7 049 million. In view of the prevailing recessionary conditions in the economy and the lower level of imports it must be expected that Government revenue will continue to increase relatively slowly.

Inland revenue is expected to amount to R5 813 million as against the current financial year’s revised estimate of R5 374 million, an increase of just more than 8%. Loan levies on individuals and companies are estimated at R480 million as against the revised estimate of R464 million for 1977-’78, after allowance has been made for R23 million in respect of the proceeds of the loan levy on South West African companies, which will in future accrue to the South West Africa Account. In so far as collections in respect of gold mines are concerned, the normal income tax is estimated at R435 million and the proceeds of gold mine leasing contracts at R145 million as against the revised estimates of R344 million and R97 million respectively. These estimates are based on reasonably conservative assumptions in respect of the gold price and gold mining profits.

Customs duties are estimated at R330 million as against the revised estimate of R300 million for 1977-’78. At the present rate of 15% the import surcharge is expected to yield R415 million and excise duties R896 million, compared with this year’s revised estimates of R370 million and R870 million respectively. Sales duty at current rates will yield R341 million compared with the 1977-’78 revised figure of R319 million. In total it is therefore estimated that the collections of the Department of Customs and Excise at present rates can yield an amount of R1 997 million for the customs pool, which represents an increase of 6,6% on the revised estimate of R1 874 million for 1977-’78. Because of the customs pool’s contractual commitments with our neighbouring states, now including Bophuthatswana, the State Revenue Fund’s share of the pool will probably amount to R1 657 million, which is slightly lower than the expected receipts of R1 675 million for 1977-’78.

On the basis of current tax rates and taking account of the additional expenditures of R190 million, as proposed, there will be a deficit—excluding loans—of R2 341 million in 1978-’79 compared with R1 941 million in the current financial year. Before adjusting these figures in terms of my impending taxation and financing proposals, I should like at this stage to deal with the new general sales tax.

General Sales Tax

In my Budget Speech last year I announced that the Government had accepted in principle the proposal made by the Standing Commission on Tax Policy for the imposition of a general sales tax and that the Department of Inland Revenue would commence as soon as possible to prepare for the introduction of this tax. At the same time I said that it would take many months before the tax could be put into effect.

I am pleased to be able to announce that, despite the fact that the Department has not yet obtained all the staff necessary for the effective administration of the proposed system, the planning has progressed to such an extent that the tax will be introduced with effect from 1 July 1978. However, much work remains to be done, not the least of which is the drafting of the final form of the necessary legislation and its consideration by Parliament during the current session.

It is well known that the Department of Inland Revenue has been in constant consultation with the private sector about the proposed tax. I have received expressions of appreciation for this co-operation from various sources, from individuals, from departments, from organized commerce, industry, agriculture and mining. I am confident that the fruits of this co-operation will be reaped in the form of a practicable tax aimed at imposing the least possible burden in time and cost on the shoulders of the vendors— who will be responsible for the collection and remittance of the tax.

The Department of Inland Revenue published its proposals for comment in the form of a draft Bill in the Government Gazette exactly a week ago. This is yet another endeavour to afford all interested parties an opportunity to appraise the proposed tax and to submit their comments to the authorities. I shall also welcome suggestions aimed at improving the Department’s proposals from hon. members on both sides of the House—or should I say on all four sides of the House— in order that the legislation which will ultimately be submitted to Parliament will, as far as possible, be free from technical obscurities and that the House will thus be able to devote its undivided attention to the consideration of the principles involved.

I think it is necessary for us to agree to label the new tax a general sales tax (“algemene verkoopbelasting”) levied at the point of final sale, so as to distinguish it from the present sales duty (“verkoopreg”), and obviate unnecessary confusion from the start.

The question has been raised as to why the existing basis of sales duty cannot be retained with a mere extension of the commodities involved. There are indeed certain undisputed advantages attaching to such a course of action. Nevertheless, there are other considerations which weigh more heavily with the tax authorities as to why a general sales tax should be imposed. Once the administrative problems have been overcome, the introduction of the new tax will overcome many of the disadvantages of the current sales duty, some of which are:

1. (a) the escalation factor inherent in the current sales duty which will now be eliminated;
2. (b) the limited scope and narrow base of the present sales duty inhibit the natural growth of revenue from this source and can give rise to unequal competition and expenditure;
3. (c) the diversity of rates and classifications of the various commodities as well as the determination of neutral values complicates sales duty administration; and
4. (d) sales duty rates have in several cases reached saturation point.

The most important consideration for the establishment of the proposed broadly based final-point-of-sale general sales tax is to create a viable indirect tax which will, as consumption expenditures increase, maintain a natural growth in revenue without necessarily having to increase the rate of taxation. I will readily concede that the imposition of such a new tax cannot be painless. No tax is painless. To tell the truth, as Colbert expresses it: “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.”

If no concessions are made in the form of reductions in other indirect taxes when the proposed broad general sales tax is imposed, there can be no doubt that it will have a detrimental price-raising effect which will eventually be passed on to the final consumer. However, subject to certain assumptions concerning the escalation effect of the existing indirect taxes which will be adjusted to lower rates, as I shall presently explain in more detail, and bearing in mind the fact that the general sales tax to be levied on capital and certain intermediate goods will not be fully passed on during the first year, I am satisfied that the net price-raising effect of this tax, as measured by the consumption expenditure deflator, will be limited, apart from its also being non-recurrent.

Although I do not wish to go into the details of the Department of Inland Revenue’s proposals, it is nevertheless necessary to refer to certain broad principles involved in the proposed tax:

1. (a) One of the main objectives is that the tax rate be as low as possible. To this end the base must be made as broad as possible. It is accordingly proposed that the tax should be levied on all purchases which are not destined for resale or processing, that is, including purchases of capital goods and government purchases at all levels.
2. (b) The tax is levied on transactions rather than on commodities. The exemption of commodities as such will be limited to the absolute minimum in order to avoid identification and accounting problems. Where exemption from the tax is granted, such as, for example, in the case of the purchase of goods acquired for resale, goods to be used in a manufacturing process and incorporated in the manufactured product, and farming requisites such as seed, feed, fuel, fertilizer and livestock, such exemption will be granted by means of the vendor’s registration certificate.
3. (c) The tax must be neutral and must not favour some enterprises to the detriment of others. Thus, for instance, the provision of holiday accommodation without meals will be treated in the same way as temporary residence in hotels and will thus be taxed. It is also the aim to maintain neutrality regarding inputs in order not to favour comparable inputs of a branch of industry or a process of manufacture. For example, all types of fuel used in a manufacturing process will be exempted from taxation, so that one competitor does not have an advantage over another in this respect.
4. (d) In order to avoid price escalation as far as possible it has been the constant aim not to subject intermediate goods to tax where they form a significant part of production costs.
5. (e) Every endeavour is being made to adhere as closely as possible to existing trading and accounting practices. Thus it is proposed, inter alia, that prices be marked in accordance with the “add-in” system in order to include the tax in the price. It is, however, obviously wrong to assume that in such a case the tax may not be shown separately on the goods. Indeed it will be left to the seller to decide whether he wishes to display a single inclusive price, or the basic price plus tax and the final price.

As it is my intention to keep the general sales tax as low as possible and to institute it on the broadest possible base, it would not be equitable to start with a high initial rate. It is obvious, however, that the more the exemptions of the tax that are granted, the higher the rate of tax will have to be in order to yield a comparable revenue for the Exchequer.

Based on these and other principles, I wish to propose that the general sales tax be instituted at a level of 4%, with effect from 1 July 1978. As tax collections during any month are only remitted to the State in the following month, I estimate that the revenue from this source, which will amount to about R1 000 million in a full year, will yield some R650 million in 1978-’79.

Sales Duty

When I announced last year that on the recommendation of the Standing Commission on Tax Policy, consideration was being given to the introduction of a new general sales tax, I also mentioned that the continued existence of the present sales duty would be reconsidered. I have carefully considered the representations made to me to abolish the sales duty immediately and to allow a tax holiday of some months before the introduction of the general sales tax, but do not deem it advisable to accede to these requests, mainly for two reasons. Firstly, it will cause a serious disruption in the retail trade, and, more important, it will simply not be possible from a fiscal point of view deliberately to sacrifice the revenue involved in the immediate abolition of all sales duties.

On the other hand, it should be borne in mind that the existing sales duty is levied at the point of import or manufacture and any reduction effected will take time to be passed on to the consumer, depending upon the length of the supply lines.

To cause the least possible disruption at the change-over from the one duty to the other and to ensure that the reduction in sales duty is also passed on for the benefit of the consumer in the form of lower prices, I propose that from tomorrow the existing sales duties be reduced by 5% ad valorem across the board, that is the 8% rate becomes 3%, the 12,5% rate becomes 7,5%, 16% becomes 11%, 20,5% becomes 15,5%, 25% becomes 20%, and 33% becomes 28%.

The loss of revenue resulting from this concession is considerable. The consumer should, after the introduction of the general sales tax, not pay more than is the case today on articles which are at present subject to sales duty. If any section of the trade does not fully adjust its prices downward on new stocks on which the lower rates of sales duty have been levied, a very serious view will be taken of the matter.

The Standing Commission on Tax Policy recommended that the existing sales duty on certain selected less essential goods subject to relatively high rates be converted into ad valorem excise duties. I accept this recommendation in principle and intend implementing it later this year.

Surcharge on Imports

In the course of my Budget Speech last year I mentioned that the imposition of the 15% ad valorem surcharge on imports was a temporary fiscal measure which would be reconsidered when our revenue sources could be augmented by the introduction of the new general sales tax. Representations submitted to me in this regard varied from a strong case for the retention of the full surcharge to an equally strong case for its abolition.

The need for income is, however, such that I cannot abolish the surcharge now, but I propose that it be reduced to 12,5%. It is still my intention to reduce the surcharge further and possibly to phase it out as and when fiscal circumstances permit. Nevertheless I do expect from importers that the 2,5% reduction now proposed will, as in the case of the reduction in sales duty, be passed on to the consumer in the form of lower prices.

It is estimated that the imposition of a 4% general sales tax together with the proposed reduction in the sales duty and import surcharge will result in a net inflow of R395 million to the Exchequer in 1978-’79.

Government Notices to give effect to the amendments in respect of the surcharge, excise duties and the existing sales duties will be published tomorrow and these changes therefore become effective on 30 March 1978.

Contribution to Food Price Stabilization

Because of the incidence of the new general sales tax, I have considered concessions to enable the lower paid and less affluent members of our society to adjust to the new circumstances. One of these concessions I have already announced, namely the special R10 million enhancement of social and civil pensions and other social payments to levels on the whole appreciably higher than would otherwise have been the case.

But I wish to go further. There are other areas where I feel the Government can help during this adjustment period. One of these affects food prices.

Food will also be subjected to the general sales tax, but with few exceptions there are no compensating downward adjustments of other taxes which will neutralize the effect of the general sales tax on food prices.

In order to meet, at least to some degree, especially the less privileged members in our society, I feel that it is fair to provide a relatively large amount which can be used in the course of this year to help stabilize the price of one or more basic foodstuffs, especially bread. I therefore propose that an amount of R20 million be specifically set aside for this purpose. Exactly how this amount is to be used will be decided upon in the course of the year in consultation with the Minister of Agriculture.

Bantu General Tax

Another area where I feel assistance can be granted during this adjustment period relates to the tax position of the Black man. The Bantu general tax consists of, on the one hand, a fixed amount of R2,50 payable annually before 1 June by each adult male between the ages of 18 and 65 years and, on the other hand, an income tax on a graduated scale depending on the taxable income of the taxpayer. The proceeds of this dual tax are remitted proportionately to the Bantu authorities as well as to Transkei and Bophuthatswana.

Both these types of taxes have an historical justification. However, the time has now arrived to review the situation thoroughly and to make adjustments where practical, not only because the Black man in South Africa also will have to make his contribution in paying the proposed general sales tax to be levied on all purchases, but also because the existing taxes represent a measure of anomaly in our tax legislation.

I therefore wish to propose that the fixed tax of R2,50 per taxpayer be abolished from the year of assessment which ended on 28 February 1978. Tax payable before 1 June this year will accordingly not be levied. Since the proceeds from this tax are remitted fully to the Bantu authorities and neighbouring countries involved, these authorities will naturally have to be compensated for the loss of revenue. I estimate the loss of revenue and hence the remittance, at R9 million in 1978-’79.

An interdepartmental committee is at present studying the graduated income tax system and a great deal of work has already been done in this regard. Certain disparities exist between the tax rates and thus the taxes payable by taxpayers who are subject to the Bantu Taxation Act of 1969 and those who are subject to the Income Tax Act of 1962. Attention will be given to this matter when the report of the interdepartmental committee is received.

The contribution to food price stabilization as well as the abolition of the fixed per capita tax on the Bantu represents additional expenditures totalling R29 million, an amount to which I have already referred.

I now come to a number of other budget proposals which entail a loss of revenue.

Excise Duties on Wine and other Beverages

The excise duty on unfortified wine was increased last year by 5,68 cents per litre to 7 cents per litre. This increase was intended to reduce to some extent the wide disparity in the excise duties between fortified and natural wines.

It was never the intention to discourage the production of natural wine. Where representations received from the wine industry reveal that the higher duty is in fact tending to have this general effect, I feel that a measure of relief is justified, and accordingly propose that the excise duty on unfortified wine be reduced by 3 cents per litre to 4 cents per litre with effect from tomorrow. The reduction will mean a loss of revenue to the Exchequer of approximately R4,5 million.

For a number of years an alcoholic beverage from oranges has been produced on a limited scale in the Republic. Similarly, an alcoholic beverage called apple cider is being produced from apple juice. Neither these beverages is at present liable for the payment of excise duty. I am informed that certain cooperatives now intend producing on some scale a fortified alcoholic beverage from apple juice and possibly also from pear juice. These beverages will compete with wines and in order not to grant the alcoholic apple, pear and orange beverages an undue advantage, it has been decided to impose an excise duty on these beverages too. I propose that an excise duty of 424 cents per 100 litres be levied on unfortified apple, pear and orange beverages, 2 372 cents per 100 litres on such fortified beverages and 4 074 cents per 100 litres on such sparkling beverages.

Details of the quantities of these beverages to be produced are at present unknown. Consequently an estimate of the anticipated revenue from this source cannot be made. Producers of these types of beverages should approach the nearest Controller of Customs and Excise in order to obtain particulars of the tax requirements with which they must comply.

Stamp Duty on Leasing

Stamp duties were reviewed last year and with effect from 1 April levied for the first time on leasing contracts in respect of movable goods. The proposed general sales tax, however, calls for the reconsideration of this duty. It would be unfair to my mind to maintain this stamp duty, which is, inter alia, applicable to leasing contracts in respect of motor vehicles, machinery and equipment, in view of the proposal that the new general sales tax be also levied on all such leasing contracts. I have therefore decided to abolish this stamp duty with effect from 1 April 1978. The loss of revenue for the 1978-’79 financial year is estimated to be R4,5 million.

Investment and Initial Allowances

I announced last December that I will propose that the machinery and buildings initial and investment allowances be extended for a further period of three years. This extension will, however, only apply to machinery, plant and buildings (or improvements, other than repairs) used in a process of manufacture in the ordinary sense of the word—and not in a process similar to manufacture.

As far as the leasing of assets is concerned, the intention was that the granting of investment allowances to lessors should in effect be a tax concession to the lessee who should receive the benefit thereof in the form of lower rentals. This aim is not achieved when the lessee is not liable for tax as is the case with a municipality. Consequently, I propose that the investment allowance be not granted to the lessor unless the lessee is a taxpayer. This amendment will apply in respect of all lease agreements entered into on or after the date of promulgation of the amending legislation.

I have also received representations for the granting of initial and investment allowances in respect of used machinery. The present allowances applying to areas other than the economic development areas are restricted to new and unused machinery and plant. The original purpose of the allowances was to encourage industrialists to modernize their factories so as to make them more competitive. This is still the intention, but as a result of inflation the allowances have also recently been extended for a further period of three years to help industrialists meet increased replacement costs.

Nevertheless in order to assist industrialists who acquire used machinery—which in certain instances could utilize more labour per unit—I propose that the basic initial allowance of 25% also be granted in respect of such used machinery where it is brought into operation on or after 1 April 1978, be it inside or outside an economic development area. The cost of this concession amounts to R500 000 for 1978-’79.

Exporters’ Allowance: Packaging Costs

As a result of abuses which occurred, the provisions of the Income Tax Act relating to the exporters’ allowance were amended last year. It has now come to light, however, that certain exporters have been experiencing problems as a result of one of the amendments, namely the withdrawal at short notice of the increased packaging cost concession, since they entered into contracts at prices which took account of this concession.

In view of this it is proposed that the relevant concession be retained for a further year. The reasons for the withdrawal are still valid and it is not expected that any further extensions will be granted. The sacrifice of revenue is estimated at R100 000 for the 1978-’79 financial year.

Losses or Profits on Foreign Credits

In terms of the Income Tax Act exchange losses or profits on foreign credit transactions are not taken into account in determining taxable income where the losses or profits are of a capital nature. Such losses or profits are caused by fluctuations in exchange rates which are beyond the control of businessmen. In the present world of floating exchange rates the danger of sustaining large losses when repaying foreign credits, however, has become a still larger and more important risk inherent in such transactions and this may discourage the use of foreign funds for productive purposes in the Republic.

It seems fair to me that, apart from the interest thereon, such losses should be considered as a part of the cost of the credit. I therefore wish to propose that the Income Tax Act be amended to allow the deduction from income of exchange losses on foreign financing for which no forward cover is available, such deduction to apply only if the losses originate from the repayment of credits utilized for domestic productive purposes in the commercial, industrial and mining fields. Where profits are realized in these circumstances, they will, of course, be dealt with as taxable income. The deduction of losses and the taxation of profits on foreign financing transactions will be applicable to all losses actually sustained and all profits actually realized after today. The revenue sacrificed is estimated to be R1 million for the 1978-’79 financial year.

I now come to matters affecting the individual directly.

Funding of Pensions

Where an employee of a professional or other firm is admitted as a partner to the firm, he is obliged in terms of the present Income Tax Act to withdraw from any pension fund established for employees of the firm. Partnership may be offered to an employee at a relatively advanced age and the person concerned may as a result of his new status possibly have to sacrifice valuable pension benefits. The general question whether membership of pension funds by owners of a firm as well as the employees thereof could be recognized for income tax purposes, is being investigated by the Department of Inland Revenue. In the meantime it is proposed that the Act be amended to cover the case of the employee who becomes a partner, but subject to certain conditions which will be formulated.

The Income Tax Act further provides for a deduction from the income of a firm which pays a pension to a former employee, but not if it is paid to a former partner. I accordingly now also wish to propose that the Act be amended to cover the payment of bona fide pensions to former partners.

By the simple expedient of transforming his business or profession into a company, the owner or practitioner at present obtains certain tax advantages including those which I have just mentioned. I feel that such an anomaly should be removed from the tax laws of our country. The loss of revenue for 1978-’79 is estimated at R2 million.

Transfer Duties

With a view to making it cheaper for heads of households to acquire suitable dwellings, substantial reductions in transfer duties have been made during the past five years. The concession made in 1974 was particularly important because it reduced the duty on a property costing not more than R20 000 to a nominal 1%.

The Commission of Inquiry into Housing Matters (the Fouché Commission) has recently recommended that there should be a complete exemption from transfer duty on acquisitions by natural persons of building stands costing not more than R8 000 and of dwellings costing not more than R20 000. The Government has accepted this recommendation and I propose that the exemptions be made applicable to all such transactions concluded on or after 1 April 1978.

For the 1978-’79 financial year the loss of revenue is estimated at R3 million.

Donations Tax

The object of the donations tax is to discourage taxpayers from parting with their income-bearing assets and thus reducing their liability for income tax and, ultimately, for estate duty. Provision has always been made for certain exemptions. One of these exemptions permits a taxpayer to donate to his children free of tax an amount of R10 000 per child.

This amount has remained unchanged for more than 20 years and I think an increase is now justified. I propose therefore to raise the exemption limit to R15 000 per child and that the increased limit be applied to donations made on or after 1 April 1978. The loss of revenue will be R200 000 for the year 1978-’79.

Estate Duty

During 1971 the rates of estate duty were revised and at the same time the present system of deductions in respect of children and the surviving spouse was introduced. The effect of this was a substantial reduction in the amount of duty payable in the greater majority of estates.

In determining the dutiable value of an estate an amount of R25 000 is deductible as primary rebate, a further rebate of R25 000 is allowed for each child of the deceased who survives him, and a rebate of R25 000 is allowed for the surviving spouse.

I have reviewed the different types of rebates in the light of changed circumstances and decided to increase each one to R30 000. This means, for example, that if the deceased is survived by a spouse and two children, liability for estate duty will only commence when the taxable value of his estate exceeds R120 000 and not R100 000 as is the case at present. In the case where a person dies leaving a surviving spouse and two children and the value of his estate moreover includes a maximum of R70 000 in the form of the proceeds of Government stock and life assurance policies, this sum of R70 000 will suffice to cover the duty on an estate with a net value of no less than R472 308. Ample provision has therefore now been made for small as well as large estates. With proper planning in advance, few cash problems should be experienced in respect of estate duty.

The increased deductions will apply to the estates of persons who die on or after 1 April 1978 and for the year 1978-’79 the loss will be R1 million.

Financing Requirements

I wish to return to the Government’s accounts for a few moments. The expected deficit, excluding loans but after accounting for the proposed general sales tax and downward adjustment in the sales duties and import surcharge, is estimated to amount to R1 946 million. Apart from an amount of R29 million provided in an attempt to stabilize food prices and to allow for the abolition of the fixed tax, which is included in the deficit, the further concessions I have just proposed amount to R16,8 million. This means that the deficit, excluding loans, increases to R1 963 million.

To this must now be added domestic as well as foreign loan redemptions amounting to R1 754 million. All in all, financing must therefore be found for an amount of R3 717 million.

Available Means

With regard to foreign loans it will be wise to budget modestly at this stage. Although I am convinced that the Government will succeed in obtaining loans on reasonable terms overseas in the course of the next financial year, my estimates for the purposes of this Budget include an amount of only R75 million from this source as against repayment commitments of R232 million. I think it is appropriate at this stage to state that I am in any event not prepared to pay excessively high rates of interest on foreign loans offered to a country such as South Africa with its particularly impressive credit-worthiness.

Apart from foreign sources, I estimate that the following amounts will become available from domestic sources:

Foreign and domestic sources should therefore yield R3 466 million. This still leaves a shortfall of R251 million which will have to be found elsewhere.

Securities Rand Bonds

There is one additional source of financing with which I should like to deal at this stage, and that is Securities Rand Bonds. Securities rand represent the local sale proceeds of assets and investments held by non-residents. In view of the control over the direct transfer of such funds abroad, special channels through which non-residents can withdraw securities rand funds from South Africa have been available for a considerable time.

One of these channels involves the investment of such funds in existing or new Government stock or in the stock of public utility companies or local authorities where the stock has a maturity of at least five years to redemption and is held continuously over this period by the investor.

With the large gap which has developed between the official exchange rate and the rate for securities rand over the past few years, it became more and more attractive to non-residents to create new securities rand simply by purchasing South African shares abroad and selling them on the local market. The proceeds would then be used to buy qualifying domestic Government or semi-Government stock. The shares thus disposed of by non-residents are acquired by South Africans and dividends are earned locally, but such transactions contribute nothing towards the country’s foreign exchange earnings. We accept an obligation to make high regular interest payments abroad and, at redemption, to repatriate the full capital proceeds. Depending upon the discount at which the securities rand funds were obtained, there is often also a substantial capital profit at stake.

In order to minimize the abuse of one of these repatriation channels I have decided to withdraw this concession. The redemption proceeds of the qualifying stock purchased with securities rand from tomorrow will therefore no longer be freely transferable abroad. In its place the Treasury will issue new 6% Securities Rand Bonds which, with few exceptions, will be non-negotiable and non-transferable and will have a maturity of seven years. The semi-annual interest payments as well as the redemption proceeds will be freely transferable abroad. The 6% Securities Rand Bonds will be available for subscription as soon as practicable but not later than 1 June 1978.

I trust that this step will not only ensure that the abuses which have occurred will be stemmed, but that the Exchequer will moreover derive greater benefit from this concession than in the past. Emigrants will not be permitted to invest their blocked funds in Securities Rand Bonds. However, as in the past they will still be able to invest in Non-resident Bonds. Existing holders of bonds or stocks the redemption proceeds of which already qualify for remittance abroad in terms of the previous dispensation, will retain the right of transfer.

It is estimated that the Securities Rand Bonds will yield revenue amounting to R34 million.

If this amount is added to the total otherwise expected to become available from domestic and overseas sources, an aggregate estimated amount of R3 500 million from loan sources will be available to finance the deficit. This leaves a net shortfall of R217 million which must still be found. Before I make a proposal in this regard it is necessary to take a look at the tax position of companies and of persons.

Companies Tax

The South African economy is currently in its fourth year of recessionary conditions. Company profits are detrimentally affected by this and it has a consequential effect on Government revenue. As it is necessary on the eve of a new upward phase to enable companies to make their full contribution through production and higher productivity with the aid of cheaper financing and to make new investments and achieve higher rates of employment, I feel it is now necessary for the Government to grant relief in respect of the tight cash flow position experienced by many companies.

I accordingly propose that the surcharge on normal income tax payable by companies be reduced by 2,5 percentage points in respect of the years of assessment ending on or after 1 April 1978 and on or before 31 March 1979. This means that all companies earning income, excepting gold mining and diamond mining companies, will pay a 5% tax surcharge instead of 7,5%, while gold-mining and diamond-mining companies will pay a surcharge of 7,5% instead of 10%.

I further wish to propose that the 15% loan levy hitherto paid by all companies be imposed again for the years of assessment ending on or after 1 April 1978 and on or before 31 March 1979. No rates are proposed for companies in respect of income obtained in South West Africa since this decision rests with the Administrator-General.

As a further measure to improve the cash flow of companies I am sure it would be useful if the loan levy which in any case is repayable during February next year, that is in the ensuing financial year, could be refunded to companies on 15 July this year. This earlier repayment involves no sacrifice of revenue—there will in fact be a saving of interest for the Exchequer. The reduction of the surcharge by 2,5 percentage points will cost the Exchequer an amount of R48 million in 1978-’79.

Personal Income Tax

I now come to the question of personal income tax. Lord Chesterfield once remarked that “there are some occasions when a man must tell half his secret in order to conceal the rest”. I feel hon. members will agree with me that by now I have probably revealed far more than half of my secrets. What remains is embodied in my proposals concerning personal income tax.

Firstly, I propose that the 10% loan levy imposed on individuals during the last two years, be imposed again for the year of assessment ending on 28 February 1979. But, as in the case of companies, I feel that it will be fair to make an earlier repayment to individuals of the loan levy falling due for redemption in February, and I propose to do so on 15 July 1978. This step will assist the individual taxpayer to alleviate his own “cash flow” problems, especially in view of the imposition of the general sales tax on 1 July this year.

But I feel it essential to go further. For several years already individuals have been burdened with high marginal rates of income tax which, although unavoidable, have influenced productivity and hence growth. It has often been mentioned to me that as a result of our high marginal rates, some taxpayers find it more attractive to spend more time on relaxation than on productive labour.

Although I have difficulty in accepting this generalization as it stands and feel that it is exaggerated, particularly if account is taken of the generally favourable effective rates of tax obtaining in South Africa, I nevertheless wish to remove any doubts about the matter in so far as I am able to do so. Our country cannot afford a preference for relaxation above exertion. We need every hour of exertion, and every effort should be made to enhance our economic vitality and to strengthen our military preparedness. Hence I feel that it is in the country’s best interest if I propose that the full 10% surcharge on normal tax on individuals be now completely abolished. No surcharge will therefore be payable for the year of assessment ending on 28 February 1979.

Very important, these decisions to reduce taxation are specifically aimed at creating a climate favourable to a higher level of economic activity, a matter to which I return at the end of my speech.

The abolition of this surcharge means that the maximum marginal tax rate will revert to 60%, a figure which found favour with the Franzsen Commission a few years ago. The loan levy which will still be payable is, of course, an interest-bearing loan and redeemable as such. It is by no means a tax.

The abolition of the surcharge will benefit all individuals whose tax, before addition of the surcharge and loan levy, amounts to R150 per annum or more and will have a favourable influence on all marginal rates at which incremental incomes are taxed.

Hon. members will recall that during my previous Budget Speech I said that I agreed with the Standing Commission on Tax Policy that the crux of the problem concerning the taxation of married women was to be found in the high marginal tax rates on individuals and that a reduction in the marginal rates would go a long way towards solving the question of the joint taxation of the husband’s and the wife’s incomes. The present proposal is an important step in this direction in as much as it ensures that the addition of the working wife’s income to that of her husband—which is the way some people prefer to look at the matter—will henceforth attract lower rates of tax.

The cost of this concession is as much as R206 million for a full year and R132 million for 1978-’79.

Standing Commission on Tax Policy

I should like to add a few comments on the work of the Standing Commission on Tax Policy. The Commission has recently embarked upon a study of fringe benefits, a subject which is becoming increasingly more topical under present-day circumstances. The purpose is not to tax all fringe benefits, irrespective of their nature and scope, but I am convinced that it is common cause that whenever excessive untaxed fringe benefits are available to one taxpayer and not to another, an unfair advantage accrues. I expect to receive a report on this important matter during the course of this year.

Another important matter to which the Commission is devoting its attention relates to so-called “tax expenditures”, that is revenue losses enshrined in our tax laws which allow for special exemptions or reductions of income or deferrals of tax liability. The existence of an ever-growing array of such concessions prevents a balanced judgment on priorities of expenditure, which is becoming more and more essential today. These concessions are not quantified annually and Parliament is therefore not in a position to review their relative importance or necessity from time to time.

Other matters which are under constant review by the Commission include the effects of inflation on taxation, individual tax rates, incentive allowances, international taxation and withholding tax, and estate duty.

Stabilization Account

The net deficit as determined prior to my income tax proposals amounted to R217 million. To this must be added concessions amounting to R48 million in favour of companies and R132 million in favour of individuals. In total this increases the deficit to R397 million. I propose that this amount be financed by the utilization of the R42 million surplus for the financial year 1977-’78 and by the transfer of R355 million from the Stabilization Account.

Summary

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

There was a time when the Budget, in South Africa as in most other countries, was viewed mainly as an exercise in balancing the Government’s accounts. At present it is rightly recognized as a major instrument of policy. But it has never been, and never will be, a panacea for all short and long-term economic problems. Certainly, it cannot simultaneously attain economic policy objectives which are of a conflicting character. I have therefore attempted in this Budget to set out clearly my present priorities and policy stance—the encouragement of economic growth within the framework of financial discipline.

The Budget contains elements of structural tax reform and elements of short-term economic policy.

The main element of tax reform is, of course, the introduction of the new general sales tax, the advantages of which are widely recognized. At the same time I have reduced the surcharge on company tax by 2,5 percentage points and abolished the 10% surcharge on income tax payable by individuals. I have done so with the dual purpose of reducing the maximum marginal income tax rate to 60%—which means, in effect, that relatively greater reliance is being placed upon indirect taxation and relatively less on direct taxation—and of providing a moderate, but significant stimulus to the economy, in so far as Government action is able to do so in what is a predominantly private enterprise economy. The responsibility of the private sector to make its decisive contribution to economic expansion in the year ahead must be clear to all who have the best interests of the Republic at heart.

To mitigate any adverse effects which the shift in the relative tax burden might have on certain income groups, I have proposed various other changes in expenditure and revenue. These include generous increases in pensions and welfare payments, the provision of more funds for housing, the setting aside of additional funds to stabilize food prices, and the abolition of the fixed per capita tax. Account must also be taken of the salary and wage increases already announced.

As far as short-term economic policy is concerned, it is clear from the figures I have placed before the House that I expect fiscal policy to play a key role in bringing about the planned shift in policy to a greater emphasis on economic growth.

It is not, however, intended that the desired expansionary effect should emanate in the first instance from the increase in government expenditure. On the contrary, the Budget makes provision for an increase of just over 9% in government expenditure during 1978-’79 above the revised estimate for the current financial year. Since this percentage is below the present rate of inflation, government expenditure should again, as during the current financial year, decline in real terms, albeit marginally. The maintenance of this strict restraint in government spending is deliberately designed to provide more scope for the encouragement of economic activity in the private sector.

The fiscal stimulus to growth in the private sector will mainly be imparted in the following two ways:

Firstly, the Budget makes provision for an increase in the total deficit, excluding borrowing, of just over 10% to a figure of R2 143 million. This implies a meaningful addition to the direct income generated by the government’s fiscal operations. This increase, of course, is the net result of the various detailed changes in expenditure and revenue included in the Budget. Of particular importance here are the increases in salaries, wages and pensions, and the concessions in respect of the surcharge on company tax and on personal income tax. Taken together, these changes should assist in increasing total consumption and investment outlays, and thereby raise the level of production and the rate of economic growth.

Secondly, the Budget should have the effect of bringing about a moderate increase in the supply of money and near-money, mainly as a result of the transfer of the expected balance of R42 million at the end of the current financial year to the new year and the planned drawing on the Stabilization Account of about R355 million. In this manner the Government’s financial operations should contribute towards the objective of avoiding excessive monetary contraction.

It is evident that we are now reaping the benefits of the financial discipline exerted through the two previous Budgets and that the South African economy has basically been strengthened by our conservative economic policies. Like most other countries, we are still confronted by economic and other problems, and should therefore not relax our guard for a moment. But the fact remains that the good progress we have made in dealing with our economic difficulties now forms a base from which we can move with confidence into a phase of more rapid real economic growth without sacrificing stability.

That is the challenge, and that is the great prospect before us in South Africa.

Mr. Speaker, I now lay upon the Table—

1. (1) Estimate of Expenditure to be defrayed from State Revenue Account during the year ending 31 March 1979 [R.P. 2—’78];
2. (2) Estimate of Revenue for the financial year ending 31 March 1979 [R.P. 4—’78];
3. (3) Statistical Survey [W.P. B.—’78];
4. (4) Comparative figures of Revenue for 1977-’78 and 1978-’79;
5. (5) Taxation proposals [A. 1—’78];
6. (6) Memorandum on pension proposals.

Mr. Speaker, in the first instance I would like to extend some congratulations to the hon. the Minister of Finance. I think there is little doubt that this is a record budget, a budget which exceeds in expenditure some R9 800 million, an amount which, without doubt, by the time the financial year is over and with additional estimates included, will exceed that magic figure, R10 000 million. For South Africa this is a record.

On a personal note I would also like to congratulate the hon. the Minister on his endurance. I think the length of his budget speech here this afternoon is, without any doubt, also a record, lasting as it did for a period exceeding two and a quarter hours. This is most definitely a record achievement in the financial history of South Africa. Yet, if I may say so, the hon. the Minister seems to look very well for it. [Interjections.] Whether those of us who will have to pay his newly announced comprehensive turnover tax will feel as well as he seems to be feeling at the moment, is, of course, another question. If I may use the hon. the Minister’s metaphor of the goose from which the feathers are being plucked, I want to state that, in many respects, the taxpayer is standing before us with many of his feathers plucked, having received just a little bit to feed him in order to keep him alive. Certainly, the budget which the hon. the Minister has put before us today is like the curate’s egg. I concede immediately that the budget is good in parts. However, there are also parts of the budget which, I think, the taxpayers of South Africa are going to find highly indigestible. [Interjections.] To us it seems that the most important of these is that the hon. the Minister, in his whole approach to the general sales tax, has now adopted the principle of taxing the poor. [Interjections.] That is the tragedy which stems from this budget. The tragedy is that the hon. the Minister wants to tax the poor. Not only does he want to tax the poor once; he also adopts the double taxation concept in that he retains the ordinary sales tax. On top of that, in many cases there is a triple taxation, because the hon. the Minister has retained the extra import duty. If we include the customs duty being paid on imported goods, the hon. the Minister has become the master of quadruple taxation as well. [Interjections.]

There is little doubt that in so far as the general sales tax is concerned the timing of the hon. the Minister is most unfortunate for South Africa. The introduction of that tax, as early as 1 July 1978, is likely to cause not only administrative problems, but hardships as well. The rate of 4% is excessive in the circumstances and the danger of increasing inflation and of exploitation as a result of this taxation cannot be ignored. When the hon. the Minister has dealt out some concessions and has spoken about granting tax concessions, one thing which must not be forgotten is that, even if we take into account the reduction in the amount of the sales tax, the reduction in the amount of the additional import duty, as well as the concessions on personal tax which have been given, the hon. the Minister has still managed to extract another R500 million from the poor of South Africa, from the people of South Africa who are going to have to buy to live. That is the bad and the indigestible part of the curate’s egg. [Interjections.]

Having said this to the hon. the Minister and having conceded that there are parts of this budget which one undoubtedly welcomes, I believe that we should all have more time to study this somewhat lengthy budget speech. Therefore, in accordance with the traditions of this House, I move—

Mr. Chairman, I feel a little bit like the person who came after the Lord Mayor’s show. When the debate was adjourned last night we were trying to explain to the hon. the Minister why we wanted him to accept the amendment which I had moved. I believe we have already given the motivation as to why we believe that the professional council should deal with anybody convicted of taking part in a strike. I believe we have indicated clearly why we believe that any such double punishment should be left to the professional council, and should not be part of the legislation before us. I am sure the hon. the Minister is going to show his usual reasonable manner in indicating to us that he will accept our amendment.

Mr. Chairman, I should like to address myself to the amendment which has been moved by the hon. member for Berea. This clause is a very important one. During the Second Reading debate my colleague, the hon. member for Bryanston, supported the clause on behalf of this party because of the motivation advanced by the hon. the Minister in his Second Reading speech and because of the very serious nature of contemplated strike action by members of the medical profession. All of us realize the consequences that could flow from that. We have been listening with interest to the amendment which has been moved by the hon. member for Berea, and after very careful consideration we have decided to support this amendment. We appreciate that the hon. the Minister may well advance the view that if the change is made it may delay the removal of the name of the offender from the appropriate register, but despite that delay, despite the problems involved and despite the serious nature of the charge—assuming for a moment that the person concerned has been found guilty—we believe that, as in the past, so here too the medical council should sit in judgment of the person concerned. For that reason we shall support the hon. member’s amendment.

Mr. Chairman, I have listened carefully to the arguments of the hon. members for Berea and Pinelands, but I am afraid that I cannot accept the amendment which has been moved. This amendment means that before a person’s name can be removed from the appropriate register, an inquiry must again be held by the council. These inquiries can take as long as six or 12 months or even longer, and in the meantime the person concerned can continue to practise. He can then undermine the discipline of employees and upset patients. That, as far as I am concerned, is a practical problem which will flow from the acceptance of this amendment. In addition, as far as registered persons are concerned, if we accept this amendment it will effectively negate this provision. As I have already pointed out, the council already has the power to inquire into acts or omissions of registered persons, and this covers strikes and go-slow strikes. Because of the seriousness of the practical problems involved here, I am afraid that I cannot accept the amendment. One must remember that a person whose name has to be erased from the appropriate register because of the fact that he has been convicted, has in fact been convicted in a court of law. What better institution can one choose as regards impartiality than a court of law? It is a court of law. This is not a semi-judicial body such as the council itself.

You must tell Jimmy Kruger that!

No, I am not telling anybody anything. I am just elaborating on my argument. I think I have made that point, but because the hon. member for Berea did bring up this point, I just want to add that after a person has been convicted in this manner, and his name has been removed from the register, it does not mean that his name has to stay off the register for longer than six months. He can reapply within six months and can be reinstated in six months’ time, or later on because he can apply at regular intervals. I do not want to separate the criminal and ethical aspects, but there is a distinction. The council usually acts against criminal and ethical offences. Here, however, I do not want to separate them. I only want to state clearly that this is regarded as a serious criminal offence, and because of the nature of the offence, and because of the practical problems involved in having a second inquiry, I cannot accept this amendment.

Mr. Chairman, I thank the hon. the Minister for his explanation. I do feel that he made a perfectly valid point in connection with the time it might take for an inquiry to be held. I do see his problem there. I wonder, however, whether there is not a compromise somewhere in between. The Minister might, for example, be prepared to accept that the registrar “may” remove the name from the register, leaving out any reference to “after appropriate inquiry by the council”. I just feel that this would remove any taint of unnecessary powers from this Bill. I believe, in fact, that it would be an improvement. I see the hon. the Minister shaking his head, but I would like to ask him to consider this seriously. We on this side of the House accept that it is a criminal offence and also that it is a serious offence. Any disruption of health services, where lives are involved, is both a serious ethical offence and a criminal offence, but I would point out to the hon. the Minister that there could be an occasion on which a person is frustrated through pressure of work. He may then commit what, in the final analysis, turns out to be a minor infringement of the Bill as it stands. He may then be fined accordingly by the criminal courts, though obviously the offence is not a serious one, as contemplated by this Act I therefore believe that under such circumstances it would be a very great improvement if the hon. the Minister would accept that in such instances, or in other such instances as may well give rise to extenuating circumstances, the registrar may remove the name, but not that it should compulsorily be done in the sense that the registrar must remove the name of a person so convicted.

Mr. Chairman, I think I have already replied to all the points the hon. member has thus far raised. As far as its being a criminal offence is concerned, I think the courts are the best institutions to judge the seriousness of such offences, and I think the courts will always take into account the fact that the name of the person concerned is going to be removed from the register if he is found guilty. I therefore think we can leave that to the courts themselves. As soon as I accept this amendment which wants to introduce the word “may”, however, we would again be back at square one. All the arguments I have raised come into play again. I am therefore very sorry that I cannot accept the amendment. I am really sorry.

Mr. Chairman, as section 30 of the Act reads at present, information in regard to the prospecting or mining for or treatment of ores containing source material, may not be made known without the consent of the Atomic Energy Board or of the board in consultation with the Minister of Mines. In clause 1 of the Bill on page 5 in lines 6 to 7 the words—

which were inserted here by mistake, will have the result that information in regard to the prospecting or mining for or treatment of ores containing source material, which is financed by the board or the State, may freely be made known. It is not the intention to make known any information in regard to prospecting for source material without the necessary consent. That is why I move the amendment which is printed in my name on the Order Paper, as follows—

Mr. Chairman, when the Second Reading of this Bill was taken, we pointed out from this side of the House that we had very grave misgivings about the restrictive nature of this legislation. We stated that we believed that its effect would be counter-productive in relation to the specific purposes the hon. Minister had in mind. When he replied to our objections at the Second Reading, the hon. the Minister conceded that the Bill was indeed restrictive in certain respects and that he would be prepared to undertake a re-examination, together with members of the Opposition, to see whether certain improvements could be made in the sense in which we suggested them at Second Reading.

I think it is right for us to express our appreciation to the hon. the Minister for his willingness to do this and also for making available for this purpose during the recess members and senior officials of the Department of Mines and of the Atomic Energy Board to discuss with us some of the details over which difficulties had arisen. Despite attempts to reach agreement, we unfortunately found that there was a basic difference of approach that could not be bridged. I do not want to go into detail as I think we have already made the nature of our objections clear during the Second Reading. The hon. the Minister has quite rightly pointed out that some of the objectives of this Bill are of a sensitive nature, and therefore I do not wish to dwell unduly on those topics. However, I want to say that it would be better for the development of nuclear energy in South Africa, better for the participation by the public in the development of nuclear energy, better for the confidence of the people as nuclear energy becomes a part of our economy that, instead of proclaiming a general prohibition and then proceeding by way of exemption, we proceeded from the basis that everything should be permitted except what has specifically to be prohibited. It is, as you will see, Mr. Chairman, a fundamentally different approach, one which we believe, should our view be accepted, would be conducive to the confidence, the participation and the development which is necessary for the development of nuclear energy. That this could not be achieved is a great pity. We may return to the subject when some other occasion presents itself and I hope also that the hon. the Minister, when he is able to reflect on these things later, will contemplate the kind of approach which we have recommended, because there is much in the development of nuclear energy in other countries to show that the maintenance and the enforcement of secrecy in these matters is, in fact, not conducive to achieving the object he has in mind and can, in fact, have a detrimental effect on the confidence of people whose confidence it does require as this most important field of human endeavour continues to develop in South Africa.

At this stage I would take the matter no further except to say that while we have sought to leach agreement, by way of amendment, with the hon. the Minister and since the amendments which we have considered are not fully acceptable either to his side or to this side of the House, we have to abandon the attempt to reach agreement on clause 1 and agree to differ. We shall therefore oppose clause 1 of this Bill.

Mr. Chairman, like the hon. member who has just spoken, this party during the Second Reading debate gave serious consideration, as we always do in regard to legislation in the House, to the implications and the consequences of either having or not having the amendments put forward in this Bill. We took great care to study the format of what happens in other countries as well and discovered that the proposed amendments do not constitute as wide and as far-reaching legislation as is currently in force in a country such as, for instance, the USA. In addition we considered the risk factors, the necessity of having legislation which will give confidence to those bodies which are interested in doing business in the nuclear field with South Africa. We also took into consideration the fact that nuclear energy is one of those sources where once the horse has bolted, it is difficult to close the door. Although we are concerned about certain of the legal aspects of clause 1, I would like to indicate to the hon. the Minister that my party is prepared to support him as far as clause 1 is concerned with one reservation. That is that we are most concerned about the word “publish” which is being introduced by clause 1(a).

It appears that the hon. the Minister may have certain practical difficulties in implementing the aspects of this particular clause. We would like to suggest to the hon. the Minister that he consider the possibility of adding a definition of the word “publish” to the Atomic Energy Act of 1967, a definition which at the moment does not exist. The argument for and against such a definition is that it will be extremely difficult to determine exactly what point of communication publication actually takes place. I refer the hon. the Minister to the Copyright Act, No. 63 of 1965, which states that a literary, dramatic or musical work, any addition to such work or an artistic work shall be deemed to have been published only and only if reproduction of the work or addition has been issued to the public. Another area where we find a legal definition of the word “publish” is in the Defamation Act and also in common law. I think, however, that the courts may well have considerable difficulty in establishing at exactly what point of communication publication has taken place. We would like to suggest to the hon. the Minister that he should consider including a definition as to what “publish” means in the Atomic Energy Act. Whilst we have had very considerable and fruitful discussions with the hon. the Minister’s department—this party would like to thank them for it—I would like to indicate to the hon. the Minister that this party is prepared to support the clause in view of the critical nature and the vital importance of nuclear energy to South Africa. We are not doing so because we are always in agreement with the principle of banning information totally and then asking people to obtain exemption from such banning. If it were at all possible, we would have preferred to have it done the other way, i.e. that the hon. the Minister or the Director of the Atomic Energy Board would have to ban certain information specifically and that other information could be published. On balance, however, we considered that this measure was of sufficient national and strategic interest to South Africa and therefore we support the clause.

Mr. Chairman, the hon. member who was the first to participate in the debate today, made it very clear that we had really made an attempt to see whether we could not agree with one another. During the Second Reading debate, I conceded at once that, if there was any possibility at all of improving the legislation so that both sides of the House would be satisfied with it, we would consider the matter once again. We are taking this attitude for one important reason, which is that we do not, if we can help it, want to have an argument here about one aspect. I am referring specifically to atomic energy now. That is why I took a great deal of trouble to put officials of the Atomic Energy Board at the special disposal of hon. members so that everyone could really feel that there was an attempt from both sides of the House to see whether we could not agree on the matter. After negotiations, after I had had further talks with the people myself and had reconsidered the matter—I considered it again late last night—I am afraid that we shall just have to agree, as the hon. member said, to differ on this matter.

What is actually contained in clause 1 of the Bill, is in general a prohibition on disclosure. This is the essence of it. The objective of the legislation is to protect the very important matters that deal with atomic energy. The provision which is before the House at the moment, has been in existence for 11 years already. All that is being proposed now is that it should be adapted and better defined. In other words, the essence of the problem in this regard, viz. that one must try to afford protection against the possible disclosure of the matters which were mentioned, is not a new question. In fact, this legislation has been applied in this way for 11 years and in this period it did not create a problem for people who want to communicate on, want to publish information on, or do research into this subject and make it known. It did not create any problems, because it laid down one requirement only, viz. that the consent of the Atomic Energy Board had to be obtained. This was easy.

I want to give an example. There are mines in this country which are searching for source material or which mine source material and make the products of the source material available. There are mines which have invested many millions of rands in these activities. Here we have the problem that these people must also tell the general shareholders what is happening. Annual general meetings were held at which these things were discussed, and it was possible for us to reach an agreement with one another for 11 years. That is why I am not really concerned that the provision will cause the obstruction which people think it will. Even the universities did not have any problem with the provisions of the present legislation. All we are doing in this clause is to take it further and to define it in a better way. I do not think this closer definition will cause a greater obstruction than there was in the past.

With reference to the remarks made by the hon. member for Durban North, who has just spoken, about the word “information”— what is involved here is the publishing of information—I want to tell him that the essence of this clause lies in the words before “publishing”, viz.—

† That is what it is all about. It has to do with the communication, the transmission or the making known to any person of any of the matters which are tabulated in the clause. I do not believe it makes that much difference. If one is prohibited from communicating or from transmitting information, I do not think the word “published” would make that much difference. Therefore I cannot accept the hon. member’s suggestion, although I am prepared to give it further thought. We can always come back in future, and if in the meantime we find that we should change the words to suit the occasion we can do so. However, on this occasion with the Bill as it stands now, I am afraid that I cannot accept the suggestions of the hon. members.

Mr. Chairman, I do not want to drag out the argument unnecessarily and I also accept in part what the hon. the Minister has just said. However, the fact remains that the practice in the past was that certain concessions were made by the Board. To a certain extent, these concessions can be considered as an endorsement of the standpoint of this side of the House. One can argue that the fact that it was necessary to make concessions, proved what we are alleging here, viz. that much of the information which is prohibited, is in actual fact quite permissible and that its publication is actually in the public interest. Such information was and is in fact being published. Technical periodicals and newspapers contain a long record of disclosures in respect of these matters. Information in connection with the quality of ore, the reserves, etc., has been published for a long time. Information of this nature is necessary in order to acquaint the general public with the possibilities which exist for investment, development, etc. Therefore, since it has already been done in the past, although it was by way of exception, it proves that the strict general prohibition which is now being imposed, is actually unnecessary and that the concessions which it was possible to make on such a large scale, as the hon. the Minister himself conceded, weakens the argument that this general prohibition is necessary. However, let us not continue with the argument. We differ in principle as to the application of the provision.

There are sections of clause 1 with which we agree. As I have already indicated, we have no objection to the proposed paragraphs (a)(iii) and (iv). Nor do we object to the proposed paragraph (b), but since the clause must be dealt with as a whole and we therefore have to take a stand against the clause in its entirety, we are unfortunately forced to vote against the clause, for the reason which I have already given.

Mr. Chairman, we have already made our feeling about the word “publish” in clause 1 clear. I now wish to draw the hon. the Minister’s attention to the proposed section 30A(b). Here we have a problem on which I should appreciate the hon. the Minister’s additional comments. It reads—

In this respect certain anomalous situations can arise which may give rise to difficulty in the execution of the amendments which have been proposed. It would appear that the word “receive” contained within this paragraph could give rise to certain very specific problems in practice. Let us assume that certain information is disclosed verbally to an innocent individual who, upon hearing what is said, immediately realizes that the statement was made in contravention of the proposed section 30A(1)(a). He now has information for which he has not asked and it would be inequitable to hold that person liable in the absence of intent on his part. We in this party should like to ask the hon. the Minister whether he would be prepared to redefine the word “receive” in such a way that it does not lead to any unnecessary or harsh measures being imposed on innocent people. Like my previous suggestion regarding the word “publish”, I should like to suggest that the hon. the Minister consider the possibility of perhaps bringing in an amendment in the Other Place in regard to the words “receive” and “publish” in order to facilitate the introduction of the definitions into the Atomic Energy Act.

Mr. Chairman, if the hon. member is experiencing problems with the word, I want to say to him at once that it was inserted in the Bill as such by the drafters of the Bill. Consequently, I am unable to dispute the matter, because that is the legal terminology in which it has been clothed. I think it is fair to say that the hon. member is not experiencing any problem with the principle, but in fact with the word “receive”. I shall take another look at the word and I shall consult these people about it once again. If they see their way clear to change the terminology, I shall be pleased to have the necessary changes effected. I have no objection to that.

Mr. Chairman, I shall again be brief. I think it is right to point out that clause 3, which deals with the prohibition of information in regard to nuclear installations, in fact covers quite a wide field, a field which has been the subject of some of the gravest difficulties in a number of countries in connection with the development of nuclear energy. The organized opposition which has grown against nuclear energy in a number of countries, has very frequently taken the form of protest against the licensing of nuclear installations, the licensing of sites for the purpose of nuclear installations. I have by way of example a German publication here in which there appears a letter addressed to the president of the Bundesrepublik by some 44 of the leading scientists in Germany. The letter was actually written by the Director of the Nuclear Physics Institute of the University of Munster and supported by 44 other scientists. The purpose of the letter was to protest against the licensing of nuclear installations in circumstances to which these scientists take strong exception, because they believe that there are certain dangers attached to the granting of these licences. It seems to me that one of the difficulties which has arisen here is precisely that these scientists are not fully aware, nor has there been a proper discussion or consultation, of the associated problems relating to the licensing of nuclear installations. Let me give another example.

It was recently proposed in the USA—I do not think it has gone to Congress yet—but a Bill has been prepared dealing with the same question, and the matter is of such concern to Congress that it was decided to include in the Bill a provision allowing financial grants to people who wish to protest lawfully against the licensing of certain installations, for fear that they might be prevented by financial stringencies, by a shortage of financial funds, from formally expressing as fully as they wish the kind of objections which they have to the proposed licensing of these installations. This merely serves to illustrate the problem which exists. It illustrates an attitude of mind which has grown up in other countries, and from which I think we must learn, that if we wish nuclear energy to go forward in this country without undue difficulty, that if it becomes necessary to license a number of other sites for the purpose of nuclear installation, it is most important that we should carry public confidence with us. Public confidence without public knowledge is unattainable. This kind of development does not flourish in secrecy. The evidence in other countries shows that the exact opposite is true. I believe that while it may seem the obvious thing, the simple thing, the rational thing, to prohibit the publication or the disclosure of information in regard to the licensing of nuclear sites and installations, the truth is not quite so obvious. The truth is that by making this information more freely available, by directing more attention to public information, to public education in regard to nuclear energy, by sharing as much as can be shared in regard to these matters, one acquires public confidence and the public support which is needed if one is going to make a success of nuclear energy in this country. This is a broad philosophy, and since we are discussing a particular clause in the Committee Stage, I do not want to take the matter any further than that. I regret to say again that we cannot support this clause. I say it without rancour. I have no strong objection to what the hon. the Minister is trying to achieve, but I think this Bill is trying to achieve it in the wrong way. That is all I have to say on this clause. We shall oppose it.

Mr. Chairman, how does one argue against a standpoint such as this? The hon. member contends that the public should be informed so as to avoid suspicion, especially with regard to a matter as important as this, a matter about which emotions have been aroused all over the world and about which emotions can readily be aroused locally as well. This is a fact. However, the hon. member should realize that it is not only in Germany that it has happened that a number of scientists have come forward and raised objections to the whole development of nuclear physics and everything connected therewith. It has happened in other countries as well. I should not like to do this, but I can refer to countries as well. Perhaps I should do so after all. I mention Australia as an example. In Australia the situation is so bad that the trade unions have stepped in and that they have even stopped the mining of nuclear fuel altogether.

That is purely from ignorance.

Yes, I agree. The matter has already assumed enormous proportions. We find groups of people in every part of the world who seize simply everything and make a fuss about it. This is a fact, and I accept it. I do not think, however, that we should allow ourselves to be put off by that. The fact of the matter is that we in South Africa have to do what is right.

I shall go as far as I am permitted to go here in this House. With regard to nuclear installations, what is involved here is those things which are already known. The installations we are discussing are, in the first place, the nuclear installations which are under construction at the moment. The whole development at Velindaba and at Pelindaba are the two major projects we are dealing with at the moment. When the hon. member contends that it is in the public interest to disclose those things which can in fact be disclosed, I am in full agreement with him. One should tell the public what they can possibly be told. Consequently, I want to give the undertaking to tell in future what may in fact be told. While I am talking about this now, I may say at once that the licensing division of the Atomic Energy Board is a very important division. The board consists of able people with good training, people familiar with developments in the world, people who keep contact with the outside world and who continually pay attention to the plans according to which development takes place so as to enable them to take the necessary security measures.

I am convinced that whenever the power station is completed, the public will be told— and this is very important—what the answers are to the important questions they are asking. What will the public want to know? The public will want to know whether there is any danger of pollution, whether the authorities realize the danger of pollution, whether the Government has taken the necessary steps to prevent pollution, and what its effect in the long term will be. These are all things the public will want to know. I believe that we shall be able to say at that stage that the necessary precautions have been taken. It is important for the hon. member to realize, however, that we have to be very careful not to push the matter of informing the public to extremes. It is true that the public has to be kept informed of developments. In this instance, however, we are dealing with a highly confidential matter. All countries keep intelligence with regard to this matter dark. We in South Africa do the same.

Therefore, I cannot argue the matter any further with the hon. member, except to say to him that I as the Minister concerned, give this House the undertaking to disclose from time to time what can be said by a Minister within the context of the situation, on condition that such disclosures fall within the confines of the Act. I can give the hon. member my assurance that if there is any field to which we pay particular attention, specifically with a view to ensuring in good time that the necessary security measures are taken with regard to the nuclear installations and the sites on which they are erected, it is this field. Unfortunately I cannot take the matter any further now. I cannot concede that we should disclose too much. Neither can I withdraw the clause. If I could do so, I would not have included it in the Bill. It is essential to have it in the Bill in this form. The hon. member should realize, however, that I give the assurances I am able to give, readily and with pleasure.

Mr. Chairman, while wishing to express our agreement with the Minister’s general intention, and to thank him for giving us the assurance that in so far as this stringent Bill allows he will seek opportunities to disclose information, we have very real difficulty in accepting the kind of legislation which has been put before us today. This is not because we disagree with the hon. the Minister that there are certain sensitive areas, but because we believe that these areas are limited and can be defined. We believe it is highly desirable that the far wider area, which should be in the domain of public knowledge, should not be subject to the kind of prohibition which we find throughout the Bill.

Clause 4 introduces a new provision into the Act. The proposed new section 30C reads, inter alia, as follows—

The first point that needs to be made is that this is a very wide provision. It deals with the exercise of any power in terms of the Atomic Energy Act and authorizes the Minister not to disclose the reasons for the exercise of his powers in terms of that Act in any direction. He need not only not disclose what he has done; he need also not disclose his reasons or his thinking behind his actions. We would be inclined to give the hon. the Minister the benefit of the doubt, because although this is not a power which is really needed in view of the Bill’s other stringent prohibitions on disclosure, it does give the Minister a power to be used in the case of an emergency situation, a very special situation which might possibly arise in the sphere of international relations—and such relations are involved in the development of nuclear power.

The proposed new provision goes on—and this is where our real difficulty occurs—to state—

The word “review” as it is used in this context means that a court may not review whether the Minister, in the exercise of those powers or in the reaching of a decision not to disclose his reasons, acted bona fide. The court may not review the question of whether he acted as a reasonable man or whether he applied his mind properly to the subject. The power of review of a court is distinct from the power to take a case on appeal. What is being dealt with in this new provision is the elimination of the right of review. It has nothing to do with an appeal on the facts. We realize that if this is a secret matter and the Minister cannot disclose his reasons, the taking of a matter on appeal on the facts would entail the disclosure in court, even though it may be had in camera, of those actions or reasons which the Minister may have felt he was unable to disclose. Therefore, Sir, one must go along with a special provision whereby the Minister cannot submit to an appeal in the court; but to take the matter further and to say also that he need not submit to a review of the matter by the court, means in fact that the court cannot test whether the Minister—and I do not for the sake of the argument mean this Minister; it could be a successor of his—happened to be drunk on the day he took the decision not to disclose his reasons. It cannot review the question of whether he happened to be non compos mentis on the day he took this decision. It cannot review the question of whether or not he was advised by someone who was out of his mind when the decision was taken. By “review” we mean the right of a court to consider whether the Minister applied his mind properly, whether he was in fact acting bona fide or whether—and again I do not refer to this Minister—he was bribed to take a certain decision. That is the kind of thing to which a court can apply its mind in the case of a review, and that is quite distinct from an appeal on the facts. To take away the right of the court to review a matter or the right of an opponent of the Minister to take a matter on review if he feels that it is justified in the circumstances, to my mind goes very far. We accordingly have difficulty in accepting the exclusion of review in terms of this clause.

Mr. Chairman, we must understand each other very clearly in this regard. This legislation deals with atomic energy, and in all countries of the world this is regarded as something extremely sensitive. What I want to say to the hon. member, is that there are certain dominant words in this clause. I quote—

And then the important words follow—

should be withheld. If the situation is such that the Minister has to withhold certain information in the interests of the security of the State, I am not prepared to allow a court or whatever body to review the verdict of the Minister. Then it will not mean anything at all. I am sorry, but I cannot concede to that request at all. That point is the very heart of the matter. What can be more important to the security of the State than the fact that atomic energy in South Africa, as in any other country, is regarded as a matter of the utmost secrecy. I simply do not see my way clear to have it any other way. If it is in the interest of the security of the State, I simply do not see my way clear to be taken on appeal by anybody, irrespective of whom he may be. The reason why I am arguing with the hon. member, is that I am of the opinion that he is accentuating another aspect. For me the emphasis falls on the words I quoted. That is the dominant aspect. In the light thereof I want to suggest to the hon. member for his consideration not to cling to the point of view he holds at the moment.

Mr. Chairman, I want to concede at once that the emphasis does in fact fall also on the words “When the Minister … is … of the opinion that it is in the interest of the security of the State”. I concede that at once. That is the point. When it comes to the matter of revision, however, it is a question of the opinion of the Minister. Then it is not a question of facts. Then the security of the State, and what is connected therewith, is not at stake either. The point at issue is whether the hon. the Minister had been properly advised on the day he formed his opinion. To put it possibly better, the point at issue is whether the hon. the Minister actually came to the right conclusion, or had taken the necessary trouble to obtain the correct advice. Suppose there is a very flippant Minister in future who receives advice from a person

But surely one is not going to put such a Minister in such a job.

It can happen to any person. It has happened in the past in other places. A Minister may be appointed who is unable to perform his duties reasonably and fully. He may decide that the security of the State is at stake in a certain respect. There may, however, also be people who realize that he came to that conclusion in error, not because they contest the facts, not even because they know what the facts are or want to take the facts on appeal, but because they know that the Minister was not able at that particular moment to reach such a decision. This is what is relevant in the case of review. The hon. the Minister will probably concede that there is a very important difference between appeal to a court of law— and we do concede that such a decision by the Minister should not go on appeal—and the question of review where the court will simply see to it that the decision was taken by a person who was in fact authorized thereto.

Mr. Chairman, we have to look at what is written here. Because the Minister considers it to be in the interests of the security of the State, he may withhold certain reasons. If the Minister does so, however, he does not want to be challenged to disclose the reasons why he withholds them. It is stated very clearly—

I emphasize “reasons”. There is no mention of the performance of the deed, but of the reasons why the Minister does not want to tell. I continue to quote—

Surely I cannot allow review. If I do certain things in the interests of the security of the State, surely I cannot be taken to court to tell the court or anybody else why I do not want to disclose the reasons, because if I have to do that, I have to disclose the whole matter and that I cannot do. That is why I repeat that with regard to this measure, what is relevant is that the decision of the Minister not to disclose his reasons for certain steps having been taken, should not be reviewed. Why should the Minister tell why he does not want to do certain things and does not want to disclose certain information in the case where a matter is in the interests of the security of the State. I must say that I cannot follow the hon. member’s logic in this regard. What else is the essence of the whole matter? The point is that the Minister takes a decision in the interests of the security of the State. In that case it should not be possible for him to be taken to court to indicate why he does not want to give his reasons for his decision.

Mr. Speaker, I move—

This Bill seeks to rectify a few matters which have become apparent with the application of the Mining Rights Act during the past few years. Before I proceed to elucidate the legislation, I just want to say that over the years it has always been the practice to discuss the problems of the various mines with them. In this Bill we are accommodating interested parties in pursuance of representations which were made to us by the mining industry in South Africa over a very long period.

The presence of prospectors on land which the State has acquired for specific State or public purposes, creates problems for the State as far as the utilization of the land for such purposes is concerned. Provision is therefore being made in the Bill that land acquired by the State, will be deemed to have been withdrawn from public prospecting as from the date on which it becomes State land. Hon. members will appreciate that in practice it will not always be possible to withdraw land from public prospecting on the same day it becomes State land. Prospecting on withdrawn State land is only possible under the authority of a prospecting lease in terms of section 13 of the Act which, if such lease is granted, will make it possible to have proper control over prospecting and related activities on such land.

As section 18(12)(a) of the Act now reads, the holder of a right to base metals, or his nominee, who prospects or mines on unproclaimed private land in respect of which the right to such minerals is not severed from the ownership of the land, is not entitled to apply to the mining commissioner for permission to use the surface of adjoining land for purposes in connection with his prospecting or exploitation activities. It was not the intention to exclude such a person from this right, and it is therefore being proposed that section 18(12)(a) be rectified in this respect.

As a matter of principle, all rentals which the State receives in respect of prospecting or mining leases on land within a Coloured area, are paid over to the board of management for such area. This principle is embodied in all the relevant sections of the Mining Rights Act, except in section 42. This oversight is now being rectified in this Bill.

The time has also arrived for provision to be made for the maximum scales according to which licence moneys may be collected in respect of claims which are not being adequately worked, but are being retained for speculative or other purposes not connected with mining, to be considerably increased.

Section 58 of the Act provides for the pegging of claims with the permission of the Minister on open proclaimed land which is not available for the pegging of claims by the public. A claim licence confers on the holder thereof the right to mine on the claims concerned. Mining companies, especially those which mine gold in the Witwatersrand area, often want to peg claims in terms of section 58 on open proclaimed land adjoining their existing mining title, mainly with the object of carrying out an investigations for the purpose of obtaining information on the gold reefs, their assay values and the available ore reserves which may economically be exploited. In such a case, where an investigation is contemplated, it is not possible for the mining company to present a scheme for the exploitation of the claims at that stage, nor is it possible for the State to determine the share of the profits derived from the working of the claims, or the royalties or other consideration to be paid to the State by the company. For this reason it is being proposed that section 58 be adapted.

It also follows that where an investigation is contemplated, the right to mine should be suspended until such time as the Minister is satisfied that the scheme for the working of the claims is satisfactory or until the Minister has ascertained the share of the profits, royalties or other consideration to be paid to the State. Hon. members will probably appreciate that a person who holds a section 58 claim can circumvent the conditions on which the permission for the pegging thereof has been granted, by transferring the claim to another party. For this reason, provision is made that transfer will be subject to the approval of the Minister and on such conditions as he may think fit. Provisions are also being proposed which will make it possible to cancel claims if the terms and conditions on which they were pegged or transferred, are not complied with.

In view of the provisions of the new Liquor Act, 1977, it is necessary to adapt section 139(3)(f) of the Mining Rights Act in terms of which spirituous liquor may simply be sold to Black labourers in the mine compounds. Hon. members will agree with me that it is advisable to provide food for consumption on the premises in the compound where the liquor is consumed, and section 139(3)(f) is therefore being extended to make provision for that.

The mines may make only certain deductions from the earnings of a mine employee. The mines provide their Black labourers with food and accommodation, and because the cost of the food and accommodation may not be deducted from their earnings, these expenses are not reflected in the earnings. The earnings of Black employees in other industries whose employers do not themselves provide them with food and accommodation, are considerably higher than those of mine employees. The mines are trying to recruit more and more local labourers, but the wages offered cannot compete with those of other major undertakings which do not themselves provide food and accommodation. Employers in the mining industry are of the opinion that their Black labourers should be paid considerably higher wages, but that the Black labourers should then have to pay for their food and accommodation by way of deductions from their wages. The Chamber of Mines has made representations in this connection and a provision which enables the mines to make such a deduction, has been included in this Bill.

Mr. Speaker, these are then the few aspects with which this Bill deals, and as hon. members have heard, they are not really of a contentious nature.

Mr. Speaker, we in these benches do not find the Bill contentious either. In these days, perhaps more than at any other times in history, it is important that the control which the Government has to exercise over mining should take place in cooperation with the mining industry with a view to enabling the hon. the Minister to perform his task of maintaining the balance between, on the one hand, the right of free enterprise of the citizen of South Africa to employ his capital, to go and search for minerals and later to mine them, and, on the other hand, the interests of the nation as a whole. The national interest makes it imperative that in the exploitation of our mineral wealth, there should be a measure of order, there should not be malpractices, and the exploitation thereof should be in the hands of those who are best equipped for it. With several of these provisions, the hon. the Minister is making provision for the performance of the duty to which I have referred. We are of the opinion that with these provisions the hon. the Minister gets as near as possible to the ideal balance and although there are a few matters which we should like to discuss at the Committee Stage, we have no criticism in principle against the Second Reading of the Bill, and we support the Second Reading.

Mr. Speaker, I am particularly pleased that the hon. member for Parktown supports the Mining Rights Amendment Bill. He speaks with authority on the mining industry; however, I cannot say that he speaks with authority when it comes to general politics. If only he had belonged to this side of the House, he would have been able to make a contribution.

This amendment is important to the mining industry, especially in the light of the circumstances in South Africa today. The mineral wealth of our country is of very great importance and it is a fact that prospecting has to be done by the most effective method possible. It must be seen to that people who have prospecting rights will not use them in a purely opportunistic manner for personal gain. One also finds that where people enjoy such rights, they misuse them for holidays and all sorts of practices which have nothing to do with the object of the legislation. The object of the legislation is that it should be used for the mining of minerals.

What is of very great importance in connection with the Mining Rights Amendment Bill is the provision which relates to the wages of Black mineworkers in South Africa. In my view, the mining industry can be very proud of the wages of the Black workers in our country. In the light of the present political conditions in Africa and the instability which Africa has to contend with, the mining industry can be directly affected in the sense that many of our Black workers in the industry are drawn from other Black States. That creates a dangerous tendency and in my view we ought to impress upon the Black people in South Africa that there is a wonderful future in the mining industry. The amendment offers employers the opportunity to propagate the mining industry more effectively among our own Black people.

If hon. members were to visit a mining compound, they would find that the food which these workers get is of the very best. If one considers the type and the quality of the food, it can be compared with that of any five-star hotel. I am not exaggerating now. The kitchen facilities of the compounds at our mines are open 24 out of 24 hours. There is medical proof that the workers who come to work at the mines from other territories gain 30 lbs—these days it is plus/minus 15 kg—in weight within a month. Care is therefore taken to ensure a balanced diet. When workers are recruited, people are inclined to think that the wages are not very attractive, but if the employer were to have the right to recover from the workers the cost of the eating facilities and the food which they supply in the compounds, it would be a totally different situation. One would then find that the wages which the Black workers earn in our mines are very good. I think it offers the employers, the mining magnates, the opportunity better to advertise among the Black people to enter the service of the mines. I am convinced that this amendment is very important and that it will enable us to draw to the mining industry many more Black workers within the borders of South Africa. That would lend greater continuity and stability to this vital industry for the future of our country.

Mr. Speaker, it is very evident that the hon. member for Rustenburg is very close to the mining world and I may say that from our perspective here, he obviously has a tremendous interest in the culinary world as well. I was wondering whether he was propounding or advocating the extensive use of chicken in the compounds of the various mining industries. [Interjections.] Like the hon. member for Parktown and the hon. member for Rustenburg. I can find nothing contentious in this amending Bill. In fact, judging by the dates when it was last amended—some sections more than 10 years ago—it was to be expected that certain amendments had to come about sooner or later. If one considers the problems which arise from the extremely low fees paid in respect of claims which are not correctly or properly worked, one can see that since 1967, when that particular provision was last reviewed and amended, the value of money itself has depreciated quite considerably, and that alone is sufficient justification for bringing about certain of these amendments, apart from encouraging people to work the site.

Like the hon. member for Rustenburg I and my party are certainly aware, particularly after the hon. Minister for Finance’s budget speech today, of the tremendous importance of the mining sector to the economy of South Africa. We were heartened to hear that most of the amendments in this Bill have come about as a result of communication and understanding between the hon. the Minister’s department and the mining concerns in South Africa.

So this party will be giving the Bill its full support.

Mr. Chairman, in connection with this clause I should like to ask the hon. the Minister to give us a little more information about the considerations which led to the increased moneys which are payable now, being fixed at the amount stipulated in the Bill. It appears to some of us that the amount may still not be high enough to prevent the malpractices with which the hon. the Minister has to contend. For that reason we should like to be satisfied that the amount is in fact high enough.

Mr. Chairman, the hon. member has raised a debatable point. Quite honestly, I myself thought that the amount should be somewhat higher. But one also wants to be careful not to harm the industry itself. In any event, I think this is a considerable improvement. We can always improve it still further in future. The hon. member will realize that there are certain parts of our country where there are prospects. It is easy to obtain claims in our country. If the tariff is very low, it happens that people simply hold on to large areas of land. It is not their intention to do anything with that land, because they are not miners. They use the land for other purposes. I do not think that it is in the interests of the country or of the mining industry that we allow the wrong people to monopolize a large part of the country’s surface area, thereby making it inaccessible to the mining industry. That is what this measure seeks to prevent. Whether we have gone far enough, is left to everyone’s judgment. We shall first try this, and then we shall see whether the measure needs to be amended any further.

Mr. Chairman, I should like to add a few words to what the hon. member for Rustenburg has already said about the subject matter of this clause. The question of the value of wages paid in kind to mineworkers is one that goes back a long way. I understand it is true that the hon. the Minister has received representations from the industry over a long period. It is not always easy to estimate in precise terms what these wages in kind are worth. There is the question whether one values them at what they actually cost the mines or what they would have cost the worker if he had had to get them in the ordinary market. So one will find different interpretations of what this really means in terms of employment.

However, I think there is no doubt about it that it is a better practice to include these moneys in the wages and then to reclaim them, as has been done since time immemorial in the case of boots. Incidentally, the hon. the Minister is probably aware that the amounts recovered for boots have generally been quite unrealistic in terms of their actual value, and so the object of the exercise has in that particular case been largely defeated. It is the case in a widening area of industry that people are beginning to look not so much at salaries, at that which appears at the bottom right-hand corner of the cheque, as at the total employment package. This can include benefits in kind of many sorts. There is a possibility that with the introduction of this legislation in respect of the mining industry, other employers may well come with requests for a similar measure. In other words, a degree of competition may result. Nevertheless, I think it is right that we should classify wages in this way, particularly in the mining industry, an industry which has been the target of a great deal of sometimes malicious and ill-informed criticism. I have no objection to the clause. I simply raise these matters because I think we may be chasing up hares that may run in other directions. Perhaps it is best that that should be so.

Mr. Speaker, I move—

At its inception in 1965 the National Institute for Metallurgy (NIM) was a relatively small organization, but since then its activities and the number of its staff have expanded considerably. Over the years NIM has been developed into a metallurgical research institute of world class and it occupies an important role in the utilization of our mineral wealth. The more extensive processing of our minerals is of cardinal importance to the economy of our country. It is therefore justified that, firstly, the title of the chief executive officer of NIM be upgraded from director-general to the status of president and, secondly, that the president should be the chairman of the board of control, to bring it into line with the position which applies in respect of other statutory research institutions, for example the Council for Scientific and Industrial Research, the Atomic Energy Board and the Human Sciences Research Council.

It has also become advisable to afford representation on the control board of NIM to those industries and sectors that are more intimately involved with the activities and aims of NIM. It is therefore proposed that the representation of the mining industry be extended to two members and that persons be appointed to the board of control of NIM who possess a knowledge of, firstly, the chemical industry, due to the dependence of extraction metallurgy on chemicals, secondly, economic and financial matters, because the research and development work of NIM is exerting a growing influence on the country’s economy and the involvement of its research projects in the matter of marketability is growing in importance, and, thirdly, science and engineering, because NIM is a research organization and should have members on its board of control capable of understanding the scientific and technological implications of a given research programme. Persons with knowledge of science or engineering can be drawn from other research organizations such as the AEB, the CSIR and universities, or from the private sector.

Hon. members will note that it is now being proposed that representation by a person by reason of his knowledge of atomic energy and matters relating to the Atomic Energy Board, is falling away. The position is that the AEB has established its own division of extraction metallurgy which deals with the extraction metallurgy of nuclear material, particularly uranium. In terms of the proposed provisions contained in the Bill it is still possible to appoint an official of the AEB with a knowledge of NIM’s sphere of research to the control board of NIM. Because the provisions of section 34 of the Exchequer and Audit Act of 1975 do not apply to statutory bodies, it is necessary to make provision for the Minister to be able to promulgate regulations relating to the recovery of losses and damage caused to NIM by officers or employees in the employ of NIM.

Mr. Speaker, we welcome this Bill. Not only is it true, as the hon. the Minister had said, that the National Institute for Metallurgy has undergone tremendous development over the years and that its activities now cover a far wider field than they did then, but it is also the case that the whole trend of the mining industry over the past decade and more has been such that it has been in this same sphere of metallurgy that the most interesting and exciting discoveries have been made and the major projects in South and Southern Africa, which we have seen being developed in this period have for the most part had more to do with the discovery of metallurgical processes than with the progress made in the sphere of mining as such. I say this without wishing to reflect in any way on our mining engineers, who have also been doing outstanding work in recent times, but due to the necessity of exploiting certain new deposits, it has become necessary to discover new metallurgical techniques; this has been done and NIM has played a very major role in this regard.

We therefore welcome the fact that the Bill is now affording an increased status to the institute and we take pleasure in supporting it.

Mr. Chairman, the amendment relating to clause 1 that has been proposed, aims to ensure that a large number of people who have been resident in South Africa for a considerable time but who are not yet citizens of the country should not be exempted from military service due to the deletion of certain sections of the principal Act. During the Second Reading we explained to the hon. the Minister why we were in favour of the retention of that section of the principal Act. The hon. the Minister explained that there were various reasons why people who are not citizens of South Africa should continue, for a time at least, to be subject to military service, viz. until the State President deletes the sections in question by proclamation.

We on this side of the House were of the opinion that the sections concerned should in fact be retained in the principal Act. That is why we moved the amendment.

Mr. Chairman, I should think that the arguments advanced by the hon. member for Verwoerdburg during the Second Reading debate constitute an adequate and conclusive reply to this amendment that has been proposed. Indeed, in his reply to the Second Reading debate the hon. the Minister also indicated that subsection (2) was there specifically to enable him to implement this provision after due cognizance had been taken of all relevant circumstances. I therefore find it somewhat strange that the hon. member who has just moved this motion did not reply to the hon. the Minister’s argument or to those advanced by the hon. member for Verwoerdburg. What this amounts to, Sir, is that the specific aim of subsection (2) is to make provision for the granting of a discretion to the State President to repeal the subsections of section 2 of the Defence Act in question by proclamation. Consequently we should like to hear from that side of the House what other arguments, apart from those already dealt with in the Second Reading debate, they now advance.

Mr. Chairman, the hon. member for Bloemfontein West has just asked what our reply is to the replies furnished in the Second Reading debate by the hon. the Minister and the hon. member for Verwoerdburg. I am quite unable to understand the hon. member. If he had listened to the hon. member for Verwoerdburg, he would have realized that the hon. member supports us. He underlined and endorsed every statement we made. He agreed with us. Most interesting of all, however, was that when the Minister replied, he too said that he agreed with us. He said that he agreed and that this provision should continue to be in force for many years. He conceded that this was the reason why subsection (2) of this clause had been inserted. This is precisely what he said. The strangest thing I have ever heard is that whereas we, sitting here in Parliament, wish to delete a provision in an Act, we concede at the same time that it should remain on the Statute Book for many years to come. In other words, hon. members opposite recognize that our argument is correct. They support the legislation as it stands. Consequently they concede that it should remain as it is for some time yet, and they state that after we had waited for a few years, it may be deleted. We on this side have already proved that this provision ought to remain on the Statute Book for the next 24 years. The hon. member for Verwoerdburg agreed. [Interjections.] He is laughing now because he knows that the only difference between us is that whereas I referred to 24 years, he talks about 24 years and 11 months. That is the only difference between us. I have never heard of a situation occurring in which, although Parliament wants to delete a provision in an existing Act, that provision should still remain for such a long period. I think this is ridiculous. It is quite clear that it is ridiculous. That is why I say that the best reason for us to vote against this clause is the very arguments advanced by the hon. member for Verwoerdburg and the hon. the Minister. Both of them admitted that this provision should remain on the Statute Book. As I have already said, the hon. member for Verwoerdburg conceded that it would have to be used for almost another 25 years. In other words, in point of fact we now have the support of the Government for the attitude we are adopting here.

Mr. Chairman, I do not think that the hon. House is concerned at the moment with what the hon. member for Yeoville or the hon. member for Verwoerdburg says or said about this matter. We are concerned with what is stated in the legislation before us. When one looks as subsection (2), one will see very clearly that subsection (1) comes into operation “on a date fixed by the State President by proclamation in the Gazette.” The fact that it is the State President who is concerned here is in itself an indication of the importance attached to this clause by this side of the House. The date will be fixed by the State President, and as the hon. member for Yeoville would have it, it may be in 25 years time, but it could also be far sooner. That is what I like in this provision. We are having it inserted, but we shall not cause it to come into effect before, in the opinion of the State President, it is time to do so. In my opinion, by doing so we are achieving everything that is required and consequently I am unable to see why the subsection in question or the clause should be deleted.

Mr. Chairman, at this stage I should perhaps just make it known that I am not prepared to accept this motion now, for the simple reason—as I said in the Second Reading debate—that the position is in fact fully under control with reference to the provision in subsection (2). It is impossible for me or for the hon. member for Yeoville to say that this will continue to be the position for many years. The hon. member knows what happens in practice. In practice a specific category of persons is called up to render service. In the second place, there are other steps now being taken which will encourage people to accept citizenship. In the third place, we have an obligation to immigrants whom we have permitted to enter the country under certain conditions. Therefore we cannot compel them with retrospective effect, nor can we change the conditions now. We have various obligations. However, to delete this provision and leave the legislation unchanged only means that I or another Minister of Defence should have to have legislation adopted in this regard in the future. Now, however, provision is being made for the matter of removing the sections in question from the Defence Act when they are no longer useful, to be placed in the hands of the State President. I therefore regret that I am unable to accept the amendment.

Mr. Chairman, I do not want to get shot down in this cross-fire between the hon. member for Yeoville, who wants to retain a clause that does not work, and the hon. member for Verwoerdburg, who wants to delete a clause because he likes it. I find such arguments a little difficult to reconcile. I want to deal with the matter purely on its merits. We have a provision in the Act at the moment which does not force anyone to do military duty. It simply forces them to report for duty, if they fall in certain categories, and then by merely signing a declaration they do not have to serve in the forces. To my mind, however, this is a waste of effort and time. One calls a man up; he signs a piece of paper; one says “good-bye” and he goes home. In the long term I see no point in it other than that, as someone has mentioned, one will have a record of the case. On the other hand, once the new Citizenship Bill comes into force, every person under the age of 25 will become a citizen and will become liable for duty. Once that Bill is operative, as I see it, the present provisions of the Act will become totally unnecessary. We are not going to call up people who have missed the sieve, who are already permanent residents and who are over the age of 25, and those who are under the age of 25 will in any case be called upon to do their service. Therefore we accept the provision as it stands, recognizing that it will lead to the deletion of certain subsections of section 2 when the new Citizenship Bill becomes operative. Under those circumstances we support the ultimate removal of this clause which, in any case, we see as a dead letter at the moment achieving nothing. We shall therefore support the clause as it stands.

Mr. Chairman, it is of course very difficult, even if one is a bad shot like the hon. member for Verwoerdburg, to miss the hon. member for Durban Point.

Nobody misses me.

I think that the difficulty the hon. member for Durban Point has is that in his present argument he actually ignores the facts. The first point is that, as far as the Act is concerned, a proclamation was issued, viz. Proclamation No. 366 of 22 December 1967, and what is interesting is that during 1977, as a result of that proclamation, 2 306 people who were not South African citizens in fact registered for national service. What the hon. member for Durban Point is forgetting is that, if one does not call them up, one may well end up losing 2 306 men in a year. There may be some who sign a declaration to say that they do not intend becoming South African citizens, but on my information that number is relatively small. Therefore, I do not want to lose 2 306 men and I do not believe the hon. member for Durban Point wants to lose them either.

But one is not going to lose them. Harry, tell us why one would lose them.

Because there will be no call-up; the moment one repeals this section, there will be no call-up.

But we are not going to repeal it immediately.

That is the whole point. This is where, with respect, I do not understand the hon. the Minister of Defence. He says if he does not make provision for this now so that the State President, whether it be in 23 years time, 24 years time or whatever

No, I was not referring to 24 years.

… can do this, he will have to come to Parliament again to introduce another amendment to the Defence Act. The hon. the Minister cannot tell me that in the years that lie ahead he is never going to come with amendments to the Defence Act. I want to promise him that he and his successors will come with amendments, of course they will! Why then introduce an amendment which you know you are not going to bring into force for years? That is the real argument, and nobody has given an answer to that whatsoever. I challenge any member to get up here and say he actually wants the relevant section to be repealed today. Not a single member of the House says this. All the Minister is saying is that one day he may want to repeal it and then he wants to leave it to the State President to do so. With great respect, Sir, I have never heard of anything quite so ridiculous. If it was to be done within a few months it would make sense. If it was to be done before the next session of Parliament, it could be understood. However, when one knows it is not going to be done for decades, the thing becomes nonsense.

Mr. Chairman, the hon. member for Yeoville used my argument of yesterday afternoon to substantiate his argument. He said, amongst other things, that there was no difference between my argument and the one advanced by him. However, there is a very important difference between the two of us. He is a Prog and I am a Nationalist. This is the first great difference, an important difference. I say this for a specific reason. As the hon. the Minister has said, we have given the immigrants our word. We have given our word to these people—in fact, we have entered into a contract with them—that they can come to South Africa on certain conditions, and we are not going back on our word. These are things which have already been argued and which the hon. the Minister informed us about yesterday. We are not going back on our word; that must be very clearly understood.

I told the hon. member for Yeoville that I agreed with him that the immigrants who were in South Africa and who enjoyed the benefits of this country were morally obliged to defend South Africa if this should ever become necessary. On that I agree with him. In fact, I asked that those people should come forward of their own free will to report for defending South Africa when necessary. In that respect I still agree with him today.

However, I do not agree that we should accept his amendment so that the clause may be completely deleted. He is completely misinterpreting clause 1(2). The clause actually provides that the hon. the Minister may, after the matter has been considered by the Cabinet, recommend to the State President that clause 1(1) be put into effect after a certain period has elapsed. I said that that provision should remain for a long time.

However, we must be very realistic about the matter. The hon. member for Yeoville told us that 2 306 aliens were registered in this connection in 1977. I do not know whether the hon. member for Yeoville is aware of this, but in 1965, when South Africa still had a ballot system, 17 000 citizens of South Africa were exempted from training. Those people are approximately 30 years old today. However, as far as this small group of immigrants is concerned, he wants us to break our word—and this is my first objection—and to compel them to do their military service. However, there are South African citizens in this country—as I said, in 1965, when we still had a ballot system, there were 17 000 of them—who have never undergone military training. Nor do we intend to involve those people and to compel them to undergo military training now. Do you want them all to be forced to do so? We just have to maintain the balance in this connection.

He is one of them.

I think that we are making a very equitable arrangement in this connection, and it is a good balance which the hon. the Minister and the Department of Defence have brought about here. We realize that this clause will have to be amended at some future date, but since we want time for this, clause 1(2) has been inserted so that the hon. the Minister may eventually repeal the measure, after having considered the matter.

I just want to assure the hon. member for Yeoville that I agree with him that the immigrants in South Africa have to pull their weight. We earnestly request them to do this, but we are not going to force them and we are going to keep our word. Therefore we cannot support his amendment.

Mr. Chairman, I think the hon. member for Verwoerdburg has not been fair to my hon. colleague, for he implied that it was the approach of this party that we should not keep the promise that was made to immigrants in South Africa. In this respect he is quite wrong, as we support the principle that the provision concerned, as it is contained in the Act and as it has in fact been laid down in the Act for a number of years, should be retained. We do not ask for it to be changed, and we do not ask for it to be deleted either. Nor do we want the provision to be deleted and the deletion to take effect after a number of years have elapsed, so that when it takes effect, the promise which was made to immigrants will not be kept. For this very reason we want the position to be left as it is. We want the position to be left as it is so that no change is made as far as those people are concerned. If they are then called up, as is the case at present, and if they then want to do their national service as is the case at present, it will be a good thing, for then there will be some thousands who will do military duty and who will be trained as has been the case during the last few years. For this reason we ask that the amendment as proposed be accepted.

Mr. Chairman, as I have already indicated, I shall move an amendment at this stage because we are dealing here with a clause which has to be brought into line with the Apprenticeship Act. In this connection, reference is made to section 26(1) of the Apprenticeship Act, which compels an apprentice to complete the full period of his apprenticeship. If this is not done, the period is extended. Consequently we must provide for the situation if an apprentice is absent because he is performing his military duty, and therefore our amendment is intended to exclude that subsection (1). However, there is another subsection as well, i.e. subsection (4)(d), which refers to a remission of four months for national service performed. Clause 2 of the Bill provides for various remissions in this connection, and if subsection (4)(d) remains applicable to servicemen, this may lead to confusion. In order to make the law quite clear, therefore, I move the following amendment—

We support the amendment.

I accept the amendment.

Mr. Chairman, I have a number of amendments on the Order Paper and I now move amendments Nos 1, 2 and 3 that appear in my name, as follows—

1. (1) On page 5, in line 2, after “determine” to insert:
   : Provided that unless urgency does not so permit, reasonable notice of proposed entry shall be given to the owner or occupier: Provided further that persons entering upon land pursuant to the aforesaid powers shall exhibit written authority so to do to the owner or occupier
2. (2) on page 5, in line 11, after “done” to insert:
   bona fide and without negligence
3. (3) on page 5, in line 12, after “(1)” to insert:
   : Provided that compensation for damage done to improvements to or on the land shall be payable, to the extent determined by the Minister in consultation with the Minister of Agriculture

I would like to briefly motivate these amendments. As regards the first amendment, it is obviously desirable that when the Army, or anybody else for that matter, enters upon private property, the persons who occupy that property or the persons who own that property should be given notice of that fact. The argument might be advanced that the exigencies might be of such a nature that it cannot be done, and in order to cover that situation we have specifically provided that if there is urgency one is not required to give reasonable notice. As to the second part, if one is on premises it appears to us to be desirable that persons who are there pursuant to these powers should exhibit authority to do so when they are asked to do so by the owner or occupier of the land. The motivation for this is very simple; All sorts of people can enter upon property and can allege that they are in fact doing so pursuant to these powers while they can actually be up to harmful activity, and there is no means of checking their authority if they are not obliged to exhibit it. Therefore it seems to us that this is an amendment which is most desirable in the circumstances. In case the hon. the Minister should feel that the amendment is somewhat too wide in regard to giving notice in advance—we believe it is not—then my colleague, the hon. member for Wynberg, will move another amendment as an alternative to this one. The second amendment relates to the question of acting bona fide and without negligence. The proposed new section 99A(3) provides—

We say that this should be the case only provided that such a person acts bona fide and without negligence, because if there is damage done as a result of an act which is not bona fide or which is a negligent act, and it is damage which can be established, we believe there should then not be an indemnity such as the one which is contained in this subsection.

The third amendment relates to the argument we raised during the Second Reading debate, viz. that compensation should be payable. The amendment which I move here does not quite go as far as I would like it to go. I think my hon. colleague’s amendment which is on the Order Paper in his name is a better amendment. However, we suggest this amendment because we have reason to believe, for facts which I do not wish to mention to the hon. the Minister, but which he knows, that this was an amendment which at one stage he might have been prepared to consider. In those circumstances I have moved this one because I thought this was the one which would be the most acceptable to the hon. the Minister even though it does not go as far as we would like it to go. I would concede immediately to you, Mr. Chairman, that I believe this amendment is out of order. The reason why it is out of order—but I still want to move it … [Interjections.] … is that I wrote on 9 March 1978 to the hon. the Minister of Defence. My letter to him read as follows—

If I may interpose here, the reason for this is that it involves possible expenditure by the State. The letter then goes on to say—

I then quoted the two amendments, one of which is in the name of my hon. colleague and one of which is in my name. The hon. the Minister, with expedition to be commended, replied on 13 March 1978. Even though the expedition is commended, I regret that the contents of his reply are not commended by me. It is a very short, sharp letter which says—

I must say that he said: “With kind regards.” [Interjections.] I think, with respect, the hon. the Minister should have obtained the consent and should then have left it to the House to decide whether they should accept this amendment or not, because I am now hampered by the fact that the State President has not acceded to this because the hon. the Minister who in this case acts for him has decided that he is not even going to pursue the matter.

The big boss!

Much as I appreciate the hon. the Minister’s kind regards, I am very disappointed in the rest of what he did in those circumstances.

At this stage I again want to appeal to the hon. the Minister. In his arguments he has put two simple points to us. The first is that he will be hampered if compensation has to be paid. I have tried to indicate to the hon. the Minister that we accept that we are living in an age in which sacrifices have to be made. However, sacrifices have to be shared by the community as a whole and it is wrong that because one man happens to have his farm in a particular position and finds himself in a particular situation, he is the one who is injured and receives no compensation, whereas the people who are living 200 miles away and happen not to be in that kind of situation, but who are similarly protected by that fence, do not have to suffer the damage.

The second argument he used was that in many cases a fence or such works would be for the protection of the man to whom the farm actually belonged. I concede that immediately, but so is that particular operation a defence for people who live three, four, five, six, ten or a hundred miles away. They are also being protected by it, but it so happens that the man whose farm is on the border is perhaps more exposed than other people. He is there and is to some extent rendering a service to the community, and he should continue with his farming operations, because many of those farmers on the border are producing essential agricultural products for South Africa under circumstances where they do expose themselves to danger in our interest. Admittedly they are doing it for their own benefit, but also as a matter of national interest to the country. The two arguments the hon. the Minister has put forward ignore the concept of equity and the concept that while the State has to do something for the protection of the country as a whole, the burden is borne by the country and not by the individual. That is why we must pursue the issue because to us this is a matter of principle, namely that burdens must be shared equally and that when damage is done and property is destroyed there must be compensation. That must be the basis on which we operate. If we ignore that fundamental principle, it can happen that although today we agree it should be done in regard to agricultural land which is on the border, tomorrow, in the face of urban terrorism, we shall do it in the towns. In all these circumstances one will end up and say that one has accepted the principle that there need not be compensation. We believe it is a fundamental principle that this House should accept that one does not damage anybody’s property. Certainly one does not damage it wilfully or negligently without paying that individual compensation.

Order! The hon. member for Yeoville has moved the amendments printed in his name on the Order Paper. As he rightly said, I cannot accept his third amendment, because it would involve additional expenditure. An hon. member is not entitled to move such an amendment without a recommendation by the State President.

Mr. Chairman, I want to tell the hon. member for Yeoville straight away that we on this side of the House are by no means prepared to accept these amendments of his.

His first amendment is to the effect that if the urgency of the situation necessitates it, such an occupier of land on the border has to be notified in writing. If he had listened to the hon. the Minister’s speech yesterday, he would have heard that we are dealing with an abnormal situation in which it is in fact urgent for our border to be safeguarded as soon as possible. For that reason I consider his first amendment to be completely unnecessary. It would only cause delay.

As far as his third amendment is concerned, I want to point out…

Order! The third amendment is not relevant.

I shall confine myself to the first amendment. As far as compensation is concerned, I cannot agree with that either. It seems to me that these hon. members have not the slightest idea of the problems of people living on the border. They are suffering great damage at the moment because the border has not been safeguarded, and that damage has to be borne by those people themselves. But because the Defence Force wants to safeguard the border and this may cause damage, the hon. members now want the State to accept responsibility for this. My land lies very close to the border. If I were to go to the farmers on the border, I would find that they would be prepared to make a contribution to the safeguarding of the border. They would regard it as an insult to be paid compensation. For that reason, this side of the House has no intention of accepting the amendments.

Mr. Chairman, I decided to remain seated whilst waiting for the hon. member for Wynberg to move his amendment.

He is going to!

If he is going to move his amendment, I would rather wait, because it is going to be interesting to hear which is the official amendment of the PFP. Therefore I shall wait to hear which is the official amendment of the Official Opposition so that I can know which one to comment on and to reply to.

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

I want to refer briefly to the amendments moved by the hon. member for Yeoville. His first amendment runs “… that unless urgency does not so permit”, or “reasonable notice” is given. I want to point out that these are very vague terms. When one refers to “urgency”, who is to determine this urgency? Is it an objective ex post facto view of what was urgent when one eventually appears before the court? With respect, that is very vague. The second aspect is “reasonable notice”. That is equally vague; very fine words, but meaningless. However, it goes further than that. This amendment contains no sanction whatsoever. The amendment is merely stated, and if one does not comply with it, no sanction whatever is involved. All it is a prescription laying down what good manners require. That is in fact all that the hon. member for Yeoville is doing here. I want to say at once that it is unnecessary to prescribe to our Defence Force by law what constitutes good manners. If a sanction was involved, I should still have been able to understand it. In other words, this amendment is worthless as it is stated here and there is no reason why we should accept it.

The second amendment moved by the hon. member for Yeoville is to the effect that the person concerned must act “bona fide and without negligence”. If the hon. member for Yeoville would read subsection (1) of the proposed new section 99A, he would note that it only authorizes the hon. the Minister to have certain works carried out for purposes of prevention or protection. Anything which goes beyond that is not covered by the hon. the Minister’s mandate. In other words, this bona fide and “without negligence” does not enter the picture at all. It has already been covered. If anyone is negligent or acts mala fide, there is a possibility for the aggrieved party to act. However, it goes further than that. This amendment places the burden of proof that the Defence Force was not negligent, on the Defence Force. Any lawyer will tell you that it is virtually impossible to prove a negative. I want to suggest that this wording places an impossible burden on the Defence Force. Now, in terms of his proposed amendment, the Defence Force has also to prove its good faith. With respect, I think that this amendment has not been well thought out. In conclusion, I want to point out that as the clause reads at present, the fact is that under section 31(1) of the Exchequer and Audit Act, the Treasury is entitled to consider an ex gratia payment in certain cases. If, therefore, one wishes to maintain or propose that the Minister, in consultation with someone else, can reach a decision to compensate, what it ultimately depends on in any event is the discretion of the Minister, and then we are once again dealing with the ex gratia payment, a payment for which provision has in fact already been made. To put it differently, it is a fact that all the amendments moved by the hon. member for Yeoville—and I say this with respect to the hon. member because I know that his attitude is the right one—are totally unacceptable. There is no reason why any one of them should be accepted. It is my contention that what should have been contained in the legislation is already stated therein.

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

1. (1) On page 5, in line 12, after “(1)” to insert:
   : Provided that compensation shall be paid by the Minister to the owner for any loss sustained, the quantum of which shall, in the absence of agreement, be determined by arbitration
2. (2) on page 5, in line 13, after “who” to insert:
   after having had exhibited to him written authority granted by the Minister in terms of subsection (1)

Permit me to deal with my second amendment first. However, I want to state clearly that if the amendment moved by the hon. member for Yeoville is accepted by the hon. the Minister, then my amendment will fall away. The amendment moved by the hon. member for Yeoville is therefore the amendment of the Official Opposition. [Interjections.]

Order! I should just like to point out to the hon. member that I did not allow amendment (3) of the hon. member for Yeoville. [Interjections.]

Mr. Chairman, I was referring to my second amendment and to the first amendment of the hon. member for Yeoville. [Interjections.]

Order! The hon. member may continue.

The aim of this amendment of mine is to afford the land-owner the right to expect that strangers entering his property are official representatives of the Defence Force. My problem is that under present circumstances, it could very easily happen that strangers could enter upon land without the landowner being aware that they were doing so lawfully or without the landowner being aware who the people were. That is why I moved in my amendment that before the land-owner is found guilty of an offence because he has prevented people from entering his property, the people entering his property should, under normal circumstances at least, give written notice to the landowner that they are in fact acting on the authority of the Minister. That is the aim of the amendment. It is by no means the aim to make it difficult for the Defence Force to carry out its duties. Nor is it the aim to waste time. It is purely and simply for reasons of decency and orderliness.

This brings me to my first amendment. It seems to me that it is generally accepted by hon. members who have taken part in this debate that the Defence Force is only able to act in the far-off rural areas, at places where at present, very few if any improvements have been effected. We cannot be sure that this will always be the case. It could also be the case that although a specific improvement appears to us to be an insignificant one, it may be that to the person farming there it is of tremendous importance. It could be of tremendous importance to him that a specific fence, dam, piece of grazing or whatever, should be maintained. For that reason it is surely not unreasonable to expect that such a person should be able to enter a claim for the recovery of that property, particularly when it costs him money.

Sir, we do not ask that the compensation granted should be excessive. Nor do we ask that payment should be at market value. During the Second Reading I proposed that the compensation should merely compensate a person on the basis of replacement value. I understand that this amendment is out of order. As my colleague has said, we applied for the necessary permission in this regard but if it is out of order, then I shall withdraw it. However, I did want to reconfirm the principle.

I am unable to accept amendment (1) moved by the hon. member for Wynberg as it requires the State President’s recommendation.

Mr. Chairman, I have been sitting in this House since 1969, and this is the first occasion I know of where conflicting amendments have been placed on the Order Paper by one party. I have never seen anything like it in my life. I think that is why the Opposition is in the state it is in today. There is so much conflict in their policy and among their members that it is not surprising that we should have contradictory amendments from them on the Order Paper. I really think that this borders on the ridiculous. I honestly think this is ridiculous; it is certainly most revealing. The hon. member who has just resumed his seat, the hon. member for Wynberg, is also a farmer, but nevertheless he made a very naïve remark in this regard. He referred to the entry upon land by other persons, but the issue here is specifically that of defence. Let us now analyse what he said. If the Defence Force decides to carry out certain operations relating to security on a farm, then surely they have to go there in a defence vehicle. They have to do that in the first place. In the second place, the farmers in that vicinity are aware that such activities are in progress. How, then, can one be so naïve as to say that strangers will enter upon that land and that they will do so in the name of the Defence Force? Thirdly, if that land is trespassed upon by strangers, the farmer still has the right, under common law, to prosecute those people who are trespassing. Why must provision be made for that in this legislation? After all, the farmer has the right to prosecute those people.

I want to repeat that it borders on the ridiculous that we should have contradictory amendments from one party on the Order Paper this evening. It is absolutely naïve of a farmer who ought to be a practical person to say that strangers can enter upon land without approval, particularly when military operations are in progress.

Mr. Chairman, in the first place I want to announce that we shall support the amendment moved by the hon. member for Pretoria West. It is a matter of technical wording. I do not know whether it really makes any difference, but we support it as it possibly states the position more clearly.

Fortunately my problem, my “Harry”, with the conflicting amendments has now been solved. I know now that we have an official amendment from the Official Opposition.

† It is also very nice to know that from this united effective Opposition we have a choice of amendments. [Interjections.] I think this is a great step forward. They are offering an option. They are offering an official amendment, ruled out of order, and they are offering an unofficial amendment. This is one of the rare occasions on which I can support the official view of the official effective united Opposition. I support the view of the official spokesman and the Official amendment.

And if that is rejected, will you accept the other?

No, if that is rejected, I would prefer my own. In fact, I prefer my own in any case. I do not, however, accept the unofficial amendment which the chairman has ruled out of order because that lays down that any decision shall be by arbitration. I think that my amendment, as printed, improves on the wording of that of the hon. member for Yeoville.

The only problem is that you did not even bother to ask for the permission of the State President.

He speaks solely of improvements made to the land, but I believe that it is better to specify what these are, and in mine I specify crops, improvements, buildings or other structures, in order that this should be clear. Now as to writing letters to the State President or to the Minister, let me say that I prefer the direct approach. The hon. the Minister is sitting opposite me, and he has it within his power to take over the amendment that I have moved. I have therefore not written him a letter. I now wish to appeal to him to accept the principle which is contained in various other laws and which I believe was recommended to him initially in regard to this measure. I am referring to the principle that he should have the discretion, in consultation with the hon. the Minister of Agriculture who is the Minister responsible for expropriation and the Minister best qualified to deal with the value of agricultural land and agricultural property, to grant compensation. If he, talking to the hon. the Minister of Agriculture, should determine that damage has been done, he would have the power to compensate for it.

I want to furnish a different reason for the need for the right to compensate. If one completely exonerates every officer of the Defence Force from any liability, one is then saying that any person working on these types of fortifications or defences is free to do as he likes. If something gets in his way, he can knock it over or bulldoze it…

No, front-end load it!

Yes, front-end load it. He may do what he likes to it because he is not liable. If there is a provision, however, for compensation to be paid, one immediately introduces an element of responsibility, and people are going to think twice before they do damage to a crop, and some crops, of course, can be quite valuable. I am thinking of sugar cane, for instance. Some chap could come along and by simply diverting his line of advance by about 50 yards possibly avoid doing damage. But if he has a clear, unqualified right he could merely say he is going to keep going straight ahead. In the same way the Transport Commission builds a straight road without caring what it knocks over. If there is some sanction, however, some need for compensation, one inserts an element of responsibility in that a person doing the work will seek to avoid doing damage because he knows that if he does damage, for example if he destroys a building or a structure unnecessarily, he can give cause for compensation to be paid. I believe that this can be optional, can be at the discretion of the hon. the Minister and in consultation with the hon. the Minister of Agriculture.

I believe this is no imposition on the State; it is a safeguard against misuse of the power which we as Parliament are being asked to give. So, Mr. Chairman, whilst I am not going to force you into the invidious position of ruling me out of order, I am going to ask the hon. the Minister to take over my amendment, which I believe conforms to his real thinking, and to move it. Let us not play politics with this. It is simply a question of producing better legislation where we are giving the power to the hon. the Minister himself, power which he will then have the option to exercise in his judgment. It does, however, impose a limitation on his personnel; and it gives some confidence to the public that there will be no reckless contempt for private property. Obviously, the interests of security and defence must come first. Obviously, they will be the first commitment and the first priority. Let us, however, recognize the rights of private ownership as one of the issues for which we are fighting in our defence of South Africa. We are defending South Africa for the very purpose of perpetuating the system of private enterprise and private ownership of property. Let us in our defence of South Africa take note of what we are defending.

Mr. Chairman, before my time runs out, I want to refer to another matter. I indicated at Second Reading that we felt that notice should be given. I do not like either the official wording proposed by the Official Opposition or the unofficial wording of the Official Opposition, but I accept the principle of giving notice and therefore I move as an amendment—

That makes the position clear. It does not tie people down, but it brings in the concept that, where notice can be given before land is entered upon, it should be given. I am moving that amendment and not the one printed.

Mr. Chairman …

Mr. Chairman …

I call upon the hon. the Minister to speak.

At this stage, Mr. Chairman, I should possibly … [Interjections.] All right, I shall sit down.

Well, if the Chairman does not want to look this way, I do not mind. [Interjections.]

Order!

Mr. Chairman, I think we have a difficulty …

Is it a point of order?

Yes, it is a point of order. I think we have a genuine difficulty in regard to the seating arrangements. I have drawn the attention of the authorities to this before and I think that perhaps there was a misunderstanding in this particular case. I am just suggesting that there is a difficulty. I am suggesting that, because the hon. member for Yeoville has another opportunity to speak, he ought to be given that opportunity in the interests of orderly debate.

But the hon. the Minister indicated that he was willing to resume his seat and to give the hon. member a chance to speak. However, the hon. member for Yeoville does not want to avail himself of that opportunity …

You do not want to look this way.

Does the hon. member for Yeoville want to speak?

Mr. Chairman, if you do not look around the House, I am afraid … [Interjections.]

Mr. Chairman, on a point of order! Is the hon. member for Yeoville entitled to say to you as Chairman, “You had better make up your mind” and that you should look around the House?

I said he must do his job.

The hon. the Minister may continue.

Mr. Chairman, I am prepared to accept the amendment of the hon. member for Pretoria West. It affects an improvement to the wording.

† I regret that I cannot accept the amendments moved by the hon. members for Yeoville, Wynberg and Durban Point. I cannot accept these amendments because I have no doubt in my mind that the effects of these amendments will only hamper the work that we are already doing.

*Let me give a few examples. Yesterday I said—and I think the hon. member for Yeoville also expressed himself in favour of it—that we should say as little as possible about this matter in public. I notice that certain newspapers have already started telling people what we are doing there. According to them we are now engaged in a “clearance”. So far no one has used that word. Yet they have now decided that we are engaged in “clearance”. I should like to make an appeal to the Press please to leave these matters in the hands of people who know something about it. There is enough for them to become dramatic about. They must please not do so with regard to this matter. I said that we have already completed more than 600 km without legislation with the cooperation of the owners. Secondly, I said that there were different ways of affording protection. There is not only one particular way of doing it. What I did say, however, was that we are trying to do it as cheaply as possible. That is one of the reasons why I do not want to introduce the concept of compensation, because we have long border-lines. Once we introduce the concept of compensation, Mr. Chairman, have you considered how high our account will be?

How many buildings are affected?

No, wait a minute. The hon. member is now coming with quite a different story. Thirdly, when the Defence Force decides to perform certain functions, this clause tells us clearly that they may only be performed within a distance not exceeding 10 km. That provision itself affords us some flexibility, therefore; that is why it was inserted. I explained it yesterday. I said that where we have already completed work, we deviated from a particular line if topographical reasons made it necessary and did the work at a different place. We possess the flexibility which will prevent our having to cause damage. That is why this provision has been inserted here. If one is eventually forced by circumstances, which cannot be foreseen today, to afford a particular form of protection which will result in people incurring damage what in this Bill prevents their being properly compensated? There is nothing in this Bill which prevents that. It is still in the discretion of the Minister to decide in a particular case to go to the Treasury and with the aid of other agencies that assist us—I do not want to mention their names here—we shall try to determine whether someone’s property is really being damaged. In such an event an ex gratia payment can be made.

Why do we not put it like that?

How many more times do I have to explain to the hon. member for Durban Point that this is a serious and urgent matter? I do not want to cause the work to be delayed by a lot of pettiness because someone wants so much compensation, or another is afraid of this and another of that. Some of these properties are unoccupied. The owners do not even live there. We are looking for those owners, and as a result of the absence of some of them we have up to now been unable to do anything there. However, my very first priority is the security of the country. In the second place I maintain that if these people receive the protection, in whatever form which these activities will entail, why should I pay them compensation as well? What new concept is that then? There is nothing which prevents his receiving an ex gratia payment if I should cause him any damage.

It protects everybody.

In the first place I am protecting that man because he owns land in an area where he may be harmed by terrorists. Since we are already advising inhabitants of the border areas on the protection of their homes, the Defence Force has taken the view that we are not going to pay for it. We furnish them with guidance with regard to what they should do. We tell them what kind of protective measures they could put into operation around their houses or property. We even furnish guidance with reference to where they may obtain assistance. We have however always refrained from incurring any expenses ourselves in order to make these things possible for such a person, because we have taken the view that he should protect himself. The State is spending large amounts of money to ensure greater safety in the border areas, and hon. members are now asking me to pay compensation as well. I do not want to go into the matter any further— the matter has already been ruled out of order in any case. I just wanted to explain why I wrote that courteous letter to the hon. member for Yeoville. [Interjections.] Now the hon. member has the reasons for that letter.

As far as the question of notification is concerned, I just want to say that any representative of the Defence Force wears a uniform.

So do the terrorists.

Yes, but we are not going to turn up there in terrorist uniforms. We arrive there in Defence Force uniforms and each person who wears a Defence Force uniform is in possession of an identification card. Special people are assigned to this work. It is not anybody’s job. The work takes place under the direction of responsible officers and up till now we have demonstrated this. Have hon. members up till now received any complaints in this regard? We have completed the work over a distance of more than 600 km and hon. members have not yet received any complaints. [Interjections.] This we have accomplished without legislation. The fact is that we have so far received the co-operation of the vast majority of people. All that we are doing here now is to embody it in legislation. The procedure which will be adopted, is that a Defence Force representative, most probably an officer, will inspect the area; he will immediately show his identification and have a discussion with the owner if he is there. If the owner is not on the land and if we cannot trace him, hon. members expect me to send out written notifications. The messenger might drive out to that specific place two or three times and each time there might be no one to whom the notification can be delivered. That can also happen. All these aspects have a delaying effect.

The S.A. Defence Force has a specific method of administration. The hon. member for Durban Point is now alleging—and it surprises me that the hon. member can say such a thing, because he would normally not put forward such arguments—that someone can turn up in that area and act in a reckless manner. Surely the hon. member knows that the Defence Force does not act in that way. It is exactly our point of view that we should as far as possible obtain the co-operation of owners. That also applies when we are conducting exercises. I cannot understand why ordinary, everyday administration should be embodied in detail in legislation. One does not embody something like that in legislation. One does not have to embody in legislation these things which one as a reasonable person uses as norms for one’s administration. It will be a bad day for us if we should begin to insert commas, full stops and phrases because we are afraid of all kinds of things. Then we shall not be able to complete the work. I do not intend to hamper the urgent priority which this work enjoys in any way. I regret, therefore, that I cannot accept the amendments.

Mr. Chairman, I regret that the hon. the Minister has not accepted the amendments, but on the other hand I actually appreciate the spirit and manner in which he replied to the discussion as opposed to the course that some other hon. members have taken tonight. The fact that the hon. the Minister does not agree with me does not mean that he has not in fact dealt with the matter in what I regard as a reasoned and polite manner. May I, with respect, just point out a number of things to the hon. the Minister. In the first place he says that if we were to accept these amendments it would hamper the work. However, what is significant in what he said is that, in respect of the authority and the notice, he virtually said that the Army would administratively do what we are asking should be a requirement that they should do. In other words, although we do not disagree on the fact that it should be done, we appear to disagree on whether it should or should not be in the legislation.

Let us take a simple situation. It is logical and courteous to tell an owner that one is coming to do something before one goes onto his property, and there can be no reason why it should be argued that having to notify a man would hamper the work which one is doing. In exactly the same way I think it is logical that if one finds somebody on one’s property who is busy executing some work, one should be entitled to ask him for his authority. It would be a very foolish Defence Force man who would, if he were asked, refuse to give the authority. Therefore, from a logical point of view for the hon. the Minister to argue that these amendments would hamper him in the task that he wishes to perform, I regret, is not of substance. I think the hon. the Minister, on thinking about it, will agree with that.

The second matter is perhaps a more important one, namely the question of the compensation. Here, I think, the hon. the Minister has a fundamental difference of opinion with us. He believes that where one executes work which is necessary for the defence of South Africa there is no obligation to compensate anyone if that person suffers damage as a result of that.

[Inaudible.]

Does the hon. the Minister say that he does not believe that?

That is not what I said.

No, but that is what the hon. the Minister is conveying. Perhaps the hon. the Minister agrees with us, and it is merely a case of not finding each other in words. What I am trying to say is that if one erects some works upon a property which is adjoining the border it is not only that individual who is protected, but all the others who are also in that area. In fact, the country as a whole is protected and whereas I am an urban dweller I believe that I am actually being protected by the security work that is being done on the border. I think that is how we have to look at it and I hope that is how the hon. the Minister wants the public to look at it, because if the impression is conveyed that the only people who are being protected as a result of these actions are the people who are in the immediate vicinity, it would be a most unfortunate impression to be created. I say this because I believe that any action which takes place on the border is protective action for the country as a whole. If that is so the burden of the loss and the burden of the cost of the loss is borne by all of us, is borne by the country as a whole. The hon. the Minister said that there is nothing in the Bill which prevents him from arranging that there should be ex gratia compensation. Let me then take the second choice amendment which we put forward, which is the one I indicated the hon. the Minister at one stage was considering accepting. This amendment gives him a discretion. It reads—

In other words, it is a discretionary matter where the State does not have to pay compensation when it is not appropriate. If the hon. the Minister has the intentions which he announced only a few minutes ago, he cannot refuse to accept this amendment, because that is precisely what he told the House. It is true that we prefer the amendment which is in the name of my hon. colleague for Wynberg, because that enables the matter to be determined by arbitration which is the normal method when it is not discretionary. The first amendment which stands in my name gives that discretion and I appeal to the hon. the Minister to move it.

I want to deal with one other aspect, namely, the compensation which is paid out when something happens which is in the national interest. I believe that hon. members on that side of the House believe that, when they take land and farms in order to incorporate that land in a homeland, they are doing something which is in the national interest. We may disagree with them on whether there should or should not be independent homelands, but the issue here is that hon. members on that side of the House believe that, when one takes farms for the purpose of consolidating a homeland, one is doing it in the national interest and that therefore the country as a whole must pay for it. What is the difference between taking that kind of action which one believes to be in the national interest and taking the kind of action we are talking about here, action which we all agree is in the national interest? One could therefore similarly argue that, because it is in the national interest to have homelands, one should be able to take a man’s farm, give it to a homeland and not compensate him. That is really what hon. members on that side of the House are saying. They cannot possibly believe that that is their philosophy and their approach. Basically, the principle is that, if one does something in the national interest, everybody must in fact pay for it and it must be shared by the community as a whole.

For the benefit of those hon. members who have some difficulty in reading the Order Paper, I want to explain finally why one moves alternative amendments. One of my amendments provides that one must give reasonable notice and exhibit one’s authority and the alternative amendment provides that one only has to exhibit one’s authority in case the hon. the Minister does not want to do both things. If is well known to those who know the Standing Orders that one hon. member cannot move alternative amendments. The hon. member in that far corner, who seems to enjoy the fact that alternative amendments are moved through different persons, unfortunately does not know the rules of the House and the procedures which are followed here. To make it quite clear so that there is no misunderstanding, I want to say that we want both reasonable notice and the exhibiting of authority; and, if the hon. the Minister does not accept both, we at least want one part of it. Secondly, in so far as compensation is concerned, we prefer that it be determined by arbitration, but, if the hon. the Minister does not accept that, we at least want to put to him the alternative making it subject to his discretion. For the benefit of the hon. member, who I understand is actually a professional man who understands all these things, but who seems to have a slight aberration tonight as a result of which he does not know what is going on in the House, I have explained it to him in words of one syllable.

Mr. Chairman, the hon. member for Yeoville—he too is a professional man—did his best to explain those contradictory amendments, but I do not believe he convinced us on this side of the House or the party next to him. Even if he were to speak the whole evening, he would not convince us. The hon. member does not want to realize—I believe that he does not want to realize it because it is a very good case he is trying to oppose—that the defence works the Government is constructing are in the best interests of the inhabitants there and of South Africa. It is not the intention to deprive anyone of his rights of ownership or to do him an injustice by not granting him the compensation to which he is entitled. Let us just take a look at the meaning of this specific clause. This clause lays down that under certain circumstances the Defence Force cannot be held responsible in respect of works constructed there. However, there is accountability in accordance with the principles of our common law if the Defence Force or anyone employed by it acts mala fide. The aggrieved person can then claim damages through the normal court procedures, and if he proves his case, a court will acknowledge that he is right and will award him full damages.

In the second place—as has been repeated a number of times in this Committee—the Minister is empowered to make ex gratia payments in deserving cases. This is what hon. members on the other side of the House want. But because it comes from the Government I believe that they do not trust the hon. the Minister to use his judgment properly. Why else do they want this incorporated in the legislation? It is a type of exemption and it is not usually incorporated in legislation of this nature.

I think the hon. member for Yeoville wanted to set a trap for us with his second amendment in which he refers to “bona fide and without negligence”. If that amendment were to be adopted, it would in fact frustrate the whole purpose of the Bill. In fact—as the hon. member for Pretoria West mentioned—it would impose on the State the onus of showing that it had acted in good faith and that it had not been negligent. That is totally ridiculous. I believe that the hon. member for Yeoville, as a lawyer, ought to know that it is highly unusual to try and insert wording of this nature in a Bill. I do not believe he thought he had any chance of succeeding.

He is a chancer.

These words call to my mind the fact that last year, when another indemnity act was being discussed in this House, the hon. members of the PRP also tried to insert the words “ bona fide and without negligence”. At the time that, too, was rejected in toto.

So much has already been said on the matter that, to conclude, I only want to deal with the hon. member for Durban Point.

† He wants to bring an element of responsibility into the operation by having this included in the Bill, namely the compensation. Then people will not act irresponsibly, he said.

I want to tell him that for more than a year the Defence Force has been doing this type of work, and the hon. member for Durban Point should know better than most hon. members in this Committee that the Defence Force acts responsibly. This type of construction work that they are doing is something which is being done under the supervision of senior, responsible officers, and there is therefore no cause for him to make the remarks which he did make earlier during his speech.

Mr. Chairman, at this stage I am not quite sure which of the amendments are standing and which are not. Apparently we are only dealing with the first amendment moved by the hon. member for Yeoville.

The hon. member should just be sure not to discuss those that are not standing.

That is just what I want to prevent, Mr. Chairman. To begin with, the hon. member for Yeoville moved his first and second amendments and subsequently the hon. member for Durban Point moved his.

Sir, will it take a Pearl Harbour to make us in South Africa open our eyes? When we see how fighter aircraft and heavy artillery are being unshipped in our neighbouring states, is it really still the time to talk about compensation in this hon. House? In these circumstances must we still talk in terms of action bona fide here? Are we still to speak in terms of “unless urgency does not so permit”? I believe that the time has come for us to open our eyes and to accept this legislation as it stands. It is time for us to say that urgency demands of us that we take steps which can be carried out immediately and without irritation without any delays occurring. [Interjections.]

If we analyse this amendment by the hon. member for Yeoville, we immediately come up against the first line, which reads—

In other words, it must be proved that urgency did not permit it and that urgency did not require it. This amounts to the first delayed action. However, the hon. member takes it further and states—

Our immediate question is what constitutes, and what does not constitute, reasonable notice. Once again a court case could be conducted to settle that point. However, the hon. member goes on to say—

Written authority from whom? From the Minister? To obtain it from the Minister would involve further delay. The hon. the Minister explained this very clearly this evening. He said that Defence Force men entering upon private property would carry identification cards and that anyone whose land was entered upon would know that the person doing so was authorized thereto.

The same applies to the hon. member for Durban Point.

What is wrong with our amendment?

While the hon. member for Durban Central is asking so insistently what is wrong with their amendment …

It is a very reasonable amendment.

Let us see how the amendment moved by the hon. member for Durban Point reads. I quote—

Once again there has to be consultation. Discussions have to be conducted. In the meantime the work is at a standstill and nothing can be done to protect our borders. [Interjections.] In the meantime our country is exposed to danger. [Interjections.] I conclude with the following words of the late Dr. Hans-Martin Schleyer, words which we would do well to take to heart. He said this in a speech made shortly before his death. He maintained that there would have to be a change in the mentality of man and that the individual should ask himself what he could do for the community, and not what the community could do for him.

Mr. Chairman, we have expressed our appreciation for the fact that the Defence Force takes a great deal of trouble to use young men who do not want to carry a rifle in other posts and other capacities. We have taken cognizance of this and have expressed our appreciation for it during the Second Reading debate. During the Second Reading debate we also gave our support to the principle that it should not be easy for national servicemen who refuse to perform national service for religious reasons, to evade their responsibilities. We supported that principle. As far as I know, problems have been encountered in respect of conscientious objectors in a number of countries—if not in all countries—where national service is compulsory, because these people refuse to serve the State in any way and in any capacity, however wide the choice they are given may be. We may also expect that as the dangers threatening South Africa increase, a growing number of national servicemen will try to evade their duty by making out that they do not wish to perform national service for religious reasons. This is to be expected and that is why we in this party support the principle of detention for those who try to evade their national service. However, we have a problem with regard to the period of detention laid down in the Bill. I also want to add at once that we have taken cognizance of the fact that detention is not as harsh as it perhaps was a few years ago and furthermore that detention is not of such a nature that an 18 or 19 year old who is locked up for a year or two or kept in detention is unable to return to ordinary civilian life. Nevertheless we feel that the period proposed is so long that it may create the impression that people who really do not wish to perform service for religious reasons may be regarded as enemies of the State because they may be punished excessively. Consequently I move the amendments printed in my name on the Order Paper, as follows—

1. (1) On page 7, in line 8, to omit “thirty-six” and to substitute “twenty-four”;
2. (2) on page 7, in lines 14 and 15, to omit “of eighteen months” and to substitute:
   equal to the period of such service plus 25% of such period of service

Mr. Chairman, if I understand the hon. member for Wynberg correctly, it seems to me that he said he expected unwillingness to perform national service to be on the increase. If the hon. member for Wynberg did not say that, then he should explain to me what he did say. Did we understand him correctly to say that he expected a growing degree of unwillingness to perform national service as the danger increased? Did the hon. member say that?

Yes, I did; it is …

If words have any meaning, that is to say that we had to hear this evening that a member of Parliament sounded a pessimistic note which created the impression that our young men are cowardly in the face of threats. He said that he expected this to be the case to an increasing extent.

You are talking absolute nonsense.

We all heard it. After all, we are not deaf. We want to tell the hon. member that we accept his bona fides as a person in this matter. However, we do not accept the bona fides of his party in this matter if that is the standpoint of his party. In these times, in which we are in fact experiencing a threat to our national servicemen from outside, that party ought to share with us the standpoint that we wish to eliminate any unwillingness. That is the attitude we expect of that party. That, at least, is what we expect them to say, even though the words are not always translated into action.

There was an additional motivation for the amendment in that a longer period of detention would create the impression that the people in question were indeed enemies of the State. What difference would it make to the impression created whether the period of detention was 12 months, 24 months or whatever? The fact is that it undermines national service if these people, as the Act puts it, do not report for such service. If anyone fails to report for such service, that is an offence. It is not an offence if a man who belongs to a recognized religious denomination reports, and states that in accordance with the tenets to which he adheres, he may not participate in war. We make provision for that man, and appropriate services are allocated to him to perform within the context of the Defence Force. He can still serve his country.

I said that.

If that is the case I want to say to the hon. member that he is creating just as gravely mistaken an impression if he thinks that we say to anyone who objects to national service on the grounds of bona fide religious considerations that he is an enemy of the State. We want to deal with those people who hide behind a smokescreen and could create a climate which could harm us abroad. That is why I want to say to the hon. member that if he could have given us a different motivation, we could have given him a hearing.

Let us consider the content of the amendment itself. Let us consider the proposed periods of detention. They now become 36 months instead of a period of service of 24 months, viz. a ratio of 2 to 3 or 18 months to a period of service of 12 months. Once again this is a ratio of 2 to 3. The hon. member wants to upset this ratio because in the first place, he wants to reduce the period of detention to 24 months. Then he comes up with a formula relating to the period of service of 12 months or less. It reads as follows—

It sounds rather as if the hon. member is dealing with sales tax or is engaged in a complicated calculation involving fractions. I do not think that constitutes sound legislation. I do not know what the hon. the Minister’s standpoint is, but I suspect that he is of the same opinion. We on this side of the House cannot, therefore, support the amendment.

Mr. Chairman, I regret that I am unable to accept the hon. member’s amendments. I consider that I dealt with this matter at great length during the Second Reading debate. I just want to repeat that I can find no justification for imposing a period of detention on a person which is shorter than the period during which someone else has to render service in these very dangerous times. That is what this amounts to. The period of service is 36 months. That is the period for which anyone can be called up in these times, and according to the hon. member it is in these times that the danger is growing. Consequently I can find no justification for reducing the period of detention.

Yesterday I put it to hon. members that this was a very thorny issue. It is not a matter which one can deal with lightly because it is a matter of feeling. It is a matter which sometimes causes bad feeling among people and is one that can easily cause feelings to run very high. I understand that. But on the other hand we have up to now handled the matter in a manner that has given satisfaction even to those people who are affected thereby, even to those who are directly affected. They have been afforded some measure of satisfaction as regards the way in which the matter has been handled. This matter was also submitted to the churches— or the representatives of the churches; I do not want to create the impression that the churches as such have dealt with the matter, because only their representatives have dealt with it—and the majority of the churches concur with this standpoint. Consequently I do not think that we should try to effect changes at this stage. I must be guided by what I have achieved thus far through negotiations and what, in my opinion, constitutes a just attitude towards those who have in any event to perform service and do not seek this way out.

It is a long period.

Yes, it is long, but to perform two years of national service under today’s circumstances is also a long time, and then they are still subject to periodic call-ups for eight years. That is indeed a long time. In other countries in which these problems have also to be dealt with, people are obliged to do other work for periods equal to twice the period of national service. In some countries they go so far as to make the tax payable by such a person double that paid by a person who does perform national service. In other words, throughout the world …

That is not detention.

Nevertheless I believe that detention in the form in which we implement it is better and more successful than the measures adopted in other countries. I therefore regret that I am unable to accept the hon. member’s second amendment because it is totally unrealistic if one takes into account the circumstances in which national service has to be performed.

Mr. Chairman, I rise merely to place on record that the NRP does not support the amendments. In the first place I believe they are illogical. The second amendment suggests that the detention period should be for the period of service plus 25%. A man doing two years’ service first does 24 months and then does eight camps of one month each, which takes him to 32 months. If one applies the same formula, 25% of 32 months will add another eight months. Such a person would then do 40 months’ detention, and et the PFP proposal is that he should do only 24 months’ detention, which is eight months less than the serving soldier in the case of two years’ service. But they accept 25% longer in respect of shorter service. The shorter service is likely to be the 12-week border service where the men are called up to do a job in the field, in action and under extreme danger. We in this party cannot support such lenient treatment of a deliberate refusal to serve one’s country in time of what is virtually a war, where the circumstances and the dangers are similar to those of a war. We do not believe that one should take a mathematical, an over sympathetic view which would enable him to make a lesser sacrifice than the man who serves his country. Therefore we do not support the amendments which are proposed.

Mr. Chairman, I think I tried to indicate during the Second Reading debate that this was a delicate matter in our view, and the hon. the Minister agreed with that. It is also a matter where one has one’s own view which one perhaps does not wish to impose upon others, particularly when it involves matters of conscience and of religion. I think my personal views are well known, but I certainly do not believe that I am entitled to foist those views on others, nor am I entitled to ignore the legitimate religious beliefs of other persons. That is why I make no secret of the fact that this clause has caused us very great concern because of this very problem. That is why I want to express my disappointment at the hon. member for Bloemfontein West who normally acts in quite a reasoned fashion, but no doubt has been overcome by the vapours of the evening which surround him there and decided …

Order! What does the hon. member mean by the “vapours” that surround him?

If you read what Shakespeare says about vapours, Sir, you will know what I am referring to. [Interjections.]

Is the hon. member not reflecting on hon. members?

No. I do not know what you are thinking of, Sir. Maybe you are thinking of something else, but I am using the simple term that he is overcome by the vapours surrounding him in that party.

I accept the hon. member’s explanation.

Sir, I regret the hon. member’s approach, because normally he is quite reasoned and for him to seek to turn what is in fact a serious matter which concerns the religious beliefs of other people in such a manner as to try and take somewhat unsuccessfully, some rather poor and petty political debating point, does not become him. I know him too well and I am quite sure that he will think about it and by tomorrow morning be very sorry. [Interjections.]

There is no question of the hon. member for Wynberg wanting to sow pessimism or wanting to sow anything which would cause a feeling of despair. That is not the way the hon. member acts or speaks, nor is it what he believes in, and to seek to put those words into his mouth is not the sort of thing that one would expect from the hon. member for Bloemfontein West. I want to leave the hon. member there because actually I quite like him and that is why I do not want to be too hard on him. [Interjections.]

Do not get sentimental about him!

The hon. the Minister must be careful. I might get sentimental about the hon. the Minister and that would be dangerous. [Interjections.]

I want to get back to my argument. We take the view that there is little doubt that whatever is imposed upon the individual who will not serve must be a deterrent to him unless he has a really very sincere religious belief. We also believe that he should not find himself in a situation which would, as a result of whatever punishment or restriction is imposed upon him, perhaps in the end, when the matter is over, turn him into a person who will not be a good South African citizen in other respects. That is why we have some concern about a period as long as three years. We may be wrong in the periods we have suggested, because what we are looking for is something which does not harm the person as an individual. We are looking for something which does not harm the person who has genuine religious beliefs, yet at the same time we believe that those people who are not prepared to recognize the authority of the State, who are obstructionists in that regard and do harm, have to be dealt with effectively. We are looking for a solution and, interestingly enough, the hon. the Minister virtually said the same thing. The hon. the Minister did not pretend that he thought this was the ideal solution. He did not pretend that he might not one day come along with something different. On the contrary, the hon. the Minister has come along, quite clearly and honestly, and said that they do various things in all other parts of the world and that he believes that this measure is the best we can do in the circumstances, but that if there was something better one day he certainly would look into it.

Of course!

I respect that view and we try to do the same. In our view—and that is the view the hon. member for Wynberg put forward—at the present moment three years’ detention may not be the ideal solution. We believe that perhaps the period should be less or that we should even look at other alternatives. I indicated to the hon. the Minister, and this will no doubt be debated again under his Vote, that perhaps we should look for something where, for example, one might make a man serve double the period, but serve in a useful capacity where he has to work hard, where he has to build or carry out some other kind of operation, whether it be equivalent to the activities of the American Peace Corps or anything else. Something of that kind may be a solution because we want to employ everybody as profitably and as usefully as we can. I am quite sure the hon. the Minister will look into this. He may find that it is not a satisfactory solution, but when one is dealing with matters of conscience and religion one has to respect the views of other people. What one must not do is to allow the State to be taken for a ride by people who do not respect the authority of the State, and the authority of the State in respect of military matters is something which cannot be disrespected by anyone.

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

Mr. Speaker, the Bill has now passed through the Committee stage. We have moved amendments which have not met with any degree of success. Without any hesitation, therefore, I want to say that perhaps all of us in the House, including the hon. the Minister and the governing party, will feel that this type of legislation is not necessary in South Africa. However, as has been said before, sometimes when one wants to have peace one may have to prepare for war. I do not believe that anybody in South Africa, neither the governing party nor the people as a whole, desires to attack anybody, but people do wish to defend themselves against aggression and attack. In that spirit we have voted for this legislation and we shall continue to vote for it However, I do not think one can let the occasion go by without saying that it is of no small significance that we in South Africa now have to take steps to introduce strips of land along our boarders in order to have defensive works established on them. This must be a matter which all of us must regard in a very serious light. In the same way I do not believe anybody in South Africa can ignore the fact that there are arms build-ups in countries adjoining us. I therefore think that the defensive measures taken by us can be justified much more readily than the arms build-ups in adjoining countries. Whatever else can be said about South Africa and the Government, I do not believe it has any aggressive intentions against any country winch adjoins our boarders. Countries which adjoin our boarders, countries which have virtually no defence forces and can be overrun in a matter of hours if this Government chooses to do so, have always been able to live in safety and in the full belief that there is no danger of aggression from South Africa. I therefore think we can say, with some degree of unanimity in this House, that the defensive measures we take are truly defensive measures and that this proposed legislation is truly defensive legislation which is not introduced and supported here with any aggressive intent. However, I think it would be inappropriate to let the reading of this defence measure go by without drawing attention to the fact that no amount of works on the boarders and no amount of provisions indicating who should fight and how our armed forces should fight, can finally protect South Africa against aggression and terrorism. That protection can only be truly attained if we have united and satisfied people in South Africa who, irrespective of their colour, race, political or religious beliefs, have a stake in South Africa, want to defend it and unanimously reject aggression and terrorism. It is that which, in addition to the defensive measures, we have to work for in order to achieve the true defence of South Africa.

Mr. Speaker, we thank the Official Opposition for their support of the Third Reading of the Bill. We thank them for their responsible approach to the Second Readings. The minor differences between us in the Committee Stage are surely necessary in a system in which we are entitled to differences of opinion. I want to associate myself with the statement by the hon. member for Yeoville that we cannot rely solely on our defence works which we construct on our borders. That is undoubtedly true. If a survey be made of our prospective enemies, of people who are neutral towards us and of people who are still considering whether or not they want to be our friends, and are also guided by the overall image emanating from this Parliament, then, if that overall image is one of determination, of no doubt as to where the Official Opposition stands in the matter, then the battle is far closer to being won than the defence works alone would be able to achieve. That is why I endorse it. I want to take it a step further and say that it is undoubtedly true that, as is the case with a country like Switzerland, we can influence the outside world with the bulward we establish by preparation and also by the determination shown by the people themselves. Furthermore, it is undoubtedly true that as far as domestic affairs are concerned, we need order and peace to ensure that we shall be able to counter any onslaught on our borders without hindrance. Having said that, it is equally obvious that just as an Opposition has to support the Government in the onslaught from abroad, they should do everything in their power to create a highly responsible image as regards the domestic situation in order to enable the State to carry out its programmes for order and peace.

Mr. Chairman, I thank hon. members for their cordial co-operation in dealing with this measure. It is a defence measure, the aim of which is to improve the defence capability of our country. The hon. member for Yeoville referred to the stockpiling of arms beyond our borders. That is true, and I want to refer for a moment to the stockpiling of arms by superpowers which Africa really does not need. Africa does not need a stockpile of arms. It needs food; it needs health services; it needs technical assistance; it needs development, and if the superpowers were to keep their noses out of Southern Africa, South Africa could do a great deal for Southern Africa. But if they continue to stockpile arms, then they will reap what they have sown. The giving of arms instead of the other positive actions, also entails that South Africa will have to spend more on the security of all its people. We shall therefore carry on, because we believe that no one else has the right to prescribe to us how we are to manage our own affairs. That we South Africans will do ourselves. We are prepared to pay the highest price for that principle, the highest price in defence of that right.

Mr. Speaker, a perfect and eternally valid Act, without any amendments, does not and will probably never exist. As times change, as circumstances change, it is necessary for the legislature always to see to it that legislation adapts to the changing circumstances. It is therefore necessary for the legislature to continue to effect the necessary amendments to legislation and even, if necessary, to repeal legislation and introduce other legislation in its place. The law must always keep pace with changes and developments, but it remains the duty of the legislature to see to it that legislation which is introduced with regard to such changes and developments will always have a stabilizing effect.

Legislation should in fact promote the interests of those people, or groups of people, who are affected by it, and be beneficial to them. On the other hand the legislature also has to ensure that such changes have a stabilizing effect and also that no harm is done to the interests of an orderly community. Such changes must be effected with a view to their being of a protective and enabling nature. To put it briefly, the legislature has to see to it that changes and amendments will always be balanced. Above all, care must be taken that the object of legislation is never defeated.

Legislation, to be good legislation, has to comply with these requirements. Therefore, if we apply them to the Bill under discussion tonight, we find that, for the most part, it affects two groups of people. In the first place it affects the prison staff as such. In the second place it affects the prisoners as such. Perhaps, to a far lesser extent, it affects the public as well. As far as the prison staff is concerned, provision is being made for changes in the definition with regard to the appointment of members of the Prisons Service. Furthermore provision is being made for powers for the commissioner to determine security measures applicable to prisons, as well as to classify the groups into which prisons are divided. Furthermore, provision is being made to grant privileges and indulgences to prisoners and summarily withdraw such privileges and indulgences as well.

Here we are dealing with clause 4, a clause to which the hon. member for Houghton paid particular attention in her speech. I do not want to discuss the clause now. It may be discussed later on during the Committee Stage. However, I want to ask the hon. member for Houghton respectfully to study her speech again very thoroughly. She referred, inter alia, to a judgment of Mr. Justice Marius Diemont. The hon. member will note that there is a very clear distinction between indulgences and privileges on the one hand, and rights on the other. Rights are something to which every prisoner may lay claim, as was made very clear by Mr. Justice Diemont as well. He said there were basic rights to which a prisoner may lay claim, rights of which he may not be deprived, for example food and clothing. Mr. Justice Diemont, however, went on to say that it was a different matter as far as privileges were concerned. I do not want to discuss his judgment any further.

I request the hon. member for Houghton, however, to study it carefully. If she were to do that, she would not argue here that we are dealing with legislation which is “far-reaching” and which results in an “objectionable change”. The hon. member for Houghton suggested that it was very clear that we did not in future want to allow anyone to put his case to the Supreme Court by way of an application. According to her such an application would simply not be able to succeed because this legislation provides that privileges and indulgences may be withdrawn without furnishing any reasons. However, I want to point out to her, with all due respect, that in this case this side of the House has never yet been reluctant for its legislation to be tested by our courts. We are quite prepared for that to happen. However, if the courts point out loopholes to us which may exist in one Act after another, or more and more loopholes in a particular section of an Act, we would be failing in our duty as a legislature or as Parliament if we do not see to it that those loopholes are closed. That is all we are doing in this case. For that reason it is also essential for us to ensure in such a case that the security of the State is constantly protected, and furthermore, that no delaying tactics are established to defeat it. It is the duty of the legislature to see to it that those loopholes are closed. I do not want to go into this matter any further. As I said, it may be dealt with during the Committee Stage.

However, I want to dwell briefly on clause 10, another clause which the hon. member for Houghton does not like at all. This clause proposes that rewards be paid to persons in prisons who report some form or other of planned crime to the prison authorities or who expose anyone who commits a crime. I cannot understand how an hon. member of this House can object to such a clause. Nor do I think it would be inappropriate if I asked her, with all due respect, whether she is all in favour of crime or whether she does not want a criminal to be exposed. If she is opposed to this clause, she definitely does not intend that crime be exposed. I therefore believe that it is essential that this clause should in fact be piloted through and that a person should be properly rewarded for exposing a man who wants to commit a crime and for ensuring that crime is prevented.

It is, moreover, the duty of the legislature to take notice of reports of commissions which are appointed in connection with legislation which it has to draw up. In this connection I want to mention the report of the Viljoen Commission tonight, a report of which thorough cognizance was taken in this legislation. That brings me to the second group of people to which this legislation applies. I am referring to the prisoners. Various recommendations have been made in the Viljoen Report, but I want to make it very clear that the legislature is of course not compelled to accept such a report word for word or recommendation for recommendation. The hon. member for Houghton acknowledges the principle that it is not necessary to accept a report in that way. For example, it was recommended in the Viljoen Commission report that the number of strokes which may be inflicted as corporal punishment should be reduced to five. I see, however, that there is an amendment of hers in which she says that it should be reduced from seven to six. In other words, she does not necessarily feel herself committed to the provisions of the report.

You do not understand that this is because of a consequential clause.

The hon. member for Houghton said very clearly in her Second Reading speech that she thought the report recommended five strokes. She nevertheless adhered to six strokes in her amendment.

There is a consequential clause, one that is not being amended.

The hon. member accepts the principle that a report does not necessarily have to be accepted exactly as it stands by the legislature. To me it is important that three principles are mentioned in this case. The first principle is that the number of strokes be reduced, the second that the minimum period of detention of habitual criminals be reduced and the third that the age of persons on whom corporal punishment is inflicted be reduced.

I now want to dwell for a moment on the aspect of corporal punishment, because a good deal of attention has been paid to it in previous speeches in this hon. House. This is set out very clearly on page 137 of the report of the Commission of Inquiry into the Penal System of the Republic of South Africa, the so-called Viljoen Commission report. What officials of the Department of Prisons had to say on this matter, according to this report, is very important in my view, for I believe that we should allow ourselves to be led by experience. I believe that in many cases we should allow ourselves to be led by the old hands. I believe that we should allow ourselves to be led by those people who deal with these matters every day and who have practical experience of them.

The Department of Prisons was dead set against the age limit of 50 years with regard to corporal punishment being lowered. They also gave evidence before the commission that they were dead set against the number of strokes which may be inflicted being reduced. The reason for that is very clear. They have found that there were old prisoners for whom no punishment except corporal punishment helped in any way. They also found and stated in evidence to the commission that those prisoners displayed stubbornness and aggressiveness and that, according to their experience, nothing except corporal punishment was of any avail. Nevertheless it is being proposed in the Bill that the age limit be reduced from 50 years to 40 years. It is also proposed that the maximum number of strokes be reduced from ten, as it used to be, to seven. I want to make it clear that, as far as I am concerned, the punishment could have stayed as it was. This Bill, however, is before us and I want to say that if it has to be amended, I agree that it should definitely not be reduced as was recommended by the Viljoen Commission.

I am sure you would like to increase it.

Yes, I would rather increase it. You are quite right.

You look as if you would like to, and with a cat-o’-nine-tails too.

Yes, I should like to have that as well. I shall state it unequivocally—it seems to me that the Official Opposition is trying to provoke me—that the heavier the penalties are, the more they will deter people from committing a crime. It is as a result of the watering down of penalties that crime is being committed more and more freely today—no one will deter me from that argument, for practical experience has taught us that over the years.

Before the Opposition gets hurt too much with the cat-o’-nine-tails and the strokes which they want reduced, I shall continue with my speech. Since it is proposed in the Bill that the number of strokes be reduced and that the age limit be lowered, I want to say that it is probably a result of the requirements of the times in which we are living that these are indeed being reduced. I therefore want to conclude by saying that I believe that the provisions, where they are to be amended, provide a fine piece of legislation which will present us in a better light in the eyes of probably many other people than was previously the case.

Mr. Speaker, the hon. member for Aliwal must have had problems with the acoustics of this Chamber because he obviously did not hear what the arguments and the motivation of the comments by the hon. member for Houghton on clause 4 were. When she said that she was in favour of as many privileges as are feasible and reconcilable with the discipline in the prison being retained for the sake of the existence and life of the prisoners, it did not mean that she was in favour of crime. One might just as well say: I am not in favour of capital punishment, therefore I am in favour of murder. That argument is based on precisely the same logic. The other arguments which the hon. member for Aliwal advanced, do not differ very greatly in logic and persuasive power from the argument to which I have just referred. Our objection to clause 4, as already set out to a certain extent by the hon. member for Houghton and the hon. member for Umbilo, is founded on two grounds. The one is that it is the task of this responsible House to guard against the privileges and indulgences granted to prisoners in gaols, which can make the difference between a tenable and an untenable existence, being summarily curtailed. It is a principle which has been recognized for centuries, ever since detention has taken place. It is no new thought. All the hon. member for Houghton asked was that we in this House should not create the impression that we are too scrupulous with regard to the indulgences and privileges—not the rights: the distinction was drawn very clearly— granted to detainees in prison. That is the one aspect which we are worried about as far as clause 4 is concerned. The other question is of a much wider nature, because the provision that indulgences and privileges may be withdrawn without furnishing any reasons and without hearing such prisoner or any other person, will undoubtedly not remain within the four walls of this House. I can assure you of that, Mr. Speaker. That is the kind of wording and the kind of measure which is seized upon by our enemies. There is little more I want to say about it apart from this: I cannot understand why the proposed section 22(2)(b) is being inserted. As the legislation now reads, it is obvious that if the Commissioner of Police, or in the previous case the Minister, may grant indulgences or privileges to a prisoner, he may also withdraw them. That procedure we may safely leave in the hands of those people, because they are responsible people and they will not grant an indulgence only to withdraw it again the next day without any reason. Now, however, the whole world is being told …

By you people.

It is stated here. We do not have to recount it. Here it is! It is now being proclaimed to the world at large that we are so scrupulous with regard to privileges and indulgences that we do not even want to hear such prisoner concerning it. In other words, we shall withdraw them summarily, without investigation and with malicious intent. I think this is food for earnest thought by the hon. the Minister …

Are you conducting the epilogue?

… and hon. members on its possible effect, not so much in prison, but elsewhere, and warrants reconsideration. I do not want to say anything more about it because my meaning is quite clear.

The next clause that gives rise to misgivings, is clause 7. In the past there was an arrangement between the Republic and other States or those territories in the process of becoming independent that we could take some of their prisoners or detainees to keep in our prisons or places of detention because they did not always have the necessary facilities. With this proposal, however, the hon. the Minister has introduced a new principle. Now it does not apply to detention only, but also to the serving of a term of imprisonment. In other words, we can arrive at the unfortunate position—in my opinion an unfortunate position—where a person is sentenced by a court in South Africa and is then condemned to serving this sentence in another state. I know it will not easily happen, but it is the principle on which this reciprocal provision is based. In the explanation furnished by the hon. the Minister in his Second Reading speech, he referred to short-term prisoners, but in the legislation, as I read it, there is no mention of short-term prisoners; it could also apply to life imprisonment. This is in my opinion a dangerous principle which is being introduced here.

Clause 5 can perhaps be seen as a minor and unimportant provision. According to the provisions of the existing section 25(3) the staff of the Prisons Service, the Commissioner, is expected to arrange for the inspection of such police cells and other places of detention where sentenced prisoners—in other words people who are normally already under the jurisdiction of prisons—are detained. Such places have to be inspected by and on behalf of the Commissioner of Prisons. That subsection is now being deleted and places where sentenced criminals are detained, if it is not a prison, but a police station or another place of detention …

But that cannot happen.

Of course it can.

Where does the hon. member get that from?

Those are the explanations given to us by the Department of Prisons. I concede that I could have misunderstood them, but that is my impression of the situation, and if it is so, I should like to give the following comment: The Department of Prisons places a responsibility on the police, and the police in turn place a responsibility on the Department of Prisons. If an anomaly should occur, there could be a serious conflict of interests.

Finally, I want to refer to the provision in clause 18. Clause 18 deals with segregated prisoners; not prisoners condemned to solitary confinement, but segregated prisoners. The difference between a prisoner who is sentenced to solitary confinement and a segregated prisoner, is that when they are working, the one type of prisoner works with others in a group, while the other has to work alone. Work is indeed given to segregated prisoners. Labour is not only directive and a requirement of the law for all prisoners—except of course where there are exceptions as in the case of solitary confinement—but it is also regarded by the law as a factor with regard to therapy for and the health of prisoners. What is now going to happen—according to my interpretation of clause 18—is that the difference between prisoners sentenced to solitary confinement and segregated prisoners— who are in a completely different category— is going to be blurred and eliminated as a result of the provision in this clause.

I shall discuss this in greater detail during the Committee Stage, but the objection we have in this regard is to the provision that the sentenced prisoner receives exemption from labour. The provision that he may receive exemption from labour is misleading, because labour is—I repeat this because I have a great deal of authority to say it—one of the most important factors with regard to the mental as well as physical well-being of the prisoner. The House will commit an error if we do anything in that regard that can prejudice this factor.

Mr. Speaker, the hon. member for Houghton criticized the hon. the Minister in her speech for having galloped through his Second Reading speech. She said that he had spoken too fast and that she wanted more information. She wants explanations concerning the principle in clause 4. We had the same phenomenon with the hon. member for Johannesburg North. The hon. member enjoys the dubious privilege of having admitted me as an attorney while he was still a judge. To his credit I must say that this was one ruling which he gave without delay. [Interjections.] It is a privilege to me as an ex-attorney to give this ex-judge a lesson in law. The hon. member objects in principle to clause 4. He did not leave this for the Committee Stage, but mentioned his objection now, and I should like to reply to him. They object to the fact that the audi alteram partem rule is apparently being removed here. In other words, a prisoner is being deprived of a privilege without being able to make any reply. This is basically the objection of the hon. members.

My argument is that we must draw a very clear distinction between a right and a privilege. A right is laid down in law in respect of a prisoner, and can be enforced. If it says in the Act that a prisoner is entitled to half an hour’s exercise in the morning and the prison authorities will not allow this or withdraw it, he can enforce that right. He can go to the Supreme Court and he can force the prison authorities to grant him the right provided for in the Act. The proposed statutory amendment which is before the House does not deprive a single prisoner of any right. Apart from a right, there is also a privilege which we have to consider. My definition of a privilege is that it is something special—like a favour—which the giver is not obliged to grant and to which the receiver is not entitled. A privilege can be removed at any time without any reasons being furnished. No right is established so there cannot be any question of enforcing the privilege. The hon. ex-judge referred to an authority which he had with him somewhere. I also have authority for my statement. [Interjections.] The Random House Dictionary of the English Language says—

The dictionary gives the following example—

Therefore a privilege can be revoked at any time and the implication is that this can be done without furnishing any reasons.

In the judgment in the Hassim case, which the hon. member for Aliwal as well as the hon. member for Houghton referred to, the Supreme Court specifically distinguished between a right and a privilege. The judgment reads—

The reference is to Hassim—

Have you ever heard of that, Kowie?

[Inaudible.]

The granting and withdrawal of privileges is a purely domestic matter which is under the jurisdiction of the Department of Prisons.

Why then is the provision in the legislation?

Read the Act, man! [Interjections.] The granting of privileges is an extremely useful and indispensable instrument in the rehabilitation process and the withdrawal of privileges is an equally useful instrument for imposing and maintaining discipline and good order. In other words, for these reasons I say that no one can invoke the audi alteram partem rule when it comes to privileges. Therefore, it is absolutely justified to accept the proposed legal rule.

I think hon. members are afraid that irregularities may take place in prison and that a prisoner may then not be able to complain about it. However, there is a complaints book in which a prisoner may write any complaint he may have. He may also report his complaint to a warder. He is heard, no matter how trivial his complaint. If one reads the law—and I hope the hon. member for Johannesburg North has read it— one will see that there are special prisons inspectors who visit prisons regularly. When they visit the prisons, prisoners have an opportunity to make their complaints to them as well. In addition to this, there is something which the ex-judge may have forgotten, and this is that judges—I do not know whether he ever did this—and magistrates regularly visit the prisons and ask whether there are any complaints. Apart from this other recourse there is also the right laid down in the law. If I have a right as a prisoner, I can enforce my right by going to the Supreme Court, even though I am a prisoner. So there are adequate means of protecting prisoners from alleged irregularities.

I should like to pay tribute to the hon. the Minister, the Commissioner and his staff for what they are doing to correct the distorted image of our prisons department. Our Department of Prisons is continually being criticized. Robben Island is referred to as a penal camp, an Alcatraz and a Devil’s Island. I have here in my hand a bulky volume which is being distributed abroad under the title Maltreatment and Torture of Prisoners in South Africa. This is the image which the outside world has of our prisons authorities!

What has the Department of Prisons done about this criticism which is levelled at it? I shall tell hon. members what they have done, so that they may see for themselves whether the department has anything to hide. In the first place, the Commissioner wrote to the Secretary for Justice in 1976, requesting him to encourage judges and magistrates to visit the prisons more often and to submit their comment to him. Is this the behaviour of someone who has anything to hide? What happened then? The judges and magistrates then paid more visits. The Commissioner awaited their reports. I say with great pride that not a single negative report was received from any judge or magistrate. On the contrary, the prisons authorities were complimented by the judges and magistrates.

Furthermore, 1 165 visitors were allowed into our prisons in 1975-’76. These people were able to have a look at what was going on in our prisons behind those mysterious walls. 1 165 people went to have a look. They included seven Ministers, 19 M.P.s and Senators, 61 judges, 114 magistrates, 83— please note—foreign visitors and 881 other people who are actively involved in criminal reform. Not a single one of these people had any negative criticism to make. If the Department of Prisons opens its doors to admit people behind those walls, is this the behaviour of people who have anything to hide?

I now come to the most important point of this aspect. On 25 April 1977, Robben Island was thrown open to a group of local and foreign newsmen. The prison was thrown open to these people and they could simply go and see what was going on at Robben Island. What did they find there? Did they find that it was a penal camp, a Devil’s Island, and that the kind of allegation which was being made abroad was substantiated? No, they simply found that it was a modern prison. Nothing else. This is to the credit of the department. That is why I pay tribute to the department for their brave action in opening their prison doors so that people could look round inside. What I find so strange is that hon. members on the other side of the House say nothing about this. They just level unfounded criticism. They refer to the statement of an ex-judge which is based on madness. He asks: What is going to happen in the outside world? The outside world will raise a hue and cry now, it is alleged. I shall tell hon. members what is in fact going on in the outside world. In this book it can be seen that hon. members of the PFP are quoted as people who blacken the name of our country. I want to tell the PFP that the time has come for them to set a watch before their mouths when they make remarks in connection with South Africa in this House, as the hon. member for Houghton also did. She used words to the effect that the hon. the Minister does not like appeals, that he is irritated by the thought of appeals. These are the things which are used against us abroad. I think it is a disgrace.

She says it for foreign consumption. [Interjections.]

What is going on behind the walls of our prisons? Only one thing is going on there: rehabilitation. There are 100 000 prisoners in our prisons and the whole staff is devoted to rehabilitation. There are knowledgeable people; there are social workers, educationists and psychologists who try, in co-operation with the Prisons Board, to rehabilitate people.

Finally, I want to read a quotation in connection with the noble work done by the Department of Prisons. Lionel Fox said—

This is the noble task of the Department of Prisons, and this is what those people are managing to do. I pay tribute to them for what they have done in spite of the nonsensical criticism expressed against them by certain ex-judges.

Mr. Speaker, I should first of all like to react to something that the hon. member for Aliwal said in reacting to questions from my right-hand side. He said that he would like to see the number of strokes increased. He said that if a cat-o’-nine-tails were used it would be so much for the better. One rather gathers the impression that he would like to wield this whip himself. Obviously he is disagreeing with his hon. Minister …

You must read my speech.

… because the hon. the Minister, in a sympathetic way, is reducing the number of strokes that are being given. The hon. member for Aliwal is disagreeing with him and is suggesting that even a cat-o’-nine-tails should be used.

Will you read my speech?

I listened to your speech. I do not now wish to read it as well. Just to listen to it was quite enough.

You do not understand Afrikaans.

Secondly, the hon. member for Jeppe has mentioned the question of privileges being granted and his dictionary was obviously correct in defining the word “privilege”. A privilege is something which can be granted and can be taken away again. But the question is, who does the granting, and who does the taking away? I believe that if a Parliament passes a law which grants a privilege to prisoners, it should not be the right of the Commissioner of Prisons to be able to withdraw a privilege that Parliament, in its wisdom, has granted. I would agree that if A grants a privilege then A can take that privilege away again.