Mr. Speaker, South Africa has just completed what is perhaps its toughest year since the Second World War. There has been a negative per capita growth. There has been high inflation. There has been serious unemployment and there have been reduced living standards. All of this, and more, combined with a deteriorating political situation, contributed towards a psychological state where both investors and consumers lost confidence; consumer demand dropped; industry developed a substantial surplus capacity; and investors held back so that the gross domestic fixed investment dropped by more than 10% during the year and, significantly, was exceeded by gross domestic savings.

The Government put the strengthening of the balance of payments as a major priority, and a restrictive monetary and fiscal policy, applied for this purpose, accelerated the recessionary slide so much that it became apparent that a perpetuation of this policy might well become counterproductive. Fortunately the current account of the balance of payments was assisted by an increased gold price and a demand for exports of primary products. This resulted in a dramatic turn around. The Capital Account, however, showed no such dramatic change, and while there are cyclical factors which influence this, there is little doubt that politics play a major role.

In this setting we called for action to halt rising unemployment, to maintain living standards and to get South Africa back onto a healthy growth path. The hon. the Minister, in his budget, has indicated that in his short-term economic policy he now desires a shift of emphasis towards sound economic growth. Naturally, with this objective we agree. There are a number of specific measures which are introduced by the hon. the Minister to achieve this objective, measures with which we also agree. Some of these measures are in substance those which we ourselves have called upon the hon. the Minister to introduce. All credit must therefore be given to the hon. the Minister for introducing them. Those measures will have our support, as will also some of the social objectives he has sought to achieve in certain of the concessions and allowances which he has given.

In our view, however, none of the stimulatory measures introduced will achieve its objective if internal confidence is not restored. If the psychological climate is not right consumer demand will not pick up, nor will investor confidence be restored. In seeking to create a climate to encourage local investment and consumer demand, the hon. the Minister will have our support.

Let us accept some of the realities of our political life. No amount of withholding of money from investment will solve South Africa’s political problems. However, creating employment opportunities, while it cannot solve all the problems, certainly can assist in this solution. I would like to make an appeal today to the leaders of commerce, of industry and of mining to invest in South Africa and to show confidence in the economic future of South Africa. We need their help to create more jobs. We need their help to create more earnings. For business and for workers alike, we need confidence in South Africa. We need to create an economic atmosphere in which political solutions must be more readily found. If we first restore internal economic confidence, we will also get foreign confidence restored in South Africa. However, if we ourselves do not have the confidence in our own country, how can we expect foreigners to have confidence in South Africa?

The hon. the Minister has tried—and I give him every credit for it—to present a budget which will increase the business confidence in South Africa, and we will help him to do so.

We will see what we can do to encourage people to invest in South Africa, to accept the realities of a situation and to see to it that more money is spent by consumers and by the businessmen of South Africa. We appreciate that he also is acting within constraints, not only economic constraints, but also constraints which are created by Government policies. If we in these benches are prepared to help to restore business confidence, can we not today in fairness say to the Government and to the hon. the Prime Minister that they must tell us what political action they will take in order to make a real economic revival possible? Without this political action, whatever may be the good intentions of the hon. the Minister, we may have a mild upswing, in the short term, but in the long term we may find ourselves becoming an isolated, beleaguered and boycotted community with inadequate economic growth, declining living standards, high unemployment, constant balance of payments problems, and increasing internal disorder. All of this will be sought to be met by appeals to patriotism, by appeals to accept higher taxation, by more expenditure on security and defence and by more authoritarian acts. All of this will be said to be necessary while we are under pressure in South Africa. The choice lies before this House today. I believe the fool’s paradise is over. We cannot pretend that things are going to go ahead in the way in which they have gone ahead in the past. The time for real action is now. Action is required not only by the hon. the Minister, who I believe has sincerely tried to restore internal confidence, but by the whole Cabinet, in respect of the political problems that confront South Africa.

What are the political choices that lie before us? Some of the action required is obvious, for example the removal of race discrimination, not by lip service, but by reviewing every single law, regulation and administrative action, and eliminating from them discrimination based on colour and race. I should imagine that there is no one in this House who knows more about the necessity to do that in respect of our future problems than the hon. the Minister of Foreign Affairs, who knows exactly what it means if we do not in fact honour what he has undertaken before the world to do. The question of the granting of human rights, the removal of laws which infringe upon freedom, dignity and the rule of law, are all matters which should not be controversial in this House at all.

There are two other fundamental issues which I should like to touch upon. The first is the political system that South Africa is to have, and the second is the economic system of South Africa for the future. On politics, I believe the divide has been reached in the political thinking in this House. That issue is citizenship. Will there be one South Africa governed by whatever system may be evolved, be it unitary, federal, central or a hybrid of some of them, or perhaps a unique system in which all, irrespective of race, will in fact be full citizens, or will there be a different form of citizenship under different national aegises for persons of different colour? The PFP has opted for citizenship for all in the same State. The Government has opted for citizenship in different States. To implement this policy, the Government has had recourse to the homelands concept. The choice of possible solutions is, however, limited. There is a choice between citizenship on the one hand and partition on the other. Yet the Government has rejected both and has instead opted for a homeland policy with which, on both economic and political grounds, it has no prospect of success whatever. 13% of the surface area of South Africa producing 4% of the gross domestic product for 69% of the population is not a saleable commodity in the Africa of 1978 or beyond. That is a reality of life. But, Sir, the political debates on our future range far and wide. There are conferences, there are seminars, there are books, there are lectures, and all concern themselves with various constitutional proposals. All have their own variation of the political theme, but on the economic system there is very little debate. There are of course attacks on the Government for taking too big a share of the economy. There are attacks on the role of the public corporations, on the interference by the State in the free market mechanism, but all White political parties, in varying degrees, pay lip service to capitalism or, as some call it, free enterprise.

The other side of the picture, however, tells quite a different story. The so-called liberation struggle in Africa has, as its platform, not only human rights, equality and freedom, combined with the benefits to the community and the individual flowing from political power. Every single movement also has a new economic system as its objective. In not one single instance is such an objective a system of either capitalism or free enterprise. It is rather a variety of concepts ranging from Marxist communism to socialism. The promises that are held out to the potential converts are not merely the emotional concepts associated with freedom, but also the materialistic advantages to accrue from a change in the economic structure of society. Black Africa, whether one likes it or not, is not a free enterprise continent. Although the definition of socialism in the Third World might in some cases cause even Marx and Engels to turn in their graves, no less than 16 States in Africa describe themselves as socialist, and those who claim to have mixed economies lean heavily, in fact, towards mixed economies under autocratic rule tending towards socialism. Socialism, to a community which feels it has been deprived and which ownes little of the means of production, has a magical appeal, particularly before it is introduced and when it is alleged to be the panacea of all ills. To socialism on the African continent must be added the consideration of socialism elsewhere in the world.

Even confining oneself to Europe, to the exclusion of the Eastern bloc countries, even in Western Europe one sees that there are communist parties powerful in countries such as Italy and France. One also finds socialist parties often exercising varying degrees of political power or influence. One also finds social democratic parties, with different affiliations to socialism, exercising political power in a number of States. All these countries, and the political movements in them, tend to support socialist elements in the so-called liberation movements.

How does White South Africa face up to this situation? The truth is that White South Africa has ignored it. It is concerned with the political aspects, and no thought is given to the economic system which would accompany a political change. It is assumed, utterly wrongly, that capitalism, as it exists today, is in fact going to continue, but what is interesting is that even in South Africa, in the creation of the homelands through the medium of the creation of development corporations, the nature of the land tenure and the roles of the homeland governments in the economies of the homelands, we tend to move away from free enterprise to a mixed economy system with the accent on State socialism.

In Africa wealth has been concentrated in the hands of Whites, from the point of view of government, from the point of view of the State, from the point of view of the corporations and from the point of view of the individual. Salary and wage inequalities existed throughout Africa before the Blacks took over their own government. Hardships, as a result of inequality of opportunity, were apparent everywhere and capitalism was associated throughout with Whites. The nationalization of the means of production was taken as the politicians’ answer to all the inequalities of wealth which existed there. This has been part of the whole world movement and the whole world appeal to egalitarianism, with a Marxist promise of a new and better quality of life, not for each according to his ability, but solely in accordance with his needs.

The challenge to South Africa therefore, both internally and externally, is not only based on the exercising of political power, but also on the image of concentrated wealth and privilege and the use of political power to predict them. I ask again whether South Africa is ready to meet the challenge.

There is a very real wage gap and there is also a real opportunity gap in South Africa. There is also a wealth gap or poverty gap, whatever one chooses to call it, and the wealth gap is the target of every single agitator who seeks to elicit support for his cause. Socialism may not be understood, but it is the bait or panacea which is proffered to the underprivileged, and it is certainly made attractive.

How is it to be answered? No amount of superficial talk on the evils of socialism and the benefits of free enterprise will suffice here. I believe that a solution needs to be found because I believe that the problem is even greater than the problem of political rights, but a solution is not to be found in old-fashioned 19th century capitalism.

With that concept, let me now turn specifically to the budget.

Hear, hear!

Sir, that demonstrates to me the lack of appreciation of the threats that exist in South Africa. The hon. members opposite do not understand what is happening in South Africa. They think it is all going to go on for ever as it has been doing. Let me tell them that they are living in a fool’s paradise if they think that a few small changes to taxation measures are going to safeguard the future of South Africa. [Interjections.] They are living in a fool’s paradise and the chorus of baying I hear now is only a reflection of how fools bay at the moon when they do not have answers to the problems.

Let us test the budget from a number of premises: Firstly, will this budget create confidence either at home or abroad; secondly, will it arrest unemployment and does it create the machinery that will create new jobs; thirdly, will it encourage growth; fourthly, will it reduce the level of inflation; fifthly, is it equitable in the application of the tax proposals; and, sixthly, does the budget contribute to the finding of the ultimate solutions for South Africa’s problems and state the correct social priorities?

It is interesting that this is supposed to be the year of the consumer. This is supposed to be the year in which the consumer is given prominence and is paid attention. I think that the hon. the Minister in this budget certainly has not put the consumer first. Benjamin Franklin—the hon. the Minister was pleased to litter his speech with a number of quotations—said that in this world nothing is certain but death and taxes. To our finance Minister there appears to be a corollary to this, viz. that whatever new forms of taxation there possibly can be, must now also be applied while the old forms of taxation must never be given up. We have had direct taxation on individuals and companies and also compulsory loan levies. We have had customs and excise duties, estate duties and a multiplicity of other taxes from stamp duties to transfer duties. Besides the customs and excise duties, we were in the past given sales duty as an alternative to turnover tax, not as an addition to it. However, that is not enough. After that we were given the temporary import surcharge and now we are to have a general sales tax.

Where is it all going to end? May I take up the hon. the Minister again and give a further quotation. This one dates back a long way. It is from Sidney Smith, who said: “The schoolboy whips his taxed top; the beardless youth manages his taxed horse with a taxed bridle on a taxed road; and the dying Englishman pours his medicine, on which he has paid 7%, into a spoon, on which he has paid 15%, and flings himself back on his bed on which he has paid 22% and expires in the arms of an apothecary who has just paid a licence of £100 for the privilege of seeing to his death.” That is the concept of taxation the hon. the Minister seems to have taken upon himself. Before dealing with the present budget, we should ask the hon. the Minister what is next in line, what new trick of taxation he has up his sleeve to spring on us. If one may make a forecast, I would imagine that, when turnover tax comes, capital gains tax will not lag far behind. I wonder whether the hon. the Minister will respond to that in his reply.

Let me test this budget from the point of view of whether its taxation proposals are in fact equitable in so far as the public are concerned. Firstly, the figures clearly show that the much vaunted tax concessions amount to far less than the extra money the hon. the Minister is taking away from the taxpayers.

Let me quote some figures. Despite the tax concessions the hon. the Minister is actually budgeting to take R57 million more away from the taxpayer this year—that is from the individual taxpayer—than he did last year. This figure, after the wage increases which will undoubtedly come due to the inflation which will occur during this year, will be even more as individuals move into a higher tax bracket. General sales tax is estimated, after allowing for concessions on sales duty and import surcharge, to bring in an extra R395 million. In a full year that figure will amount to R745 million. However, the personal tax concessions amount to no more than R132 million. Therefore, as the hon. the Minister was so keen on talking about geese, may we be permitted to say with the poet: “He takes the goose and gives the giblets in alms.” That is the truth of it.

However, there is a more serious aspect: This budget discriminates against the lower income groups. They are expected to pay sales tax but they receive no concession. The hon. the Minister, in his budget speech, talked about a food subsidy of R20 million. However, when we look at the budget, we find that whereas the subsidy on wheaten products was R90 million in 1977, last year it was reduced to R60 million and this year it is reduced to R45 million. What nonsense it is to say that we are being given R20 million, when with the same breath R15 million is taken away, and since 1977 R45 million has been taken away. It seems to me that the hon. the Minister taketh away more with the one hand than he giveth with the other. The same applies to maize. It was R60 million in 1977. It was then reduced to R50 million and it is thereabouts now. The hon. the Minister has accordingly deprived the poor, he has deprived the people who need the concessions more than anyone else.

Let us look at the actual tax rates. A single man earning R1 750 per annum or less receives no concessions in this budget. A married man with no children who earns R2 750 per annum receives no concessions in this budget. A married man with two children earning R3 000 per annum receives no concessions in this budget. A married man with three or four children earning R4 000 per annum receives no concessions whatsoever in this budget. Is that just? Is that correct? Is that what should be done? Oh, the hon. the Minister will say to me: There are so few people earning this in South Africa. How wrong can he be. There are 1 719 000 individual taxpayers in South Africa— according to an answer given by the hon. the Minister last year—and of those, 831 255— that is more than half—had a taxable income of R3 999 or less. I am now only talking about Whites, Coloureds and Indians; I am not at the moment talking about Blacks. If we talk about the lower income groups not having been given any concessions perhaps there is no more glaring example than those who are 60 years and over. Where they earn R5 000 or less, this budget gives them no concessions whatsoever. I would like to hear from the hon. the Minister and from the National Party benches whether that is equitable and whether that is just and fair.

Mr. Speaker, let me give you some further examples. A White taxpayer with a taxable income of R5 000 who is married with two children gets a tax concession under this budget of R27. However, if one earns R20 000 one gets a tax concession of R472. If one earns R30 000 one gets a tax concession of R1 000. No wonder that there were cheers from the NP benches when the hon. the Minister announced these concessions. On the other hand there were no cheers from the working people of South Africa.

Let us look at after-tax income. The after tax income that one is left with if one earns R5 000 per year, in the case of a married man with two children, is R4 703. If one earns R20 000 one’s after-tax income amounts to R14 808 and at R30 000 the after-tax income is R19 000. What is interesting is the fact that a man who is earning R20 000 a year has three times the after-tax income of the man earning R5 000 a year, but his tax benefits are 17½ times more. A man earning R30 000 has four times the after-tax income of an individual earning R5 000 a year, but his tax benefits under this budget is 37 times more than that of the man who earns R5 000 a year. Is that just and equitable?

Let us turn to the Black taxpayers. The poll tax of the Black taxpayers has been abolished and obviously they and we will welcome this step. Their tax scales at the lower levels of income are, however, much higher than those of the Whites and I have the figures here to prove it. They get no tax concessions whatsoever. Is that just? These are blatant abnormalities and in order to cover them there should be a credit in a fixed amount for the estimated sales tax which is paid at the various lower income levels. That credit should be given to these people in the lower income groups. Furthermore the revision of the Bantu taxation laws cannot be allowed to drag on as it has already dragged on for years. There must be some urgency in respect of this matter and it must be dealt with immediately and without delay.

One of the other factors which the hon. the Minister appears to have overlooked, is that many of the items which are subject to the new sales tax, have not been subject to sales duty in the past. These very items are the essentials of the working man which the hon. the Minister saw fit not to impose sales duty on before. This in fact means that the working man gets no benefit in that respect through the concessions which are granted on the sales duty. We want to make our view in regard to the matter quite clear. We regard the timing as being utterly wrong for the introduction of this duty. We regard the amount as being far too high and we do not believe that it should cover all the items which the hon. the Minister has included in his net. It should be a replacement tax and not an additional tax. In this regard I would also like to say that the wealth gap, to which I have referred, is of such a nature in our country that it needs to be closed far more before a tax of this nature can be imposed on all items, including the essentials of the working man. We say this is an unjust tax, and seeing that the hon. the Minister was so keen on quoting about the geese, I want to quote the following saying: “The law locks up the man and woman who steals the goose from off the common, but lets the greater felon loose who steals the common from the goose.” The hon. the Minister might well have cause to remember that one.

I would now like again to turn to the question of confidence. Here, as I indicated earlier on, the hon. the Minister has indicated that he has sought to encourage consumer spending and business investment by placing additional money into the hands of both these parties. The hon. the Minister has positively demonstrated in a number of concessions— they are in fact some 14 in number—that these are matters in which he has sought to try to improve the situation in order to instil confidence. While the list of concessions is lengthy, the actual substance of them is perhaps more cosmetic than real. The question that must be asked in this regard is: Are they sufficient to revive an economy which, in the view of so many, has been subject to such drastic measures which are close to an over-kill? We regret to say that we believe that the stimulatory measures are not adequate at this stage. We believe that while well intentioned, the Minister has been too timid, and that further stimulation will be necessary. Some of these good intentions have been frustrated by the quantum and the timing of the sales tax and the maintenance of the sales duty and import surcharge. Courage is what is needed in these circumstances. A tax holiday from both sales duty and the new turnover tax for a period would have encouraged consumer demand, and would thus have enabled hard pressed industries to bring unutilized capacity into operation. The hon. the Minister appears to have forgotten that our shops are full of stocks on which the full sales duty has been paid. It will take months to get those goods off the shelves. Full sales duty has been paid on them and a run-off period is absolutely essential.

I also want to say that a 1% tax concession to companies is, I believe, again just a gesture and is not likely to create great new liquidity or to encourage savings. It is more cosmetic and intended to encourage people, rather than creating a real situation of liquidity. While the hon. the Minister’s concessions cover an extremely wide range, none of them is of sufficient impact really to change the psychological climate or to create a meaningful turnaround. Even the hon. the Minister’s own advisers seem to be doubtful about the effect of the measures and talk about further stimulation later this year. A more dramatic move at this stage would have had a far greater impact than to have spread this stimulation in stages over a period of time.

However, as I have indicated, stimulation alone is not sufficient to restore confidence. The political and economic matters have to be dealt with because the two go hand in hand. It is quite clear that South Africans must face the reality that the Republic’s politics will determine its economic future and that economic policies and strength will merely influence a political course. That is why I said that the budget is really a challenge to the hon. the Prime Minister and the rest of the Cabinet. Between the lines of the hon. the Minister’s budget speech one sees that he has to act within the constraints imposed upon him by existing policies and by past mistakes. He is saying in effect that he is trying to restore confidence and that it is now over to the Cabinet. He is in fact asking who is going to help him to restore that confidence in South Africa.

Perhaps nothing underlines the issue more than the question of unemployment in South Africa. The hon. the Minister has conceded that unemployment is at an undesirably high level. What the extent of the unemployment is, we cannot really accurately say. The statistics for Whites, Coloureds and Indians who are registered as unemployed are regarded as fairly reliable, but even here the view is held by some experts that unemployment in the Coloured community is much higher than the registered unemployment statistics show. The statistics for Black unemployment, while at a staggering 12,4% of the economically active, is however less convincing and some experts consider the figure to be substantially higher. There is also concern about the basis on which the figures are calculated, namely what actually constitutes economically active persons and what constitutes being unemployed. Then there is also the method of statistical magic which is now employed by ceasing to regard certain persons as citizens and removing them from the statistics. In this way the unemployed are reduced in absolute terms, as are also, of course, the economically active. Bophuthatswana’s independence reduced the statistics in respect of economically active persons by 1 787 000 souls. What is ignored here is the fact that most of these people who are unemployed and who may be citizens of Bophuthatswana and are no longer part of the statistics really rely on the South African economy for their existence.

We in these benches had hoped that more would be done to create jobs. Accelerated demand in itself will neither in the short nor the medium term provide the stimulus for the jobs to re-employ the existing unemployed or to absorb the new work seekers in the form in which it is being done. Some of the demand will unfortunately go into imported goods. Some of the unutilized capacity will be brought into production with little extra labour and we must not forget that while manufacturing contributed 22,3% of the GDP in 1977, it only employed 13% of the economically active persons in South Africa.

While the amount given for the building industry, for public works and for housing is welcome, it is in our view inadequate. It will not really get the industry off the ground, nor is the amount adequate to meet the acute Black housing shortage. More stimulus is required for that industry. In exactly the same way we talk about investment allowances. We believe that more than that is needed. For example, in the United Kingdom 100% can be written off during the first year. I have repeatedly said to the hon. the Minister that allowances should be given for new jobs which are created and that they should be given on the same basis as in employing new machinery. If the hon. the Minister looks at what is done in the United States of America regarding this issue, he will see that this is not something which is impractical or unique.

In this very same unemployment situation we find the position that whilst we have unemployed we are developing a further skilled labour shortage, a shortage of skilled workers which is accelerated by emigration, not of South Africans, but of immigrants who are unfortunately leaving in certain numbers, and by insufficient immigration. In our view the Government is not concentrating sufficiently on technical and vocational education, not only for economic, but also for social reasons. The drive for education which has taken place all over Africa has in the main been a drive for academic education, whereas the truth is that there should be greater concentration on technical and vocational education.

When it comes to unemployment it is no use playing with statistics. Democracy and peaceful transition depend upon political stability, which in turn depends upon full employment. Without full employment we are in fact seeking to fight the battle which lies ahead with one arm tied behind our backs.

Regarding this particular aspect of the budget one can also refer to the growth which, with respect, has not occurred in the last little while. We have a population increase of 2,8% p.a. and yet, when we look at our growth factor we see that we have come nowhere near that. Therefore we have had a negative per capita growth for a number of years. The economists tell us that we need a growth rate of between 5% and 6%. The hon. the Minister has made no forecast, but has merely said that 3% will be better than ½%, which, quite obviously, everybody will agree with. However, the difficulty we see, is that the stimulation is not adequate, that the over-kill of the economy has been such that it will take too long to recover and that the economic conditions of our major trading partners may have an adverse effect on our income. If the hon. the Minister has been correctly reported in regard to his “pinprick” speech, we regard this as a greater threat than merely a pin-prick, but as something we cannot ignore. We have to face the reality that in South Africa one of the reasons for a low growth factor is not only the state of the economy and the pressure from outside, but the high cost of implementing apartheid policies which have sapped the growth rate for decade after decade in this country. The hon. the Minister has to face the reality that either one is going to make the cake bigger or, alternatively, one is going to force people into having to give up a part of the share of the cake they presently have. We prefer to make the cake bigger rather than to ask people to accept smaller slices of that cake.

Mr. Speaker, therefore, I wish to move the following amendment—

1. (1) to ensure adequate economic growth;
2. (2) to combat unemployment;
3. (3) to ensure that there is no unfair treatment of the lower income groups in taxation;
4. (4) to fight inflation;
5. (5) to eliminate all discrimination as between South African citizens; and
6. (6) to promote full participation by all South Africans in the economic system”.

In conclusion I want to commend to the hon. the Minister—perhaps for the budget speech he may deliver next year—a text which one uses when one is to deliver a sermon. In this connection I refer the hon. member to a passage from the New Testament with which he is perhaps familiar. I refer to the Gospel of St. Luke, which states—

This year the hon. the Minister has filled the rich with the good things and has sent the poor away empty handed.

Mr. Speaker, before making a few remarks about the speech by the hon. member for Yeoville, it is my privilege to join the very large chorus of people who have applauded these budget proposals put forward by the hon. the Minister. I could have devoted the entire half hour at my disposal to quotations showing how the budget had been received at various levels of our economic life. I daresay that apart from a few minor exceptions, there has only been appreciation for the hon. the Minister’s budget. I should very much like to associate myself with that. I think that we as political groups in South Africa may well rejoice at the fact that the business world has received the budget of the hon. the Minister in this spirit. There are of course exceptions, as I have said, for example, the hon. member for Yeoville, and only one newspaper has really been an exception, namely the Rand Daily Mail. I shall come back to this later in my speech.

Furthermore, this is also the first time that Dr. De Loor has handled with the budget bs Secretary for Finance, and I should like to add his name and that of others among his senior staff to that of the hon. the Minister when we congratulate them on what is, as far as I am concerned, a brilliant budget.

I want to make one favourable remark with regard to what the hon. member for Yeoville had to say and support him in his appeal to the businessmen of this country to display the confidence in South Africa’s economy that is so badly needed. I should very much like to support him in that he deemed it necessary to do so in this House, viz. to appeal to people to support the economy of South Africa. I think the hon. member deemed it necessary even to address some of the members of his own party in that regard. In the second place I want to congratulate the hon. member on having been permitted to move the amendment to the budget. Hon. members will recall that the amendment to the Part Appropriation was not moved by the hon. member for Yeoville but by the hon. member for Park-town. It therefore gives me great pleasure to congratulate the hon. member for Yeoville wholeheartedly on having obtained permission to move this amendment. Indeed, to me the wording of the amendment looks rather like his style.

I want to give the hon. member for Yeoville the assurance that it is unnecessary for him to address this side of the House on the subject of what is meant by capitalism, socialism, etc. In the past we were constantly being accused by that side of the House of moving away from capitalism. When those hon. members still belonged to a different party I remember the former leader of the Official Opposition using the same argument for 13 years, viz. that we were moving away from capitalism. Even a newspaper like the Sunday Times yesterday had a big headline saying: “It is back to capitalism.” The Government was reproached with having taken for itself too big a slice of the cake—as the hon. member for Yeoville called it. However in this budget a bigger slice is being given to the private sector. I shall come back to that again later. However I want to say to the hon. members for Yeoville and Parktown that if we were to leave this big slice of the cake to private initiative, the Official Opposition would have to talk to those in the private sector who are able to stimulate the economy. For the most part it is people belonging to the PFP who handle the big money in the private sector. It must not be said—as the Rand Daily Mail does—that these people should to some extent refrain from a stimulation of the economy. It is now time—and here I want to support the hon. member for Yeoville—for those people to show their confidence, to display their loyalty towards South Africa. The Government has given them an opportunity to do so. In the coming year we shall look forward with great interest to seeing what those people do in this regard. I might just add as my personal opinion that those who do not want to make use of the gap being created for them in this budget irrespective of their political convictions should not come and complain at a later stage if they do not share in the economic prosperity of this country. That economic prosperity is on its way, and at a higher tempo than over the past few years, is certain. This budget attests to that. This is a budget of confidence. The Government is putting its confidence in this country and asking the people to give evidence of their confidence in South Africa as well. I shall refer to this again later.

The hon. member for Yeoville also discussed the political action which the Government must take. I am sure that the hon. member will not take it amiss of me if I do not dwell on that. However, it is unnecessary for me to say in my speech what is expected of the leaders of the NP. The hon. member for Yeoville made a speech which almost created the impression that he was leader of the Opposition. He gave a full exposition of his political philosophy. I noted that the hon. member for Parktown sometimes looked round at him and then turned to look at the hon. member for Sea Point.

The hon. the Leader of the Opposition.

Mr. Speaker, the hon. member for Parktown has to watch both in order to ascertain for himself which of them is really giving the lead. However the hon. member for Yeoville will excuse me if I do not find it necessary to make such a speech myself. I shall leave the action in the able hands of the leaders of this side of the House.

Your problem is that you cannot answer the questions!

There is one matter concerning which I want to address the hon. member for Yeoville. In his reaction to the speech by the hon. the Minister of Finance last Wednesday, the hon. member did something which, as far as I am concerned, was unworthy of him. Before moving the adjournment of the debate the hon. member said something which he elaborated on again today. Today, however, he tempered his words to a far greater extent In his speech last Wednesday the hon. member had a great deal to say. Among other things he had the following to say about the proposed new system of taxation (Hansard, 29 March 1978)—

Today the hon. member dwelt on this. [Interjections.] However I want to say to the hon. member that I believe that a case could be made for saying that no new taxation proposal, no new system of taxation can even be painless. There is a great deal to be said for the statement that since we are now moving towards a broad system of taxation, it must take place in a manner which will not be painless. However, I take it amiss of the hon. member that he maintained that the hon. the Minister had accepted the principle of taxing the poor. After all, that is untrue. At the same time the hon. member states that the concessions which the hon. the Minister is making with regard to the rebate of 10% only applies to those people who comprise the higher income groups. Surely it goes without saying that this will be so. I have before me a table indicating the income tax payable by a married man with two children. The table sets out the position which applied in 1947 and the position as it will apply in 1979. Surely it is true that except for 1947 and the few years subsequent to that, people with a taxable income of less than R1 500 have paid no tax. If one pays no tax, then automatically one pays no loan levy. What concession is the hon. the Minister to make?

But with an income higher than R1 500, an unmarried person pays tax.

Surely the hon. the Minister cannot make a concession in respect of something which does not exist. That is simply impossible. If the hon. member were to read the hon. the Minister’s speech, he would see that the hon. the Minister said that everyone who pays more than R150 per annum in income tax obtains the benefit.

And those who pay less than R150? [Interjections.]

Those people get the same benefits as other people get. I shall come to that later.

And the man who pays R145?

The hon. member should also note that it is not only individuals who pay income tax; the companies also pay. The hon. member must not try to create the impression by means of glib talk that the rich man’s party to which he belongs champions the cause of the poor people. That rich man’s party is now championing the cause of the poor people! That is something new!

Oppenheimer for the poor! [Interjections.]

This is obviously propaganda and I shall come back to it later, because I should also like to say something before 5 April with a view to the by-election in Springs. I also want to say something about the things which the hon. member wants to make such a fuss of now. However, I think the hon. member should give the hon. member for Sea Point an opportunity to speak before 5 April. [Interjections.]

Hon. members must please give me the opportunity to continue. The hon. member had almost an entire week at his disposal to study the speech by the hon. the Minister, but I did not have the copy of the hon. member’s speech at my disposal. It is typical of the hon. member—I grant him that—that he made my task easier for me, because shortly after the hon. the Minister made his speech, the PFP, as usual, issued a statement. The statement expounded the attitude towards the budget of the financial group of the PFP. All the hon. member really did today was to expand on that statement.

The hon. member made a big fuss and said that the inception date of the new sales tax was wrong. He said that the timing was completely wrong. The Federated Chamber of Industries has calculated that at this stage our supplies are at the lowest percentage ever; viz. if one looks at them relatively. It is when the supplies are so low that one should introduce the new sales tax. It is very clear to me that whatever time one chooses to introduce a new system of taxation, the time will not be suitable. The hon. member is dissatisfied—I shall deal with that later—and he wants a tax holiday. According to him it would be convenient to introduce the new tax after a tax holiday. Broadly speaking there is no time that would suit everyone as regards the implementation of a new system.

The hon. member went on to make mention of the fact that the tax concessions granted by the Minister were inadequate to compensate for the increased demands which the consumer would have to pay after 1 July. In a certain sense he is right there. If we do the necessary calculations we shall see that there can be a difference, a negative amount of approximately R80 million which the consumer may—and I stress the word “may”—have to pay in addition.

A great deal more than that.

However, it is essential that we should not look at the situation in terms of the short-term only. Let us also consider what long-term benefits to the consumer the situation may entail. After all, there cannot only be short-term disadvantages. There are long-term advantages as well. In any event, the figure mentioned by the hon. member, the figure of R395 million, the money which the hon. the Minister is now withdrawing from individual pockets is far less than the amount involved in the concessions granted.

Let us take another look at the matter. The hon. the Minister said that the surplus of R42 million on the budget plus a withdrawal from the Stabilization Fund which together would amount to approximately R400 million constituted new money which would be pumped into the economy. The consumer will undoubtedly enjoy the benefit of this new money being pumped into the economy in due course. After all, this must create a beneficial situation over the long term.

You are again referring to the rich man.

The hon. the Minister also pointed out that the sales duty could be selectively reduced still further. I want to associate myself with that. I believe that as the revenue from the sales tax increases, the hon. the Minister will on the other hand certainly reduce the sales duty selectively. However, I do not believe—and I think the hon. the Minister’s approach is correct—that we can eliminate the sales duty entirely. We can link it to the customs and excise provisions, but the sales tax cannot be eliminated entirely and wholly lost to us as a tool of fiscal policy. However, the sales tax can be reduced in the same year and then, depending on the reaction in the economy, additional early repayments of loan levies may be considered by the hon. the Minister. These, too, are all benefits for the consumer. Let us look at the repayment of loan levies which is being envisaged for July. We must also take into account that the middle of the year is a time when everyone gets their salary increases. With this in mind we see that this is not such a heavy blow to the consumer. There are other and greater benefits for him in the long term.

The hon. member said that the new tax would do nothing to reduce the rate of inflation. However, it is calculated that on the proposed 4% basis, the rate of inflation will increase by only 1% and furthermore that this would be a merely temporary phenomenon. Therefore there will only be a temporary 1% increase. It is not the case, as is being maintained, that the increase in electricity tariffs and rail tariffs will coincide with the levying of the 4% sales tax. By the time that the 4% begins to form part of the consumer price index, the increase in electricity tariffs and rail tariffs will already have been absorbed, and we can expect an increase of a mere 1% in the rate of inflation as a result of the 4% tax.

The hon. member went on to say in his statement that the hon. the Minister had made a mistake by not allowing a tax holiday. It may be that a tax holiday could have been advantageous to the consumer. I am prepared to concede that there is that possibility. However, if we were to announce a tax holiday now—I am now arguing from the standpoint, which is also a fact, that the supplies are low at this stage—it would quite simply mean that there would be widespread purchasing and stockpiling of supplies, which would cause large-scale disruption, to the retail trade in any event. In the second place, it is surely impossible for the hon. the Minister to reduce the sales tax substantially, and even to eliminate it entirely, and then to wait a further three or four months before introducing the sales tax. The fact is that the country needs that revenue. We cannot balance the country’s financial affairs without that revenue.

The hon. member went on to make a major issue of confidence. I want to agree with the hon. member that in order to create confidence in South Africa’s economy, it is necessary to take appropriate steps. I am of the opinion that by means of this budget the hon. the Minister has taken the necessary steps to create consumer confidence, to bring about internal investor confidence and even to attract foreign capital.

I acknowledge that he tried.

These are the points we must stress. If we, the hon. member for Yeoville and I, are loyal South Africans, these are the points we must stress to all and sundry in South Africa.

Let us just consider what is being done in the budget. In the first place we have the R400 million in new money to which I referred and which has been obtained from savings, the pumping in of the surplus and the withdrawal from the Stabilization Fund. This represents R400 million in new money which is being introduced into the economy. If we add to that the tax concessions and the additional amounts voted for education and housing among other things—I could embroider on that theme but due to the time factor I do not want to dwell on it—we see that in fact the budget entails the possibility— I used the word “possibility” advisedly—that the economy of South Africa could have an injection of between R600 and R1 000 million. If that does not bespeak confidence, I do not know what does. To come back briefly to the hon. member’s standpoint that our political approach is to the detriment of South Africa, I just want to say to him that despite the fact that the hon. the Minister had to take stringent disciplinary steps to keep the economy and finances sound in two previous budgets, this side of the House has carried on with its policy and while we are implementing that policy the Minister has nevertheless found it possible to give the economy this injection of funds.

I want to refer to another matter which is not only important in respect of confidence among the consumers and the domestic investors, but is also a very powerful instrument wherewith to create confidence in the foreign capital market. I refer to the principle of self-financing. If there is one tribute we can pay to the economy and the population of South Africa under the present Minister of Finance, then it is that we have been moving in the direction of self-financing, of self-sufficiency. One cannot imagine a stronger weapon in any national economy than this very self-sufficiency which we have achieved at this stage. I do not wish to intimate for a moment that South Africa is not interested in capital from abroad.

The hon. the Minister himself announced in the budget that he would budget for R75 million in this regard. I want to say that I am sure that if our banking friends in the outside world take note of South Africa’s record in the past and the fact that we have here a budget capable of stimulating growth at a rate of more than 2% per annum, they must be jealous and be inclined at this stage to invest in the capital market offered by South Africa. Is it not a deed of confidence that we have been able to reach that stage? Let us add to that the situation we have in South Africa and have had over the years. From 1946 to 1976 we in South Africa have succeeded in providing ourselves 87% of the capital needed for investment. Surely that constitutes confidence, deeds which bespeak confidence.

Mr. Speaker, in the final few minutes at my disposal—unfortunately I do not have as much time at my disposal as the hon. member had—I want to react to what the hon. member said towards the end of his speech. He asked the hon. the Minister of Finance what, since he had now come up with sales tax, his next tax trick was going to be. He asked what we were going to have next and hinted at the introduction of a capital gains tax. Here I want to refer to what I have just said about capital formation and self-financing. Looking back over the years, we find that in order to cover its State expenditure, South Africa has relied for the most part on two sources: The ordinary income tax—direct income tax as we know it—and the revenue we have obtained by way of customs and excise duties. Over the years we have leant heavily on the principle in income tax of taxing the man who can pay. The fact of the matter, however, is that we have reached a saturation point as far as income tax is concerned. When we consider the level of personal savings in South Africa, voluntary or compulsory in the form of tax etc. it appears that our level of personal savings amounts to 30% as against the investment capital required. Therefore we have reached our ceiling as far as personal tax is concerned. As far as customs and excise duties are concerned, we know that these duties can fluctuate and that they are not a sound basis of revenue for covering State expenditure. Sound recommendations in this regard were made in the report of the Franzsen Commission. As hon. members are aware, this eventually gave rise to the introduction of sales duty. However, this form of tax, too, namely sales duty, has its own inherent limiting characteristics. I think the most important is that the duty is imposed at the point of origin and that it is a system affording the possibility of promoting exploitation. Furthermore it is a system which soon reaches its optimum point, and that is another reason why we had to move away from this system. We are now introducing sales tax and as far as I am concerned—I have already mentioned this to the hon. the Minister—we could consider, for convenience sake, calling this new tax “expenditure tax”. I know that there may be valid objections to that name but after all, we are moving away from the idea that we tax income per se, because then we are taxing what a person spends. If one adopts so broad a basis, it does not matter in which income group one falls. The man who spends will be taxed. There are many people who will be very happy that we have been able to reduce the high marginal rate from 72% to 60%.

Together with the levy.

Yes, together with the levy. The fact that we have been able to do so gives those of our people who are prepared to be productive, the opportunity to earn. Just like any other person on the lowest tax scale also has the opportunity to earn money, these people, too, must be afforded the opportunity to be productive and to earn money. That money comes back in the form of investment and it entails a variety of other benefits, inter alia, the opportunity to create more posts and to combat unemployment, etc. It is most important that we should make this concession. A few weeks ago the hon. member for Hillbrow asked for this, and now the hon. the Minister has granted it. To the hon. member for Yeoville I want to say that he should go and take a look at what the Sunday Times has to say in an editorial about this “Rich Man, Poor Man” idea which the hon. member has with regard to this tax. I should not like to use the description of the hon. member for Bezuidenhout by the hon. member for Langlaagte in this connection, but since the hon. member for Yeoville has now got hold of the “Rich Man, Poor Man” idea, I want to tell him that I hope he is not going to play the role of Falconetti in this budget. [Interjections.]

Mr. Speaker, the hon. member for Schweizer-Reneke has made certain attitudes of the Government in relation to the budget very clear. I want to associate myself completely with the hon. member for Yeoville, however, when it comes to the question of capitalism and state socialism as applied to the governing party. For years we have been attacking the governing party for having adopted the Big Government attitude. The hon. the Minister of Economic Affairs knows very well that I have, on several occasions, asked that a new attitude should be taken and that a great deal of the shareholding which is in the hands of the Government, should be spun off into the private sector. I therefore agree entirely with what the hon. member for Yeoville has said in this regard. When one gets a headline in a newspaper article which says: “Back to capitalism”, surely that in itself asks the question put by the hon. member, i.e.: “Where have we been if now all of a sudden we have to take a swing back towards capitalism?” The danger has all along been the inclination towards socialism, towards a bigger part played by the State in all the activities of the economy of South Africa. This is something which we regard as being totally undesirable. If there is really a swing away by the NP from state capitalism towards a greater freedom of enterprise and a greater emphasis on the private sector, it can only be welcomed by everybody who has a concern for the economy of South Africa, but only time will show if this is so. There is no doubt that we are in a situation of change. As a matter of fact, a great deal of change is now taking place in the whole system of taxation. The hon. member for Schweizer-Reneke says that the new sales tax of 4% is going to add only 1% to our inflation rate. He has discounted the Railways’ tariff increases and the Escom increases. He says that only when these increases have been fully absorbed into the economy, will the new sales tax be introduced and, according to him, the inflation rate will then go up by 1%. Can one brush aside a matter like this and pretend it does not matter or exist when one has already a double-figure inflation rate? We can quite rightly ask the question: Where in the budget is any serious attempt made by the Government to control the inflation which is undermining every single thing that is being done in the economy of this country? This is, to my mind, one of the weakest aspects of the budget, and it will be dealt with by other speakers on this side.

The hon. member also mentioned the issue of self financing, and said that we had reached the situation where we have the ability to provide almost 100%of the financing that we require for expansion. I would like to ask the hon. the Minister whether he would not welcome the opportunity to borrow money overseas at a reasonable interest rate. Surely he would. The hon. member for Schweizer-Reneke himself will tell me that the ability to borrow money overseas at a reasonable rate of interest is something that we dearly desire. The problem that we have today is simply that to borrow money at high rates of interest and in the situation where the foreign currencies are escalating while our own currency is devaluing, creates a situation where we are forced to find the money that we need for expansion in our own economy.

If I may comment on the budget itself, I would like to say that we have here an effort by the hon. the Minister to swing back to the indirect system of taxation and away from the direct way of taxation. This is done for very obvious reasons. This is the second time in my experience in the House that this has been tried. I have here the debate which took place in 1969 when the previous Minister of Finance, who was being the preacher that year and quoting out of Ecclesiastes extensively, introduced a sales levy to the tune of R100 million. That was then designed to reduce the marginal rate of tax from 66% to 59% or 60%. My own recollection of the report of the Franzsen Commission—I must confess that I read it some years ago—is that the figure of 60% was a maximum figure and not an optimum figure. I am sure that the hon. the Minister will confirm that the 60% was the maximum figure which it was felt by the Commission could be safely borne by the private sector at marginal rates. A lower figure than that would be an optimum figure, if it was possible to attain.

In 1969 we had an attempt to spread the base of taxation. All the arguments which were used then have been used again in this budget. We have the figure of R100 million which is required in sales duty to be able to reduce marginal rates by 6% to that critical figure of 60%. We have in this budget now a figure of R1 000 million which the hon. the Minister intends to take from the private sector. In this particular year it will only be a figure of R650 million because it will operate only for eight months of the year. I shall return to that figure a little bit later on. We must understand that this is no panacea and that there are many problems which arise out of this new proposal, as there were problems which arose out of the previous proposal. At the time when the previous proposal was made, we warned that escalation of that figure of tax would work very significantly against the system which the hon. the Minister was then introducing. One of the reasons which the hon. the Minister gives today for abandoning, or at least scaling down, that system of sales duty and imposing this system of sales tax, is because of that factor of escalation. I feel we were quite justified in saying then as we did that the previous system would work itself out and that a maximum figure would rapidly be reached. As the hon. the Minister says, it has reached saturation point in regard to many of the commodities on which that sales duty is levied. It is no longer adequate to meet the need of what we are trying to do in South Africa today.

I want to make my point very clear. I believe the levels of tax now are still too high. I want to make the point that the rand in the hands of the private sector will do far more to stimulate growth in South Africa than it can in any shape or form in the hands of the public sector, channelled through the myriad pipelines which the Government has and through which it would be put into circulation in the economy. In the hands of the private sector it has a force behind it which is absolutely unequalled in any sphere of government. In the private sector it has behind it the drive and the initiative of the private individual working for himself and attempting to achieve something for his family.

The hon. member for Schweizer-Reneke mentioned the acclaim, the chorus and the paeans of praise with which the budget was received. I believe it is a very, very ordinary budget and I think the hon. the Minister will agree. It is introduced in a very difficult time and there are no radical changes in the budget. There are no marvelous panaceas which the hon. the Minister has brought before us; it is a very ordinary budget. I often wonder what an hon. Minister on that side of the House must feel like when he gets thanked morning, noon and night and slobbered over with kisses by hon. members on that side of the House, who thank him and say what a wonderful guy he is for the sort of budget which he has introduced, a budget which I regard as a very, very ordinary budget indeed. One gets these clouds of rhetoric, one gets the acclaim and the instant ecstasy in newspaper headlines, when really and truly, all the hon. the Minister has achieved is to hold the pass.

He has not won the battle.

That is correct. He has not won the battle. The battle will continue for many a year. Confidence has to be stimulated. I think the time is ripe for it, I do think it is time for the economy to move ahead, but it will be stimulated by the fact that the hon. the Minister has been able to hold the situation as it is and by introducing a moderate, and only a very, very moderate, amount of money into the economy for the purpose of stimulation. It does not favour capital formation in private hands. In fact, the hon. the Minister is doing something which I regard as something drastically wrong. By taxing the services he is taxing the effort which the Black entrepreneur can make. I am referring to the small man who is moving into the economy. The service which he can provide is his entrance to the private enterprise system and by putting a 4% tax on every service which is provided by people like that, is something which is going to inhibit the participation of those people upon whom the future of the system depends. I think that is something which the hon. the Minister should give very serious attention to, because the small business is obviously the way in which the Black entrepreneur can get into the private enterprise system. I am pleased to see that there are at universities and elsewhere bureaus of small business being set up whereby people who are in business on a limited scale, people who are coming into this system of free enterprise, can get all the advice and help that they so desperately need.

I want to raise with the hon. the Minister the question of taxes on foodstuffs. The reason the hon. the Minister gives for taxing basic foodstuffs is that it is a matter of administrative convenience—and that only— because it will be so difficult to identify certain areas of taxation. He has said that it is much easier simply to tax the whole lot. It carries a very clear implication that the hon. the Minister has to subsidize basic foodstuffs which will be consumed by the population if he is going to continue this taxation on basic foodstuffs.

I want to raise an anomaly with the hon. the Minister. He has confirmed that he is going to take from the public, at a figure of 4%, an amount of R650 million, of which he proposes to give R20 million to the hon. the Minister of Agriculture for the subsidization of food. In an interview with The Citizen the hon. member for Schweizer-Reneke said that he had done a sum and that according to his figures the hon. the Minister would, at a taxation rate of 3%, gamer R1 000 million. At a rate of 4%, the hon. member said, he would obviously have a great deal more money with which he could subsidize food. The hon. the Minister has a whole galaxy of talent available to him. He has some of the brightest minds in the Public Service behind him.

They are sitting on this side of the House.

I am not talking about you, Alex. The hon. the Minister, with all the people, computers and tick-tack machines, etc., available to him, gives a figure of R650 million, while the hon. member for Schweizer-Reneke, with just two thumbs to help him, gives a figure of R1 000 million calculated on a taxation rate of 3%. I should like the hon. the Minister to confirm that his figure of R650 million is in fact the right one and that he will have R20 million available to give to our friend over there, the hon. the Minister of Agriculture. As I stand here and the hon. the Minister sits over there, I know that the figure of R20 million is a pittance compared with what the hon. the Minister would like to have with which to subsidize basic foodstuffs for the people in this country. As the hon. member for Yeoville quite rightly said, the bread subsidy was cut by R25 million in one shot and then by a further R15 million after that. I know, as does everybody else in the House, that the hon. the Minister regards that figure of R20 million as being totally inadequate.

I now want to discuss the position of the farming community. I want to say right here and now that it is obvious in a debate like this that we are not going to be able to debate the situation of the farming community at length. I now give the hon. the Minister fair notice that during his Vote we shall raise and discuss these matters in detail, because the position of the farming community has been cut to ribbons this year by the railway tariff increases, the cuts in fertilizer subsidies, etc. I want to ask the hon. the Minister why we have to subsidize food when the farming community has had to absorb the entire cost escalation and why we have to increase the cost of food and only then attempt to bring it down for the consumer by subsidies. Surely it would be far better to use the money which is being used for subsidies to subsidize input into the farming industry. If one can bring down that figure, and decrease the costs to the farmer to make possible increased production, the use of better seeds and methods, and efficiency in marketing, etc., one will be able to bring down the cost of food to a far lower level and in a far more practical fashion.

That is far too logical for this Government.

I do not know about that. There is a magazine which is published by the organization SAMSO, which is virtually the hon. the Minister’s own organization and falls under the auspices of the S.A. Agricultural Union. It is loyal to the hon. the Minister. In the most recent edition of this magazine it is stated—

It goes on to list a whole number of problems which have to be solved. I quote further—

It goes on to quote hon. members in this House, for example, the Deputy Minister of Agriculture, the Minister of Agriculture himself and other hon. members on that side. It closes with a quotation from a meeting which was held by the hon. the Minister of Agriculture and the hon. the Minister of Finance to help sort out the problems in the maize industry. I want to ask the hon. the Minister where in this budget is the answer to the problem that he discussed with the hon. the Minister of Finance relating to that particular question, because the maize industry is the basis of the whole farming industry in South Africa. If the hon. the Minister cannot find the answer, then the entire farming community will find themselves in serious jeopardy and the entire food position in South Africa will be in serious jeopardy. Subsidization is going to prove an inadequate answer to the problem with which we are faced. I seriously suggest to the hon. the Minister that it must be possible to find a better solution, for example by cutting excise duty on goods which are used for the manufacture of basic fertilizers, by cutting the cost that Foskor has to bear to produce basic phosphates for our farming industry, by cutting the 4% excise duty on tractors and all that kind of thing. It is absolute madness that we should continue with a system like this, building up the costs against the farming community at a time when food is of vital importance to us, and is still going to be taxed at 4% in addition to everything else. The farming community finds itself in the position that it is unable to produce at a profit without a substantial increase now from the hon. the Minister of Agriculture. The livestock industry find themselves in a serious situation of price resistance. They are faced with rising costs and they are unable to market in volume. If they were able to market in volume they could perhaps absorb lower price realizations and higher costs, but they cannot even do that. Worst of all, they are locked into a dead situation from which there is no escape, because right up until this time it has been possible for farmers who found themselves in difficulty to dispose of their property, but there is no way in the market of today that they can even do that. People are locked into situations which are deteriorating by the day. I can see no way out for them. I think this is a very, very serious situation indeed.

The keynote of the hon. the Minister’s Second Reading speech was old-fashioned discipline and sacrifice. I want to know: Since when has discipline been old fashioned? It has only been old fashioned to previous Ministers of this Government who have dealt with our economy. We need only to think back to the days when we were told to spend for prosperity and we were told that if the economy got in the way of apartheid we would bend and break the economy. Where does this old fashioned business come from? I said earlier this year, and I repeat it again, that this hon. Minister has put the bit in the teeth of apartheid. He has succeeded in scaling down the emphasis which the Government places on all the ideological clap-trap with which it tries to dress up the policy it advocates. What he is doing, is typical of the governing party, i.e. they always advance in reverse. Every time they make what appears to be an advance, one finds that it is a reverse from a situation previously adopted by that party. I must say I welcome it, because everything they are doing today leads them onto the ground which we currently occupy. They advance in reverse all the time.

The hon. the Minister mentioned sacrifice. I think he owes it to the country to tell the White population that a great deal of this sacrifice which is necessary is going to come from the White population because of the share which has to be given from now on to the majority of the people in this country, i.e. the Black majority who are emerging into the modern situation in which we find ourselves. I believe that at last we are reaching a realistic view of our own situation. We are a small country, we have a small economy and it is in a serious state of recession. We cannot afford guns and butter. That is our situation. We must realize it and it is encumbent upon the hon. the Minister to make quite certain that that message gets across to the people outside.

At this moment, defence is obviously an urgent priority and there is nothing we can do about it. We have to go along with that, but defence, as has been said so many times, starts in the hearts and minds of the Black community and communism cannot hold a candle to what it is possible for us to achieve here in South Africa if we do the things correctly which we ought to be doing. The hon. the Minister of Plural Relations sketched it all out on Saturday night on television and said this is what we should be doing. We should be giving people the rights which are due to them as creatures of God. However, what evidence is there that the Government is doing that? On a later occasion, we shall also have a debate with that hon. Minister as we shall have with the hon. the Minister of Agriculture on what he should be doing and what he is not doing to do this thing and to do it right. One of the problems we face is that the voters are streets ahead of the NP. They are miles ahead of the NP. A survey was undertaken which showed that 68% of the people who voted for the NP in the last election believed that Soweto was part and parcel of the White political setup in South Africa. 68% of the voters who supported the NP believed that, but not one hon. member on the other side will get up and say that that is in fact the case. We have the hon. the Minister of Plural Relations—the most singular plural if I may say so—and the hon. the Deputy Minister—an even more singular plural, if I may say so—saying that by 1984 the entire Black population of South Africa will be citizens of other countries than South Africa. Shades of George Orwell! I wonder what he would have made of that.

What we need, and what this budget ought to be doing, is to re-emphasize the quality of life for all people and to put forward the constructive elements of capitalism at its best. Capitalism at its best is money employed in bringing to flower the fruits of peace. I want to make it quite clear that I admit that we have to spend money for defence. We have to defend ourselves. However, if we were to achieve, here in South Africa, a settlement of the outstanding differences with the Black population, aggression from the outside would be against the entire population, against the whole of South Africa. That is the situation we have to reach if we want to be able to de-escalate expenditure on defence. I ask the hon. the Minister what could we not achieve in South Africa if we were able to achieve that situation, if we were able to de-escalate our needs for defence? Surely, aggression from outside will be aimed against the whole population of this country. The total population, united and bearing with it, as it would, the support of our friends—of people who should be our friends—could make it possible for us—as the United States did in the case of Israel—to supply enough arms to replace our total defence budget. It should be borne in mind that Israel’s total defence budget was shot down in five days during the last Arab-Israeli war. Surely, that is the sort of situation which we ought to try to achieve. However, I cannot see that this Government, or anyone, is getting close to achieving that situation. To pin-point what I am trying to say, I wish to move the following amendment—

1. (1) takes realistic steps to achieve a settlement of outstanding differences with the Black population of South Africa, thereby eliminating the basic causes of Communist-inspired unrest and allowing a de-escalation of defence needs;
2. (2) takes steps to pass on to the poor, the old and the sick more realistic benefits relative to present high levels of taxation;
3. (3) proves positively its intention to reduce the inflation rate as a prerequisite to sound economic growth and full employment;
4. (4) makes provision for adequate subsidization of basic foods to the consumer;
5. (5) takes urgent steps to return the agricultural industry to a sound economic footing; and
6. (6) eliminates all forms of unnecessary Government interference which impede economic development and restrict the principles of a free enterprise economy.”.

I wish to make it quite clear that there would be funds available—from a de-escalation of defence expenditure—which could be used to very great advantage. Let me talk to the hon. the Minister of Agriculture. In this budget we have been given an additional amount—and the hon. the Minister will correct me if I am wrong—of R5 million for “Landboukrediet”. I want to state to the hon. the Minister of Finance that I can use that R5 million in my own constituency. That is the situation as it is today. [Interjections.] If I lay the first claim to it, perhaps the hon. the Minister will give me that amount. [Interjections.]

Quite easily!

Quite easily? We can use that …

No, it will be going to Delmas!

No, it is not going to Delmas. [Interjections.]

They are going to use that money to build a new telephone exchange at Delmas! [Interjections.]

I wish to make an appeal to the hon. the Minister of Finance, who has also made an additional allowance of R5 million for consolidation, to take note of the fact that a serious situation arises in several areas where farming people are under considerable pressure from the local Black population who have been told that the farms are going to be given to them, but that, due to the delay in the programme of the Government, the farms have not yet been handed over. I believe that these areas are ones that should receive urgent attention from the hon. the Minister of Finance and any other hon. Minister there. That hon. Deputy Minister, for example, is concerned with Ongeluksnek for one, and this is one of the places which deserves serious attention. If additional funds have been allocated, that is one of the things which the hon. the Minister and the hon. the Deputy Minister should give their early and urgent attention to.

Let me now mention subsidies. I have dealt with the hon. the Minister of Agriculture, but I just want to draw something to his attention again. He will be able to identify the costs to the farming community which are the direct result of Government action, Government excise and Government taxes, money accruing to the Government and the Central Revenue Fund and increasing costs to the farming community. The hon. the Minister and I were both at Cedara the other day, and we saw a Government institution which is an outstanding example of an institution which has revolutionized the whole aspect of farming in the province of Natal. With all the modern aids and the whole new set-up developed at that institution, however, the farming community is nevertheless still in such a state that it cannot generate, in its own industry, the amounts of capital necessary to bring it such a pitch of efficiency that the knowledge that can be obtained at a place like Cedara can be used fruitfully. That is our problem. I think that what is required is a totally new approach to the whole question of the supply of food here in South Africa. If the hon. the Minister of Finance is going to implement this tax, it is encumbent upon him to find the means and to take the steps for doing so.

Obviously there is insufficient time today to talk about the new constitutional proposals that hon. members on that side are endeavouring to implement, so we shall deal with that matter at a later stage. I want to go on record, however, as having said in this budget debate that I believe that they are inadequate and totally a matter of wishful thinking. I do not think they are related, in any way, to the realities of what is happening in South Africa. The very name of the Department of Plural Relations is a denial of pluralism because the whole concept of pluralism is such that people inhabiting a common geographical area have to be linked together in some kind of relationship, and everything that the hon. the Minister and his department does is designed to tell the Black people, who inhabit a common geographical area with the White people, that they must simply leave and go away to do their own bit somewhere else.

That is why I admit openly, and only too readily, that of the people who now live here amongst us, a considerable proportion has no desire whatever to be associated with us in the way we are going. They are “tuisland-gebonde” and they wish to remain there and be associated with the people in the homeland areas, but there is a group of people, people who are the product of a change of mind, and that is where the Government is wrong. The Government looks at their Black skins and does not see what is going on in the minds of the people concerned, people who have allied and associated themselves with the thoughts, values and standards of the Western world. Those are the people of the future.

You are now talking yourself out of Mooi River.

I invite that hon. Deputy Minister to come and stand against me in Mooi River next time. I really look forward to that. That is something I would really enjoy, particularly if it is the Deputy Minister of Agriculture. If there was ever anyone who was guaranteed to have a hard time with the farming community there, it is that hon. Deputy Minister. [Interjections.]

One of the most extraordinary things puzzling me in South Africa is that the hon. the Minister has introduced a budget changing the whole of our pattern of taxation. Everything is in a state of flux and yet we do not know what the real figures are going to be. As has happened so many times in the past, however, the hon. the Minister will come along next year and all of a sudden, with a pleased smile of surprise on his face, he will say that we have a surplus although we never thought that we would have it! The hon. member for Schweizer-Reneke was out when I asked him where he got his figure of R1 000 million from a 3% sales tax.

What are you talking about now?

He was quoted in The Citizen as having said that a 3% sales tax would give the hon. the Minister R1 000 million, and that the hon. the Minister had increased it to 4% in order to have enough money to subsidize food adequately in South Africa. This is the kind of double talk we get from members like that, members who should be supporting the hon. the Minister but who have, in my opinion, simply scotched the hon. the Minister’s whole approach and everything he has been trying to say. One of the things that really surprises me is the fact that the voters of this country, year after year and time and again, can return to power a Government like this without the remotest idea of what is going on and without a hope of solving the problems. An example is that hon. Minister who has come along with a budget that we reject entirely.

Mr. Speaker, the hon. member for Mooi River started in a fairly calm fashion, but as his speech continued it developed into an attack on the policy of the Government. It is rather strange that an attack of this nature should come from a member of a party which has a very small political basis anyway. It is common knowledge that the NRP has no political future in this country. I think the time has come for them to make up their minds about which way they are going.

At least I do not have to reply to the verbal bombardment by the hon. member for Yeoville earlier in the debate, in the course of which he almost got drowned in his own verbosity. I do, however, want to answer one question he has put. He asked what political action the Government would be prepared to take to stimulate economic growth in South Africa and to ensure the country’s economic future. I just want to say that we do not intend taking any political action which would have the same effect as the disastrous policy of the PFP. It is quite obvious that the policy of that party will lead to complete economic disaster. Had I been in his shoes, I would not have asked such questions.

*To get back to the hon. member for Mooi River, I want to point out that he concerned himself chiefly with certain technical aspects of the budget. He will receive a proper reply to what he said. He said, inter alia, without qualifying it in any way, that we should leave money in the hands of the public and then the economy would grow by itself. I think the hon. member does know a little more about economics than this. One of the basic causes of inflation is that the money supply is too large. Inflation usually results from there being too much money in circulation. Too much money is the very cause of further demand inflation. We should rather see to it that money is available to those people who are in a position to bring about economic growth in the country.

I do not want to comment at this stage on the remarks which the hon. member made about agriculture. It seems to me as if we are going to proceed to a discussion of non-financial matters very early on in the course of this debate. I do not think it is necessary to discuss agriculture at this stage; there will be more than enough time to do so later on.

I should like to say something about the haphazard talk about socialism we have had in this House during the past two years. In the course thereof all sorts of accusations have been made about State interference. This matter has been debated often before, but it is clear to me that many people who know nothing about it, speak about it. The time has now arrived for anyone on that side of the House who rises to speak of State interference to spell out precisely what they want to have removed, because they always speak in broad, general terms. If they will spell out what has to be removed, we shall be able to conduct a debate on the matter and then we shall be able to determine what is to be removed and what not. Then we shall learn how the public of South Africa will react if it is proposed that certain measures taken by the Government for the very protection of the public be repealed.

Before discussing finance and since it has evidently become the fashionable thing this afternoon, I want to say a thing or two about that party by way of introduction. In recent times the entire onslaught has been aimed at the PFP that wants to force South Africa in each instance into an integrationist society which offer no solutions, but will merely lead to more discrimination. This was clearly depicted once again last night in the TV programme made by Cliff Saunders in America, a programme in which he showed the results of a forced integrated society in which one finds more discrimination than in any other circumstances. The PFP has another objective as well, and that is to create a situation in South Africa which will result in nothing but Black racism of the worst degree.

However, I actually want to speak to the hon. member for Durban Point as well as the hon. member for Mooi River. I want to speak to them in a friendly way because their party is unfortunately saddled with the sickly remnants of a political era which has passed, remnants of jingoism which, I feel, the English-speaking people have utterly rejected in South Africa during the past election. I do not believe it is easy for the hon. the Leader of the NRP, the hon. member for Durban Point, to accommodate those elements in his party. I am referring, inter alia, to the statements by one of the senior members of his party, viz. the MPC, Mr. Derrick Watterson, and specifically to statements made by him in a recent debate conducted in the Provincial Council of Natal on the commercialization of the Sabbath by means of the showing films on Sundays. I should like to quote what he said on that occasion. I understand that his Hansard is far worse than the newspaper report from which I am about to quote and which reads as follows—

He is speaking about the hon. the Minister of Justice—

Disgraceful!

I wonder whether the hon. member …

From what newspaper are you reading?

I happen to be reading from Die Burger, but I also have a quotation with me from The Daily News which puts it even more clearly. I think the time has arrived for that hon. member to repudiate a man like this seriously in public for the sake of South Africa. What does Mr. Watterson think he is doing?

Has the poor fool not yet come to realize that our boys on the borders of South Africa are fighting Russian imperialism and nothing else? The statement which I have just quoted, is one of the most unforgivable I have ever heard from a senior member of the NRP. Then we also have the disgraceful remark by Mr. Trevor Warman of his being ashamed of being a South African.

You are wresting his statement completely from its context. That is not at all what he said.

Perhaps these are not his precise words, but this is what he said in effect. These people should rather flee back to the country from which Mr. Watterson comes, because we do not need them here.

The hon. member also spoke about the arrogant attitude of a Minister, but how arrogant is it for another MPC in Natal, Mr. Frank Martin, to go so far as to continue with his Turnhalle stories as though he was governing the country. I appeal to them to eradicate this disease in South Africa, because all it is doing is to damage the noble national unity which the NP has brought about in South Africa.

I said at the outset that it would appear as though the Opposition was unable to say much against this excellent budget. I want to go so far as to say that this budget will go down in the annals of the history of South Africa as one of the turning points which ushered in a new economic era in South Africa. I am making this statement on the basis of specific reasons. A few new principles have been incorporated in the budget and these, by expanding indirect taxation, lay the foundation for new economic growth. Secondly, the emphasis falls on generated growth in the private sector itself and not by means of increased State expenditure. This is, in other words, the stimulation of growth without the danger of an excessive increase in the rate of inflation. I believe, too, that the removal of economic disparities between the White and the non-White populations in South Africa is a noble step in the right direction, one which will have far-reaching consequences in the future.

The hon. member for Yeoville once again advanced his hackneyed story of State interference. I want to reaffirm, however, that State interference in this budget is aimed solely at the ugly side of the purely capitalistic system, i.e. caring for the needy, something which the private sector will not do. In addition there are restrictions in respect of exploitation by free enterprise. Thirdly, it is concerned with the provision of that infrastructure which cannot be readily provided by the private sector. Moreover, emphasis is being placed on a strong programme of objectives for the provision of education to all population groups, the key to economic success in the future. In respect of the majority of Government departments we now have programmes of objectives, which is a big step in the direction of improving our budgeting procedure and our efficiency. In addition the budget does not fail to give further impetus to implementing the physical aspect of our policy of separate development. This task of socio-economic upliftment by the Government is and remains one of the most remarkable achievements of our time, and it is a pity that it is not recognized as such by the world.

To me, the budget also meets another very important prerequisite. This is a matter which has already been mentioned and emphasized here viz. the improvement in the business climate. The business climate remains the cornerstone of any economic growth. One of the ironic facts of economic trends in the world is the fact that the business climate is not always influenced by economic factors. One virtually gains the impression that the economy is an emotional subject and does not always react to purely economic or scientific factors. Very often the economy is very sensitive to political factors, as has been rightly pointed out this afternoon, and it also influences the mood of people. We often see shares slumping on the stock exchange when the mood of people is one of depression. When the mood is one of optimism the exchange share prices rise on regardless of any economic factors. In past years there have been examples of economic recessions.

For instance, we can think of Sharpeville. Recently the French Government had to take serious steps to bolster the French franc immediately prior to their election. These things are indicative of the very serious tendency for political factors to have an influence on the economy. Unfortunately, however, these are factors about which a Government can do preciously little. These recessions are usually due to factors beyond our control. However, by means of this budget, the hon. the Minister of Finance has succeeded in boosting to a considerable extent the business mood as well as business confidence, which was already improving as a result of the favourable position of the trade balance. We cannot win without this business confidence. Internal business confidence must of necessity filter through to our foreign friends and to the economic sphere in countries abroad. I believe, in spite of the fact that the political climate is not good, that we shall nevertheless still attract considerable foreign investments this year. This causes one to ask whether we are not perhaps too sensitive about the outflow of foreign capital. Although it is absolutely essential for very strict measures to be taken to restrict the outflow of domestic capital, I ask whether there should not be a considerable relaxation of the measures relating to the outflow of foreign capital invested in this country. South Africa is a very profitable field of investment for countries abroad as far as capital investment is concerned, and for that reason people will invest here and will do so more readily if they have the assurance that when the term of their investment has expired, they will be able to withdraw their capital without there being any detrimental restrictions. South Africa is maintaining a very good record in respect of the repayment of loans to countries abroad. However, there are still too many restrictions with regard to the outflow of capital, in my opinion these deter prospective investors. I believe that assurances with regard to the repayment of private capital in particular, can serve as a strong stimulus for foreign investment in South Africa. We have in South Africa a considerable ability to create capital, but if we have regard to the fact that we have to create approximately 270 000 employment opportunities in South Africa per annum, that we have a considerable population increase per annum and that there are a considerable number of unemployed at the moment, we shall have to do everything in our power to attract considerably more foreign capital so as to be able to fulfil future development potential.

The question also arises whether we are not obsessed at times with the detrimental consequences of inflation. At this particular juncture the hon. the Minister has done the right thing by stimulating the economy moderately, something which can, of course, have a strong ripple effect due to the strong business confidence which is being created. So, if inflation is the price which has to be paid for that, perhaps we should go ahead and pay it. We cannot withhold growth for an unspecified period of time, and we cannot do so for the reasons which I have already mentioned. Unfortunately, a high rate of inflation is a powerful political weapon which is used at times by hon. members of the Opposition as well. To this I must add that they have been using it rather badly during the past year, since it has had no influence on politics. Evidently it has become a powerful weapon in other countries only, because here in South Africa we have an intelligent electorate capable of understanding the reasons for our situation of inflation. In my opinion the task of creating the necessary employment opportunities is still enjoying a high priority and if inflation is to be the price that has to be paid for it in future, perhaps we should just pay it. It does not seem either as if world economists have a solution to the problem of inflation. In saying this I do not want to detract from the inherent discipline of this budget—the hon. the Minister referred to this as “growth through financial discipline” in his budget. In future, however, we shall have to give thought to growth irrespective of the rate of inflation. This is an interesting possibility, one which may possibly be thoroughly investigated.

Finally I should like to state that the budget before us is the right budget at the right time. In fact, it is a masterpiece by a Minister who has the knowledge, the background, and the intuition as regards the demands of our time. There are people who try to hold out other solutions to us, for instance the proposals of the Club of South African Action Research under Prof. Tusenius that says that the economy can take a new turn within a period of three to six months if we comply with certain requirements.

I do not have much fault to find with his reasoning as to what our priorities should be, but I am of the opinion that some of his premises are not correct. He says quite correctly that the economic strength of a country ultimately determines its political and military strength and that it should therefore also serve to defend its spiritual and cultural values. However, I want to say—and this is also a reply to the hon. member for Yeoville’s question—that if we have to make political adjustments in South Africa which, in the process, would give rise to our having to lose political control over our own people, then the price is too high. In a case like this it is better to die in one’s own country than to become a slave in one’s own country.

Mr. Speaker, in presenting this, his fourth budget, the hon. the Minister of Finance set up a record of successes for himself which is probably unequalled in the history of our country. He has done so under some of the most difficult circumstances any Minister of Finance has probably ever had to contend with. I want to mention a few examples only: The hon. the Minister had to contend with the oil crisis of 1973 which resulted in a more than fivefold increase in our oil bill. In addition it caused cost escalations on virtually every front. It caused cost escalations among our most important trading partners as well, which meant that their economies suffered set-backs and that their capital formation and buying power were adversely affected. The hon. the Minister also had to contend with a reduced inflow of capital while the amounts had to be spent on defence increased at an unprecedented rate. He had to contend with a collapse in the gold price and with serious inflation which meant that strict measures had to be taken which caused a balance of payments problem, curbed economic activity and a serious unemployment situation. Seen against this background, the hon. the Minister has done wonders in being able to submit a positive budget to this House none the less. This I regard as an unprecedented achievement and something on which he and the able heads of his department should be congratulated most sincerely.

Before I go any further, however, I should like to refer briefly to the most important points of criticism expressed by the Opposition. The homeland concept is virtually as old as the hills. It is nothing new. It is really as old as the hills, because it is something which dates back to the days when Adam kicked off the ball. It is the same phenomenon as the balkanization of Europe and is what happened in Africa as well. How many countries were there when the UN was founded and how many are there today? It is a process which is still continuing. Moreover, it is also the only formula anybody has been able to devise to give the maximum assurance to the White population, the Coloured population, the Indian population and the smaller Black groups in South Africa that Black domination will not develop. The last election furnished resoundingly the absolute proof of the fact that the people of South Africa want to pursue the homeland policy.

As regards the second point of the possession of 13% of the land, I want to state that it is nothing but stupidity to see that in isolation each time, because although size does have something to do with the matter, it most definitely has relatively little to do with it. The genius and industry of a people, plus a large number of other factors, determine what happens to its country. There are many examples of this, for instance, Switzerland and Taiwan.

As far as our economic structure is concerned, I should like to point out that our structure is in fact one of the most modern in the world today. If hon. members of the Opposition want to attack it, I should like to know what model of what country they would in fact suggest for our particular circumstances at this juncture. I myself am capitalistically oriented. But one cannot deny the fact that there is no country in the world in which the State does not have or must have a share in important industries in order to ensure the maximum benefits and sound growth for its people.

As far as I know, and as far as I have been told, sales tax is in fact the form of tax the Opposition has always asked for. It is scientific and follows the trend in most of the leading countries in the rest of the world. It broadens the base and does something to the marginal situation, about which all of us complained such a great deal. Therefore, I really cannot see why we should argue about this, in my opinion, very scientific and logical approach.

As far as political stability is concerned, once again I should like to see models of political stability to be compared with ours, especially in the African context.

We could go on to no avail with many destructive approaches. The big question remains, however, what positive suggestion are we able to make, are we able to make even critically, so as to ensure for all of us a good and successful policy in the future.

† A budget, Mr. Speaker, should, at least to some extent, reflect the past. It should spell out the present; and it should project the future. On all three counts and fronts the hon. the Minister is clear and definite.

The outstanding feature in his budget is that the economy is being mildly stimulated. We may quarrel about the degree, but the fact remains that it is a very positive and logical step at the present time.

Secondly—this is very important and I cannot see how anybody can disagree with it—it actively further promotes social justice and the narrowing of the economic gap between the non-Whites and the Whites. This is certainly a positive step. It may be the turning point towards much greater things in time to come.

Thirdly, the principles of a free economic system we are all clamouring for, have at least been enhanced. Features such as a decrease in the marginal tax rate must be welcomed.

On top of it all, the Government has succeeded in maintaining State expenditure within reasonable limits.

From this viewpoint then our prospects look good. However, there are other realities to be considered. First of all, it is true that the overall political and economic prospects are still, and even more, uncertain. Secondly, Western countries have poured more than R100 000 million into bottomless pits of OAU countries. If the USA and its institutions have to write all this off, it will be rather interesting—perhaps frightening—to see what will happen to the already wobbly dollar. The question is whether they can foresake these debtors. Some of them are right on our doorstep. Do they perhaps look to our wealth, our economic strength and our assets to recoup these losses and potential losses? The writing off of such enormous debts could mean financial chaos in very important financial circles in the Western World. We should keep these facts of life in the back of our minds when we plan for our future.

For us, then, there is only one road of survival ahead, namely we must plan to look after ourselves. We shall find that once we begin to do that—and the indications are certainly that we can do that—more and more others will come along wanting to help us to look after ourselves.

The budget under consideration already contains the basic structure and features we need. I do believe this is vitally important. We as a nation, united should all strive to further these concepts as fast as we can, for example putting the nation to work and keeping them in employment. There is hardly anything more degrading, more demoralizing and more explosive in our situation than idleness and unemployment. There are many historical examples of how a nation, a dedicated nation, a united nation, can work itself rich practically overnight. Take, for example, the Germans after the last world war, the Jews in Israel, the people of Taiwan and the Japanese. One of the great mistakes of Jack Kennedy with his great grand society was that he placed too much accent on leisure and leisure industries and too little accent on power stations and self-sufficiency.

Secondly, we should promote internal harmony in our nation on every conceivable front. Therefore it is so important that every word we utter should be carefully weighed, and we should all—Opposition, Government, all of us—endeavour to build better harmony internally. This is a programme in itself and something on which we should all work day and night.

Thirdly, under present circumstances, both employment and harmony can be promoted considerably by an expansion of Black housing, or rather non-White housing, the non-White housing industry. In this connection I believe a special formula should be worked out to utilize more of their own savings for this purpose. I do not think we realize how much potential and actual saving there is among the non-White population of South Africa. We should never be too ready to subsidize.

This in turn should benefit other industries, such as the furniture industry.

Overall we should be moving into a situation of increasing numbers of middle and upper-class non-Whites, actively and productively engaged in hard work and the attainment of a better social life.

Practices such as “something for nothing” and the innumerous subsidies should, evolutionary-wise, be further replaced by equality of opportunity and merit.

This is one of the reasons why I cannot understand the Opposition rejecting or at least showing so much opposition today to the new sales tax and to the fact that some people will be a little bit worse off than before.

A larger internal or home market should be promoted by every possible means. 25 million people should really be able to sustain a very high degree of economic activity, even without much outside influence or help, especially if we uplift more of our own people to the middle and upper classes.

In training and education we should place the accent a little more on technical training, enabling people to do something tangible and to produce something tangible, rather than turning out too many political philosophers. Generally in schooling we should shift the accent a little more to practical knowledge about present-day living and future potential, even if our children have to learn less about how Napoleon bumped his toe in the old, old days.

We shall have to give more attention to capital formation, capital preservation and investment promotion, which are all very vital in our case. We cannot evade the hardships of inflation, but we can do a number of things about it, such as looking at pensions—all pensions, not only civil pensions—at inflation accounting and increased allowances for write-offs or depreciation, and at accepting higher profit margins, especially in key industries where price administration have to be applied.

We should look again at the flow of the nation’s savings. Perhaps the trend is too much towards one kind of institution, something which might lead to undesirable results and financial dictatorships. We need, and must maintain, a total plan and strategy in our survival package. Here we should amongst others, think of and apply the concept of, the formidable twins: OED—Operation Elimination Discrimination—and OEN—Operation Elimination Nonsense. The hon. the Minister of Economic Affairs has set a fine example by eliminating some unnecessary forms and returns. We have masses of these things, not only in Government circles, but also in private industry. There should be a campaign to eliminate or simplify all these. When in doubt—about the need for it—cut it out. We should go for maximum productive efficiency.

In practically all these matters the hon. the Minister has started to develop a pattern for which I again want to pay a special tribute to him and to his key men, such as Dr. De Loor, Dr. De Kock and Mr. Pretorius. Finance and economics in today’s world, and in our national life permeate every facet of our activities, and we have really been achieving, and can achieve wonders not withstanding, admittedly, our many sins.

If we carry on in an evolutionary manner on the road indicated by the present Government—and nobody says it is perfect—and further promote its policies in changing matters in a logical and evolutionary manner, we will yet show the world a model which many others would like to imitate. There is no example in the entire wide world where so few have done, and are doing, so much for so many.

Mr. Speaker, I will not react to what the hon. member for Pinetown has said, because my time is far too limited and far too valuable to become involved in the crossfire among the other three parties in this House.

The hon. the Minister of Finance introduced a budget under very difficult international circumstances. The officials responsible for drafting the budget speech must be complimented for the clarity and draftmanship which made the speech far easier to digest and to understand. Naturally, we in the SAP welcome all the concessions mentioned in the budget. The general sales tax will undoubtedly increase the cost of living and add to the burden of all, but will hit the have-nots the hardest. However, having said that, I must add that, on the other hand, if we want meaningful changes to be brought about in South Africa in order to improve the quality of life of all South Africans the tax would be the most effective manner of increasing the money available to effect such change. Obviously, in the years to come, the general sales tax will yield thousands of millions of rand. A large percentage of that money will go towards housing, pensions, defence, education, homeland development, the viability of the homelands, etc.

If this is accepted that we require far greater sums of money to improve the living conditions of all South Africans, the question which can legitimately be asked is where the money will be coming from. It will come from internal or external sources. At present, although we must do our utmost to raise external loans, we must also be realistic about our prospects in that regard. As a result of the successful collection of the general sales tax, I can see the present hon. Minister of Finance and his successors to have sufficient finance to raise the standard of living of the have-nots, something which will help to make South Africa a still happier place to live in for all the inhabitants of this country. Having introduced the general sales tax, the Government is obliged to abolish sales duty, and also to abolish the 15%—now reduced to 12,5%— ad valorem surcharge on imports from the day the general sales tax is introduced. There is absolutely no justification for retaining the surcharge. The hon. the Minister himself spoke of this as a temporary fiscal measure. The surcharge will increase the cost of living and cause further hardship which can be eliminated.

This debate takes place at a time when issues such as Rhodesia and South West Africa are closer to settlement than ever before in our history. The settlements may or may not be recognized internationally. We in South Africa naturally welcome peace in our time, but it would be unnatural for us to ignore the terrorists, aided and abetted by Marxist regimes, menacing the borders of those countries. The price of even peace will have to be paid in time to come. In South Africa we face the harsh realities of urban terrorism. Whether we like it or not, these matters affect foreign investment, but I shall deal with this aspect at a later stage.

Our best defence internally is a happy and contented South African people. Every South African must have a very real stake and must stand to lose something in this country. Through various agencies, for example, the Coloured Development Corporation and the South African Bantu Trust, the Government has made available to a limited number of people sufficient finance to have a stake, and some of them have acquired a very substantial stake. We should like to see a far greater number of people obtain a stake with very real rights.

The only way in which one could do that overnight, would be to agree to sell every house owned by the Government to the tenants on a free-hold basis. To make it easier, every tenant should be given a 100% bond, if necessary, and the period of payment ought to be long enough in order to ensure that the repayment of the bond is only a little bit higher than the present rental. Pride in and security of ownership will be the greatest factor in creating a stable middle class which would stand shoulder to shoulder with every other South African in difficult times.

I had hoped that with the additional funds from the general sales tax, the hon. the Minister would have done far more for the less privileged like the pensioners. All of us are inundated with complaints from pensioners who cannot make ends meet. This is a fact of life.

I should like to ask the hon. the Minister whether, in conjunction with his colleague the hon. the Minister of Social Welfare and Pensions, an in-depth study can be done before the next budget is presented to us. I am convinced that if such an in-depth study were done to establish what the needs were of South Africa’s pensioners, the hon. the Minister of Finance would come to the irresistible conclusion that he should increase pensions substantially. I believe that he will have sufficient money from the general sales tax—in fact, far more than he anticipates— and from that fund he will be able to assist the pensioners in giving them a substantial increase.

A concession that is welcomed is that losses incurred when repaying foreign credits will henceforth be deductable from taxable income. In view of the importance of foreign capital we feel that the hon. the Minister should consider even going further. In order to encourage borrowing overseas, the importer should be encouraged to obtain credit for as long a term as possible. This will mean that more funds will be available internationally for other purposes. If the hon. the Minister, however, would like importers to obtain credits, the State should cover exchange losses in full and not merely allow that losses may be deducted from taxable income. Importers, because of long and close business ties with overseas suppliers, may be able to arrange large foreign loans on a long-term basis.

Since I am dealing with foreign loans, I should like to mention that we believe there are thousands of South Africans who go overseas every year and who, if properly briefed, could influence the people with whom they come into contact. They can tell such people about the factual position in South Africa. Especially people in commerce and industry can be instrumental and assist us in our efforts to change the climate in the favour of South Africa. I believe that if we were prepared to make a vast investment in a “Sell South Africa” campaign, and harness many of our people who go overseas, not only the Governments of those countries would be hearing the facts, but also the people who live in those countries and I believe they are just as important. I hold the view that governments or presidents are not, by the very nature of things, there permanently. Therefore a vast “Sell South Africa” campaign must be aimed at the people of the West, the men in the street who are living in Western countries. Foreign loans on a greater scale could be a reality if such a campaign were a success, and there is no reason whatsoever why such a campaign should not be successful. The hon. the Minister of Finance and his colleagues must convince the West that pressure must be brought to bear on the communist world in order to give South Africa an opportunity to work out its salvation without being subject to pressure. In other words, instead of the pressure being on South Africa, the pressure should be reversed and should be brought to bear on Russia and Cuba whose presence in Africa is not in the interests of Africa or the peoples of Africa.

Any suggestions about how we are to do that?

I shall come to the suggestions presently. The hon. the Minister of Finance and his colleagues, in dealing with foreign loans, must bear in mind that there are reasons, other than merely the policies of this Government, that have precluded us from obtaining the foreign loans that we want. Our destiny, economic growth and future budgets are going to be determined to a large extent, whether we like it or not, by our trading partners. The Government, for diplomatic or other reasons, may not be in a position to raise matters pertinently in this regard, but I feel that we, as an Opposition, would be failing in our duty if we did not do so. If one watches the destruction in Africa and elsewhere because some of our so-called former allies do not show the necessary awareness or are shirking their responsibilities, one can see why we as an Opposition must not fail to do our duty to the country in this Parliament.

I should like to draw some facts to the hon. the Minister’s attention, facts which could assist him and other South Africans in the consideration of our financial position. Some of the countries we deal with are members of the EEC and they may have their own problems in the future.

The EEC may in the future find itself having member countries represented by communist governments. Not only would communist governments consequently have a say in the EEC; they would also have access to the defence secrets of Nato. There is an enormous trade between Europe and the communist States, and even though the Western States disapprove or even violently disapprove of the internal policies of communist States, this does not act as a debarment to their giving credit to and doing business with those communist States. If the West consequently disapproves of the South African Government’s policy, there is no need to come along with arms boycotts or restrictions on foreign loans. We, on the other hand, cannot turn a deaf ear to our critics. America is the most powerful leader in the West. One word from her and more foreign loans to South Africa would become a reality. These foreign loans would provide employment for the have-nots whom we and the Americans would like to see advanced. America does not approve of the political policies of South Africa because they want faster change—and obviously there must be faster change—but even a blind man can see that a genuine effort is being made to improve the quality of life of all South Africans. America can, if she is sincere in assisting in this process, encourage foreign loans for specific projects. I am thinking firstly, for example, of the elimination of the housing backlog, secondly the development of the homelands into viable entities to provide employment for the people living there and thirdly loans to improve all the townships and to provide amenities. Such loans would assist the Government in expediting the task it has embarked on to improve the quality of the life of the have-nots in South Africa. If the American Administration is genuine in its aspirations for South Africa, such loans by objectives would show their good faith.

A wave of terrorism has hit many parts of the world, including major capitals of the world, yet no one has suggested the disinvestment of those countries. In fact, some of the countries which have acted as sponsors or consorts to terrorist organizations in Africa are now themselves the targets of terrorists. It is the wish of terrorists and Marxists to stop foreign loans to South Africa. The target at the moment is Southern Africa. Does the Western world think for one moment that the Marxist objectives end in Southern Africa? The aim of the Marxists is to paralyse economically any country that is West-inclined and, when the Marxists take over, the people of those countries are not liberated but are in fact suppressed in a manner so callous that it makes the previous Governments in all circumstances look like model Governments.

The American Administration has gone out of its way to court and pay homage to terrorist leaders and Governments at the expense of tried and tested friends. If the Cubans and the Russians want the Patriotic Front to succeed in Rhodesia and Swapo in South West Africa, is the American Administration naïve enough to think it will have any influence over those organizations whose declared belief is not a democratic or humane form of Government but the brutal subjection of the inhabitants of those countries? The American Administration now stands on the brink of being tarred by the same brush as are the organizations they are promoting at present. The American Administration has intervened in Africa and has chosen sides and, when the crunch comes, they will have to accept responsibility for their actions. My prediction is that at that point in time they will be conspicuous by their absence, like they were absent in Angola. I believe that as the story of Africa and other parts of the world unfolds, President Carter and his Administration will in respect of their present attitude go down in history condemned as representing the darkest period in the history of a very great nation, possibly the greatest nation in the world, unless they change their attitude.

As foreign loans are to a large extent impeded by the attitude adopted by the Carter Administration, I believe attempts should be made to reason with President Carter. If this fails, I believe a campaign should be started on a massive scale—I have reason to believe that peoples in other countries will join in that campaign—to expose the Carter Administration for what it is to the people of America. That, obviously, is the negative part of the campaign. The positive part would be to sell South Africa and show what we have done, what we are doing and what we are going to do.

Arms embargoes and blocking foreign loans to South Africa because of our internal policies do not make sense when the countries of the West do not place the same embargoes on Russia, most countries of Africa and eastern Europe and many other countries. If the Carter Administration were to do a survey on human dignity and other humanitarian stances they have adopted, they would find that, if they were to look at the nations in the United Nations Organization, there are very few nations for whom South Africa will have to stand back. This does not mean that there is no room for improvement in South Africa. There is plenty of room for improvement, and we must see to it that we improve matters where matters have to be improved. I think that President Carter’s Human Rights Programme is merely a bluff to camouflage the fact that he has lost the will to stand up to the Marxists. President Carter wants peace, and so do we all, but he wants millions of people from other nations to pay the cost of his peace. President Carter has lost sight of the fact that, if Africa is lost to the Marxists, Europe will be the next target as the Russians will control strategic shipping routes, strategic defence positions and most of the world’s mineral wealth. With Europe controlled and Africa lost, it will then be too late for the Americans to wake up. President Carter, as a matter of urgency, must tell the Russians and the Cubans to get out of Africa to ensure that foreign loans to and trade with the whole of Southern Africa are stimulated so that we can show the world that without pressure we can bring about peace, prosperity and stability on this continent.

There are those who may doubt the influence of America on Russia and other countries, but they are wrong in their doubts. Let us just look at a few facts of the past. When Russia had a serious grain crop failure, it had to turn to the West. In 1972-’73 the Soviet Union bought from America approximately 19 000 tons of grain at a cost exceeding $1 000 million. In 1975-’76 the Soviet Union bought over 13 million tons of grain from the USA, 4,3 million tons from Canada and 1,5 million tons from Australia. The United States Secretary of the Treasury was reported as having said in 1975 that the US Government would remove whatever impediments existed to expand trade with the Soviet Union, both by removing the arbitrary ceiling on export and import bank credits for US exports and by eliminating the unacceptable aspects of the Jackson amendments to recent trade Bills. If my memory serves me correctly the American Administration did not adopt the same attitude towards South Africa, especially in regard to Sasol 2. I would appreciate it if the hon. the Minister of Finance would correct me if I am wrong, but I understand that the Export-Import Bank of America did not adopt the same attitude towards South Africa as it adopted towards Russia, if not in regard to Sasol 2, then in respect of other projects. The American influence on Russia is so strong that at the time when the grain exports took place it upset the powerful American Federation of Labour and Congress Industrial Organization, whose president criticized Pres. Ford by saying: “Open the doors of private US grain market to the Russians in a way that will cost the American consumers billions of dollars.” Despite that fact the Americans went ahead with the grain exports to Russia. It would be interesting to know exactly how much money Russia presently owes America. I have merely given one example of how much influence America and other Western countries have which could be used to influence and pressurize a Russian-Cuban withdrawal from Africa. The United States, according to the 1975 statistics, has enormous influence which it can exercise in favour of South Africa if it really wants to. The statistics show that during 1975 America gave grants to 28 countries of Africa including 201 million dollars and 617 million dollars in credits. There were further grants to other countries of Western Europe, Eastern Europe, the Near East, Southern Asia, East Asia and the Pacific. Total grants and credits during 1975 by America totalled 8 039 million dollars. I believe we must make a commitment to the American Administration of our real intent and spell out to them the changes that we envisage. At the same time we must make it clear to them that we in South Africa must find our own solutions to the problems in Southern Africa. They, in turn, must make an American commitment of the sort I spoke of earlier on. Similar approaches must be made to other Western and friendly countries and if these approaches fail I believe that a plan must be evolved and everything must be placed in written form for easy reference for every South African and every well-disposed person overseas to use to appeal directly to the people of those countries by giving them the true facts of the situation, because the true facts never reach the people living in those Western countries.

The Government must be prepared to groom every well-disposed person and have thousands of volunteer ambassadors carrying the message of South Africa throughout every town and city in the formerly well-disposed world and the still well-disposed world. This campaign will cost millions of rand but the results in years to come will in budgets to come not be able to be measured in terms of money at all.

In conclusion I wish to deal very briefly with an amendment that we propose by saying that during the course of my speech I have dealt with the legs of my amendment. I believe the hon. the Minister should have no practical difficulty in accepting all three of the amendments that have been introduced, although for political reasons he obviously cannot accept the amendments. However, in these three amendments are the objectives that the hon. the Minister of Finance must set himself and I am sure that both he and his department have set these objectives as are contained in these amendments. Mr. Speaker, I accordingly move the following further amendment—

1. (1) take steps to ensure a satisfactory rate of growth and rising standards of living for all our people;
2. (2) give more effective relief to pensioners and others from the overwhelming burden of ever-increasing prices, particularly of foodstuffs; and
3. (3) assist every South African, where possible, to obtain a meaningful stake in South Africa”.

Mr. Speaker, the hon. member who has just sat down has in my view really made a very good speech. There is something I want to confess to him this afternoon. Long ago I suspected that he might perhaps ultimately move to the PFP …

Never!

But after his speech this afternoon I am convinced that the gap between him and the PFP is too great ever to be bridged. The hon. member did criticize, but he balanced his criticism by also pointing out the benefits which the budget entails. If one reads the hon. the Minister’s budget speech again, one comes to the conclusion that it is in reality a lesson in economics. In the situation in which we find ourselves, it is difficult to raise any specific matter which the hon. the Minister did not deal with in his speech. It is therefore no wonder to me that for the second year in succession, the hon. Opposition must in fact congratulate the hon. the Minister on his budget speech and on the budget which he has submitted. Last year, the hon. member for Constantia, then still the hon. member for Von Brandis, and belonging to another party, said the following (Hansard, Vol. 67, col. 5035)—

Those hon. members had no alternative then but to pay tribute to the hon. the Minister. This year the situation has repeated itself. The hon. member for Yeoville expressed his satisfaction with the budget last week and I am sorry that the hon. member for Yeoville is not in the House now. As a member of the Official Opposition it is the hon. member’s task to criticize. I honestly feel that the hon. member is talking with his tongue in his cheek when he criticizes this budget. I believe that the hon. member for Yeoville would be able to deliver a better eulogy on the budget than the criticism he is able to express against it. If the hon. member had delivered a eulogy on the budget, he would have spoken from his heart. This afternoon I got the impression that he was not speaking from his heart when he tried to criticize the budget.

It is very easy to identify problem situations or problem areas in the economy of a country, as the hon. member for Mooi River did this afternoon when he identified a difficult agricultural situation. I shall come back to his argument presently.

Do you agree with him?

I shall come back to that. Even to suggest remedial measures does not require extraordinary effort. But to lay down financial policy, taking its side effects into account, to apply it consistently and then later—usually one year later—to achieve success, is an art, and the hon. the Minister has succeeded in doing that. Last year the hon. the Minister declared it to be his policy that the balance of payments should be improved and this year he was able to announce with great satisfaction that he had reached his target and that a deficit of R1 630 million on the current account of the balance of payments in 1976 had been converted into a surplus of R751 million, 7,5% of the GNP. As a result of the conservative, but very correct, fiscal and monetary policy, the hon. the Minister has brought in a good harvest and as any good farmer should do, he has settled his debts and has not allowed himself any luxuries. Now it is true that the reserves are still low and that some people will fret about it, some will grumble about it, but I am happy and optimistic in the knowledge that if we now move forward carefully and watch the capital position very carefully and do not over-spend, the improvement will continue even in spite of the possibility that the net inflow of foreign capital may decline. I am not alone in this view. Several experts in economics hold the same view. It is for example the viewpoint of the Afrikaanse Handelsinstituut. If one reads their recent report, one sees that they specifically mention the fact that long-term capital is still not likely to be readily available, but they continue—

That confirms my optimistic view of the matter.

Last year I said in the debate on that budget that the economy would have to sweat out certain symptoms before a real upswing in the business cycle could be expected. Today I am of the opinion that during the past year we did get rid of a considerable number of undesirable phenomena. One of the most important of them is that the nation has, if not altogether, then at least to a great extent, got rid of its obsession with avoiding the effects of inflation. In other words, the nation now accepts that the pressure of inflation cannot be avoided by merely continuing to demand higher wages for workers, or higher prices for products. It is today accepted that higher productivity and moderation of the living standard are the solutions. The growth fever—with the accent on the “fever”—has declined, and that has naturally caused a decline in the growth rate as well. In South Africa, just as in other Western countries, it has been realized that it is very important to stabilize the economy, even if it is very painful. For this purpose it was essential in the circumstances that the real consumer expenditure of the private sector as well as of the public sector should decrease. It was painful, but necessary. Even if we had to enforce it, it was absolutely essential. In this, the hon. the Minister, with his old-fashioned policy—to use his own term—of financial discipline, has played no small part, in having succeeded in bringing the amount of money and quasi-money under control, so that the total expansion of credit fell to less than 1% during the second half of 1977.

Now that the fever has been broken, however, we must attend to the recovery. There are naturally many factors which are very detrimental to a normal recovery. These are mainly external factors over which we have very little control and which can only be countered by inner strength and stamina of the economy. It was therefore very pleasing to me that the hon. the Minister announced in his budget speech that it was his policy to create a stronger economic power within our sub-continent.

That is his aim and that is going to be his policy. This announcement by the hon. the Minister will, however, be absolutely futile if it is not accompanied by a spirit of confidence and optimism. The psychological factor is an enormously important item in the whole business cycle theory. Certain economists are even prepared to give it the highest priority in ascertaining what really influences the business cycle. I therefore say that it will be futile for the hon. the Minister to set such a goal if there is not the necessary confidence and optimism.

In these times in which we are all rather worried and depressed about all the problems facing our country, I think that the budget speech was really a shot in the arm which inspired the nation with new courage. The reaction of the Press also bears testimony to this. A newspaper like The Citizen almost jumped out of its skin with “What a happy budget!” Headings in certain other newspapers read: “Begroting gunstig ontvang,” “Boubedryf kan weer asemhaal” en “Begroting verras met toegewing van R192 miljoen.” All this is proof of the optimistic spirit which has been created.

In order to create a stronger economic power within our continent, in other words, to increase the economic power of the Republic of South Africa, it is now necessary—and it is also the stated policy—to change over to growth with financial discipline. The great question now facing us is how it must be done. It is not strange that in times of economic recession and, even more so, in times of depression, the State in particular is expected to take the initiative in stimulating economic activity. It can very easily be argued that a depression is the most extreme form of failure of the free enterprise system. There have been economists in the past who argued that way. If a recession takes place and conditions of depression prevail, they say it is proof of the failure of the free enterprise system. They also say then that if a depression is proof of the failure of the free enterprise system, the alternative is surely a planned economy, something which can only be properly undertaken by the State. That is a dangerous argument. In such times the State is then placed under great pressure by special interest groups, whether organized labour, organized agriculture, mining, commerce or whoever. Each interest group then presents its claims, and the result is really a competition for the favours of the Government.

I just want to return now to the speech made by the hon. member for Mooi River. The hon. member for Mooi River mentioned the very critical situation in which agriculture in South Africa found itself. That is nothing new. We have already discussed a motion here in which we unanimously agreed that agriculture in South Africa was in a very difficult situation. I stated earlier in my speech that it was not so difficult to identify the problem area. That is what the hon. member tried to do this afternoon. He identified a problem area and then suggested certain remedial measures. When one comes forward with measures for treating a situation such as this, one has to be very careful what measures one uses. The hon. member for Mooi River suggested that the State should pay a larger subsidy to producers in order that agricultural prices may be stabilized and kept at a low level. There are certain merits in that argument, but there are also certain dangers. When one starts subsidizing, one merely treats the symptom and one does not get to the real illness. I think the hon. member will agree with me that that is the case. In my view, the solution to our agricultural problems, which are not only the problems of agriculture, but also of other industries, lies in an economic upswing which will result in greater purchasing power. I just want to make the following little point to the hon. member. An upswing in the economy of our immediate neighbouring States would mean that the hon. the Minister of Agriculture would not have to spend a single sleepless night worrying about any surpluses which we might have in this country.

Our neighbouring States would eagerly absorb the surpluses of all agricultural products if only they had the purchasing power. In my view that is where the solution to our problem lies. We must stimulate the economy in such a way as to create greater purchasing power. There is a vast potential domestic purchasing power which still has to be developed. In my view this is the solution, and if we were now to subsidize, it would merely amount to patchwork and it would not go to the heart of the problem.

In difficult economic situations, State intervention is frequently asked for, by the very people and groups who are really advocates of a free economy. State intervention is then condoned and defended as long as it is in the interests of that particular interest group. The danger exists, however, and it is a very real one, that a free economy may ultimately develop into a controlled economy or one planned wholly by the State. In fact, that was exactly what happened after the world depression of the thirties. Certain Western countries had so much State intervention that their economies became totally State-controlled. That is why I say that in difficult times, one must be moderate in one’s demands for State intervention.

In 1978, South Africa is faced with the question of how the upswing must take place. How much initiative must come from the State? In what way must the State intervene? How strong must be the discipline imposed by the State? I think the view expressed in yesterday’s Sake-Rapport is absolutely correct where they make the statement that the budget has pointed the way and that it now depends upon the reaction of the private sector whether the country’s economic growth will begin to accelerate again. “Create a stronger economic power”, that is the call of the hon. the Minister. Our task is to make South Africa strong, and preparedness on all fronts should be the watchword. Someone recently put the question: Are there enough soldiers in our business community? Are there sufficient businessmen with the faith and ability to make our economy strong again? I think that the answer to this question is “Yes”. There are sufficient soldiers. All that is lacking is confidence. I think that with this budget, these soldiers in our business life ought to get the necessary confidence. In every army there are naturally also the hands-uppers and the deserters. That is something which we have experienced before. After the riots of March 1960, for example, there was a sharp reaction and there was also a drainage of capital. At that time, too, there was a sharp decline in our immigration figures. But they improved again. Many of those who deserted then have very quietly returned in the meantime. I also believe that this difficult situation in which we find ourselves will again improve if we simply go ahead with confidence. Confidence is what we need now, and there is reason for confidence. The fact that the hon. the Minister is only providing for R75 million in respect of foreign loans speaks volumes for the resilience of the South African economy and should create confidence not only internally, but also abroad. The fact that South Africa has been able to settle her debts, and even to build up a considerable credit, creates confidence abroad. The most sensitive of all barometers, the South African Stock Exchange, has already shown a favourable reaction, and industrial shares, especially, have shown a strong upward trend during the past week.

The stability of the Government is another very important factor which inspires confidence. Nobody, not even the outside world, denies the fact that South Africa has a very stable Government. The fact that in spite of conditions of recession, the problem of unemployment is still under control, is a very important plus factor. The fact that international business undertakings and industrialists from abroad are prepared not only to stay here, but even to state that they are going to expand their investments in South Africa— and I can mention a series of examples—is a sign of confidence. The stability of our rate of exchange is another factor of confidence. In spite of all our problems, our rate of exchange has not gone mad.

Taking everything into account, I have the fullest confidence, and I believe that, just as we overcame the situation of the balance of payments, we shall also succeed in realizing the wonderful ideal of a stronger economic power. I believe that from its own inner strength, South Africa can really become the workshop and the granary of Africa.

The economic requirements for development are land, capital, labour and initiative. We have them all. What we do lack at the moment is perhaps capital. But I firmly believe that in future we shall also be able to generate sufficient capital to provide in our needs. The indications are already there. The pension assets of South Africa are already more than R11 000 million. That is a vast source of investment revenue. Still more capital will become available as the fiscal measures, as announced, get under way. We are however in the favourable position of having reserve capacities which can be utilized for expansion without the necessity of applying large capital amounts. Infrastructure, the great consumer of capital, was extensively expanded during the years of affluence, and with what we now have at our disposal, we can accomplish a great deal. Furthermore I also wish to make the point that we should not be obsessed with the problem of capital. The people of old used to say that a little bit can go a long way if used with discretion. We must again use the art of discretion. I believe that with our reserve capacity and with our labour, we can and ought to convert certain capital-intensive planning into labour-intensive planning. In that way we shall be able to conserve capital.

I believe that if we can maintain the rate of export, we shall be able to satisfy many of our capital requirements from our current revenue account. I firmly believe that it is not such a bad idea as it may appear at first sight to utilize current revenue in order to satisfy capital requirements. Some of the strongest economies in the world have been built in that way. The post-war recovery of West Germany and Japan took place in that manner. They utilized current revenue to supply capital. I do believe that with a view to cash revenue, we shall gradually have to refine and process more and more of the raw materials which we are how exporting. For the sake of the ideal of a stronger economic power we shall have to see to it that a good balance and co-ordination exist between the different sectors of the economy.

The needs of our Defence Force, our communications, our transport system, our mines, our industries and our agriculture must be identified and we shall have to see to it that there is no overlapping in respect of the supply industries. In a situation such as the one in which we find ourselves, this is very important. We cannot have two parallel industries in the sense that for example one industry manufactures tractors for a particular sector of the economy, while another industry manufactures almost identical goods for another sector. I believe—whether it is a popular idea or not—that we shall have to take the step of identifying the most capable manufacturers of necessities and expanding them. [Interjections.] I believe that with hard work by an inspired nation which knows that they are doing it for the future of South Africa and its people, we can build a strong economy for ourselves and so take our place with honour in the comity of nations.

Mr. Speaker, I want to congratulate the hon. member for Malmesbury on a very good, well-thought out speech.

Then I want to refer to the cry of the hon. member for Yeoville that this is allegedly a rich man’s budget. I want to content myself with reading two quotations to him. The first is what Mr. Raymond Parsons, executive director of Assocom, said to Sake-Rapport—

The second one comes from the Business Times of the Sunday Times of 2 April. I read on page 4—

I want to content myself with this because I feel it is the best reply which can be given to the hon. member for Yeoville.

If we take a critical, but realistic look at the world economy, it is very clear to us that we are not dealing with a simple situation. The matter is becoming more and more complicated due to the fact that the basic economic problems which led to the serious world recession in 1974-’75, as well as the problems which emanated from those depressive economic circumstances, have not yet been overcome or even partially overcome because a solution for them has not yet been found. So for example, with the exception of a few countries, the struggle against inflation is still continuing while unemployment is worsening. There is a notable lack of confidence amongst the entrepreneurs in the private sectors of industrial countries. Confidence is of considerable importance for continued economic development, without which the recovery in the world economy, on a sound basis, cannot get properly under way.

The first factor which is responsible for this, is the continued, increasing unemployment and its possible political consequences. Secondly, the high rate of inflation is definitely a deterrent for entrepreneurs in their investment decisions. A third aspect which urges industrialists to be cautious, is the energy crisis and the structural adaptations which this may require in future. It does not matter from which angle one considers the economic problems of the West. It is clear that a critical situation is developing, a situation from which the West will not easily and probably not soon either be able to extricate itself, with the desired results.

So far, the recovery of world economy has leaned heavily on the greater vitality of the American economy. However, this driving force is rapidly weakening, and various factors are responsible for this. For instance, the rate of inflation in the USA is still too high, its foreign trade deficit is still far too great and its domestic energy consumption too high, while its oil imports remain on too high a level. In 1972 the USA spent less than $5 billion on oil, but in 1977 it had to spend no less than the enormous amount of $45 billion on oil. One thing is as plain as a pike-staff, and this is that there is no instant solution to the problems of world economy.

I want to sum up. It is clear that the problems of unemployment, inflation, high energy consumption and costs, uncertainty about the energy situation in the future and political developments are the chief cause of the slow rate of fixed investment by leading industrialists in most of the developing countries. These factors play no small part in impeding the recovery of the world economy.

Therefore, if one looks at the South African economy, in the light of the world economy which I have just tried to sketch briefly, one does not find it strange that we are faced with the same situation here. Indeed, if one draws up a list of the shocks which the South African balance of payment has had to absorb over the past few years, one sees that the recovery of the current account of the balance of payments is definitely an impressive one.

I want to mention a few of these shocks. There was the serious world recession in 1974-’75, the drop in the gold price from a high of $198 per fine ounce at the end of 1974 to a low of $103 per fine ounce in August 1976, the events in Angola at the end of 1975, the unrest in Soweto and other Black residential areas in June 1976, the Biko episode during October 1977, the recently introduced arms boycott by the UN, and last but not least, the perennial problem of Mozambique as well as those of Rhodesia and South West Africa with which the Republic is closely involved.

All these events influence our economic relations with the outside world, and the most important consequences of this from the viewpoint of our economy, have an effect on our balance of payments. In this respect we were, inter alia, obliged to incur high defence expenditure and there was also the continued stockpiling of strategic goods as well as the ultimate adverse effect on the capital account of the balance of payment. Although we are still faced with economic problems, our present economic situation differs fundamentally from that of two years ago. In the first half of 1976 we were still living above our income in the sense that we had a considerable deficit in the current account of our balance of payments. To a large extent we financed this deficit by means of short-term loans from abroad. The present position is completely different. Although the capital account of our balance of payment has deteriorated, the huge deficit of R1 630 in the current account has been transformed into a surplus of R751 million—this is a reversal of almost R2 400 million. This surplus in the current account was primarily brought about firstly, by the application of a conservative fiscal and monetary policy; secondly, by an increase of 30% in the value of goods exports and of 19% in the net gold production; and thirdly, by a drop of 7,4% in imports. This surplus means that an additional income was created in the domestic economy. I also want to make the statement that, had the political circumstances and the net inflow of foreign capital been more normal, the surplus on the current account of the balance of payments would already have resulted in a remarkable upward trend in the net gold and other foreign reserves and the creation of an expansionistic monetary and financial climate.

This remarkable reversal from a large deficit to a considerable surplus in the current account of the balance of payments proves the inherent strength and adaptability of the South African balance of payments. There is no longer a question mark over South Africa’s ability to exercise control over its money supplies, its Government expenditure and the current account of the balance of payments. Our success in this sphere enjoys recognition everywhere. Both the public and the private sectors are now able to reduce their foreign obligations by repaying foreign trade credit and other short-term loans. The question is rightly, as the hon. member for Malmesbury also put it, whether South Africa has the ability under the prevailing circumstances to set in motion a new business cycle upswing in domestic activities. The slump in the economy necessarily had an adverse effect on the tax basis of the economy. As a result of this slump, the Government’s revenue from income tax on individuals and from indirect tax decreased. Therefore, steps have to be taken to prevent a vicious circle arising in the sense that the low revenue from tax might force the Government to reduce expenditure or to make a greater use of bank credit. Steps of this nature, however, do not mean that all sorts of excessive expenditure should be incurred in the public and private sectors or that large wage and salary increases should be granted. They do mean that restrictive measures and fiscal measures should gradually be relaxed to the required extent. That is why I want to congratulate the hon. the Minister sincerely on this fine budget. It is a budget which is meant to create a policy of growth with financial discipline and which, quite correctly, was immediately praised by several business and community leaders.

If one makes an in-depth analysis of the measures the hon. the Minister adopted to bring about a more general and less selective, although still moderate, stimulation of economic growth, one realizes how correctly and judiciously it was done. I want to give a few examples of this. Firstly, there is the further promotion of exports for which an amount of R92,9 million is being requested, which represents an increase of 115% in comparison with the previous budget. This further promotion of exports is very important, especially in view of the untapped capacity which exists in the manufacturing industries. A second example is the continued process of import replacement as well as the attempts of the private sector to promote the import replacement of capital and intermediary goods. Thirdly, the appropriation for housing amounts to R177 million—an increase of 16%. Furthermore there is additional bank financing for non-European housing to an amount of R80 million. The building programme of the Department of Public Works amounts to R175,9 million—an increase of 23%. These steps provide the building and construction industry with the necessary support and create employment opportunities without exercising a great influence on the balance of payments.

Fourthly: By means of reducing the surcharge payable by companies on normal tax by 2,5%, companies are put in a position to make new investments and employ larger numbers of people. By doing away with the full surcharge of 10% on normal tax on individuals, the hon. the Minister has succeeded in alleviating to a large extent the problems of the higher marginal scales of income tax as well as the taxation of married women in the higher income group. You will remember, Mr. Speaker, that during the Third Reading debate of the part appropriation, I pointed out that it would be better to scale down the tax on married women in the higher income groups instead of dividing this tax between the two partners. The increases in salaries, wages and pensions and the concession in connection with the surcharge on companies and personal income tax, will bring about an increase in total consumption and investment and in this way raise the level of production and economic growth rate.

One thing is as plain as a pikestaff: This budget inspires confidence, confidence which will even extend as far as countries abroad. As far as the course of our economy in the foreseeable future is concerned, the political factors will continue to play a key role. We must avoid one thing at all costs: We must not allow ourselves to be put off by unnecessary pessimism, especially about the future. Firstly, we have at our disposal natural resources which are hardly equalled in the world. Secondly, our people have the will, the ingenuity, the necessary perseverance and the strength to cope with South Africa’s problems in a realistic way and to solve them.

Mr. Speaker, the hon. member for Malmesbury referred to a recent speech of mine in which I congratulated the hon. the Minister of Finance on having detached himself from certain problems he had at the time. It is perfectly true and I intend doing that again. I can assure the hon. member for Malmesbury of that. I have, however, quite a few other things to say and I hope that he, in turn, will remember to quote what I said with regard to such additional matters.

The hon. member for Smithfield quite correctly identified certain bottlenecks in the economy. He referred to the patience and the courage we would have to display in future to help solve these problems. He also referred to the classic fiscal and monetary aids which could be employed. I doubt, however, whether the mere employment of classical methods and the use of confidence and courage, however valuable they may be, are going to provide the solution on their own to the problems we have to face at this point in time. In the course of my speech I want to refer to some of the problems and I want to make a few recommendations as to the way in which we can try to find solutions.

† I have said before and I say again that I believe that the hon. the Minister of Finance has done well in this budget within the means available and within the limited options at his disposal. He has had to work within conditions of serious political instability in Southern Africa. This situation has caused an escalation in defence demands in the country, has discouraged foreign investment in South Africa and has in fact caused a sapping, a diminution of the confidence in South Africa which we would hope for in normal circumstances not only at home from our own investors, but also from those foreign investors who, by custom and by attraction, have tended to invest their money in South Africa. The effects have been compounded by the impact of a world recession on our trade. By the decline in confidence and domestic investment, of which I have spoken, by unemployment, by continued inflation at a high level, by a very low productivity factor in South Africa that is largely due to a long history of racial discrimination and unequal opportunities for training and reward in our labour force, our gross domestic product falls below the rate of our population increase in South Africa. In these constricting circumstances the hon. the Minister obviously has limited ability to shape a policy by fiscal and monetary measures alone. The hon. member for Smithfield must remember that it is all very well to look to these traditional methods, but I believe that we are today in the situation where we are experiencing a set of difficulties which require more than merely traditional methods. I believe that we in South Africa have to have due regard to the grave problems that beset us and must seriously contemplate extraordinary means in order to extricate ourselves from this dilemma.

The fiscal and monetary measures which are traditionally used and which the hon. the Minister has used with some skill within the limited compass of the budget, tend to cancel each other out and tend to interreact at the expense of each other. If one makes an ingenious combination of various factors with a view to stimulating the economy, one gets an interreaction in that one can put these factors together to produce a certain result, but in this particular case one aim has escaped the Minister and that is inflation.

I believe that the budget which was produced by the hon. the Minister does nothing to arrest inflation in the short term and little to restore productivity and growth in the long term. I shall motivate this statement. His budget is nevertheless a good financial exercise, but it has few real objectives, few long-term aims beyond the stabilization of the present uneasy situation. This certainly has its immediate advantage and its immediate value for unless we stabilize the present situation, we are going nowhere. Therefore, to the extent that he has laid a foundation, the budget is worthy of note. We will not escape our problems, however, until we use the budget as a more decisive instrument of policy not merely in the short term or as a balancing exercise in difficult circumstances, but also as a way of achieving more fundamental remedies within our social system. It is in that manner that we have looked at the budget, and while giving the hon. the Minister due credit for what he has achieved within a limited compass, I believe we have not yet found the fundamental remedies which our society, our situation and our state of recession, within the world recession, have now created. I believe we need to look harder for further remedies in the case of some of the things with which I should like to deal in the short time available to me.

What are the keys to our recovery? I believe these can be none other than productivity and growth. To stimulate growth without a corresponding rise in human productivity is clearly an inflationary thing to do. We badly need growth. In recent years growth has fallen far below the minimum required if this country is to make good the damage of inflation. I believe the economic development programme was correct in saying that the minimum growth comfortably consistent with the needs imposed upon us by an expanding population is of the order of an average of 5,5% per annum. We are very far below that figure. We need not only to meet the needs of a rapidly rising population, increasing at a rate of nearly 3% per annum, but also to meet the reasonable expectations of that large part of our population which has not yet been able to share in the general standards of living to which all South Africans would aspire. This is an essential purpose of growth. Nobody would deny that a high rate of growth, however discredited it may be in various places as a major factor in State economics, in a developing society like South Africa is essential. However, desirable and necessary as this growth is, our purposes will be eroded by inflation unless the productivity of our workers is greatly enhanced.

Productivity in South Africa is very low indeed. It is shamefully low. It is something which we should all know and recognize. Productivity in South Africa on average compares very poorly with a great many other countries. It is not getting much better, except in a few sectors.

Let us look at the facts. Since 1970 our population has increased by some 17%. The physical volume of manufacturing has since 1970 also increased by some 17%, although the number of employees increased by 19% between 1970 and 1977. We are looking at real terms now and this means that the number of workers in employment has actually increased above the rate of population growth, while the rate of production has barely kept pace with the increase in population. The total number of hours worked, in spite of this increase in the work force, grew by only 12% over that period. That is why the gross domestic product in real terms, in per capita terms, is virtually static in South Africa and is even losing ground. That is the fundamental reason, I believe, why we cannot achieve growth without incurring inflation.

If one looks at the countries now emerging from the world recession with the greatest success, one finds that those which have best been able to resume growth, while actually bringing down inflation, are precisely those countries which have the highest rates of human productivity and which are best able to turn the human productivity of their working classes, their working people, to growth. It is only in such circumstances that one can really expect to achieve growth without incurring the accompanying evil of inflation.

The effects of low human productivity, particularly in a time of world recession, but at other times too, are disastrous and are particularly disastrous in South Africa. Let us not be blinded by the artificial values of inflationary monetary values. Let us look at the real terms of reference. I am again going to use 1970 as a base and compare the figures of 1970 with the figures for 1977. The figures I am about to quote are extrapolated from the Reserve Bank’s Quarterly Bulletin of Statistics for the latter months of 1977. Compared with a base of 100 in 1970, the number of new companies registered in 1977 is down by 78%. This means that only 22% as many companies were registered in 1977 as were registered in 1970. The number of company liquidations in 1977 was up by 900%. The number of insolvencies was up by 237%. The unemployment figure for the White, Coloured and Asian people in South Africa was up 400%.

One mentions these things with very little pleasure because this is our country and this is the situation we have to remedy. We therefore have to ask ourselves what methods can be used and what measures can be taken in order to ensure that South Africa will climb back out of this difficulty to re-establish the vigorous economy it should have.

What do these factors mean? It means, once again, that in a country where skilled management, raw material resources and good technology are available, these things are still not enough. The missing factor is human productivity. This means equal opportunity for all through education, technical and professional training and equal incentives for all through the removal of every form of economic discrimination. It means nothing less than a common economic society for South Africa, not just for the Whites and some tens of thousands of Black and Brown people, but for the millions. The amount of money provided for the purpose of Bantu training in the budget included an increase of R26,5 million, in other words, an increase of 22%. As a gesture I believe this is admirable, but I also believe it is not nearly enough in the context of the situation I have just attempted to describe.

The urgency is made, more acute by reason of the drop in skilled immigrants. The economic development programme calculates that a net gain of 30 000 immigrants per year is essential if we are to maintain our growth rate of 5,5%. If we cannot get immigrants we must accelerate the training of our own people. At the present time the growth rate through immigration is practically nil and therefore it imposes an extra demand and urgency upon us to speed up the training of our people. We see little reflection and realization of this in the budget. I believe this is the kind of thing one must look for in a budget, which is also an instrument of policy. As we all know, our population by the year 2000 is predicted to be 50 million people. If this is so, we shall need at least five million managerial, professional and technical people at our disposal in the economy. Assuming that every economically active White can be educated and trained to assume such positions, the Whites will supply less than half that number. This means that within 22 years, in less than one generation, two and a half million Black and Brown people must also reach that standard of professional, technical and managerial training. This is a mammoth task. I believe that if a budget has a task to perform and if it is to serve in any way as an instrument of policy, we should have seen a budget rich with provision for this urgent task which now faces our country. Economic strength, and therefore also social contentment, political stability and strategic defence ability is what survival is all about. That, at least in planning and direction, is what a budget should also be about.

Turning now from the industrial sector and more particularly to agriculture, the implications of population growth and human productivity are as severe. Only 12% of South Africa’s land area is arable.

15%.

This percentage can be increased and no doubt is being increased, but only at very high capital expense, at very high capital cost. This means that the use of additional land must also be capital intensive and highly efficient. It means that our farmers must be efficient. This brings up the question of land consolidation for which some small provision is made in the budget. I think it is no longer a matter where politics can prevail over economics. The whole question of purchasing land with the use of taxpayers’ money in order to change the ownership of that land without any improvement in the economic utilization of that land is in fact a money wasting, time wasting and energy wasting exercise. I think the time has come for us to review the entire situation. If we must change the ownership of land for political purposes, then by all means let us do it by jurisdictional changes, as recently when we changed the jurisdiction of land as between the Cape and Natal by passing a statute without spending any money at all.

You are arguing on a false assumption.

What we cannot do, and I want to correct a false assumption, is to purchase land from effective, efficient and productive farmers in order to put it in the hands of other people. I do not care what their race is, but if those hands are inefficient then South Africa with its limited arable land is doing itself a very serious disservice. I believe we have got to review the entire matter and rethink this thing from the beginning, because our land resources are a very important part of our capital heritage. I should have liked to have seen this R35 million added to the R25 million which the hon. the Minister provided for technical training for the Bantu peoples.

How else can we grow out of our situation? The time pressures are upon us. We know that we would like to do many things if we had the time, if we had the opportunity, if we had the capital, and if other countries which should perhaps be minding their own affairs, would get off our backs. I believe there is one thing we can do. I have in mind that we should in fact indicate in advance, so that all who run may read, that South Africa has the intention to bring about fundamental changes in its economic and social life. It can indicate in advance, by way of five or 10 year plans, that it is committing itself to development along certain specific lines. It could tie together and co-ordinate some of the things that are already being done. I have in mind, for example, the extension of the economic development programme as a compulsory planning instrument. I believe we must not just look at these problems, analyse them and print them, but we must do more to implement them. Another element could be the Wiehahn and Riekert Commissions on labour legislation and labour utilization which could form an important part of such a plan.

There was recently the statement of intent by the hon. the Minister of Plural Relations and Development on a five-year socioeconomic plan for urban Blacks. That would be an essential part of such a plan. There could be a fuller application of the recommendations of the Theron Commission on the socio-economic development of the Coloured people. I believe, as I have indicated, that we should have a new look at the whole principle and basis of land consolidation in order to ensure that whatever land changes take place, whatever improvements take place in land utilization, these are in fact improvements which make a major contribution to the economy of South Africa in the difficult days which lie ahead. I believe, as I have indicated, that there should be a major review of policy and a major national programme for the creation of a full, productive participation by all South Africans of all races in this single economy of South Africa. Perhaps the most important of all is, as I have indicated earlier in my speech, that without productivity I do not believe that any fiscal or monetary measures or any other expedients will get us out of the difficulties in which we are placed. If our intent in these things was clear, not only to people abroad, who would certainly have much to learn from such an expression of intent, but also to our own people, who perhaps are losing confidence, who are wondering where we are going, we might well restore confidence and reduce hostility everywhere.

This is the kind of South Africa in which we in the Official Opposition believe. We believe in an open society with growth and prosperity unimpeded by the old discriminations, the impediments of the past. We believe it is time, not only for us, but for all South Africans to take a fresh look at these things, to make up their minds anew and to restore the kind of South Africa in which we all really should believe. This is certainly the kind of South Africa we believe in, and this is the kind of South Africa this budget should have been about.

Mr. Speaker, the hon. member for Constantia once again tried to lecture us on the advantages of the open society in which he and his party believe. He is convinced that once we have such an open society, a society in which all the race groups in the country will each have an equal share, all our problems, especially our economic problems, will be solved. I wonder whether the hon. member for Constantia watched the television programme last night in which Black leaders in America discussed the grave lack of progress among the Blacks in America after so many years in an open society, a lack of progress of such gravity that the unemployment figure with regard to the Blacks is three times as high as that for Whites in America. In America there is no limitation at all on the employment or the education or whatever of Blacks. Nevertheless those Black leaders say that after so many years in an open society, one still finds more than a million Blacks in America who are not even interested in finding employment any more. They never seek employment. They do not want employment. And this is what is happening after so many years in a so-called open society. This is the situation which we find there today. The hon. member for Constantia believes that this will not happen here. The hon. member believes that, if we can only establish an open society in this country, all our problems will be solved, all our economic problems will be solved, everything in the garden will be rosy once more and we will once again be the darling of the world.

The hon. member for Constantia also says that nothing is done in this budget to stimulate productivity. Productivity is, however, the result of two things. In the first place it is the result of training, training in work, based on academic training. In the second place it is the result of an inbuilt urge on the part of the worker to do well. I ask you: Did the hon. the Minister of Finance not make provision in his budget for this very problem of training? Did he not make provision for far greater amounts to be spent on academic training? In the current financial year much larger amounts will be spent on education than ever before. The hon. the Minister of Education and Training has just announced that the salaries of teachers are to be equalized. As far as training is concerned, this budget is therefore making specific provision for the necessary growth in the productivity of all our people.

However, I have said that there is a second factor necessary for growth in productivity: The inbuilt urge on the part of every economically active person to do well, to do better than the next man, to do better than he himself did the previous year. Until such time as we can instil this in our Blacks, we will never encounter that productivity among them. I ask you: What are the hon. Opposition members doing who are always posing as the champions of the Blacks in our country? What are they doing to bring home to the Black man that productivity depends on him, too, and not only on the White man? If he does not have it in him and if those who champion his cause cannot help him to make it part of his nature, we cannot have that increase in productivity which the hon. member for Constantia would so much like.

I have the February report of the Chamber of Mines of South Africa at hand, in which excellent graphs indicate to us the result of an increase in wages. As a matter of fact I forgot to say that there is a third factor that is of importance in increasing productivity. That third factor is higher wages, for if the workers receive higher wages and therefore maintain a higher standard of living, higher productivity follows automatically. However, we find the following situation which the Chamber of Mines spells out very clearly to us: Between 1970—the index figure for that year is put at 100—and today, the wages of Black workers on the mines have increased by more than 500%. However, their productivity, measured in tonnage yield is 2% lower today than in 1970. Although there has been such a vast increase in their wages their productivity has dropped by 2%.

Production; not productivity.

I wish to repeat: If one does not have that inbuilt urge to do well, nothing in the world can force one to do well. Therefore, like the hon. member for Constantia, I believe that growth without higher productivity is inflationary; it is tremendously inflationary. Again I ask: What is the hon. Opposition doing to instil this urge, this inbuilt urge in the Blacks whose cause they are always trying to champion?

Nothing.

I say “absolutely nothing”. I wish to return to my hon. friend the Minister of Finance. As we were bench mates until last Friday, I am particularly proud of my benchmate until last Friday. He could be paid no greater compliment than the fact that all three Opposition parties said very, very little about the budget today. They spoke very widely on national affairs, but they said very little about the budget. They could not have paid the hon. the Minister of Finance a greater compliment on his budget last Wednesday.

Therefore I now wish to say something about that budget. Hon. members will not hold it against me if, first of all, I thank the hon. the Minister for having reduced the excise duty on unfortified wines by 3 cents per litre, for there is no doubt that the increase of the excise duty on unfortified wines last year, an increase to 7 cents per litre, definitely had a detrimental effect on the sales of those unfortified wines. Therefore I wish to thank him that he saw his way clear to reducing it in his budget.

I now come to what the hon. Opposition said, and I have in mind in particular the chief spokesman of the Opposition, the hon. member for Yeoville, and also other hon. members of the various Opposition parties. I refer to the subject about which they waxed so eloquent, the fact that we tax the poor. The hon. member for Yeoville and other hon. members of the Opposition are really becoming boring with their annual refrain to the effect that we are taxing the poor. This is utter nonsense! Of course they draw no distinction between who are really the poor and the rich. A man with an annual income of R6 000 will often regard himself as one of the poor, and then he, too, is easily incited by speeches such as those which we heard here once again this afternoon, speeches which try to indicate that he did not get a large enough slice of the cake. If it were not for the damage done by such speeches to our country and her economy, I would not have objected to the hon. Opposition using such methods in order to make a little political capital out of it, for they desperately need those petty political points they score. When one looks at their numerical strength, which is usually not even enough to force a division, one sees that they truly need a little political capital. Therefore I would not have objected to this, but it is doing our country so much damage that I can only condemn that type of behaviour in the strongest possible terms. It is extremely irresponsible to act in such a manner. Taxes are levied so that the State can provide services to the whole population. These services to the value of R9 600 million, which the State wishes to provide during this tax year, are due to the nation as a whole.

When we look at a few of the figures, we shall see that it is specifically the lower income groups that benefit most by these services provided by the State. One only has to look at free education, free medical services, civil pensions and all the similar aspects to see that it is these very lower income groups that benefit most from these services provided by the State. While everyone benefits from them, the lower income groups so much more than the higher income groups, is it not fair that everyone should also make a contribution to the funds which the State needs to provide those services, even if only on a very modest scale? We do not expect lower income groups to pay as much tax as the higher income groups, but we do expect everyone to realize their responsibility with regard to the contributions required for the State to provide those services.

People are quick to say that the lower income groups are not benefiting from this budget at all, but we should see the budget against the background of budgets in the past. When we look at the tax paid by the various groups, we see that a married man with an income of R5 000 per annum pays tax amounting to R520 per annum—this is for a married man without children. The man with an income of R25 000 per year, however, pays tax amounting to R7 120 per year. In other words, for each R5 000 of that man’s income, he pays R1 424, as against the R520 paid by the man with an income of R5 000. Then the hon. member for Yeoville said that there was nothing in the budget for the less privileged person. I wish to repeat that, if it were not for that sort of speech being extremely dangerous to the economy and our national character, I would not have begrudged them the petty political capital which they try to make in this manner. I am not even speaking of the great many people who pay no tax at all. Consequently I am 100% in favour of the general sales tax which the hon. the Minister is introducing now. This, it is to be hoped, will bring home to each and every citizen of the country that each of us has the responsibility to contribute something, no matter how little it may be, to the funds which the State needs to provide all the services which it does provide to the whole population. I wish to accuse the Opposition of trying to destroy the character of our nation for the sake of petty political considerations, especially among the Blacks, as I have also indicated on the basis of the American example I have just quoted. Democracy without responsibility will kill the soul of a people. It is no wonder that the hon. the Minister of Finance is in very good company when he introduces this general sales tax. It enjoys general approval. Even the world-famous Prof. Von Hayek who has just visited our country, a world-famous economist and a winner of the Nobel prize, said that we are on the right track with this general sales tax. The question arises involuntarily: Are hon. members on the other side, especially the hon. member for Yeoville, not on the wrong track when they condemn this tax? Are they not completely off the rails?

I wish to refer to a further point spelt out very clearly in this budget, viz. domestic saving. I need not try to convince hon. members that it is vital that we should make an effort to bring about greater domestic saving. Under present world conditions this goes without saying. It is irresponsible to allege that people earn too little to be able to save. As children we were raised by our parents to believe that if one received a shilling—ten cents today—one should set aside at least a tickey and should save. Saving does not only depend on income. Saving is an attitude to life, a facet of character, and therefore it is irresponsible constantly to put words in peoples’ mouths by saying that they earn too little to be able to save. I repeat: Saving is an attitude to life and a facet of character and without saving we can never generate that capital which we need to stimulate our economy.

Why does one save? One saves, of course, because one wants to have something for the so-called rainy day. In the second place, one saves because one wishes to put something aside for one’s old age. In the third place, one saves because one wants something for higher education for one’s children so that they can be more productive. In the fourth place, one saves because one wishes to leave something for one’s children. In this process one is forming capital. A developing country such as this country of ours needs a tremendous amount of capital.

If it should be so, as hon. members on the other side say, that we cannot obtain enough capital from abroad—which is not true—it is twice as necessary that we devote more attention to domestic saving. What is the hon. the Minister of Finance doing in this budget? He is making major concessions in respect of estate duty. I have said that one saves, inter alia, because one wishes to leave something for one’s children. In this budget the hon. the Minister makes considerable provision for greater concessions in respect of the heirs, the wife and the children. By so doing he stimulates saving and thereby also stimulates capital formation.

I also wish to say something about the role of the entrepreneur in our economic system. Hon. members on the other side are constantly championing the cause of the worker. The Afrikaner is the one who grew up poor. It is he who knows poverty and it is he who knows what it is to grow up in difficult circumstances. There is nothing those hon. members can tell us about that. However, it is irresponsible always to emphasize that aspect only. It is just as necessary to emphasize the role of the entrepreneur, for it is the entrepreneur who has to create the job opportunities to supply the worker with a job, an income and by the same token his bread. Therefore it is just as necessary to emphasize the role of the entrepreneur, and therefore I am grateful for the concession made by the hon. the Minister with the abolition of the 10% surcharge on the tax for individuals and also the concession in respect of company tax. I believe that companies will use that deduction for capital formation. I also believe that the greater part of the 10% surcharge on income tax for individuals will also be used for saving and capital formation. Therefore it is specifically the entrepreneur who will benefit from this saving, and I cannot praise too highly the fact that the hon. the Minister has now taken the bull by the horns by making the concessions to the entrepreneur which are so essential for the necessary capital formation. Without that capital formation our economy cannot grow.

Business suspended at 18h30 and resumed at 20h00.

Mr. Speaker, I now wish to discuss the plan of the hon. the Minister of Finance to eliminate abuses with regard to the securities rand bonds and to obtain money for the State. I quote what the hon. the Minister said in this regard—

This concerns securities rand bonds—

Unfortunately there are still a few loopholes in the system. I should now, in all modesty, like to expose one of the loopholes to the hon. the Minister so that it can be closed. These emigrants, these runaways, got their money out of the country by buying bonds just before the date for the payment of interest on semi-Government institutions such as Escom and by then selling the bonds at a lower price just after the date in question. They then have the right to take the interest out of the country. Therefore, by selecting a bond every time, buying it just before the date for the payment of interest and selling just after the date of payment of interest, they have succeeded in getting their money out of the country. The committee of the Stock Exchange has requested its members, the brokers, not to handle such transactions and in this regard they have co-operated very well.

There is, however, a further loophole. People buy shares with a high yield, a yield of 17,4%, 16,0%, 13,8%, 15,2%, 11,6% or 14,3%, etc. They buy the shares just before the shares go ex-dividend, and then they sell the shares again at a lower price, for the price of the share immediately drops by approximately the same amount as the dividend payment. They then receive that dividend and then they have the right, in terms of the provisions of our exchange control regulations, to take those dividends out of the country.

The committee of the Stock Exchange and its broker members then find it impossible to prevent those transactions as well. I have already said that the brokers co-operated very well in this regard as there is no law or regulation in this case which prohibits them from handling those transactions; it was purely a request, a directive by the committee of the exchange. In cases where shares are involved, this is not possible, and therefore I wish to suggest that the hon. the Minister should promulgate a regulation which will prevent a foreign shareholder from being able to take dividends out of the country if he has held those shares for less than six months. Six months after he has sold the shares, the price is once again more or less at the same level as it was before they went ex-dividend. Therefore I wish to suggest that it be laid down that shares have to be held for six months before the dividends thereon can leave the country. By so doing we will close a further loophole whereby emigrants can take their money out of the country.

My time has almost expired, but I wish to bring one further matter—even though I do it ad nauseam—under the attention of the hon. the Minister. In this regard I refer to the position of the civil pensioners who retired years ago. I have already discussed the matter with the hon. the Minister, but I wish to reemphasize it here. We shall have to introduce a graded system of increases of civil pensions. If a man retired three to four years ago, he receives no increase. If he retired three to six years ago, he received an increase of, say, 5%. If he retired even further back, the increases increase correspondingly. In this way we shall eliminate cases such as that in my constituency, where a school principal who served in this capacity for 25 years and retired 20 years ago, receives a civil pension of R79. This is less than a social pension. Fortunately the hon. the Minister granted an increase of 5%, with a minimum of R15, in this regard. This minimum amount is, of course much higher than 5% of these low pensions. However, I wish to appeal for a graded system of increases. The longer a person has been retired, the higher the percentage increase should be, for only then will we really be able to do justice to our old pensioners who paid good money into their pension funds and are now getting bad money back.

Mr. Speaker, I have a few bones to pick with the hon. member for Yeoville tonight. However, I note that he is not at present in the House. I want to discuss a few matters with him, and I should appreciate it if his hon. colleagues would be so kind as to ask him to be present, because I should like to continue my discussion with him. I shall leave the two matters which I want to refer to in pursuance of what the hon. member said today and what he said during the budget debate last year in abeyance for a while until he puts in an appearance. If he does not turn up, I shall simply have to address him in his absence.

The hon. the Minister termed the budget a budget of “growth with discipline”. I think one can with equal justification give another apt description of the budget, viz. that it is a budget that has as its objective a total strategy for the Republic of South Africa. It is an irrefutable fact that in South Africa there can be no question of national defence if we do not have a strong economy to underpin it. In other words, there will be no defence of our borders, internal peace and order, training, growth and development without a strong economy. I think this budget reflects a very important shift in the strategy of the Government to keep South Africa as strong as possible. The inherent strength and durability of our economy is reflected in the ability which it displayed to withstand the recent strict disciplinary measures. If one considers that we are going to spend less in real terms in this year’s budget than we did last year, the hon. the Minister and his colleagues deserve to be complimented on the measure of self-discipline which they applied.

One may regard the budget as a chess board with, in real terms, the same number of pieces on the board. However, these pieces have been arranged in accordance with an entirely different strategy this year than they were last year. The strategy which is displayed on the board this year, must of necessity compel the respect and high regard of any informed observer of our economic conditions.

The creation of an overall strategy can very easily conjure up a plethora of expenditure, and I think that, in the past, the Opposition distinguished itself as master of this art. I think we shall discover during the course of this debate, how many wonderful expenditure votes the Opposition is able to conjure up. The task of this budget, or of any other budget in these times, is to find the means to finance this overall strategy, of a strong defence and a strong economy, and everything that goes with it. In this respect the hon. the Minister had very few options, for to exploit additional sources of income in a country whose financial structure is already so refined as South Africa’s is, requires careful planning.

A very important matter which the Opposition has up to now very conveniently omitted to mention, is that we have reached the stage where additional sources of taxation no longer comply in full and in all respects with the requirements for so-called “good” taxation. We have reached the stage where certain types of taxation are going to fail that test, not because the tests are too stringent or because it is a poor type of taxation, but quite simply because we have developed to such an extent already that we have exploited all the logical and obvious sources of taxation and now have to give serious thought to sources which might also have serious sporadic side-effects. I shall return to this aspect later.

The hon. the Minister had a choice. He could either have taxed income or wealth in the form of estate duty, etc., further, or he could have developed indirect taxation further, viz. spending taxation, i.e. things such as customs, excise and sales duty, and so on.

I now want to refer to direct taxation. I think that, with the exception of the hon. member for Yeoville, there is consensus in South Africa today that we cannot afford a further increase in direct taxation on the income of individuals or companies. There are authoritative sources to confirm this. Today the hon. member for Yeoville levelled very acrimonious remarks at us in this regard. He referred to discrimination against lower income groups, not only in regard to the general sales tax which has now been announced, but also in regard to the income tax structure, according to which people, as their incomes increase—on which inflation also has an effect, of course—move upwards on the income tax scale and gradually incur a higher marginal tax rate in their taxation structure. He also objected to that. I think that, with the exception of the hon. member, who is the chief spokesman on finance for the PFP, there is consensus on this matter. I want to quote from a few sources. Mr. Raymond Parsons said—

I think it is obvious what he meant by this. I quote the following from Tegniek of March 1978—

I could also quote from Volkshandel. However I want to quote from a very good source, namely from a speech which the hon. the Prime Minister made last year in Pretoria before trade union leaders. I shall quote only a short passage—

In other words, there is consensus on this matter, viz. that additional sources of revenue in the form of direct taxation is simply not possible. In fact, people have been agitating for relief from direct taxation for a long time.

Over the years this has even been developed into an agitation for the alleviation of estate duty. How can one alleviate income tax? One does not tamper with the tax structure, as the Opposition constantly wants to do. Before one pays attention to the tax structure as such, one eliminates or trims the frills and flourishes attached to it. One first eliminates the surcharge and the loan levy. Eventually, when one has trimmed everything off and one still wants to change the tax, only then does one change the structure as such. A responsible Government does not tamper with its tax structure. It makes use of surcharges and other methods, such as the loan levy, to raise or lower the taxation in its entirety as the demands of the times change. These are the techniques which one applies in a healthy financial administration.

Let us consider taxation on spending. Many people are agitating for us to broaden our present sales duty and increase the rate. But is that possible? The Government and its officials have been applying this tax for years now. They have acquired an intimate knowledge of the advantages and disadvantages of sales duty. I think that, in regard to this matter too, a consensus exists, viz. that the scope for any extension of sales duty in South Africa is extremely limited because one experiences problems as one tries to raise the rate and broaden the base. In the first place, therefore, it can never comply with the requirement for a broadening of the base. It is simply impossible. In addition sales duty suffers from escalation disease. It is a well-known fact that if a duty of 100 cents is levied at the starting point, the consumer ultimately pays 141 cents. So it escalates, and the 41 cents go into the pockets of the merchants in the commercial chain. It is unfair, on both sides, to firms as well as consumer. A tax is a tax and must be paid as such into the Exchequer.

Fluctuating rates on various items is not only difficult to administrate, but also distort prices. If there are differing rates on two items, items between which there is a specific relationship at the point of manufacture as far as the price is concerned, and a different tax is now applied to them, the relationship between the ultimate prices of these two items is completely distorted in the end. It is discriminatory against those items on which a higher purchase duty is charged than others. Sales duty is therefore a tax which one cannot take too far by an adjustment of the rates.

In addition sales duty damps competition. That enterprising retailer who is prepared to cut his costs, to reduce his profit margin and offer his product to the consumer at a far lower price than his competitor, is prevented from doing so because the tax which is levied at the point of origin remains unchanged as a component in the selling price.

It is obvious that with a sales tax as is now being proposed, if a retailer reduces his price, he also reduces the amount which has to be paid as tax.

Another important matter which one would after all have expected hon. members on that side of the House to mention, is that if one levies a sales duty at the point of origin, that sales duty represents a loan to the State by the entire trade, because the sales duty is paid immediately, and the trade only gets it back in its final phase, viz. on the day when the consumer pays it. This is a very important financing aspect of the matter which they have not yet mentioned.

In other words, one concludes that expansion of sales duty is in fact possible, but is considerably limited as far as both the rates and the basis are concerned. How does one eventually define a “luxury item” in a country such as South Africa where wages and salaries are increasing so rapidly? Therefore, as far as indirect taxation is concerned in the form of sales duty, there are no substantial and productive further possibilities of expansion.

Value-added tax does not in South Africa have the application possibility which it perhaps has in Europe owing to the administrative burden that goes with it, etc. What is more, a person of the calibre of Prof. Sadie said as long ago as 1970 that it made no sense to apply that clumsy system when one could achieve the same results with an ordinary retail turnover tax.

In his speech for the sources of taxation the hon. the Minister came face to face with this truth again and I want to quote from Public Finance in Theory and Practice by Prof. R. L. Prest, in which he said the following—

We have already ascertained this from the Opposition ranks. He goes on to say—

In other words, eventually we reach the stage where we have no alternative but to consider a sales tax with a fixed rate. It is in this respect that I want to take issue with the hon. member for Yeoville this evening. I think he did South Africa an injustice. I think that today, and also when he spoke the other day, he introduced an element into this taxation, into the finances of South Africa and the essence of the various measures of this budget which made no contribution to the preservation of internal peace and a situation of trust between Whites and non-Whites. I want to accuse him of this directly and shall prove it in a moment, for the introduction of this general sales tax complies pre-eminently with three of the four most important requirements for “good” taxation. In terms of the fourth requirement, i.e. fairness of taxation, he made an accusation today and the other day, and I hope I find time to deal with this in full.

In the first place the neutrality of this general sales tax is above suspicion. It is neutral because it causes no distortion whatsoever in the entire price structure. It does not in any way disturb the traditional price and trade structure of South Africa. It has no built in escalation. Nor does it have any problems as far as the adjustment of the rate is concerned. A very important aspect is that, owing to the income potential of this tax, it was made possible for the Minister to reduce other rates of taxation. The reduction of the other rates of taxation has consequently enabled the hon. the Minister to put certain stimulatory measures into operation. This is a direct result of the introduction of this tax.

The second requirement of taxation is efficiency. Initially the cost of collecting this tax is going to be a little high, because there has to be training, etc. Ultimately, however, the cost will be far less, particularly in comparison with the revenue which it will entail. In other words, it will comply pre-eminently with the requirement for efficiency.

A third aspect requirement for good taxation is certainty. This tax complies with the requirement for certainty because the dealer knows precisely how much he must charge. He can calculate it easily. He knows when he is going to pay and he knows how he has to pay. It is an easy system which affords all concerned the necessary certainty.

A very important characteristic of this tax is that it does not play any part in the entire trade structure until a transaction takes place. Only then is the tax levied. The dealer who is saddled with merchandise which he cannot sell, is not also saddled with the additional burden which the fiscus formerly imposed on him, i.e. the burden that he had to finance the fiscus with tax which was payable in advance, while he struggled to get rid of his stock. As far as the trade is concerned, this is a very fair tax. It also encourages cash sales, for the dealer who pays the tax when the transaction takes place, is not readily going to make credit available to a purchaser.

The fourth requirement for taxation is its fairness. It is in this respect in which I wish to take issue with the hon. member for Yeoville. I want to quote what the hon. member for Yeoville said last year during the budget debate here. This is what he said (Hansard, Vol. 67, col. 5011)—

A little further on in his speech the hon. member said—

And still further on—

This is extremely important now—

Then, just after the hon. the Minister had delivered his budget speech this year, the hon. member for Yeoville said (Hansard, 29 March 1978)—

So the hon. member carries on and eventually arrives at “quadruple tax”. I want to tell the hon. member without any qualification that that was the most irresponsible statement he has ever made in this House. The fact of the matter is—and it is easily demonstrated—that this tax does not place such a great burden on the consumer as the hon. member insinuated. The indisputable fact is that the greater part of those amounts return indirectly to the “poor” people who paid the tax. It does in fact return in the fact of an improvement in the quality of their lives and I shall demonstrate this in a moment.

However, the hon. member for Yeoville also said last year that he was a person who was an advocate of stability. I want to put it to him that the type of policy which he and his party proclaims, is quite the most unstable we have ever seen in this country. Their policy is so unstable that, in the by-election which is going to take place the day after tomorrow in Springs—and this is stated in Beeld of 25 March—the two candidates are not even prepared to talk to a journalist about the policy of the PFP. According to Beeld their policy changes too frequently. There is too much uncertainty. The candidates say: Very well, give me your questions in writing and we shall reply to you in writing as far as the policy is concerned.

People who do not even have a policy which they can sell in a small constituency such as Springs, speak from these benches of stability and say that we should not drag petty politics into important matters, but at the same time the hon. member acts in the irresponsible way in which he acted.

Let us consider this tax, and its fairness or otherwise. I immediately concede to him the argument that this tax is indeed regressive. It means that the rate which is paid on items is not related to the earnings to the people purchasing the item. People with low incomes therefore pay relatively more tax because they spend a larger portion of their income on the type of goods on which this tax is being levied. They spend a large proportion of their incomes on those commodities than those in the higher income groups spend on these taxed items.

Judged purely on its face value, purely emotionally, purely superficially, purely for political gain, as we know the approach of the PFP, it seems that the general sales tax fails the test of good taxation. But what are the facts of the matter? Our taxpayers are not dealing with people on this side of the House who are a lot of capitalistic, unscrupulous exploiters. Nor is the country dealing with a lot of baboons for officials who are not capable of investigating the effect of such a tax thoroughly and scientifically. The attitude of hon. members opposite shows us that they did not take the trouble of talking to their professionals, the specialists of the Department who have worked out and tested this matter in the field. Is the hon. member aware that no fewer than two universities were involved in investigations to determine the effect of this tax? I do not think he is aware of that. It is no use quoting reams of figures across the floor of this House to demonstrate these matters but I will say this, however: The results of those scientific investigations indicate that this tax is not such a Draconian measure as the hon. Opposition is trying to imply it is. This tax does not have the effect on the poorer people which the hon. members are trying to imply it has. It is not a new taxation system whose advantages and disadvantages are not known to us. The Franzsen Commission sounded a warning a long time ago against the problems connected with this type of taxation. On the grounds of the facts which are known to us, the matter was thoroughly investigated again and trips were taken abroad to study it in other countries as well.

But as far as this tax is concerned, the so-called “taxing of the poor” it is not important in the final instance what the hon. member for Yeoville has to say about it, for he does not have the last word on the matter. The truth as far as this tax is concerned will have the last word to say on this tax. I am afraid that the hon. member did not convey the whole truth concerning this tax. The whole truth will prove to be the decisive factor.

Therefore I want to make an appeal to people who are really interested in the moral aspects of this tax. I want to make an appeal in particular to those who report on this tax— those people who are going to report that with this tax, as the hon. member stated so irresponsibly “the Minister wants to tax the poor”—to acquaint themselves with the facts and to take the trouble to go to the department to acquire there the results of the scientific investigations, before commenting on it.

What are the facts concerning this tax? The net effect which the tax is going to have on the person affected by it, is far less than the mere 4% to which reference has been made. The tax must be seen in perspective against the background of the total tax package. It should be seen within the perspective of where the funds are going to be spent which are collected in this way. That is the truth. In addition: The man who is going to pay the tax—from the nature of the case we take a Black man as example—with an income of say R1 200 per annum, will find that R1 200 is not the total amount on which he will pay the tax of 4%; he will pay sales tax only a portion thereof and for such a person we arrive at an amount of less than R40. The sales tax is therefore going to cost him less than R40 gross per annum. With this in mind it is significant when the hon. member says that he will, here and there, grant subsidies, such as an amount of R20 million; that he is also granting other rebates. It is also significant therefore, when the hon. member says that he is abolishing the general Bantu tax of R2,50 entirely. When one looks at the amounts involved in perspective, even these small amounts are significant figures.

There was another matter which the hon. members omitted to mention. They omitted to inform this House of what the qualified effect of the reduction of 5% in the sales duty will be. Such a reduction will eventually, after it has reached the consumer, amount to approximately 7%. They also committed to mention this. In other words, they omitted to subtract that less than R40 from the effect of the reduction in sales duty.

Then, too, there is another matter they did not mention, something which they are not telling the consumer outside this House, and that is that the R650 million, which is according to this budget going to come from the new source of taxation, does not all come from the pocket of the individual consumer. The entire Government sector is equally liable to that tax. In other words, a large portion of that tax will be derived from the general sales tax which is also paid by the State and all the way through to each municipality. They are also going to pay the general sales tax. So, the burden which the consumer eventually has to pay will be far lighter than the total amount of R650 million.

They said nothing of significance about the other compensatory measures which were announced. It is important that the 10% surcharge on personal income tax was reduced and it is important that the repayment of the loan levy will be made earlier. These are things which enable the consumer to overcome the initially difficult problems of this taxation. Nor did they tell us what the influence is going to be of the reduction of the tax on imported goods, transfer duties, etc. It is a total package which determines the tax structure of the consumer, but nothing was said about that. They accentuate only the 4% and the effect which it will allegedly have on the poor man. It is just at this point that their argument is finally destroyed, because, apart from the net effect of the sales tax in the midst of the total tax packet, the figures for which they can also obtain from the Department, there is a second aspect which is very important and must be borne in mind, namely the fact that the non-Whites’ wages and salaries are increasing so rapidly that the income pattern of the non-Whites gradually rises above the regressive nature of this taxation.

This is an irrefutable fact. In other words, that tax becomes less important as the income and the buying power of the poorer people increases. These are matters which should be borne in mind when one asks oneself whether it is an unfair tax.

But there are other concessions as well which the hon. the Minister is making and which materially affect the quality of life. He is granting tremendous social increases in spending on matters which affect the poorer people in particular. We could analyse this aspect. There is the Department of Community Development. Just consider what additional amounts are going to be spent on housing. Just look at the amounts which are going to be spent on health. Just see what is going to be spent on education, particularly Black education, where there was a 23% increase. Then, too, there is the Department of Coloured Relations, for which there is an increase of R35 million, or 14%. There are all indirect methods which the Government is applying to return this money collected in the interests of those people who are affected the most by the tax.

I am convinced that it is just as important that this Government care for the lesser privileged in South Africa as it is that it should give the higher income groups their fair share. It is just as important that they encourage them to proceed with their enterprises and the creation of work opportunities. Here and there the poorer people may perhaps pay a little more tax, but what are they receiving in exchange? Apart from what is indirectly being returned to them they are receiving greater prosperity which is created by the leaders in the community who bear major responsibilities, those people who deserve higher incomes and who are not being taxed so onerously that they cannot fulfil the indispensable role which they have to play in the economy. We offer no apology for the support which this side of the House accords to the system of free enterprise. If one therefore analyses, in such a debate as this, how the hon. Opposition approach the matter, one can only arrive at one conclusion which is that this budget has knocked them for a loop. They are so lacking in criticism that we had to listen this afternoon to a lecture on socialism and goodness knows what else. They are so lacking in criticism that they were prepared to make such a dangerous statement as this one—“taxing the poor”—in the House, something which is extremely explosive among the lesser privileged groups in our country, a statement which, in accordance with their manner of presentation, was wrested completely out of context and perspective. I trust that they will acquaint themselves with the facts and on their part rectify the matter.

Mr. Speaker, I am tempted to reply fully to the hon. member for Florida, who has just resumed his seat, because he has really not done his homework tonight. Unfortunately my time is limited, but let me just give a few examples. The hon. member said that we, the Opposition, had remained silent when the original sales duty was introduced and that we had also remained silent about the escalation which took place.

I did not say that.

He was speaking in particular about the escalation in sales duty at the manufacturing level. He alleged that we had kept quiet about that escalation. The hon. member should know that that is totally untrue.

I did not say that.

At that time there was of course another Official Opposition, an effective Opposition … [Interjections.] …who from the first debate on the original sales duty objected to the possibility of an escalation of that tax. I myself more than once took part in those debates.

The hon. member also referred to a floating as against a fixed rate. We obviously accept that one cannot have a floating rate. If it has to be a fixed rate, however … [Interjections.] No, my colleague, the hon. member for Mooi River, has made it very clear. If there has to be a fixed rate—and it is necessary if one wants to eliminate administrative costs—there can be only one solution, namely to subsidize where the pressure on the consumer is the heaviest.

My hon. colleague made it very clear, and if I have the opportunity, I shall come back to it later. To state, however, that the tax will become less important as the purchasing power increases, is absolutely absurd, because with the increase in the inflation rates the values of each rand decreases. Therefore one should not only consider the purchasing power when going into the taxes people will have to pay, but also the declining value of the rand. I hope that I shall have the opportunity to refer to this point again before the end of my speech.

However, I should first like to reply to the allegations which the hon. member for Newcastle made here earlier today. I want to reply very clearly and frankly to his statements. He quoted certain words from Die Burger. Let me say immediately that I regard what I read in a newspaper with suspicion. [Interjections.] Wait a minute! I am not going to run away from that. I am merely saying that I do not accept a newspaper report as the correct version of what has really been said. If the words which the hon. member quoted have actually been spoken, however, I should like to say that they are not in line with the policy of my party or the spirit of my party and that I therefore repudiate the spirit of those words unequivocally. This party is totally dedicated to the defence of South Africa. We are totally dedicated to the maintenance of the security of South Africa as a country and as a State. However much our politics may differ, those differences do not affect or reduce the quality of our dedication to the defence of South Africa. Therefore I should like to say that if those words were in fact used, it was against the spirit of my party, so I cannot endorse them, for that is not the way we as a party feel about the defence of our country.

Suspend him!

Mr. Speaker, I should like to return to the budget in which the biggest single amount is allocated to defence. The amount appropriated has been reduced by R100 million as against that of last year, but as a result of the transfer of last year’s surplus amounting to R239 million the Defence Vote still constitutes the biggest and most important item in the budget. May I just mention in passing that one of the disappointments of the last six or eight months has been that the attempt to channel the investments of the nation towards defence by issuing bonus bonds has not enjoyed the support which it should have. I believe that the Government is to a certain extent to blame because they did not publicize it, they did not show any enthusiasm and they did not launch the programme of encouragement which the scheme deserved when the bonus bonds were issued. I hope the hon. the Minister of Defence and the hon. the Minister of Finance will promote this matter in the coming year and that we shall not have a repetition of this halfhearted, in fact sloppy, promotion and encouragement of the bonus bonds. I believe this is one sphere where the nation can and would like to invest if they are properly encouraged. It is something which deserves the attention of the State.

I have mentioned defence as being the biggest single item in the budget and I should like to add immediately that the eyes of South Africa are fixed on our preparedness, on our ability to defend ourselves, also at the place where the threats against South Africa are the gravest.

† I believe, Mr. Speaker, that I would be failing in my responsibilities if I did not use this parliamentary opportunity tonight, particularly in the light of recent events, to place on record where my party stands in relation to where the immediate danger and the immediate requirement for a defence capacity actually exists at the moment, viz. in the South West African situation. I hope it is unnecessary, but, nevertheless, let me say at once, that I have no intention of dealing with or exploiting the delicate current negotiations on South West Africa, nor do I seek premature answers, nor a premature debate on the detail of those negotiations. There will be an opportunity to deal with that later, I hope sooner than later. Let me say in passing that we have not been briefed by the Government—which is perhaps a pity—and neither are there any confidences which we have received from the Government which I am breaching or dealing with this evening. However, I have obviously made it my business to be informed on the situation as far as it is possible.

The facts, as we know them, are that agreement was reached at the Turnhalle conference by the representatives of all communities in South West Africa and we welcome both the method and the approach which was adopted. I want to say, without making politics out of it, that we see this as pluralism in its true meaning, with community talking to community, with group talking to group. I repeat: That is pluralism in its true meaning. I want to add that we believe that any lasting solution in South West Africa, South Africa, or in any other plural society, must give security to minorities and to communities as such by recognizing and accommodating their identities in the final constitutional structure. In the second place we believe that any concession to Western proposals which departs from this basic principle should not close the door or remove the right in the self-determination by the people of South West Africa—I want to emphasize the words “in the self-determination by the people of South West Africa”—to accommodate this pluralism in their final constitution. We know as a fact that the Turnhalle was rejected by the Western Five and by Swapo. Is it perhaps unfair to say that it was rejected on Swapo’s instructions?

New proposals were submitted and they are now under negotiation, but as I have said, I shall say no more on it. Everyone hopes, and we hope and we would welcome, a settlement enjoying international recognition and bringing an end to terrorism and violence in South West Africa. The goal is a free society; bringing peace under a democratic system of government; guaranteeing security from violence or from domination for every community as well as every individual in a way which is acceptable to the peoples of South West Africa. I also want to state very clearly that my party believes that South Africa has a dual responsibility in this respect. We have a historic responsibility to the peoples of South West Africa, a responsibility mandated to us and carried over to us over the generations. We have a second responsibility, however, and that is to the peace and security of Southern Africa itself as a whole. If the price of recognition by the world endangers either of these responsibilities, if it gambles with freedom or with the security of the peoples of South West Africa and if it opens the door to a Marxist dictatorship, then it is too high a price to pay in the eyes of this party. Therefore we support every effort to achieve agreement, security and peace in the area. We see the ball as being in Swapo’s court at the moment. They are the aggressors and not South Africa. It is for them to lay down their arms and it is for them to accept a peaceful solution. I want to add that I believe we cannot let the situation drag on for ever while young men are dying or are being maimed, while political leaders seeking peaceful solutions are assassinated, abducted or intimidated. These people are not Whites, but Black leaders, Black civilians, innocent women and children who are being murdered by Marxist guns and Marxist mines. I want to repeat tonight what I have said before: If Swapo continues its cowardly aggression, its hit-and-run tactics, i.e. hitting and running back to hide behind rules and borders which they ignore in one direction and rely upon in the other, there is no choice in my mind but to play by the rules which they have made, i.e. to assert our right to hot pursuit, to meet force with force, to meet attack with counter-attack and to clean them out of their nests wherever they may be so that innocent civilians can live freely in peace. This is the alternative the great powers must accept as the consequence of failure to face up to the realities of Africa, the failure to say to Russia and to her puppets: “We have had enough. You have had your last territorial conquest, either by default, subterfuge, diplomacy or violence.”

I have spoken openly because I believed that I had to say what we in this party believe; because a political party in opposition must have the guts to state where it stands on cardinal issues and to take the consequences if it is wrong. If I am wrong we are prepared to take the consequences of what we believe.

I want to say one final word in this context as one of the handful left in this House—I thought it was three, but I believe it is now five—who served with the Western powers in the last war. I claim this right because I believe I am now the only member of this House of Assembly who served throughout that war for 5½ years.

Think again.

You are certainly not the only one. I served 5½ years.

I am glad that there are more of us. There were five that I knew of, now I know of two more who went right through. [Interjections.] I am not arguing or playing politics. I hope those hon. members will back me in what I now want to say. I am claiming my right to say my say to the West with whom I fought on the side of democracy to try to save the world from totalitarianism. I believe I am one of those who has the right to do so and I shall welcome it if those hon. members who served as I did, will join me in expressing this view to the West. I want to say that it was not just numbers and weapons which gave the Western powers the title of “the great powers”; it was ideals, beliefs, moral integrity, courage, at times little more than faith, which gave them that title. There were times like Dunkirk when nothing but faith kept them going and proved their greatness. I want to appeal tonight to the West, particularly to the United States of America, rather to remember North Africa, where many of us served together, Italy, where thousands of South Africans served with the United States forces, Normandy and the Far East, and to remember the spirit which motivated them, and not to let the humiliation of Vietnam so cripple the moral fibre of a great nation that for fear, shame or blackmail they should turn Africa into a Marxist satellite and enslave its people in puppet dictatorships. This may not be their objective, but it could well be the epitaph of freedom and democracy in Africa if this were allowed to happen.

I believe it was my duty and my responsibility to say what I feel about these things here in this House, here in the Parliament of South Africa, where it is before the eyes and the ears of the people of South Africa. I did not want to say it in any other way or in any other place, because this is what faces us in the months and years which lie ahead. There will be opportunities next week to deal with matters like the solution of the problems which face us, the causes and reasons, what must be done and what should have been done, and I do not intend to deal with them tonight. These are matters which I do not want to tie to this issue tonight. I will deal with them when the time comes and I will criticize and attack those things which I believe should not have been done, and point out those things which should have been done. I am dealing with this now, at a time when we are voting the money which will give to South Africa its security, power and punch, and what it needs to ensure, not just for us, but for those for whom we are responsible, security and hope, because we dare not allow this country of ours to become one of those puppet States.

A heavy responsibility rests on this Parliament, a responsibility to look beyond the emotionalism, the blind loyalty and blind acceptance of norms, actions and habits which have guided us.

Earlier on I referred to a statement, which I believe was made in a spirit of resentment, possibly against the imposition of norms unacceptable to a section of our society. Let us recognize that in this issue of security there must be norms acceptable, not to any section, colour or group, but to all our people. With this money we are voting for defence, we must get from it the best value and the real security we need. We as a new party want to pledge our total dedication to the cause of making this possible and if in doing so it is necessary—and it will be necessary— for us to attack and criticize those things we believe aggravate our dangers, harm and weakenour capacity to defend, we shall say those things frankly and fearlessly to this House.

We are going to say these things. However, let us not confuse the things on which we disagree with the basic issue of ensuring that in this point of Southern Africa the standards we have tried to build up here shall not be destroyed. We, the peoples of South Africa, must not look to sectional interest and fears instead of looking to our people as a whole, to all the peoples of the Republic, as the bulwark and common cause of one entity which together must repel communism.

I am sorry if I have interrupted a financial debate at this stage. I have explained that it would not have been possible for me to be present to say these things at a later stage, and, I believe that I could not allow this first opportunity, in the light of present circumstances, to pass without saying what I have said.

Mr. Speaker, it is a pleasure to hear the hon. member for Durban Point rise to make such a positive speech in which he spells out, in the way he did, certain things which are fundamentally to the advantage of and in the interests of South Africa. What he said is precisely the opposite what hon. spokesmen of the Official Opposition have said today. We are grateful for that.

At the start of his speech, however, he accused the hon. member for Florida of not having done his homework. I just want to say to the hon. member for Durban Point that he was not listening properly. The hon. member for Florida did not say what the hon. member maintained he said. He understood him quite wrongly.

I now want to refer to the matter raised by the hon. member for Durban Point with reference to the speech by the hon. member for Newcastle. I now want to ask the hon. member directly whether he will take action against that hon. member in his party and will suspend him if Hansard proves that this newspaper report is correct. What is he going to do about it? To me it is pathetic. [Interjections.] Is he going to take action against him? I want to say to the hon. member for Durban Point—he is the leader with nine hon. members behind him and a few representatives in the provincial council—that it is more than a week ago that an hon. member in his party made such statements. What kind of a leader is he if he has failed to realize this for a full week and an hon. member on this side of the House has to draw his attention to it? How would he govern South Africa as a Prime Minister if he were to come to power? [Interjections.]

Finances has been discussed at length this afternoon and many matters have been touched on. I intend climbing the mountain slopes on the Fanie Botha hiking trail until I reach the mountain tops, from which vantage point I can take a brief look at certain important matters which have not yet been touched on, and say something about them. Firstly I just want to mention, with reference to what the hon. member for Schweizer-Reneke said, that last year, on 30 March, the hon. the Minister made the announcement that Dr. J. H. de Loor would become Secretary for Finance. At that stage he was Director of Finance in the Department of Finance and also South Africa’s chief representative at the IMF and at the World Bank in Washington. I think it would be appropriate to convey the thanks and tribute of this House not only to Dr. de Loor and everyone in the Department of Finance, but also to everyone at the Reserve Bank—and here I have in mind Prof. Franzsen as well—for the hard work they have done throughout the year to keep South Africa’s finances sound and to have come up with this budget.

There is another point, too, to which I should like to refer this evening, viz. that on 30 May the NP will have been in power for 30 years. What have we found in the course of these 30 years? In 1946, at 1970 prices, the gross domestic product was a mere R3 720 million. In 1976 it was already as much as R15 575 million. That is how the NP has served and developed this country over a period of 30 years, as the hon. the Minister’s budget is again doing this year.

What did we find at the time of the recent election? The entire nation of South Africa thanked and paid tribute to the NP. We won this large number of seats, and there is not a single large city in South Africa which does not represent the NP in its heart and soul. For example, there are Cape Town Gardens and Von Brandis in Johannesburg. We have an NP mayor there as well. At the moment the NP is also master in Port Natal, in East London City, in Port Elizabeth and in other cities. That is how the NP has looked after the finances of this country over the years, because lay hands on a man’s pocket, and he will kick you.

I should like to say something to our hon. Minister. One should not wait until someone is dead before bringing him roses. It is while the man is still living that one should say what one thinks of him. Today we are privileged to have a good English-speaking Afrikaner as a Minister, someone who knows South Africa and its people. He is a strong man and he has used his power well, a forceful man who uses his talents to the full, a brilliant Minister who has rendered unsurpassed service to South Africa with this budget. He is a Minister who is a master of his trade. We thank him sincerely for what he has done by means of this budget. I think we can in fact refer to this budget as a budget of the people. There is no one in our entire society who is not involved. This budget is imbued with strong financial discipline and it is due to last year’s budget—the discipline applied by the hon. the Minister, the department and all the officials I have mentioned— that South Africa can face the world with a smile today and can sleep peacefully.

The Opposition does not realize what the effect is of the enormous concession in respect of company tax and personal tax. Whereas the higher income group has been placed in a less favourable position, the marginal scale is now being reduced from 70 cents to 60 cents in the rand. These highly paid people in South Africa are the very people who form capital and effect savings in South Africa. It is they, too, who create employment opportunities, provide work and expertise, and so on. If we had not accommodated this section of our community, the situation would have deteriorated steadily. It is far better to make a poor man pay a few cents in tax and give him a good job from which he can earn a livable wage. That is what the hon. the Minister has done by means of this budget.

Furthermore this budget is totally deflationary. Whereas the old sales duty is now being partially replaced and a general sales tax is being introduced, it can rightly be said that it is deflationary. I want to ask the hon. the Minister to do away with the remainder of the sales duty as soon as possible, as matters develop. It cannot be done overnight, but it can in fact be done. In the course of the debate today, reference has been made a number of times to the commentary of economists, of the news media and others in this budget. Although bitter attacks have been made on me in the past by newspapers because I spoke to them frankly, I do not mind speaking frankly again this evening. Apart from the few instances when things have gone wrong, I think that it is appropriate this evening that we in this House, too, should thank the newspapers because they have adopted such a positive approach to this budget. Our newspapers have done their job consistently well. They have acted positively and have not made use of headlines affording a distorted image of the content of the budget. Nor did they go wrong in their headings; they consistently stated the truth, except in isolated instances, as I have already said, where things were not put quite correctly. However, if we read through all the reports carefully, it is evident that they were well written. I want to quote a few of the headings to the House. Die Transvaler’s heading was: “Horwood deel uit. Belasting ligter, dog pryse hoër.” That is the truth, after all. There was sound reporting throughout. The newspaper said that economists were delighted, although it was added that there was some sour among the sweet. Thank heavens the Opposition did not have a share in this. If that had been the case, it would not have been sour, but bitter.

I think that the sour to which the newspapers referred was the hon. the Minister’s concession relating to the price of unfortified wine. To us Transvalers, unfortified wine, dry wine, is sometimes a little on the sour side. That is probably why the newspapers referred to sourness.

The heading in The Citizen was: “What a happy budget. Tax cuts and something for everyone.” This newspaper displayed a very sound and positive attitude. It did not do South Africa any harm. Nor did it attempt to incite the various race groups against each other as the hon. member for Yeoville of course tried to do. In any event the hon. member for Florida clearly indicated in what respect the hon. member for Yeoville did so.

The Financial Gazette heading read: “Away with austerity. Owen Horwood’s kindest cut. At last the budget is providing incentive for the free enterprise system.” After all, those are the facts, summed up in a brief and businesslike way.

I could also refer to the heading in Oggendblad: “Belastingbonus. Almal betaal minder. Ekonome ingenome.” I could continue in this vein. I could refer to Sake-Rapport and to the Financial Mail. The latter journal opens with the heading: “Rich Man, Poor Man.” Then, however, it goes on to say: “That does not mean it is not a clever budget.” I do not believe that if it had had a chance, the Financial Mail would not have attacked the hon. the Minister. We are very grateful for that. Then, too, there is Beeld and The Natal Mercury. I could continue in this vein and refer to newspapers throughout the country. “It is a Rich Man, Poor Man budget,” says The Natal Mercury. However this newspaper does not use extreme language.

Now, however, I want to refer to the Johannesburg Stock Exchange. There is no other barometer in the country which gives as definite an indication of the effect of a budget as does the Stock Exchange. What really happened last week? Only last week the Stock Exchange announced that a growth budget was on its way. By this time the people on the Stock Exchange know the hon. the Minister and they were expecting something of the sort. As a result, last week the greatest emphasis was on industrial shares. Now, it is also a fact that share brokers state very definitely that there was no exchange of gold-mining shares for industrial shares. New money was invested in industrial shares. This, of course is to us a very favourable sign. For example, an increase of 20 cents in one share in the industrial sector last week was nothing unusual. In the banking sector, too, there was steady growth. For example, Volkskas shares rose from 285c to 300c on Friday. All these are good things.

Before going further I want to discuss one matter with the hon. the Minister. We in South Africa produce 75% of the Western World’s gold. A major part of our reserves is in gold. We have just heard that the IMF has decided that the monetary authorities may from now on sell gold freely. They can buy, sell or hold it at the market price. Due to this decision we are now in a position to revalue our gold at a price which will have to be decided on. I will not say that it should be revalued at the market price; in any event it is not my task to decide at what price our gold should be revalued. I want to know from the hon. the Minister whether we shall be able to revalue our gold and if so, when this is to be done. If we revalue our gold, will it mean that the value of our gold, as shown in the statements concerned, will be shown at a realistic price? Everyone in South Africa— yes, the whole world—will be able to see that we in South Africa are indeed in a very strong position as far as our reserves are concerned. There are certain difficulties in this regard. As far back as last year we adopted the empowering legislation to enable these things to be done by our Reserve Bank. I must say that such a step entails many advantages. Although there may be occasional problems, in my opinion the advantages predominate. I ask the hon. the Minister to take a look at this matter and give us an indication of when it may occur.

Before I forget I want to come back to the hon. member for Constantia. He of course uttered a profound truth when he pointed out that productivity in South Africa was very low. However the Government has been saying for many years that we in this country should be more productive.

Indeed, that is our policy. The hon. member was very positive as far as that is concerned. Nevertheless I want to refer him to Vote 25, where he will note that the National Productivity Institute is getting R760 000 this year. That amount includes the sum of R200 000 earmarked for an investigation into productivity promotion in respect of export industries. I think we would be well-advised to give attention to this matter and make an appeal to the outside world and the private sector to make use of the services of the National Productivity Institute. I think our people are not geared for this. They do not realize what enormous benefits await them if they do make use of the services of the institute. We know of cases of these services having been of major benefit to people who did in fact avail themselves of the services of the institute.

Before the hon. member for Yeoville disappears I want to come back to him. I should like to have the attention of the hon. member for Yeoville. The other day the hon. member loudly asked: Why does the hon. the Minister want this tax? I refer to sales tax. It seems to me that the hon. member does not really know where he stands. At the time when sales duty was introduced, the then Official Opposition opposed it right from the outset. After all, at that stage the hon. member for Yeoville was one of them. On whose behalf is the hon. member speaking? Assocom, the Handelsinstituut, FCI and everyone else said that the tax which the Minister came up with was the right tax.

I speak on behalf of the poor people in South Africa. [Interjections.]

Nor does he speak on behalf of the voters of South Africa, because the voters have rejected his party. I want to tell the hon. member what his predecessor, Mr. Baxter, the then member for Constantia, said with reference to this type of tax. He said that he welcomed the decision to impose sales tax at point of sale rather than at the point of origin. According to him this is truly a measure by which to counter inflation because it prevents anything from being added to the tax between the point of origin and the point of sale. Mr. Baxter went on to say that he found that the measure corresponded very closely to UP policy and what they had recommended and insisted on over the years. There were interjections after that statement and Mr. Baxter was trying to say that the hon. the Minister should be congratulated on having learned the lesson which they had tried to teach him. The then member for Constantia therefore states that he is very grateful that this is now to be introduced, but that hon. member is now maintaining that he and his people have never advocated it. I think he should go and do his homework and then he will do much better. The hon. member also advocated a tax holiday here. He said that he deplored the fact that there was no tax holiday, but I deplore the fact that his common sense is on holiday and that he stood here with his tongue idling. I now want to discuss briefly what that hon. member said this afternoon. He said that the poor man was being taxed. Who, then, is the poor man to whom he refers? It is really the Black man in South Africa to whom he is referring by implication, but the Black man in South Africa is really very well off. There is no country or people on this earth that has ever prospered, made such progress and received so much in so short a time as this same Black man in South Africa. I am now going to refer to a few points.

Let us take just two sectors. Let us look at education first. Just recently Medusa, the medical university for Black students, was opened, quite apart from the other university institutions. It has also been announced that from next year, all school books for Black children will be made available free of charge. New schools are being constructed at a rate of more than one a day—I stress “one per day”. Another 15 secondary schools will be built in urban areas this year. Recently a new teaching college was opened in Soweto. Surely these are very important things which are being done to train those people in that sphere.

And what is happening in the field of business? There are no fewer than 15 000 Black business enterprises within and outside the homelands. A recent survey showed that the real income of the urban Black man about which they have so much to say rose by 51% in the seven years before 1976, as against the lower figure of 3,8% for the Whites. How, then, can that hon. member say that the Black man—the poor man, as he calls him—is not being looked after? I only want to mention one instance. I refer to Barnabas Titus, the Black Man of the Year. He possesses a garage in the Transkei, and his annual turnover is R600 000, and that is by no means an exception. I also want to point to a fact which cropped up in the discussion of the Post Office budget. Notwithstanding all the riots in the Black areas, 11 800 telephones have been installed for the Black people this year. Apart from that, the Post Office is budgeting to spend R126 million over the past five years purely to give them more telephones.

The hon. member mentioned, inter alia, that we should spend less on ideological legislation. However, I want to put a question to him: What are those ideological laws which we have? The ideology and principle of this National Party is to afford all the non-Whites in South Africa the opportunity to live together in their own ranks in happiness and prosperity, group by group as the Creator put us here, to assist the various Bantu peoples and guide them to sovereign autonomy and to develop them so that each can rise in its own territory to the highest level it is capable of. What assistance have we in fact offered, apart from that which is given to them in the normal course, for example employment, etc.? We have done a great deal. We need only consider what has been budgeted this year for the Department of Plural Relations. No less than R534 million has been budgeted for that department. To that we must add the Treasury’s budget of R8,4 million. Then, too, there is the Department of Education and Training. R143,8 million has been budgeted for that. Then there is the amount set aside for Transkei and Bophuthatswana under the Foreign Affairs Vote. The amounts in question are R113,5 million and R22 million respectively. Then there is the R274 million for the Department of Coloured Affairs and the R46 million for the Department of Indian Affairs. This represents a total of R1 205 million, or 12,28% of the total budget. That is not to mention the subsidies on maize, bread, etc., subsidies which amounted to R95 million and to which a further R20 million will be added as the hon. the Minister announced. That is what we are doing for those people.

Now I want to deal with a matter of great importance, namely our balance of payments. I want to say to the hon. member for Yeoville that as far as this matter is concerned, he and the other hon. members opposite must please not prejudice South Africa in the future by publicizing incorrect or distorted information. The hon. member for Parktown would be well advised to reply in regard to this matter when he gets the chance to speak. In 1976 there was a deficit of R1 700 million on our current account. In 1977, however, there was a surplus of R800 million. That is to say that there was a turnaround to the amount of R2 500 million. As the hon. the Minister of Finance said in his budget speech, the team of IMF experts was very pleased when they saw how the situation had improved. However, South Africa’s enemies could easily maintain that the turnaround in the capital account was their doing. Let us take a brief look at the capital account. In 1975 there was a net capital inflow of R1 900 million and one of R1 200 million in 1976. However, last year in 1977 there was a net outflow of R1 000 million. As I have said, South Africa’s enemies think that they had a finger in the pie in this regard and that it is due to their actions that this amount has left the country. That is why I ask the Official Opposition to look at this, too, and not to be guilty of playing into the hands of our enemies every now and again as some of them do. It is true that the turnaround from a net inflow of R1 900 million in 1975 to a net outflow of R1 000 million in 1977 could have been disastrous if we had not had the opposite trend in the current account and had not been able to balance the two.

Moreover, we should not regard this as a state of affairs caused by coincidence: the two are duly correlated and there is a close connection between the current account and the capital account of the balance of payments. There are certain reasons why this is so and I want to point out those reasons. In any country experiencing an internal recession, imports usually drop, and as a result the current account improves. There is a lower level of imports and a lower level of supplies and this of course requires far less financing. As a result South Africa was able to reduce its total foreign loans by means of trade financing or suppliers credit because it had the money to do so. South Africa also made use of its favourable balance of payments to pay off those foreign loans.

There is another aspect, too, that we should not fail to bear in mind, viz. that the local subsidiaries or branches of overseas organizations required less long-term funds to expand their production capacity, and as a result were also able to repay moneys which they had borrowed. All this is the result of measures effected by the hon. the Minister to cool down our economy a little and to reduce imports. In this way this process was initiated. That is why I say that the allegation that a major outflow of capital in 1977 arose out of political pressure from outside is by no means true. It is ascribable to the monetary and fiscal measures adopted by the hon. the Minister, which worked well. I think it is time for us to acknowledge that they did work well.

The industrial countries of the West, too, have been experiencing their biggest recession since 1930. South Africa has also been influenced thereby. We know that over the past 42 months we have been having a fairly severe recession. The growth rate dropped from 7% in 1974 to ½ last year. However, it has never been a negative figure as in England and the USA.

Then, too, I just want to refer to a few other points. During 1977 the total outflow of short-term capital was more than R1 000 million. This was partly reduced by the net inflow of long-term capital. As imports dropped, South Africa’s importers partially repaid the foreign suppliers’ credit and the foreign loans they had incurred during 1975 and 1976. Because the wholesalers, the retailers and the manufacturers required fewer supplies, since the consumer expenditure in South Africa was less, they had money at their disposal to pay their foreign short-term loans. As the demand for local banking facilities dropped, the South African banking institutions also had money available, with the result that the money they borrowed in 1975 and 1976 could be repaid. All these repayments were based wholly on economic laws and the sound discipline established by the hon. the Minister. We must take care lest ill-considered speeches unnecessarily give the outside world, our enemies, the impression that this is the result of their doing, because that is by no means the case. This Government, and the hon. the Minister of Finance in particular, have succeeded in repaying R1,5 billion of our loan debt over the past 18 months. We are very grateful for that and we must bear in mind that when someone pays his debts, that is not a disaster but rather a blessing. That is why we should not feel bad if South Africa has reduced its debts to the extent that we have done. Once again we must not criticize, as the Opposition has done, but rather thank the hon. the Minister and pay tribute to him.

In conclusion, I just want to refer to one other matter. We are having many problems with America. Years ago I said—it is on record in this House—that we should look to Western Europe. The population of Western Europe, the EEC countries, is greater than that of America. The economies of these countries are together stronger than that of America. Those countries are also experiencing problems, but I think that Western Europe, too, should pull itself together and become aware of its own strength. If those countries do not know it, we must tell them. We have problems with those countries. For example I want to refer to Nato. We know that they are having problems, because in Italy, one of the three flanks of Nato’s defence, things are not going so well. Nato has to defend Western Europe on three fronts, namely the northern front, viz. the Scandinavian countries and surrounding oceans; the southern front, viz. the Mediterranean Sea and the surrounding countries, and the central front, viz. Central Europe, the border of 800 km between West Germany and Czechoslovakia. The Nato countries and the EEC must stand united, and they must do something to save themselves from the threat being posed.

Mr. Speaker, it is pleasant for me to participate in this budget debate this evening. Please allow me, Mr. Speaker, to congratulate the hon. the Minister and also his officials who spent many long hours to submit such a successful budget to this House. We thank them sincerely.

Twelve speakers—and I am the 13th— have kept themselves busy with an analysis of the budget. They probably made a very thorough study of it and they are also people with financial expertise. You will pardon me, Mr. Speaker, for not being able to go into all these matters in detail. To the hon. member for Yeoville I want to say that at the beginning of his speech he was a good patriot. I want to congratulate him on that part of his speech. Later in his speech, however, he retrogressed. I want to point out to him that a patriot, a person who loves his nation and who believes in the things which are right, talks the way he did at the beginning of his speech. But if one throws one’s hands into the air and becomes, as we call it, a “hensopper”, then one concludes with that last part of his speech.

We are grateful for the concessions which the hon. the Minister has made in the budget. I want to dwell on a few of those aspects in particular. In the first place I wish to thank the hon. the Minister for looking after the interests of the aged of our nation. Not only did he take care of the Whites, he also made ample provision for the non-White aged. In this connection I am also thinking of the provision which he made for the many old-age homes which have been erected and which are still to be erected.

I also wish to thank the hon. the Minister for the concessions which he made to his taxpayers. He has made great concessions to both White and non-White taxpayers. I also wish to express my thanks to the officials who assisted the hon. the Minister in the preparation of the budget. Doubtless it is easy to draw up a budget when the country is riding on the waves of prosperity, but when there are difficult periods to be gone through, like the period which South Africa is experiencing at the moment—I do not want to be pessimistic when I say that, because I have confidence in the country and its people—it is difficult to present a successful budget such as this one. We take cognizance of it with appreciation. We shall simply have to accept that South Africa is facing a difficult period and it would be unwise for anyone in this House to allege that we shall have an easier time of it in future; circumstances are going to become even more difficult in future. If there is any person who is under the impression that things will get better, I want to say in advance that he can forget about it.

We read in the newspapers every day, we watch television, we listen to the radio and consequently we know … [Interjections.] That hon. friend who is giggling like that reminds me of something I have heard before, in the bush, but usually I shot it. [Interjections.] I want to repeat that conditions will become more difficult for South Africa in future. In future it will be required of all people in South Africa to thrust their hands deeper into their own pockets. It is easy to say: “I am a patriot,” while all goes well, but am I also a patriot when times become difficult? That is why I am grateful to read in the papers that certain firms in America state that they will continue their trade with South Africa as in the past. It is generally the very big undertakings who take this stand. The Standard Oil Company is one which is specifically mentioned. It is one of the biggest in the Western world, one of the most influential undertakings. It also applies, inter alia, to Mobil Gas, Caltex, General Motors and the Ford Company, who all state that they will continue their trade with South Africa. This nation can thank those Americans and those undertakings.

We live in a troubled time, a time in which the hon. the Minister and his officials, in particular, find it very difficult to obtain large loans abroad. Even when they do succeed in obtaining loans abroad, it is over a short term. That makes the situation exceedingly difficult. In view of this I am grateful for the attitude which the American companies have adopted. Why do I say that? They know that a stable Government is in power in South Africa. They know that their investments are safe here and that in the future they can build and expand on these investments.

There is one thing we must accept today, and that is that the West, America, South Africa and Israel are engaged in a struggle against communism. I wonder every day whether each one of us in this House is in fact inspired to fight communism. I hope and trust that I am wrong and that these thoughts of mine are unfounded. But I doubt whether that is the case. The West is engaged in a struggle against communism. If hon. members watched the programme Weegskaal which was broadcast on television last night, then they will know that communism has made the southern point of Africa its target. The Rev. Pit, a Hollander by birth and an expert on communism, explained the communist onslaught in great detail. He told the West that his latest observations from interviews which he had conducted in Russia and behind the Iron Curtain, indicated that communism sees a danger in only three countries. The first country is America, the second is Israel and the third one is South Africa. Why, Sir? Because Christianity has been established here, as in the other two countries, but also because South Africa has the minerals which those countries need. Therefore, every South African citizen—Black, Brown or White—must realize that in future he will have to thrust his hand deep into his pocket to preserve this treasure at the southern point of Africa. It is going to cost a great deal and we therefore we cannot do otherwise. I may differ from someone politically, but as the hon. member for Durban Central once again asked the West tonight: What did we do in the past? I want to thank the hon. member for his contribution. I want to ask not only the West, but America specifically: What did we do for you during the war in Korea? In the circumstances, we can ask the president of America: Is this White nation at the southern point of Africa worth nothing to you, or do you want to sell it for the oil of Lagos?

In these times in which we are living, we need determination. One can, however, be as prepared and as inspired as one may wish, and as we indeed are, but if one has not the funds at one’s disposal, one goes down. For that reason we in South Africa must establish a sound economy. We must ensure that we eliminate the existing unemployment as far as possible. Sir, since America and its president have so much to say about us, I just want to tell them that they … No, I cannot and shall not say that to him. But what I can say to him is that he should go for a drive in his Cadillac through his own Harlem and see what is happening there. I do not want to compare it with us, because that does not help one in any way. All that I want to say, is that he has sufficient problems of his own. We also have sufficient problems of our own. The president should try, with the best will and methods at his disposal, to solve his problems in America itself. But he must allow us in South Africa to solve our own problems.

He should examine his own conscience.

That is quite correct. He should examine his own conscience. But it is not only he who should do that, but all the Western nations.

In this time of a scarcity of money throughout the world, we are grateful that people of the hon. the Minister’s department are able to obtain foreign loans for us. I believe that it probably calls for many sacrifices. I do not know whether other hon. members also find this to be the case, but for me it is one of the most difficult things in life to ask someone for money. When someone has owed me money, I have never been able to ask for it back. If he does not himself know that he must pay it back to me, I have never been able to ask him to do so. It is difficult for any person today to go and stand and bid for money in the money market of the world because one knows that one really needs it. I can push out my chest today and say—as I have often done in this House—that there is still much to be done. But if I were to place the PFP in power I would not like to see the mess of a paradise which they would create. I also want to tell them that they must not think that they can, in an instant, convert this country into a land of Canaan.

I notice that the priest, the hon. member for Pinelands, is not even listening. He is not listening, because the things I say, hurt him. He has a very long backbone and it must hurt him. I just want to tell his party that it will not be so easy. They will not be able, in an instant, or in five or six years, to be able to solve the housing shortage which the Coloureds are today experiencing. Nor will they be able to solve the Black people’s housing problems in four, five or even ten years.

You people cannot, and you are the Government.

Attempts are being made to get rid of these squatter camps and to provide those people with housing. But if it is being claimed that we can change everything in the near future as in a dream, and that everything will then be so wonderful, then I say—and I have confidence in the NP—that at this stage the NP does not have the ability to solve these problems either. We can only do what is possible and what we have the money for.

The PFP says that this sales tax is hitting the poor man hard. Perhaps that is so in certain respects, but they want us to hit him still harder when they expect us to satisfy everybody’s needs immediately. Surely that is impossible. One cannot meet everybody’s needs all at once. But strenuous efforts are being made to provide the Coloureds, the Blacks and the Indians with housing. Even if it is difficult, we still remain a fortunate country. Has there been a strike during the past three years? In America, recently, there was a strike by coal-mine workers which lasted of 110 days. Now again there is a bus strike, involving thousands of workers. Even if South Africa is such a so-called bad country in the eyes of the world for allegedly being the oppressors of the Black man, the Brown man and the Indian, yet these people are happy. From the bottom of my heart I should like to see that everyone is employed. I feel sorry that there is so much unemployment. But that is due to circumstances. If the Carter government wants to impose boycotts and sanctions against South Africa, does it not realize that it is those very people who are going to suffer the most? Does it not realize that it would be better to help South Africa so that it is able to solve these very real problems, which cut to the quick? Then, like the hon. member for Durban Point, I should also like to see who would be able to attack us and threaten our borders. Would Swapo succeed? Swapo and the communists cannot succeed if all goes well with every population group in South Africa. How can Swapo and the communists succeed in their aims if all goes well with every section of our population and if the people have work? But it seems to me that Swapo is being helped by Western nations, because the communists have infiltrated so deeply into their government circles that they would like to see chaos, unemployment and famine in South Africa.

Tell that to the hon. the Minister.

The hon. member says I must tell that to the hon. Minister. What must I tell the hon. the Minister? I say the hon. the Minister has done his best, that in the circumstances in which we find ourselves today, he has done his best.

Who created the circumstances?

It is your policy which is the cause of it.

The hon. member made one great mistake in his life, Mr. Speaker, and he must please excuse me for saying it to him. I believe that there is not a single person in this House whom I hate. I am not equally fond of all of them; that I can also say. The hon. member for Pinelands has exchanged his clerical garb for this place, and I think he was of more value outside. I do not know what sort of mischief he got up to there, but I think he was of more value there. He should rather take off his jacket and put his shoulder to the wheel together with the hon. the Minister and with the Government to pick the fruits of prosperity which I have briefly pointed out to hon. members tonight. I do not know the Brown man all that well, but there are few hon. members in this House who can talk with as much experience as I can of the Black man. I say so with pride.

I started working with the Black man when few, if any, of the present hon. members were sitting in this House. I have had dealings with the Black man since the year 1949 and I also helped to establish the big Bantu townships in the White residential areas. I know every one of those Bantu townships. If one drives through them, one will see my name on many of the plates which have been affixed to those buildings. I worked with those people for many years, and I know them. One thing about the Black man is that he may fib to you, but you may not lie to him. Always tell him the truth. Always tell the Black man the truth and if you promise him three cents, rather give him four cents, but never two cents. That is the reason why they did not murder the Afrikaners in Kenya, but only the other White groups.

The hon. member for Pinelands must listen carefully now.

Listening carefully will not really help. I know the Black man and I know his circumstances. I made contact with the Black man in other fields in my life. I worked with him, shoulder to shoulder, but many times in my life I also defied death with him at my side. I defied death together with the Black man and I have respect for him. As I have said, I cannot speak with authority about the Brown man, but none of those population groups are hated by me or anyone of my party colleagues. That I believe, and so does everyone who sits here, and I think a great deal of the Opposition also believes that hard work is necessary and that all of us who sit here tonight, would like to see that that part of our population should get what they are entitled to.

Therefore I want to thank the hon. the Minister of Finance once again. In these circumstances in which we live, it is a good budget. In these circumstances, Koeks Rossouw will defend this budget on every platform. I am not afraid of it. It may perhaps be difficult, but as a patriot I shall still thank the hon. the Minister many times for it in the future.

Mr. Speaker, the hon. member for Stilfontein has covered a wide field. He has touched on a number of very interesting subjects ranging from patriotism to the provisions of the hon. the Minister’s budget, to communism, Swapo, squatter camps, Black strikes and his own intimate knowledge of the Black man. [Interjections.]

You will never understand!

You do not understand anything! [Interjections.]

The hon. member for Stilfontein covered a number of subjects and I am afraid I do not have the time to deal with them. Therefore, I hope that he will forgive me if I just continue with the subject which I myself want to raise.

Where is Jimmy?

There are occasions when one gets a few rare words of wisdom emanating from Cabinet benches. Last week we had such an example when the hon. the Minister of Defence told us that South Africa could only maintain a proper defence position if the internal economy of this country was sound. As hon. members on these benches have pointed out, the follow-through on that particular bit of wisdom is that we have to recognize that, in order to obtain capital in South Africa, we have to restore the confidence of the outside world in the stability of this country otherwise we will not be able to ensure a decent growth rate to replace the miserable 0,5% which we “enjoyed” last year. We have to get this capital if we want to stimulate the economy in such a way as to combat the grim spectre of increasing unemployment in South Africa.

There was another example of wisdom from Cabinet benches a few years ago when the hon. the Prime Minister told us that the only thing that ever gave him a sleepless night was the thought of massive Black unemployment. What I would like to ask the hon. the Prime Minister is if, with unemployment amongst the Blacks reaching a figure of over 640 000, he is sleeping well these nights. I wonder. [Interjections.] However, if we want to restore confidence in South Africa we have again to consider the whole internal policy in South Africa, and I have to remind hon. members that the events over the last six months, the bannings, the detentions, prohibitions of outside meetings … [Interjections.] … the suppression of Black political organizations and of other organizations … [Interjections.] … all have a disastrous effect on confidence in the stability of South Africa. It seems to the outside world as if South Africa is in a state of chronic emergency. Not only do these actions seem highly objectionable to the outside world, but the lack of action on the side of the Government, for instance, after the death of Steve Biko … [Interjections.] … and the one obvious action which the Government should have taken, which was to kick out the hon. the Minister in charge of the particular portfolio—I mean the hon. the Minister of Police … [Interjections.]

Why do you not say anything about Botswana?

I say the same about Botswana. [Interjections.] I say exactly the same about Botswana. If there is proof of negligence as far as that is concerned … [Interjections.] … then, the persons responsible for what happened in Botswana should be kicked out of office. [Interjections.]

Order!

At least, if this had happened in South Africa, it would have demonstrated that normal Western standards of due responsibility are being observed by the South African Government. Then, we have the example of the banning of Donald Woods, who, until he left this country, had the status of a good editor of a small town newspaper. However, today he has every platform in the world open to him, from the Security Council of the United Nations to … [Interjections.] I can tell this hon. House that since 19 October 1977 there has been a marked stepping up of the campaign against South Africa, both in the United States and elsewhere, a campaign for far more drastic steps than the mandatory arms sanctions against South Africa. [Interjections.] Anti-South African bodies in the United States and in Europe, which have campaigned for years against investment in South Africa, and which used to be laughed out of court at the annual general meetings of the companies which they were attending, are today finding a far more receptive audience. That is so, thanks to Jimmy Kruger and thanks also to the NP Cabinet’s way-out actions last October. [Interjections.] The directors of these companies have, in many cases, just thrown in the sponge. They have decided that the South African connection is just not worth the candle, and have also decided that all the trouble which is being caused for them at home is simply not worth the whole risk factor involved. [Interjections.]

Order!

The sad fact of the matter is that several influential banks in the United States have already undertaken not to make any more loans to South Africa.

That should please you very much.

Several major corporations have pegged their existing investments; one, at least, has pulled out altogether and the unhappy prospect of others taking exactly the same course of action, when the usual annual general meetings are held in America next month, is very much on the cards. I wonder if hon. members are aware of the fact that a newspaper as influential as the New York Times has taken the line, since the bannings of 19 October, that it would support—and in fact did support—the mandatory arms sanctions against South Africa, the declaration that South Africa is a threat to peace, and quite recently has been coming out with the advice that the Export-Import Bank trade credits to South Africa should be ended and that further investment in South Africa should be curtailed. [Interjections.] The New York Times has also come out in support of the campus campaign for disinvestment from South Africa. [Interjections.] I use the word “campaign” advisedly because there is no doubt that a campaign is actually on the go on the campuses and elsewhere.

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

No, you may not. Indeed, it is fast becoming a crusade to force United States companies to disinvest from South Africa and, indeed, not to engage in any new investment, and I want to point out to hon. members that there are over 360 American companies in South Africa with an overall investment worth about R1 600 million and employing something like 90 000 Black people. There is no doubt that this campaign is gaining momentum every day and that it is gaining support over a very wide field.

There is also no doubt that this Government is making it infinitely more difficult for overseas investors to withstand the pressures to withdraw from South Africa, firstly, by moving far too slowly—and my answer is that the Government must move very much faster—in the direction of the reform of race policy. And let me say that what hon. members construe as meaningful change, for instance in the field of sport, international hotels, the opening of theatres, etc., is dismissed overseas as being meaningless and indeed just cosmetic.

And by Helen Suzman!

They have had these policies all along.

You know it is not cosmetic.

Secondly, the Government has made the task of overseas investors much more difficult by the idiotic, precipitate and exacerbating actions which they have taken over and over again, in the past few months, actions which have brought the Republic opprobrium in the headlines of the world Press. I wonder if one or two things like this were not whispered in the ear of the hon. the Prime Minister when he saw all those influential American businessmen in Port Elizabeth a couple of weeks ago? I also wonder if any of them pointed out to the hon. the Prime Minister—and I hope they did— that all the arguments which are used, or used to be used in the past, by them, and I may add by those of us who go overseas, to advocate further investment in South Africa …

“Advocate” is the wrong word.

Agitate against it!

… as an instrument of reform in South Africa can now no longer be accepted with any conviction because we cannot point to any really outstanding achievements as regards the removal of race discrimination. Nor can we point to any real achievements in the political advancement of Blacks as the result of economic integration in South Africa. In short, we have not been able to deliver the goods. It is true that we can say that Blacks are now doing more skilled work. We can say that there is a growing middle class among Blacks.

Do you say it?

Yes, I do say it, but I cannot say that the vast gap which still exists between White living standards and Black living standards is disappearing. I cannot say either that discrimination has really been removed in South Africa. The old argument that economic integration leads to political integration does not carry the same conviction in the light of the changes that have taken place in Southern Africa since the Portuguese coup d’état in 1974 and that is because the argument one used to use with such conviction was a long-term argument. It was based on the fact that reform would follow all this economic integration and that sooner or later there would be political reform as well. However, the time-frame in Southern Africa has altered dramatically since the Portuguese coup d’état …

Why?

“Why”, says that member. Because we no longer have those cosy buffer-states of Angola, Mozambique, Rhodesia and South West Africa surrounding the enclave of White South Africa. That is why.

But that is your greatest joy.

Steps are therefore urgently needed—this is what I want to impress on the Government…

What are you still doing here? Why don’t you leave? You do not belong here.

Order!

Steps are therefore urgently needed to remove discrimination.

Pack your bags and go. “Bitterbek!”

Order! The hon. member must withdraw that word.

She is damned bitter; I beg your pardon, Mr. Speaker.

Order! The hon. member must withdraw the word “bitterbek” as well as the word “damn”.

I withdraw the words, Mr. Speaker.

Stop wasting my time. Sir, steps have got to be taken by those in power to share power. It is no good taking little ad hoc tottering steps as a result of outside pressures. That is no good at all. If we do not take proper steps to back up economic integration by removing race discrimination and not just petty apartheid, I believe that moderation towards South Africa must continue to lose out to militant hostility.

Harry, what do you say?

Instead of moderate pressures to influence reform inside South Africa through contact and economic involvement, the emphasis is now on the complete isolation of South Africa and the complete withdrawal from South Africa. The emphasis is on punitive action against South Africa.

You are prompting them to do so.

During the last election campaign I was castigated by the Nationalists and the NRP alike because I said I welcomed the United States as an ally in the cause of removing race discrimination in South Africa and that I welcomed United States pressure for change and that the time for us to worry would be when the United States wrote South Africa off as a bad job, did not care what happened to us and left us to the tender mercies … [Interjections.] … of the Cubans and of the Russians. I have to say today that I believe that as a result of the actions of the Government, actions of omission and of commission, that day is rapidly drawing near when the United States will wash its hands of us as a bad job. That will be very, very much worse for us than having pressure brought to bear on us by the United States.

What is the Government’s reaction to all this? As I see it, it is threefold. First of all, of course there is the indignant wail of self-pity we get.

That is what we are getting from you tonight.

It goes like this—“The world does not understand our problems.”

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

“The world wants us to commit suicide,” and, of course, most of all we hear: “The world has double standards.” There was a very good example of this last week when the hon. the Prime Minister spoke at Stellenbosch University’s Autumn School. He said, inter alia, that he knew that Pres. Carter would condemn South Africa but not Nigeria when he visited that country in spite of the fact—and I quote— “that Nigeria is a military dictatorship without Press or personal freedom where public executions still take place”. That is, of course, quite right and one can think of many other examples of double standards. They say, why is South Africa criticized and apparently Idi Amin is allowed to go unscathed? This is not true, of course. No country in the West maintains diplomatic relations with Uganda. However, there are lots of examples of double standards. Why are the detentions in Cambodia, Chile and behind the Iron Curtain not criticized as vociferously apparently as the detentions in South Africa? There are good answers, I am afraid, to all of this and the most important answer is that South Africa is not expected to behave like a Third World country. South Africa is expected, unlike Uganda, Cambodia and those other countries, to behave like a Western democracy.

Are you suggesting that we do not behave like a Western democracy?

Yes, I am. We very often do not behave like a Western democracy. Detaining people without trial, having 44 deaths in detention without trial is not behaving like a Western democracy. That is not upholding the standards of an evolved industrial society where Western codes are supposed to apply. [Interjections.] The other answer is, of course, that South Africa’s unique brand of entrenched-by-law race discrimination provides an excuse for double standards and it provides a unifying base which makes it possible for countries right across the line to talk out against Pretoria. [Interjections.] The second reaction to all the hostility aimed at South Africa is to dismiss it all as engendered by self-interest. Again, the hon. the Prime Minister says that America’s policy is dictated by her need for Nigerian oil. I have no doubt that there is a great deal of truth in the fact that countries do have policies dictated by self-interest. Quite naturally, it is absolutely true. We do exactly the same thing, but it is also true that South Africa provides one of those rare opportunities in politics where expediency actually coincides with a just cause, and that is the cause of removing race discrimination.

Finally, the Government used to great effect during the general election the clarion call for all good South Africans to close ranks against the hostile world because “the world will be satisfied with nothing less than an immediate hand-over to a Black majority Government”. This has of course been denied over and over again, but the denials are never quoted, neither Pres. Carter’s nor Andrew Young’s nor Hodding Carter’s nor Secretary of State Vance’s denials. They are not quoted at all. Now I want to point out, however, that the election is over. Is it not time to come down to earth, to think of South Africa’s interests rather than the interests of the NP? [Interjections.] Is it not time to stop baying at the moon about “going it alone”?

We are going without you.

Is it not time to stop flexing our muscles against the entire world? Is it not time to evaluate world opinion and South Africa’s interests on a sound basis, and to see where world opinion could very well coincide with South Africa’s true interests? Then we can get on with making the necessary adjustments.

A final word to the hon. member for Stilfontein who has gone out for some refreshment. Is it not time to give that overworked word “patriotism” its true meaning?

Let us start with you.

In other words, when my country is wrong, put it right and when my country is right, keep it right. [Interjections.]

Order!

That is the real meaning of patriotism and not just identifying patriotism with approval of the National Government’s policy in South Africa.

Mr. Speaker, the hon. member for Houghton has referred to campaigns which are being waged against South Africa, but in the process she has emerged as the most ardent champion of those campaigns. [Interjections.] The hon. member did not raise a single argument in favour of South Africa in her speech. On the contrary. She has repeated all the arguments of those who are opposed to South Africa, also those of the Marxist world and their sympathizers. She did not raise the positive aspects in South Africa which she could have done. The hon. member says that South Africa does not behave itself like a Western democracy.

Not South Africa; the NP.

The hon. member said that South Africa does not behave like a Western democracy. Why does the hon. member not have the courage of her conviction and tell the rest of the world that here in South Africa there is more democracy than in the rest of Africa and in the Marxist world? Why does she not stand up and say that here in South Africa there is more freedom of speech than in the rest of Africa? Why does the hon. member not stand up and say—especially since she professes that investments are not going to be made in South Africa—that the legislative organs in South Africa, of all the nations, are outspoken protagonists of a free economy and that they actively promote it? Why does she say nothing about that? The hon. member used old threadbare arguments and again sided with those who are undermining South Africa. Last week a leader of the people was murdered in cold blood in South West Africa. But she did say a single word about it. [Interjections.] The hon. member for Houghton has also referred scornfully to the hon. member for Stilfontein and talked about patriotism. The hon. member for Houghton is in my view a typical and perfect example of an unpatriotic South African. [Interjections.]

Mr. Speaker, on a point of order: Is the hon. Deputy Minister in order to describe the hon. member for Houghton as he did? [Interjections.]

Order! I do not think it is unparliamentary. The hon. the Deputy Minister may proceed.

Because I require more time to state the matter pertinently and in greater detail, I now move—

Agreed to.

Mr. Speaker, I move—

Agreed to.